20-F

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

_________________

FORM 20-F

_________________

(Mark One)

 ☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

 ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019

OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from _________________ to _________________

OR

☐	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report
	Commission file number 001-33283
EUROSEAS LTD.
(Exact name of Registrant as specified in its charter)
(Translation of Registrant's name into English)
Marshall Islands
(Jurisdiction of incorporation or organization)
4 Messogiou & Evropis Street, 151 24 Maroussi Greece
(Address of principal executive offices)
Tasos Aslidis, Tel: (908) 301-9091, euroseas@euroseas.gr, Euroseas Ltd. c/o Tasos Aslidis, 11 Canterbury Lane, Watchung, NJ 07069
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class			Trading Symbol(s)	Name of each exchange on which registered
Common shares, $0.03 par value			ESEA	Nasdaq Capital Market
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
(Title of Class)
Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report
			5,600,259 common shares, $0.03 par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act.
☐ Yes       ☒    No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
☐ Yes     ☒      No
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒ Yes    ☐      No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒ Yes      ☐    No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, non-accelerated filer, or an emerging growth company.  See definition of "accelerated filer", "large accelerated filer" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one)
Large accelerated filer ☐		Accelerated filer ☐			Non-accelerated filer ☒
					Emerging growth company ☐
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.     ☐
† The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing: U.S. GAAP International Financial Reporting Standards as issued by the International Accounting Standards Board. Other If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow
Item 17     Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☒ Yes       ☐   No
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
☒ Yes      ☐   No

TABLE OF CONTENTS

Page

Forward-Looking Statements		1
Part I
Item 1.	Identity of Directors, Senior Management and Advisers	2
Item 2.	Offer Statistics and Expected Timetable	2
Item 3.	Key Information	2
Item 4.	Information on the Company	37
Item 4A.	Unresolved Staff Comments	53
Item 5.	Operating and Financial Review and Prospects	54
Item 6.	Directors, Senior Management and Employees	65
Item 7.	Major Shareholders and Related Party Transactions	70
Item 8.	Financial Information	74
Item 9.	The Offer and Listing	75
Item 10.	Additional Information	76
Item 11.	Quantitative and Qualitative Disclosures About Market Risk	88
Item 12.	Description of Securities Other than Equity Securities	89

Part II

Item 13.	Defaults, Dividend Arrearages and Delinquencies	89
Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds	89
Item 15.	Controls and Procedures	89
Item 16A.	Audit Committee Financial Expert	90
Item 16B.	Code of Ethics	90
Item 16C.	Principal Accountant Fees and Services	91
Item 16D.	Exemptions from the Listing Standards for Audit Committees	91
Item 16E.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	91
Item 16F.	Change in Registrant's Certifying Accountant	91
Item 16G.	Corporate Governance	91
Item 16H.	Mine Safety Disclosure	91

Part III

Item 17.	Financial Statements	91
Item 18.	Financial Statements	92
Item 19.	Exhibits	92

FORWARD-LOOKING STATEMENTS

Euroseas Ltd. and its wholly owned subsidiaries, or the Company, desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. This annual report contains forward-looking statements. These forward-looking statements include information about possible or assumed future results of our operations or our performance. Words such as "expects," "intends," "plans," "believes," "anticipates," "estimates," and variations of such words and similar expressions are intended to identify the forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. These statements involve known and unknown risks and are based upon a number of assumptions and estimates which are inherently subject to significant uncertainties and contingencies, many of which are beyond our control. Actual results may differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements include, but are not limited to, statements regarding:

• our future operating or financial results;

• future, pending or recent acquisitions, joint ventures, business strategy, areas of possible expansion, and expected capital spending or operating expenses;

• container shipping industry trends, including charter rates and factors affecting vessel supply and demand;

• our financial condition and liquidity, including our ability to obtain additional financing in the future to fund capital expenditures, acquisitions and other general corporate activities;

• availability of crew, number of off-hire days, drydocking requirements and insurance costs;

• our expectations about the availability of vessels to purchase or the useful lives of our vessels;

• our expectations relating to dividend payments and our ability to make such payments;

• our ability to leverage to our advantage our manager's relationships and reputations in the container shipping industry;

• changes in seaborne and other transportation patterns;

• changes in governmental rules and regulations or actions taken by regulatory authorities;

• potential liability from future litigation;

• global and regional political conditions;

• acts of terrorism and other hostilities, including piracy;

• business disruptions due to natural disasters or other disasters outside our control, such as the recent novel Coronavirus COVID-19 ("Coronavirus") outbreak; and

• other factors discussed in the section titled "Risk Factors."

WE UNDERTAKE NO OBLIGATION TO PUBLICLY UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENTS CONTAINED IN THIS ANNUAL REPORT, EXCEPT AS REQUIRED BY LAW, OR THE DOCUMENTS TO WHICH WE REFER YOU IN THIS ANNUAL REPORT, TO REFLECT ANY CHANGE IN OUR EXPECTATIONS WITH RESPECT TO SUCH STATEMENTS OR ANY CHANGE IN EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH ANY STATEMENT IS BASED.

1

PART I

Item 1. Identity of Directors, Senior Management and Advisers

Not Applicable.

Item 2. Offer Statistics and Expected Timetable

Not Applicable.

Item 3. Key Information

Please note:  Throughout this report, all references to "we," "our," "us" and the "Company" refer to Euroseas Ltd. and its subsidiaries. We use the term deadweight ton, or dwt, in describing the size of vessels. Dwt, expressed in metric tons, each of which is equivalent to 1,000 kilograms, refers to the maximum weight of cargo and supplies that a vessel can carry. We use the term twenty-foot equivalent unit, or teu, in describing the size of our containerships in addition to dwt. Teu, expressed in number of containers, refers to the maximum number of twenty-foot long containers that can be placed on board. Unless otherwise indicated, all references to "dollars" and "$" in this report are to, and amounts are presented in, U.S. dollars. All share and per share amounts have been adjusted to account for the 1-for-8 reverse stock split, effective at the close of trading on December 18, 2019.

A. Selected Financial Data

SELECTED CONSOLIDATED FINANCIAL DATA

The following table presents selected consolidated financial and other data of Euroseas Ltd. for each of the years in the five-year period ended December 31, 2019. The table should be read together with "Item 5. Operating and Financial Review and Prospects." Excluding fleet data, the selected consolidated financial data of Euroseas Ltd. is a summary of, is derived from, and is qualified by reference to, our audited consolidated financial statements and notes thereto, which have been prepared in accordance with U.S. generally accepted accounting principles, or "U.S. GAAP."

Our audited consolidated statements of operations, shareholders' equity and cash flows for the years ended December 31, 2017, 2018 and 2019 and the consolidated balance sheets at December 31, 2018 and 2019, together with the notes thereto, are included in "Item 18. Financial Statements" and should be read in their entirety.

Following the close of trading on the Nasdaq Capital Market on May 30, 2018, the Company completed the spin-off of its drybulk fleet (excluding M/V Monica P, a handymax drybulk carrier, which was agreed to be sold) to EuroDry Ltd. ("EuroDry"). Shareholders of the Company received one EuroDry common share for every five common shares of the Company they owned as of May 23, 2018. Shares of EuroDry commenced trading on May 31, 2018 on the Nasdaq Capital Market under the symbol "EDRY." EuroDry operates in the dry cargo, drybulk shipping markets, owning and operating drybulk vessels previously owned and operated by Euroseas, and is now a separate publicly traded company. As a result of the spin-off and the subsequent sale of M/V Monica P, the Company has become a pure containership company and the only publicly listed company concentrating on the feeder and intermediate containership sector. Accordingly, the results of operations and financial condition of EuroDry have been presented in discontinued operations for all historical comparative periods presented. The summary financials below refer to Euroseas Ltd. "continuing operations" giving effect to the spin-off of drybulk vessels to EuroDry ("discontinued operations") unless otherwise noted; historical comparative periods have been adjusted accordingly.

As further described in Note 2 to our consolidated financial statements on January 1, 2018 we adopted the new accounting guidance for revenue from contracts with customers (ASC 606) and on January 1, 2019 we adopted the new accounting guidance for leases (ASC 842), in each case using the modified retrospective approach. As such, the information prior to adoption of such new guidance has not been restated and continues to be reported under the accounting standards in effect for such periods.

See next page for table of Euroseas Ltd. – Summary of Selected Historical Financials.

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Euroseas Ltd. – Summary of Selected Historical Financials (in U.S. Dollars except for Fleet Data and number of shares)
Year Ended December 31,
	2015			2016			2017			2018			2019
Statement of Operations Data
Time charter revenue		35,509,971			21,409,236			24,278,048			36,062,202			41,769,278
Voyage charter revenue		-			47,979			559,319			206,682			-
Related party management fee income		240,000			240,000			240,000			-			-
Commissions		(1,965,466	)		(1,151,879	)		(1,318,248	)		(1,844,147	)		(1,745,599	)
Net revenue, continuing operations		33,784,505			20,545,336			23,759,119			34,424,737			40,023,679
Voyage expenses		(1,852,482	)		(1,209,085	)		(1,564,489	)		(1,261,088	)		(1,055,408	)
Vessel operating expenses		(21,833,674	)		(13,853,444	)		(15,019,342	)		(19,986,170	)		(23,983,282	)
Other operating income		-			-			499,103			-			-
Dry-docking expenses		(1,332,378	)		(2,204,784	)		(571,291	)		(2,774,924	)		(2,714,662	)
Vessel depreciation		(8,108,231	)		(4,959,487	)		(3,585,965	)		(3,305,951	)		(4,178,886	)
Related party management fees		(3,589,167	)		(2,399,461	)		(2,632,637	)		(3,536,094	)		(3,671,335	)
General and administrative expenses		(2,886,884	)		(2,673,594	)		(2,502,203	)		(2,565,502	)		(2,444,495	)
Net gain on sale of vessels		461,586			10,597			803,811			1,340,952			-
Loss on write-down of vessels held for sale		(1,641,885	)		(5,924,668	)		(4,595,819	)		-			-
Operating (loss) / income, continuing operations		(6,978,610	)		(12,668,590	)		(5,409,713	)		2,335,960			1,975,611
Interest and other financing costs		(1,398,553	)		(1,370,830	)		(1,554,695	)		(3,050,768	)		(3,424,969	)
(Loss)/gain on derivatives, net		(261,674	)		(119,154	)		12,389			(44,343	)		(2,885	)
Other investment income		1,212,938			1,024,714			-			-			-
Impairment of other investment		-			(4,421,452	)		-			-			-
Loss on debt extinguishment		-			-			-			-			(328,291	)
Foreign exchange gain / (loss)		16,711			(31,033	)		(30,214	)		13,963			2,024
Interest income		26,445			22,277			37,972			81,792			95,839
Equity loss in joint venture		(2,158,393	)		(2,444,627	)		-			-			-
Impairment in joint venture		-			(14,071,075	)		-			-			-
Net loss, continuing operations		(9,541,136	)		(34,079,770	)		(6,944,261	)		(663,396	)		(1,682,671	)
Dividends to Series B preferred shares		(1,639,149	)		(1,725,699	)		(1,808,811	)		(1,335,733	)		(1,271,782	)
Preferred deemed dividend		-			-			-			-			(504,577	)
Net loss attributable to common shareholders, continuing operations		(11,180,285	)		(35,805,469	)		(8,753,072	)		(1,999,129	)		(3,459,030	)
Loss per share attributable to common shareholders- basic and diluted, continuing operations (1)		(13.95	)		(35.08	)		(6.33	)		(1.41	)		(1.21	)
Preferred stock dividends declared		1,639,149			1,725,699			1,808,811			1,335,733			1,271,782
Preferred dividends declared per preferred share outstanding at end of period		48.53			48.60			48.48			68.13			158.97
Weighted average number of shares outstanding during period, basic and diluted (1)		801,349			1,020,713			1,383,440			1,414,775			2,861,928

(1) In December 2019, the Company completed a 1-for-8 reverse stock split. The reverse stock split was undertaken with the objective of meeting the minimum $1.00 per share requirement for listing the Company's common stock on the Nasdaq Capital Market. The weighted average number of shares as well as the earnings / losses per share shown above have been adjusted retroactively to give effect to the shares associated with this reverse split.

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	Euroseas Ltd. – Summary of Selected Historical Financials (continued) As of December 31,
Balance Sheet Data	2015			2016			2017			2018			2019
Current assets, continuing operations		20,872,484			8,285,054			12,168,251			11,994,168			6,297,092
Current assets of discontinued operations		711,815			2,159,029			3,914,117			-			-
Vessels, net		52,521,193			41,145,269			52,132,079			48,826,128			116,230,333
Deferred assets and other long term assets, continuing operations		51,185,084			33,459,098			28,919,785			6,134,267			4,334,267
Long-term assets of discontinued operations		47,116,387			58,645,054			65,195,329			-			-
Total assets		172,406,963			143,693,504			162,329,561			66,954,563			126,861,692
Total current liabilities, continuing operations		20,391,502			9,710,927			12,649,309			11,592,535			24,851,259
Current liabilities of discontinued operations		(1,026,121	)		1,463,708			5,883,288			-			-
Long term bank loans, including current portion		22,201,040			20,402,911			34,014,502			36,586,790			84,483,105
Related party loan, current		-			2,000,000			-			-			5,000,000
Vessel profit participation liability		-			-			1,297,100			1,067,500			-
Long-term liabilities of discontinued operations		16,440,000			28,243,478			30,364,035			-			-
Total liabilities		45,279,121			55,781,792			80,021,604			44,376,584			98,753,414
Preferred shares		32,079,249			33,804,948			35,613,759			18,757,361			7,654,577
Number of common shares outstanding (1)		1,024,470			1,359,514			1,409,266			1,564,456			5,600,259
Common stock		30,734			40,785			42,279			46,934			168,008
Total shareholders' equity		95,048,593			54,106,764			46,694,198			3,820,618			20,453,701
Cash Flow Data				Year Ended December 31,
		2015			2016			2017			2018			2019
Net cash (used in) / provided by operating activities of continuing operations		(905,910	)		(5,088,067	)		5,053,025			(1,474,830	)		3,240,429
Net cash provided by/(used in) investing activities of continuing operations		8,904,008			1,109,456			(16,511,220	)		6,253,868			(55,720,226	)
Net cash (used in)/ provided by financing activities of continuing operations		(20,058,980	)		(6,341,223	)		12,750,658			135,403			45,198,270

(1) In December 2019, the Company completed a 1-for-8 reverse stock split. The reverse stock split was undertaken with the objective of meeting the minimum $1.00 per share requirement for listing the Company's common stock on the Nasdaq Capital Market. The weighted average number of shares as well as the earnings / losses per share shown above have been adjusted retroactively to give effect to the shares associated with this reverse split.

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Fleet Data (1)	2015			2016			2017			2018			2019
Number of vessels		12.74			8.67			9.28			11.49			13.1
Calendar days		4,650			3,175			3,386			4,191			4,782
Available days		4,587			3,028			3,285			4,115			4,680
Voyage days		4,285			2,844			3,184			3,814			4,636
Utilization Rate (percent)		93.0	%		93.9	%		96.9	%		92.7	%		99.1	%
				(In U.S. Dollars per day per vessel)
Average TCE rate (2)		7,855			7,120			7,309			9,179			8,782
Vessel Operating Expenses		4,695			4,363			4,436			4,769			5,015
Management Fees		772			756			777			844			768
G&A Expenses		621			842			739			612			511
Total Operating Expenses excluding drydocking expenses		6,088			5,961			5,952			6,225			6,294
Drydocking expenses		287			694			169			662			568

 (1) For the definition of calendar days, available days, voyage days and utilization rate, see "Item 5.A – Operating Results".

(2) Time charter equivalent rate, or TCE rate, is a measure of the average daily revenue performance of our vessels and is determined by dividing time charter revenue and voyage charter revenue less voyage expenses or time charter equivalent revenue, or TCE revenues, by the number of voyage days during the relevant time period. TCE revenues, a non-U.S. GAAP measure, provides additional meaningful information in conjunction with time charter revenue and voyage charter revenue, the most directly comparable U.S. GAAP measure, because it assists the Company's management in making decisions regarding the deployment and use of its vessels and because the Company believes that it provides useful information to investors regarding the Company's financial performance. TCE revenues and TCE rate are also standard shipping industry performance measures used primarily to compare period-to-period changes in a shipping company's performance despite changes in the mix of charter types (i.e., spot charters, time charters, pool agreements and bareboat charters) under which the vessels may be employed between the periods (see also "Item 5.A – Operating Results"). Our definition of TCE revenues and TCE rate may not be comparable to that used by other companies in the shipping industry.

5

The following table reflects the reconciliation of TCE revenues to time charter revenue and voyage charter revenue as reflected in the consolidated statement of operations and our calculation of TCE rates for the periods presented.

Year Ended December 31,

	2015			2016			2017			2018			2019
(In U.S. dollars, except for voyage days and TCE rates which are expressed in U.S. dollars per day)
Time charter revenue		35,509,971			21,409,236			24,278,048			36,062,202			41,769,278
Voyage charter revenue		-			47,979			559,319			206,682			-
Voyage expenses		(1,852,482	)		(1,209,085	)		(1,564,489	)		(1,261,088	)		(1,055,408	)
Time Charter Equivalent or TCE Revenues		33,657,489			20,248,130			23,272,878			35,007,796			40,713,870
Voyage days		4,285			2,844			3,184			3,814			4,636
Average TCE rate		7,855			7,120			7,309			9,179			8,782

B. Capitalization and Indebtedness

Not Applicable.

C. Reasons for the Offer and Use of Proceeds

Not Applicable.

D. Risk Factors

Any investment in our common stock involves a high degree of risk. You should consider carefully the following factors, as well as the other information set forth in this annual report, before making an investment in our common stock. Some of the following risks relate principally to the industry in which we operate and our business in general. Other risks relate to the securities market for, and ownership of, our common stock. Any of the described risks could significantly and negatively affect our business, financial condition, operating results and common stock price. The following risk factors describe the material risks that are presently known to us.

Industry Risk Factors

The cyclical nature of the shipping industry may lead to volatile changes in charter rates, which may reduce our revenues and negatively affect our results of operations.

We are an independent shipping company that operates in the container shipping industry. Our profitability is dependent upon the charter rates we are able to charge for our ships. The supply of, and demand for, shipping capacity strongly influence charter rates. The demand for shipping capacity is determined primarily by the demand for containerized goods trade and the distance that those goods must be moved by sea. The demand for trade is affected by, among other things, world and regional economic and political conditions (including developments in international trade, economic slowdowns caused by public health events such as the recent Coronavirus outbreak, fluctuations in industrial and agricultural production and armed conflicts), environmental concerns, weather patterns, and changes in seaborne and other transportation costs. The size of the existing fleet in a particular market, the number of new vessel deliveries, the scrapping of older vessels and the number of vessels out of active service (i.e., laid-up, drydocked, awaiting repairs or otherwise not available for hire) determine the supply of shipping capacity, which is measured by the amount of suitable tonnage available to carry cargo. The cyclical nature of the container shipping industry may lead to volatile changes in charter rates, which may reduce our revenues and net income.

In addition to the prevailing and anticipated charter rates, factors that affect the rate of newbuilding, scrapping and laying-up include newbuilding prices, secondhand vessel values in relation to scrap prices, costs of bunkers and other operating costs, costs associated with classification society surveys, normal maintenance and insurance coverage, the efficiency and age profile of the existing fleet in the market and government and industry regulation of maritime transportation practices, particularly environmental protection laws and regulations. These factors influencing the supply of and demand for shipping capacity are outside of our control, and we may not be able to

6

correctly assess the nature, timing and degree of changes in industry conditions. Some of these factors may have a negative impact on our revenues and net income.

Our future profitability will be dependent on the level of charter rates in the international container shipping industry.

Containership rates ended 2013 at very depressed levels but increased gradually through the period to mid-2015 reaching levels comparable to those seen during the previous peak in mid-2011. However, the second half of the year 2015 saw a decline to the very low levels seen in 2013. In 2016, this declining trend continued, at a milder pace, reaching, or, for containerships greater than 2000 teu, falling below their 2013 levels, an all-time low. Beginning in early 2017 containership rates started a recovery. In the second half of the year rates initially stabilized and then slightly eased. In 2018 rates initially increased through May to the levels last seen in the second half of 2015, but still remained below their historical average. Thereafter, a decline began which erased the entirety of the gains by year end. Containership rates started 2019 in a depressed mode but by March had gradually strengthened to levels that, although were below those achieved in the first half of 2018, were noticeably higher than the low rates seen in 2016. The remainder of the year experienced one of the slowest growth rates in the containerized trade, as global economic growth weakened and continued fears of a U.S.-China 'trade war' escalated. In January 2020, freight rates rose initially, only to decrease significantly as a result of the Coronavirus outbreak that originated in China. The Coronavirus pandemic has resulted in disruptions to industrial production and supply chains within China, which have caused uncertainty in the short-term outlook for the sector.

Rates in the containership market are influenced by the balance of demand for and supply of vessels and may remain depressed or decline again in the future.  Because the factors affecting the supply of and demand for vessels are outside of our control and are unpredictable, the nature, timing, direction and degree of changes in industry conditions are unpredictable, and as a result so are the rates at which we can charter our vessels.  In addition, we may not be able to successfully charter our vessels in the future or renew existing charters at rates sufficient to allow us to meet our obligations or to pay dividends to our shareholders.

Some of the factors that influence demand for vessel capacity include:

• supply of, and demand for, containerized cargo;

• changes in the production of semi-finished and finished consumer and industrial products, and the resulting changes in the international pattern of trade;

• global and regional economic and political conditions, armed conflicts and terrorist activities;

• pandemics, such as the outbreak of Coronavirus in China in 2020;

• embargoes and strikes;

• the location of regional and global manufacturing facilities;

• availability of credit to finance international trade;

• the location of consuming regions for semi-finished and finished consumer and industrial products;

• the distance containerized commodities are to be moved by sea;

• environmental and other regulatory developments;

• currency exchange rates;

• changes in global production and manufacturing distribution patterns of finished goods that utilize containerized commodities;

• changes in seaborne and other transportation patterns; and

• weather and other natural phenomena.

Some of the factors that influence the supply of vessel capacity include:

• the number of newbuilding orders and deliveries including slippage in deliveries;

• the scrapping rate of older vessels;

• the price of steel and other materials;

• port and canal congestion;

• changes in environmental and other regulations that may limit the useful life of vessels;

• vessel casualties;

• the number of vessels that are out of service; and

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• changes in global commodity production.

We anticipate that the future demand for our container vessels and the charter rates of the corresponding markets will be dependent upon economic recovery and growth in the United States, Europe, Japan, China and India and the overall world economy as well as seasonal and regional changes in demand and changes to the capacity of the world fleet. The capacity of the world fleet may increase and economic growth may not continue. Adverse economic, political, social or other developments could also have a material adverse effect on our business and results of operations.

An over-supply of containership capacity may lead to a reduction in charter rates and profitability and may require us to raise additional capital in order to remain compliant with our loan covenants and affect our ability to pay dividends or redeem preferred stock in the future.

The market supply of containerships has been increasing, and the number of containerships on order reached historic highs in 2014. The orderbook has gradually declined and in 2019 neared its lowest level of the last twenty years. Growth of the fleet is also affected by the scrapping rate. If the number of new ships delivered exceeds the number of vessels being scrapped and lost, vessel capacity will increase. An over-supply of containership capacity may result in a further reduction of charter rates. As reported by industry sources, the containership fleet increased by 3.2% in 2016, 2.9% in 2017, 5.6% in 2018 and 4.0% in 2019. As of April 15, 2020, containership volumes have decreased by 0.6%. Specifically, as reported by industry sources, the capacity of the fully cellular worldwide container vessel fleet, as of April 15, 2020, was approximately 23.0 million teu with approximately another 2.35 million teu, or about 10.22% of the fleet capacity on order. If the supply of vessel capacity increases but the demand for vessel capacity does not increase correspondingly, charter rates and vessel values could materially decline.

If such a rate decline occurs upon the expiration or termination of our current charters, we may only be able to re-charter those vessels at reduced rates or we may not be able to charter these vessels at all. Many containership charters we renewed or concluded during 2016 and 2017 were at unprofitable rates and were entered into because they resulted in lower losses than would have resulted had we put the vessels in lay-up. Charter rates have improved since and reached marginally profitable levels during 2018 and into 2019, but remained volatile and fluctuated during 2018, which continued into 2019. Charters renewed or entered into around the end of 2019 were at rates that were profitable in some cases, but could decrease again, depending on changes of demand for and supply of shipping capacity. Any inability to enter into more profitable charters may require us to raise additional capital in order to remain compliant with our loan covenants and may also affect our ability to pay dividends in the future.

The market value of our vessels can fluctuate significantly, which may adversely affect our financial condition, cause us to breach financial covenants, result in the incurrence of a loss upon disposal of a vessel or increase the cost of acquiring additional vessels.

The value of our vessels may fluctuate, adversely affecting our earnings and liquidity and causing us to breach our secured credit agreements.

The fair market values of our vessels are related to prevailing charter rates. While the fair market value of vessels and the freight charter market have a very close relationship as the charter market moves from trough to peak, the time lag between the effect of charter rates on market values of ships can vary. A decrease in the market values of our vessels could limit the amount of funds that we can borrow or trigger certain financial covenants under our current or future credit facilities, and we may incur a loss if we sell vessels following a decline in their market value.  Furthermore, a decrease in the market value of our vessels could require us to raise additional capital in order to remain compliant with our loan covenants, and could result in the foreclosure of our vessels and adversely affect our earnings and financial condition.

The market value of our vessels may increase or decrease depending on the following factors:

• general economic and market conditions affecting the shipping industry in general;

• supply of container vessels, including newbuildings;

• demand for container vessels;

• types and sizes of vessels;

• scrap values;

• other modes of transportation;

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• cost of newbuildings;

• technological advances;

• new regulatory requirements from governments or self-regulated organizations;

• competition from other shipping companies; and

• prevailing level of charter rates.

As vessels grow older, they generally decline in value. Due to the cyclical nature of the container shipping industry, if for any reason we sell vessels at a time when prices have fallen, we could incur a loss and our business, results of operations, cash flow, financial condition and ability to pay dividends could be adversely affected.

In addition, we periodically re-evaluate the carrying amount and period over which vessels are depreciated to determine if events have occurred that would require modification to such assets' carrying values or their useful lives. A determination that a vessel's estimated remaining useful life or fair value has declined below its carrying amount could result in an impairment charge against our earnings and a reduction in our shareholders' equity.

Our secured loan agreements, which are secured by mortgages on our vessels, contain various financial covenants. Any change in the assessed market value of any of our vessels might also cause a violation of the covenants of each secured credit agreement, which, in turn, might restrict our cash and affect our liquidity. Among those covenants are requirements that relate to our net worth, operating performance and liquidity. For example, there is a maximum fleet leverage covenant that is based, in part, upon the market value of the vessels securing the loans, as well as requirements to maintain a minimum ratio of the market value of our vessels mortgaged thereunder to our aggregate outstanding balance under each respective loan agreement. If the assessed market value of our vessels declines below certain thresholds, we may violate these covenants and may incur penalties for breach of our credit agreements. For example, these penalties could require us to prepay the shortfall between the assessed market value of our vessels and the value of such vessels required to be maintained pursuant to the secured credit agreement, or to provide additional security acceptable to the lenders in an amount at least equal to the amount of any shortfall. If we are unable to pledge additional collateral, our lenders could accelerate our debt and foreclose on our fleet. Furthermore, we may enter into future loans, which may include various other covenants, in addition to the vessel-related ones, that may ultimately depend on the assessed values of our vessels. Such covenants could include, but are not limited to, maximum fleet leverage covenants and minimum fair net worth covenants.

Adverse economic conditions, especially in the Asia Pacific region, the European Union or the United States, could harm our business, results of operations and financial condition.

Because a significant number of the port calls made by our vessels involves the loading or discharging of containerships in ports in the Asia Pacific region, economic turmoil in that region may exacerbate the effect of any economic slowdown on us. China has been one of the world's fastest growing economies and a major manufacturing hub for the production and export of finished goods which are predominantly shipped in containerships. However, China's growth rate of real gross domestic product, or "GDP", has been declining and is forecasted to further decline in 2020, especially due to the recent impact of the Coronavirus, and, the United States, a major trading partner of China, has indicated that it may seek to implement more protectionist trade measures, in order to protect its domestic economy, which might further affect the growth rate of the Chinese economy, in particular, and the Asia Pacific region in general. Additionally, the European Union, or the EU, and certain of its member states are facing significant economic and political challenges, including a risk of increased protectionist policies. Our business, results of operations and financial condition will likely be harmed by any significant economic downturn and economic instability in the Asia Pacific region, including China, or in the EU or the United States.

Outbreaks of epidemic and pandemic of diseases and governmental responses thereto could adversely affect our business.

Our operations are subject to risks related to outbreaks of infectious diseases.  For example, the recent outbreak of Coronavirus, a virus causing potentially deadly respiratory tract infections originating in China, may negatively affect economic conditions and the demand for our shipping regionally as well as globally and otherwise impact our operations and the operations of our customers and suppliers. Governments in affected countries are imposing travel bans, quarantines and other emergency public health measures. In response to the Coronavirus outbreak, countries such as China, Italy, Spain and France have implemented lockdown measures, and other countries and local governments may enact similar policies. As of March 15, 2020, the United States has temporarily restricted travel by foreign nationals into the country from a number of areas, including China and Europe. In addition, on March 18, 2020, the U.S. and Canada agreed to restrict all nonessential travel across the border. Companies are also taking precautions, such as requiring employees to work remotely, imposing travel restrictions and temporarily closing

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businesses. These restrictions, though temporary in nature, including future prevention and mitigation measures, may continue and increase depending on developments in the Coronavirus outbreak and are likely to have an adverse impact on global economic conditions, which could materially adversely affect our future operations. As a result of these measures, our vessels may not be able to call on ports, or may be restricted from disembarking from ports, located in regions affected by Coronavirus. The ultimate severity of the Coronavirus outbreak is uncertain at this time and therefore we cannot predict the impact it may have on our future operations, which could be material and adverse.

Eurozone's potential inability to deal with the sovereign debt issues of some of its members could have a material adverse effect on the profitability of our business, financial condition and results of operations.

Despite the efforts of the European Council since 2011 to implement a structured financial support mechanism for Eurozone countries experiencing financial difficulties, questions remain about the capability of a number of member countries to refinance their sovereign debt and meet their debt obligations. In March 2011, the European Council agreed on the need for Eurozone countries to establish a permanent stability mechanism, the European Stability Mechanism (or "the ESM"), which will be activated by mutual agreement to provide external financial assistance to Eurozone countries. Despite these measures, concerns persist regarding the debt burden of certain Eurozone countries and their ability to meet future financial obligations and the overall stability of the euro.  An extended period of adverse development in the outlook for European countries could reduce the overall demand for our services. These potential developments, or market perceptions concerning these and related issues, could have a material adverse effect on our financial position, results of operations and cash flow.

Liner companies, which comprise the largest contingent of charterers of containerships, have been placed under significant financial pressure, thereby increasing our charter counterparty risk which may have a material adverse effect on our business, financial condition and results of operations.

The decline in global trade after the financial crisis of 2008 and the subsequent economic slowdown has resulted in a significant decline in demand for the seaborne transportation of products in containers, including for exports from China to Europe and the United States. Consequently, the cargo volumes and, especially, freight rates (i.e., the rates that liner companies charge to their clients) achieved by liner companies, which charter containerships from ship owners like us, declined sharply in the second half of 2011. They stabilized toward the end of 2012, remained at similar levels in 2013, but declined in 2014 and 2016 also due to a growing oversupply of containerships despite a short-lived recovery in the middle of 2015. In 2017, a rate recovery began, which was maintained throughout the year and the first half of 2018. The second half of 2018 and the beginning of 2019 saw a decline in containership charter rates mainly due to measured demand for goods because of the uncertainty surrounding the possibility of increased protectionist policies by governments worldwide. Rates made progress throughout 2019, although improvements were mostly weighted towards the larger size container segments. Current containership rates still remain below historical averages, affecting their profitability. The recent Coronavirus pandemic has also had a major impact on containership rates, causing prolonged uncertainty in the markets. The financial challenges faced by liner companies, some of which have announced efforts to obtain third party aid and restructure their obligations, including our charterers, have reduced demand for containership charters and may increase the likelihood of our customers being unable or unwilling to pay us contracted charter rates. The combination of the current surplus of containership capacity and the expected increase in the size of the world containership fleet over the next several years may make it difficult to secure substitute employment for our containerships if our counterparties fail to perform their obligations under the currently arranged time charters, and any new charter arrangements we are able to secure may be at lower rates.

The containership industry is highly competitive, and we may be unable to compete successfully for charters with established companies or new entrants that may have greater resources and access to capital, which may have a material adverse effect on our business, prospects, financial condition, liquidity and results of operations.

The containership industry is highly competitive and capital intensive. Competition arises primarily from other vessel owners, some of whom may have greater resources and access to capital than we have. Competition among vessel owners for the seaborne transportation of semi-finished and finished consumer and industrial products can be intense and depends on the charter rate, location, size, age, condition and the acceptability of the vessel and its operators to the charterers. Due in part to the highly fragmented market, many of our competitors with greater resources and access to capital than we have could operate larger fleets than we may operate and thus be able to offer lower charter rates or higher quality vessels than we are able to offer. If this were to occur, we may be unable to retain or attract new charterers on attractive terms or at all, which may have a material adverse effect on our business, prospects, financial condition, liquidity and results of operations.

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Changes in the economic and political environment in China and policies adopted by the Chinese government to regulate China's economy may have a material adverse effect on our business, financial condition and results of operations.

The Chinese economy differs from the economies of most countries belonging to the Organization for Economic Cooperation and Development, (or "OECD"), in such respects as structure, government involvement, level of development, growth rate, capital reinvestment, allocation of resources, rate of inflation and balance of payments position. Prior to 1978, the Chinese economy was a planned economy. Since 1978, increasing emphasis has been placed on the utilization of market forces in the development of the Chinese economy. Annual and five-year State Plans are adopted by the Chinese government in connection with the development of the economy. Although state-owned enterprises still account for a substantial portion of the Chinese industrial output, in general, the Chinese government is reducing the level of direct control that it exercises over the economy through State Plans and other measures. There is an increasing level of freedom and autonomy in areas such as allocation of resources, production, pricing and management and a gradual shift in emphasis to a "market economy" and enterprise reform. Limited price reforms were undertaken, with the result that prices for certain commodities are principally determined by market forces. Many of the reforms are unprecedented or experimental and may be subject to revision, change or abolition based upon the outcome of such experiments. The Chinese government may not continue to pursue a policy of economic reform. The level of imports to and exports from China could be adversely affected by the nature of the economic reforms pursued by the Chinese government, as well as by changes in political, economic and social conditions or other relevant policies of the Chinese government, such as changes in laws, regulations or export and import restrictions, all of which could adversely affect our business, operating results, financial condition and cash flows.

We conduct business in China, where the legal system is not fully developed and has inherent uncertainties that could limit the legal protections available to us.

Some of our vessels may be chartered to Chinese customers and from time to time on our charterers' instructions, our vessels may call on Chinese ports. Such charters and voyages may be subject to regulations in China that may require us to incur new or additional compliance or other administrative costs and may require that we pay to the Chinese government new taxes or other fees. Applicable laws and regulations in China may not be well publicized and may not be known to us or to our charterers in advance of us or our charterers becoming subject to them, and the implementation of such laws and regulations may be inconsistent. Changes in Chinese laws and regulations, including with regards to tax matters, or changes in their implementation by local authorities could affect our vessels if chartered to Chinese customers as well as our vessels calling to Chinese ports and could have a material adverse impact on our business, financial condition and results of operations.

The current state of global financial markets and current economic conditions may adversely impact our ability to obtain additional financing on acceptable terms or at all, which may hinder or prevent us from expanding our business.

Global financial markets and economic conditions have been, and continue to be, volatile. Beginning in February 2020, partially due to fears associated with the spread of the Coronavirus, global financial markets, and starting in late February, financial markets in the U.S., experienced even greater relative volatility and a steep and abrupt downturn, which volatility and downturn may continue as the Coronavirus continues to spread. On March 11, 2020, the World Health Organization declared the Coronavirus outbreak a pandemic. In response to the Coronavirus outbreak, many countries, ports and organizations, including those where we conduct a large part of our operations, have implemented measures to combat the outbreak, such as quarantines and travel restrictions. Such measures have and will likely continue to cause severe trade disruptions. This continuing volatility may negatively affect the general willingness of banks and other financial institutions to extend credit, particularly in the shipping industry, due to the historically volatile, and currently below historical average, asset values of vessels. As the shipping industry is highly dependent on the availability of credit to finance and expand operations, it has been and may continue to be negatively affected by this decline in lending. In addition, the current state of global financial markets and current economic conditions might adversely impact our ability to issue additional equity at prices which will not be dilutive to our existing shareholders or preclude us from issuing equity at all.

Also, as a result of concerns about the stability of financial markets generally and the solvency of counterparties specifically, the cost of obtaining money from the credit markets has increased as many lenders have increased interest rates, enacted tighter lending standards, refused to refinance existing debt at all or on terms similar to current debt and reduced, and in some cases ceased, to provide funding to borrowers. Due to these factors, we cannot be certain that additional financing will be available, if needed, and to the extent required, on acceptable terms

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or at all. If additional financing is not available when needed, or is available only on unfavorable terms, we may be unable to meet our obligations as they come due or we may be unable to enhance our existing business, complete additional vessel acquisitions or otherwise take advantage of business opportunities as they arise.

We are subject to complex laws and regulations, including environmental regulations that can adversely affect the cost, manner or feasibility of doing business.

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 International Convention for the Prevention of Pollution from Ships of 1973, as modified by the Protocol of 1978 relating thereto, collectively referred to as MARPOL 73/78 and herein as MARPOL, including the designation of emission control areas, ECAs, thereunder, the International Convention on Load Lines of 1966, or the LL Convention, the International Convention on Civil Liability for Oil Pollution Damage of 1969, as amended by different Protocol in 1976, 1984 and 1992, and amended in 2000, and generally referred to as the CLC, the International Convention on Civil Liability for Bunker Oil Pollution Damage, or Bunker Convention, the International Convention for the Safety of Life at Sea of 1974, or SOLAS, the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention, or ISM Code, the International Convention for the Control and Management of Ships' Ballast Water and Sediments, or the BWM Convention, the U.S. Oil Pollution Act of 1990, or OPA, the Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA, the U.S. Clean Water Act, or the CWA, the U.S. Clean Air Act, or the CAA, the U.S. Outer Continental Shelf Lands Act, the U.S. Maritime Transportation Security Act of 2002, or the MTSA, and European Union regulations. 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. Furthermore, events like the explosion of the Deepwater Horizon and the subsequent release of oil into the Gulf of Mexico, or other events, may result in further regulation of the shipping industry, and modifications to statutory liability schemes. Thus, 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. 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. Because such conventions, laws and regulations are often revised, we cannot predict the ultimate cost of complying with such conventions, laws and regulations or the impact thereof on the resale price or useful life of our vessels. Additional conventions, laws and regulations may be adopted which could limit our ability to do business or increase the cost of our doing business and which may materially adversely affect our operations. We are required by various governmental and quasi-governmental agencies to obtain certain permits, licenses and certificates with respect to our operations. Under OPA, for example, owners, operators and bareboat charterers are jointly and severally strictly liable for the discharge of oil within the 200-mile exclusive economic zone around the United States. An oil spill could result in significant liability, including fines, penalties and criminal liability and remediation costs for natural resource damages under other federal, state and local laws, as well as third-party damages. We are required to satisfy insurance and financial responsibility requirements for potential oil (including marine fuel) spills and other pollution incidents. There can be no assurance that any such insurance we have arranged to cover certain environmental risks 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. We currently maintain, for each of our vessels, pollution liability coverage insurance of $1.0 billion per incident. If the damages from a catastrophic spill exceeded our insurance coverage, it would severely and adversely affect our business, results of operations, cash flows, financial condition and ability to pay dividends.

Environmental requirements can also require a reduction in cargo capacity, ship modifications or operational changes or restrictions, lead to decreased availability of insurance coverage for environmental matters or result in the denial of access to certain jurisdictional waters or ports, or detention in certain ports.  Under local, national and foreign laws, as well as international treaties and conventions, we could incur material liabilities, including clean up obligations and natural resource damages in the event that there is a release of bunkers or hazardous substances from our vessels or otherwise in connection with our operations.  We could also become subject to personal injury or property damage claims relating to the release of hazardous substances associated with our existing or historic

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operations.  Violations of, or liabilities under, environmental requirements can result in substantial penalties, fines and other sanctions, including in certain instances, seizure or detention of our vessels.

We are subject to international safety regulations and the failure to comply with these regulations may subject us to increased liability, may adversely affect our insurance coverage and may result in a denial of access to, or detention in, certain ports.

The operation of our vessels is affected by the requirements set forth in the ISM Code set forth in Chapter IX of SOLAS. The ISM Code requires shipowners, ship managers and bareboat charterers to develop and maintain an extensive "Safety Management System" that includes the adoption of a safety and environmental protection policy setting forth instructions and procedures for safe operation and describing procedures for dealing with emergencies. We rely upon the safety management system that we and our technical managers have developed for compliance with the ISM Code. The failure of a shipowner or bareboat charterer to comply with the ISM Code may subject it to increased liability, may invalidate existing insurance or decrease available insurance coverage for the affected vessels and may result in a denial of access to, or detention in, certain ports.  Currently, each of our vessels and Eurobulk Ltd. ("Eurobulk"), our affiliated ship management company (the "Manager"), are ISM Code-certified, but we may not be able to maintain such certification indefinitely.

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 documents of compliance for our offices and safety management certificates for all of our vessels for which the certificates are required by the United Nations' International Maritime Organization (the "IMO"). The document of compliance (the "DOC"), and the safety management certificate (the "SMC"), are renewed as required.

In addition, vessel classification societies also impose significant safety and other requirements on our vessels. In complying with current and future environmental requirements, vessel-owners and operators may also incur significant additional costs in meeting new maintenance and inspection requirements, in developing contingency arrangements for potential spills and in obtaining insurance coverage. Government regulation of vessels, particularly in the areas of safety and environmental requirements, can be expected to become stricter in the future and require us to incur significant capital expenditures on our vessels to keep them in compliance.

The operation of our vessels is also affected by other government regulation in the form of international conventions, national, state and local laws and regulations in force in the jurisdictions in which the vessels operate, as well as in the country or countries of their registration. Because such conventions, laws, and regulations are often revised, we may not be able to predict the ultimate cost of complying with such conventions, laws and regulations or the impact thereof on the resale prices or useful lives of our vessels. Additional conventions, laws and regulations may be adopted which could limit our ability to do business or increase the cost of our doing business and which may materially adversely affect our operations. We are required by various governmental and quasi-governmental agencies to obtain certain permits, licenses, certificates and financial assurances with respect to our operations. See Item 4: "Information on the Company – Business Overview – Environmental and Other Regulations in the Shipping Industry" for more information.

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.  Depending on the date of the IOPP renewal survey, existing vessels constructed before September 8, 2017 must comply with the updated D-2 standard on or after September 8, 2019.  For most vessels, compliance with the D-2 standard will involve 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. We currently have 13 vessels that do not comply with the updated guideline and costs of compliance may be substantial and adversely affect our revenues and profitability.

Furthermore, United States regulations are currently changing. Although the 2013 Vessel General Permit ("VGP") program and U.S. National Invasive Species Act ("NISA") are currently in effect to regulate ballast discharge, exchange and installation, the Vessel Incidental Discharge Act ("VIDA"), which was signed into law on December 4, 2018, requires that the U.S. Environmental Protection Agency ("EPA") develop national standards of performance for approximately 30 discharges, similar to those found in the VGP within two years. By approximately 2022, the U.S. Coast Guard must develop corresponding implementation, compliance and enforcement regulations

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regarding ballast water. The new regulations could require the installation of new equipment, which may cause us to incur substantial costs.

Regulations relating to low sulfur emissions that came into effect on January 1, 2020 may adversely affect our revenues and profitability.

Under maritime regulations that came into effect on January 1, 2020, ships will have to reduce sulfur emissions, for which the principal solutions are the use of scrubbers or buying fuel with low sulfur content which is more expensive than standard marine fuel.  We do not currently intend to install scrubbers on our fleet. Our fuel costs and fuel inventories have increased as a result of these sulfur emission regulations, but the effect is limited by the fact that our vessels are under time charter agreements and these costs are paid by the charterer. However, fuel costs are taken into account by the charterer in determining the amount of time charter hire and, therefore, fuel costs also indirectly affect time charter rates. Low sulfur fuel is more expensive than standard marine fuel containing 3.5% sulfur content and may become more expensive or difficult to obtain as a result of increased demand, which may have a material adverse effect on our business, results of operations, cash flows and financial condition.

Increased inspection procedures and tighter import and export controls and new security regulations could increase costs and disrupt our business.

International container shipping is subject to various security and customs inspection and related procedures in countries of origin and destination. Inspection procedures may result in the seizure of contents of our vessels, delays in the loading, offloading or delivery and the levying of customs duties, fines or other penalties against us.

It is possible that changes to existing procedures will be proposed or implemented. Any such changes may affect the container shipping industry and have the potential to impose additional financial and legal obligations on carriers and, in certain cases, to render the shipment of certain types of goods by container uneconomical or impractical. These additional costs could reduce the volume of goods shipped in containers, resulting in a decreased demand for container vessels. In addition, it is unclear what financial costs any new security procedures might create for container vessel owners, or whether companies responsible for the global traffic of containers at sea, referred to as container line operators, may seek to pass on certain of the costs associated with any new security procedures to vessel owners.

If our vessels fail to maintain their class certification and/or fail any annual survey, intermediate survey, drydocking or special survey, those vessels would be unable to carry cargo, thereby reducing our revenues and profitability and violating certain covenants in our loan agreements.

The hull and machinery of every commercial vessel must be classed by a classification society authorized by its country of registry. The classification society certifies that a vessel is safe and seaworthy in accordance with the applicable rules and regulations of the country of registry of the vessel and SOLAS. Our vessels are currently classed with Det Norske Veritas ("DNV"), Bureau Veritas and Nippon Kaiji Kyokai. ISM and International Ship and Port Facilities Security ("ISPS") certifications have been awarded to the vessels by Bureau Veritas or Liberian Flag Administration and to the Manager by Bureau Veritas.

A vessel must undergo annual surveys, intermediate surveys, drydockings and special surveys. In lieu of a special survey, a vessel's machinery may be on a continuous survey cycle, under which the machinery would be surveyed periodically over a five-year period. Every vessel is also required to be drydocked every 30 to 36 months for inspection of the underwater parts of such vessel.

If any vessel does not maintain its class and/or fails any annual survey, intermediate survey, drydocking or special survey, the vessel will be unable to carry cargo between ports and will be unemployable and uninsurable. That status could cause us to be in violation of certain covenants in our loan agreements.Any such inability to carry cargo or be employed, or any such violation of covenants, could have a material adverse impact on our financial condition and results of operations.

Most insurance underwriters make it a condition for insurance coverage that a vessel be certified as "in class" by a classification society that is a member of the International Association of Classification Societies ("IACS"). All of our vessels that we have purchased, and may agree to purchase in the future, must be certified as being "in class" prior to their delivery under our standard purchase contracts and memorandum of agreement. If the vessel is not certified on the date of closing, we have no obligation to take delivery of the vessel. We have all of our vessels, and intend to have all vessels that we acquire in the future, classed by IACS members. See Item 4: "Information on the

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Company – Business Overview – Environmental and Other Regulations in the Shipping Industry" for more information.

Rising fuel prices may adversely affect our results of operations and the marketability of our vessels.

Fuel (bunkers) is a significant, if not the largest, operating expense for many of our shipping operations when our vessels are under voyage charter. When a vessel is operating under a time charter, these costs are paid by the charterer. However, fuel costs are taken into account by the charterer in determining the amount of time charter hire and, therefore, fuel costs also indirectly affect time charter rates. While the price of fuel is currently at relatively low levels due to the price of oil, the price and supply of fuel is unpredictable and fluctuates based on events outside our control, including geopolitical developments, supply and demand for oil and gas, actions by the Organization of the Petroleum Exporting Countries ("OPEC") and other oil and gas producers, war and unrest in oil producing countries and regions, regional production patterns and environmental concerns. Fuel prices had been at historically high levels through mid-2014, but by the first quarter of 2016 fuel prices had fallen by more than 50%. Oil prices began rising in February 2016 until June 2016, due to, among other reasons, the war in Syria, oscillated until November 2016, due to movements in the U.S. dollar exchange rate and various geopolitical events, surging again since end-November 2016, due to the announcement by OPEC of future production cuts. In the two-year period 2017-2018, oil prices fluctuated between about $45/bbl (for West Texas Intermediate, "WTI") and about $75/bbl, before reaching $76.41/bbl in October 2018 and then falling to $42.53/bbl by December 24, 2018. Thereafter, oil prices rebounded responding, at least partly, to a 90-day trade-war truce agreed between the United States and China. By April 1, 2019 the WTI rose by 49.1% to $63.43/bbl. Oil markets faced a steep one-day loss on August 7, 2019 with the WTI closing at $51.09/bbl, after the United States threatened to impose more tariffs on China, then soared to $62.90/bbl in September when key oil facilities in Saudi Arabia were disabled in a missile attack.  Prices dropped to around $55.0/bbl in October 2019, and then began rising until the end of the year to approximately $61.0/bbl. In the first week of January 2020, following turmoil in the Persian Gulf, the price of oil increased to $62.70/bbl, only to drop once again to $57.86/bbl by mid-January as disruptions eventually eased. However, by February 1, 2020 the price dropped to $52.10/bbl, as concerns over the Coronavirus pandemic started emerging, and further dropped starting on March 9, 2020 to $23.43/bbl, and $20.31/bbl by April 1, 2020, after OPEC and Russia failed to agree on maintaining production cuts, and Saudi Arabia increased its own production. The lowest price seen thus far in 2020 was on April 21, 2020 at $11.61/bbl, which slightly picked up to $16.94/bbl by April 24, 2020.  Oil prices are significantly below their 10-year average of $70/bbl (for WTI). Any increases in the price of fuel, especially if exceeding its 10-year average, may adversely affect our operations, especially if such increases are combined with lower containership rates.

Upon redelivery of vessels at the end of a period time or trip time charter, we may be obligated to repurchase bunkers on board at prevailing market prices, which could be materially higher than fuel prices at the inception of the charter period. We may also be obligated to value our bunkers, inventories, on board at the end of a period time or trip time charter, at a lower value than the acquisition value, if prevailing market prices are significantly lower at the time of the vessel redelivery from the charterer.

Rising crew costs may adversely affect our profits.

Crew costs are a significant expense for us under our charters. There is a limited supply of well-qualified crew. We generally bear crewing costs under our charters. An increase in the world vessel operating fleet will likely result in higher demand for crews which, in turn, might drive crew costs further up. Any increase in crew costs may adversely affect our profitability especially if such increase is combined with lower containership rates.

Maritime claimants could arrest or attach our vessels, which would interrupt our business or have a negative effect on our cash flows.

Crew members, suppliers of goods and services to a vessel, shippers of cargo, lenders and other parties may be entitled to a maritime lien against that vessel for unsatisfied debts, claims or damages. In many jurisdictions, a maritime lien holder may enforce its lien by arresting or attaching a vessel through foreclosure proceedings. The arresting or attachment of one or more of our vessels could interrupt our cash flow and require us to pay large sums to have the arrest or attachment lifted which would have a material adverse effect on our financial condition and results of operations.

In addition, in some jurisdictions, such as South Africa, under the "sister ship" theory of liability, a claimant may arrest both the vessel that is subject to the claimant's maritime lien, and any "associated" vessel, which is any

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vessel owned or controlled by the same owner. Claimants could try to assert "sister ship" liability against one of our vessels for claims relating to another of our vessels.

The smuggling of drugs or other contraband onto our vessels may lead to governmental claims against us.

We expect that our vessels will call in ports in South America and other areas where smugglers attempt to hide drugs and other contraband on vessels, with or without the knowledge of crew members. To the extent our vessels are found with contraband, whether inside or attached to the hull of our vessel and whether with or without the knowledge of any of our crew, we may face governmental or other regulatory claims, which could have an adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.

Governments could requisition our vessels during a period of war or emergency, resulting in loss of earnings.

A government could requisition for title or seize one or more of our vessels. Requisition for title occurs when a government takes control of a vessel and becomes the owner. Also, a government could requisition one or more of our vessels for hire. 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. Even if we would be entitled to compensation in the event of a requisition of one or more of our vessels, the amount and timing of the payment would be uncertain. Government requisition of one or more of our vessels could have a material adverse effect on our financial condition and results of operations.

World events outside our control may negatively affect our ability to operate, thereby reducing our revenues and results of operations or our ability to obtain additional financing, thereby restricting the implementation of our business strategy.

We operate in a sector of the economy that is likely to be adversely impacted by the effects of political conflicts, including the current political instability in the Middle East, terrorist or other attacks, war or international hostilities. Terrorist attacks such as the attacks on the United States on September 11, 2001 and similar attacks that followed, the continuing response to these attacks, as well as the threat of future terrorist attacks, continue to cause uncertainty in the world financial markets and may affect our business, results of operations and financial condition.  The continuing conflicts in Iraq, Iran, Afghanistan, Libya, Egypt, Ukraine, Syria, amongst other countries, may lead to additional acts of terrorism and armed conflict around the world, which may contribute to further economic instability in the global financial markets. These uncertainties could also have a material adverse effect on our ability to obtain additional financing on terms acceptable to us or at all. Terrorist attacks on vessels may in the future also negatively affect our operations and financial condition and directly impact our vessels or our customers. Future terrorist attacks could result in increased volatility and turmoil of the financial markets in the United States of America and globally and could result in an economic recession in the United States of America or the world. Any of these occurrences could have a material adverse impact on our financial condition, costs and operating cash flows.

Disruptions in world financial markets and the resulting governmental action could have a material adverse impact on our ability to obtain financing, our results of operations, financial condition and cash flows, and could cause the market price of our common stock to further decline.

Europe, the United States and other parts of the world have exhibited weak economic conditions, are exhibiting volatile economic trends or have been in a recession. For example, during the 2008-2009 crisis, the credit markets in the United States experienced sudden and significant contraction, deleveraging and reduced liquidity, and the United States federal government and state governments have since implemented a broad variety of governmental action and/or new regulation of the financial markets. Securities and futures markets and the credit markets are subject to comprehensive statutes, regulations and other requirements. The Securities and Exchange Commission ("SEC"), other regulators, self-regulatory organizations and exchanges are authorized to take extraordinary actions in the event of market emergencies, and may effect changes in law or interpretations of existing laws. A number of financial institutions and especially banks that traditionally provide debt to shipping companies like ours have experienced serious financial difficulties and, in some cases, have entered bankruptcy proceedings or are in regulatory enforcement actions. As a result, access to credit markets around the world has been reduced. The extension of Quantitative Easing ("QE") and more recently the reversal of it, high levels of Non-Performing Loans ("NPLs") in Europe and stricter lending requirements may reduce bank lending capacity and/or make the terms of any lending more onerous.

We face risks related to changes in economic environments, changes in interest rates, and instability in the banking and securities markets around the world, among other factors. Major market disruptions and the changes in market conditions and regulatory changes worldwide may adversely affect our business or impair our ability to borrow

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amounts under our credit facilities or any future financial arrangements. We cannot predict how long the current market conditions will last. However, these recent and developing economic and governmental factors, including proposals to reform the financial system, together with the concurrent decline in charter rates and vessel values, may have a material adverse effect on our results of operations, financial condition or cash flows, and might cause the price of our common stock on the Nasdaq Capital Market to decline.

In addition, public health threats, such as Coronavirus, influenza and other highly communicable diseases or viruses, outbreaks of which have from time to time occurred in various parts of the world in which we operate, including China, could adversely impact our operations, and the operations of our customers.

We may require substantial additional financing to fund acquisitions of additional vessels and to implement our business plans. Sufficient financing may not be available on terms that are acceptable to us or at all. If we cannot raise the financing we need in a timely manner and on acceptable terms, we may not be able to acquire the vessels necessary to implement our business plans and consequently we may not be able to pay dividends.

Effects and events related to the Greek sovereign debt and economic crisis may adversely affect our operating results.

Greece has experienced a macroeconomic downturn in recent years, which has been slowly recovering, partially as a result of the sovereign debt crisis and the related austerity measures implemented by the Greek government. Eurobulk's operations in Greece may be subjected to new regulations or regulatory action that may require us to incur new or additional compliance or other administrative costs and may require that we or Eurobulk pay to the Greek government new taxes or other fees. We and Eurobulk also face the risk that strikes, work stoppages, civil unrest and violence within Greece may disrupt our and Eurobulk's shore-side operations located in Greece. The Greek government's taxation authorities have increased their scrutiny of individuals and companies to secure tax law compliance. If economic and financial market conditions remain uncertain, persist or deteriorate further, the Greek government may impose further changes to tax and other laws to which we and Eurobulk may be subject or change the ways they are enforced, which may adversely affect our business, operating results, and financial condition.

We rely on information technology, and if we are unable to protect against service interruptions, data corruption, cyber-based attacks or network security breaches, our operations could be disrupted and our business could be negatively affected.

We rely on information technology networks and systems to process, transmit and store electronic and financial information; to capture knowledge of our business; to coordinate our business across our operation bases; and to communicate internally and with customers, suppliers, partners and other third-parties. These information technology systems, some of which are managed by third parties, may be susceptible to damage, disruptions or shutdowns, hardware or software failures, power outages, computer viruses, cyberattacks, telecommunication failures, user errors or catastrophic events. Our information technology systems are becoming increasingly integrated, so damage, disruption or shutdown to the system could result in a more widespread impact. Our business operations could be targeted by individuals or groups seeking to sabotage or disrupt our information technology systems and networks, or to steal data. A successful cyber-attack could materially disrupt our operations, including the safety of our operations, or lead to unauthorized release of information or alteration of information in our systems. Any such attack or other breach of our information technology systems could have a material adverse effect on our business and results of operations. If our information technology systems suffer severe damage, disruption or shutdown, and our business continuity plans do not effectively resolve the issues in a timely manner, our operations could be disrupted and our business could be negatively affected. In addition, cyber-attacks could lead to potential unauthorized access and disclosure of confidential information and data loss and corruption. There is no assurance that we will not experience these service interruptions or cyber-attacks in the future. Further, as the methods of cyber-attacks continue to evolve, we may be required to expend additional resources to continue to modify or enhance our protective measures or to investigate and remediate any vulnerabilities to cyber-attacks.

The withdrawal of the United Kingdom from the European Union could adversely affect us.

The United Kingdom ("U.K.") referendum on its membership in the EU resulted in the U.K. withdrawing from the EU on January 31, 2020 ("Brexit"). We have operations in the EU, and as a result, we face risks associated with the potential uncertainty and disruptions that may follow Brexit, including volatility in exchange rates and interest rates and potential material changes to the regulatory regime applicable to our business or global trading parties. While the framework for the U.K. and Europe's future relationship has been laid out in a Withdrawal Agreement, negotiations are ongoing and final terms of the withdrawal remain uncertain. Brexit could adversely affect European or worldwide

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political, regulatory, economic or market conditions and could contribute to instability in global political institutions, regulatory agencies and financial markets generally and in the U.K., specifically. While we have limited exposure to the U.K. or the Pound sterling ("GBP"), any of these effects of Brexit, and others we cannot anticipate or that may evolve over time, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Seasonal fluctuations could affect our operating results and the amount of available cash with which we service our debt or could pay dividends.

We operate our vessels in markets that have historically exhibited seasonal variations in demand and, as a result, in charter rates. To the extent we operate vessels in the spot market, this seasonality may result in quarter-to-quarter volatility in our operating results which could affect our ability to reinstate payment of dividends to our common shareholders. For example, the containership market is typically stronger in the spring and fall months following the celebration of Chinese New Year in the first quarter of each year and in anticipation of the increased demand during the year-end holiday season. In addition, unpredictable weather patterns in these months tend to disrupt vessel scheduling and supplies of certain commodities. This seasonality has not materially affected our operating results and the amount of available cash with which we service our debt or could pay dividends, because our fleet is currently employed on period time charters, but this seasonality may materially affect our operating results if our vessels are employed in the spot market in the future.

We may have difficulty securing profitable employment for our vessels if their charters expire in a depressed market.

As of April 15, 2020, 17 of our vessels are employed on time charter contracts, while one vessel is idle, and on February 24, 2020, we signed an agreement to sell another vessel for scrap, which has not been delivered to the buyers yet due to Coronavirus restrictions. 15 of our vessels are under time charters scheduled to expire during 2020 and two of our vessels' time charters are scheduled to expire in 2021. As April 15, 2020, the containership charter rates for vessels like ours remain below historical averages. When the current charters of our vessels are due for renewal, we may be unable to re-charter these vessels at similar or better rates or we might not be able to charter them at all. Although we do not receive any revenues from our vessels while not employed, we are required to pay expenses necessary to maintain the vessel in proper operating condition, insure it and service any indebtedness secured by such vessel. If we cannot re-charter our vessels on time charters or trade them in the spot market profitably, our results of operations and operating cash flow will be adversely affected.

Reliance on suppliers may limit our ability to obtain supplies and services when needed.

We rely on a significant number of third party suppliers of consumables, spare parts and equipment to operate, maintain, repair and upgrade our fleet of ships. Delays in delivery or unavailability or poor quality of supplies could result in off-hire days due to consequent delays in the repair and maintenance of our fleet or lead to our time charters being terminated. This would negatively impact our revenues and cash flows. Cost increases could also negatively impact our future operations.

The derivative contracts we enter into to hedge our exposure to fluctuations in interest rates can result in higher than market rates and reductions in our stockholders' equity as well as charges against our income, while there is no assurance of the credit worthiness of our counterparties.

We enter into interest rate swaps generally for purposes of managing our exposure to fluctuations in interest rates applicable to indebtedness under our credit facilities which were advanced at floating rates based on the London Interbank Offered Rate ("LIBOR"). Interest rates and currency hedging may result in us paying higher than market rates. As of December 31, 2018, the aggregate notional amount of interest rate swaps relating to our fleet as of such date was $10 million. As of December 31, 2019, all previous swap contracts had matured and the Company had no open position in interest rate swaps. In April 2020, we entered into a new interest rate swap agreement for a notional amount of $30 million. There is no assurance that our derivative contracts or any that we enter into in the future will provide adequate protection against adverse changes in interest rates or that our bank counterparties will be able to perform their obligations. In addition, as a result of the implementation of new regulation of the swaps markets in the United States, the European Union and elsewhere over the next few years, the cost of interest rate may increase or suitable hedges may not be available. While we monitor the credit risks associated with our bank counterparties, there can be no assurance that these counterparties would be able to meet their commitments under our derivative contracts or any future derivative contract. Our bank counterparties include financial institutions that are based in European Union countries that have faced and might face again financial stress. The potential for our bank counterparties to

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default on their obligations under our derivative contracts may be highest when we are most exposed to the fluctuations in interest and currency rates such contracts are designed to hedge, and several or all of our bank counterparties may simultaneously be unable to perform their obligations due to the same events or occurrences in global financial markets.

To the extent our existing interest rate swaps do not, and future derivative contracts may not, qualify for treatment as hedges for accounting purposes we would recognize fluctuations in the fair value of such contracts in our income statement. In addition, to the extent any future derivative contracts qualify for treatment as hedges for accounting purposes, changes in the fair value of our derivative contracts would be recognized in "Accumulated Other Comprehensive Loss" affecting our accumulated deficit, and may affect compliance with the net worth covenant requirements in our credit facilities. Changes in the fair value of our derivative contracts that do not qualify for treatment as hedges for accounting and financial reporting purposes affect, among other things, our net income and our earnings per share. For additional information see "Item 5. Operating and Financial Review and Prospects" and "Item 11. Quantitative and Qualitative Disclosures about Market Risk".

We may be subject to litigation that, if not resolved in our favor and not sufficiently insured against, could have a material adverse effect on us.

We may be involved in various litigation matters from time to time. These matters may include, among other things, contract disputes, personal injury claims, environmental claims or proceedings, asbestos and other toxic tort claims, employment matters, governmental claims for taxes or duties, and other litigation that arises in the ordinary course of our business. Although we intend to defend these matters vigorously, we cannot predict with certainty the outcome or effect of any claim or other litigation matter, and the ultimate outcome of any litigation or the potential costs to resolve them may have a material adverse effect on us. Insurance may not be applicable or sufficient in all cases and/or insurers may not remain solvent which may have a material adverse effect on our financial condition and operating cash flows.

Company Risk Factors

We depend entirely on Eurobulk to manage and charter our fleet, which may adversely affect our operations if Eurobulk fails to perform its obligations.

We have no employees and we currently contract the commercial and technical management of our fleet, including crewing, maintenance and repair, to Eurobulk, our affiliated ship management company. We may lose the Manager's services or the Manager may fail to perform its obligations to us which could have a material adverse effect on our financial condition and results of our operations. Although we may have rights against our Manager if it defaults on its obligations to us, you will have no recourse against our Manager. Further, we will need to seek approval from our lenders to change the Manager as our ship manager.

Because the Manager is a privately held company, there is little or no publicly available information about it and there may be very little advance warning of operational or financial problems experienced by the Manager that may adversely affect us.

The ability of the Manager to continue providing services for our benefit will depend in part on its own financial strength. Circumstances beyond our control could impair the Manager's financial strength, and because the Manager is privately held it is unlikely that information about its financial strength would become public unless the Manager began to default on its obligations. As a result, there may be little advance warning of problems affecting the Manager, even though these problems could have a material adverse effect on us.

We may have difficulty properly managing our growth through acquisitions of new or secondhand vessels and we may not realize expected benefits from these acquisitions, which may negatively impact our cash flows, liquidity and our ability to pay dividends to our stockholders.

We intend to grow our business by ordering newbuild vessels and through selective acquisitions of high-quality secondhand vessels to the extent that they are available. Our future growth will primarily depend on:

• the operations of the shipyards that build any newbuild vessels we may order;

• the availability of employment for our vessels;

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• locating and identifying suitable high-quality secondhand vessels;

• obtaining newbuild contracts at acceptable prices;

• obtaining required financing on acceptable terms;

• consummating vessel acquisitions;

• enlarging our customer base;

• hiring additional shore-based employees and seafarers;

• continuing to meet technical and safety performance standards; and

• managing joint ventures or significant acquisitions and integrating the new ships into our fleet.

Ship values are correlated with charter rates. During periods in which charter rates are high, ship values are generally high as well, and it may be difficult to consummate ship acquisitions or enter into shipbuilding contracts at favorable prices. During periods in which charter rates are low and employment is scarce, ship values are low and any vessel acquired without an attached time charter will automatically incur additional expenses to operate, insure, maintain and finance the ship, thereby significantly increasing the acquisition cost. In addition, any vessel acquisition may not be profitable at or after the time of acquisition and may not generate cash flows sufficient to justify the investment. We may not be successful in executing any future growth plans and we cannot give any assurance that we will not incur significant expenses and losses in connection with such growth efforts. Other risks associated with vessel acquisitions that may harm our business, financial condition and operating results include the risks that we may:

• fail to realize anticipated benefits, such as new customer relationships, cost-savings or cash flow enhancements;

• be unable to hire, train or retain qualified shore-based and seafaring personnel to manage and operate our growing business and fleet;

• decrease our liquidity by using a significant portion of available cash or borrowing capacity to finance acquisitions;

• significantly increase our interest expense or financial leverage if we incur additional debt to finance acquisitions;

• incur or assume unanticipated liabilities, losses or costs associated with any vessels or businesses acquired; or

• incur other significant charges, such as impairment of goodwill or other intangible assets, asset devaluation or restructuring charges.

Furthermore, a delay in the delivery to us of any such vessel acquired, or the failure of the shipyard to deliver a vessel at all, could cause us to breach our obligations under a related charter and could adversely affect our earnings. In addition, the delivery of any of these vessels with substantial defects could have similar consequences.

A shipyard could fail to deliver a newbuild on time or at all because of:

• work stoppages or other hostilities, political or economic disturbances that disrupt the operations of the shipyard;

• quality or engineering problems;

• bankruptcy or other financial crisis of the shipyard;

• a backlog of orders at the shipyard;

• disputes between us and the shipyard regarding contractual obligations;

• weather interference or catastrophic events, such as major earthquakes or fires;

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• our requests for changes to the original vessel specifications or disputes with the shipyard; or

• shortages of or delays in the receipt of necessary construction materials, such as steel, or equipment, such as main engines, electricity generators and propellers.

If we fail to properly manage our growth through acquisitions of newbuild or secondhand vessels we may not realize the expected benefits from these acquisitions, which may negatively impact our cash flows, liquidity and our ability to pay dividends to our stockholders. Unlike newbuild vessels, secondhand vessels typically do not carry warranties as to their condition. While we generally inspect existing vessels prior to purchase, such an inspection would normally not provide us with as much knowledge of a vessel's condition as we would possess if it had been built for us and operated by us during its life. Repairs and maintenance costs for secondhand vessels are difficult to predict and may be substantially higher than for vessels we have operated since they were built. These costs could decrease our cash flows, liquidity and our ability to pay dividends to our stockholders.

Our business depends upon certain members of our senior management who may not necessarily continue to work for us.

Our future success depends to a significant extent upon our chairman and chief executive officer, Aristides J. Pittas, certain members of our senior management and our Manager. Mr. Pittas has substantial experience in the container shipping industry and has worked with us and our Manager for many years. He, our Manager and certain members of our senior management team are crucial to the execution of our business strategies and to the growth and development of our business. If these individuals were no longer to be affiliated with us or our Manager, or if we were to otherwise cease to receive services from them, we may be unable to recruit other employees with equivalent talent and experience, which could have a material adverse effect on our financial condition and results of operations.

Certain of our shareholders hold shares of Euroseas in amounts to give them a significant percentage of the total outstanding voting power represented by our outstanding shares.

As of April 15, 2020, Friends Investment Company Inc., (or "Friends"), Containers Shareholders Trinity Ltd., Eurobulk Marine Holdings Inc. and Diamantis Shareholders Ltd., all affiliates of the Company controlled by the Pittas family and partly owned by our Chairman and CEO, Vice Chairman and people affiliated or working with Eurobulk amongst others, own approximately 62.0% of the outstanding shares of our common stock and unvested incentive award shares, representing 59.3% of total voting power (after accounting for the certain voting rights of our Series B Preferred Shares before conversion and 56.8% of total voting power on an as converted basis). As a result of this share ownership and for as long as Friends owns a significant percentage of our outstanding common stock, Friends will be able to influence the outcome of any shareholder vote, including the election of directors, the adoption or amendment of provisions in our amended and restated articles of incorporation or bylaws, as amended, and possible mergers, corporate control contests and other significant corporate transactions. In addition, as of April 15, 2020, funds advised by Tennenbaum Capital Partners LLC ("TCP") and Preferred Friends Investment Company Inc., an affiliate of the Company partly owned by our Chairman and CEO, Vice Chairman and people affiliated or working with Eurobulk amongst others, owned shares of our Series B Convertible Perpetual Preferred Shares, to which we will refer as the Series B Preferred Shares, that are convertible into 4.6% and 3.8%, respectively, of our common shares and unvested incentive award shares on an as-converted basis.

Our corporate governance practices are in compliance with, and are not prohibited by, the laws of the Republic of the Marshall Islands, and as such we are entitled to exemption from certain Nasdaq corporate governance standards. As a result, you may not have the same protections afforded to stockholders of companies that are subject to all of the Nasdaq corporate governance requirements.

Our Company's corporate governance practices are in compliance with, and are not prohibited by, the laws of the Republic of the Marshall Islands. Therefore, we are exempt from many of Nasdaq's corporate governance practices other than the requirements regarding the disclosure of a going concern audit opinion, submission of a listing agreement, notification of material non-compliance with Nasdaq corporate governance practices, and the establishment and composition of an audit committee and a formal written audit committee charter. For a list of the practices followed by us in lieu of Nasdaq's corporate governance rules, we refer you to the section of this annual report entitled "Board Practices—Corporate Governance" under Item 6.

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We and our principal officers have affiliations with the Manager that could create conflicts of interest detrimental to us.

Our principal officers are also principals, officers and employees of the Manager, which is our ship management company. These responsibilities and relationships could create conflicts of interest between us and the Manager. Conflicts may also arise in connection with the chartering, purchase, sale and operations of the vessels in our fleet versus other vessels that are or may be managed in the future by the Manager. Circumstances in any of these instances may make one decision advantageous to us but detrimental to the Manager and vice versa. Further, it is possible that in the future Eurobulk may manage additional vessels which will not belong to Euroseas and in which the Pittas family may have non-controlling, little or even no power or participation, and Eurobulk may not be able to resolve all conflicts of interest in a manner beneficial to us and our shareholders.

Companies affiliated with Eurobulk or our officers and directors may acquire vessels that compete with our fleet.

Companies affiliated with Eurobulk or our officers and directors own container carriers and may acquire additional containership vessels in the future. These vessels could be in competition with our fleet and other companies affiliated with Eurobulk might be faced with conflicts of interest with respect to their own interests and their obligations to us. Eurobulk, Friends and Aristides J. Pittas, our Chairman and Chief Executive Officer, have granted us a right of first refusal to acquire any containership that any of them may consider for acquisition in the future. In addition, Aristides J. Pittas will use his best efforts to cause any entity with respect to which he directly or indirectly controls to grant us this right of first refusal. Were we, however, to decline any such opportunity offered to us or if we did not have the resources or desire to accept any such opportunity, Eurobulk, Friends and Aristides J. Pittas, and any of their respective affiliates, could acquire such vessels.

Our officers do not devote all of their time to our business.

Our officers are involved in other business activities that may result in their spending less time than is appropriate or necessary in order to manage our business successfully. Our Chief Executive Officer, Chief Financial Officer, Chief Administrative Officer, Internal Auditor and Secretary are not employed directly by us, but rather their services are provided pursuant to our Master Management Agreement with Eurobulk. All our corporate officers hold similar positions with EuroDry Ltd. ("EuroDry"), a publicly listed company spun-off from Euroseas in May 2018, and our CEO is also President of Eurobulk and involved in the management of other affiliates and is a member of the board of other companies. Therefore, our officers may spend a material portion of their time providing services to other companies.  They may also spend a material portion of their time providing services to Eurobulk and its affiliates on matters unrelated to us.

We are a holding company, and we depend on the ability of our subsidiaries to distribute funds to us in order to satisfy our financial obligations or to make dividend payments.

We are a holding company and our subsidiaries, which are all wholly-owned by us, conduct all of our operations and own all of our operating assets. We have no significant assets other than the equity interests in our wholly-owned subsidiaries. As a result, our ability to make dividend payments to you depends on our subsidiaries and their ability to distribute funds to us. If we are unable to obtain funds from our subsidiaries, we may be unable or our Board of Directors may exercise its discretion not to pay dividends.

We may not be able to pay dividends.

Our Board of Directors decided to suspend the quarterly dividend in the fourth quarter of 2013 in order to focus every resource available in exploiting investment opportunities in the market. Our last dividend of $0.15 per share was declared in August 2013 and was paid in September 2013. This was the thirty-second consecutive quarterly dividend declared and paid. We have not declared any dividends on our common stock since then, and we may not resume dividend payments as we may not earn sufficient revenues or we may incur expenses or liabilities that would reduce or eliminate the cash available for distribution as dividends. Our loan agreements may also limit the amount of dividends we can pay under some circumstances based on certain covenants included in the loan agreements.

The declaration and payment of any dividends will be subject at all times to the discretion of our Board of Directors. Our Series B Preferred Shares provide that we must pay a cash dividend to holders of the Series B Preferred Shares in an amount equal to 40% of any dividend we pay on our common shares on an as-converted-basis in addition to the dividend of the Series B Preferred Shares that is payable at the time.  This provision may be an important factor when our Board of Directors determines whether to declare dividends on our common shares. The timing and amount

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of dividends will depend on our earnings, financial condition, cash requirements and availability, restrictions in our loan agreements, growth strategy, charter rates in the container shipping industry, the provisions of Marshall Islands law affecting the payment of dividends and other factors. Marshall Islands law generally prohibits the payment of dividends other than from surplus (retained earnings and the excess of consideration received for the sale of shares above the par value of the shares), but, if there is no surplus, dividends may be declared out of the net profits (basically, the excess of our revenue over our expenses) for the fiscal year in which the dividend is declared or the preceding fiscal year. Marshall Islands law also prohibits the payment of dividends while a company is insolvent or if it would be rendered insolvent upon the payment of a dividend. As a result, we may not be able to pay dividends.

If we do not have sufficient cash to pay dividends on our Series B Preferred Shares when due, we may suffer adverse consequences.

The Series B Preferred Shares paid dividends in-kind until January 29, 2019 (rather than in cash). After that date, dividends to holders of the Series B Preferred Shares are paid in cash. If we do not have sufficient cash to pay dividends to holders of the Series B Preferred Shares, then our failure to pay such dividends would be a dividend payment default and would therefore cause the dividend rate to increase, pursuant to the terms of the Statement of Designations of the Series B Preferred Shares. In addition, failure to pay dividends on our Series B Preferred Shares when due will adversely affect our ability to utilize shelf registration statements to sell our securities, which has been an important fund-raising avenue for us in the past.

If we are unable to fund our capital expenditures, we may not be able to continue to operate some of our vessels, which would have a material adverse effect on our business and our ability to pay dividends.

In order to fund our capital expenditures, we may be required to incur borrowings or raise capital through the sale of debt or equity securities. Our ability to access the capital markets through future offerings may be limited by our financial condition at the time of any such offering as well as by adverse market conditions resulting from, among other things, general economic conditions and contingencies and uncertainties that are beyond our control. Our failure to obtain the funds for necessary future capital expenditures, including for our vessel under construction, would limit our ability to continue to operate some of our vessels and could have a material adverse effect on our business, results of operations and financial condition and our ability to pay dividends. Even if we are successful in obtaining such funds through financings, the terms of such financings could further limit our ability to pay dividends.

Our existing loan agreements contain restrictive covenants that may limit our liquidity and corporate activities.

Our existing loan agreements impose operating and financial restrictions on us. These restrictions may limit our ability to:

• incur additional indebtedness;

• create liens on our assets;

• sell capital stock of our subsidiaries;

• make investments;

• engage in mergers or acquisitions;

• pay dividends;

• make capital expenditures;

• change the management of our vessels or terminate or materially amend the management agreement relating to each vessel; and

• sell our vessels.

Therefore, we may need to seek permission from our lenders in order to engage in some corporate actions. The lenders' interests may be different from our interests, and we may not be able to obtain the lenders' permission when needed. This may prevent us from taking actions that are in our best interest.

Servicing future debt would limit funds available for other purposes.

To finance our fleet, we have incurred secured debt under loan agreements for our vessels. We also currently expect to incur additional secured debt to finance the acquisition of additional vessels we may decide to acquire in the future. We must dedicate a portion of our cash flow from operations to pay the principal and interest on our debt. These payments limit funds otherwise available for working capital expenditures and other purposes. As of December

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31, 2019, we had total bank debt of approximately $85.2 million. Our bank debt repayment schedule as of December 31, 2019 required us to repay $42.5 million of bank debt during the next two years and all remaining bank debt in the third and fourth year. As of April 1, 2020, we repaid $3.3 million of our total bank debt decreasing our outstanding bank debt to $81.9 million. If we are unable to service our debt, it could have a material adverse effect on our financial condition, results of operations and cash flows.

A further rise in interest rates could cause an increase in our costs and have a material adverse effect on our financial condition and results of operations. To finance vessel purchases, we have borrowed, and may continue to borrow, under loan agreements that provide for periodic interest rate adjustments based on indices that fluctuate with changes in market interest rates. If interest rates increase significantly, it would increase our costs of financing our acquisition of vessels, which could have a material adverse effect on our financial condition and results of operations. Any increase in debt service would also reduce the funds available to us to purchase other vessels.

Our ability to obtain additional debt financing may be dependent on the performance of our then existing charters and the creditworthiness of our charterers.

The actual or perceived credit quality of our charterers, and any defaults by them, may be one of the factors that materially affect our ability to obtain the additional debt financing that we will require to purchase additional vessels or may significantly increase our costs of obtaining such financing. We may be unable to obtain additional financing, or may be able to obtain additional financing only at a higher-than-anticipated cost, which may materially affect our results of operations, cash flows and our ability to implement our business strategy.

Credit market volatility may affect our ability to refinance our existing debt or incur additional debt.

The credit markets have recently experienced extreme volatility and disruption, which has limited credit capacity for certain issuers, and lenders have requested shorter terms and lower leverage ratios. The market for new debt financing is extremely limited and in some cases not available at all. If current levels of market disruption and volatility continue or worsen, we may not be able to refinance our existing debt or incur additional debt, which may require us to seek other funding sources to meet our liquidity needs or to fund planned expansion.

We are exposed to volatility in LIBOR, and we may enter into derivative contracts, which can result in higher than market interest rates and charges against our income. If volatility in LIBOR occurs, it could affect our profitability, earnings and cash flow.

LIBOR is the subject of recent national, international and other regulatory guidance and proposals for reform. These reforms and other pressures may cause LIBOR to be eliminated or to perform differently than in the past. The consequences of these developments cannot be entirely predicted, but could include an increase in the cost of our variable rate indebtedness and obligations. The amount outstanding under our senior secured credit facility has been, and amounts under additional credit facilities that we may enter in the future, will generally be, advanced at a floating rate based on LIBOR, which has been volatile in prior years, which can affect the amount of interest payable on our debt, and which, in turn, could have an adverse effect on our earnings and cash flow. In addition, in recent years, LIBOR has been at relatively low levels, but may rise in the future as the current low interest rate environment comes to an end. Our financial condition could be materially adversely affected at any time that we have not entered into interest rate hedging arrangements to hedge our exposure to the interest rates applicable to our credit facilities and any other financing arrangements we may enter into in the future. Even if we enter into interest rate swaps or other derivative instruments for purposes of managing our interest rate exposure, our hedging strategies may not be effective and we may incur substantial losses.

LIBOR has historically been volatile, with the spread between LIBOR and the prime lending rate widening significantly at times. These conditions are the result of the disruptions in the international credit markets. Because the interest rates borne by our outstanding indebtedness fluctuate with changes in LIBOR, if this volatility were to occur, it would affect the amount of interest payable on our debt, which in turn, could have an adverse effect on our profitability, earnings and cash flow.

Furthermore, the calculation of interest in most financing agreements in our industry has been based on published LIBOR rates. Due in part to uncertainty relating to the LIBOR calculation process in recent years, it is likely that LIBOR will be phased out in the future. As a result, our loan agreements contain provisions that entitle the lenders, in their discretion, to replace published LIBOR as the base for the interest calculation with their cost-of-funds rate. Since some of our loans have such clauses, our borrowing costs could increase significantly, which would have an adverse effect on our profitability, earnings and cash flow.

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In addition, the banks currently reporting information used to set LIBOR will likely stop such reporting after 2021, when their commitment to reporting information ends.  The Alternative Reference Rate Committee, a committee convened by the Federal Reserve that includes major market participants, has proposed an alternative rate to replace U.S. Dollar LIBOR: the Secured Overnight Financing Rate, or "SOFR." The impact of such a transition from LIBOR to SOFR could be significant for us.

In order to manage our exposure to interest rate fluctuations, we may from time to time use interest rate derivatives to effectively fix some of our floating rate debt obligations. No assurance can however be given that the use of these derivative instruments, if any, may effectively protect us from adverse interest rate movements. The use of interest rate derivatives may affect our results through mark to market valuation of these derivatives. Also, adverse movements in interest rate derivatives may require us to post cash as collateral, which may impact our free cash position. Interest rate derivatives may also be impacted by the transition from LIBOR to SOFR or other alternative rates. Entering into swaps and derivatives transactions is inherently risky and presents various possibilities for incurring significant expenses. Such risk may have an adverse effect on our financial condition and results of operations.

As we expand our business, we may need to upgrade our operations and financial systems, and add more staff and crew. If we cannot upgrade these systems or recruit suitable employees, our performance may be adversely affected.

Our Manager's current operating and financial systems may not be adequate if we expand the size of our fleet, and our attempts to improve those systems may be ineffective. In addition, if we expand our fleet, we will have to rely on our Manager to recruit suitable additional seafarers and shore-side administrative and management personnel. Our Manager may not be able to continue to hire suitable employees as we expand our fleet. If our Manager's affiliated crewing agent encounters business or financial difficulties, we can make satisfactory arrangements with unaffiliated crewing agents or else we may not be able to adequately staff our vessels. If we are unable to operate our financial and operations systems effectively or to recruit suitable employees, our performance may be materially adversely affected.

If we acquire additional ships, whether on the secondhand market or newbuildings, and those vessels are not delivered on time or are delivered with significant defects, our earnings and financial condition could be adversely affected.

We expect to acquire additional vessels in the future either from the secondhand markets or by placing newbuilding orders. A delay in the delivery of any of these vessels to us or the failure of the contract counterparty to deliver a vessel at all could cause us to breach our obligations under a related time charter and could adversely affect our earnings, our financial condition and the amount of dividends, if any, that we pay in the future. The delivery of any vessels we might decide to acquire, whether newbuildings or secondhand vessels, could be delayed or certain events may arise which could result in us not taking delivery of a vessel, such as a total loss of a vessel, a constructive loss of a vessel, substantial damage to a vessel prior to delivery or construction not in accordance with agreed upon specification or with substantial defects.

Labor interruptions could disrupt our business.

Our vessels are manned by masters, officers and crews that are employed by third parties. If not resolved in a timely and cost-effective manner, industrial action or other labor unrest could prevent or hinder our operations from being carried out normally and could have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.

We will not be able to take advantage of potentially favorable opportunities in the current market with respect to vessels employed on time charters.

As of April 15, 2020, 17 of our vessels are employed under time charters with remaining terms ranging from less than one month to 10 months based on the minimum duration of the charter contracts, with options to extend for an additional seven to 22 months.  The percentage of our fleet that is under time charter contracts represents approximately 47% of our vessel capacity for the remainder of 2020 and 5% of our capacity in 2021. Although time charters provide relatively steady streams of revenue, vessels committed to time charters may not be available for chartering during periods of increasing charter rates. If we cannot re-charter these vessels on time charters or trade them profitably, our results of operations and operating cash flow may suffer. We may not be able to secure charter rates in the future that will enable us to operate our vessels profitably. Although we do not receive any revenues from certain of our vessels while such vessels are unemployed, we are required to pay expenses necessary to maintain the

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vessel in proper operating condition, insure it and service any indebtedness secured by such vessel. Despite the fact that 17 of our 19 vessels are employed, we may be forced to lay up vessels if rates drop to levels below daily running expenses or if we are unable to find employment for the vessels for prolonged periods of time.

We or our Manager may be unable to attract and retain key management personnel and other employees in the shipping industry, which may negatively affect the effectiveness of our management and our results of operations.

Our success depends to a significant extent upon the abilities and efforts of our management team. Our success will depend upon our and our Manager's ability to hire additional employees and to retain key members of our management team. The loss of any of these individuals could adversely affect our business prospects and financial condition and operating cash flows. Difficulty in hiring and retaining personnel could adversely affect our results of operations. We do not currently intend to maintain "key man" life insurance on any of our officers.

Risks involved with operating ocean-going vessels could affect our business and reputation, which may reduce our revenues.

The operation of an ocean-going vessel carries inherent risks. These risks include, among others, the possibility of:

• marine disaster;

• piracy;

• environmental accidents;

• grounding, fire, explosions and collisions;

• cargo and property losses or damage;

• business interruptions caused by mechanical failure, human error, war, terrorism, political action in various countries, labor strikes, adverse weather conditions, natural disasters or other disasters outside our control, such as the recent Coronavirus outbreak; and

• work stoppages or other labor problems with crew members serving on our vessels including crew strikes and/or boycotts.

Such occurrences could result in death or injury to persons, loss of property or environmental damage, delays in the delivery of cargo, loss of revenues from or termination of charter contracts, governmental fines, penalties or restrictions on conducting business, higher insurance rates, and damage to our reputation and customer relationships generally. Any of these circumstances or events could increase our costs or lower our revenues, which could result in reduction in the market price of our shares of common stock. The involvement of our vessels in an environmental disaster may harm our reputation as a safe and reliable vessel owner and operator.

The operation of containerships has certain unique operational risks which could affect our business, financial condition, results of operations and ability to pay dividends.

The operation of certain ship types, such as containerships, has certain unique risks. Containerships operate at higher speeds as compared to other ocean-going vessels in order to move cargoes around the world quickly and minimize delivery delays. These high speeds can result in greater impact in collisions and groundings resulting in more damage to the vessel when compared to vessels operating at lower speeds. In addition, due to the placement of the containers on a containership, there is a greater risk that containers carried on deck will be lost overboard if an accident does occur. Furthermore, with the highly varied cargo that can be carried on a single containership, there can be additional difficulties with any clean-up operation following an accident. Also, we may not be able to correctly control the contents and condition of cargoes within the containers which may give rise to events such as customer complaints, accidents on-board the ships or problems with authorities due to carriage of illegal cargoes. Any of these circumstances or events could negatively impact our business, financial condition, results of operations and ability to pay dividends. In addition, the loss of any of our vessels could harm our reputation as a safe and reliable vessel owner and operator.

Our vessels may suffer damage and may face unexpected drydocking costs, which could affect our cash flows and financial condition.

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. The loss of earnings while these vessels are being repaired and reconditioned, as well as the actual cost of these

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repairs, would decrease our earnings. 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 near our vessels' positions.  The loss of earnings and any costs incurred while these vessels are forced to wait for space or to steam to more distant drydocking facilities would decrease our earnings.

Purchasing and operating previously owned vessels may result in increased operating costs and vessels off-hire, which could adversely affect our earnings. The aging of our fleet may result in increased operating costs in the future, which could adversely affect our results of operations.

Although we inspect the secondhand vessels prior to purchase, this inspection does not provide us with the same knowledge about their condition and cost of any required (or anticipated) repairs that it would have had if these vessels had been built for and operated exclusively by us. Generally, we do not receive the benefit of warranties on secondhand vessels.

In general, the costs to maintain a vessel in good operating condition increase with the age of the vessel. As of April 15, 2020, the vessels in our fleet had an average age of approximately 17.7 years.  As our vessels age, they may become less fuel efficient and more costly to maintain and will not be as advanced as more recently constructed vessels due to improvements in design and engine technology. Rates for cargo insurance, paid by charterers, also increase with the age of a vessel, making older vessels less desirable to charterers. Governmental regulations, safety or other equipment standards related to the age of vessels may require expenditures for alterations, or the addition of new equipment, to our vessels and may restrict the type of activities in which our vessels may engage. As our vessels age, market conditions may not justify those expenditures or enable us to operate our vessels profitably during the remainder of their useful lives.

If we sell vessels, we are not certain that the price for which we sell them will equal their carrying amount at that time.

Unless we set aside reserves for vessel replacement, at the end of a vessel's useful life, our revenue will decline, which would adversely affect our cash flows and income.

As of April 15, 2020, the vessels in our fleet had an average age of approximately 17.7 years. Unless we maintain cash reserves for vessel replacement, we may be unable to replace the vessels in our fleet upon the expiration of their useful lives. We estimate the useful life of our vessels to be 25 years from the completion of their construction. Our cash flows and income are dependent on the revenues we earn by chartering our vessels to customers. If we are unable to replace the vessels in our fleet upon the expiration of their useful lives, our business, financial condition and results of operations may be materially adversely affected. Any reserves set aside for vessel replacement would not be available for other cash needs or dividends.

Technological innovation could reduce our charter income and the value of our vessels.

The charter rates and the value and operational life of a vessel are determined by a number of factors including the vessel's efficiency, operational flexibility and physical life. Efficiency includes speed, fuel economy and the ability to load and discharge cargo quickly. Flexibility includes the ability to enter harbors, utilize related docking facilities and pass through canals and straits. The length of a vessel's physical life is related to its original design and construction, its maintenance and the impact of the stress of operations. If new vessels are built that are more efficient or more flexible or have longer physical lives than our vessels, competition from these more technologically advanced vessels could adversely affect the amount of charter hire payments we receive for our vessels and the resale value of our vessels could significantly decrease. As a result, our available cash could be adversely affected.

We are subject to certain risks with respect to our counterparties on contracts, and failure of such counterparties to meet their obligations could cause us to suffer losses or otherwise adversely affect our business.

We enter into, among other things, charter-party agreements. Such agreements subject us to counterparty risks. The ability and willingness of each of our counterparties to perform its obligations under a contract with us will depend on a number of factors that are beyond our control and may include, among other things, general economic conditions, the condition of the maritime and offshore industries, the overall financial condition of the counterparty, charter rates received for specific types of vessels, and various expenses. In addition, in depressed market conditions, our charterers may no longer need a vessel that is currently under charter or may be able to obtain a comparable vessel at lower rates. As a result, charterers may seek to renegotiate the terms of their existing charter parties or avoid their

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obligations under those contracts, especially when the contracted charter rates are significantly above market levels. Should a counterparty fail to honor its obligations under agreements with us, it may be difficult to secure substitute employment for such vessel, and any new charter arrangements we secure in the spot market or on time charters would be at lower rates given currently decreased charter rate levels. If our charterers fail to meet their obligations to us or attempt to renegotiate our charter agreements, it may be difficult to secure substitute employment for such vessel, and any new charter arrangements we secure in the spot market or on time charters may be at lower rates given currently decreased charter rate levels. 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 in the future and compliance with covenants in our credit facilities.

A decrease in spot charter rates may provide an incentive for some charterers to default on their charters.

When we enter into a time charter, charter rates under that charter are fixed for the term of the charter. If the spot charter rates or short-term time charter rates in the containership shipping industry remain significantly lower than the time charter equivalent rates that some of our charterers are obligated to pay us under our existing charters, the charterers may have incentive to default under that charter or attempt to renegotiate the charter. If our charterers fail to pay their obligations, we would have to attempt to re-charter our vessels at lower charter rates, which would affect our ability to operate our vessels profitably and may affect our ability to comply with covenants contained in our current or future credit facilities and financing agreements.

We may not have adequate insurance to compensate us adequately for damage to, or loss of, our vessels.

We procure insurance for our fleet against risks commonly insured against by vessel owners and operators which includes hull and machinery insurance, protection and indemnity insurance (which, in turn, includes environmental damage and pollution insurance) and war risk insurance and freight, demurrage and defense insurance for our fleet. We generally do not maintain insurance against loss of hire which covers business interruptions that result in the loss of use of a vessel except in cases we consider such protection appropriate. We may not be adequately insured against all risks and we may not be able to obtain adequate insurance coverage for our fleet in the future. The insurers may not pay particular claims. 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. Our insurance policies contain deductibles for which we will be responsible and limitations and exclusions which may increase our costs. Since it is possible that a large number of claims may be brought, the aggregate amount of these deductibles could be material. Moreover, the insurers may default on any claims they are required to pay. If our insurance is not enough to cover claims that may arise, it may have a material adverse effect on our financial condition, results of operations and cash flows.

Because we obtain some of our insurance through protection and indemnity associations ("P&I Associations"), we may also be subject to calls in amounts based not only on our own claim records, but also the claim records of other members of the P&I Associations.

We are indemnified for legal liabilities incurred while operating our vessels through membership in P&I Associations or clubs.  P&I Associations are mutual insurance associations whose members must contribute to cover losses sustained by other association members.  The objective of a P&I Association is to provide mutual insurance based on the aggregate tonnage of a member's vessels entered into the association.  Claims are paid through the aggregate premiums of all members of the association, although members remain subject to calls for additional funds if the aggregate premiums are insufficient to cover claims submitted to the association.  We cannot assure you that the P&I Association to which we belong will remain viable or that we will not become subject to additional funding calls which could adversely affect us.  Claims submitted to the association may include those incurred by members of the association as well as claims submitted to the association from other P&I Associations with which our P&I Association has entered into inter-association agreements.

We may be subject to calls in amounts based not only on our claim records but also the claim records of other members of the protection and indemnity associations through which we receive insurance coverage for tort liability, including pollution-related liability. Our payment of these calls could result in significant expense to us, which could have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.

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Our vessels are exposed to operational risks, including terrorism, cyber-terrorism and piracy that may not be adequately covered by our insurance.

The operation of any vessel includes risks such as weather conditions, mechanical failure, collision, fire, contact with floating objects, cargo or property loss or damage and business interruption due to political circumstances in countries, piracy, terrorist and cyber-terrorist attacks, armed hostilities and labor strikes. Such occurrences could result in death or injury to persons, loss, damage or destruction of property or environmental damage, delays in the delivery of cargo, loss of revenues from or termination of charter contracts, governmental fines, penalties or restrictions on conducting business, higher insurance rates and damage to our reputation and customer relationships generally.

Acts of piracy have historically affected ocean-going vessels trading in regions of the world such as the South China Sea, the Indian Ocean and in the Gulf of Aden off the coast of Somalia. Although the frequency of sea piracy worldwide has generally decreased since 2013, sea piracy incidents continue to occur, particularly in the Gulf of Aden off the coast of Somalia and increasingly in the Sulu Sea and the Gulf of Guinea, with dry bulk vessels and tankers particularly vulnerable to such attacks. Acts of piracy could result in harm or danger to the crews that man our vessels.

If these piracy attacks occur in regions in which our vessels are deployed that insurers characterized as "war risk" zones or Joint War Committee "war and strikes" listed areas, premiums payable for such coverage could increase significantly and such insurance coverage may be more difficult to obtain. In addition, crew costs, including the employment of onboard security guards, could increase in such circumstances. Furthermore, while we believe the charterer remains liable for charter payments when a vessel is seized by pirates, the charterer may dispute this and withhold charter-hire until the vessel is released. A charterer may also claim that a vessel seized by pirates was not "on-hire" for a certain number of days and is therefore entitled to cancel the charter party, a claim that we would dispute. We may not be adequately insured to cover losses from these incidents, which could have a material adverse effect on us. In addition, any detention 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 earnings.

We may not be adequately insured against all risks, and our insurers may not pay particular claims. With respect to war risks insurance, which we usually obtain for certain of our vessels making port calls in designated war zone areas, such insurance may not be obtained prior to one of our vessels entering into an actual war zone, which could result in that vessel not being insured. 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. Under the terms of our credit facilities, we will be subject to restrictions on the use of any proceeds we may receive from claims under our insurance policies. Furthermore, in the future, we may not be able to maintain or obtain adequate insurance coverage at reasonable rates for our fleet. We may also be subject to calls, or premiums, in amounts based not only on our own claim records but also the claim records of all other members of the protection and indemnity associations through which we 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 the event of a claim or decrease any recovery in the event of a loss. If the damages from a catastrophic oil spill or other marine disaster exceeded our insurance coverage, the payment of those damages could have a material adverse effect on our business and could possibly result in our insolvency.

Recent action by the IMO's Maritime Safety Committee and U.S. agencies indicate that cybersecurity regulations for the maritime industry are likely to be further developed in the near future in an attempt to combat cybersecurity threats.  This might cause companies to cultivate additional procedures for monitoring cybersecurity, which could require additional expenses and/or capital expenditures. However, the impact of such regulations is hard to predict at this time. We do not carry cyber-attack insurance, which could have a material adverse effect on our business, financial condition and results of operations.

In general, we do not carry loss of hire insurance. Occasionally, we may decide to carry loss of hire insurance when our vessels are trading in areas where a history of piracy has been reported. Loss of hire insurance covers the loss of revenue during extended vessel off-hire periods, such as those that occur during an unscheduled drydocking or unscheduled repairs due to damage to the vessel. Accordingly, any loss of a vessel or any extended period of vessel off-hire, due to an accident or otherwise, could have a material adverse effect on our business, financial condition and results of operations.

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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 governments it could lead to monetary fines or penalties and/or adversely affect our reputation and the market for our shares of common stock and its trading price.

Although we do not expect that our vessels will call on ports located in countries or territories subject to country-wide or territory-wide sanctions and/or embargoes imposed by the U.S. government or other authorities or countries identified by the U.S. government or other authorities as state sponsors of terrorism ("Sanctioned Jurisdictions"), and we endeavor to take precautions reasonably designed to mitigate such activities, including relevant trade exclusion clauses in our charter contracts forbidding the use of our vessels in trade that would violation economic sanctions, it is possible that, from time to time, vessels in our fleet on charterers' instructions, and without our knowledge or consent, may call on ports located in such countries or territories in the future. If such activities result in a sanctions violation, we could be subject to monetary fines, penalties, or other sanctions, and our reputation and the market for our common stock could be adversely affected.

Sanctions and embargo laws and regulations vary in their application, 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 strengthened over time.  Current or future counterparties of ours may be affiliated with persons or entities that are or may be in the future the subject of sanctions imposed by the U.S. administration, 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, our results of operations may be adversely affected, we could face monetary fines or penalties, or we may suffer reputational harm.

All of the Company's revenues are from chartering-out its vessels on voyage or time charter contracts. The Company's vessels can also enter into pooling arrangements under which an international company and trading house involved in the use and/or transportation of commodities directs the Company's vessel to carry cargoes on its behalf. In time charters and pooling arrangements, the Company has no contractual relationship with the owner of the cargo. The vessel is directed to a load port to load the cargo, and to a discharge port to offload the cargo, based solely on the instructions of the charterer. As of April 15, 2020, none of our vessels have called on ports in Sanctioned Jurisdictions in the past or are arranged to call such ports in the future.  The vessels' shipowning companies do not presently have, and have not in the past had, any agreements, arrangements or contracts with the governments of Iran, North Korea, Sudan, Syria or Cuba or entities that these countries control.

Although we believe that we have been in compliance with all applicable sanctions and embargo laws and regulations, and intend to maintain such compliance, there can be no assurance that we will be in compliance with all applicable sanctions and embargo laws and regulations 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. In addition, certain institutional investors may have investment policies or restrictions that prevent them from holding securities of companies that have contracts with countries or territories identified by the U.S. government as state sponsors of terrorism. The determination by these investors not to invest in, or to divest from, our common stock may adversely affect the price at which our common stock trades. Moreover, our charterers may violate applicable sanctions and embargo laws and regulations as a result of actions that do not involve us or our vessels, and those violations could in turn negatively affect our reputation. In addition, our reputation and the market for our securities may be adversely affected if we engage in certain other activities, such as entering into charters with individuals or entities in countries or territories subject to U.S. sanctions and embargo laws that are not controlled by the governments of those countries or territories, or engaging in operations associated with those countries or territories pursuant to contracts with third parties that are unrelated to those countries or territories or entities controlled by their governments. 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 these and surrounding countries or territories.

We expect to operate substantially outside the United States, which will expose us to political and governmental instability, which could harm our operations.

We expect that our operations will be primarily conducted outside the United States and may be adversely affected by changing or adverse political and governmental conditions in the countries where our vessels are flagged or registered and in the regions where we otherwise engage in business. Any disruption caused by these factors may interfere with the operation of our vessels, which could harm our business, financial condition and results of operations. Past political efforts to disrupt shipping in these regions, particularly in the Arabian Gulf, have included attacks on ships and mining of waterways. In addition, terrorist attacks outside this region, such as the attacks that

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occurred against targets in the United States on September 11, 2001 and on a number of occasions in other countries following that, as well as continuing or new unrest and hostilities in Iraq, Iran, Afghanistan, Libya, Egypt, Ukraine, Syria and elsewhere in the world, may lead to additional armed conflicts or to further acts of terrorism and civil disturbance. Any such attacks or disturbances may disrupt our business, increase vessel operating costs, including insurance costs, and adversely affect our financial condition and results of operations. Our operations may also be adversely affected by expropriation of vessels, taxes, regulation, economic sanctions or other adverse events or circumstances in or affecting the countries and regions where we operate or where we may operate in the future.

Further, governments may turn to trade barriers to protect their domestic industries against foreign imports, thereby depressing shipping demand. In particular, leaders in the United States have indicated the United States may seek to implement more protective trade measures. President Donald Trump was elected on a platform promoting trade protectionism. The results of the presidential election have thus created significant uncertainty concerning the future relationship between the United States, China and other exporting countries, including with respect to trade policies, treaties, government regulations and tariffs. For example, on January 23, 2017, President Trump signed an executive order withdrawing the United States from the Trans-Pacific Partnership, a global trade agreement intended to include the United States, Canada, Mexico, Peru and a number of Asian countries. In March 2018, President Trump announced tariffs on imported steel and aluminum into the United States that could have a negative impact on international trade generally. In 2019, the United States announced additional sanctions relating to Venezuela, including those against the Government of Venezuela and Petróleos de Venezuela (PdVSA), which may impact Venezuela’s oil output, and in turn, affect global oil supply. Protectionist developments, or the perception 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 time charters with us. This could have a material adverse effect on our business, results of operations, financial condition and our ability to pay any cash distributions to our stockholders.

The international nature of our operations may make the outcome of any bankruptcy proceedings difficult to predict.

We are incorporated under the laws of the Republic of the Marshall Islands and we conduct operations in countries around the world. Consequently, in the event of any bankruptcy, insolvency, liquidation, dissolution, reorganization or similar proceeding involving us or any of our subsidiaries, bankruptcy laws other than those of the United States could apply. If we become a debtor under U.S. bankruptcy law, bankruptcy courts in the United States may seek to assert jurisdiction over all of our assets, wherever located, including property situated in other countries. There can be no assurance, however, that we would become a debtor in the United States, or that a U.S. bankruptcy court would be entitled to, or accept, jurisdiction over such a bankruptcy case, or that courts in other countries that have jurisdiction over us and our operations would recognize a U.S. bankruptcy court's jurisdiction if any other bankruptcy court would determine it had jurisdiction.

Obligations associated with being a public company require significant company resources and management attention.

We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the other rules and regulations of the SEC, including the Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley"). Section 404 of Sarbanes-Oxley requires that we evaluate and determine the effectiveness of our internal control over financial reporting.

We work with our legal, accounting and financial advisors to identify any areas in which changes should be made to our financial and management control systems to manage our growth and our obligations as a public company. We evaluate areas such as corporate governance, corporate control, internal audit, disclosure controls and procedures and financial reporting and accounting systems. We will make changes in any of these and other areas, including our internal control over financial reporting, which we believe are necessary. However, these and other measures we may take may not be sufficient to allow us to satisfy our obligations as a public company on a timely and reliable basis. In addition, compliance with reporting and other requirements applicable to public companies do create additional costs for us and will require the time and attention of management. Our limited management resources may exacerbate the

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difficulties in complying with these reporting and other requirements while focusing on executing our business strategy. We may not be able to predict or estimate the amount of the additional costs we may incur, the timing of such costs or the degree of impact that our management's attention to these matters will have on our business.

Exposure to currency exchange rate fluctuations will result in fluctuations in our cash flows and operating results.

We generate all our revenues in U.S. dollars, but we incur approximately 25% of our vessel operating expenses and drydocking expenses, all of our vessel management fees, and approximately 6% in 2019 of our general and administrative expenses in currencies other than the U.S. dollar. This could lead to fluctuations in our operating expenses, which would affect our financial results. Expenses incurred in foreign currencies increase when the value of the U.S. dollar falls, which would reduce our profitability and cash flows. In 2019, we had no exposure to the GBP.

We depend upon a few significant customers for a large part of our revenues and the loss of one or more of these customers could adversely affect our financial performance.

We have historically derived a significant part of our revenues from a small number of charterers. During 2019, 2018, and 2017, approximately 86%, 97% and 91%, respectively, of our revenues derived from our top five charterers. If one or more of our charterers chooses not to charter our vessels or is unable to perform under one or more charters with us and we are not able to find a replacement charter, we could suffer a loss of revenues that could adversely affect our financial condition and results of operations.

United States tax authorities could treat us as a "passive foreign investment company," which could have adverse United States federal income tax consequences to United States holders.

A foreign corporation will be 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, "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. For purposes of these tests, income derived from the performance of services does not constitute "passive income." United States shareholders of a PFIC are subject to a disadvantageous United States federal income tax regime with respect to the income derived by the PFIC, the distributions they receive from the PFIC and the gain, if any, they derive from the sale or other disposition of their shares in the PFIC. In addition, United States shareholders of a PFIC are required to file annual information returns with the United States Internal Revenue Service, or IRS.

Based on our current method of operation, we do not believe that we have been, are or will be a PFIC with respect to any taxable year. In this regard, we treat the gross income we derive or are deemed to derive from our time chartering activities as services income, rather than rental income. Accordingly, we believe that our income from our time chartering activities should not constitute "passive income," and the assets that we own and operate in connection with the production of that income should not constitute passive assets.

There is substantial legal authority supporting this position consisting of case law and IRS pronouncements concerning the characterization of income derived from time charters and voyage charters as services income for other tax purposes.  However, it should be noted that there is also authority which characterizes time charter income as rental income rather than services income for other tax purposes.  Accordingly, in the absence of legal authority directly relating to PFIC rules, no assurance can be given that the IRS or a court of law will accept this position, and there is a risk that the IRS or a court of law could determine that we are a PFIC. Moreover, no assurance can be given that we would not constitute a PFIC for any future taxable year if the nature and extent of our operations changed.

If the IRS were to find that we are or have been a PFIC for any taxable year, our United States shareholders will face adverse United States federal income tax consequences. Under the PFIC rules, unless those shareholders make an election available under the United States Internal Revenue Code of 1986, as amended, (which election could itself have adverse consequences for such shareholders, as discussed in Item 10 of this Annual Report under "Taxation — United States Federal Income Taxation of U.S. Holders"), such shareholders would be subject to United States federal income tax at the then prevailing income tax rates on ordinary income plus interest upon excess distributions and upon any gain from the disposition of our shares, as if the excess distribution or gain had been recognized ratably over the United States shareholder's holding period of our shares. See "Taxation — United States Federal Income Taxation of U.S. Holders" in this Annual Report under Item 10 for a more comprehensive discussion of the United States federal income tax consequences to United States shareholders if we are treated as a PFIC.

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Based on the current and expected composition of our and our subsidiaries' assets and income, it is not anticipated that we will be treated as a PFIC. Our actual PFIC status for any taxable year, however, will not be determinable until after the end of such taxable year. Accordingly, there can be no assurances regarding our status as a PFIC for the current taxable year or any future taxable year. See the discussion in the section entitled "Item 10.E. Taxation — Passive Foreign Investment Company Status and Significant Tax Consequences". We urge U.S. Holders to consult with their own tax advisors regarding the possible application of the PFIC rules.

If management is unable to provide reports as to the effectiveness of our internal control over financial reporting, investors could lose confidence in the reliability of our financial statements, which could result in a decrease in the value of our common stock.

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.

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, or the Code, 50% of the gross shipping income of a vessel owning or chartering corporation, such as us and our subsidiaries, that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States may be subject to a 4% United States federal income tax without allowance for deduction, unless that corporation qualifies for exemption from tax under Section 883 of the Code, or Section 883, and the applicable Treasury Regulations promulgated thereunder.

We intend to take the position that we qualified for this statutory tax exemption for United States federal income tax return reporting purposes for our 2019 taxable year and we intend to so qualify for future taxable years. However, there are factual circumstances beyond our control that could cause us to lose the benefit of this tax exemption for any future taxable year and thereby become subject to United States federal income tax on our U.S.-source shipping income. For example, in certain circumstances we may no longer qualify for exemption under Section 883 for a particular taxable year if shareholders, other than "qualified shareholders", with a five percent or greater interest in our common shares owned, in the aggregate, 50% or more of our outstanding common shares for more than half the days during the taxable year. Due to the factual nature of the issues involved, there can be no assurances on our tax-exempt status.  In addition, we may fail to qualify if our common stock comes to represent 50% or less of the value or outstanding voting power of our stock.

If we are not entitled to exemption under Section 883 for any taxable year, we would be subject for those years to an effective 2% United States federal income tax on the shipping income we derive during the year which is attributable to the transport of cargoes to or from the United States. The imposition of this taxation would have a negative effect on our business and would result in decreased earnings available for distribution to our shareholders.

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 operate in a number of countries throughout the world, including countries known to have a reputation for corruption. We are committed to doing business in accordance with applicable anti-corruption laws and have adopted a code of business conduct and ethics which is consistent and in full compliance with the U.S. Foreign Corrupt Practices Act of 1977. We are subject, however, to the risk that we, our affiliated entities or our or their respective officers, directors, employees and agents may take action determined to be in violation of such anti-corruption laws, including the U.S. Foreign Corrupt Practices Act of 1977. 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, results of operations 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.

It may be difficult to enforce service of process and enforcement of judgments against us and our officers and directors.

We are a Marshall Islands corporation, and our subsidiaries are incorporated in jurisdictions outside of the United States. Our executive offices are located outside of the United States in Maroussi, Greece. A majority of our

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directors and officers reside outside of the United States, and a substantial portion of our assets and the assets of our officers and directors are located outside of the United States. As a result, you may have difficulty serving legal process within the United States upon us or any of these persons. You may also have difficulty enforcing, both in and outside of the United States, judgments you may obtain in the U.S. courts against us or these persons in any action, including actions based upon the civil liability provisions of U.S. federal or state securities laws.

There is also substantial doubt that the courts of the Marshall Islands, Greece or jurisdictions in which our subsidiaries are organized would enter judgments in original actions brought in those courts predicated on U.S. federal or state securities laws. In addition, the protection afforded minority shareholders in the Marshall Islands is different than those offered in the United States.

Risk Factors Relating To Our Common Stock

The trading volume for our common stock has been low, which may cause our common stock to trade at lower prices and make it difficult for you to sell your common stock.

Although our shares of common stock have traded on the Nasdaq Global Market since January 31, 2007, on the Nasdaq Global Select Market since January 1, 2008, and on the Nasdaq Capital Market since June 26, 2015, the trading volume has been lower over the last couple of years. Our shares may not actively trade in the public market and any such limited liquidity may cause our common stock to trade at lower prices and make it difficult to sell your common stock.

The market price of our common stock has been and may in the future be subject to significant fluctuations.

The market price of our common stock has been and may in the future be subject to significant fluctuations as a result of many factors, some of which are beyond our control. Among the factors that have in the past and could in the future affect our stock price are:

• actual or anticipated fluctuations in our quarterly and annual results and those of other public companies in our industry;

• changes in market valuations or sales or earnings estimates or publication of research reports by analysts;

• changes in earnings estimates or shortfalls in our operating results from levels forecasted by securities analysts;

• speculation in the press or investment community about our business or the shipping industry;

• changes in market valuations of similar companies and stock market price and volume fluctuations generally;

• payment of dividends;

• strategic actions by us or our competitors such as mergers, acquisitions, joint ventures, strategic alliances or restructurings;

• changes in government and other regulatory developments;

• additions or departures of key personnel;

• general market conditions and the state of the securities markets; and

• domestic and international economic, market and currency factors unrelated to our performance.

The international container shipping industry has been highly unpredictable.  In addition, the stock markets in general, and the markets for container shipping and shipping stocks in general, have experienced extreme volatility that has sometimes been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock.  Our shares may trade at prices lower than you originally paid for such shares.

If our common stock does not meet the Nasdaq Capital Market's minimum share price requirement, and if we cannot cure such deficiency within the prescribed timeframe, our common stock could be delisted.

Under the rules of the Nasdaq Capital Market, listed companies are required to maintain a share price of at least $1.00 per share.  If the share price declines below $1.00 for a period of 30 consecutive business days, then the listed company has a cure period of at least 180 days to regain compliance with the $1.00 per share minimum. The company may regain compliance if the bid price of its common shares closes at $1.00 per share or more for a minimum of ten consecutive business days at any time during the 180-day cure period. If the price of our common stock closes

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below $1.00 for 30 consecutive days, and if we cannot cure that deficiency within the 180-day timeframe, then our common stock could be delisted. On January 14, 2019, we received such a notice as our share price traded below $1.00 for 30 consecutive days, however Nasdaq determined that the Company was eligible for an additional 180-day period, or until January 13, 2020, to regain compliance. In December 2019, we effected a 1-for-8 reverse stock split to comply with the minimum share price requirement.

If the market price of our common stock remains below $5.00 per share, under stock exchange rules, our shareholders will not be able to use such shares as collateral for borrowing in margin accounts. This inability to continue to use our common stock as collateral may lead to sales of such shares creating downward pressure on and increased volatility in the market price of our common stock.

If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business, our share price and trading volume could decline.

 The trading market for our common shares will depend, in part, upon the research and reports that securities or industry analysts publish about us or our business. We do not have any control over analysts as to whether they will cover us, and if they do, whether such coverage will continue. If analysts do not commence coverage of the Company, or if one or more of these analysts cease coverage of the Company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline. In addition, if one or more of the analysts who cover us downgrade our shares or change their opinion of our shares, our share price may likely decline.

Our Amended and Restated Articles of Incorporation, Bylaws and Shareholders' Rights Plan contain anti-takeover provisions that may discourage, delay or prevent any (1) merger or acquisition, (2) the removal of incumbent directors and officers and (3) the ability of public shareholders to benefit from a change in control.

Our current amended and restated articles of incorporation and bylaws contain certain anti-takeover provisions. These provisions include blank check preferred stock, the prohibition of cumulative voting in the election of directors, a classified Board of Directors, advance written notice for shareholder nominations for directors, removal of directors only for cause, advance written notice of shareholder proposals for the removal of directors and limitations on action by shareholders. In addition, on May 10, 2019 we adopted a shareholders' rights plan, which replaced and is substantially similar to our prior shareholder rights agreement that expired on May 27, 2019, pursuant to which our Board of Directors may cause the substantial dilution of any person that attempted to acquire us without the approval of our Board of Directors.  These anti-takeover provisions, either individually or in the aggregate, may discourage, delay or prevent (1) our merger or acquisition by means of a tender offer, a proxy contest or otherwise, that a shareholder may consider in its best interest, (2) the removal of incumbent directors and officers, and (3) the ability of public shareholders to benefit from a change in control. These anti-takeover provisions could substantially impede the ability of shareholders to benefit from a change in control and, as a result, may adversely affect the market price of our common stock and shareholders' ability to realize any potential change of control premium.

Future sales of our common stock could cause the market price of our common stock to decline.

Sales of a substantial number of shares of our common stock in the public market, or the perception that these sales could occur, may depress the market price for our common stock. These sales could also impair our ability to raise additional capital through the sale of our equity securities in the future.

We may issue additional shares of our stock in the future and our stockholders may elect to sell large numbers of shares held by them from time to time. Our amended and restated articles of incorporation authorize us to issue up to 200,000,000 shares of common stock and 20,000,000 shares of preferred stock.

On January 27, 2014 we entered into an agreement to sell 25,000 of our Series B Preferred Shares to a fund managed by TCP and 5,700 shares to Preferred Friends Investment Company Inc., an affiliate of the Company.  The Series B Preferred Shares are convertible into common shares.  Pursuant to a registration rights agreement between us and TCP, we filed a registration statement registering for resale all of the common shares issuable upon conversion of the Series B Preferred Shares, which has resulted in these shares becoming freely tradable without restriction under the Securities Act of 1933, as amended (the "Securities Act"), if such shares are sold under the registration statement. On December 29, 2016 we sold 89,928 shares of our common stock to Friends for total proceeds of $1,000,000. Further, on December 23, 2016 we issued 112,500 shares of our common stock to two funds managed by TCP in order to purchase the M/V "RT Dagr". We entered into a registration obligation agreement requiring us to register under the Securities Act the 112,500 shares sold to the funds managed by TCP, and such shares will become freely tradable

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without restriction under the Securities Act if they are sold under the registration statement that we intend to file. In June 2019, we redeemed $11.7 million of our Series B Preferred Shares, leaving an $8 million face value of our Series B Preferred Shares outstanding.

In December 2016 and January 2017, we filed with the SEC two prospectus supplements to issue and sell, in an at-the-market ("ATM") offering, shares of our common stock having an aggregate offering price of up to $10 million. From December 21, 2016 through January 26, 2017, we issued and sold 160,078 shares of our common stock through the ATM offering for net proceeds of approximately $2.7 million. In October 2018, we filed with the SEC a new prospectus supplement under which we may issue and sell, in an ATM offering, shares of our common stock having an aggregate offering price of up to $4.2 million; in October 2019, we issued and sold 144,727 shares of our common stock in this ATM offering for net proceeds of approximately $0.85 million. On March 12, 2020, we filed with the SEC a shelf registration statement on Form F-3 and filed an amendment thereto on March 27, 2020, which, if declared effective, will give us the ability to sell in one or more offerings, within a three-year period, up to 2,369,950 shares of our common stock that were previously acquired in private transactions or in the open market or which are issuable upon conversion of Series B Convertible Perpetual Preferred Shares (the "Series B Preferred Shares") or any convertible notes into which the Series B Preferred Shares may convert.

Issuance of preferred stock may adversely affect the voting power of our shareholders and have the effect of discouraging, delaying or preventing a merger or acquisition, which could adversely affect the market price of our common stock.

Our Board of Directors approved the issuance of 30,700 shares of our Series B Preferred Shares in 2014 (of which 8,000 are outstanding as of April 15, 2020) and may decide in the future to issue preferred shares in one or more series and to determine the rights, preferences, privileges and restrictions with respect to, among other things, dividends, conversion, voting, redemption, liquidation and the number of shares constituting any series subject to prior shareholders' approval. If our Board determines to issue preferred shares, such issuance may discourage, delay or prevent a merger or acquisition that shareholders may consider favorable. The issuance of preferred shares with voting and conversion rights may also adversely affect the voting power of the holders of common shares. This could substantially impede the ability of public shareholders to benefit from a change in control and, as a result, may adversely affect the market price of our common stock and shareholders' ability to realize any potential change of control premium.

Our Series B Preferred Shares are senior obligations of ours and rank prior to our common stock with respect to dividends, distributions and payments upon liquidation, which could have an adverse effect on the value of our common stock.

The rights of the holders of our Series B Preferred Shares rank senior to the obligations to holders of our common shares. Upon our liquidation, the holders of Series B Preferred Shares will be entitled to receive a liquidation preference of $1,000 per share, plus all accrued but unpaid dividends, prior and in preference to any distribution to the holders of any other class of our equity securities, including our common shares. The existence of the Series B Preferred Shares could have an adverse effect on the value of our common shares.

Because the Republic of the Marshall Islands, where we are incorporated, does not have a well-developed body of corporate law, shareholders may have fewer rights and protections than under typical state law in the United States, such as Delaware, and shareholders may have difficulty in protecting their interests with regard to actions taken by our Board of Directors.

Our corporate affairs are governed by our amended and restated articles of incorporation and bylaws, as amended, and by the Marshall Islands Business Corporations Act (the "BCA"). The provisions of the BCA resemble provisions of the corporation laws of a number of states in the United States. However, there have been few judicial cases in the Republic of the Marshall Islands interpreting the BCA. The rights and fiduciary responsibilities of directors under the law of the Republic of the Marshall Islands are not as clearly established as the rights and fiduciary responsibilities of directors under statutes or judicial precedent in existence in certain U.S. jurisdictions. Stockholder rights may differ as well. For example, under Marshall Islands law, a copy of the notice of any meeting of the shareholders must be given not less than 15 days before the meeting, whereas in Delaware such notice must be given not less than 10 days before the meeting. Therefore, if immediate shareholder action is required, a meeting may not be able to be convened as quickly as it can be convened under Delaware law. Also, under Marshall Islands law, any action required to be taken by a meeting of shareholders may only be taken without a meeting if consent is in writing and is signed by all of the shareholders entitled to vote, whereas under Delaware law action may be taken by consent if approved by the number of shareholders that would be required to approve such action at a meeting. Therefore,

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under Marshall Islands law, it may be more difficult for a company to take certain actions without a meeting even if a majority of the shareholders approve of such action. While the BCA does specifically incorporate the non-statutory law, or judicial case law, of Delaware and other states with substantially similar legislative provisions, public shareholders may have more difficulty in protecting their interests in the face of actions by the management, directors or controlling shareholders than would shareholders of a corporation incorporated in a U.S. jurisdiction.

Item 4. Information on the Company

A. History and Development of the Company

Euroseas Ltd. is a Marshall Islands company incorporated under the BCA on May 5, 2005. We are a provider of worldwide ocean-going transportation services. On May 30, 2018, the Company spun-off its drybulk fleet (excluding M/V Monica P, a handymax drybulk carrier, which was agreed to be sold at the time) into EuroDry Ltd., a separate publicly listed company also listed on Nasdaq Capital Market. Shareholders of the Company received one EuroDry Ltd. share for every five shares of the Company they held. As a result of the spin-off and the subsequent sale of M/V Monica P, the Company has become a pure containership company and the only publicly listed company concentrating on the feeder and intermediate containership sector.  Our containerships transport dry and refrigerated containerized cargoes, mainly including manufactured products and perishables. As of April 15, 2020, our fleet consisted of 19 containerships. The total cargo carrying capacity of the 19 containerships is 660,940 dwt or 51,083 teu. Two of our vessels were acquired before January 1, 2004 and were controlled by the Pittas family interests. On June 29, 2005, the shareholders of the two vessels (and of five additional vessels that have since been sold) transferred their ownership in each of the vessels to Euroseas in exchange for shares in Friends, a 100% owner of Euroseas at that time.  Since June 2005, the Company has purchased 28 vessels and ordered four newbuildings. Euroseas took delivery of three of the newbuildings in February 2016, January 2017 and May 2018, respectively, while one newbuilding vessel contract was cancelled. The Company sold 15 vessels and spun-off 6 of its vessels into EuroDry on May 30, 2018.

During 2019, we acquired eight containership vessels. In August 2019, we took delivery of four feeder containerships, owned by affiliates of the Pittas family including our CEO, for $28.2 million (comprising a cash consideration of $15 million and the issuance of 2,816,902 common shares), the M/V EM Hydra and M/V EM Spetses, both 1,740 teu feeder containerships built in 2005 and 2007, respectively, the M/V EM Kea, a 3,100 teu feeder containership built in 2007, and the M/V Diamantis P, a 2,008 teu feeder containership built in 1998. In November 2019, we took delivery of four intermediate 4,253 teu containerships, three built in 2009 and one in 2008, and also assumed the charters they were under. The vessels were acquired from companies controlled by Synergy Holdings Limited for approximately $40 million. On February 24, 2020, we signed an agreement to sell the M/V Manolis P, a 1,452 teu vessel, built in 1995 for scrap, for approximately $2.8 million. The vessel reached her destination port on April 7, 2020, but so far has not been delivered to the buyers due to Coronavirus restrictions and port lockdowns in the territory of arrival (Alang, India).  The scrap price has dropped since the date of the agreement to sell the M/V Manolis P, and the buyers are now seeking to terminate the agreement on the basis that timely delivery did not occur.  We are in the process of seeking a settlement with the buyers; however, if the agreement were to be terminated and we would sell the vessel at currently prevailing scrap prices, we would receive approximately $0.7 million less for the vessel than under the current agreement.  

Our common shares traded under the symbol ESEA on the Nasdaq Global Market beginning January 31, 2007 and on the Nasdaq Global Select Market beginning January 1, 2008, and since June 26, 2015 have traded on the Nasdaq Capital Market.

Our executive offices are located at 4 Messogiou & Evropis Street, 151 24, Maroussi, Greece. Our telephone number is +30-211-1804005.

The SEC maintains an Internet website at www.sec.gov, which contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Our website address is www.euroseas.gr. The information contained on our website is not part of this annual report.

B. Business Overview

Our fleet consists of containerships that transport container boxes providing scheduled service between ports.  Please see the information in the section titled "Our Fleet", below. During 2015, 2016, 2017, 2018 and 2019, we had a fleet utilization of 93.0%, 93.9%, 96.9%, 92.7% and 99.1%, respectively, our vessels achieved daily time charter equivalent rates of $7,855, $7,120, $7,309, $9,179 and $8,782, respectively, and we generated voyage charter revenue

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and time charter revenue totalling $35.51 million, $21.46 million, $24.84 million, $36.27 million and $41.77 million respectively.

Our business strategy is focused on providing consistent shareholder returns by carefully selecting the timing and the structure of our investments in containership vessels and by reliably, safely and competitively operating the vessels we own, through our affiliate, Eurobulk. Representing a continuous ship-owning and management history that dates back to the 19th century, we believe that one of our advantages in the industry is our ability to select and safely operate containership vessels of any age.

Our Fleet

As of April 15, 2020, the profile and deployment of our fleet is the following:

Name	Type	Dwt	TEU	Year Built	Employment (*)	TCE Rate ($/day)
Container Carriers
AKINADA BRIDGE	Intermediate	71,366	5,610	2001	TC until Oct-20	$16,000
SYNERGY BUSAN	Intermediate	50,726	4,253	2009	TC until Aug-20	$12,900
SYNERGY ANTWERP	Intermediate	50,726	4,253	2008	TC until May-20	CONTEX(**) 4250 less 6.25%; floor $8,000 / ceiling $16,000
SYNERGY OAKLAND	Intermediate	50,787	4,253	2009	TC until Oct-20 plus 8-12 months extension option	$9,000 until Feb-20; $10,000 until Oct-20; option CONTEX(**) 4250 less 10%
SYNERGY KEELUNG (+)	Intermediate	50,969	4,253	2009	TC until Dec-20/Jun-22 plus 8-12 months option	$10,000 until Jun-21; $11,750 until Jun-22; option $14,500
EM KEA	Feeder	42,165	3,100	2007	TC until Apr-20	$9,700
EM ASTORIA	Feeder	35,600	2,788	2004	TC until Sep-20	$8,500
EVRIDIKI G	Feeder	34,677	2,556	2001	TC until Sep-20	$10,250
EM CORFU	Feeder	34,654	2,556	2001	TC until Sep-21	$10,200
EM ATHENS	Feeder	32,350	2,506	2000	TC until Oct-20	$9,250
EM OINOUSSES	Feeder	32,350	2,506	2000	Idle	-
DIAMANTIS P	Feeder	30,360	2,008	1998	TC until Jul-20	$8,000
EM SPETSES	Feeder	23,224	1,740	2007	TC until Apr-20	$7,000
EM HYDRA	Feeder	23,351	1,740	2005	TC until May-20	$7,500
JOANNA	Feeder	22,301	1,732	1999	TC until Feb-21	$8,050
MANOLIS P	Feeder	20,346	1,452	1995	Sold Feb-20(***)	-
AEGEAN EXPRESS	Feeder	18,581	1,439	1997	TC until Jul-20	$7,500
NINOS	Feeder	18,253	1,169	1990	TC until May-20	$7,750
KUO HSIUNG	Feeder	18,154	1,169	1993	TC until May-20	$7,500
Total Container Carriers	19	660,940	51,083

(*) TC denotes time charter. All dates listed are the earliest redelivery dates under each TC unless the contract rate is lower than the current market rate in which cases the latest redelivery date is assumed; vessels with the latest redelivery date shown are marked by (+).

(**) The CONTEX (Container Ship Time Charter Assessment Index) has been published by the Hamburg and Bremen Shipbrokers' Association (VHBS) since October 2007. The CONTEX is a company-independent index of time charter rates for container ships. It is based on assessments of the current day charter rates of six selected container ship types, which are representative of their size categories: Type 1,100 TEU and Type 1,700 TEU with a charter period of one year, and the Types 2,500, 2,700, 3,500 and 4,250 TEU all with a charter period of two years.

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(***) On February 24, 2020, we entered into an agreement to sell the M/V Manolis P for scrap. The vessel reached her destination port on April 7, 2020, but so far has not been delivered to the buyers due to Coronavirus restrictions and port lockdowns in the territory of arrival (Alang, India). The scrap price has dropped since the date of the agreement to sell the M/V Manolis P, and the buyers are now seeking to terminate the agreement on the basis that timely delivery did not occur.  We are in the process of seeking a settlement with the buyers.

We plan to expand our fleet by investing in vessels in the containership market under favorable market conditions. We also intend to take advantage of the cyclical nature of the market by buying and selling ships when we believe favorable opportunities exist.  We employ our vessels in the spot and time charter market. As of April 15, 2020, 17 of our vessels are employed under time charter contracts, while one is undergoing repairs and one is currently under contract to be sold.

As of April 15, 2020, approximately 47% of our ship capacity days for the remainder of 2020 and approximately 5% of our ship capacity days in 2021 are under contract.

In "Critical Accounting Policies – Impairment of vessels" below, we discuss our policy for impairing the carrying values of our vessels. During the past few years, the market values of vessels have experienced extraordinarily high volatility, and substantial declines in many vessel classes.  As a result, the charter-free market value, or basic market value, of certain of our vessels may have declined below those vessels' carrying value. We may not impair those vessels' carrying value under our accounting impairment policy, due to our belief that future undiscounted cash flows expected to be earned by such vessels over their operating lives would exceed such vessels' carrying amounts.

The table set forth below indicates (i) the carrying value of each of our vessels as of December 31, 2018 and 2019, respectively, (ii) which of our vessels we believe has a basic market value below its carrying value, and (iii) the aggregate difference between carrying and market value represented by such vessels.  This aggregate difference represents the approximate analysis of the amount by which we believe we would have to reduce our net income/ (loss) if we sold all of such vessels in the current environment, using industry-standard valuation methodologies, in cash, in arm's-length transactions.  For purposes of this calculation, we have assumed that the vessels would be sold at a price that reflects our estimate of their current basic market values. However, we are not holding our vessels for sale, except as otherwise noted in this report.

Our estimates of basic market value assume that our vessels are all in good and seaworthy condition without need for repair and if inspected would be certified in class without any notations.  Our estimates are based on information available from various industry sources, including:

• reports by industry analysts and data providers that focus on our industry and related dynamics affecting vessel values;

• news and industry reports of similar vessel sales;

• news and industry reports of sales of vessels that are not similar to our vessels where we have made certain adjustments in an attempt to derive information that can be used as part of our estimates;

• approximate market values for our vessels or similar vessels that we have received from shipbrokers, whether solicited or unsolicited, or that shipbrokers have generally disseminated;

• offers that we may have received from potential purchasers of our vessels; and

• vessel sale prices and values of which we are aware through both formal and informal communications with shipowners, shipbrokers, industry analysts and various other shipping industry participants and observers.

As we obtain information from various industry and other sources, our estimates of basic market value are inherently uncertain.  In addition, vessel values are highly volatile; as such, our estimates may not be indicative of the current or future basic market value of our vessels or prices that we could achieve if we were to sell them.

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Name	Capacity	Purchase Date	Carrying Value as of December 31, 2018 (in millions)	Carrying Value as of December 31, 2019 (in millions)
Container Carriers	(teu)
EVRIDIKI	2,556	May-2008	$8.88(1)	$8.06(2)
MANOLIS P	1,452	Apr-2007	$2.11	$1.79
NINOS	1,169	Feb-2001	$1.51	$1.51
JOANNA	1,732	Jul-2013	$3.81	$3.40
KUO HSIUNG	1,169	May-2002	$1.57	$1.57
AEGEAN EXPRESS	1,439	Sep-2016	$2.51	$2.25
AKINADA BRIDGE	5,610	Dec-2017	$10.54	$10.33
EM ASTORIA	2,788	Jun-2017	$4.55	$4.42
EM ATHENS	2,506	Sep-2017	$4.03	$3.87
EM CORFU	2,556	Nov-2017	$5.28	$4.95
EM OINOUSSES	2,506	Oct-2017	$4.04	$3.86
EM KEA	3,100	Aug-2019	-	$9.31
EM SPETSES	1,740	Aug-2019	-	$7.40
EM HYDRA	1,740	Aug-2019	-	$6.57
DIAMANTIS P	2,008	Aug-2019	-	$4.95(2)
SYNERGY BUSAN	4,253	Nov-2019	-	$10.12
SYNERGY ANTWERP	4,253	Nov-2019	-	$10.06
SYNERGY OAKLAND	4,253	Nov-2019	-	$10.45
SYNERGY KEELUNG	4,253	Nov-2019	-	$11.36
Total Container Carriers	51,083		$48.83	$116.23

(1) Indicates a container vessel for which we believe, as of December 31, 2018, the basic charter-free market value is lower than the vessel's carrying value as of December 31, 2018.  We believe that the carrying value of this vessel, assessed separately, of $8.88 million as of December 31, 2018 exceeds its basic charter-free market value of approximately $7.70 million by approximately $1.18 million.  As further discussed in "Critical Accounting Policies – Impairment of vessels" below, we believe that the carrying values of our vessels as of December 31, 2018 were recoverable.

(2) Indicates container vessels for which we believe, as of December 31, 2019, the basic charter-free market value is lower than the vessel's carrying value as of December 31, 2019.  We believe that the aggregate carrying value of these vessels, assessed separately, of $13.01 million as of December 31, 2019 exceeds their aggregate basic charter-free market value of approximately $11.50 million by approximately $1.51 million.  As further discussed in "Critical Accounting Policies – Impairment of vessels" below, we believe that the carrying values of our vessels as of December 31, 2019 were recoverable.

We note that as of April 15, 2020, 17 of our container vessels are employed under time charter contracts of durations from less than one to 10 months until the earliest redelivery charter period.  If we sell those vessels with the charters attached, the sale price may be affected by the relationship of the charter rate to the prevailing market rate for a comparable charter with the same terms.

We refer you to the risk factor entitled "The market value of our vessels can fluctuate significantly,which may adversely affect our financial condition, cause us to breach financial covenants, result in the incurrence of a loss upon disposal of a vessel or increase the cost of acquiring additional vessels" and the discussion in Item 3.D under "Industry Risk Factors."

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Management of Our Fleet

The operations of our vessels are managed by Eurobulk Ltd., or Eurobulk, an affiliated company. Eurobulk manages our fleet under a Master Management Agreement with us and separate management agreements with each shipowning company. Eurobulk was founded in 1994 by members of the Pittas family and is a reputable ship management company with strong industry relationships and experience in managing vessels. Under our Master Management Agreement, Eurobulk is responsible for providing us with: (i) executive services associated with us being a public company; (ii) other services to our subsidiaries and commercial management services, which include obtaining employment for our vessels and managing our relationships with charterers; and (iii) technical management services, which include managing day-to-day vessel operations, performing general vessel maintenance, ensuring regulatory and classification society compliance, supervising the maintenance and general efficiency of vessels, arranging our hire of qualified officers and crew, arranging and supervising drydocking and repairs, arranging insurance for vessels, purchasing stores, supplies, spares and new equipment for vessels, appointing supervisors and technical consultants and providing technical support and shoreside personnel who carry out the management functions described above and certain accounting services.

Our Master Management Agreement with Eurobulk compensates Eurobulk with an annual fee and a daily management fee per vessel managed. Our Master Management Agreement, which we initially entered into in 2008, was amended and restated as of January 1, 2018, and its term was extended until January 1, 2023.  It provided for a 5% discount of the daily vessel management fee for any period during which the number of the Euroseas-owned vessels (including vessels in which Euroseas is a part owner) managed by Eurobulk is greater than 20 ("volume discount"), which was permanently incorporated into the daily management fee effective January 1, 2018 (see below). The Master Management Agreement can be terminated by Eurobulk only for cause or under other limited circumstances, such as sale of the Company or Eurobulk or the bankruptcy of either party. This Master Management Agreement will automatically be extended after the initial period for an additional five-year period unless terminated on or before the 90th day preceding the initial termination date. Pursuant to the Master Management Agreement, vessels we might acquire in the future will enter into a separate management agreement with Eurobulk with a term and rate as specified in the Master Management Agreement.

During 2017, in exchange for providing us with the services described above, we paid Eurobulk an annual fee of $2,000,000 and a management fee of 685 Euros per vessel per day for any operating vessel and 50% (i.e. 342.5 Euro) of that amount for any vessel laid-up including the 5% volume discount. The management fee is adjusted annually for Eurozone inflation every January 1^st. There was no adjustment for inflation from January 1, 2017, to date and, hence, we continued to pay Eurobulk an annual fee of $2,000,000 and a fee of 685 Euros per vessel per day in operation and 342.5 Euros per vessel per day in lay-up. In the case of newbuilding vessel contracts, the same management fee of 685 Euros becomes effective when construction of the vessels actually begins. Under the amended and restated Master Management Agreement, as of January 1, 2018, the volume discount has been permanently incorporated into the daily management fee which remained unchanged at 685 Euros in 2018 and 2019, and will be adjusted annually for inflation in the Eurozone. On May 30, 2018, the Company signed an addendum with the Manager according to which daily management fees were kept at 685 Euros per day per vessel and, effective May 30, 2018, the fixed cost was adjusted to $1,250,000. As a result, for the year 2018, the fixed cost was calculated at $2,000,000 pro-rated for the period of January 1, 2018 until May 30, 2018 and at $1,250,000 for the period of May 31, 2018 until December 31, 2018. On November 15, 2019, the Company signed an addendum adjusting the fixed annual cost to $2,000,000 to compensate Eurobulk Ltd. for the increase in the fleet and certain management services provided by Synergy Marine Ltd., a company controlled by Andreas Papathomas and which became affiliated with the Company post-acquisition, as a result of his appointment to the Board of Directors of the Company in November 2019. As a result, for the year 2019, the fixed cost was calculated at $1,250,000 pro-rated for the period of January 1, 2019 until November 15, 2019 and at $2,000,000 for the period of November 16, 2019 until December 31, 2019.

Our Competitive Strengths

We believe that we possess the following competitive strengths:

• Experienced Management Team. Our management team has significant experience in all aspects of commercial, technical, operational and financial areas of our business. Aristides J. Pittas, our Chairman and Chief Executive Officer, holds a dual graduate degree in Naval Architecture and Marine Engineering and Ocean Systems Management from the Massachusetts Institute of Technology. He has worked in various technical, shipyard and ship management capacities and since 1991 has focused on the ownership and operation of vessels carrying dry cargoes. Dr. Anastasios Aslidis, our Chief Financial Officer, holds a Ph.D. in Ocean Systems Management also from Massachusetts Institute of Technology and has over 20 years of experience, primarily as a partner at a Boston based international consulting firm focusing on investment and risk management in the maritime industry.

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• Cost Efficient Vessel Operations. We believe that because of the efficiencies afforded to us through Eurobulk, the strength of our management team and the quality of our fleet, we are, and will continue to be, a reliable, low cost vessel operator, without compromising our high standards of performance, reliability and safety. Despite the average age of our fleet being approximately 17.7 years on April 15, 2020, our total vessel operating expenses, including management fees and general and administrative expenses but excluding drydocking expenses were $6,294 per day for the year ended December 31, 2019. We consider this amount to be among the lowest of the publicly listed containerships shipping companies in the United States. Our technical and operating expertise allows us to efficiently manage and transport a wide range of cargoes with a flexible trade route profile, which helps reduce ballast time between voyages and minimize off-hire days. Our professional, well-trained masters, officers and onboard crews further help us to control costs and ensure consistent vessel operating performance. We actively manage our fleet and strive to maximize utilization and minimize maintenance expenditures for operational and commercial utilization. For the year ended December 31, 2019, our operational fleet utilization was 99.9%, up from 96.0% in 2018, while our commercial utilization rate was 99.2%, up from 96.7% in 2018. Our total fleet utilization rate in 2019 was 99.1%.

• Strong Relationships with Customers and Financial Institutions. We believe ourselves, Eurobulk and the Pittas family to have developed strong industry relationships and to have gained acceptance with charterers, lenders and insurers because of long-standing reputation for safe and reliable service and financial responsibility through various shipping cycles. Through Eurobulk, we offer reliable service and cargo carrying flexibility that enables us to attract customers and obtain repeat business. We also believe that the established customer base and reputation of ourselves, Eurobulk and the Pittas family help us to secure favorable employment for our vessels with well-known charterers.

Our Business Strategy

Our business strategy is focused on providing consistent shareholder returns by carefully timing and structuring acquisitions of containerships and by reliably, safely and competitively operating our vessels through Eurobulk. We continuously evaluate purchase and sale opportunities, as well as long term employment opportunities for our vessels. Key elements of the above strategy are:

• Renew and Expand our Fleet. We expect to grow our fleet in a disciplined manner through timely and selective acquisitions of quality vessels. We perform in-depth technical review and financial analysis of each potential acquisition and only purchase vessels as market opportunities present themselves. We focus on purchasing well-maintained secondhand vessels, newbuildings or newbuilding resales based on the evaluation of each investment option at the time it is made. In January 2017, we sold one containership. In June, September, October and December 2017, we took delivery of five secondhand containerships, and in December 2017, we sold one containership. On May 30, 2018, we spun-off our drybulk fleet (excluding M/V Monica P, which was agreed to be sold) into EuroDry. As a result of the spin-off and subsequent sale of Monica P in June 2018, we became a pure containership company. In August and November 2019, we acquired eight secondhand containerships, expanding our fleet to nineteen containership vessels.

• Maintain Balanced Employment. We intend to employ our fleet on either longer term time charters, i.e. charters with duration of more than a year, or shorter term time/spot charters. We seek longer term time charter employment to obtain adequate cash flow to cover as much as possible of our fleet's recurring costs, consisting of vessel operating expenses, management fees, general and administrative expenses, interest expense and drydocking costs for the upcoming 12-month period. When we expect charter rates to improve we try to increase the percentage of our fleet employed in shorter term contracts (allowing us to take advantage of higher rates in the future), while when we expect the market to weaken we try to increase the percentage of our fleet employed in longer term contracts (allowing us to take advantage of higher current rates). We believe this balanced employment strategy will provide us with more predictable operating cash flows and sufficient downside protection, while allowing us to participate in the potential upside of the spot market during periods of rising charter rates. As of April 15, 2020, on the basis of our existing time charters, approximately 47% of our vessel capacity for the remainder of 2020 and approximately 5% in 2020 are under time charter contracts, which will ensure employment of a portion of our fleet, partly protect us from market fluctuations and increase our ability to make principal and interest payments on our debt and pay dividends to our shareholders.

• Optimize Use of Financial Leverage. We intend to use bank debt to partly fund our vessel acquisitions and increase financial returns for our shareholders. We actively assess the level of debt we incur in light of our ability to repay that debt based on the level of cash flow generated from our balanced chartering strategy and efficient operating cost structure. Our bank debt repayment schedule as of December 31, 2019 calls for a reduction of approximately 14.7% of our debt by the end of 2020 and an additional reduction of about 41.2% by the end of 2021 for a total of 55.9% reduction over the next two years, excluding any new debt that we

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assumed or may assume. As our debt is being repaid we expect that our ability to raise or borrow additional funds more cheaply in order to grow our fleet and generate better returns for our shareholders will increase.

Our Customers

Our major charterer customers during the last three years include CMA-CGM ("CMA"), Golden Sea Shipping ("GSS"), Hapag Lloyd, MSC and Maersk Line amongst others. We are a relationship driven company, and our top five customers in 2019 include three of our top five customers from 2018 and three from 2017. Our top five customers accounted for approximately 87% of our revenues in 2019, 97% of our revenues in 2018 and 91% of our revenues in 2017. In 2019, CMA, GSS, Hapag Lloyd, MSC and Maersk accounted for 24%, 21%, 16%, 15% and 11% of our revenues, respectively. In 2018, CMA, GSS and MSC accounted for 51%, 33% and 11%, of our revenues, respectively. In 2017, CMA, GSS and MSC accounted for 34%, 31% and 17% of our revenues, respectively. Our dependence on our key charterer customers is moderate, as in the event of a charterer default our vessels can generally be re-chartered at the market rate, in the spot or charter market, although it is likely that such rate will be lower than the charter rate agreed with the charterer. In addition, as of the date of this report, none of our charterers have reported any inability to pay their obligations to us as a result of the Coronavirus outbreak.

The Containership Industry

Containership shipping refers to the transport of containerized trade which encompasses mainly the carriage of finished goods, but an increasing number of other cargoes in container boxes. Containerized trade has been the fastest growing sector of seaborne trade, although in the last three years the rate of growth has slowed. Containerships are categorized by their size measured in terms of twelve-foot equivalent unit ("teu") capacity and whether they have their own gearing (cranes). The different categories of containerships are as follows: (i) Post-Panamax vessels are generally vessels with carrying capacity of more than 4,000 teu; (ii) Panamax vessels are vessels with carrying capacity from 3,000 to 4,000 teu, and, in some designs, even up to 5,000 teu; these vessels are called such because the measurements of their beam and draft are the maximum allowable through the original Panama Canal; and (iii) Feeder containerships are vessels with carrying capacity from 500 to 3,000 teu and are usually equipped with cargo loading and unloading gear. Containerships are primarily employed in time charter contracts with liner companies, which in turn employ them as part of the scheduled liner operations. Feeder containerships are put in liner schedules feeding containers to and from central regional ports (hubs) where larger containerships provide cross ocean or longer haul service. The length of the time charter contract can range from several months to years.

Our Competitors

We operate in markets that are highly competitive and based primarily on supply and demand. We compete for charters on the basis of price, vessel location, size, age and vessel condition, as well as on reputation. Eurobulk arranges our charters (whether spot charters, time charters or shipping pools) through Eurochart S.A. ("Eurochart"), an affiliated brokering company which negotiates the terms of the charters based on market conditions. We compete primarily with other shipowners of carriers in the Feeder and Panamax containership sectors. Ownership of containerships is highly fragmented and is divided among state controlled and independent shipowners. Some of our publicly listed competitors include Danaos Corporation (NYSE: DAC), Costamare Inc. (NASDAQ: CMRE) and Performance Shipping Inc. (formerly Diana Containerships Inc.) (NYSE: DCIX).

Seasonality

The containership shipping industry's seasonal trends are driven by the import patterns of manufactured goods and refrigerated cargoes by the major importers, such as the United States, Europe and Japan. The volume of containerized trade is usually higher in the fall in preparation for the holiday season. During this period, container shipping rates are higher and, as a result, so are charter rates.

Environmental and Other Regulations in the Shipping Industry

Government regulation and laws significantly affect the ownership and operation of our fleet. We are subject to international conventions and treaties, national, state and local laws and regulations in force in the countries in which our vessels may operate or are registered relating to safety and health and environmental protection including the storage, handling, emission, transportation and discharge of hazardous and non-hazardous materials, and the remediation of contamination and liability for damage to natural resources. Compliance with such laws, regulations and other requirements entails significant expense, including vessel modifications and implementation of certain operating procedures.

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A variety of government and private entities subject our vessels to both scheduled and unscheduled inspections. These entities include the local port authorities (applicable national authorities such as the United States Coast Guard ("USCG"), harbor master or equivalent), classification societies, flag state administrations (countries of registry) and charterers, particularly terminal operators. Certain of these entities require us to obtain permits, licenses, certificates and other authorizations for the operation of our vessels. Failure to maintain necessary permits or approvals could require us to incur substantial costs or result in the temporary suspension of the operation of one or more of our vessels.

Increasing environmental concerns have created a demand for vessels that conform to stricter environmental standards. We are required to maintain operating standards for all of our vessels that emphasize operational safety, quality maintenance, continuous training of our officers and crews and compliance with United States and international regulations. We believe that the operation of our vessels is in substantial compliance with applicable environmental laws and regulations and that our vessels have all material permits, licenses, certificates or other authorizations necessary for the conduct of our operations. However, because such laws and regulations frequently change and may impose increasingly stricter requirements, we cannot predict the ultimate cost of complying with these requirements, or the impact of these requirements on the resale value or useful lives of our vessels. In addition, a future serious marine incident that causes significant adverse environmental impact could result in additional legislation or regulation that could negatively affect our profitability.

While we do not carry oil as cargo, we do carry fuel oil (bunkers) in our containerships. We currently maintain, for each of our vessels, pollution liability insurance coverage of $1.0 billion per incident. If the damages from a catastrophic spill exceeded our insurance coverage, that would have a material adverse effect on our financial condition and operating cash flows.

International Maritime Organization

 The International Maritime Organization, the United Nations agency for maritime safety and the prevention of pollution by vessels (the "IMO"), has adopted the International Convention for the Prevention of Pollution from Ships, 1973, as modified by the Protocol of 1978 relating thereto, collectively referred to as MARPOL 73/78 and herein as "MARPOL," the International Convention for the Safety of Life at Sea of 1974 ("SOLAS Convention"), and the International Convention on Load Lines of 1966 (the "LL Convention"). MARPOL establishes environmental standards relating to oil leakage or spilling, garbage management, sewage, air emissions, handling and disposal of noxious liquids and the handling of harmful substances in packaged forms. MARPOL is applicable to drybulk, tanker and LNG carriers, among other vessels, and is broken into six Annexes, each of which regulates a different source of pollution. Annex I relates to oil leakage or spilling; Annexes II and III relate to harmful substances carried in bulk in liquid or in packaged form, respectively; Annexes IV and V relate to sewage and garbage management, respectively; and Annex VI, lastly, relates to air emissions. Annex VI was separately adopted by the IMO in September of 1997; new emissions standards, titled IMO-2020, took effect on January 1, 2020.

Air Emissions

In September of 1997, the IMO adopted Annex VI to MARPOL to address air pollution from vessels.  Effective May 2005, Annex VI sets limits on sulfur oxide and nitrogen oxide emissions from all commercial vessel exhausts and prohibits "deliberate emissions" of ozone depleting substances (such as halons and chlorofluorocarbons), emissions of volatile compounds from cargo tanks and the shipboard incineration of specific substances. Annex VI also includes a global cap on the sulfur content of fuel oil and allows for special areas to be established with more stringent controls on sulfur emissions, as explained below. Emissions of "volatile organic compounds" from certain vessels, and the shipboard incineration (from incinerators installed after January 1, 2000) of certain substances (such as polychlorinated biphenyls, or "PCBs") are also prohibited. We believe that all our vessels are currently compliant in all material respects with these regulations.

The Marine Environment Protection Committee, or "MEPC," adopted amendments to Annex VI regarding emissions of sulfur oxide, nitrogen oxide, particulate matter and ozone depleting substances, which entered into force on July 1, 2010.  The amended Annex VI seeks to further reduce air pollution by, among other things, implementing a progressive reduction of the amount of sulfur contained in any fuel oil used on board ships.  On October 27, 2016, at its 70^th session, the MEPC agreed to implement a global 0.5% m/m sulfur oxide emissions limit (reduced from 3.50%) starting from January 1, 2020.  This limitation can be met by using low-sulfur compliant fuel oil, alternative fuels or certain exhaust gas cleaning systems.  Once the cap becomes effective, ships will be required to obtain bunker delivery notes and International Air Pollution Prevention ("IAPP") Certificates from their flag states that specify sulfur content. Additionally, at MEPC 73, amendments to Annex VI to prohibit the carriage of bunkers above 0.5% sulfur

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on ships were adopted and took effect on March 1, 2020.  These regulations subject ocean-going vessels to stringent emissions controls, and may cause us to incur substantial costs.

Sulfur content standards are even stricter within certain "Emission Control Areas," or ("ECAs").  As of January 1, 2015, ships operating within an ECA were not permitted to use fuel with sulfur content in excess of 0.1% m/m.  Amended Annex VI establishes procedures for designating new ECAs.  Currently, the IMO has designated four ECAs, including specified portions of the Baltic Sea area, North Sea area, North American area and United States Caribbean area. Ocean-going vessels in these areas will be subject to stringent emission controls and may cause us to incur additional costs. Other areas in China are subject to local regulations that impose stricter emission controls. If other ECAs are approved by the IMO, or other new or more stringent requirements relating to emissions from marine diesel engines or port operations by vessels are adopted by the U.S. Environmental Protection Agency ("EPA") or the states where we operate, compliance with these regulations could entail significant capital expenditures or otherwise increase the costs of our operations.

Amended Annex VI also establishes new tiers of stringent nitrogen oxide emissions standards for marine diesel engines, depending on their date of installation.  At the MEPC meeting held from March to April 2014, amendments to Annex VI were adopted which address the date on which Tier III Nitrogen Oxide (NOx) standards in ECAs will go into effect.  Under the amendments, Tier III NOx standards apply to ships that operate in the North American and U.S. Caribbean Sea ECAs designed for the control of NOx produced by vessels with a marine diesel engine installed and constructed on or after January 1, 2016.  Tier III requirements could apply to areas that will be designated for Tier III NOx in the future.  At MEPC 70 and MEPC 71, the MEPC approved the North Sea and Baltic Sea as ECAs for nitrogen oxide for ships built on or after January 1, 2021. The EPA promulgated equivalent (and in some senses stricter) emissions standards in 2010.  As a result of these designations or similar future designations, we may be required to incur additional operating or other costs.

As determined at the MEPC 70, the new Regulation 22A of MARPOL Annex VI became effective as of March 1, 2018 and requires ships above 5,000 gross tonnage to collect and report annual data on fuel oil consumption to an IMO database, with the first year of data collection having commenced on January 1, 2019. The IMO intends to use such data as the first step in its roadmap (through 2023) for developing its strategy to reduce greenhouse gas emissions from ships, as discussed further below.

As of January 1, 2013, MARPOL made mandatory certain measures relating to energy efficiency for ships. All ships are now required to develop and implement Ship Energy Efficiency Management Plans ("SEEMPS"), and new ships must be designed in compliance with minimum energy efficiency levels per capacity mile as defined by the Energy Efficiency Design Index ("EEDI").  Under these measures, by 2025, all new ships built will be 30% more energy efficient than those built in 2014.

We may incur costs to comply with these revised standards. Additional or new conventions, laws and regulations may be adopted that could require the installation of expensive emission control systems and could adversely affect our business, results of operations, cash flows and financial condition.

Safety Management System Requirements

The SOLAS Convention was amended to address the safe manning of vessels and emergency training drills.  The Convention of Limitation of Liability for Maritime Claims (the "LLMC") sets limitations of liability for a loss of life or personal injury claim or a property claim against ship owners. We believe that 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 (the "ISM Code"), our operations are also subject to environmental standards and requirements. The ISM Code requires the party with operational control of a vessel to develop an extensive safety management system that includes, among other things, the adoption of a safety and environmental protection policy setting forth instructions and procedures for operating its vessels safely and describing procedures for responding to emergencies. We rely upon the safety management system that we and our technical management team have developed for compliance with the ISM Code. The failure of a vessel owner or bareboat charterer to comply with the ISM Code may subject such party to increased liability, may decrease available insurance coverage for the affected vessels and may result in a denial of access to, or detention in, certain ports.

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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.

Although all our vessels are currently ISM Code-certified, such certification may not be maintained by all our vessels at all times. Non-compliance with the ISM Code may subject such party to increased liability, invalidate existing insurance or decrease available insurance coverage for the affected vessels and result in a denial of access to, or detention in, certain ports. For example, the U.S. Coast Guard and E.U. authorities have indicated that vessels not in compliance with the ISM Code will be prohibited from trading in U.S. and E.U. ports.

Amendments to the SOLAS Convention Chapter VII apply to vessels transporting dangerous goods and require those vessels be in compliance with the International Maritime Dangerous Goods Code ("IMDG Code"). Effective January 1, 2018, the IMDG Code includes (1) updates to the provisions for radioactive material, reflecting the latest provisions from the International Atomic Energy Agency, (2) new marking, packing and classification requirements for dangerous goods and (3) new mandatory training requirements. Amendments which took effect on January 1, 2020 also reflect the latest material from the UN Recommendations on the Transport of Dangerous Goods, including (1) new provisions regarding IMO type 9 tank, (2) new abbreviations for segregation groups, and (3) special provisions for carriage of lithium batteries and of vehicles powered by flammable liquid or gas.

The IMO has also adopted the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers ("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.

The IMO's Maritime Safety Committee and MEPC, respectively, each adopted relevant parts of the International Code for Ships Operating in Polar Water (the "Polar Code"). The Polar Code, which entered into force on January 1, 2017, covers design, construction, equipment, operational, training, search and rescue as well as environmental protection matters relevant to ships operating in the waters surrounding the two poles.  It also includes mandatory measures regarding safety and pollution prevention as well as recommendatory provisions.  The Polar Code applies to new ships constructed after January 1, 2017, and after January 1, 2018, ships constructed before January 1, 2017 are required to meet the relevant requirements by the earlier of their first intermediate or renewal survey.

Furthermore, recent action by the IMO's Maritime Safety Committee and United States agencies indicates that cybersecurity regulations for the maritime industry are likely to be further developed in the near future 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.

Pollution Control and Liability Requirements

The IMO has negotiated international conventions that impose liability for pollution in international waters and the territorial waters of the signatories to such conventions. For example, the IMO adopted an International Convention for the Control and Management of Ships' Ballast Water and Sediments (the "BWM Convention") in 2004. The BWM Convention entered into force on September 8, 2017.  The BWM Convention requires ships to manage their ballast water to remove, render harmless or avoid the uptake or discharge of new or invasive aquatic organisms and pathogens within ballast water and sediments.  The BWM Convention's implementing regulations call for a phased introduction of mandatory ballast water exchange requirements, to be replaced in time with mandatory concentration limits, and require all ships to carry a ballast water record book and an international ballast water management certificate.

On December 4, 2013, the IMO Assembly passed a resolution revising the application dates of the BWM Convention so that the dates are triggered by the entry into force date and not the dates originally in the BWM Convention.  This, in effect, makes all vessels delivered before the entry into force date "existing vessels" and allows

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for the installation of ballast water management systems on such vessels at the first International Oil Pollution Prevention ("IOPP") renewal survey following entry into force of the convention. The MEPC adopted updated guidelines for approval of ballast water management systems (G8) at MEPC 70. At MEPC 71, the schedule regarding the BWM Convention's implementation dates was also discussed and amendments were introduced to extend the date existing vessels are subject to certain ballast water standards. Those changes were adopted at MEPC 72.  Ships over 400 gross tons generally must comply with a "D-1 standard," requiring the exchange of ballast water only in open seas and away from coastal waters.  The "D-2 standard" specifies the maximum amount of viable organisms allowed to be discharged, and compliance dates vary depending on the IOPP renewal dates. Depending on the date of the IOPP renewal survey, existing vessels must comply with the D-2 standard on or after September 8, 2019. For most ships, compliance with the D-2 standard will involve installing on-board systems to treat ballast water and eliminate unwanted organisms.  Ballast water management systems, which include systems that make use of chemical, biocides, organisms or biological mechanisms, or which alter the chemical or physical characteristics of the ballast water, must be approved in accordance with IMO Guidelines (Regulation D-3). As of October 13, 2019, MEPC 72's amendments to the BWM Convention took effect, making the Code for Approval of Ballast Water Management Systems, which governs assessment of ballast water management systems, mandatory rather than permissive, and formalized an implementation schedule for the D-2 standard. Under these amendments, all ships must meet the D-2 standard by September 8, 2024. Costs of compliance with these regulations may be substantial.

Once mid-ocean ballast exchange or ballast water treatment requirements become mandatory under the BWM Convention, the cost of compliance could increase for ocean carriers and may have a material effect on our operations. However, many countries already regulate the discharge of ballast water carried by vessels from country to country to prevent the introduction of invasive and harmful species via such discharges. The U.S., for example, requires vessels entering its waters from another country to conduct mid-ocean ballast exchange, or undertake some alternate measure, and to comply with certain reporting requirements.

The IMO also adopted the International Convention on Civil Liability for Bunker Oil Pollution Damage (the "Bunker Convention") to impose strict liability on ship owners (including the registered owner, bareboat charterer, manager or operator) for pollution damage in jurisdictional waters of ratifying states caused by discharges of bunker fuel. The Bunker Convention requires registered owners of ships over 1,000 gross tons to maintain insurance for pollution damage in an amount equal to the limits of liability under the applicable national or international limitation regime (but not exceeding the amount calculated in accordance with the LLMC).  With respect to non-ratifying states, liability for spills or releases of oil carried as fuel in ship's bunkers typically is determined by the national or other domestic laws in the jurisdiction where the events or damages occur.

Ships are required to maintain a certificate attesting that they maintain adequate insurance to cover an incident. In jurisdictions, such as the United States where the Bunker Convention has not been adopted, various legislative schemes or common law govern, and liability is imposed either on the basis of fault or on a strict-liability basis.

Anti‑Fouling Requirements

In 2001, the IMO adopted the International Convention on the Control of Harmful Anti‑fouling Systems on Ships, or the "Anti‑fouling Convention." The Anti‑fouling Convention, which entered into force on September 17, 2008, prohibits the use of organotin compound coatings to prevent the attachment of mollusks and other sea life to the hulls of vessels. Vessels of over 400 gross tons engaged in international voyages will also be required to undergo an initial survey before the vessel is put into service or before an International Anti‑fouling System Certificate is issued for the first time; and subsequent surveys when the anti‑fouling systems are altered or replaced. We have obtained Anti‑fouling System Certificates for all of our vessels that are subject to the Anti‑fouling Convention.

Compliance Enforcement

Noncompliance with the ISM Code or other IMO regulations may subject the ship owner or bareboat charterer to increased liability, may lead to decreases in available insurance coverage for affected vessels and may result in the denial of access to, or detention in, some ports. The USCG and European Union authorities have indicated that vessels not in compliance with the ISM Code by applicable deadlines will be prohibited from trading in U.S. and European Union ports, respectively.  As of the date of this report, each of our vessels is ISM Code certified. However, there can be no assurance that such certificates will be maintained in the future.  The IMO continues to review and introduce new regulations. It is impossible to predict what additional regulations, if any, may be passed by the IMO and what effect, if any, such regulations might have on our operations.

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United States Regulations

The U.S. Oil Pollution Act of 1990 and the Comprehensive Environmental Response, Compensation and Liability Act

The U.S. Oil Pollution Act of 1990 ("OPA") established an extensive regulatory and liability regime for the protection and cleanup of the environment from oil spills. OPA affects all "owners and operators" whose vessels trade or operate within the U.S., its territories and possessions or whose vessels operate in U.S. waters, which includes the U.S.'s territorial sea and its 200-nautical mile exclusive economic zone around the U.S.  The U.S. has also enacted the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), which applies to the discharge of hazardous substances other than oil, except in limited circumstances, whether on land or at sea. OPA and CERCLA both define "owner and operator" in the case of a vessel as any person owning, operating or chartering by demise, the vessel.  Both OPA and CERCLA impact our operations.

Under OPA, vessel owners and operators are "responsible parties" and are jointly, severally and strictly liable (unless the spill results solely from the act or omission of a third party, an act of God or an act of war) for all containment and clean-up costs and other damages arising from discharges or threatened discharges of oil from their vessels, including bunkers (fuel).  OPA defines these other damages broadly to include:

(i) injury to, destruction or loss of, or loss of use of, natural resources and related assessment costs;

(ii) injury to, or economic losses resulting from, the destruction of real and personal property;

(iii) loss of subsistence use of natural resources that are injured, destroyed or lost;

(iv) net loss of taxes, royalties, rents, fees or net profit revenues resulting from injury, destruction or loss of real or personal property, or natural resources;

(v) lost profits or impairment of earning capacity due to injury, destruction or loss of real or personal property or natural resources; and

(vi) net cost of increased or additional public services necessitated by removal activities following a discharge of oil, such as protection from fire, safety or health hazards, and loss of subsistence use of natural resources.

OPA contains statutory caps on liability and damages; such caps do not apply to direct cleanup costs.  Effective November 12, 2019, the USCG adjusted the limits of OPA liability for non-tank vessels, edible oil tank vessels, and any oil spill response vessels, to the greater of $1,200 per gross ton or $ 997,100 (subject to periodic adjustment for inflation). These limits of liability do not apply if an incident was proximately caused by the violation of an applicable U.S. federal safety, construction or operating regulation by a responsible party (or its agent, employee or a person acting pursuant to a contractual relationship) or a responsible party's gross negligence or willful misconduct.  The limitation on liability similarly does not apply if the responsible party fails or refuses to (i) report the incident as required by law where the responsible party knows or has reason to know of the incident; (ii) reasonably cooperate and assist as requested in connection with oil removal activities; or (iii) without sufficient cause, comply with an order issued under the Federal Water Pollution Act (Section 311 (c), (e)) or the Intervention on the High Seas Act.

CERCLA contains a similar liability regime whereby owners and operators of vessels are liable for cleanup, removal and remedial costs, as well as damages for injury to, or destruction or loss of, natural resources, including the reasonable costs associated with assessing the same, and health assessments or health effects studies. There is no liability if the discharge of a hazardous substance results solely from the act or omission of a third party, an act of God or an act of war. Liability under CERCLA is limited to the greater of $300 per gross ton or $5.0 million for vessels carrying a hazardous substance as cargo and the greater of $300 per gross ton or $500,000 for any other vessel. These limits do not apply (rendering the responsible person liable for the total cost of response and damages) if the release or threat of release of a hazardous substance resulted from willful misconduct or negligence, or the primary cause of the release was a violation of applicable safety, construction or operating standards or regulations.  The limitation on liability also does not apply if the responsible person fails or refused to provide all reasonable cooperation and assistance as requested in connection with response activities where the vessel is subject to OPA.

OPA and CERCLA each preserve the right to recover damages under existing law, including maritime tort law.  OPA and CERCLA both require owners and operators of vessels to establish and maintain with the USCG evidence of financial responsibility sufficient to meet the maximum amount of liability to which the particular responsible person may be subject. Vessel owners and operators may satisfy their financial responsibility obligations by providing a proof of insurance, a surety bond, qualification as a self-insurer or a guarantee. We comply and plan

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to comply going forward with the USCG's financial responsibility regulations by providing applicable certificates of financial responsibility.

The 2010 Deepwater Horizon oil spill in the Gulf of Mexico resulted in additional regulatory initiatives or statutes, including higher liability caps under OPA, new regulations regarding offshore oil and gas drilling and a pilot inspection program for offshore facilities. However, several of these initiatives and regulations have been or may be revised. For example, the U.S. Bureau of Safety and Environmental Enforcement's ("BSEE") revised Production Safety Systems Rule ("PSSR"), effective December 27, 2018, modified and relaxed certain environmental and safety protections under the 2016 PSSR. Additionally, the BSEE amended the Well Control Rule, effective July 15, 2019, which rolled back certain reforms regarding the safety of drilling operations, and the U.S. President has proposed leasing new sections of U.S. waters to oil and gas companies for offshore drilling.  The effects of these proposals and changes are currently unknown. Compliance with any new requirements of OPA and future legislation or regulations applicable to the operation of our vessels could impact the cost of our operations and adversely affect our business.

OPA specifically permits individual states to impose their own liability regimes with regard to oil pollution incidents occurring within their boundaries, provided they accept, at a minimum, the levels of liability established under OPA and some states have enacted legislation providing for unlimited liability for oil spills. Many U.S. states that border a navigable waterway have enacted environmental pollution laws that impose strict liability on a person for removal costs and damages resulting from a discharge of oil or a release of a hazardous substance.  These laws may be more stringent than U.S. federal law.  Moreover, some states have enacted legislation providing for unlimited liability for discharge of pollutants within their waters, although in some cases, states which have enacted this type of legislation have not yet issued implementing regulations defining vessel owners' responsibilities under these laws. We intend to comply with all applicable state regulations in the ports where the Company's vessels call.

We currently maintain pollution liability coverage insurance in the amount of $1.0 billion per incident for each of our vessels. If the damages from a catastrophic spill were to exceed our insurance coverage, it could have an adverse effect on our business and results of operations.

Other United States Environmental Initiatives

The U.S. Clean Air Act of 1970 (including its amendments of 1977 and 1990) ("CAA") requires the EPA to promulgate standards applicable to emissions of volatile organic compounds and other air contaminants.  The CAA requires states to adopt State Implementation Plans, or "SIPs," some of which regulate emissions resulting from vessel loading and unloading operations which may affect our vessels.

The U.S. Clean Water Act ("CWA") prohibits the discharge of oil, hazardous substances and ballast water in U.S. navigable waters unless authorized by a duly-issued permit or exemption, and imposes strict liability in the form of penalties for any unauthorized discharges. The CWA also imposes substantial liability for the costs of removal, remediation and damages and complements the remedies available under OPA and CERCLA. In 2015, the EPA expanded the definition of "waters of the United States" ("WOTUS"), thereby expanding federal authority under the CWA. Following litigation on the revised WOTUS rule, in December 2018, the EPA and Department of the Army proposed a revised, limited definition of "waters of the United States." The proposed rule was published in the Federal Register on February 14, 2019 and was subject to public comment. On October 22, 2019, the agencies published a final rule repealing the 2015 Rule defining "waters of the United States" and recodified the regulatory text that existed prior to the 2015 Rule. The final rule became effective on December 23, 2019. On January 23, 2020, the EPA published the "Navigable Waters Protection Rule," which replaces the rule published on October 22, 2019, and redefines "waters of the United States." The effect of this rule is currently unknown.

The EPA and the USCG have also enacted rules relating to ballast water discharge, compliance with which requires the installation of equipment on our vessels to treat ballast water before it is discharged or the implementation of other port facility disposal arrangements or procedures at potentially substantial costs, and/or otherwise restrict our vessels from entering U.S. Waters.  The EPA will regulate these ballast water discharges and other discharges incidental to the normal operation of certain vessels within United States waters pursuant to the Vessel Incidental Discharge Act ("VIDA"), which was signed into law on December 4, 2018 and replaces the 2013 Vessel General Permit ("VGP") program (which authorizes discharges incidental to operations of commercial vessels and contains numeric ballast water discharge limits for most vessels to reduce the risk of invasive species in U.S. waters, stringent requirements for exhaust gas scrubbers, and requirements for the use of environmentally acceptable lubricants) and current Coast Guard ballast water management regulations adopted under the U.S. National Invasive Species Act ("NISA"), such as mid-ocean ballast exchange programs and installation of approved USCG technology for all vessels equipped with ballast water tanks bound for U.S. ports or entering U.S. waters. VIDA establishes a new framework for the regulation of vessel incidental discharges under Clean Water Act (CWA), requires the EPA to develop

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performance standards for those discharges within two years of enactment, and requires the U.S. Coast Guard to develop implementation, compliance, and enforcement regulations within two years of EPA's promulgation of standards. Under VIDA, all provisions of the 2013 VGP and USCG regulations regarding ballast water treatment remain in force and effect until the EPA and U.S. Coast Guard regulations are finalized. Non-military, non-recreational vessels greater than 79 feet in length must continue to comply with the requirements of the VGP, including submission of a Notice of Intent ("NOI") or retention of a PARI form and submission of annual reports. We have submitted NOIs for our vessels where required. Compliance with the EPA, U.S. Coast Guard and state regulations could require the installation of ballast water treatment equipment on our vessels or the implementation of other port facility disposal procedures at potentially substantial cost, or may otherwise restrict our vessels from entering U.S. waters.

European Union Regulations

In October 2009, the European Union amended a directive to impose criminal sanctions for illicit ship-source discharges of polluting substances, including minor discharges, if committed with intent, recklessly or with serious negligence and the discharges individually or in the aggregate result in deterioration of the quality of water.  Aiding and abetting the discharge of a polluting substance may also lead to criminal penalties.  The directive applies to all types of vessels, irrespective of their flag, but certain exceptions apply to warships or where human safety or that of the ship is in danger.  Criminal liability for pollution may result in substantial penalties or fines and increased civil liability claims.

Regulation (EU) 2015/757 of the European Parliament and of the Council of 29 April 2015 (amending EU Directive 2009/16/EC) governs the monitoring, reporting and verification of carbon dioxide emissions from maritime transport, and, subject to some exclusions, requires companies with ships over 5,000 gross tonnage to monitor and report carbon dioxide emissions annually, which may cause us to incur additional expenses.

The European Union has adopted several regulations and directives requiring, among other things, more frequent inspections of high-risk ships, as determined by type, age and flag as well as the number of times the ship has been detained.  The European Union also adopted and extended a ban on substandard ships and enacted a minimum ban period and a definitive ban for repeated offenses.  The regulation also provided the European Union with greater authority and control over classification societies, by imposing more requirements on classification societies and providing for fines or penalty payments for organizations that failed to comply. Furthermore, the EU has implemented regulations requiring vessels to use reduced sulfur content fuel for their main and auxiliary engines. The EU Directive 2005/33/EC (amending Directive 1999/32/EC) introduced requirements parallel to those in Annex VI relating to the sulfur content of marine fuels. In addition, the EU imposed a 0.1% maximum sulfur requirement for fuel used by ships at berth in the Baltic, the North Sea and the English Channel (the so called "SOx-Emission Control Area").  As of January 2020, EU member states must also ensure that ships in all EU waters, except the SOx-Emission Control Area, use fuels with a 0.5% maximum sulfur content.

International Labour Organization

The International Labour Organization (the "ILO") is a specialized agency of the UN that has adopted the Maritime Labor Convention 2006 ("MLC 2006"). A Maritime Labor Certificate and a Declaration of Maritime Labor Compliance is required to ensure compliance with the MLC 2006 for all ships that are 500 gross tonnage or over and are either engaged in international voyages or flying the flag of a Member and operating from a port, or between ports, in another country.  We believe that all our vessels are in substantial compliance with and are certified to meet MLC 2006.

Greenhouse Gas Regulation

Currently, the emissions of greenhouse gases from international shipping are not subject to the Kyoto Protocol to the United Nations Framework Convention on Climate Change, which entered into force in 2005 and pursuant to which adopting countries have been required to implement national programs to reduce greenhouse gas emissions with targets extended through 2020. International negotiations are continuing with respect to a successor to the Kyoto Protocol, and restrictions on shipping emissions may be included in any new treaty. In December 2009, more than 27 nations, including the U.S. and China, signed the Copenhagen Accord, which includes a non-binding commitment to reduce greenhouse gas emissions. The 2015 United Nations Climate Change Conference in Paris resulted in the Paris Agreement, which entered into force on November 4, 2016 and does not directly limit greenhouse gas emissions from ships.  The U.S. initially entered into the agreement, but on June 1, 2017, the U.S. President announced that the United States intends to withdraw from the Paris Agreement, which provides for a four-year exit

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process, meaning that the earliest possible effective withdrawal date cannot be before November 4, 2020. The timing and effect of such action has yet to be determined.

At MEPC 70 and MEPC 71, a draft outline of the structure of the initial strategy for developing a comprehensive IMO strategy on reduction of greenhouse gas emissions from ships was approved. In accordance with this roadmap, in April 2018, nations at the MEPC 72 adopted an initial strategy to reduce greenhouse gas emissions from ships.  The initial strategy identifies "levels of ambition" to reducing greenhouse gas emissions, including (1) decreasing the carbon intensity from ships through implementation of further phases of the EEDI for new ships; (2) reducing carbon dioxide emissions per transport work, as an average across international shipping, by at least 40% by 2030, pursuing efforts towards 70% by 2050, compared to 2008 emission levels; and (3) reducing the total annual greenhouse emissions by at least 50% by 2050 compared to 2008 while pursuing efforts towards phasing them out entirely. The initial strategy notes that technological innovation, alternative fuels and/or energy sources for international shipping will be integral to achieve the overall ambition. These regulations could cause us to incur additional substantial expenses.

The EU made a unilateral commitment to reduce overall greenhouse gas emissions from its member states from 20% of 1990 levels by 2020. The EU also committed to reduce its emissions by 20% under the Kyoto Protocol's second period from 2013 to 2020.  Starting in January 2018, large ships over 5,000 gross tonnage calling at EU ports are required to collect and publish data on carbon dioxide emissions and other information.

In the United States, the EPA issued a finding that greenhouse gases endanger the public health and safety, adopted regulations to limit greenhouse gas emissions from certain mobile sources and proposed regulations to limit greenhouse gas emissions from large stationary sources. However, in March 2017, the U.S. President signed an executive order to review and possibly eliminate the EPA's plan to cut greenhouse gas emissions, and in August 2019, the Administration announced plans to weaken regulations for methane emissions. The EPA or individual U.S. states could enact environmental regulations that would affect our operations.

Any passage of climate control legislation or other regulatory initiatives by the IMO, the EU, the U.S. or other countries where we operate, or any treaty adopted at the international level to succeed the Kyoto Protocol or Paris Agreement, that restricts emissions of greenhouse gases could require us to make significant financial expenditures which we cannot predict with certainty at this time. Even in the absence of climate control legislation, our business may be indirectly affected to the extent that climate change may result in sea level changes or certain weather events.

Vessel Security Regulations

Since the terrorist attacks of September 11, 2001 in the United States, there have been a variety of initiatives intended to enhance vessel security such as the U.S. Maritime Transportation Security Act of 2002 ("MTSA"). To implement certain portions of the MTSA, the USCG issued regulations requiring the implementation of certain security requirements aboard vessels operating in waters subject to the jurisdiction of the United States and at certain ports and facilities, some of which are regulated by the EPA.

Similarly, Chapter XI-2 of the SOLAS Convention imposes detailed security obligations on vessels and port authorities and mandates compliance with the International Ship and Port Facility Security Code ("the ISPS Code").  The ISPS Code is designed to enhance the security of ports and ships against terrorism.  To trade internationally, a vessel must attain an International Ship Security Certificate ("ISSC") from a recognized security organization approved by the vessel's flag state.  Ships operating without a valid certificate may be detained, expelled from or refused entry at port until they obtain an ISSC. The various requirements, some of which are found in the SOLAS Convention,  include, for example, on-board installation of automatic identification systems to provide a means for the automatic transmission of safety-related information from among similarly equipped ships and shore stations, including information on a ship's identity, position, course, speed and navigational status; on-board installation of ship security alert systems, which do not sound on the vessel but only alert the authorities on shore; the development of vessel security plans; ship identification number to be permanently marked on a vessel's hull; a continuous synopsis record kept onboard showing a vessel's history including the name of the ship, the state whose flag the ship is entitled to fly, the date on which the ship was registered with that state, the ship's identification number, the port at which the ship is registered and the name of the registered owner(s) and their registered address; and compliance with flag state security certification requirements.

The USCG regulations, intended to align with international maritime security standards, exempt non-U.S. vessels from MTSA vessel security measures, provided such vessels have on board a valid ISSC that attests to the vessel's compliance with the SOLAS Convention security requirements and the ISPS Code. Future security measures

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could have a significant financial impact on us. We intend to comply with the various security measures addressed by MTSA, the SOLAS Convention and the ISPS Code.

The cost of vessel security measures has also been affected by the escalation in the frequency of acts of piracy against ships, notably off the coast of Somalia, including the Gulf of Aden and Arabian Sea area. Substantial loss of revenue and other costs may be incurred as a result of detention of a vessel or additional security measures, and the risk of uninsured losses could significantly affect our business. Costs are incurred in taking additional security measures in accordance with Best Management Practices to Deter Piracy, notably those contained in the BMP5 industry standard.

Inspection by Classification Societies

The hull and machinery of every commercial vessel must be classed by a classification society authorized by its country of registry. The classification society certifies that a vessel is safe and seaworthy in accordance with the applicable rules and regulations of the country of registry of the vessel and SOLAS. Most insurance underwriters make it a condition for insurance coverage and lending that a vessel be certified "in class" by a classification society which is a member of the International Association of Classification Societies, the IACS. The IACS has adopted harmonized Common Structural Rules, or "the Rules," which apply to oil tankers and bulk carriers contracted for construction on or after July 1, 2015. The Rules attempt to create a level of consistency between IACS Societies.All of our vessels are certified as being "in class" by all the applicable Classification Societies (e.g., American Bureau of Shipping, Lloyd's Register of Shipping).

A vessel must undergo annual surveys, intermediate surveys, drydockings and special surveys. In lieu of a special survey, a vessel's machinery may be on a continuous survey cycle, under which the machinery would be surveyed periodically over a five-year period. Every vessel is also required to be drydocked every 30 to 36 months for inspection of the underwater parts of the vessel. If any vessel does not maintain its class and/or fails any annual survey, intermediate survey, drydocking or special survey, the vessel will be unable to carry cargo between ports and will be unemployable and uninsurable which could cause us to be in violation of certain covenants in our loan agreements. Any such inability to carry cargo or be employed, or any such violation of covenants, could have a material adverse impact on our financial condition and results of operations.

The following table lists the upcoming intermediate or special survey for the vessels in our current fleet.  Special surveys typically require drydocking of the vessels while intermediate surveys may not, depending on the age of the vessel and its condition.  The intermediate surveys listed in the table below will not require drydocking of the vessels, unless otherwise specified below.

Vessel	Next	Type
EVRIDIKI G.	June 2021	Special Survey (Drydocking)
EM CORFU	October 2021	Special Survey (Drydocking)
AKINADA BRIDGE	November 2021	Intermediate Survey
KUO HSIUNG	November 2021	Special Survey (Drydocking)
AEGEAN EXPRESS	October 2020	Intermediate Survey
EM ASTORIA	October 2021	Intermediate Survey
JOANNA P	January 2022	Intermediate Survey
EM ATHENS	December 2020	Special Survey (Drydocking)
EM SPETSES	July 2020	Special Survey
EM KEA	July 2020	Special Survey
EM HYDRA	June 2020	Special Survey
DIAMANTIS P	September 2021	Intermediate Survey (Drydocking)
SYNERGY BUSAN	January 2022	Intermediate Survey
SYNERGY ANTWERP	November 2021	Intermediate Survey
SYNERGY OAKLAND	February 2022	Intermediate Survey
SYNERGY KEELUNG	May 2022	Intermediate Survey
NINOS	July 2020	Intermediate Survey

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Risk of Loss and Liability Insurance

General

The operation of any cargo vessel includes risks such as mechanical failure, physical damage, collision, property loss, cargo loss or damage and business interruption due to political circumstances in foreign countries, piracy incidents, hostilities and labor strikes. In addition, there is always an inherent possibility of marine disaster, including oil spills and other environmental mishaps, and the liabilities arising from owning and operating vessels in international trade. OPA, which imposes virtually unlimited liability upon shipowners, operators and bareboat charterers of any vessel trading in the exclusive economic zone of the United States for certain oil pollution accidents in the United States, has made liability insurance more expensive for shipowners and operators trading in the United States market. We carry insurance coverage as customary in the shipping industry. However, not all risks can be insured, specific claims may be rejected, and we might not be always able to obtain adequate insurance coverage at reasonable rates.

Hull and Machinery Insurance

We procure hull and machinery insurance, protection and indemnity insurance, which includes environmental damage and pollution insurance and war risk insurance and freight, demurrage and defense insurance for our fleet. We generally do not maintain insurance against loss of hire (except for certain charters for which we consider it appropriate), which covers business interruptions that result in the loss of use of a vessel.

Protection and Indemnity Insurance

Protection and indemnity insurance is provided by mutual protection and indemnity associations, or "P&I Associations," and covers our third-party liabilities in connection with our shipping activities. This includes third-party liability and other related expenses of injury or death of crew, passengers and other third parties, loss or damage to cargo, claims arising from collisions with other vessels, damage to other third-party property, pollution arising from oil or other substances and salvage, towing and other related costs, including wreck removal. Protection and indemnity insurance is a form of mutual indemnity insurance, extended by protection and indemnity mutual associations, or "clubs."

Our current protection and indemnity insurance coverage for pollution is $1 billion per vessel per incident. The 13 P&I Associations that comprise the International Group insure approximately 90% of the world's commercial tonnage and have entered into a pooling agreement to reinsure each association's liabilities. The International Group's website states that the Pool provides a mechanism for sharing all claims in excess of $10 million up to, currently, approximately $8.2 billion. As a member of a P&I Association, which is a member of the International Group, we are subject to calls payable to the associations based on our claim records as well as the claim records of all other members of the individual associations and members of the shipping pool of P&I Associations comprising the International Group.

C. Organizational structure

Euroseas is the sole owner of all outstanding shares of the subsidiaries listed in Note 1 of our consolidated financial statements under "Item 18. Financial Statements" and in Exhibit 8.1 to this annual report.

D. Property, plants and equipment

We do not own any real property.  As part of the management services provided by Eurobulk during the period in which we have conducted business to date, we have shared, at no additional cost, offices with Eurobulk.  We do not have current plans to lease or purchase office space, although we may do so in the future.

Our interests in our vessels are owned through our wholly-owned vessel owning subsidiaries and these are our only material properties. Please refer to Note 1, "Basis of Presentation and General Information", of the attached Financial Statements for a listing of our vessel owning subsidiaries.  Our vessels are subject to priority mortgages, which secure our obligations under our various credit facilities. For further details regarding our credit facilities, refer to "Item 5. Operating and Financial Review and Prospects — B. Liquidity and Capital Resources — Credit Facilities."

Item 4A.Unresolved Staff Comments

None.

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Item 5. Operating and Financial Review and Prospects

The following discussion should be read in conjunction with "Item 3. Key Information – D. Risk Factors", "Item 4. Business Overview", and our financial statements and footnotes thereto contained in this annual report. This discussion contains forward-looking statements, which are based on our assumptions about the future of our business. Our actual results may differ materially from those contained in the forward-looking statements. Please read "Forward-Looking Statements" for additional information regarding forward-looking statements used in this annual report. Reference in the following discussion to "we," "our" and "us" refer to Euroseas and our subsidiaries, except where the context otherwise indicates or requires.

We are constantly evaluating opportunities to increase the number of our vessels deployed on time charters or to participate in shipping pools (if available for our vessels); however, we only expect to enter into additional time charters or shipping pools if we can obtain contract terms that satisfy our criteria.  Containerships are employed almost exclusively on time charter contracts. We carefully evaluate the length and rate of the time charter contract at the time of fixing or renewing a contract considering market conditions, trends and expectations.

We constantly evaluate vessel purchase opportunities to expand our fleet accretive to our earnings and cash flow. Additionally, we will consider selling certain of our vessels when favorable sales opportunities present themselves. If, at the time of sale, the carrying value is less than the sales price, we will realize a gain on sale, which will increase our earnings, but if, at the time of sale, the carrying value of a vessel is more than the sales price, we will realize a loss on sale, which will negatively impact our earnings. Please see "Critical Accounting Policies", below, for a further discussion of the consequences of selling our vessels for amounts below their carrying values.

Significant Developments in 2019

Trinity/Diamantis Vessel Acquisition

In August 2019, we completed the acquisition of four feeder containerships, owned by affiliates of the Pittas family including our CEO, for a consideration of $28.2 million, comprising a cash payment of $15 million and the issuance of 2,816,902 common shares to the sellers (the "Trinity/Diamantis Vessel Acquisition"). We financed the cash portion of the Trinity/Diamantis Vessel Acquisition price via the arrangement of two bank loans, drawing a total of $16.2 million with the excess amount used for general corporate purposes. The cash portion of the Trinity/Diamantis Vessel Acquisition price was used to repay the existing indebtedness of the vessels with the sellers receiving only payment in Euroseas common shares. The Trinity/Diamantis Vessel Acquisition was evaluated and approved by a special committee of independent members of the Board of Directors. The four vessels are the M/V "EM Hydra" and the M/V "EM Spetses", both 1,740 teu feeder containership built in 2005 and 2007, respectively, the M/V "EM Kea", a 3,100 teu feeder containership built in 2007, and the M/V "Diamantis P", a 2,008 teu feeder containership vessel built in 1998.

Synergy Vessel Acquisition

In November 2019, we acquired and took delivery of four container carrier vessels of intermediate size of 4,253 teu, all built in South Korea, three in 2009 and the other in 2008. The vessels were acquired from companies controlled by Synergy Holdings Limited, for approximately $40 million (the "Synergy Vessel Acquisition"). The Synergy Vessel Acquisition of the four vessels (the "Synergy Vessels") was financed by bank debt of $32 million, a private placement of $6 million at a share price of $5.68 subscribed equally by an entity affiliated to the Company's Chief Executive Officer and an entity controlled by the seller of the Synergy Vessels and $2 million of the Company's cash. The Company also assumed the charters the vessels were under on the date of the transfer. As part of the Synergy Vessel Acquisition, the Company has agreed that the Manager enter into an agreement with Synergy Marine Limited for the provision of certain management services for the next three years. Mr. Andreas Papathomas, Chairman of Synergy Holdings Limited, was appointed to our Board of Directors. We also agreed to issue an additional $0.5 million in shares of Euroseas common stock to Synergy Holdings Limited if certain conditions are fulfilled in one year.

Series B Preferred Shares

On June 10, 2019, the Board of Directors agreed to redeem $11.7 million of the Series B Preferred Shares. In parallel with the redemption, the holders of Series B Preferred Shares agreed to reduce the annual dividend rate to 8% per annum, effective June 11, 2019, which will apply until January 29, 2021, after which date the dividend rate

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will increase to 14%, and will be payable only in cash. From January 29, 2019 to June 11, 2019, the Series B Preferred Shares carried a dividend rate of 12% per annum, which was paid in cash.

Reverse Stock Split

On December 18, 2019, we completed a 1-for-8 reverse stock split, effective at the close of trading on December 18, 2019. Our common shares began trading on a split-adjusted basis on December 19, 2019. The reverse stock split was undertaken with the objective of meeting the minimum $1.00 per share requirement for listing our common shares on the Nasdaq Capital Market.

A.Operating results

Factors Affecting Our Results of Operations

We believe that the important measures for analyzing trends in the results of our operations consist of the following:

Calendar days. We define calendar days as the total number of days in a period during which each vessel in our fleet was in our possession including off-hire days associated with major repairs, drydockings or special or intermediate surveys or days of vessels in lay-up. Calendar days are an indicator of the size of our fleet over a period and affect both the amount of revenues and the amount of expenses that we record during that period.

Available days. We define available days as the total number of Calendar days in a period net of off-hire days associated with scheduled repairs, drydockings or special or intermediate surveys, or days of vessels in lay-up. The shipping industry uses available days to measure the number of days in a period during which vessels were available to generate revenues.

Voyage days. We define voyage days as the total number of Available days in a period net of off-hire days associated with unscheduled repairs or days waiting to find employment but including days our vessels were sailing for repositioning. The shipping industry uses voyage days to measure the number of days in a period during which vessels actually generate revenues or are sailing for repositioning purposes.

Fleet utilization. We calculate fleet utilization by dividing the number of our voyage days during a period by the number of our available days during that period. The shipping industry uses fleet utilization to measure a company's efficiency in finding suitable employment for its vessels and minimizing the amount of days that its vessels are off-hire either waiting to find employment, or commercial off-hire, or for reasons such as unscheduled repairs or other off-hire time related to the operation of the vessels, or operational off-hire.  We distinguish our fleet utilization into commercial and operational. We calculate our commercial fleet utilization by dividing our available days net of commercial off-hire days during a period by our available days during that period.  We calculate our operational fleet utilization by dividing our available days net of operational off-hire days during a period by our available days during that period.

Spot Charter Rates. We calculate spot charter rates on contracts made in the spot market for the use of a vessel for a specific voyage ("voyage charter") to transport a specified agreed upon cargo at a specified freight rate per ton or occasionally a lump sum amount. Under a voyage charter agreement, the charter party generally commits to a minimum amount of cargo and the charterer is liable for any short loading of cargo or "dead" freight. Spot charter rates are volatile and fluctuate on a seasonal and year to year basis. The fluctuations are caused by imbalances in the availability of cargoes for shipment and the number of vessels available at any given time to transport these cargoes.

Time Charter Equivalent ("TCE"). A standard maritime industry performance measure used to evaluate performance is the daily TCE. Daily TCE revenues are time charter revenues and voyage charter revenues minus voyage expenses divided by the number of voyage days during the relevant time period. Voyage expenses primarily consist of port, canal and fuel costs that are unique to a particular voyage, which would otherwise be paid by a charterer under a time charter whereas under spot market voyage charters, we pay such voyage expenses. We believe that the daily TCE neutralizes the variability created by unique costs associated with particular voyages or the employment of containerships on time charter or on the spot market (containerships are, generally, chartered on a time charter basis) and presents a more accurate representation of the revenues generated by our vessels. Our definition of TCE may not be comparable to that used by other companies in the shipping industry.

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Basis of Presentation and General Information

We use the following measures to describe our financial performance:

Time charter revenue and Voyage charter revenue. Our charter revenues are driven primarily by the number of vessels in our fleet, the number of voyage days during which our vessels generate revenues and the amount of daily charter revenue that our vessels earn under charters, which, in turn, are affected by a number of factors, including our decisions relating to vessel acquisitions and disposals, the amount of time that we spend positioning our vessels, the amount of time that our vessels spend in drydock undergoing repairs, maintenance and upgrade work, the age, condition and specifications of our vessels, levels of supply and demand in the transportation market, the number of vessels on time charters, spot charters and in pools and other factors affecting charter rates in the containership market.

Commissions. We pay commissions on all chartering arrangements of 1.25% to Eurochart, a company affiliated with our CEO, plus additional commission of up to 1.25% to other brokers involved in the transaction, plus address commission of up to 3.75% deducted from charter hire. These additional commissions, as well as changes to charter rates will cause our commission expenses to fluctuate from period to period. Eurochart also receives a fee equal to 1% calculated as stated in the relevant memorandum of agreement for any vessel sold by it on our behalf.

Voyage expenses. Voyage expenses primarily consist of port, canal and fuel costs that are unique to a particular voyage which would otherwise be paid by the charterer under a time charter contract, as well as commissions. Under time charters, the charterer pays voyage expenses whereas under spot market voyage charters, we pay such expenses. The amounts of such voyage expenses are driven by the mix of charters undertaken during the period. Voyage expenses are also incurred, when our vessels are sailing for repositioning purposes or for drydocking, which we pay.

Vessel operating expenses. Vessel operating expenses include crew wages and related costs, the cost of insurance, expenses relating to repairs and maintenance, the costs of spares and consumable stores, tonnage taxes and other miscellaneous expenses. Our vessel operating expenses, which generally represent fixed costs, have historically changed in line with the size of our fleet. Other factors beyond our control, some of which may affect the shipping industry in general (including, for instance, developments relating to market prices for insurance or inflationary increases) may also cause these expenses to increase.

Related party management fees. These are the fees that we pay to our affiliated ship manager under our management agreements for the technical and commercial management that Eurobulk performs on our behalf.

Vessel depreciation. We depreciate our vessels on a straight-line basis with reference to the cost of the vessel, age and scrap value as estimated at the date of acquisition. Depreciation is calculated over the remaining useful life of the vessel. Remaining useful lives of property are periodically reviewed and revised to recognize changes in conditions, new regulations or other reasons. Revisions of estimated lives are recognized over current and future periods.

Drydocking and special survey expense. Our vessels are required to be drydocked approximately every 30 to 60 months for major repairs and maintenance that cannot be performed while the vessels are trading. Drydocking and special survey expenses are accounted on the direct expense method as this method eliminates the significant amount of time and subjectivity to determine which costs and activities related to drydocking and special survey should be deferred.

Interest expense and loan costs. We traditionally finance vessel acquisitions partly with debt on which we incur interest expense. The interest rate we pay is generally linked to the 3-month LIBOR rate, although from time to time we may utilize fixed rate loans or could use interest rate swaps to eliminate our interest rate exposure. Interest due is expensed in the period incurred. Loan costs are deferred and amortized over the period of the loan; the un-amortized portion is written-off if the loan is prepaid early.

General and administrative expenses. We incur expenses consisting mainly of executive compensation, professional fees, directors' liability insurance and reimbursement of our directors' and officers' travel-related expenses. We acquire executive services of our chief executive officer, chief financial officer, chief administrative officer, internal auditor and corporate secretary, through Eurobulk as part of our Master Management Agreement.

In evaluating our financial condition, we focus on the above measures to assess our historical operating performance and we use future estimates of the same measures to assess our future financial performance.  In addition, we use the amount of cash at our disposal and our total indebtedness to assess our short-term liquidity needs and our ability to finance additional acquisitions with available resources (see also discussion under "Capital Expenditures" below).  In assessing the future performance of our present fleet, the greatest uncertainty relates to the spot market performance which affects those of our vessels that are not employed under fixed time charter contracts as well as the level of the new charter rates for the charters that are to expire. Decisions about the acquisition of additional vessels or possible sales of existing vessels are based on financial and operational

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evaluation of such action and depend on the overall state of the containership vessel market, the availability of purchase candidates, available employment, anticipated drydocking cost and our general assessment of economic prospects for the sectors in which we operate.

Results from Operations

Year ended December 31, 2019 compared to year ended December 31, 2018

Time charter revenue and voyage charter revenue. Time charter revenue for 2019 amounted to $41.77 million, increasing by 15.2% compared to the year ended December 31, 2018 during which they amounted to $36.27 million. In 2019, we operated an average of 13.1 vessels, a 14.0% increase over the average of 11.49 vessels we operated during the same period in 2018. In the year 2019 our fleet had 4,636 voyage days earning revenue as compared to 3,814 voyage days earning revenue in 2018. Market charter rates in the year ended December 31, 2019 were slightly lower for our containership vessels compared to the year ended December 31, 2018, which was reflected in the average earnings of our ships. While employed, our vessels generated a TCE rate of $8,782 per day per vessel in 2019 compared to a TCE rate of $9,179 per day per vessel in 2018, a decrease of 4.3%.  The average TCE rate our vessels achieve is a combination of the time charter rate earned by our vessels under time charter contracts, which is not influenced by market developments during the duration of the charter (unless the two charter parties renegotiate the terms of the charter or the charterer is unable to make the contracted payments or we enter into new charter party agreements), and the TCE rate earned by our vessels employed in the spot market which is influenced by market developments.

Commissions. We paid a total of $1.75 million in charter commissions for the year ended December 31, 2019, representing 4.2% of charter revenues. This represents a decrease over the year ended December 31, 2018, where commissions paid were $1.84 million, representing 5.1% of charter revenues.

Voyage expenses. Voyage expenses for the year 2019 were $1.06 million and relate to expenses for repositioning voyages between time charter contractsand owners' expenses at certain ports. For the year ended December 31, 2018, voyage expenses amounted to $1.26 million and related mainly to expenses for certain voyage charters and the types of voyage expenses mentioned above. Our vessels are generally chartered under time charter contracts. Voyage expenses usually represent a small fraction (2.5% and 3.5% in 2019 and 2018, respectively) of charter revenues. Voyage expenses are dependent on the number of voyage charters, the cost of fuel, port costs and canal tolls and the number of days our vessels sailed without a charter.

Vessel operating expenses. Vessel operating expenses were $23.99 million in 2019 compared to $19.99 million in 2018. In 2019, we operated an average of 13.1 vessels, a 14.0% increase over the average of 11.49 vessels we operated during the same period in 2018. Further, daily vessel operating expenses per vessel amounted to $5,015 per day in 2019 versus $4,769 per day in 2018, an increase of 5.2% mainly due to higher costs for lubricants and other vessel supplies.

Related party management fees. These are part of the fees we pay to Eurobulk under our Master Management Agreement. During 2019, Eurobulk charged us 685 Euros per day per vessel totalling $3.67 million for the year, or $768 per day per vessel. During 2018, Eurobulk charged us 685 Euros per day per vessel totalling $3.54 million for the year, or $844 per day per vessel. The increase in the total amount of U.S. dollars charged within 2019 is due to the higher number of vessels operated within 2019 compared to the previous year, partly offset by the favorable movement in $/euro exchange rates during 2019 compared to 2018.

General and administrative expenses. These expenses include the fixed portion of our management fees, incentive awards, legal and auditing fees, directors' and officers' liability insurance and other miscellaneous corporate expenses. In 2019, we had a total of $2.44 million of general and administrative expenses as compared to $2.57 million in 2018. The decrease of $0.13 million is due to the lower fixed management fee during most of 2019, which was in effect after the Company's spin-off in 2018.

Drydocking expenses. These are expenses we pay for our vessels to complete a drydocking as part of an intermediate or special survey. In 2019, we had one vessel completing her special surveys with drydock, four vessels completing their in-water (intermediate) surveys and a vessel completing her special survey with drydock that started in 2018, for a total cost of $2.71 million. During 2018, we had three vessels completing their special surveys with drydock, three vessels completing their in-water (intermediate) surveys and a vessel starting her special survey, that was ultimately completed in 2019, for a total cost of $2.77 million.

Vessel depreciation. Vessel depreciation for 2019 was $4.18 million. Comparatively, vessel depreciation for 2018 amounted to $3.31 million. The increase is due to the higher number of vessels in our fleet in 2019.

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Net gain on sale of vessels. In March 2018, the Company agreed to sell its drybulk carrier M/V "Monica P." The 20-year-old vessel was sold on June 25, 2018, for a net amount of $6.3 million and the Company recorded a $1.34 million gain on the sale. In 2019 we had no vessel sales.

Interest and other financing costs. Interest expense and other financing costs for the year 2019 were $3.42 million. Comparatively, during the same period in 2018, interest and other financing costs amounted to $3.05 million. Interest expense charged was higher in 2019 due to the higher average outstanding debt, partly offset by a lower average LIBOR rate, as compared to 2018.

Loss on debt extinguishment. For the year ended December 31, 2019, loss on debt extinguishment was $0.3 million and related to the write-off of the unamortized debt discount in connection with the refinancing of the participating mortgage loan the Company had entered into with Credit Agricole, partly offset by the lower amount, at which the vessel profit participation liability was finally settled.

Derivatives gain/loss. In 2019, we had a realized loss of $0.003 million from the net interest settlement on our interest rate swap contract that we entered into in October 2014 and matured in May 2019, as compared to a realized loss of $0.20 million and an unrealized gain of $0.20 million in 2018. We had entered into the interest rate swap to mitigate our exposure to possible increases in interest rates. The performance of our derivative contracts depends on the movement of interest rates. A decline in interest rates increases our loss in our derivative contracts and vice versa.

Dividend Series B Preferred Shares and Preferred deemed dividend. The Series B Preferred Shares paid dividends in-kind until January 29, 2019 at a rate of 5% per annum. On June 10, 2019, we agreed to redeem $11.7 million of the outstanding Series B Preferred Shares with a simultaneous reduction of the dividend rate for the remaining outstanding shares to 8.0% per annum effective from June 11, 2019 until January 29, 2021, payable in cash. Thereafter, the Series B Preferred Shares will carry a dividend rate of 14% per annum, also payable in cash. Since January 29, 2019, the Series B Preferred Shares carried a dividend of 12% per annum.  In 2019, the Company declared dividends of $1.27 million, of which $0.08 million were paid in-kind, $1.03 million were paid in cash and another $0.16 million were accrued as of December 31, 2019 and were paid in cash in the first quarter of 2020, and recorded preferred deemed dividends of $0.50 million arising out of the redemption of approximately $11.7 million of Series B Preferred Shares. In 2018, there were $1.34 million dividends paid in-kind. The decrease in 2019 is due to the redemption of $11.7 million in value of the outstanding Series B Preferred Shares, partly offset by the increase of the annual dividend rate to 12% and 8%, up from 5% during 2018, as explained above. In addition, $0.50 million of preferred deemed dividends were recorded in 2019 as a result of the redemption of $11.7 million of the Series B Preferred Shares, representing the difference between (1) the fair value of the consideration transferred to the holders of the Series B Preferred Shares (comprising the cash payment offered) and (2) the carrying amount of the Series B Preferred Shares before the redemption (net of issuance costs).

Net loss attributable to common shareholders. As a result of the above, net loss attributable to common shareholders for the year ended December 31, 2019 was $3.46 million, as compared to a net loss of $2.0 million for the year ended December 31, 2018.

Year ended December 31, 2018 compared to year ended December 31, 2017

For a discussion of the year ended December 31, 2018 compared to the year ended December 31, 2017, please refer to Part A, Item 5, "Operating and Financial Review and Prospects" in our Annual Report on Form 20-F for the year ended December 31, 2018.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. The preparation of those financial statements requires us to make estimates and judgments that affect the reported amount of assets and liabilities, revenues and expenses and related disclosure of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates under different assumptions or conditions.

Critical accounting policies are those that reflect significant judgments or uncertainties, and potentially result in materially different results under different assumptions and conditions. We have described below what we believe are our most critical accounting policies that involve a high degree of judgment and the methods of their application.

Depreciation

We record the value of our vessels at their cost (which includes acquisition costs directly attributable to the vessel and expenditures made to prepare the vessel for its initial voyage) less accumulated depreciation and

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impairment (if any). Depreciation is based on cost less the estimated residual scrap value. An increase in the useful life of the vessel or in the residual value would have the effect of decreasing the annual depreciation charge and extending it into later periods. A decrease in the useful life of the vessel or in the residual value would have the effect of increasing the annual depreciation charge and possibly an impairment charge. We depreciate our vessels on a straight-line basis over their estimated useful lives, estimated to be 25 years from date of initial delivery from the shipyard and the residual value of our vessels is estimated to be $250 per lightweight ton.

Impairment of long-lived assets

We review our vessels held for use and their related intangible assets and liabilities for impairment whenever events or changes in circumstances (such as vessel market values, vessel sales and purchases, business plans and overall market conditions) indicate that the carrying amount of the assets may not be recoverable. If indicators for impairment are present, we determine undiscounted projected net operating cash flows for the related long-lived assets and compare it to their carrying values. When the estimate of undiscounted projected net operating cash flows, excluding interest charges, expected to be generated by the use and eventual disposition of the asset is less than its carrying amount, we evaluate the asset for an impairment loss. In the event that impairment occurred, we would determine the fair value of the related asset and we record a charge to operations calculated by comparing the asset's carrying value to the estimated fair market value. We estimate fair market value primarily through the use of third party valuations performed on an individual vessel basis.

The carrying values of the Company's vessels may not represent their fair market value at any point in time since the market prices of second-hand vessels tend to fluctuate with changes in charter rates and the cost of newbuildings.

The Company determines the rates to be used in its impairment analysis based on the prevailing market charter rates for the first two years and on inflation-unadjusted historical average rates, from year three onwards. The Company calculates the historical average rates over a 18-year period for 2019, excluding outliers, and a 17-year period for 2018, which both start in 2002 and take into account complete market cycles, and which provide a more representative reference for the long term rates. These rates are used for the period a vessel is not under a charter contract; if there is a contract, the charter rate of the contract is used for the period of the contract.

Our impairment exercise is highly sensitive on variances in the time charter rates and vessel operating costs; it also requires assumptions for:

• the effective fleet utilization rate;

• estimated scrap values;

• future drydocking costs; and

• probabilities of sale for each vessel.

Our estimates for the time charter rates for the first two years are based on the prevailing market charter rates (based on the length of charters that can be secured at the time of the analysis, generally, one to two years). Vessel utilization estimates are based on the status of each vessel at the time of the assessment and the Company's past experience in finding employment for its vessels at comparable market conditions. Cost estimates, like drydocking and operating costs, are based on the Company's data for its own vessels; past estimates for such costs have generally been very close to the actual levels observed. Specifically, we use our budgeted operating expenses escalated by 1.5% per annum and our budgeted drydocking costs, assuming a five-year special survey cycle. Overall, the assumptions are based on historical trends as well as future expectations. Although management believes that the assumptions used to evaluate potential impairment are reasonable and appropriate, such assumptions are highly subjective. Our impairment test for the year ended December 31, 2019 identified two of our vessels with indication for impairment as presented in the following table. For these vessels, we performed our impairment analysis which indicated no impairment. Furthermore, we performed sensitivity analysis for the charter rates and operating cost assumptions (which are the inputs most sensitive to variations) allowing for variances of up to 10%, and a further reduction in charter rates for the following two years, to reflect any possible effect from the slowdown of economic activity due to the Coronavirus pandemic, without an impairment indication.

There can be no assurance as to how long-term charter rates and vessel values will increase as compared to their current levels and approach historical average levels for similarly aged vessels or whether they will improve by any significant degree. Charter rates, which improved significantly during 2018, but gradually weakened towards the end of 2018 and through most of 2019 (apart from a brief upsurge in the fourth quarter), have weakened once again in early 2020, and may return to their previously very depressed levels which could adversely affect our revenue,

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profitability and future assessments of vessel impairment. The impairment analysis may determine that the carrying value of a vessel is recoverable if the vessel is held and operated to the end of its useful life, however, if the vessel is sold when the market is depressed, the Company might suffer a loss on the sale. Whether the Company realizes a gain or loss on the sale of a vessel is primarily a function of the relative market values of vessels at the time the vessel was acquired less the accumulated depreciation and impairment, if any, versus the relative market values on the date a vessel is sold.

For a discussion of the potential loss in the case of sale of all of our vessels with market value below their carrying value, we refer to the "Item 4.B. Business Overview – Our Fleet".

For the two vessels which as of December 31, 2019 had impairment indication, a comparison of the average estimated daily time charter equivalent rate used in our impairment analysis with the average "break even rate" for the uncontracted period is presented below:

Vessel	Charter Rate as of 12/31/2019	Remaining Months Chartered	Remaining Life (years)	Rate Year 1 (2020)	Rate Year 2 (2021)	Rate Year 3+ (2022+)	Breakeven Rate (USD/day)
Evridiki	10,250	8.0	6.5	10,902	10,902	12,917	11,113
Diamantis P	8,000	6.0	3.5	8,966	8,966	9,884	8,775

Recent Accounting Pronouncements

Please refer to Note 2 of the financial statements included in Item 18 of this annual report for a description of recent accounting pronouncements that may apply to us.

B. Liquidity and Capital Resources

Historically, our sources of funds have been equity provided by our shareholders, operating cash flows and long-term borrowings. Our principal use of funds has been capital expenditures to establish and expand our fleet, maintain the quality of our vessels during operations and the periodically required drydockings, comply with international shipping standards and environmental laws and regulations, fund working capital requirements and, if necessary, operating shortfalls, make principal repayments on outstanding loan facilities, and pay dividends.

Beginning in February 2020, partially due to fears associated with the spread of the Coronavirus, global financial markets, and starting in late February, financial markets in the U.S., experienced even greater relative volatility and a steep and abrupt downturn, which volatility and downturn may continue as the Coronavirus continues to spread. On March 11, 2020, the World Health Organization declared the Coronavirus outbreak a pandemic. In response to the Coronavirus outbreak, many countries, ports and organizations, including those where we conduct a large part of our operations, have implemented measures to combat the outbreak, such as quarantines and travel restrictions. Such measures have and will likely continue to cause severe trade disruptions. The extent to which the Coronavirus will impact the Company's results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the Coronavirus and the actions to contain or treat its impact, among others. Accordingly, an estimate of the impact of the Coronavirus cannot be made at this time. We expect to rely on cash available, funds generated from operating cash flows, funds from our shareholders, equity offerings, and long term borrowings to meet our liquidity needs going forward and to finance our capital expenditures and working capital needs in 2020 and beyond. There are also $7.35 million of undrawn amounts available under our revolving facility with Eurobank Ergasias S.A., which can be used to finance up to 55% of the market value of post 2001-built ships.

Cash Flows

As of December 31, 2019, we had a working capital deficit of $18.6 million and have been incurring losses. For the year ended December 31, 2019, we generated net cash from operating activities of $3.1 million. Our cash balance amounted to $1.0 million and cash in restricted and retention accounts amounted to $4.9 million as of December 31, 2019. The holders of Series B Preferred Shares will receive a cash dividend at an annual dividend rate of 8% until January 29, 2021, which will increase to 14% thereafter. For 2020, we expect our daily TCE rates to potentially decrease compared to 2019, due to decreased time charter rates observed in the market, as of the date of this report, and the impact of the Coronavirus outbreak on the demand in the dry-bulk shipping industry. We intend to fund our working capital requirements and capital commitments via cash on hand and cash flows from operations,

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 as well as via the cash proceeds expected to be generated through the sale of certain of the Company's older vessels for scrap. In the event that these are not sufficient, we may also use funds from debt refinancing and equity offerings and convert to equity the related party loans, if required, among other options. We believe we will have adequate funding through the sources described above and, accordingly, we believe we have the ability to continue as a going concern and finance our obligations as they come due over the next twelve months following the date of the issuance of our financial statements. Consequently, our consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

Year ended December 31, 2019 compared to year ended December 31, 2018

Net cash from operating activities.

Our net surplus from cash flows provided by operating activities for 2019 was $3.24 million as compared to a cash flow deficit from operating activities of $1.48 million in 2018.

The major drivers of the change of cash flows from operating activities for the year ended December 31, 2019 compared to the year ended December 31, 2018, are the following: the increase in the average number of vessels in our fleet, offset by the decrease of the market rates during the year ended December 31, 2019, which resulted in a lower TCE rate of $8,782 compared to $9,179 for the year ended December 31, 2018. The increase in the average number of vessels in our fleet is also reflected in the increase of our operating income (excluding non-cash items) to $6.25 million for the year ended December 31, 2019 from $4.43 million for the corresponding period in 2018. This positive effect also added a net working capital inflow of $0.92 million during the year ended December 31, 2019 compared to a net working capital outflow of $3.48 million for the year ended December 31, 2018, mainly due to the significant decrease in the amount of reimbursements made to our Manager, partly offset by the higher net interest expense for the year ended December 31, 2019 compared to the corresponding period in 2018.

Net cash from investing activities.

Net cash flows used in investing activities were $55.72 million for the year ended December 31, 2019 compared to $6.25 million provided by investing activities for the year ended December 31, 2018. The net decrease in cash flows from investing activities of $61.97 million from 2018 is mainly attributable to an increase of $55.72 million in payments for vessel acquisitions and major improvements during the year ended December 31, 2019 compared to the same period of 2018, combined with a decrease of $6.25 million in proceeds from vessel sales that took place in 2018.

Net cash from financing activities.

Net cash flows provided by financing activities were $45.20 million for the year ended December 31, 2019, compared to net cash flows provided by financing activities of $0.14 million for the year ended December 31, 2018. This increase in cash flows provided by financing activities of $45.06 million, compared to the year ended December 31, 2018, is attributable to (i) a decrease of $18.95 million in long term debt principal payments during the year ended December 31, 2019, (ii) an increase of $4.76 million in proceeds from issuance of common stock, net of offering expenses during the year ended December 31, 2019 compared to the same period of 2018, (iii) an increase in proceeds of long term debt (net of loan arrangement fees paid) of $30.77 million during the year ended December 31, 2019 (including $5.0 million of related party loans), compared to the same period of 2018 and (iv) an outflow of funds of $3.30 million to a spun-off subsidiary (EuroDry) during the year ended December 31, 2018, partly offset by an outflow of $11.69 million arising from the redemption of the Series B Preferred Shares and an outflow of $1.03 million of dividends on the Series B Preferred Shares paid in cash during 2019. For the year ended December 31, 2018, there was no redemption of cash dividend payment on the Series B Preferred Shares.

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Year ended December 31, 2018 compared to year ended December 31, 2017

For a discussion of the year ended December 31, 2018 compared to the year ended December 31, 2017, please refer to Part A, Item 5, "Operating and Financial Review and Prospects" in our Annual Report on Form 20-F for the year ended December 31, 2018.

Debt Financing

We operate in a capital-intensive industry which requires significant amounts of investment, and we fund a major portion of this investment through long term debt. We maintain debt levels we consider prudent based on our market expectations, cash flow, interest coverage and percentage of debt to capital.

As of December 31, 2019, we had five outstanding loans with a combined outstanding balance of $90.21 million. These loans mature between 2020 and 2023. Our long-term debt as of December 31, 2019 comprises bank loans granted to our vessel-owning subsidiaries with a combined outstanding balance of $85.21 million with margins over LIBOR ranging from 2.95% to 3.90%, and a related party loan with a balance of $5.00 million and an interest rate of 8%.  A description of our loans as of December 31, 2019 is provided in Note 8 of our attached financial statements. As of December 31, 2019, we are scheduled to repay approximately $17.54 million of the above bank loans in 2020, including the $5.0 million related party loan.

Our loan agreements contain covenants.

Our loans have various covenants such as minimum requirements regarding the security cover ratio (the ratio of fair value of vessel to outstanding loan less cash in retention accounts) and restrictions as to changes in management and ownership of the ship-owning companies, distribution of profits or assets (in effect not permitting dividend payment or other distributions in cases that an event of default has occurred), additional indebtedness and mortgage of vessels without the lender's prior consent, sale of vessels, maximum fleet-wide leverage, sale of capital stock of our subsidiaries, ability to make investments and other capital expenditures, entering in mergers or acquisitions, minimum cash balance requirements and minimum cash retention accounts (restricted cash). When necessary, we do provide supplemental collateral in the form of restricted cash or cross-collateralize vessels to ensure compliance with security cover ratio ("loan-to-value" ratio).  Increases in restricted cash required to satisfy loan covenants would reduce funds available for investment or working capital and could have a negative impact on our operations.  If we cannot cure any violated covenants, we might be required to repay all or part of our loans, which, in turn, might require us to sell one or more of our vessels under distressed conditions. As of December 31, 2019, we were not in default of any credit facility covenant.

Shelf Registration

On December 19, 2016, the SEC declared effective our shelf registration statement on Form F-3 pursuant to which we registered common shares, preferred shares, debt securities, warrants and units up to a total dollar amount of $400,000,000 (about $5.70 million of which were used under our ATM offering), to be sold by the Company, as well as 715,422 common shares to be sold by certain selling shareholders.

On March 12, 2020, we filed with the SEC a shelf registration statement on Form F-3 and filed an amendment thereto on March 27, 2020.  The shelf registration statement, if declared effective, will give us the ability to offer and sell, within a three year period, up to $400,000,000 of our securities, consisting of common shares, preferred shares, debt securities, warrants and units, as well as 2,369,950 common shares that were previously acquired in private transactions or in the open market or which are issuable upon conversion of the Series B Preferred Shares or any convertible notes into which the Series B Preferred Shares may convert.

Capital Expenditures

We make capital expenditures from time to time in connection with our vessel acquisitions or participation in joint ventures to acquire vessels.

In 2010, we entered into our Euromar joint venture with two private equity firms. The Company had not provided any guarantees to Euromar beyond its capital already invested or funds put in escrow. None of the loans entered into by Euromar had any recourse to the Company. On September 7, 2017, Euroseas became the sole owner of Euromar at a nominal price of $1. The Company acquired the 85.714% interest in Euromar it did not already own and Euromar became a wholly-owned subsidiary of the Company. As of December 31, 2017, all vessels of Euromar were sold with the consent of Euromar's lenders; all proceeds from such sales and any funds in excess of other liabilities were applied towards the indebtedness of Euromar with any excess indebtedness written off; Euromar was released from all its corporate guarantees to its lenders.

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In June 2017 we took delivery of the feeder containership M/V "EM Astoria" for $4.75 million. In September 2017 we took delivery of the feeder containership M/V "EM Athens" for $4.2 million. In October 2017 we took delivery of the feeder containership M/V "EM Oinousses" for $4.3 million and the feeder containership M/V "EM Corfu" for $5.7 million. In December 2017 we took delivery of the intermediate containership M/V "Akinada Bridge" for $11.1 million. All these five containerships were purchased from Euromar for $29.85 million.

In August 2019 we took delivery of four feeder containerships, the M/V "Diamantis P", M/V "EM Hydra", M/V "EM Spetses", and M/V "EM Kea", owned by affiliates of the Pittas family including the Company's CEO, for a total of $28.2 million. The consideration towards the feeder vessels included a cash payment of $15.0 million, financed by two bank loans, and the issuance of 2,816,902 shares of common stock to the sellers. In November 2019, we took delivery of four intermediate size containerships, the M/V "Synergy Busan", M/V "Synergy Antwerp", M/V "Synergy Oakland" and M/V "Synergy Keelung", for a cost of approximately $40 million. The acquisition was financed by bank debt of $32.0 million, existing funds of the Company and $6.0 million raised in private placements.

We currently have six vessels scheduled for drydocking over the next 12 months. We may face delays in performing these drydocks or special surveys due to the effects of the Coronavirus, particularly if travel restrictions persist (refer to section above "B. Liquidity and Capital Resources – Cash Flows" for a discussion of how we plan to cover our working capital requirements and capital commitments).

Dividends

In, 2017, 2018 and 2019, the Company declared no dividend on its common stock. During the fourth quarter of 2013, the Company decided to suspend the quarterly dividend on its common stock to focus all its resources in exploiting investment opportunities in the markets.

Within 2017 and 2018, the Company declared eight consecutive quarterly dividends on its Series B Preferred Shares, amounting to $1.81 million in 2017 and $1.34 million in 2018, all of which were paid in-kind. Within 2019, the Company declared dividends of $1.27 million, of which $0.08 million were paid in-kind, $1.03 million were paid in cash during 2019 and another $0.16 million were accrued as of December 31, 2019 and were paid in the first quarter of 2020. The Series B Preferred Shares paid dividends in-kind until January 29, 2019 at a rate of 5% per annum. From January 29, 2019 to January 29, 2021, the dividend rate on the Series B Preferred Shares was set to increase to 12% per annum and to 14% per annum thereafter. On June 10, 2019, we redeemed $11.7 million of the Series B Preferred Shares, with a simultaneous reduction of the dividend rate to 8% per annum until January 29, 2021, after which date it will be increased to 14% per annum. From January 29, 2019 to June 11, 2019, the Series B Preferred Shares carried a dividend rate of 12% per annum.

C. Research and development, patents and licenses, etc.

Not applicable.

D. Trend information

Our results of operations depend primarily on the charter rates that we are able to realize. Charter rates paid for container vessels are primarily a function of the underlying balance between vessel supply and demand.

The demand for containership capacity is determined by the underlying demand for commodities transported in these vessels, which in turn is influenced by trends in the global economy. One of the main drivers of the containerized trade has been the growth in exports of finished goods. Demand for containership capacity is also affected by the operating efficiency of the global fleet, i.e., the average speed the fleet operates, and port congestion. A factor affecting mainly the containership sector, especially during periods of high fuel prices and/or low charter rates, is slow-steaming (i.e., the practice of running a vessel at lower speeds to economize on fuel costs). Slow-steaming increases the number of ships required to carry a given amount of trade volume and thus increases demand for ships as do higher levels of port congestion, leading to higher charter rates if all other factors influencing rates are unchanged.

The supply of containerships is dependent on the delivery of new vessels and the removal of vessels from the global fleet, either through scrapping or loss.  According to industry sources, as of April 15, 2020, the capacity of the fully cellular worldwide container vessel fleet was approximately 23.0 million teu with approximately 2.35 million teu, or, about 10.22% of the present fleet capacity on order. If the supply of vessel capacity increases but the demand for vessel capacity does not increase correspondingly, charter rates and vessel values could materially decline. The level of scrapping activity is generally a function of scrapping prices in relation to current and prospective charter market conditions, as well as operating, repair and survey costs. The average age at which a vessel is scrapped over

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the last ten years has been between 25 and 27 years, with smaller vessels scrapped at a later age. During strong markets, the average age at which the vessels are scrapped increases; during 2004, 2005, 2006, 2007 and the first nine months of 2008, the majority of the Feeder, Handysize and Intermediate size containerships that were scrapped were in excess of 30 years of age.  Continued weakness of containership charter rates resulted in increased scrapping rates at even lower vessel scrapping ages. In fact, 2016 saw scrapping of more than 500,000 teu, a 35-year record. In 2017 scrapping reached 398,610 teu, while in 2018, scrapping rates declined year on year reaching 119,910 teu. In 2019, the scrapping rate increased, reaching 182,560 teu. So far in 2020, there have been 29,570 teu of containerships that have been scrapped.

Declining shipping charter rates have a negative impact on our earnings when our vessels are employed in the spot market or when they are to be re-chartered after completing a time charter contract. As of April 15, 2020, approximately 47% of our ship capacity days in remainder of 2020 and approximately 5% of our ship capacity days in 2021, are under time charter contracts. If the market rates decrease from current levels or the supply of vessels increases, our vessels may have difficulty securing employment and, if so, may be employed at rates lower than their present charters.

On March 11, 2020, the World Health Organization declared the Coronavirus outbreak a pandemic. In response to the outbreak, many countries, ports and organizations, including those where the Company conducts a large part of its operations, have implemented measures to combat the outbreak, such as quarantines and travel restrictions. Such measures have and will likely continue to cause severe economic growth and trade disruptions. Preliminary estimates of industry analysts have containerized trade declining in excess of 10% in 2020 with a similar rebound in 2021.  At the same time, the increased uncertainty may cause restrain in placing orders for the construction of new vessels or may cause increase scrapping of existing vessels resulting in lower growth or even decline in the available number of container vessels; this, in turn, might create tight market conditions when containerized trade increases again. The extent to which the Coronavirus will impact economic growth, consumption patterns, containerized trade and the supply of vessels and, consequently, the Company's results of operations and financial condition is highly uncertain and cannot be predicted at this time.

E. Off-balance Sheet Arrangements

As of December 31, 2019, we did not have any off-balance sheet arrangements.

F. Tabular Disclosure of Contractual Obligations

Contractual Obligations and Commitments

Contractual obligations are set forth in the following table as of December 31, 2019:

In U.S. dollars	Total	Less Than	One to Three Years	Three to	More Than Five Years
		One Year		Five Years
Long-term bank loans	$85,207,220	$12,541,840	$38,665,380	$34,000,000	-
Related party loan	$5,000,000	$5,000,000	-	-	-
Interest Payments (1)	$10,093,000	$4,425,000	$4,877,000	$791,000	-
Vessel Management fees (2)	$15,516,488	$5,131,034	$10,385,454
Other Management fees (3)	$6,120,800	$2,000,000	$4,120,800
Total	$121,937,508	$29,097,874	$58,048,634	$34,791,000

(1)Assuming the amortization of the loans as of December 31, 2019 described above, each loan's interest rate margin over LIBOR and average LIBOR rates of about 1.61%, 1.21%, 1.21%, 1.41% and 1.81% per annum for the five years, respectively, based on the LIBOR yield curve as of December 31, 2019. This also includes our obligation

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to make payments required as of December 31, 2019 under our related party loan, with an interest rate of 8% per annum.

(2)Refers to our obligation for management fees under our Master Management Agreement and management agreements with the shipowning companies in effect as of December 31, 2019 and expiring on January 1, 2023.  The management fees have been computed for 2020 based on the agreed rate of 685 Euros per day per vessel (approximately $767). For the years after 2020, we have assumed an annual increase in the rate of 2% for inflation. We assumed a rate of 1.12 in the US dollar to Euro exchange rate. We further assume that we hold our vessels until they reach 25 years of age, after which they are considered to be scrapped and no longer bear obligations.

(3)Refers to our obligation for management fees of $2,000,000 per year under our Master Management Agreement with Eurobulk for the cost of providing executive services to the Company. This fee is adjusted for inflation in Greece during the previous calendar year every January 1^st. From January 1, 2021 on, we have assumed an inflation rate of 2.0% per year. The agreement expires on January 1, 2023.

G.Safe Harbor

See "Forward-Looking Statements" at the beginning of this annual report.

Item 6. Directors, Senior Management and Employees

A. Directors and Senior Management

The following sets forth the name and position of each of our directors and executive officers.

Name	Age	Position
Aristides J. Pittas	60	Chairman, President and CEO; Class A Director
Dr. Anastasios Aslidis	60	CFO and Treasurer; Class A Director
Aristides P. Pittas	68	Vice Chairman; Class A Director
Stephania Karmiri	52	Secretary
Panagiotis Kyriakopoulos	59	Class B Director
Christian Donohue	52	Director
Andreas Papathomas	68	Director
George Taniskidis	59	Class C Director
Apostolos Tamvakakis	62	Class C Director

Aristides J. Pittas has been a member of our Board of Directors and our Chairman and Chief Executive Officer since our inception on May 5, 2005. Since 1997, Mr. Pittas has also been the President of Eurochart, our affiliate. Eurochart is a shipbroking company specializing in chartering and selling and purchasing ships. Since January 1995, Mr. Pittas has been the President and Managing Director of Eurobulk, our affiliated ship management company. He resigned as Managing Director of Eurobulk in June 2005. Eurobulk is a ship management company that provides ocean transportation services. From September 1991 to December 1994, Mr. Pittas was the Vice President of Oceanbulk Maritime SA, a ship management company. From March 1990 to August 1991, Mr. Pittas served both as the Assistant to the General Manager and the Head of the Planning Department of Varnima International SA, a shipping company operating tanker vessels. From June 1987 until February 1990, Mr. Pittas was the head of the Central Planning department of Eleusis Shipyards S.A. From January 1987 to June 1987, Mr. Pittas served as Assistant to the General Manager of Chios Navigation Shipping Company in London, a company that provides ship management services. From December 1985 to January 1987, Mr. Pittas worked in the design department of Eleusis Shipyards S.A. where he focused on shipbuilding and ship repair. Mr. Pittas has a B.Sc. in Marine Engineering from University of Newcastle - Upon-Tyne and a MSc in both Ocean Systems Management and Naval Architecture and Marine Engineering from the Massachusetts Institute of Technology.

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Dr. Anastasios Aslidis has been our Chief Financial Officer and Treasurer and member of our Board of Directors since September 2005. Prior to joining Euroseas, Dr. Aslidis was a partner at Marsoft, an international consulting firm focusing on investment and risk management in the maritime industry. Dr. Aslidis has more than 25 years of experience in the maritime industry. He also served as consultant to the Boards of Directors of shipping companies (public and private) advising on strategy development, asset selection and investment timing. Dr. Aslidis holds a Ph.D. in Ocean Systems Management (1989) from the Massachusetts Institute of Technology, M.S. in Operations Research (1987) and M.S. in Ocean Systems Management (1984) also from the Massachusetts Institute of Technology, and a Diploma in Naval Architecture and Marine Engineering from the National Technical University of Athens (1983).

Aristides P. Pittas has been a member of our Board of Directors since our inception on May 5, 2005 and our Vice Chairman since September 1, 2005. Mr. Pittas has been a shareholder in over 100 oceangoing vessels during the last 20 years. Since February 1989, Mr. Pittas has been the Vice President of Oceanbulk Maritime SA, a ship management company. From November 1987 to February 1989, Mr. Pittas was employed in the supply department of Drytank SA, a shipping company. From November 1981 to June 1985, Mr. Pittas was employed at Trust Marine Enterprises, a brokerage house as a sale and purchase broker. From September 1979 to November 1981, Mr. Pittas worked at Gourdomichalis Maritime SA in the operation and Freight Collection department. Mr. Pittas has a B.Sc in Economics from Athens School of Economics.

Stephania Karmiri has been our Secretary since our inception on May 5, 2005. Since July 1995, Mrs. Karmiri has been executive secretary to Eurobulk, our affiliated ship management company. Eurobulk is a ship management company that provides ocean transportation services. At Eurobulk, Mrs. Karmiri has been responsible for dealing with sale and purchase transactions, vessel registrations/deletions, bank loans, supervision of office administration and office/vessel telecommunication. From May 1992 to June 1995, she was secretary to the technical department of Oceanbulk Maritime SA, a ship management company. From 1988 to 1992, Mrs. Karmiri served as assistant to brokers for Allied Shipbrokers, a company that provides shipbroking services to sale and purchase transactions. Mrs. Karmiri has taken assistant accountant and secretarial courses from Didacta college.

Panagiotis Kyriakopoulos has been a member of our Board of Directors since our inception on May 5, 2005. Since July 2002, he has been the Chief Executive Officer of STAR INVESTMENTS S.A., one of the leading Mass Media Companies in Greece, running television and radio stations. From July 1997 to July 2002 he was the C.E.O. of the Hellenic Post Group, the Universal Postal Service Provider, having the largest retail network in Greece for postal and financial services products. From March 1996 until July 1997, Mr. Kyriakopoulos was the General Manager of ATEMKE SA, one of the leading construction companies in Greece listed on the Athens Stock Exchange. From December 1986 to March 1996, he was the Managing Director of Globe Group of Companies, a group active in the areas of shipowning and management, textiles and food and distribution. The company was listed on the Athens Stock Exchange. From June 1983 to December 1986, Mr. Kyriakopoulos was an assistant to the Managing Director of Armada Marine S.A., a company active in international trading and shipping, owning and managing a fleet of twelve vessels. Presently he is Chairman of the Hellenic Private Television Owners Association, BoD member of the Hellenic Federation of Enterprises (SEV) and BoD member of Digea S.A.  He has also been an investor in the shipping industry for more than 20 years. Mr. Kyriakopoulos has a B.Sc. degree in Marine Engineering from the University of Newcastle upon Tyne, a MSc. degree in Naval Architecture and Marine Engineering with specialization in Management from the Massachusetts Institute of Technology and a Master degree in Business Administration (MBA) from Imperial College, London.

George Taniskidis has been a member of our Board of Directors since our inception on May 5, 2005. He is the Chairman of Core Capital Partners, a consulting firm specializing in debt restructuring. He was Chairman and Managing Director of Millennium Bank and a member of the Board of Directors of BankEuropa (subsidiary bank of Millennium Bank in Turkey) until May 2010. He was also a member of the Executive Committee and the Board of Directors of the Hellenic Banks Association. From 2003 until 2005, he was a member of the Board of Directors of Visa International Europe, elected by the Visa issuing banks of Cyprus, Malta, Portugal, Israel and Greece. From 1990 to 1998, Mr. Taniskidis worked at XIOSBANK (until its acquisition by Piraeus Bank in 1998) in various positions, with responsibility for the bank's credit strategy and network. Mr. Taniskidis studied Law in the National University of Athens and in the University of Pennsylvania Law School, where he received a L.L.M. After law school, he joined the law firm of Rogers & Wells in New York, where he worked until 1989 and was also a member of the New York State Bar Association. He is also a member of the Young Presidents Organization.

Apostolos Tamvakakis has been a member of our Board of Directors since June 25, 2013. Mr. Tamvakakis has also been a member of the Board of Directors of EuroDry Ltd. since May 5, 2018. From January 2015 to February 2017 he was independent non-executive Vice Chairman of the Board of Directors of Piraeus Bank. Since July 2012 he participated as a Member of the Board of Directors and Committees in various companies. From December 2009 to June 2012, Mr. Tamvakakis was appointed Chief Executive Officer of the National Bank of Greece. From May

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2004 to March 2009, he served as Chairman and Managing Director of Lamda Development, a real estate development company of the Latsis Group and from March 2009 to December 2009, he served on the management team of the Geneva-based Latsis Group, as Head of Strategy and Business Development. From October 1998 to April 2004, he served as Deputy CEO of National Bank of Greece. Prior to that, he worked as Deputy Governor of National Mortgage Bank of Greece, as Deputy General Manager of ABN AMRO Bank, as Manager of Corporate Finance at Hellenic Investment Bank and as Planning Executive at Mobil Oil Hellas. He also served as Vice-Chairman of Athens Stock Exchange, Chairman of the Steering Committee of Interalpha Group of Banks, Chairman of Ethnokarta, National Securities, AVIS (Greece), ETEVA and the Southeastern European Board of the Europay Mastercard Group. Mr. Tamvakakis has also served in numerous boards of directors and committees. He is the Chairman and Managing Partner of EOS Capital Partners Alternative Investment Fund Manager, the investment manager of a private equity fund "EOS Hellenic Renaissance Fund". He holds the positions of Vice Chairman of Gek Terna, Member of the BoD of Quest Holdings, Chairman of the Liquidations Committee of PQH Single Special Liquidation S.A. and member of the Marketing Commission of the Hellenic Olympic Committee. He is a graduate of the Athens University of Economics and has an M.A. in Economics from the Saskatchewan University in Canada with major in econometrics and economics.

Christian Donohue has been a member of the Board of Directors of Euroseas since December 7, 2017.  Mr. Donohue has also been a member of the Board of Directors of EuroDry Ltd. since May 30, 2018. Mr. Donohue was initially appointed to the Board of Directors pursuant to the provisions of the Statement of Designation of our Series B Preferred Shares, and on July 29, 2019 was appointed as a Director.  Mr. Donohue is a Managing Director at BlackRock, and he held the same position at Tennenbaum Capital Partners before Tennenbaum Capital Partners was acquired by BlackRock in 2018.

Andreas Papathomas has been a member of the Board of Directors since November 8, 2019. Mr Papathomas' background is in international business and shipping. He read Economics at Gonville & Caius College, Cambridge and undertook post-graduate studies in international economics in Geneva, following which he joined his late father's shipping business, now called the Synergy Group, where he is currently Chairman. He has successfully run the Synergy Group since 1980 and, over the years, has been involved in all aspects of shipping, including chartering, international trade, sale & purchase, financing and operations.

Family Relationships

Aristides P. Pittas, Vice Chairman, is the cousin of Aristides J. Pittas, our Chairman, President and CEO.

B. Compensation

Executive Compensation

We have no direct employees. The services of our Chief Executive Officer, Chief Financial Officer, Chief Administrative Officer, Internal Auditor and Secretary are provided by Eurobulk. These services are provided to us under our Master Management Agreement with Eurobulk under which we pay a fee, before bonuses, adjusted annually for Eurozone inflation to account for the increased management cost associated with us being a public company and other services to our subsidiaries. During 2016 and 2017, under this Master Management Agreement, as amended, we paid Eurobulk $2,000,000 each year for the services of our executives, Mr. Aristides J. Pittas, Dr. Anastasios Aslidis and Mr. Symeon Pariaros, our Secretary, Mrs. Stephania Karmiri, and our Internal Auditor. Following the spin-off, with effect May 30, 2018, the executive services fee we pay to Eurobulk each year for the services of our executives, Mr. Aristides J. Pittas, Dr. Anastasios Aslidis and Mr. Symeon Pariaros, our Secretary, Mrs. Stephania Karmiri, and our Internal Auditor, was adjusted to $1,250,000. On November 15, 2019, the Company signed an addendum adjusting the fixed annual executive compensation to $2,000,000 to compensate Eurobulk Ltd. for the increase in the fleet and certain management services provided by Synergy Marine Ltd., a company controlled by Andreas Papathomas and which became affiliated with the Company post-acquisition as a result of his appointment to the Board of Directors of the Company in November 2019. As a result, for the year 2019, the fixed cost was calculated at $1,250,000 pro-rated for the period of January 1, 2019 until November 15, 2019 and at $2,000,000 for the period of November 16, 2019 until December 31, 2019.

Director Compensation

Our directors who are also our officers or have executive positions or beneficially own greater than 10% of the outstanding common stock receive no compensation for serving on our Board of Directors or its committees.

Directors who are not our officers, do not have any executive position or do not beneficially own greater than 10% of the outstanding common stock receive the following compensation: an annual retainer of $7,500, plus $1,875

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for attending a quarterly meeting of the Board of Directors, plus an additional retainer of $3,750 if serving as Chairman of the Audit Committee. They also participate in the Company's Equity Incentive Plan.

All directors are reimbursed reasonable out-of-pocket expenses incurred in attending meetings of our Board of Directors or any committee of our Board of Directors.

Equity Incentive Plan

In May 2018, our Board of Directors approved a new equity incentive plan (the "2018 Equity Incentive Plan") to replace the 2014 Equity Incentive Plan. The 2018 Equity Incentive Plan is administered by the Board of Directors which can make awards totaling in aggregate up to 75,000 shares over 10 years after the 2018 Equity Incentive Plan's adoption date. Officers, directors and employees (including any prospective officer or employee) of the Company and its subsidiaries and affiliates and consultants and service providers to (including persons who are employed by or provide services to any entity that is itself a consultant or service provider to) the Company and its subsidiaries and affiliates are eligible to receive awards under the 2018 Equity Incentive Plan.  Awards may be made under the 2018 Equity Incentive Plan in the form of incentive stock options, non-qualified stock options, stock appreciation rights, dividend equivalent rights, restricted stock, unrestricted stock, restricted stock units and performance shares.

On November 2, 2017, an award of 12,534 non-vested restricted shares, was made to 18 key persons, comprising directors and officers of the Company and key employees of Eurobulk of which 50% vested on July 1, 2018 and 50% vested on July 1, 2019; awards to officers and directors amounted to 7,213 shares and the remaining 5,321 shares were awarded to employees of Eurobulk  On November 21, 2018, an award of 15,681 non-vested restricted shares, was made to 18 key persons of which 50% vested on November 16, 2019 and 50% will vest on November 16, 2020; awards to officers and directors amounted to 9,021 shares and the remaining 6,660 shares were awarded to employees of Eurobulk. On November 4, 2019, an award of 15,444 non-vested restricted shares, was made to 17 key persons of which 50% will vest on July 1, 2020 and 50% will vest on July 1, 2021; awards to officers and directors amounted to 8,713 shares and the remaining 6,731 shares were awarded to employees of Eurobulk.

C.Board Practices

The current term of our Class A directors expires in 2020, the term of our Class B director expires in 2021 and the term of our Class C directors expires in 2022.

There are no service contracts between us and any of our directors providing for benefits upon termination of their employment or service.

Our Board of Directors does not have separate compensation or nomination committees, and instead, the entire Board of Directors performs those responsibilities.

Audit Committee

We currently have an Audit Committee comprised of three independent members of our Board of Directors. The Audit Committee is responsible for reviewing the Company's accounting controls and the appointment of the Company's outside auditors. The members of the Audit Committee are Mr. Panos Kyriakopoulos (Chairman and "audit committee financial expert" as such term is defined under SEC regulations), Mr. Apostolos Tamvakakis and Mr. George Taniskidis.

Code of Ethics

We have adopted a code of ethics that complies with the applicable guidelines issued by the SEC. Our code of ethics is posted on our website: http://www.euroseas.gr under "Corporate Governance." We intend to disclose any waivers of the code of ethics on our website under "Corporate Governance."

Corporate Governance

Our Company's corporate governance practices are in compliance with, and are not prohibited by, the laws of the Republic of the Marshall Islands. We are exempt from many of Nasdaq's corporate governance practices other than the requirements regarding the disclosure of a going concern audit opinion, submission of a listing agreement, notification of material non-compliance with Nasdaq corporate governance practices, and the establishment and composition of an audit committee and a formal written audit committee charter. The practices that we follow in lieu of Nasdaq's corporate governance rules are described below.

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• We are not required under Marshall Islands law to maintain a Board of Directors with a majority of independent directors, and we may not be able to maintain a Board of Directors with a majority of independent directors in the future.

• In lieu of a compensation committee comprised of independent directors, our Board of Directors will be responsible for establishing the executive officers' compensation and benefits. Under Marshall Islands law, compensation of the executive officers is not required to be determined by an independent committee.

• In lieu of a nomination committee comprised of independent directors, our Board of Directors will be responsible for identifying and recommending potential candidates to become board members and recommending directors for appointment to board committees. Shareholders may also identify and recommend potential candidates to become board members in writing. No formal written charter has been prepared or adopted because this process is outlined in our bylaws.

• In lieu of obtaining an independent review of related party transactions for conflicts of interests, consistent with Marshall Islands law requirements, a related party transaction will be permitted if: (i) the material facts as to his or her relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors and the Board of Directors in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, or, if the votes of the disinterested directors are insufficient to constitute an act of the Board of Directors as defined in Section 55 of the Marshall Islands Business Corporations Act, by unanimous vote of the disinterested directors; or (ii) the material facts as to his relationship or interest are disclosed and the shareholders are entitled to vote thereon, and the contract or transaction is specifically approved in good faith by a simple majority vote of the shareholders; or (iii) the contract or transaction is fair as to the Company as of the time it is authorized, approved or ratified, by the Board of Directors, a committee thereof or the shareholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction.

• As a foreign private issuer, we are not required to solicit proxies or provide proxy statements to Nasdaq pursuant to Nasdaq corporate governance rules or Marshall Islands law. Consistent with Marshall Islands law, we will notify our shareholders of meetings between 15 and 60 days before the meeting. This notification will contain, among other things, information regarding business to be transacted at the meeting. In addition, our bylaws provide that shareholders must give us advance notice to properly introduce any business at a meeting of the shareholders. Our bylaws also provide that shareholders may designate in writing a proxy to act on their behalf.

• In lieu of holding regular meetings at which only independent directors are present, our entire Board of Directors, a majority of whom are independent, will hold regular meetings as is consistent with the laws of the Republic of the Marshall Islands.

• The Board of Directors adopted a new Equity Incentive Plan in February 2018.  Shareholder approval was not necessary since Marshall Islands law permits the Board of Directors to take such actions.

• As a foreign private issuer, we are not required to obtain shareholder approval if any of our directors, officers, or 5% or greater shareholders has a 5% or greater interest (or such persons collectively have a 10% or greater interest), directly or indirectly, in the company, or assets to be acquired, or in the consideration to be paid in the transaction(s) and the present or potential issuance of common stock, or securities convertible into or exercisable for common stock, could result in an increase in outstanding common stock or voting power of 5% or more.

• In lieu of obtaining shareholder approval prior to the issuance of designated securities, the Company will comply with provisions of the Marshall Islands Business Corporations Act, providing that the Board of Directors approves share issuances.

Other than as noted above, we are in full compliance with all other applicable Nasdaq corporate governance standards.

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D.Employees

We have no salaried employees, although we pay Eurobulk for the services of our Chief Executive Officer, Chief Financial Officer, Chief Administrative Officer, Internal Auditor and Secretary: Mr. Aristides J. Pittas, Dr. Anastasios Aslidis, Mr. Symeon Pariaros, Mr. Konstantinos Siademas and Ms. Stephania Karmiri, respectively.  Eurobulk also ensures that all seamen have the qualifications and licenses required to comply with international regulations and shipping conventions, and that all of our vessels employ experienced and competent personnel.  As of December 31, 2019, approximately 152 officers and 266 crew members served on board the vessels in our fleet.

E.Share Ownership

With respect to the ownership of our common stock by each of our directors and executive officers, and all of our directors and executive officers as a group, see "Item 7. Major Shareholders and Related Party Transactions".

All of the shares of our common stock have the same voting rights and are entitled to one vote per share.

Equity Incentive Plan

See Item 6.B of this annual report, "Compensation."

Options

No options were granted during the fiscal year ended December 31, 2019. There are currently no options outstanding to acquire any of our shares.

Warrants

We do not currently have any outstanding warrants.

Item 7. Major Shareholders and Related Party Transactions

A. Major Stockholders

The following table sets forth certain information regarding the beneficial ownership of our voting stock as of April 15, 2020 by each person or entity known by us to be the beneficial owner of more than 5% of the outstanding shares of our voting stock, each of our directors and executive officers, and all of our directors and executive officers and 5% owners as a group. All of our shareholders, including the shareholders listed in this table, are entitled to one vote for each share of common stock held.

Name of Beneficial Owner (1)	Number of Shares of Voting Common Stock Beneficially Owned		Percent of Voting of common Stock (17)			Number of Shares of Voting Series B Preferred Stock Beneficially Owned (18)		Percent of Voting of Series B Preferred Shares (18)			Number of Shares of Voting Common Stock Beneficially Owned Upon Conversion; 50% Voting Before Conversion		Percent of Total Voting Securities
Containers Trinity Shareholders Ltd. (2)		2,171,479		38.8	%		-		-			-		35.5	%
Eurobulk Marine Holdings Inc. (3)		531,614		9.5	%		-		-			-		8.7	%
Synergy Holdings Limited (4)		528,169		9.4	%		-		-			-		8.6	%
Friends Investment Company Inc. (5)		503,303		9.0	%		-		-			-		8.2	%
Diamantis Shareholders Ltd (6)		243,451		4.3	%		-		-			-		4.0	%
Family United Navigation Co		87,842		1.6	%		-		-					1.4	%
Tennenbaum Opportunities Fund V, LP (7, 8)		76,050		1.4	%		-		-			-		1.2	%
Tennenbaum Opportunities Partners V, LLC (7, 8)		36,450		0.7	%		4,345		54.3	%		278,526		5.2	%
Preferred Friends Investment Company Inc (8)		-		-			3,655		45.7	%		234,295		3.8	%
Aristides J Pittas(9)		12,504		*			-		-			-		*
Anastasios Aslidis (10)		10,775		*			-		-			-		*
Panagiotis Kyriakopoulos (11)		4,220		*			-		-			-		*

Aristides P Pittas (12)	2,598	*		-	-		-	*
Apostolos Tamvakakis (13)	1,742	*		-	-		-	*
George Taniskidis (14)	562	*		-	-		-	*
Christian Donohue	-	*		-	-		-	*
Andreas Papathomas	-	*		-	-		-	*
Stephania Karmiri (15)	-	*		-	-		-	*
Symeon Pariaros (16)	562	*		-	-		-	*
All directors and officers and 5% owners as a group	4,236,197	75.6	%	8,000	100.0	%	512,821	77.7	%

*      Indicates less than 1.0%.

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(1) Beneficial ownership is determined in accordance with the Rule 13d-3(a) of the Securities Exchange Act of 1934, as amended, and generally includes voting or investment power with respect to securities. Except as subject to community property laws, where applicable, the person named above has sole voting and investment power with respect to all shares of common stock shown as beneficially owned by him/her.

(2) Represents 2,171,479 shares of common stock held of record by Containers Trinity Shareholders Ltd. ("CTS"). A majority of the shareholders of CTS are members of the Pittas family. Investment power and voting control by CTS resides in its Board of Directors which consists of three directors, affiliated with the Pittas family. Actions by CTS may be taken by a majority of the members on its Board of Directors.

(3) Represents 528,169 shares of common stock held of record by Eurobulk Marine Holdings Inc. ("EMH"). A majority of the shareholders of EMH are members of the Pittas family. Investment power and voting control by EMH resides in its Board of Directors which consists of three directors, a majority of whom are members of the Pittas family. Actions by EMH may be taken by a majority of the members on its Board of Directors.

(4) Represents 528,169 shares of common stock held of record by Synergy Holdings Ltd. ("SHL"). SHL is indirectly controlled by a trust (under which Andreas Papathomas is a beneficiary) which may be deemed to have beneficial ownership of shares beneficially owned by SHL.  Mr. Papathomas is a director of the Company.

(5) Represents 531,614 shares of common stock held of record by Friends. A majority of the shareholders of Friends are members of the Pittas family. Investment power and voting control by Friends resides in its Board of Directors which consists of five directors, a majority of whom are members of the Pittas family. Actions by Friends may be taken by a majority of the members on its Board of Directors.

(6) Represents 243,451 shares of common stock held of record by Diamantis Shareholders Ltd. ("DSL"). A majority of the shareholders of DSL are members of the Pittas family. Investment power and voting control by DSL resides in its Board of Directors which consists of three directors, affiliated with the Pittas family. Actions by DSL may be taken by a majority of the members on its Board of Directors.

 (7) Tennenbaum Capital Partners, LLC serves as investment advisor to, inter alia, Tennenbaum Opportunities Partners V, LP and Tennenbaum Opportunities Fund VI, LLC, which are the registered holders of the Common Shares and Series B Preferred Shares of Euroseas Ltd. beneficially owned by Tennenbaum Capital Partners, LLC. Tennenbaum Capital Partners, LLC is indirectly controlled by BlackRock, Inc., which may be deemed to have beneficial ownership of shares beneficially owned by Tennenbaum Capital Partners, LLC. The address of Tennenbaum Opportunities Partners V, LP, Tennenbaum Opportunities Fund V, LLC and Tennenbaum Capital Partners, LLC is 2951 28th Street, Suite 1000, Santa Monica, CA 90405. The address of BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055. Tennenbaum Opportunities Partners V, LP and Tennenbaum Opportunities Fund VI, LLC currently hold (a) 112,500 shares of common stock and (b) Series B Preferred Shares that are convertible into 278,526 shares of common stock.

(8) Common shares are issuable upon conversion of Series B Preferred Shares (or any convertible notes into which the Series B Preferred Shares may convert) owned by this shareholder (based on the current conversion ratio).

 (9) Does not include 1,004,507 shares of common stock held of record by CTS, EMH, Friends and DSL by virtue of ownership interest in above entities by Mr. Pittas. Mr. Pittas disclaims beneficial ownership except to the

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extent of his pecuniary interest. Does not include 1,041 Series B Preferred Shares held of record by Preferred Friends Investment Company Inc., by virtue of ownership interest in Preferred Friends Investment Company Inc. by Mr. Pittas. Includes 1,750 shares vesting on July 1, 2020, 1,741 shares of common stock vesting on November 16, 2020 and 1,750 shares vesting on July 1, 2021.

(10) Does not include 20,344 shares of common stock held of record by CTS and DSL by virtue of ownership interest in above entities by Mr. Aslidis. Mr. Aslidis disclaims beneficial ownership except to the extent of his pecuniary interest. Includes 1,188 shares vesting on July 1, 2020, 1,182 shares of common stock vesting on November 16, 2020 and 1,188 shares vesting on July 1, 2021.

(11) Includes 188 shares vesting on July 1, 2020, 186 shares of common stock vesting on November 16, 2020 and 188 shares vesting on July 1, 2021.

(12) Does not include 279,640 shares of common stock held of record by CTS, EMH, Friends, DSL and Family United Navigation Co., by virtue of ownership interest in above entities by Mr. Pittas and members of his family. Mr. Pittas disclaims beneficial ownership except to the extent of his pecuniary interest. Does not include 24 shares of Series B Preferred stock held of record by Preferred Friends Investment Company Inc., by virtue of ownership interest in Preferred Friends Investment Company Inc. by Mr. Pittas and members of his family. Includes 482 shares vesting on July 1, 2020, 475 shares of common stock vesting on November 16, 2020 and 482 shares vesting on July 1, 2021.

(13) Includes 188 shares vesting on July 1, 2020, 186 shares of common stock vesting on November 16, 2020 and 188 shares vesting on July 1, 2021.

(14) Does not include 45,264 shares held of record by Friends, by virtue of Mr. Taniskidis' ownership in CTS, Friends and DSL. Mr. Taniskidis disclaims beneficial ownership except to the extent of his pecuniary interest. Does not include 96 Series B Preferred Shares held of record by Preferred Friends Investment Company Inc., by virtue of ownership interest in Preferred Friends Investment Company Inc. by Mr. Taniskidis. Includes 188 shares vesting on July 1, 2020, 186 shares of common stock vesting on November 16, 2020 and 188 shares vesting on July 1, 2021.

(15) Does not include 67 shares of common stock held of record by Friends, by virtue of Mrs. Karmiri's ownership in Friends. Mrs. Karmiri disclaims beneficial ownership except to the extent of her pecuniary interest.

(16) Includes 188 shares vesting on July 1, 2020, 186 shares of common stock vesting on November 16, 2020 and 188 shares vesting on July 1, 2021.

(17) Voting stock includes 23,299 unvested shares for a total of 5,600,259 issued and outstanding shares of the Company as of April 15, 2020.

(18) As of April 15, 2020, Series B Preferred Shares vote on an as-converted basis weighted by 50%.

B. Related Party Transactions

The operations of our vessels are managed by Eurobulk, an affiliated ship management company owned by our Chairman and CEO and his family, under a Master Management Agreement with us and separate management agreements with each shipowning company. Under our Master Management Agreement, Eurobulk is responsible for all aspects of management and compliance for the Company, including the provision of the services of our Chief Executive Officer, Chief Financial Officer, Chief Administrative Officer, Internal Auditor and Secretary. Eurobulk is also responsible for all commercial management services, which include obtaining employment for our vessels and managing our relationships with charterers. Eurobulk also performs technical management services, which include managing day-to-day vessel operations, performing general vessel maintenance, ensuring regulatory and classification society compliance, supervising the maintenance and general efficiency of vessels, arranging our hire of qualified officers and crew, arranging and supervising dry docking and repairs, arranging insurance for vessels, purchasing stores, supplies, spares and new equipment for vessels, appointing supervisors and technical consultants and providing technical support and shoreside personnel who carry out the management functions described above and certain accounting services.

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Our Master Management Agreement with Eurobulk, which we initially entered in 2008, was most recently amended and restated as of January 1, 2018 and its term was extended until January 1, 2023. The Master Management Agreement can be terminated by Eurobulk only for cause or under other limited circumstances, such as sale of the Company or Eurobulk or the bankruptcy of either party. The Master Management Agreement will automatically be extended after the initial period for an additional five-year period unless terminated on or before the 90th day preceding the preceding termination date. Each new vessel we may acquire in the future will enter into a separate management agreement with Eurobulk with a rate and term coinciding with the rate and remaining term of the Master Management Agreement pursuant to the Master Management Agreement. During 2017, under the Master Management Agreement, as amended, we paid Eurobulk a fixed cost of $2,000,000 annually, which is adjusted for a per ship per day cost of 685 Euros (or about $768 based on $1.12/Euro exchange rate) and also adjusted annually for inflation in the Eurozone every January 1^st (there was no inflation adjustment on January 1, 2018 or 2019, as the inflation rate was not positive), reflecting a 5% discount if the number of vessels wholly or partially owned by Euroseas and managed by Eurobulk is more than 20, which has been the case from January 1, 2012 to December 2017 as the total number of vessels owned by us (including the vessels owned by Euromar) was greater than 20. In absence of this discount, the cost per ship per day would have been 720 Euros.  This cost would have been reduced by half (342.5 Euros per vessel per day, or 360 Euros per vessel per day as appropriate) for any vessels that are laid up. Vessels under construction start paying the daily management fee after steel cutting. Under the amended and restated Master Management Agreement, as of January 1, 2018, the volume discount has been permanently incorporated into the daily management fee, which remained 685 Euros in 2018 and 2019 and will be annually adjusted for Eurozone inflation. As of May 30, 2018, the fixed annual cost was adjusted to $1,250,000. For the year 2018, the fixed annual cost was calculated at $2,000,000 pro-rated for the period from January 1, 2018 until May 29, 2018 and $1,250,000 thereafter for the period from May 30, 2018 until December 31, 2018 for a total amount of $1,561,126. On November 15, 2019, the Company signed an addendum adjusting the fixed annual cost to $2,000,000 to compensate Eurobulk Ltd. for the increase in the fleet and certain management services provided by Synergy Marine Ltd., a company controlled by Andreas Papathomas and which became affiliated with the Company post-acquisition, as a result of his appointment to the Board of Directors of the Company in November 2019. As a result, for the year 2019, the fixed cost was calculated at $1,250,000 pro-rated for the period of January 1, 2019 until November 15, 2019 and at $2,000,000 for the period of November 16, 2019 until December 31, 2019 for a total amount of $1,344,250.

Eurobulk has received fees for management and executive compensation expenses of $3,939,113, $5,097,220 and $5,015,585 during 2017, 2018 and 2019, respectively.

We receive chartering and sale and purchase services from Eurochart, an affiliate, and pay a commission of 1.25% on charter revenue and 1% on vessel sale price. During 2019, Eurochart received: nil for vessel sales, as there were none in 2019, and $493,341 for chartering services calculated as 1.25% of chartering revenues. During 2018, Eurochart received commissions of $64,500 for vessel sales and chartering commissions of $453,361.

Technomar S.A., a crewing agent, and Sentinel Marine Services Inc., an insurance brokering company, are affiliates to whom we pay a fee of about $50 per crew member per month and pay a commission on insurance premiums not exceeding 5%, respectively.

In August 2019, we took delivery of four feeder containerships, the M/V "Diamantis P", M/V "EM Hydra", M/V "EM Spetses", and M/V "EM Kea", owned by affiliates of the Pittas family, controlled by the Company's CEO for $28.2 million. The consideration towards the feeder vessels included a cash payment of $15.0 million, financed by two bank loans, and issuance of 2,816,902 shares of common stock to the sellers. The vessels acquisition transactions were evaluated and approved by a special committee of independent members of the Board of Directors.

On September 30, 2019, we reached an agreement with a related party, Colby Trading Ltd., a company controlled by the Pittas family and affiliated with our CEO, to draw a $2.5 million loan to finance the special survey and water ballast treatment plant installation on M/V "Akinada Bridge". The interest rate applied is 8% per annum. Interest on the loan is payable quarterly. The loan is payable in four repayment installments of a principal amount of $625,000 each. The first repayment installment will be due on May 15, 2020 and the remaining three installments will be paid on a quarterly basis thereafter and the loan will be paid in full by November 2020. Under certain circumstances, the Company can pay principal in equity, and the loan is convertible in common stock of the Company at the option of the lender at certain times. We paid $51,111 on interest for this loan for the fiscal year 2019.

On November 1, 2019, the Company entered into a second agreement with Colby Trading Ltd., to draw another $2.5 million loan to finance working capital needs. Interest on the loan is 8% per annum and is payable quarterly. There are no principal repayments until December 31, 2020, when the loan matures. Under certain circumstances, the Company can pay principal in equity, and the loan is convertible in common stock of the Company at the option of the lender at certain times. We paid $33,333 on interest for this loan for the fiscal year 2019.

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Aristides J. Pittas is currently the Chairman of each of Eurochart and Eurobulk, both of which are our affiliates.

We have entered into a registration rights agreement with Friends, our largest shareholder, pursuant to which we granted Friends the right, under certain circumstances and subject to certain restrictions, to require us to register under the Securities Act shares of our common stock held by Friends. Under the registration rights agreement, Friends has the right to request us to register the sale of shares held by it on its behalf and may require us to make available shelf registration statements permitting sales of shares into the market from time to time over an extended period. In addition, Friends has the ability to exercise certain piggyback registration rights in connection with registered offerings initiated by us.

Eurobulk, Friends and Aristides J. Pittas, our Chairman and Chief Executive Officer, have granted us a right of first refusal to acquire any containership which any of them may consider for acquisition in the future. In addition, Mr. Pittas has granted us a right of first refusal to accept any chartering out opportunity for a containership which may be suitable for any of our vessels, provided that we have a suitable vessel, properly situated and available, to take advantage of the chartering out opportunity. Mr. Pittas has also agreed to use his best efforts to cause any entity he directly or indirectly controls to grant us this right of first refusal.

C. Interests of Experts and Counsel

Not Applicable.

Item 8. Financial Information

A. Consolidated Statements and Other Financial Information

See Item 18.

Legal Proceedings

As of April 15, 2020, a subsidiary of the Company, Alterwall Business Inc. (the owner of M/V "Ninos"), is involved in a dispute with a fuel oil supplier who claimed a maritime lien against the vessel after the supplier, which had time-chartered the vessel from the Company, went bankrupt in October 2009 and failed to pay certain invoices. The vessel was arrested in Karachi in November 2009 and released after a bank guarantee for an amount of $0.53 million was provided on behalf of the Company, for which the bank has restricted an equal amount of the Company's cash which is presented within Restricted Cash. The legal proceedings are ongoing.  Although the Company believes it will be successful in its claim, it has made a provision of $0.15 million in 2016 for any costs that may be incurred.

To our knowledge, there are no other material legal proceedings to which we are a party or to which any of our properties are subject, other than routine litigation incidental to our business. In our opinion, the disposition of these lawsuits should not have a material impact on our consolidated results of operations, financial position or cash flows.

Dividend Policy

We paid a quarterly dividend to our common stock for thirty-two consecutive quarters from our inception in 2005 until November 2013 when our Board of Directors decided to suspend our quarterly dividend in order to focus every resource available in exploiting investment opportunities in the market. Our last dividend of $1.20 per share (adjusted for the 1-for-10 reverse stock split effected on July 23, 2015 and the 1-for-8 reverse stock split effected on December 18, 2019) was declared in August 2013. The exact timing and amount of any future dividend payments to our common stock will be determined by our Board of Directors and will be dependent upon our earnings, financial condition, cash requirement and availability, restrictions in its loan agreements, growth strategy, the provisions of Marshall Islands law affecting the payment of distributions to shareholders and other factors, such as the acquisition of additional vessels.

If reinstated, the payment of dividends to our common stock is not guaranteed or assured, and may again be discontinued at any time at the discretion of our Board of Directors. Because we are a holding company with no material assets other than the stock of our subsidiaries, our ability to pay dividends will depend on the earnings and cash flow of these subsidiaries and their ability to pay dividends to us. If there is a substantial decline in the containership charter market, our earnings would be negatively affected, thus limiting our ability to pay dividends.

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Marshall Islands law generally prohibits the payment of dividends other than from surplus or while a company is insolvent or would be rendered insolvent upon the payment of such dividends. Dividends may be declared in conformity with applicable law by, and at the discretion of, our Board of Directors at any regular or special meeting. Dividends may be declared and paid in cash, stock or other property of the Company.

The Series B Preferred Shares paid dividends in-kind until January 29, 2019 at a rate of 5% per annum. From January 29, 2019 to January 29, 2021, the dividend rate on the Series B Preferred Shares was set to increase to 12% per annum and to 14% per annum thereafter. On June 10, 2019, the Board of Directors agreed to redeem approximately $11.7 million of the Series B Preferred Shares with a simultaneous reduction of the dividend rate to 8% per annum until January 29, 2021, after which date it will increase to 14% per annum, payable only in cash. From January 29, 2019 to June 19, 2019, the Series B Preferred Shares carried a dividend rate of 12% per annum. Cash dividends are declared at each quarter and actual payments are made within the following quarter. In addition, if a cash dividend is paid on the Company's common stock after January 29, 2019, the holders of Series B Preferred Shares shall receive an additional cash dividend in an amount equal to 40% of the common stock dividend it would have received on an as-converted basis. The Series B Preferred Shares can be converted at the option of their holders at any time, and at the option of the Company only if certain share price and liquidity milestones are met. Each Series B Preferred Share is convertible into common stock at an initial conversion price of $15.58 (subject to adjustment, including upon a default). The Series B Preferred Shares are redeemable in cash by the Company at any time after the fifth anniversary of the original issue date, i.e. January 29, 2019. Holders of the Series B Preferred Shares may require the Company to redeem their shares only upon the occurrence of certain corporate events. For each of the years ended December 31, 2017 and 2018, the Company declared four consecutive dividends totaling $1.81 million and $1.34 million, respectively, all of which were paid in-kind. For the year ended December 31, 2019 the Company declared dividends of $1.27 million, of which $0.08 million were paid in-kind, $1.03 million were paid in cash during 2019 and another $0.16 million were accrued as of December 31, 2019 and were paid in cash in the first quarter of 2020. In addition, $0.50 million of preferred deemed dividends were recorded as a result of the redemption of $11.7 million of the Series B Preferred Shares, representing the difference between (1) the fair value of the consideration transferred to the holders of the Series B Preferred Shares (comprising the cash payment offered) and (2) the carrying amount of the Series B Preferred Shares before the redemption (net of issuance costs).

B. Significant Changes

In January 2020, M/V "EM Oinousses" experienced an engine room fire while sailing off Mozambique carrying empty containers. The fire was extinguished without any injuries to the crew but the vessel experienced damage. The vessel is currently undergoing evaluation for the type of repairs required and is idle during the evaluations. It is expected that the Company's insurance will cover the majority of the costs.  It is possible that the vessel may be scrapped after the insurance process is completed.

On February 24, 2020, we signed a contract to sell M/V "Manolis P", a 1,452 teu vessel, built in 1995 for scrap. The vessel reached her destination port on April 7, 2020, but so far has not been delivered to the buyers due to Coronavirus restrictions and port lockdowns in the territory of arrival (Alang, India). The scrap price has dropped since the date of the agreement to sell the M/V Manolis P, and the buyers are now seeking to terminate the agreement on the basis that timely delivery did not occur.  We are in the process of seeking a settlement with the buyers.

In April 2020, we entered into one interest rate swap with Eurobank for a notional amount of $30.0 million, in order to manage interest costs and the risk associated with changing interest rates of the Company's loans. Under the terms of the swap, Eurobank makes a quarterly payment to the Company equal to the 3-month LIBOR while the Company pays a fixed rate of 0.78% based on the notional amount. The swap is effective from April 24, 2020 until April 24, 2025.

No other significant events occurred after December 31, 2019.

Item 9. The Offer and Listing

A. Offer and Listing Details

The trading market for shares of our common stock is the Nasdaq Capital Market, on which our shares have traded under the symbol "ESEA" since June 26, 2015.

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B. Plan of Distribution

Not Applicable.

C. Markets

The trading market for shares of our common stock is the Nasdaq Capital Market, on which our shares have traded under the symbol "ESEA" since June 26, 2015.  Our shares began trading on the Nasdaq Global Market on January 31, 2007 and on the Nasdaq Global Select Market on January 1, 2008, and have traded on the Nasdaq Capital Market since June 26, 2015.  Prior thereto, our shares traded on the OTCBB under the symbol "ESEAF.OB" until October 5, 2006 and then under the symbol "EUSEF.OB" until January 30, 2007.

D. Selling Shareholders

Not Applicable.

E. Dilution

Not Applicable.

F. Expenses of the Issue

Not Applicable.

Item 10. Additional Information

A. Share Capital

Not Applicable.

B. Memorandum and Articles of Association

Amended and Restated Articles of Incorporation and Bylaws, as amended

Our current amended and restated articles of incorporation were filed with the SEC as Exhibit 1.1 (Amended and Restated Articles of Incorporation) to our Annual Report on Form 20-F on May 27, 2011, and our current bylaws, as amended, were filed with the SEC as Exhibits 1.2 (Bylaws) and 1.4 (Amendment to Bylaws) to our Annual Report on Form 20-F on May 28, 2010.

Purpose

Our purpose, as stated in our amended and restated articles of incorporation, is to engage in any lawful act or activity for which corporations may now or hereafter be organized under the Business Corporations Act of the Marshall Islands, or the BCA.

Authorized Capitalization

Under our amended and restated articles of incorporation, our authorized capital stock consists of 200,000,000 shares of common stock, par value $0.03 per share and 20,000,000 shares of preferred stock par value $0.01 per share. All of our shares of stock are in registered form.

Common Stock

As of April 15, 2020, we are authorized to issue up to 200,000,000 shares of common stock, par value $0.03 per share, of which there are 5,600,259 shares issued and outstanding (taking into effect the 1-for-8 reverse stock split). Each outstanding share of common stock is entitled to one vote, either in person or by proxy, on all matters that may be voted upon by their holders at meetings of the shareholders. Holders of our common stock (i) have equal ratable rights to dividends from funds legally available therefore, if declared by the Board of Directors; (ii) are entitled to share ratably in all of our assets available for distribution upon liquidation, dissolution or winding up; and (iii) do

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not have preemptive, subscription or conversion rights or redemption or sinking fund provisions. All issued shares of our common stock when issued will be fully paid for and non-assessable.

Preferred Stock

As of April 15, 2020, we are authorized to issue up to 20,000,000 shares of preferred stock, par value $0.01 per share, of which there are 8,000 shares issued and outstanding. The preferred stock may be issued in one or more series and our Board of Directors, without further approval from our shareholders, is authorized to fix the dividend rights and terms, conversion rights, voting rights, redemption rights, liquidation preferences and other rights and restrictions relating to any series. Issuances of preferred stock, while providing flexibility in connection with possible financings, acquisitions and other corporate purposes, could, among other things, adversely affect the voting power of the holders of our common stock. On January 27, 2014, the Company entered into an agreement to sell 25,000 shares of its Series B Preferred Shares to a fund managed by TCP and 5,700 shares to Preferred Friends Investment Company Inc., an affiliate of the Company, for net proceeds of approximately $29 million. These shares were issued on January 29, 2014. Additional Series B Convertible Preferred Shares were issued when dividends to preferred shares were paid in-kind (see below).

At the spin-off date Euroseas distributed EuroDry Series B Preferred Shares to holders of Euroseas' Series B Preferred Shares in exchange for a number of such Euroseas Series B Preferred Shares, representing 50% of Euroseas Series B Preferred Stock, i.e., $14,500,000 of the initial preferred shares amount of the Company and $3,692,131 of dividends paid in kind. Euroseas contributed to EuroDry its interests in seven of its drybulk subsidiaries and related intercompany debts and obligations in exchange for approximately 2,254,830 of EuroDry common shares and 19,042 of EuroDry Series B Preferred Shares (representing all of EuroDry's issued and outstanding stock as of that time). Euroseas made a special dividend of 100% of EuroDry's outstanding common shares to holders of Euroseas' common stock as of the record date of the special dividend. In addition, Euroseas distributed 100% of EuroDry's Series B Preferred Shares to holders of Euroseas' Series B Preferred Shares as described above.

The Series B Preferred Shares paid dividends quarterly in arrears in-kind until January 29, 2019 at a rate 5% per annum. The first payment of interest was on March 31, 2014. The dividend rate was set to increase to 12% for the two years following January 29, 2019 and to 14% thereafter, payable only in cash. Cash dividends are declared at each quarter and actual payments are made within the following quarter. If a cash dividend is paid on the Company's common stock after January 29, 2019, the holders of Series B Preferred Shares shall receive an additional cash dividend in an amount equal to 40% of the common stock dividend it would have received on an as-converted basis. The Series B Preferred Shares can be converted at the option of their holders at any time, and at the option of the Company only if certain share price and liquidity milestones are met.  Each Series B Preferred Share is convertible into common stock at an initial conversion price of $15.58 (subject to adjustment, including upon a default). Holders of the Series B Preferred Shares may require the Company to redeem their shares only upon the occurrence of certain corporate events.

On June 10, 2019, the Company redeemed $11.7 million of value of its outstanding Series B Preferred Shares with a simultaneous reduction of the annual dividend rate to 8% for the $8 million value of preferred shares remaining outstanding until January 29, 2021. After this date, the annual dividend rate will increase to 14%, and will be payable in cash. From January 29, 2019 to June 11, 2019, the Series B Preferred Shares carried a dividend rate of 12% per annum.

Subject to certain ownership thresholds, holders of Series B Preferred Shares have the right to appoint one director to the Company's board of directors and TCP also has consent rights over certain corporate actions including authorizing, creating or issuing any class or series of capital stock that runs senior or in parity with the Series B Preferred Shares, engaging in certain transactions with affiliates or engaging in transactions that increase the leverage of the Company more than a certain level. However, following the partial redemption on June 10, 2019 mentioned above, the holders' of Series B Preferred Shares right to appoint a director and consent rights terminated. Christian Donohue, who was initially appointed as Director by the holders of the Series B Preferred Shares, was appointed to serve as a Director by the Board of Directors in July 2019. In addition, the holders of Series B Preferred Shares will vote as one class with the Company's common stock on all matters on which shareholders are entitled to vote, with each Series B Preferred Share having a number of votes equal to 50% of the numbers of shares of common stock of the Company into which such Series B Preferred Share would be convertible on the applicable record date.

The rights and privileges of the Series B Preferred Shares are set forth in the Amended and Restated Statement of Designation of the Rights, Preferences and Privileges of the Series B Convertible Preferred Shares, a copy of which is included as Exhibit 4.28 hereto and is incorporated by reference herein.

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Directors

Our directors are elected by a plurality of the votes cast at a meeting of the shareholders by the holders of shares entitled to vote in the election. Cumulative voting may not be used to elect directors.

Our Board of Directors must consist of at least three directors, such number to be determined by the Board of Directors by a majority vote of the entire Board of Directors from time to time. Shareholders may change the number of our directors only by an affirmative vote of the holders of the majority of the outstanding shares of capital stock entitled to vote generally in the election of directors.

Our Board of Directors is divided into three classes as set out below in "Classified Board of Directors." Each director is elected to serve until the third succeeding annual meeting after his election and until his successor shall have been elected and qualified, except in the event of his death, resignation or removal.

Our bylaws were amended on March 25, 2010 in connection with our Joint Venture in order to ensure that for so long as the percentage of ownership interest of Eton Park and Rhône (considered separately) in us, is (i) greater than 35%, the Joint Venture affiliates of Eton Park or Rhône, as applicable, together with their respective permitted transferees, shall each be entitled to select two (2) directors for appointment to our Board of Directors or (ii) between 7.5% and 35%, the Joint Venture affiliates of Eton Park or Rhône, as applicable, together with their respective permitted transferees shall each be entitled to select one (1) director for appointment to the Board of Directors, in each case in addition to the current seven seats on the Board of Directors and adjusted in proportion to any change in the total number of seats on the Board of Directors.

Shareholder Meetings

Under our bylaws, as amended, annual shareholder meetings will be held at a time and place selected by our Board of Directors. The meetings may be held in or outside of the Marshall Islands. Special meetings may be called at any time by the Board of Directors, the Chairman of the Board or by the President. Notice of every annual and special meeting of shareholders must be given to each shareholder of record entitled to vote at least 15 but no more than 60 days before such meeting.

Dissenters' Rights of Appraisal and Payment

Under the BCA, our shareholders have the right to dissent from various corporate actions, including any merger or consolidation or sale of all or substantially all of our assets not made in the usual course of our business, and receive payment of the fair value of their shares. In the event of any further amendment of our amended and restated articles of incorporation, a shareholder also has the right to dissent and receive payment for his or her shares if the amendment alters certain rights in respect of those shares. The dissenting shareholder must follow the procedures set forth in the BCA to receive payment. In the event that we and any dissenting shareholder fail to agree on a price for the shares, the BCA procedures involve, among other things, the institution of proceedings in the high court of the Republic of the Marshall Islands or in any appropriate court in any jurisdiction in which the Company's shares are primarily traded on a local or national securities exchange.

Shareholders Derivative Actions

Under the BCA, any of our shareholders may bring an action in our name to procure a judgment in our favor, also known as a derivative action, provided that the shareholder bringing the action is a holder of common stock both at the time the derivative action is commenced and at the time of the transaction to which the action relates.

Limitations on Liability and Indemnification of Officers and Directors

The BCA authorizes corporations to limit or eliminate the personal liability of directors and officers to corporations and their shareholders for monetary damages for breaches of directors' fiduciary duties. Our bylaws, as amended, include a provision that eliminates the personal liability of directors for monetary damages for actions taken as a director to the fullest extent permitted by law.

Our bylaws, as amended, provide that we must indemnify our directors and officers to the fullest extent authorized by law. We are also expressly authorized to carry directors' and officers' insurance providing indemnification for our directors, officers and certain employees for some liabilities. We believe that these indemnification provisions and insurance are useful to attract and retain qualified directors and executive officers.

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The limitation of liability and indemnification provisions in our bylaws, as amended, may discourage shareholders from bringing a lawsuit against directors for breach of their fiduciary duty. These provisions may also have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our shareholders. In addition, your investment may be adversely affected to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.

There is currently no pending material litigation or proceeding involving any of our directors, officers or employees for which indemnification is sought.

Anti-takeover Effect of Certain Provisions of our Amended and Restated Articles of Incorporation and Bylaws, as Amended

Several provisions of our amended and restated articles of incorporation and bylaws, as amended, which are summarized below, may have anti-takeover effects. These provisions are intended to avoid costly takeover battles, lessen our vulnerability to a hostile change in control and enhance the ability of our Board of Directors to maximize shareholder value in connection with any unsolicited offer to acquire us. However, these anti-takeover provisions, which are summarized below, could also discourage, delay or prevent (1) the merger or acquisition of our company by means of a tender offer, a proxy contest or otherwise that a shareholder may consider in its best interest and (2) the removal of incumbent officers and directors.

Blank Check Preferred Stock

Under the terms of our amended and restated articles of incorporation, our Board of Directors has authority, without any further vote or action by our shareholders, to issue up to 20,000,000 shares of blank check preferred stock. Our Board of Directors may issue shares of preferred stock on terms calculated to discourage, delay or prevent a change in control of our company or the removal of our management.

Classified Board of Directors

Our amended and restated articles of incorporation provide for the division of our Board of Directors into three classes of directors, with each class as nearly equal in number as possible, serving staggered, three-year terms. Approximately one-third of our Board of Directors will be elected each year. This classified board provision could discourage a third party from making a tender offer for our shares or attempting to obtain control of us. It could also delay shareholders who do not agree with the policies of our Board of Directors from removing a majority of our Board of Directors for two years.

Election and Removal of Directors

Our amended and restated articles of incorporation prohibit cumulative voting in the election of directors. Our bylaws, as amended, require parties other than the Board of Directors to give advance written notice of nominations for the election of directors. Our bylaws, as amended, also provide that our directors may be removed only for cause and by either action of the Board of Directors or the affirmative vote of the holders of 51% of the issued and outstanding voting shares of the Corporation. These provisions may discourage, delay or prevent the removal of incumbent officers and directors.

Limited Actions by Shareholders

Our amended and restated articles of incorporation and our bylaws, as amended, provide that any action required or permitted to be taken by our shareholders must be effected at an annual or special meeting of shareholders or by the unanimous written consent of our shareholders. Our amended and restated articles of incorporation and our bylaws, as amended, provide that, subject to certain exceptions, our Board of Directors, our Chairman of the Board or by the President and the business transacted at the special meeting is limited to the purposes stated in the notice. Accordingly, a shareholder may not call a special meeting and shareholder consideration of a proposal may be delayed until the next annual meeting.

Advance Notice Requirements for Shareholder Proposals and Director Nominations

Our bylaws, as amended, provide that shareholders seeking to nominate candidates for election as directors or to bring business before an annual meeting of shareholders must provide timely notice of their proposal in writing to the corporate secretary. Generally, to be timely, a shareholder's notice must be received at our principal executive

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offices not less than 150 days nor more than 180 days prior to the one-year anniversary of the immediately preceding annual meeting of shareholders. Our bylaws, as amended, also specify requirements as to the form and content of a shareholder's notice. These provisions may impede shareholders' ability to bring matters before an annual meeting of shareholders or make nominations for directors at an annual meeting of shareholders.

Certain Business Combinations

Our amended and restated articles of incorporation also prohibit us, subject to several exclusions, from engaging in any "business combination" with any interested shareholder for a period of three years following the date the shareholder became an interested shareholder.

Shareholders' Rights Plan

On May 10, 2019, we adopted a shareholder rights agreement effective as of May 27, 2019 and declared a dividend distribution of one preferred stock purchase right to purchase one one-thousandth of our Series C Participating Preferred Stock for each outstanding share of our common stock, to shareholders of record at the close of business on May 27, 2019. Each right entitles the registered holder, upon the occurrence of certain events, to purchase from us one one-thousandth of a share of Series C Participating Preferred Stock at an exercise price of $3.00, subject to adjustment. The rights will expire on the earliest of (i) May 31, 2029 or (ii) redemption or exchange of the rights. The shareholder rights agreement was designed to enable us to protect shareholder interests in the event that an unsolicited attempt is made for a business combination with or takeover of the Company. We believe that the shareholder rights agreement should enhance the board of directors' negotiating power on behalf of shareholders in the event of a coercive offer or proposal. We are not currently aware of any such offers or proposals and we adopted the plan as a matter of prudent corporate governance. This shareholder rights agreement replaced our existing, substantially similar shareholder rights agreement which expired on May 27, 2019.

C. Material Contracts

We have a number of credit facilities with commercial banks and related party loans. For a discussion of our facilities, please see the section of this annual report entitled "Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Debt Financing", and Note 8 of our attached financial statements.

We are a party to a registration rights agreement with Friends. For a discussion of these agreements, please see the section of this annual report entitled "Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions." Furthermore, we are a party to a registration rights agreement with Synergy Holdings Limited, TCP and a registration obligation agreement with two funds managed by TCP. For a discussion of these agreements, please see the section of this annual report entitled "Item 3—Key Information—D. Risk Factors—Company Risk Factors—Future sales of our stock could cause the market price of our common stock to decline."

We are also a party to an agreement with Synergy Holdings Limited which specifies that if the 12-month New ConTex index for a 4,250 TEU vessel (as published on https://www.vhbs.de/index or any successor website maintained by the Hamburg and Bremen Shipbrokers' Association) (the "Index Value") is higher on November 16, 2020 at 4:00 p.m. New York time than the Index Value on November 15, 2019 at 4:00 p.m. New York time, then, on November 16, 2020, we shall issue to Synergy Holdings Limited, $500,000 divided by the 20-day volume weighted average price of the Company's common shares calculated on November 16, 2020 at 4:00 p.m. New York time.

There are no other material contracts, other than contracts entered into in the ordinary course of business, to which the Company or any of its subsidiaries is a party.

D. Exchange Controls

Under Marshall Islands law, there are currently no restrictions on the export or import of capital, including foreign exchange controls or restrictions that affect the remittance of dividends, interest or other payments to non-resident holders of our shares.

E. Taxation

The following is a discussion of the material Marshall Islands, Liberian and United States federal income tax considerations applicable to us and U.S. Holders and Non-U.S. Holders, each as discussed below, of our common stock.

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Marshall Islands Tax Considerations

We are incorporated in the Marshall Islands. Under current Marshall Islands law, we are not subject to tax on income or capital gains, and no Marshall Islands withholding tax will be imposed upon payments of dividends by us to holders of our common stock that are not residents or domiciled or carrying any commercial activity in the Marshall Islands. The holders of our common stock will not be subject to Marshall Islands tax on the sale or other disposition of such common stock.

Liberian Tax Considerations

Certain of our subsidiaries are incorporated in the Republic of Liberia.  Under the Consolidated Tax Amendments Act of 2010, our Liberian subsidiaries will be deemed non-resident Liberian corporations wholly exempted from Liberian taxation effective as of 1977, and distributions we make to our shareholders will be made free of any Liberian withholding tax.

United States Federal Income Tax

The following are the material United States federal income tax consequences to us of our activities and to U.S. Holders and Non-U.S. Holders, each as defined below, of our common stock. The following discussion of United States federal income tax matters is based on the Code, judicial decisions, administrative pronouncements, and existing and proposed regulations issued by the United States Department of the Treasury, or the Treasury Regulations, all as of the date of this Annual Report, and all of which are subject to change, possibly with retroactive effect. This discussion is also based in part upon Treasury Regulations promulgated under Section 883 of the Code. The discussion below is based, in part, on the description of our business as described in "Business" above and assumes that we conduct our business as described in that section. References in the following discussion to "we" and "us" are to Euroseas and its subsidiaries on a consolidated basis.

United States Federal Income Taxation of Our Company

Taxation of Operating Income: In General

Unless exempt from United States federal income taxation under the rules discussed below, a foreign corporation is subject to United States federal income taxation in respect of any income that is derived from the use of vessels, from the hiring or leasing of vessels for use on a time, voyage or bareboat charter basis, from the participation in a pool, partnership, strategic alliance, joint operating agreement, code sharing arrangement or other joint venture it directly or indirectly owns or participates in that generates such income, or from the performance of services directly related to those uses, which we refer to as "shipping income," to the extent that the shipping income is derived from sources within the United States. For these purposes, 50% of shipping income that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States exclusive of certain U.S. territories and possessions constitutes income from sources within the United States, which we refer to as "U.S.-source shipping income."

Shipping income attributable to transportation that both begins and ends in the United States is considered to be 100% from sources within the United States. We are not permitted by law to engage in transportation that produces income which is considered to be 100% from sources within the United States.

Shipping income attributable to transportation exclusively between non-United States ports will be considered to be 100% derived from sources outside the United States. Shipping income derived from sources outside the United States will not be subject to any United States federal income tax.

In the absence of exemption from tax under Section 883 of the Code, our gross U.S.-source shipping income would be subject to a 4% tax imposed without allowance for deductions as described below.

Exemption of Operating Income from United States Federal Income Taxation

Under Section 883 of the Code and the Treasury Regulations thereunder, we will be exempt from United States federal income taxation on our U.S.-source shipping income if:

• we are organized in a foreign country, or our country of organization, that grants an "equivalent exemption" to corporations organized in the United States; and

either

• more than 50% of the value of our stock is owned, directly or indirectly, by "qualified shareholders," individuals who are "residents" of our country of organization or of another foreign country that grants an "equivalent exemption" to corporations organized in the United States, which we refer to as the "50% Ownership Test," or

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• our stock is "primarily and regularly traded on an established securities market" in our country of organization, in another country that grants an "equivalent exemption" to United States corporations, or in the United States, which we refer to as the "Publicly-Traded Test."

The Marshall Islands, Liberia and Panama, the jurisdictions where we and our ship-owning subsidiaries were incorporated during 2019, each grants an "equivalent exemption" to United States corporations. Therefore, we will be exempt from United States federal income taxation with respect to our U.S.-source shipping income if we satisfy either the 50% Ownership Test or the Publicly-Traded Test.

The Treasury Regulations provide, in pertinent part, that the stock of a foreign corporation will be considered to be "primarily traded" on an established securities market in a country if the number of shares of each class of stock that is traded during the taxable year on all established securities markets in that country exceeds the number of shares in each such class that is traded during that year on established securities markets in any other single country. Our common stock is "primarily traded" on the Nasdaq Capital Market, which is an established securities market for these purposes.

The Treasury Regulations also require that our stock be "regularly traded" on an established securities market.  Under the Treasury Regulations, our common shares will be considered to be "regularly traded" on an established securities market if one or more classes of our stock representing more than 50% of our outstanding stock, by both total combined voting power of all classes of stock entitled to vote and total value, are listed on such market, to which we refer as the Listing Threshold. Our common stock, which is listed on the Nasdaq Capital Market and is our only class of publicly-traded stock, constituted more than 50% of our outstanding shares by value for most of the 2019 taxable year, and accordingly, we believe that we satisfied the listing threshold for the 2019 taxable year.

It is further required that with respect to each class of stock relied upon to meet the Listing Threshold, (i) such class of stock is traded on the market, other than in minimal quantities, on at least 60 days during the taxable year or one-sixth of the days in a short taxable year, or the Trading Frequency Test; and (ii) the aggregate number of shares of such class of stock traded on such market during the taxable year is at least 10% of the average number of shares of such class of stock outstanding during such year or as appropriately adjusted in the case of a short taxable year, or the Trading Volume Test. The Company currently satisfies and anticipates that it will continue to satisfy the Trading Frequency Test and Trading Volume Test. Even if this were not the case, the Treasury Regulations provide that the Trading Frequency Test and Trading Volume Tests will be deemed satisfied if, as is the case with our common shares, such class of stock is traded on an established securities market in the United States and such class of stock is regularly quoted by dealers making a market in such stock.

Notwithstanding the foregoing, the Treasury Regulations provide, in pertinent part, that a class of stock will not be considered to be "regularly traded" on an established securities market for any taxable year during which 50% or more of the vote and value of the outstanding shares of such class are owned, actually or constructively under specified attribution rules, on more than half the days during the taxable year by persons who each own 5% or more of the vote and value of such class of outstanding shares, to which we refer as the "5% Override Rule."

For purposes of being able to determine the persons who actually or constructively own 5% or more of the vote and value of our common shares, or 5% Shareholders, the Treasury Regulations permit us to rely on those persons that are identified on Schedule 13G and Schedule 13D filings with the United States Securities and Exchange Commission, or the SEC, as owning 5% or more of our common shares. The Treasury Regulations further provide that an investment company which is registered under the Investment Company Act of 1940, as amended, will not be treated as a 5% Shareholder for such purposes.

In the event the 5% Override Rule is triggered, the Treasury Regulations provide that the 5% Override Rule will nevertheless not apply if we can establish that within the group of 5% Shareholders, there are sufficient qualified shareholders for purposes of Section 883 to preclude non-qualified shareholders in such group from owning 50% or more of our common shares for more than half the number of days during the taxable year.  In order to benefit from this exception to the 5% Override Rule, the Company must satisfy certain substantiation requirements in regards to the identity of its 5% Shareholders.

We believe that we were subject to the Five Percent Override Rule, but nonetheless satisfied the Publicly-Traded Test for the 2019 taxable year because our nonqualified 5% Shareholders did not own more than 50% of our common stock for more than half of the days during the taxable year. We intend to take this position on our 2019 U.S. federal income tax returns.

Taxation in Absence of Exemption

To the extent that the benefits of Section 883 are unavailable for any taxable year, our U.S.-source shipping income, to the extent not considered to be "effectively connected" with the conduct of a United States trade or business,

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as described below, was subject to a 4% tax imposed by Section 887 of the Code on a gross basis, without the benefit of deductions which we refer to as the "4% gross basis tax regime". Since under the sourcing rules described above, no more than 50% of our shipping income is treated as being derived from United States sources, the maximum effective rate of United States federal income tax on our shipping income will not exceed 2% under the 4% gross basis tax regime.

To the extent the benefits of the Section 883 of the Code are unavailable and our U.S.-source shipping income is considered to be "effectively connected" with the conduct of a United States trade or business, as described below, any such "effectively connected" U.S.-source shipping income, net of applicable deductions, would be subject to the United States federal corporate income tax currently imposed at rates of up to 21%. In addition, we may be subject to the 30% United States federal "branch profits" taxes on earnings effectively connected with the conduct of such trade or business, as determined after allowance for certain adjustments, and on certain interest paid or deemed paid attributable to the conduct of such United States trade or business.

Our U.S.-source shipping income would be considered "effectively connected" with the conduct of a United States trade or business only if:

• We have, or are considered to have, a fixed place of business in the United States involved in the earning of shipping income; and

• substantially all of our U.S.-source shipping income is attributable to regularly scheduled transportation, such as the operation of a vessel that follows a published schedule with repeated sailings at regular intervals between the same points for voyages that begin or end in the United States.

We do not currently have, intend to have, or permit circumstances that would result in our having, any vessel sailing to or from the United States on a regularly scheduled basis.  Based on the foregoing and on the expected mode of our shipping operations and other activities, it is anticipated that none of our United States source shipping income will be "effectively connected" with the conduct of a United States trade or business for any taxable year.

United States Taxation of Gain on Sale of Vessels

Regardless of whether we qualify for exemption under Section 883 of the Code, we will not be subject to United States federal income taxation with respect to gain realized on a sale of a vessel, provided the sale is considered to occur outside of the United States under United States federal income tax principles. In general, a sale of a vessel will be considered to occur outside of the United States for this purpose if title to the vessel, and risk of loss with respect to the vessel, pass to the buyer outside of the United States. It is expected that any sale of a vessel by us will be considered to occur outside of the United States.

United States Federal Income Taxation of U.S. Holders

As used herein, the term "U.S. Holder" means a beneficial owner of common stock that is a United States citizen or resident, United States corporation or other United States entity taxable as a corporation, an estate the income of which is subject to United States federal income taxation regardless of its source, or a trust if a court within the United States is able to exercise primary jurisdiction over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust.

This discussion does not purport to deal with the tax consequences of owning common stock to all categories of investors, some of which, such as dealers in securities, investors whose functional currency is not the United States dollar, persons required to recognize income for United States federal income tax purposes no later than when such income is reported on an "applicable financial statement" and investors that own, actually or under applicable constructive ownership rules, 10% or more of our common stock, may be subject to special rules. This discussion deals only with holders who hold the common stock as a capital asset. You are encouraged to consult your own tax advisors concerning the overall tax consequences arising in your own particular situation under United States federal, state, local or foreign law of the ownership of common stock. This discussion does not address the tax consequences of owning our preferred stock.

If a partnership holds our common stock, the tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership. If you are a partner in a partnership holding our common stock, you are encouraged to consult your tax advisor.

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Distributions

Subject to the discussion of passive foreign investment companies below, any distributions made by us with respect to our common stock to a U.S. Holder will generally constitute dividends, which may be taxable as ordinary income or "qualified dividend income" as described in more detail below, to the extent of our current or accumulated earnings and profits, as determined under United States federal income tax principles. Distributions in excess of our earnings and profits will be treated first as a nontaxable return of capital to the extent of the U.S. Holder's tax basis in his common stock on a dollar-for-dollar basis and thereafter as capital gain. Because we are not a United States corporation, U.S. Holders that are corporations generally will not be entitled to claim a dividend received deduction with respect to any distributions they receive from us. Dividends paid with respect to our common stock will generally be treated as "passive category income" or, in the case of certain types of U.S. Holders, "general category income" for purposes of computing allowable foreign tax credits for United States foreign tax credit purposes.

Dividends paid on our common stock to a U.S. Holder who is an individual, trust or estate, or a U.S. Individual Holder, will generally be treated as "qualified dividend income" that is taxable to such U.S. Individual Holders at preferential tax rates provided that (1) we are not a passive foreign investment company for the taxable year during which the dividend is paid or the immediately preceding taxable year (which we do not believe we are, have been or will be), (2) our common stock is readily tradable on an established securities market in the United States (such as the Nasdaq Capital Market, on which our common stock is listed), (3) the U.S. Individual Holder has owned the common stock for more than 60 days in the 121-day period beginning 60 days before the date on which the common stock becomes ex-dividend, and (4) the U.S. Individual Holder is not under an obligation (whether pursuant to a short sale or otherwise) to make payments with respect to positions in similar or related property. There is no assurance that any dividends paid on our common stock will be eligible for these preferential rates in the hands of a U.S. Individual Holder. Dividends paid on our stock prior to the date on which our common stock became listed on the Nasdaq Capital Market were not eligible for these preferential rates.  Any dividends paid by us which are not eligible for these preferential rates will be taxed as ordinary income to a U.S. Individual Holder.

Special rules may apply to any "extraordinary dividend" generally, a dividend paid by us in an amount which is equal to or in excess of ten percent of a shareholder's adjusted tax basis (or fair market value in certain circumstances) in a share of our common stock. If we pay an "extraordinary dividend" on our common stock that is treated as "qualified dividend income," then any loss derived by a U.S. Individual Holder from the sale or exchange of such common stock will be treated as long-term capital loss to the extent of such dividend.

Sale, Exchange or other Disposition of Common Stock

Assuming we do not constitute a passive foreign investment company for any taxable year, a U.S. Holder generally will recognize taxable gain or loss upon a sale, exchange or other disposition of our common stock in an amount equal to the difference between the amount realized by the U.S. Holder from such sale, exchange or other disposition and the U.S. Holder's tax basis in such stock. Such gain or loss will generally be treated as long-term capital gain or loss if the U.S. Holder's holding period is greater than one year at the time of the sale, exchange or other disposition. Such capital gain or loss will generally be treated as U.S.-source income or loss, as applicable, for United States foreign tax credit purposes. A U.S. Holder's ability to deduct capital losses is subject to certain limitations.

Passive Foreign Investment Company Status and Significant Tax Consequences

Special United States federal income tax rules apply to a U.S. Holder that holds stock in a foreign corporation classified as a passive foreign investment company, or PFIC, for United States federal income tax purposes. In general, we will be treated as a PFIC with respect to a U.S. Holder if, for any taxable year in which such holder held our common stock, either:

• at least 75% of our gross income for such taxable year consists of passive income (e.g., dividends, interest, capital gains and rents derived other than in the active conduct of a rental business); or

• at least 50% of the average value of our assets during such taxable year produce, or are held for the production of, passive income, which we refer to as "passive assets".

For purposes of determining whether we are a PFIC, we will be treated as earning and owning our proportionate share of the income and assets, respectively, of any of our subsidiary corporations in which we own at least 25% of the value of the subsidiary's stock. Income earned, or deemed earned, by us in connection with the performance of services would not constitute passive income. By contrast, rental income would generally constitute

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"passive income" unless we were treated under specific rules as deriving our rental income in the active conduct of a trade or business.

Based on our current operations and future projections, we do not believe that we are, nor do we expect to become, a PFIC with respect to any taxable year. Although there is no legal authority directly on point, and we are not relying upon an opinion of counsel on this issue, our belief is based principally on the position that, for purposes of determining whether we are a PFIC, the gross income we derive or are deemed to derive from the time chartering and voyage chartering activities of our wholly-owned subsidiaries should constitute services income, rather than rental income. Correspondingly, such income should not constitute passive income, and the assets that we or our wholly-owned subsidiaries own and operate in connection with the production of such income, in particular, the vessels, should not constitute passive assets for purposes of determining whether we are a PFIC. 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 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.  Moreover, in the absence of any legal authority specifically relating to the statutory provisions governing PFICs, the IRS or a court could disagree with our position. In addition, although we intend to conduct our affairs in a manner to avoid being classified as a PFIC with respect to any taxable year, there can be no assurance that the nature of our operations will not change in the future.

As discussed more fully below, if we were to be treated as a PFIC for any taxable year which included a U.S. Holder's holding period in our common stock, then such U.S. Holder would be subject to different United States federal income taxation rules depending on whether the U.S. Holder makes an election to treat us as a "qualified electing fund," which election we refer to as a "QEF election". As an alternative to making a QEF election, a U.S. Holder should be able to make a "mark-to-market" election with respect to our common stock, as discussed below.  In addition, if we were to be treated as a PFIC, a U.S. Holder of our common stock would be required to file annual information returns with the IRS.

In addition, if a U.S. Holder owns our common stock and we are a PFIC, such U.S. Holder must generally file IRS Form 8621 with the IRS.

U.S. Holders Making a Timely QEF Election

A U.S. Holder who makes a timely QEF election with respect to our common stock, or an Electing Holder, would report for United States federal income tax purposes his pro rata share of our ordinary earnings and our net capital gain, if any, for our taxable year that ends with or within the taxable year of the Electing Holder.  Our net operating losses or net capital losses would not pass through to the Electing Holder and will not offset our ordinary earnings or net capital gain reportable to the Electing Holder in subsequent years (although such losses would ultimately reduce the gain, or increase the loss, if any, recognized by the Electing Holder on the sale of his common stock).  Distributions received from us by an Electing Holder are excluded from the Electing Holder's gross income to the extent of the Electing Holder's prior inclusions of our ordinary earnings and net capital gain. The Electing Holder's tax basis in his common stock would be increased by any amount included in the Electing Holder's income. Distributions received by an Electing Holder, which are not includible in income because they have been previously taxed, would decrease the Electing Holder's tax basis in the common stock.  An Electing Holder would generally recognize capital gain or loss on the sale or exchange of common stock.

U.S. Holders Making a Timely Mark-to-Market Election

A U.S. Holder who makes a timely mark-to-market election with respect to our common stock would include annually in the U.S. Holder's income, as ordinary income, any excess of the fair market value of the common stock at the close of the taxable year over the U.S. Holder's then adjusted tax basis in the common stock. The excess, if any, of the U.S. Holder's adjusted tax basis at the close of the taxable year over the then fair market value of the common stock would be deductible in an amount equal to the lesser of the amount of the excess or the net mark-to-market gains that the U.S. Holder included in income in previous years with respect to the common stock. A U.S. Holder's tax basis in his common stock would be adjusted to reflect any income or loss amount recognized pursuant to the mark-to-market election.  A U.S. Holder would recognize ordinary income or loss on a sale, exchange or other disposition of the common stock; provided, however, that any ordinary loss on the sale, exchange or other disposition may not exceed the net mark-to-market gains that the U.S. Holder included in income in previous years with respect to the common stock.

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U.S. Holders Not Making a Timely QEF Election or Mark-to-Market Election

A U.S. Holder who does not make a timely QEF Election or a timely mark-to-market election, which we refer to as a "Non-Electing Holder", would be subject to special rules with respect to (i) any "excess distribution" (generally, the portion of any distributions received by the Non-Electing Holder on the common stock in a taxable year in excess of 125% of the average annual distributions received by the Non-Electing Holder in the three preceding taxable years, or, if shorter, the Non-Electing Holder's holding period for the common stock), and (ii) any gain realized on the sale or other disposition of the common stock. Under these rules, (i) the excess distribution or gain would be allocated ratably over the Non-Electing Holder's holding period for the common stock; (ii) the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we were a PFIC, would be taxed as ordinary income; and (iii) the amount allocated to each of the other prior taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed tax deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year. If a Non-Electing Holder dies while owning the common stock, the Non-Electing Holder's successor would be ineligible to receive a step-up in the tax basis of that common stock.

United States Federal Income Taxation of "Non-U.S. Holders"

A beneficial owner of common stock (other than a partnership) that is not a U.S. Holder is referred to herein as a "Non-U.S. Holder."

Dividends on Common Stock

Non-U.S. Holders generally will not be subject to United States federal income tax or withholding tax on dividends received from us with respect to our common stock, unless that income is effectively connected with the Non-U.S. Holder's conduct of a trade or business in the United States. If the Non-U.S. Holder is entitled to the benefits of a United States income tax treaty with respect to those dividends, that income is taxable only if it is attributable to a permanent establishment maintained by the Non-U.S. Holder in the United States.

Sale, Exchange or Other Disposition of Common Stock

Non-U.S. Holders generally will not be subject to United States federal income tax or withholding tax on any gain realized upon the sale, exchange or other disposition of our common stock, unless:

• such gain is effectively connected with the Non-U.S. Holder's conduct of a trade or business in the United States, if the Non-U.S. Holder is entitled to the benefits of a United States income tax treaty with respect to that gain, that gain is taxable only if it is attributable to a permanent establishment maintained by the Non-U.S. Holder in the United States; or

• the Non-U.S. Holder is an individual who is present in the United States for 183 days or more during the taxable year of disposition and other conditions are met.

If the Non-U.S. Holder is engaged in a United States trade or business for United States federal income tax purposes, the income from the common stock, including dividends and the gain from the sale, exchange or other disposition of the stock that is effectively connected with the conduct of that trade or business will generally be subject to regular United States federal income tax in the same manner as discussed in the previous section relating to the taxation of U.S. Holders. In addition, in the case of a corporate Non-U.S. Holder, its earnings and profits that are attributable to the effectively connected income, subject to certain adjustments, may be subject to an additional United States federal "branch profits" tax at a rate of 30%, or at a lower rate as may be specified by an applicable United States income tax treaty.

Backup Withholding and Information Reporting

In general, dividend payments, or other taxable distributions, made within the United States to you will be subject to information reporting requirements. Such payments will also be subject to backup withholding tax if a U.S. Individual Holder:

• fails to provide an accurate taxpayer identification number;

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• is notified by the IRS that he failed to report all interest or dividends required to be shown on your United States federal income tax returns; or

• in certain circumstances, fails to comply with applicable certification requirements.

Non-U.S. Holders may be required to establish their exemption from information reporting and backup withholding by certifying their status on an appropriate IRS Form W-8.

If a shareholder sells our common stock to or through a United States office of a broker, the payment of the proceeds is subject to both United States backup withholding and information reporting unless the shareholder certifies that it is a non-U.S. person, under penalties of perjury, or the shareholder otherwise establishes an exemption. If a shareholder sells our common stock through a non-United States office of a non-United States broker and the sales proceeds are paid outside the United States then information reporting and backup withholding generally will not apply to that payment. However, United States information reporting requirements, but not backup withholding, will apply to a payment of sales proceeds, even if that payment is made outside the United States, if a shareholder sells our common stock through a non-United States office of a broker that is a United States person or has some other contacts with the United States.

Backup withholding is not an additional tax. Rather, a shareholder generally may obtain a refund of any amounts withheld under backup withholding rules that exceed the shareholder's United States federal income tax liability by filing a refund claim with the IRS.

Individuals who are U.S. Holders (and to the extent specified in the applicable Treasury Regulations, certain individuals who are Non-U.S. Holders and certain United States entities) who hold "specified foreign financial assets" (as defined in Section 6038D of the Code and the applicable Treasury Regulations) are required to file IRS Form 8938 (Statement of Specified Foreign Financial Assets) with information relating to each such asset for each taxable year in which the aggregate value of all such assets exceeds $75,000 at any time during the taxable year or $50,000 on the last day of the taxable year.  Specified foreign financial assets would include, among other assets, our common stock, unless the common stock were held through an account maintained with a United States financial institution.  Substantial penalties apply to any failure to timely file IRS Form 8938, unless the failure is shown to be due to reasonable cause and not due to willful neglect.  Additionally, the statute of limitations on the assessment and collection of United States federal income tax with respect to a taxable year for which the filing of IRS Form 8938 is required may not close until three years after the date on which IRS Form 8938 is filed.  U.S. Holders (including United States entities) and Non-U.S. Holders are encouraged to consult their own tax advisors regarding their reporting obligations under Section 6038D of the Code.

We encourage each shareholder to consult with his, her or its own tax advisor as to particular tax consequences to it of holding and disposing of our common stock, including the applicability of any state, local or foreign tax laws and any proposed changes in applicable law.

F. Dividends and paying agents

Not Applicable.

G. Statement by experts

Not Applicable.

H. Documents on display

We file reports and other information with the SEC. These materials, including this annual report and the accompanying exhibits, may be inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549, or from the SEC's website: http://www.sec.gov. You may obtain information on the operation of the public reference room by calling 1 (800) SEC-0330 and you may obtain copies at prescribed rates.

I. Subsidiary Information

Not Applicable.

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Item 11. Quantitative and Qualitative Disclosures about Market Risk

In the normal course of business, we face risks that are non-financial or non-quantifiable. Such risks principally include country risk, credit risk and legal risk. Our operations may be affected from time to time in varying degrees by these risks but their overall effect on us is not predictable. We have identified the following market risks as those which may have the greatest impact upon our operations:

Interest Rate Fluctuation Risk

The international containership shipping industry is capital-intensive, requiring significant amounts of investment. Much of this investment is financed by long term debt. Our debt usually contains interest rates that fluctuate with LIBOR.

We are subject to market risks relating to changes in interest rates because we have floating rate debt outstanding, which is based on U.S. dollar LIBOR plus, in the case of each credit facility, a specified margin. Our objective is to manage the impact of interest rate changes on our earnings and cash flow in relation to our borrowings and to this effect, when we deem appropriate, we use derivative financial instruments. The notional principal amount of our interest rate swap as of December 31, 2019 and 2018 was nil and $10 million, respectively. The swap has specified rates and duration. Refer to the table in Note 14 of our financial statements included at the end of this annual report, which summarizes the interest rate swaps in place as of December 31, 2019 and December 31, 2018. Our swap contract expired in May 2019.

As at December 31, 2019, we had $85.21 million of floating rate debt outstanding with margins over LIBOR ranging from 2.95% to 3.90%. Our interest expense is affected by changes in the general level of interest rates. As an indication of the extent of our sensitivity to interest rate changes, an increase of 100 basis points would have increased our net loss and decreased our cash flows in the twelve-month period ended December 31, 2019 by approximately $482,074 assuming the same debt profile throughout the year.

The following table sets forth the sensitivity of our loans as of December 31, 2019 in U.S. dollars to a 100 basis points increase in LIBOR during the next five years. Specifically, the interest we will have to pay for our floating rate loans will increase.

Year Ended December 31,	Amount in $ (floating rate loans)
2020		787,113
2021		648,945
2022		385,194
2023		200,938
2024 and thereafter		-

Inflation Risk

The general rate of inflation has been relatively low in recent years and as such its associated impact on costs has been minimal. We do not believe that inflation has had, or is likely to have in the foreseeable future, a significant impact on expenses. Should inflation increase, it will increase our expenses and subsequently have a negative impact on our earnings.

Foreign Exchange Rate Risk

The international containership shipping industry's functional currency is the U.S. dollar. We generate all of our revenues in U.S. dollars, but incur approximately 25% of our vessel operating expenses and drydocking expenses (excluding depreciation and other operating income) in 2019 in currencies other than U.S. dollars. Comparatively, in 2018 approximately 25% of our vessel operating expenses and drydocking expenses (excluding depreciation and other operating income) were in currencies other than U.S. dollars.  In addition, our vessel management fee is denominated in Euros and certain general and administrative expenses (about 6% in 2019) are mainly in Euros and some other currencies. As of December 31, 2019, approximately 33% of our outstanding trade accounts payable were denominated in currencies other than the U.S. dollar, mainly in Euros. We do not use currency exchange contracts to reduce the risk of adverse foreign currency movements but we believe that our exposure from market rate fluctuations is unlikely to be material. Net foreign exchange gain for the year ended December 31, 2019 was $2,024, and for the year ended December 31, 2018 we had a net foreign exchange gain of $13,963.

A hypothetical 10% immediate and uniform adverse move in all currency exchange rates from the rates in effect as of December 31, 2019, would have increased our operating expenses by approximately $0.68 million and the fair value of our outstanding trade accounts payable by approximately $0.1 million.

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Item 12. Description of Securities Other than Equity Securities

Not Applicable.

PART II

Item 13. Defaults, Dividend Arrearages and Delinquencies

None.

Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds

On May 10, 2019, we adopted a shareholder rights agreement effective as of May 27, 2019 and declared a dividend distribution of one preferred stock purchase right to purchase one one-thousandth of our Series C Participating Preferred Stock for each outstanding share of our common stock, to shareholders of record at the close of business on May 27, 2019. Each right entitles the registered holder, upon the occurrence of certain events, to purchase from us one one-thousandth of a share of Series C Participating Preferred Stock at an exercise price of $3.00, subject to adjustment. The rights will expire on the earliest of (i) May 31, 2029 or (ii) redemption or exchange of the rights. The shareholder rights agreement was designed to enable us to protect shareholder interests in the event that an unsolicited attempt is made for a business combination with or takeover of the Company. We believe that the shareholder rights agreement should enhance the board of directors' negotiating power on behalf of shareholders in the event of a coercive offer or proposal. We are not currently aware of any such offers or proposals and we adopted the plan as a matter of prudent corporate governance. This shareholder rights agreement replaced our existing, substantially similar shareholder rights agreement which expired on May 27, 2019.

Item 15. Controls and Procedures

(a)     Evaluation of Disclosure Controls and Procedures

Pursuant to Rules 13a-15(e) or 15d-15(e) of the Exchange Act, the Company's management, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures as of December 31, 2019. The term disclosure controls and procedures is defined under SEC rules as controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of December 31, 2019, our disclosure controls and procedures, which include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to the management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure, were effective to provide reasonable assurance that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC.

(b)     Management's Annual Report on Internal Control over Financial Reporting

The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is identified in Exchange Act Rule 13a-15(f) and 15d-15(f). Internal control over financial reporting is a process designed by, or under the supervision of, the issuer's principal executive and principal financial officers, or persons performing similar functions, and effected by the issuer's Board of Directors,

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management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with the authorization of its management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on its consolidated financial statements.

Our management, with the participation of Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2019. In making this assessment, the Company used the control criteria framework of the Committee of Sponsoring Organizations of the Treadway Commission, or COSO 2013, published in its report entitled 2013 Internal Control-Integrated Framework. As a result of its assessment, the Chief Executive Officer and Chief Financial Officer concluded that the Company's internal controls over financial reporting are effective as of December 31, 2019.

(c)        Attestation Report of the Registered Public Accounting Firm

This annual report does not contain an attestation report of our registered public accounting firm regarding internal control over financial reporting as the Company is a non-accelerated filer and is exempt from this requirement.

(d)        Changes in Internal Control over Financial Reporting

No change in the Company's internal control over financial reporting occurred during the period covered by this annual report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

Item 16A.Audit Committee Financial Expert

Our Board of Directors has determined that all the members of our Audit Committee qualify as financial experts and they are all considered to be independent according to Nasdaq and SEC rules.  Mr. Panos Kyriakopoulos serves as the Chairman of our Audit Committee and as the Audit Committee's financial expert with Mr. Apostolos Tamvakakis and Mr. George Taniskidis as members.

Item 16B.Code of Ethics

We have adopted a code of ethics that applies to officers and employees. Our code of ethics is posted in our website, http://www.euroseas.gr, under "Corporate Governance".

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Item 16C.Principal Accountant Fees and Services

Our principal auditors, Deloitte Certified Public Accountants, S.A. have charged us for audit, audit-related and non-audit services as follows:

	2018 (dollars in thousands)		2019 (dollars in thousands)
Audit Fees	$	288	$	197
Audit-Related Fees	_		_
Tax Fees	_		_
All Other Fes	_		_
Total	$	288	$	197

Audit fees relate to compensation for professional services rendered for the audit of the consolidated financial statements of the Company and for the review of the quarterly financial information as well as in connection with any other audit services required for SEC or other regulatory filings or offerings.

The Audit Committee is responsible for the appointment, replacement, compensation, evaluation and oversight of the work of the independent registered public accounting firm. As part of this responsibility, the Audit Committee pre-approves the audit and non-audit services performed by the independent registered public accounting firm in order to assure that they do not impair the auditor's independence from the Company. The Audit Committee has adopted a policy which sets forth the procedures and the conditions pursuant to which services proposed to be performed by the independent registered public accounting firm may be pre-approved.

All services provided by Deloitte Certified Public Accountants, S.A., were pre-approved by the Audit Committee.

Item 16D.Exemptions from the Listing Standards for Audit Committees

Not Applicable.

Item 16E.Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Not Applicable.

Item 16F.Change in Registrant's Certifying Accountant

None.

Item 16G.Corporate Governance

Please see Item 6.C. Board Practices - Corporate Governance.

OTHER THAN AS NOTED IN THE SECTION ABOVE, WE ARE IN FULL COMPLIANCE WITH ALL OTHER APPLICABLE NASDAQ CORPORATE GOVERNANCE STANDARDS.

Item 16H.Mine Safety Disclosure

Not Applicable.

PART III

Item 17.Financial Statements

See Item 18.

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Item 18. Financial Statements

The financial statements set forth on pages F-1 through F-60, together with the report of independent registered public accounting firm, are filed as part of this annual report.

Item 19. Exhibits

1.1	Amended and Restated Articles of Incorporation of Euroseas Ltd.(8)
1.2	Bylaws of Euroseas Ltd.(7)
1.3	Amendment to Bylaws of Euroseas Ltd.(7)
2.1	Specimen Common Stock Certificate(5)
2.2	Form of Securities Purchase Agreement(1)
2.3	Form of Registration Rights Agreement(1)
2.4	Form of Warrant(1)
2.5	Registration Rights Agreement between Euroseas Ltd. and Friends Investment Company Inc., dated November 2, 2005(2)
2.7	Form of Subscription Rights Certificate(9)
2.8	Registration Obligation Agreement by and among Euroseas Ltd., Tennenbaum Opportunities Partners V, LP and Tennenbaum Opportunities Fund VI, LLC dated December 14, 2016 (previously filed as Exhibit 2.8 to the Company's Annual Report on Form 20-F (File No. 001-33283) on April 7, 2017 and incorporated by reference herein)
4.1	Form of Lock-up Agreement(1)
4.2	Form of Standard Ship Management Agreement(1)
4.3	Agreement between Eurobulk Ltd. and Eurochart S.A., for the provision of exclusive brokerage services, dated December 20, 2004(1)
4.4	Form of Current Time Charter(1)
4.5	Amended and Restated Master Management Agreement between Euroseas Ltd. and Eurobulk Ltd. dated as of July 17, 2007, as amended February 7, 2008(4)
4.6	Addendum No. 1 to Amended and Restated Master Management Agreement between Euroseas Ltd. and Eurobulk Ltd. dated as of February 7, 2009(6)
4.7	Form of Right of First Refusal(3)
4.8	Form of Advisory Agreement(3)
4.9	Form of Senior Security Debt Indenture(5)
4.10	Form of Subordinated Debt Security Indenture(5)
4.11	Amendment to Registration Rights Agreement, dated as of March 14, 2014 to the Registration Rights Agreement, dated as of January 26, 2014, as amended by and among Euroseas Ltd., Tennenbaum Opportunities Fund VI, LLC, and Friends Investment Company, Inc. (previously filed as Exhibit 99.4 on Form 6-K (File No. 001-33283) on March 18, 2014 and incorporated by reference herein)
4.12	Specimen Certificate for the Series B Preferred Shares (previously filed as Exhibit 99.3 on Form 6-K (File No. 001-33283) on January 29, 2014 and incorporated by reference herein)
4.13	Form of Securities Purchase Agreement in connection with the sale of the Series B Preferred Shares (previously filed as Exhibit 99.4 on Form 6-K (File No. 001-33283) on January 29, 2014 and incorporated by reference herein)
4.14	Form of Registration Rights Agreement in connection with the sale of the Series B Preferred Shares (previously filed as Exhibit 99.5 on Form 6-K (File No. 001-33283) on January 29, 2014 and incorporated by reference herein)
4.15	Addendum No. 10 to Amended and Restated Master Management Agreement between Euroseas Ltd. and Eurobulk Ltd. dated as of November 15, 2019
4.16	Loan Agreement between Euroseas Ltd., as borrower, and Eurobank Ergasias, S.A., as arranger, relating to a revolving credit facility of up to US$45,000,000 dated November 21, 2018(10)
4.17	Supplemental Letter to the Facility Agreement of up to US$45,000,000 between Euroseas Ltd., as borrower, and Eurobank Ergasias, S.A., as the bank, dated May 30, 2019
4.18	Loan Agreement between Diamantis Shipowners Ltd., as borrower, and Piraeus Bank S.A., as lender, for a term loan facility of up to US$4,000,000 dated July 29, 2019
4.19	Secured Loan Agreement between Kea Shipowners Ltd., Spetses Shipowners Ltd. and Hydra Shipowners Ltd., as borrowers, and HSBC Bank PLC, as lender, for a secured loan of US$12,500,000 dated July 30, 2019

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4.20	Loan Agreement between Antwerp Shipping Ltd., Busan Shipping Ltd., Keelung Shipping Ltd. and Oakland Shipping Ltd., as borrowers, and Piraeus Bank S.A., as lender, for a term loan facility of up to US$32,000,000 dated November 8, 2019
4.21	Letter Agreement between Euroseas Ltd. and Synergy Holdings Limited relating to the Synergy Vessel Acquisition dated November 7, 2019
4.22	Loan Agreement between Euroseas Ltd., as borrower, and Colby Trading Ltd., as lender, for a term loan facility of up to US$2,500,000 dated September 30, 2019
4.23	First Supplemental Agreement relating to a Loan Agreement between Euroseas Ltd., as borrower, and Colby Trading Ltd., as lender, for a term loan facility of up to US$2,500,000 dated December 20, 2019
4.24	Second Supplemental Agreement relating to a Loan Agreement between Euroseas Ltd., as borrower, and Colby Trading Ltd., as lender, for a term loan facility of up to US$2,500,000 dated March 30, 2020
4.25	Loan Agreement between Euroseas Ltd., as borrower, and Colby Trading Ltd., as lender, for a term loan facility of up to US$2,500,000 dated November 1, 2019
4.26	Euroseas Ltd. 2018 Equity Incentive Plan(10)
4.27	Form of Stockholders Rights Agreement dated May 27, 2019(11)
4.28	Amended and Restated Statement of Designation of the Rights, Preferences and Privileges of Series B Convertible Perpetual Preferred Shares of Euroseas Ltd.(12)
4.29	Registration Rights Agreement between Euroseas Ltd. and Synergy Holdings Limited dated November 7, 2019
4.30	Equity Distribution Agreement between Euroseas Ltd. and Maxim Group LLC dated October 30, 2018
4.31	Interest Rate Swap Agreement between Euroseas and Eurobank SA/Athens dated April 16, 2020
8.1	Subsidiaries of the Registrant
12.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
12.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
13.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
13.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
15.1	Consent of Deloitte Certified Public Accountants  S.A.
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

____________

* Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for the purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

(1)	Filed as an Exhibit to the Company's Registration Statement (File No. 333-129145) on October 20, 2005.
(2)	Filed as an Exhibit to the Company's Amendment No.1 to Registration Statement (File No. 333-129145) on December 5, 2005.
(3)	Filed as an Exhibit to the Company's Amendment No. 4 to Registration Statement (File No. 333-138780) on January 29, 2007.
(4)	Filed as an Exhibit to the Company's Annual Report on Form 20-F (File No. 001-33283) on May 13, 2008.
(5)	Filed as an Exhibit to the Company's Registration Statement (File No. 333-152089) on July 2, 2008.
(6)	Filed as an Exhibit to the Company's Annual Report on Form 20-F (File No. 001-33283) on May 18, 2009.
(7)	Filed as an Exhibit to the Company's Annual Report on Form 20-F (File No. 001-33283) on May 28, 2010.
(8)	Filed as an Exhibit to the Company's Annual Report on Form 20-F (File No. 001-33283) on May 27, 2011.
(9)	Filed as an Exhibit to the Company's Form 6-K (File No. 001-33283) on May 25, 2012.
(10)	Filed as an Exhibit to the Company's Annual Report on Form 20-F (File No. 001-33283) on April 25, 2019.
(11)	Filed as an Exhibit to the Company's Form 6-K (File No. 001-33283) on May 28, 2019.

(12) Filed as an Exhibit to the Company's Form 6-K (File No. 001-33283) on March 5, 2020.

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SIGNATURES

The Registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Amendment to its annual report on its behalf.

EUROSEAS LTD. (Registrant)
By:	/s/ Aristides J. Pittas
	Aristides J. Pittas
	Chairman, President and CEO

Date: April 30, 2020

Euroseas Ltd. and Subsidiaries

Consolidated financial statements

 Index to consolidated financial statements

	Pages
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of December 31, 2018 and 2019	F-3
Consolidated Statements of Operations for the Years Ended December 31, 2017, 2018 and 2019	F-5
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2017, 2018 and 2019	F-6
Consolidated Statements of Cash Flows for the Years Ended December 31, 2017, 2018 and 2019	F-7
Notes to the Consolidated Financial Statements	F-10

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of Euroseas Ltd.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Euroseas Ltd. and subsidiaries (the “Company”) as of December 31, 2019 and 2018, the related consolidated statements of operations, shareholders' equity and cash flows, for each of the three years in the period ended December 31, 2019, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

 Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 /s/ Deloitte Certified Public Accountants S.A.

Athens, Greece

April 30, 2020

We have served as the Company's auditor since at least 2004, in connection with its initial public offering; however, an earlier year could not be reliably determined.

F-2

Euroseas Ltd. and Subsidiaries

Consolidated Balance Sheets

December 31, 2018 and 2019

(All amounts, except share data, expressed in U.S. Dollars)

	Notes		2018		2019
Assets
Current assets
Cash and cash equivalents				6,960,258		985,418
Restricted cash		8		117,063		610,376
Trade accounts receivable, net				958,705		715,097
Other receivables				2,031,415		1,570,506
Inventories		3		1,704,391		1,889,164
Prepaid expenses				222,336		526,531
Total current assets				11,994,168		6,297,092
Long-term assets
Vessels, net		4		48,826,128		116,230,333
Restricted cash		8		6,134,267		4,334,267
Total assets				66,954,563		126,861,692
Liabilities, mezzanine equity and shareholders’ equity
Current liabilities
Long-term bank loans, current portion		8		4,870,241		12,295,320
Related party loan, current		7, 8		-		5,000,000
Trade accounts payable				2,288,525		3,899,967
Accrued expenses		5		1,301,805		1,725,321
Accrued preferred dividends				-		161,315
Deferred revenues				417,634		973,774
Due to related company		7		2,672,895		795,562
Derivatives		14, 16		41,435		-
Total current liabilities				11,592,535		24,851,259

(Consolidated balance sheets continue on the next page)

F-3

Euroseas Ltd. and Subsidiaries

Consolidated Balance Sheets

December 31, 2017 and 2018

(All amounts, except share data, expressed in U.S. Dollars)

(continued)

	Notes		December 31, 2018			December 31, 2019
Long-term liabilities
Long-term bank loans, net of current portion		8		31,716,549			72,187,785
Vessel profit participation liability		8		1,067,500			-
Fair value of below market time charters acquired		6		-			1,714,370
Total long-term liabilities				32,784,049			73,902,155
Total liabilities				44,376,584			98,753,414
Commitments and contingencies		10
Mezzanine Equity
Preferred shares (par value $0.01, 20,000,000 shares authorized, 19,605 and 8,000 issued and outstanding, respectively)		15		18,757,361			7,654,577
Shareholders’ equity
Common stock (par value $0.03, 200,000,000 shares authorized, 1,564,456 and 5,600,259 issued and outstanding)		18		46,934			168,008
Additional paid-in capital				233,996,669			253,967,708
Accumulated deficit				(230,222,985	)		(233,682,015	)
Total shareholders’ equity				3,820,618			20,453,701
Total liabilities, mezzanine equity and shareholders’ equity				66,954,563			126,861,692

The accompanying notes are an integral part of these consolidated financial statements.

F-4

Euroseas Ltd. and Subsidiaries

Consolidated statements of operations

Years ended December 31, 2017, 2018 and 2019

(All amounts, except for share data, expressed in U.S. Dollars)

	Notes		2017			2018			2019
Revenues
Time charter revenue				24,278,048			36,062,202			41,769,278
Voyage charter revenue				559,319			206,682			-
Related party management fee income				240,000			-			-
Commissions (including $310,467, $453,361 and $493,341, respectively, to related party)		7		(1,318,248	)		(1,844,147	)		(1,745,599	)
Net revenue, continuing operations				23,759,119			34,424,737			40,023,679
Operating expenses
Voyage expenses		13		1,564,489			1,261,088			1,055,408
Vessel operating expenses (including $190,723, $256,069 and $249,081, respectively, to related party)		7, 13		15,019,342			19,986,170			23,983,282
Other operating income				(499,103	)		-			-
Dry-docking expenses				571,291			2,774,924			2,714,662
Vessel depreciation		4		3,585,965			3,305,951			4,178,886
Related party management fees		7		2,632,637			3,536,094			3,671,335
General and administrative expenses (including $1,306,476, $1,561,126 and $1,344,250, respectively, to related party)		7, 11		2,502,203			2,565,502			2,444,495
Net gain on sale of vessels (including $70,640, $64,500 and $0, respectively, to related party)		4, 7		(803,811	)		(1,340,952	)		-
Loss on write-down of vessels held for sale		4, 7		4,595,819			-			-
Total operating expenses, continuing operations				29,168,832			32,088,777			38,048,068
Operating (loss) / income, continuing operations				(5,409,713	)		2,335,960			1,975,611
Other income/(expenses)
Interest and other financing costs (including $0, $0 and $84,444, respectively, to related party)		7,8		(1,554,695	)		(3,050,768	)		(3,424,969	)
Loss on debt extinguishment		8		-			-			(328,291	)
Gain / (loss) on derivatives, net		14		12,389			(44,343	)		(2,885	)
Foreign exchange (loss) / gain				(30,214	)		13,963			2,024
Interest income				37,972			81,792			95,839
Other expenses, net, continuing operations				(1,534,548	)		(2,999,356	)		(3,658,282	)
Net loss, continuing operations				(6,944,261	)		(663,396	)		(1,682,671	)
Dividends to Series B preferred shares		15		(1,808,811	)		(1,335,733	)		(1,271,782	)
Preferred deemed dividend				-			-			(504,577	)
Net loss attributable to common shareholders, continuing operations				(8,753,072	)		(1,999,129	)		(3,459,030	)
Net income attributable to common shareholders, discontinued operations		17		849,701			554,506			-
Net loss attributable to common shareholders				(7,903,371	)		(1,444,623	)		(3,459,030	)
Weighted average number of shares outstanding during the year, basic and diluted		12		1,383,440			1,414,775			2,861,928
Loss per share attributable to common shareholders - basic and diluted, continuing operations		12		(6.33	)		(1.41	)		(1.21	)
Earnings per share attributable to common shareholders - basic and diluted, discontinued operations				0.61			0.39			-
Loss per share attributable to common shareholders - basic and diluted,		12		(5.72	)		(1.02	)		(1.21	)

The accompanying notes are an integral part of these consolidated financial statements.

F-5

Euroseas Ltd. and Subsidiaries

Consolidated statements of shareholders’ equity

Years ended December 31, 2017, 2018 and 2019

(All amounts, except share data, expressed in U.S. Dollars)

	Number Of Shares Outstanding(*)			Common Stock Amount(*)			Additional Paid - in Capital(*)			Accumulated Deficit			Total
Balance January 1, 2017		1,359,514			40,785			284,043,237			(229,977,258	)		54,106,764
Net loss		-			-			-			(6,094,560	)		(6,094,560	)
Dividends to Series B preferred shares		-			-			-			(1,808,811	)		(1,808,811	)
Issuance of shares sold at the market (ATM), net of issuance costs		37,723			1,133			373,110			-			374,243
Issuance of  restricted shares for stock incentive award and share-based compensation		12,534			376			116,186			-			116,562
Shares forfeited		(505	)		(15	)		15			-			-
Balance December 31, 2017		1,409,266			42,279			284,532,548			(237,880,629	)		46,694,198
Net loss		-			-			-			(663,396	)		(663,396	)
Dividends to Series B preferred shares		-			-			-			(1,335,733	)		(1,335,733	)
Spin-off of EuroDry Ltd. to stockholders		-			-			(52,520,821	)		9,656,773			(42,864,048	)
Issuance of shares sold at the market (ATM), net of issuance costs		139,509			4,185			1,860,925			-			1,865,110
Issuance of  restricted shares for stock incentive award and share-based compensation		15,681			470			124,017			-			124,487
Balance December 31, 2018		1,564,456			46,934			233,996,669			(230,222,985	)		3,820,618
Net loss		-			-			-			(1,682,671	)		(1,682,671	)
Dividends to Series B preferred shares		-			-			-			(1,271,782	)		(1,271,782	)
Preferred deemed dividend		-			-			-			(504,577	)		(504,577	)
Issuance of shares sold at the market (ATM), net of issuance costs		144,727			4,342			771,190			-			775,532
Issuance of  restricted shares for stock incentive award and share-based compensation		15,444			463			97,456			-			97,919
Shares issued in connection with acquisition of vessels		2,816,901			84,507			13,134,155			-			13,218,662
Issuance of shares through private placement		1,056,338			31,690			5,968,310			-			6,000,000
Rounding of stock split		2,393			72			(72	)		-			-
Balance December 31, 2019		5,600,259			168,008			253,967,708			(233,682,015	)		20,453,701

(*) Adjusted to reflect the 1-for-8 reverse stock split effected at the close of trading on December 18, 2019.

The accompanying notes are an integral part of these consolidated financial statements.

F-6

Euroseas Ltd. and Subsidiaries

Consolidated statements of cash flows

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

	2017			2018			2019
Cash flows from operating activities:
Net loss		(6,944,261	)		(663,396	)		(1,682,671	)
Adjustments to reconcile net loss to net cash provided by / (used in) operating activities:
Vessel depreciation		3,585,965			3,305,951			4,178,886
Other operating income		(499,103	)		-			-
Loss on write-down of vessels held for sale		4,595,819			-			-
Amortization and write off of deferred charges		113,244			321,181			205,590
Amortization of debt discount		60,988			465,507			95,214
Net gain on sale of vessels		(803,811	)		(1,340,952	)		-
Amortization of fair value of below market time charters acquired		-			-			(857,945	)
Share-based compensation		116,562			124,487			97,919
Change in the fair value of derivatives		5,901			(204,647	)		(41,435	)
Loss on debt extinguishment		-			-			328,291
Changes in operating assets and liabilities:
(Increase) / decrease in:
Trade accounts receivable		(91,604	)		(73,210	)		243,608
Prepaid expenses		(117,793	)		24,703			(304,195	)
Other receivables		(210,741	)		(1,066,378	)		460,909
Inventories		329,244			(511,373	)		(184,773	)
Increase / (decrease) in:
Due to related company		4,314,415			(2,732,256	)		(1,877,333	)
Trade accounts payable		197,782			766,052			1,539,553
Accrued expenses		167,016			282,045			482,671
Deferred revenues		233,402			(172,544	)		556,140
Net cash provided by / (used in) operating activities of continuing operations		5,053,025			(1,474,830	)		3,240,429
Cash flows from investing activities:
Cash paid for capitalized expenses and acquisition of vessels including attached time charter agreements		(30,063,480	)		(1,867	)		(55,720,226	)
Cash released from other investment		4,000,000			-			-
Proceeds from sale of vessels		9,552,260			6,255,735			-
Net cash (used in) / provided by investing activities of continuing operations		(16,511,220	)		6,253,868			(55,720,226	)

(Consolidated statements of cash flows continue on the next page)

F-7

Euroseas Ltd. and Subsidiaries

Consolidated statements of cash flows

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

(Continued)

	2017			2018			2019
Cash flows from financing activities:
Redemption of Series B preferred shares		-			-			(11,686,000	)
Proceeds from issuance of common stock, net of commissions paid		549,495			1,975,110			6,853,101
Investment in subsidiary spun-off		(915,525	)		(3,298,356	)		-
Due from spun-off subsidiary		639,312			-			-
Preferred dividends paid		-			-			(1,031,827	)
Offering expenses paid		(341,072	)		(22,488	)		(136,724	)
Loan arrangement fees paid		(187,637	)		(419,863	)		(566,500	)
Proceeds from long-term bank loans		22,250,000			34,250,000			60,167,680
Repayment of long-term bank loans and vessel profit participation liability		(7,243,915	)		(32,349,000	)		(13,401,460	)
Proceeds from related party loan		-			-			5,000,000
Repayment of related party loan		(2,000,000	)		-			-
Net cash provided by financing activities of continuing operations		12,750,658			135,403			45,198,270
Net increase / (decrease) in cash, cash equivalents and restricted cash		1,292,463			4,914,441			(7,281,527	)
Cash, cash equivalents and restricted cash at beginning of year		7,004,684			8,297,147			13,211,588
Cash, cash equivalents and restricted cash at end of year, continuing operations		8,297,147			13,211,588			5,930,061
Cash breakdown
Cash and cash equivalents		2,858,927			6,960,258			985,418
Restricted cash, current		1,103,953			117,063			610,376
Restricted cash, long term		4,334,267			6,134,267			4,334,267
Total cash, cash equivalents and restricted cash shown in the statement of cash flows, continuing operations		8,297,147			13,211,588			5,930,061
Discontinued operations:
Net cash provided by operating activities of discontinued operations		2,910,287			3,970,170			-
Net cash used in investing activities of discontinued operations		(9,635,504	)		(29,045,685	)		-
Net cash provided by financing activities of discontinued operations		9,283,359			27,928,885			-

(Consolidated statements of cash flows continue on the next page)

F-8

Euroseas Ltd. and Subsidiaries

Consolidated statements of cash flows

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

(Continued)

Supplemental cash flow information Cash paid for interest, net of capitalized expenses	1,174,863	2,475,631	3,100,049
Financing, and investing activities fees:
Loan arrangement fees accrued	74,863	-	-
Offering expenses accrued	12,488	100,000	40,846
Payment-in-kind dividends	1,808,811	1,335,733	78,640
Capital expenditures included in liabilities	-	-	71,890
Accrued preferred dividends	-	-	161,315
Shares issued as consideration for acquisition of vessels	-	-	13,218,662
Preferred shares distributed to EuroDry	-	18,192,131	-

The accompanying notes are an integral part of these consolidated financial statements.

F-9

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

1.Basis of Presentation and General Information

Euroseas Ltd. (the “Company” or “Euroseas”) was formed on May 5, 2005 under the laws of the Republic of the Marshall Islands to consolidate the beneficial owners of certain ship-owning companies. On June 28, 2005, the beneficial owners exchanged all their shares in the ship-owning companies for shares in Friends Investment Company Inc., a newly formed Marshall Islands company.  On June 29, 2005, Friends Investment Company Inc. then exchanged all the shares in the ship-owning companies for shares in Euroseas Ltd., thus becoming the sole shareholder of Euroseas Ltd at that time. In January 2007, the Company pursued a public offering and its common shares started trading on the Nasdaq Capital Market under the ticker symbol “ESEA” on January 31, 2007.

The operations of the vessels are managed by Eurobulk Ltd. (“Eurobulk” or “Management Company” or “Manager”), a corporation controlled by members of the Pittas family.  Eurobulk has an office in Greece located at 4 Messogiou & Evropis Street, Maroussi, Greece. The Manager provides the Company with a wide range of shipping services such as technical support and maintenance, insurance consulting, chartering, financial and accounting services and executive management services, in consideration for fixed and variable fees (see Note 7).

The Pittas family is the controlling shareholder of Friends Investment Company Inc., Containers Shareholders Trinity Ltd., Eurobulk Marine Holdings Inc. and Diamantis Shareholders Ltd. which, in turn, collectively own 62% of the Company’s shares as of April 15, 2020.

Following the close of trading on the Nasdaq Capital Market on May 30, 2018, the Company completed the spin-off (the “Spin-off”) of its drybulk fleet (excluding M/V Monica P, a handymax drybulk carrier, which was agreed to be sold) to EuroDry Ltd ("EuroDry"). Shareholders of the Company received one EuroDry common share for every five common shares of the Company they owned as of May 23, 2018. Shares of EuroDry commenced trading on May 31, 2018 on the Nasdaq Capital Market under the symbol "EDRY." EuroDry operates in the dry cargo, drybulk shipping markets, owning and operating drybulk vessels previously owned and operated by Euroseas, and is now a separate publicly traded company. Euroseas continues to operate in the container shipping market and remains a publicly traded company. Accordingly, the results of operations of EuroDry have been presented in discontinued operations for all historical comparative periods presented.

In August 2019, the Company completed the acquisition of four feeder containerships, owned by affiliates of the Pittas family including the Company’s Chief Executive Officer, which had been announced in June 2019 for a consideration of $28.2 million that included a cash payment of $15 million and the issuance of 2,816,901 common shares to the sellers (the “Trinity/ Diamantis Vessel Acquisition”). The Company financed the cash portion of the acquisition price via the arrangement of two bank loans described below (refer Note 8-d and 8-e), drawing a total of $16,167,680 with the excess amount used for general corporate purposes. The cash portion of the acquisition price was used to repay the existing indebtedness of the vessels with the sellers receiving only payment in Euroseas common shares.  The common shares issued to the sellers represented at that time approximately 64.3% of Euroseas’ outstanding common shares.

F-10

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

1.Basis of Presentation and General Information - continued

The vessels acquisition transactions were evaluated and approved by a special committee of independent members of the Board of Directors. The four vessels are the M/V EM Hydra and the M/V EM Spetses, both 1,740 teu feeder containership built in 2005 and 2007, respectively, the M/V EM Kea, a 3,100 teu feeder containership built in 2007, and the M/V Diamantis P, a 2,008 teu feeder containership vessel built in 1998. On August 2, 2019, the Company took delivery of M/V Diamantis P and M/V EM Hydra, and, on August 7, 2019, the Company took delivery of M/V EM Spetses and M/V EM Kea (refer Note 4).

In November 2019, the Company acquired and took delivery (from November 18, 2019 to November 21, 2019) of four container carrier vessels of intermediate size of 4,253 teu, all built in South Korea, three in 2009 and the other in 2008 (refer Note 4). The vessels were acquired from companies controlled by Synergy Holdings Limited, for approximately $40 million (the “Synergy Vessel Acquisition”). The acquisition of the four vessels (the “Synergy Vessels”) was financed by bank debt of $32 million described below (refer Note 8-f), a private placement of $6 million at a share price of $5.68 subscribed equally by an entity affiliated with the Company’s Chief Executive Officer and an entity controlled by the seller of the Synergy vessels and $2 million of existing funds. The Company also assumed the charters the vessels were under on the date of the transfer (refer Note 6). As part of the transaction, the Company has agreed that the Manager enters into an agreement with Synergy Marine Limited for the provision of certain management services by Synergy Marine Limited for the next three years (see Note 7). Mr. Andreas Papathomas, Chairman of Synergy Holdings Limited, was appointed to the Board of Directors of the Company. The Company has also agreed to issue an additional $0.5 million in shares of its common stock to Synergy Holdings Limited if certain conditions are fulfilled in one year from the acquisition date (see Note 10-b).

The Company effected a 8-for-1 reverse stock split of its issued and outstanding common shares, effective at the close of trading on December 18, 2019  (Note 18).  All share and per share amounts disclosed in the consolidated financial statements give effect to this reverse stock split retroactively, for all periods presented.

 The Company is engaged in the ocean transportation of containers through ownership and operation of container carrier ship-owning companies. Details of the Company’s wholly owned subsidiaries are set out below:

• Allendale Investment S.A., incorporated in Panama on January 22, 2002, owner of the Panama flag 18,154 deadweight tons (“DWT”) / 1,169 twenty-foot equivalent (“TEU” – a measure of carrying capacity in containers) container carrier M/V “Kuo Hsiung”, which was built in 1993 and acquired on May 13, 2002.

• Alterwall Business Inc., incorporated in Panama on January 15, 2001, owner of the Panama flag 18,253 DWT / 1,169 TEU container carrier M/V “Ninos” (previously named M/V “Quingdao I”) which was built in 1990 and acquired on February 16, 2001.

F-11

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

1.Basis of Presentation and General Information - continued

• Prospero Maritime Inc., incorporated in the Republic of Marshall Islands on July 21, 2006, owner of the Marshall Islands flag 69,268 DWT dry bulk M/V “Aristides N.P.”, which was built in 1993 and acquired on September 21, 2006. The vessel was sold on January 15, 2016.

• Manolis Shipping Ltd., incorporated in the Republic of Marshall Islands on March 16, 2007, owner of the Marshall Islands flag 20,346 DWT / 1,452 TEU container carrier M/V “Manolis P”, which was built in 1995 and acquired on April 12, 2007.

• Noumea Shipping Ltd, incorporated in the Republic of Marshall Islands on May 14, 2008, owner of the Marshall Islands flag 34,677 DWT / 2,556 TEU container carrier M/V “Maersk Noumea”, renamed “Evridiki G”, which was built in 2001 and acquired on May 22, 2008.

• Eleni Shipping Ltd., incorporated in the Republic of Liberia on February 11, 2009, owner of the Liberian flag 72,119 DWT bulk carrier M/V “Eleni P”, which was built in 1997, acquired on March 6, 2009 and sold on January 26, 2017.

• Aggeliki Shipping Ltd., incorporated in the Republic of Liberia on May 21, 2010, owner of the Liberian flag 30,306 DWT / 2008 TEU container carrier M/V “Aggeliki P”, which was built in 1998, acquired on June 21, 2010 and sold on December 6, 2017.

• Joanna Maritime Ltd., incorporated in Liberia on June 10, 2013, owner of the Liberian flag 22,301 DWT / 1,732 TEU container carrier M/V “Joanna”, which was built in 1999 and acquired on July 4, 2013. On January 8, 2016, the vessel was renamed M/V “Vento di Grecale”. On March 17, 2017 the vessel was again renamed M/V “Joanna”.

• Jonathan John Shipping Ltd., incorporated in the Republic of the Marshall Islands on August 19, 2016, owner of the Panamanian flag 18,581 DWT / 1,439 TEU container carrier M/V “Aegean Express”, which was built in 1997 and acquired on September 29, 2016.

• Gregos Shipping Ltd., incorporated in the Republic of Liberia on May 25, 2017, owner of the Liberian flag 35,600 DWT / 2,788 TEU container carrier M/V “EM Astoria”, which was built in 2004 and acquired on June 20, 2017.

• Athens Shipping Ltd., incorporated in the Republic of the Marshall Islands on September 18, 2017, owner of the Marshall Islands flag 32,350 DWT / 2,506 TEU container carrier M/V “EM Athens”, which was built in 2000 and acquired on September 29, 2017.

F-12

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

1.Basis of Presentation and General Information - continued

• Corfu Navigation Ltd., incorporated in the Republic of the Marshall Islands on September 18, 2017, owner of the Marshall Islands flag 34,654 DWT / 2,556 TEU container carrier M/V “EM Corfu”, which was built in 2001 and acquired on October 29, 2017.

• Oinousses Navigation Ltd., incorporated in the Republic of the Marshall Islands on September 18, 2017, owner of the Marshall Islands flag 32,350 DWT / 2,506 TEU container carrier M/V “EM Oinousses”, which was built in 2000 and acquired on October 23, 2017.

• Bridge Shipping Ltd., incorporated in the Republic of the Marshall Islands on September 18, 2017, owner of the Marshall Islands flag 71,366 DWT / 5,610 TEU container carrier M/V “Akinada Bridge”, which was built in 2001 and acquired on December 21, 2017.

• Diamantis Shipowners Ltd., incorporated in the Republic of Liberia on June 3, 2019, owner of the Liberian flag 30,360 DWT / 2,008 TEU container carrier M/V “Diamantis P”, which was built in 1998 and acquired on August 2, 2019.

• Hydra Shipowners Ltd., incorporated in the Republic of Liberia on June 3, 2019, owner of the Liberian flag 23,351 DWT / 1,740 TEU container carrier M/V “EM Hydra”, which was built in 2005 and acquired on August 2, 2019.

• Spetses Shipowners Ltd., incorporated in the Republic of Liberia on June 3, 2019, owner of the Liberian flag 23,224 DWT / 1,740 TEU container carrier M/V “EM Spetses”, which was built in 2007 and acquired on August 7, 2019.

• Kea Shipowners Ltd., incorporated in the Republic of Liberia on June 3, 2019, owner of the Liberian flag 42,165 DWT / 3,100 TEU container carrier M/V “EM Kea”, which was built in 2007 and acquired on August 7, 2019.

• Antwerp Shipping Ltd., incorporated in the Republic of the Marshall Islands on November 1, 2019, owner of the Marshall Islands flag 50,726 DWT / 4,253 TEU container carrier M/V “Synergy Antwerp”, which was built in 2008 and acquired on November 19, 2019.

• Keelung Shipping Ltd., incorporated in the Republic of the Marshall Islands on November 1, 2019, owner of the Cypriot flag 50,969 DWT / 4,253 TEU container carrier M/V “Synergy Keelung”, which was built in 2009 and acquired on November 18, 2019.

• Oakland Shipping Ltd., incorporated in the Republic of the Marshall Islands on November 1, 2019, owner of the Cypriot flag 50,787 DWT / 4,253 TEU container carrier M/V “Synergy Oakland”, which was built in 2009 and acquired on November 19, 2019.

F-13

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

1.Basis of Presentation and General Information - continued

• Busan Shipping Ltd., incorporated in the Republic of the Marshall Islands on November 1, 2019, owner of the Marshall Islands flag 50,726 DWT / 4,253 TEU container carrier M/V “Synergy Busan”, which was built in 2009 and acquired on November 21, 2019.

As of December 31, 2019, the Company had a working capital deficit of $18.6 million and has been incurring losses. For the year ended December 31, 2019, the Company generated net cash from operating activities of $3.2 million. The Company’s cash balance amounted to $1.0 million and cash in restricted retention accounts amounted to $4.9 million as of December 31, 2019. The holders of Series B Preferred Shares will receive a cash dividend at an annual dividend rate of 8% until January 2021, which will increase to 14% thereafter (Note 15). The Company intends to fund its working capital requirements and capital commitments via cash at hand and cash flows from operations, as well as via the cash proceeds expected to be generated through the sale of certain of the Company’s older vessels for scrap. In the event that these are not sufficient, the Company may also use funds from debt refinancing and equity offerings and convert to equity the related party loans, if required, among other options.   The Company believes it will have adequate funding through the sources described above and, accordingly, it believes it has the ability to continue as a going concern and finance its obligations as they come due over the next twelve months following the date of the issuance of these financial statements. Consequently, the consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

During the years ended December 31, 2017, 2018 and 2019, the following charterers individually accounted for more than 10% of the Company’s revenues as follows:

	Year ended December 31,
Charterer	2017			2018			2019
CMA CGM, Marseille		34	%		51	%		24	%
New Golden Sea Shipping Pte. Ltd., Singapore		31	%		33	%		21	%
Hapag-Lloyd AG, Hamburg		-			-			16	%
MSC Geneva		17	%		11	%		15	%
Maersk Line A/S		-			-			11	%

F-14

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

2.Significant Accounting Policies

The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America.  The following are the significant accounting policies adopted by the Company:

Principles of consolidation

The accompanying consolidated financial statements include the accounts of Euroseas Ltd. and its subsidiaries.  Inter-company balances and transactions are eliminated on consolidation.

Use of estimates

The preparation of the accompanying consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the consolidated financial statements, and the stated amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Other comprehensive income / (loss)

The Company has no other comprehensive income / (loss) and accordingly comprehensive income / (loss) equals net income / (loss) for all periods presented. As such, no statement of comprehensive income / (loss) has been presented.

Foreign currency translation

The Company’s functional currency as well as the functional currency of all its subsidiaries is the U.S. dollar. Assets and liabilities denominated in foreign currencies are translated into U.S. dollars at exchange rates prevailing at the balance sheet date.  Income and expenses denominated in foreign currencies are translated into U.S. dollars at exchange rates prevailing at the date of the transaction.  The resulting exchange gains and/or losses on settlement or translation are included in the accompanying consolidated statements of operations.

Cash equivalents

Cash equivalents are cash in bank accounts, time deposits or other certificates purchased with an original maturity of three months or less.

Restricted cash

Restricted cash reflects deposits with certain banks that can only be used to pay the current loan installments or are required to be maintained as a certain minimum cash balance per mortgaged vessel and amounts that are pledged, blocked or held as cash collateral.

F-15

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

2.Significant Accounting Policies - continued

Trade accounts receivable

The amount shown as trade accounts receivable, at each balance sheet date, includes estimated recoveries from each voyage or time charter. At each balance sheet date, the Company provides for doubtful accounts on the basis of specific identified doubtful receivables.

Inventories

Inventories are stated at the lower of cost and net realizable value, which is the estimated selling prices less reasonably predictable costs of disposal and transportation.  Inventories are valued using the FIFO (First-In First-Out) method.

Vessels

Vessels are stated at cost, which comprises the vessel contract price, costs of major repairs and improvements upon acquisition, direct delivery and other acquisition expenses, less accumulated depreciation and impairment, if any. Subsequent expenditures for conversions and major improvements are also capitalized when they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels; otherwise these amounts are charged to expense as incurred. Vessels under construction are presented at cost, which includes shipyard installment payments and other vessel costs incurred during the construction period that are directly attributable to the construction of the vessels, including interest costs incurred during the construction period.

Expenditures for vessel repair and maintenance are charged against income in the period incurred.

Assets Held for Sale 

The Company may dispose of certain of its vessels when suitable opportunities occur, including prior to the end of their useful lives. The Company classifies assets as being held for sale when the following criteria are met: (i) management is committed to sell the asset; (ii) the asset is available for immediate sale in its present condition; (iii) an active program to locate a buyer and other actions required to complete the plan to sell the asset have been initiated; (iv) the sale of the asset is probable, and transfer of the asset is expected to qualify for recognition as a completed sale within one year; (v) the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (vi) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

Long-lived assets classified as held for sale are measured at the lower of their carrying amount or fair value less the cost to sell the asset. These assets are no longer depreciated once they meet the criteria of being held for sale.

F-16

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

2.Significant Accounting Policies - continued

Depreciation

Depreciation is calculated on a straight line basis over the estimated useful life of the vessel with reference to the cost of the vessel, and estimated scrap value. Remaining useful lives of vessels are periodically reviewed and revised to recognize changes in conditions and such revisions, if any, are recognized over current and future periods. The Company estimates that its vessels have a useful life of 25 years from the completion of their construction. When regulations place limitations over the ability of a vessel to trade on a worldwide basis, its remaining useful life is adjusted at the date such regulations are adopted. The estimated salvage value of each vessel is $0.25 per light weight ton as of December 31, 2019 and 2018, which is based on the historical average demolition prices.

Insurance claims and insurance proceeds

Claims receivable are recorded on the accrual basis and represent the amounts to be received, net of deductibles incurred through each balance sheet date, for which recovery from insurance companies is probable and the claim is not subject to litigation. Any remaining costs to complete the claims are included in accrued liabilities. Insurance proceeds are recorded according to type of claim that gives rise to the proceeds in the consolidated statements of operations and the consolidated statements of cash flow.

Revenue and expense recognition

Revenues are generated from time charters and voyage charters. Under a time charter agreement a contract is entered into for the use of a vessel for a specific period of time and a specified daily charter hire rate. Under a voyage charter agreement, a contract is made in the spot market for the use of a vessel for a specific voyage to transport a specified agreed upon cargo at a specified freight rate per ton or occasionally a lump sum amount. Under a voyage charter agreement, the charter party generally has a minimum amount of cargo and the charterer is liable for any short loading of cargo or "dead" freight.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”, which amends the existing accounting standard for lease accounting and adds additional disclosures about leasing arrangements. ASC 842 requires lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by most leases, while lessor accounting remains largely unchanged. ASC 842, as amended, subject to certain transition relief options, allows a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, or allows entities to elect not to recast the comparative periods presented when transitioning to ASC 842 and to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. ASC 842 also provides a practical expedient to lessors by class of underlying asset, to not separate non lease components from the associated lease component, similar to the expedient provided for lessees, when the following criteria are met: i) the timing and pattern of transfer for the lease

F-17

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

2.Significant Accounting Policies - continued

component is the same as those for the non-lease component associated with that lease component and (ii) the lease component, if accounted for separately, would be classified as an operating lease. ASC 842 is effective for public entities with reporting periods beginning after December 15, 2018, including interim periods within those fiscal periods. The Company adopted ASC 842 for its reporting period commencing January 1, 2019 and has elected to use the optional new transition method that results in initial recognition of a cumulative effect adjustment to retained earnings in the year of adoption.As a result, prior periods as reported by the Company, have not been impacted by the adoption.

A time charter is a contract for the use of a vessel for a specific period of time and a specified daily charter hire rate, which is generally payable in advance. Time charter revenue is recognized when a charter agreement exists, the vessel is made available to the charterer and collection of the related revenue is reasonably assured.As of December 31, 2019, all of the Company’s vessels are employed under time charters with remaining terms ranging from less than one month to 12 months based on the minimum duration of the time charter contracts and certain time charter contracts include renewal options for terms ranging from 8 months to 23 months. A time charter generally provides typical warranties and owner protective restrictions. The Company’s time charter agreements are classified as operating leases pursuant to ASC 842, because (i) the vessel is an identifiable asset, (ii) the Company does not have substantive substitution rights and (iii) the charterer has the right to control the use of the vessel, during the term of the contract, and derives the economic benefits from such use. In a time charter contract, the Company is responsible for all the costs incurred for running the vessel such as crew costs, vessel insurance, repairs and maintenance and lubes. The charterer bears the voyage related costs such as bunker expenses, port charges and canal tolls during the hire period.

As discussed above, the transition guidance associated with ASC 842 allows for certain practical expedients to lessors. The Company elected not to separate the lease and non-lease components included in the time charter revenue because the pattern of revenue recognition for the lease and non-lease components (included in the daily hire rate) is the same and the lease component, if accounted for separately, would be classified as an operating lease. The nature of the lease component and non-lease component that are combined as a result of applying the respective practical expedient are the hire rate for a bareboat charter as well as the compensation for expenses incurred running the vessel such as crewing expense, repairs, insurance, maintenance and lubricants, respectively. The lease component is the predominant component and the Company accounts for the combined component as an operating lease in accordance with Topic 842.

F-18

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

2.Significant Accounting Policies – continued

Both the lease component and non-lease component are earned by the passage of time. Since lessor accounting remains largely unchanged from previous U.S. GAAP, upon adoption of ASC 842, the timing and recognition of earnings from time charter contracts to which the Company is party did not change from prior policy, with the exception of ballast bonuses which were recognized during the ballast leg while they are now deferred and recognized over time during the charter period. The performance obligations in a time charter contract are recognized on a straight-line basis over the term of the respective time charter agreements, beginning when the vessel is delivered to the charterer until it is redelivered back to the Company, and is recorded in “Time charter revenue” in the consolidated statements of operations for the years ended December 31, 2017, 2018 and 2019.

Voyage charter agreements are considered service contracts that fall under the provisions of ASC 606, because the Company as the shipowner retains the control over the operation of the vessel such as directing the routes taken or the vessel speed. The Company considered the provisions of ASC 842 and determined that its voyage charter agreements do not contain a lease because the charterer under such contracts does not have the right to control the use of the vessel since the Company, as the ship-owner, retains control over the operations of the vessel, provided also that the terms are pre-determined and any change requires the Company’s consent. The Company accounts for a voyage charter when all the following criteria are met: (i) the parties to the contract have approved the contract in the form of a written charter agreement or fixture recap and are committed to perform their respective obligations, (ii) the Company can identify each party’s rights regarding the services to be transferred, (iii) the Company can identify the payment terms for the services to be transferred, (iv) the charter agreement has commercial substance (that is, the risk, timing, or amount of the future cash flows is expected to change as a result of the contract) and (v) it is probable that the Company will collect substantially all of the consideration to which it will be entitled in exchange for the services that will be transferred to the charterer. The Company has determined that there is one single performance obligation for each of its voyage contracts, which is to provide the charterer with an integrated transportation service within a specified time period. In addition, the Company has concluded that a contract for a voyage charter meets the criteria to recognize revenue over time because the charterer simultaneously receives and consumes the benefits of the Company’s performance as the Company performs. Therefore, since the Company’s performance obligation under each voyage contract is met evenly as the voyage progresses, revenue is recognized on a straight line basis over the voyage days from the loading of cargo to its discharge. The majority of revenue from voyage charter agreements is usually collected in advance.

Demurrage income is included in Voyage charter revenues, represents revenue earned from the charterer when loading or discharging time exceeded the stipulated time in the voyage charter agreement and is recognized when earned and collection is reasonably assured. Demurrage income for the years ended December 31, 2017, 2018 and 2019 was not material.

Charter fees received in advance are recorded as a liability (deferred revenue) until charter services are rendered.

F-19

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

2.Significant Accounting Policies - continued

Vessel operating expenses are comprised of all expenses relating to the operation of the vessels, including crewing, insurance, repairs and maintenance, stores, lubricants, spares and consumables, professional and legal fees and miscellaneous expenses. Vessel operating expenses are recognized as incurred; payments in advance of services or use are recorded as prepaid expenses. Under voyage charter agreements, voyage expenses relate to bunkers, port charges, canal tolls, and agency fees and are all paid by the Company. Costs incurred prior to loading which are directly related to the voyage are deferred by the Company if they meet certain conditions, and are amortized over the duration of the voyage from load port to discharge port. Costs incurred during the voyage are expensed as incurred. Under time charter agreements, voyage expenses which are also recognized as incurred by the Company include costs for draft surveys, holds cleaning, postage, extra war risk insurance and other minor miscellaneous expenses related to the voyage. The charterer is responsible for paying the cost of bunkers and other voyage expenses whilst the vessel is on time charter. Certain voyage expenses paid by the Company, such as extra war risk insurance and holds cleaning may be recovered from the charterer; such amounts recovered are recorded as other income within time charter revenue.

Commissions (address and brokerage), regardless of charter type, are always paid by the Company, are deferred and amortized over the related charter period and are presented as a separate line item in revenues to arrive at net revenues in the accompanying consolidated statements of operations.

Dry-docking and special survey expenses

Dry-docking and special survey expenses are expensed as incurred.

Pension and retirement benefit obligations – crew

The ship-owning companies contract the crews on board the vessels under short-term contracts (usually up to 9 months).  Accordingly, they are not liable for any pension or post-retirement benefits.

F-20

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

2. Significant Accounting Policies - continued

Financing costs

Loan arrangement fees are deferred and amortized to interest expense over the duration of the underlying loan using the effective interest method. Unamortized fees relating to loans repaid or refinanced are expensed in the period the repayment or refinancing occurs.

Offering expenses

Deferred offering expenses are charged against paid-in capital when financing is completed or expensed to “General and administrative expenses” in the consolidated statements of operations when the offering is aborted.

Fair value of above/below market time charters acquired

The Company records all identified tangible and intangible assets or any liabilities associated with the acquisition of a vessel at fair value. Where vessels are acquired with existing time charters, the Company determines the present value of the difference between: (i) the contractual charter rate and (ii) the prevailing market rate for a charter of equivalent duration. In discounting the charter rate differences in future periods, the Company uses its Weighted Average Cost of Capital (WACC) adjusted to account for the credit quality of the counterparties, as deemed necessary.  The capitalized above-market (assets) and below-market (liabilities) charters are amortized as a reduction and increase, respectively, to time charter revenues over the remaining term of the assumed time charter.

Stock incentive plan awards

Share-based compensation represents vested and non-vested restricted shares granted to officers and directors as well as to non-employees and are included in “General and administrative expenses” in the consolidated statements of operations. In June 2018, the FASB issued ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting (Topic 718). ASU 2018-07 simplifies the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. Following the adoption of this ASU, the shares to employees and directors as well as to non-employees are measured at their fair value equal to the market value of the Company's common stock on the grant date. The shares that do not contain any future service vesting conditions are considered vested shares and the total fair value of such shares is expensed on the grant date. The shares that contain a time-based service vesting condition are considered non-vested shares on the grant date and the total fair value of such shares is recognized on a straight-line basis over the requisite service period. Prior to the adoption of this ASU, the fair value of the awards granted to non-employees was measured at the fair value at each reporting period until the non-vested shares vested and performance was complete.

F-21

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

2. Significant Accounting Policies - continued

Impairment of long-lived assets

The Company reviews its long-lived assets held for use and their related intangible assets and liabilities for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. If indicators of impairment are present, the Company performs an analysis of the future undiscounted net operating cash flows of the related long-lived assets.When the estimate of future undiscounted net operating cash flows, excluding interest charges, expected to be generated by the use and eventual disposition of the asset is less than its carrying amount, the Company evaluates the asset for an impairment loss. Measurement of the impairment loss is based on the fair value of the asset. In this respect, management regularly reviews the carrying amount of the vessels in connection with the estimated recoverable amount for each of the Company’s vessels.

Derivative financial instruments

Derivative instruments are  recorded in the balance sheet as either an asset or liability measured at its fair value with changes in the instruments' fair value recognized as either a component in other comprehensive income if specific hedge accounting criteria are met in accordance with guidance relating to  “Derivatives and Hedging”  or in earnings if hedging criteria are not met.

Preferred shares

Preferred shares are recorded at the initial consideration received less offering expenses and adjusted by including the redemption value of dividends paid in-kind. The Company recognizes changes in the redemption value of the preferred shares immediately as they occur and adjusts the carrying amount of the preferred shares to equal the redemption value at the end of each reporting period to that effect.

Evaluation of purchase transactions

When the Company enters into an acquisition transaction, it determines whether the acquisition transaction was for the purchase of an asset or a business based on the facts and circumstances of the transaction. In accordance with ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, if substantially all of the fair value of the gross assets acquired in an acquisition transaction are concentrated in a single identifiable asset or group of similar identifiable assets, then the set is not a business. To be considered a business, a set must include an input and a substantive process that together significantly contributes to the ability to create an output. All assets acquired and liabilities assumed in a business combination are measured at their acquisition-date fair values. For asset acquisitions, the cost of the acquisition is allocated to individual assets and liabilities on a relative fair value basis. Acquisition costs associated with business combinations are expensed as incurred. Acquisition costs associated with asset acquisitions are capitalized.

F-22

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

2. Significant Accounting Policies - continued

Earnings / (loss) per common share

Basic earnings / (loss) per share is computed by dividing net income / (loss) attributable to common shareholders, after the deduction of dividends paid (in cash or in-kind) to preferred shareholders, by the weighted-average number of common shares outstanding during the period. The weighted-average number of common shares outstanding does not include any potentially dilutive securities or any non-vested restricted shares of common stock. These non-vested restricted shares, although classified as issued and outstanding as of December 31, 2018 and 2019, are considered contingently returnable until the restrictions lapse and will not be included in the basic earnings / (loss) per share calculation until the shares are vested.

Diluted earnings / (loss) per share gives effect to all potentially dilutive securities to the extent that they are dilutive, using the treasury stock method. The Company uses the treasury stock method for non-vested restricted shares, while for the preferred shares issued the Company uses the if-converted method to assess the dilutive effect.

Segment reporting

The Company reports financial information and evaluates its operations by charter revenue and not by the type of ship employment for its customers, i.e. voyage or time charters.  The Company does not use discrete financial information to evaluate the operating results for each such type of charter. Although revenue can be identified for these types of charters, management cannot and does not identify expenses, profitability or other financial information for these charters.  As a result, management, including the chief operating decision maker, reviews operating results solely by revenue per day and operating results of the fleet and thus the Company has determined that it operates under one operating segment. Furthermore, when the Company charters a vessel to a charterer, the charterer is free to trade the vessel worldwide and, as a result, the disclosure of geographical information is impracticable.

F-23

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

2. Significant Accounting Policies - continued

Recent accounting pronouncements

In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. The main objective of this update is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The amendments in this update replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The ASU requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. In November 2018, FASB issued ASU 2018-19 “Codification Improvements to Topic 326, Financial Instruments-Credit Losses”. The amendments in this update clarify that operating lease receivables are not within the scope of ASC 326-20 and should instead be accounted for under the new leasing standard, ASC 842. For public business entities, the amendments in this update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early application is permitted. The adoption of this ASU is not expected to have a material effect on the Company’s consolidated financial statements and accompanying notes.

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the disclosure requirements for fair value measurement”. The amendments in this update modify the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, based on the concepts in the Concepts Statement, including the consideration of costs and benefits. The amendments in this update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted upon issuance of this update. An entity is permitted to early adopt any removed or modified disclosures upon issuance of this update and delay adoption of the additional disclosures until their effective date. The adoption of this ASU is not expected to have a material effect on the Company’s consolidated financial statements and accompanying notes.

F-24

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

3. Inventories

Inventories consisted of the following:

	2018		2019
Lubricants		1,043,763		1,728,861
Victualing		79,965		160,303
Bunkers		580,663		-
Total		1,704,391		1,889,164

F-25

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

4. Vessels, net

The amounts in the accompanying consolidated balance sheets are as follows:

	Costs	Accumulated Depreciation		Net Book Value
Balance, January 1, 2018	61,279,976	(9,147,897	)	52,132,079
-   Depreciation for the year	-	(3,305,951	)	(3,305,951	)
Balance, December 31, 2018	61,279,976	(12,453,848	)	48,826,128
-   Depreciation for the year	-	(4,178,886	)	(4,178,886	)
-   Vessel acquisitions	71,214,470	-		71,214,470
-   Vessel improvements	368,621	-		368,621
Balance, December 31, 2019	132,863,067	(16,632,734	)	116,230,333

Vessel improvements refer to the installation of Water Ballast Treatment (“WBT”) systems. As of December 31, 2019, only one vessel has completed the installation of the WBT system with a total cost of $0.37 million.

The Company considers the potential sale of its vessels, for scrap or further trading, depending on a vessel’s age, any additional capital expenditures required the expected revenues from continuing to own the vessel and the overall market prospects.

On January 13, 2017, the Company agreed to sell for scrap M/V “RT Dagr”, for a net price of $2.3 million.  The vessel was delivered to its buyers on January 31, 2017. The Company recorded a gain on sale of approximately $0.5 million presented in the “Net gain on sale of vessels” line in the “Operating Expenses” section of the consolidated statements of operations.

F-26

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

4. Vessels, net - continued

On September 30, 2017 the Company decided to sell for scrap M/V “Aggeliki P.” a 2,008 teu 1998-built container carrier and M/V “Monica P” a 46,667 dwt 1998-built drybulk carrier.  Both vessels were written down to their fair market value, resulting in a non-cash loss of $4.6 million, or $3.36 loss per share basic and diluted. These amounts are presented in the "Loss on write-down of vessels held for sale" line in the "Operating Expenses" section of the consolidated statements of operations.  The Company sold M/V “Aggeliki P.” on December 6, 2017 for net proceeds of approximately $4.4 million and recorded a gain on sale of approximately $0.3 million for the year ended December 31, 2017, presented in the “Net gain on sale of vessels” line in the "Operating Expenses" section of the consolidated statements of operations. M/V “Monica P” was sold on June 25, 2018. The sale resulted in a gain of $1.34 million for the year ended December 31, 2018, which is presented in the “Net gain on sale of vessels” line in the "Operating Expenses" section of the consolidated statements of operations.

On June 20, 2017 the Company acquired the feeder containership (2,788 teu, 2004-built) M/V “EM Astoria” for a purchase price of $4.75 million.

 On September 29, 2017 the Company acquired the feeder containership (2,506 teu, 2000-built) M/V “EM Athens” for a purchase price of $4.24 million.

On October 23, 2017 the Company acquired the feeder containership (2,506 teu, 2000-built) M/V “EM Oinousses” for a purchase price of $4.25 million.

 On October 29, 2017 the Company acquired the feeder containership (2,556 teu, 2001-built) M/V “EM Corfu” for a purchase price of $5.66 million.

On December 21, 2017 the Company acquired the intermediate containership (5,610 teu, 2001-built) M/V “Akinada Bridge” for a purchase price of $11.12 million.

On August 2, 2019 the Company acquired the feeder containership (1,740 teu, 2005-built) M/V “EM Hydra” and its attached time charter for a purchase price of $6.73 million.

On August 2, 2019 the Company acquired the feeder containership (2,008 teu, 1998-built) M/V “Diamantis P” for a purchase price of $5.22 million.

On August 7, 2019 the Company acquired the feeder containership (3,100 teu, 2007-built) M/V “EM Kea” and its attached time charter for a purchase price of $9.48 million.

F-27

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

4. Vessels, net - continued

On August 7, 2019 the Company acquired the feeder containership (1,740 teu, 2007-built) M/V “EM Spetses” and its attached time charter for a purchase price of $7.57 million.

On November 19, 2019 the Company acquired the intermediate containership (4,253 teu, 2008-built) M/V “Synergy Antwerp” for a purchase price of $10.11 million.

On November 18, 2019 the Company acquired the intermediate containership (4,253 teu, 2009-built) M/V “Synergy Keelung” for a purchase price of $11.44 million.

On November 19, 2019 the Company acquired the intermediate containership (4,253 teu, 2009-built) M/V “Synergy Oakland” for a purchase price of $10.50 million.

On November 21, 2019 the Company acquired the intermediate containership (4,253 teu, 2009-built) M/V “Synergy Busan” for a purchase price of $10.17 million.

The Company performed the undiscounted cash flow test as of December 31, 2018 and 2019 for those operating vessels whose carrying values were above their respective market values and determined that the net book value of its vessels held for use was recoverable.

All the Company’s vessels have been mortgaged as security for the Company’s loans (refer Note 8).

F-28

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

5.Accrued Expenses

The accrued expenses consisted of:

	As of December 31, 2018		As of December 31, 2019
Accrued payroll expenses		93,404		231,093
Accrued interest expense		565,623		590,216
Accrued general and administrative expenses		348,761		111,720
Accrued commissions		39,545		67,682
Other accrued expenses		254,472		724,610
Total		1,301,805		1,725,321

6.Fair Value of Below Market Time Charters Acquired

As part of the Trinity / Diamantis Vessel Acquisition in August 2019 and with respect to the vessels “EM Hydra”, “EM Kea” and “EM Spetses”, which were acquired by the Company with time charter agreements attached, the Company recognized a liability of $778,287, included in “Fair value of below market time charters acquired” in the consolidated balance sheets, since it was determined that the respective charter rates were below market rates on the date of the transfer (Level 2).

In addition, as part of the Synergy Vessel Acquisition in November 2019 and with respect to the vessels “Synergy Keelung”, “Synergy Oakland” and “Synergy Busan”, which were acquired by the Company with time charter agreements attached, the Company recognized a liability of $1,794,028, included in “Fair value of below market time charters acquired” in the consolidated balance sheets, since it was determined that the respective charter rates were below market rates on the date of the transfer (Level 2).

For the year ended December 31, 2019, the amortization of fair value of the below market acquired time charters was $857,945 and is included under “Time charter revenue” in the consolidated statement of operations.

The unamortized balance of this intangible liability as of December 31, 2019 of $1,714,370 is expected to be amortized within 2020.

F-29

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

7. Related Party Transactions

The Company’s vessel owning companies are parties to management agreements with the Manager which is controlled by members of the Pittas family, whereby the Manager provides technical and commercial vessel management for a fixed daily fee of Euro 685 for each of 2017, 2018 and 2019, under the Company’s Master Management Agreement (“MMA”). An additional fixed management fee (see below) is paid to the Manager for the provision of other management services. Vessel management fees paid to the Manager amounted to $2,632,637, $3,536,094 and $3,671,335 in 2017, 2018 and 2019, respectively, and are recorded in “Related party management fees” in the consolidated statements of operations.

The Company’s MMA with Eurobulk provides for an annual adjustment of the daily management fee due to inflation to take effect January 1 of each year. The vessel management fee for laid-up vessels is half of the daily fee for the period they are laid-up. The MMA, as periodically amended and restated, will automatically be extended after the initial five-year period for an additional five-year period unless terminated on or before the 90th day preceding the initial termination date. Pursuant to the MMA, each ship owning company has signed – and each future ship owning company when a vessel is acquired will sign - with the Manager, a management agreement with the rate and term of these agreements set in the MMA effective at such time.

The MMA was amended and restated as of January 1, 2012 to provide for a 5% discount of the daily fixed vessel management fee for the period during which the number of the Euroseas-owned vessels (including vessels in which Euroseas is a part owner) managed by the Manager is greater than 20 (“volume discount”). The daily fixed vessel management fee was adjusted to Euro 720 per day per vessel in operation and Euro 360 per day per vessel in lay-up before the 5% discount. The Company was entitled to the 5% discount for each of these years. The fee remained unchanged for the subsequent years starting January 1, 2014, 2015, 2016, 2017. The MMA was renewed as of January 1, 2014 for a new five year term until January 1, 2019.

The MMA was further renewed on January 1, 2018 for an additional five year term until January 1, 2023 with the 5% volume discount permanently incorporated in the daily management fee and the daily fixed vessel management fee amounting to Euro 685 per day per vessel in operation and Euro 342.5 for day per vessel in lay-up. The daily fixed vessel management fee remained unchanged for the year 2019 and will be adjusted annually for inflation in the Eurozone. The fee remains unchanged for 2020.

F-30

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

7. Related Party Transactions - Continued

In addition to the vessel management services, the Manager provides executive services to the Company. In 2017 and 2018 up to the Spin-off, compensation for such services to the Company as a public company was $2,000,000 per annum for the Company pre-Spin-off. The amount of such executive compensation allocated to the Company prior to the Spin-off was based on the proportion of the number of calendar days that related to Euroseas post Spin-off vessels to the number of days of the entire fleet of Euroseas. After the Spin-off, the annual compensation for such services was set at $1,250,000.

On November 15, 2019, the Company signed an addendum adjusting the fixed annual executive compensation to $2,000,000 to compensate the Manager for the increase in the fleet and certain management services provided by Synergy Marine Ltd., a company controlled by Andreas Papathomas and which became affiliated with the Company post-acquisition as a result of his appointment to the Board of Directors of the Company in November 2019. As a result, for the year 2019, the fixed cost was calculated at $1,250,000 pro-rated for the period of January 1, 2019 until November 15, 2019 and at $2,000,000 for the period of November 16, 2019 until December 31, 2019. The Company incurred costs of $1,306,476, $1,561,126 and $1,344,250 in 2017, 2018 and 2019, respectively, which are recorded in “General and administrative expenses” in the consolidated statements of operations.

Amounts due to or from related company represent net disbursements and collections made on behalf of the vessel-owning companies by the Management Company during the normal course of operations for which a right of off-set exists.  As of December 31, 2018 and 2019, the amounts due to related company were $2,672,895 and $795,562, respectively. Based on the MMA between Euroseas Ltd. and Euroseas’ ship owning subsidiaries and the Manager an estimate of the quarter’s operating expenses, expected dry-dock expenses, vessel management fee and fee for management executive services are to be advanced by the Company’s ship-owning subsidiaries in the beginning of each quarter to the Manager.

On September 30, 2019, the Company reached an agreement with a related party, Colby Trading Ltd., a company controlled by the Pittas family and affiliated with the Company’s Chief Executive Officer, to draw a $2.5 million loan to finance the special survey and WBT system installation on M/V “Akinada Bridge”. The interest rate applied is 8% per annum. Interest on the loan is payable quarterly. For further details refer to Note 8-g.

On November 1, 2019, the Company entered into a second agreement with Colby Trading Ltd., to draw another $2.5 million loan to finance working capital needs. The interest rate applied is 8% per annum. Interest on the loan is payable quarterly. For further details refer to Note 8-g.

F-31

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

7. Related Party Transactions - continued

The Company uses brokers for various services, as is industry practice.  Eurochart S.A., an affiliated company controlled by certain members of the Pittas family, provides vessel sale and purchase services, and chartering services to the Company whereby the Company pays commission of 1% of the vessel sales price and 1.25% of charter revenues. Commissions to Eurochart S.A. for vessel sales were $70,640, $64,500 and nil in 2017, 2018 and 2019, respectively, recorded in “Net gain on sale of vessels” in the consolidated statements of operations. A commission of 1% of the purchase price is also paid to Eurochart S.A. by the seller of the vessel for the acquisitions the Company makes using Eurochart’s services. The Company withheld, on behalf of Eurochart, commissions of $118,526, nil and nil in 2017, 2018 and 2019, respectively, for vessels the Company acquired. Commissions to Eurochart S.A. for chartering services were, $310,467, $453,361 and $493,341 in 2017, 2018 and 2019, respectively, recorded in “Commissions” in the consolidated statements of operations.

 Certain members of the Pittas family, together with another unrelated ship management company, have formed a joint venture with the insurance broker Sentinel Maritime Services Inc. (“Sentinel”); and with a crewing agent Technomar Crew Management Services Corp (“Technomar”). Technomar is a company owned by certain members of the Pittas family, together with two other unrelated ship management companies. Sentinel is paid a commission on insurance premiums not exceeding 5%; Technomar is paid a fee of about$50 per crew member per month. Total fees charged by Sentinel and Technomar were $89,329 and $101,394 in 2017, $118,684 and $137,385 in 2018, and $106,749 and $142,332 in 2019 respectively.  These amounts are recorded in “Vessel operating expenses” in the consolidated statements of operations.

In August 2019, the Company completed the acquisition of the four feeder containerships, owned by affiliates of the Pittas family including the Company’s CEO (see Note 1), for a consideration of $28.2 million that included a cash payment of $15 million and the issuance of 2,816,901 common shares to the sellers. The vessels acquisition transactions were evaluated and approved by a special committee of independent members of the Board of Directors.

F-32

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

8. Long-Term Bank Loans

This consists of bank loans of the ship-owning companies and is as follows:

Borrower		December 31, 2018			December 31, 2019
Noumea Shipping Ltd.	(a)		3,341,000			-
Gregos Shiping Ltd.	(b)		4,150,000			-
Alterwall Business Inc. / Allendale Investments S.A. / Manolis Shipping Ltd. / Joanna Maritime Ltd. / Jonathan John Shipping Ltd. / Athens Shipping Ltd. / Oinousses Navigation Ltd. / Corfu Navigation Ltd. / Bridge Shipping Ltd. / Noumea Shipping Ltd. / Gregos Shiping Ltd.	(c)		30,000,000			37,650,000
Diamantis Shipowners Ltd.	(d)		-			3,507,220
Kea Shipowners Ltd. / Spetses Shipowners Ltd. / Hydra Shipowners Ltd.	(e)		-			12,050,000
Antwerp Shipping Ltd. / Busan Shipping Ltd. / Keelung Shipping Ltd. / Oakland Shipping Ltd.	(f)		-			32,000,000
			37,491,000			85,207,220
Less: Current portion			(5,212,000	)		(12,541,840	)
Long-term portion			32,279,000			72,665,380
Deferred charges, current portion			125,357			246,520
Deferred charges, long-term portion			237,848			477,595
Debt discount, current portion			216,402			-
Debt discount, long-term portion			324,603			-
Long-term bank loans, current portion net of deferred charges and debt discount			4,870,241			12,295,320
Long-term bank loans, long-term portion net of deferred charges and debt discount			31,716,549			72,187,785
Loan from related party, current
Euroseas Ltd.	(g)		-			5,000,000

F-33

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

8.Long-Term Bank Loans - continued

The future annual loan repayments are as follows:

To December 31:
2020	12,541,840
2021	29,941,840
2022	8,723,540
2023	34,000,000
Total	85,207,220

(a) On December 22, 2016, the supplemental agreement between Credit Agricole and Noumea Shipping Ltd., owner of M/V “Evridiki G” was signed in order to refinance the final quarterly instalment of $720,000 and the balloon payment of $6,360,000 originally due in December 2016. The borrower and the lender agreed to amend the repayment profile in respect of the loan of which $7,080,000 remained outstanding as of the date of the supplemental agreement and to extend the final maturity date to January 2018. The loan will be repaid with three repayments of $720,000 each, due in December 2016, in July 2017 and in January 2018 together with the balloon payment of $4,920,000 due in January 2018. On February 27, 2018, the Company signed and drew a term loan facility of $4,250,000 with Credit Agricole in order to partly refinance the existing indebtedness of M/V “Evridiki G” with the bank. The loan was payable in thirteen consecutive quarterly instalments of $303,000 each and a final instalment in the amount of $311,000. The margin of the loan was 3.00% above LIBOR. The loan was secured with the following: (i) first priority mortgages over M/V “Evridiki G” and collateral vessel (M/V “EM Astoria”), (ii) first assignment of earnings and insurance and (iii) other covenants and guarantees similar to the remaining loans of the Company. The Company completed the refinancing of the specific loan using its revolving loan facility with Eurobank Ergasias S.A., as explained in note (c) below.

F-34

Euroseas Ltd. and Subsidiaries

Notes to consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

8.Long-Term Bank Loans - continued

(b) On June 15, 2017, the Company signed a term loan facility with Credit Agricole and on June 19, 2017 a loan of $4,750,000 was drawn by Gregos Shipping Ltd. to partly finance the acquisition of M/V “EM Astoria”. The loan was payable in twenty or sixteen consecutive equal quarterly installments of $100,000 plus a balloon amount of $2,750,000 or $3,150,000. The margin of the loan was 2.65% above LIBOR. The loan was secured with (i) first priority mortgage over M/V “EM Astoria”, (ii) first assignment of earnings and insurance of M/V “EM Astoria”, (iii) a corporate guarantee of Euroseas Ltd. and other covenants and guarantees similar to remaining loans of the Company. The Company paid a loan arrangement fee of $50,000 in 2017 for this loan. The Company had also entered into a profit sharing agreement with Credit Agricole whereby it would share with the bank, 35% of the excess of the fair market value of the vessel over the outstanding loan when the vessel was sold or when the loan matured. As a result of the lender's entitlement to participate in the appreciation of the market value of the mortgaged vessel, the Company recognized a participation liability of an amount of $1,067,500 as of December 31, 2018, presented in "Vessel profit participation liability" in the consolidated balance sheets, with a corresponding debit to a debt discount account, presented contra to the loan balance. In addition, 35% of the cash flow after debt service would be set aside and be used to repay the balloon payment with any excess funds to be paid to the bank. The Company completed the refinancing of the specific loan in June 2019 using its revolving loan facility with Eurobank Ergasias S.A., as explained in note (c) below, with the final participation liability paid amounting to $950,000 included in the “Repayment of long-term bank loans and vessel profit participation liability” in the consolidated statement of cash flows. The portion of debt discount remaining unamortized at the time of the refinancing was written-off and presented as “Loss on debt extinguishment” in the consolidated statement of operations, partly offset by the lower amount of $950,000 at which the vessel profit participation liability was finally settled as described above.

F-35

Euroseas Ltd. and Subsidiaries

Notes to consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

8.Long-Term Bank Loans - continued

(c) On November 21, 2018, the Company signed a reducing revolving credit facility with Eurobank Ergasias S.A (the “Lender”) for an amount of up to $45,000,000. A loan of $30,000,000 was drawn on November 21, 2018 by Alterwall Business Inc., Allendale Investments S.A., Manolis Shipping Ltd., Joanna Maritime Ltd., Jonathan John Shipping Ltd., Athens Shipping Ltd., Oinousses Navigation Ltd., Corfu Navigation Ltd. and Bridge Shipping Ltd. to fully refinance all of the Company’s existing facilities with this bank and provide working capital. The revolving tranche will be available for a period of 18 months from signing of the loan agreement for the purpose of partly financing new vessel acquisitions or providing working capital and can be renewed subject to the bank’s approval and a fee to be determined. The loan is payable in 12 equal consecutive quarterly principal installments of $900,000 and the balance will be repaid through balloon payment of $19,200,000 together with the last principal installment in November 2021. Each quarterly principal instalment paid is added to the revolving tranche and may be redrawn. The interest rate margin is 3.90% over LIBOR, reduced from 4.40% as described below. The loan is secured with (i) first priority mortgages over M/V “Ninos”, M/V “Kuo Hsiung”, M/V “Aegean Express”, M/V “Manolis P.” M/V “Joanna”, M/V “EM Athens”, M/V “EM Oinousses”, M/V “EM Corfu” and M/V “Akinada Bridge”, (ii) first assignment of earnings and insurance of the aforementioned vessels, (iii) a corporate guarantee of Euroseas Ltd. and other covenants and guarantees similar to the remaining loans of the Company. The Company has the option (at the Lender’s absolute discretion) to substitute a mortgaged vessel by notifying the Lender in writing at least one (1) month prior to the intended substitution date, provided that: a) the substitute vessel is of a similar type, of the same or younger age, having the same or enhanced characteristics (including, without limitation, deadweight, lightweight, shipyard pedigree and technical specifications) and will be 100% owned by a shipowning company, incorporated in a jurisdiction acceptable to the Lender and owned by a ship owning company owned by the Company (directly or indirectly) and b) the new shipowning company provides a first preferred mortgage over the new vessel and a corporate guarantee in favor of the Lender and executes any other security documentation as may be requested by the Lender at its discretion. The Company paid loan arrangement fees of $300,000 within 2018 for this tranche.

F-36

Euroseas Ltd. and Subsidiaries

Notes to consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

8.Long-Term Bank Loans – continued

On May 30, 2019, the Lender made available to the Company two new ship-related (M/V “EM Astoria” and M/V “Evridiki G”) advances totaling $12.0 million or 55% of the aggregate market value of the two aforementioned vessels, with a simultaneous reduction of the margin of the loan, from 4.40% to 3.90% per annum. The borrower also agreed, during the remaining facility period, to reduce the amount held as cash collateral from $5.0 million to $1.0 million and release the balance in favor of the borrower. The loan was used to refinance the existing facilities of Noumea Shipping Ltd. and Gregos Shiping Ltd. and to provide working capital. The loan is payable in 16 equal consecutive quarterly principal installments of $375,000 and the balance will be repaid through a balloon payment of $6,000,000 together with the last principal installment in May 2023. The loan is secured with (i) first priority mortgages over M/V “Evridiki G” and M/V “EM Astoria”, (ii) first assignment of earnings and insurance of the aforementioned vessels, (iii) a corporate guarantee of Euroseas Ltd. and other covenants and guarantees similar to the remaining loans of the Company. The Company paid a loan arrangement fee of $32,000 within 2019 for this tranche.

The security cover ratio covenant for the facility is set to 140%. The remaining $7,350,000 of the revolving facility, after including principal repayments up to December 31, 2019, remains available to the company in order to finance up to 55% of the market value of post 2001-built ships. The new tranches will be repaid through sixteen quarterly principal instalments with the amount of each such instalment being equal to such amount so that the balloon amount to be equal to 50% of the initially drawn relevant tranche. The undrawn amounts available under the revolving facility pay an annual commitment of 0.40% and any amount drawn will pay a 1% underwriting fee.

(d) On July 29, 2019, the Company signed a term loan facility with Piraeus Bank S.A. for an amount not exceeding the lesser between $4,000,000 and 90% of the scrap value of M/V “Diamantis P”. On July 31, 2019, a loan of $3,667,680 was drawn by Diamantis Shipping Ltd. to partly finance the acquisition of M/V “Diamantis P”. The loan is payable in twelve equal consecutive quarterly instalments of $160,460 plus a balloon amount of $1,742,160 paid together with the last instalment in July 2022. The margin of the loan is 3.50% over LIBOR. The loan is secured with (i) first priority mortgage over M/V “Diamantis P”, (ii) first assignment of earnings and insurance of M/V “Diamantis P”, (iii) a corporate guarantee of Euroseas Ltd. and other covenants and guarantees similar to remaining loans of the Company. The Company paid a loan arrangement fee of $32,000 within 2019 for this loan. The security cover ratio covenant for the facility is set to 110% until the first anniversary of the drawdown date and 120% thereafter.

F-37

Euroseas Ltd. and Subsidiaries

Notes to consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

8.Long-Term Bank Loans – continued

(e) On July 30, 2019, the Company signed a term loan facility with HSBC Bank plc. for an amount of $12,500,000. The loan was used to partly finance the acquisition of M/V “EM Hydra”, M/V “EM Kea” and M/V “EM Spetses”. The loan was drawn in tranches upon the delivery of each vessel to the Company with the last drawdown taking place on August 8, 2019.The loan is payable in fourteen consecutive equal quarterly installments of $450,000 and a balloon payment of $6,200,000 paid with the last instalment in February 2023. The loan bears interest at LIBOR plus a margin of 2.95%. The loan is secured with (i) first priority mortgages over M/V “EM Hydra”, M/V “EM Kea” and M/V “EM Spetses” (ii) first assignment of earnings and insurance of the abovementioned vessels, (iii) a corporate guarantee of Euroseas Ltd. and other covenants and guarantees similar to the remaining loans of the Company. The Company paid loan arrangement fees of $62,500 within 2019 for this loan. The security cover ratio covenant for the facility is set to 130%.

(f) On November 8, 2019, the Company signed a term loan facility with Piraeus Bank S.A. for an amount of $32,000,000. The loan was used to partly finance the acquisition of M/V “Synergy Antwerp”, M/V “Synergy Busan”, M/V “Synergy Keelung” and M/V “Synergy Oakland”. The loan was drawn in tranches upon the delivery of each vessel to the Company with the last drawdown taking place on November 18, 2019. The loan is payable in three consecutive equal quarterly instalments of $1,400,000 followed by thirteen consecutive equal quarterly instalments of $800,000 and a balloon payment of $17,400,000 paid with the last instalment. The loan bears interest at LIBOR plus a margin of 3.50%. The loan is secured with (i) first priority mortgages over M/V “Synergy Antwerp”, M/V “Synergy Busan”, M/V “Synergy Keelung” and M/V “Synergy Oakland” (ii) first assignment of earnings and insurance of the abovementioned vessels, (iii) a corporate guarantee of Euroseas Ltd. and other covenants and guarantees similar to the remaining loans of the Company. The Company paid loan arrangement fees of $352,000 within 2019 for this loan. The security cover ratio covenant for the facility is set to 125%.

(g) On September 30, 2019, Euroseas signed an agreement with Colby Trading Ltd., a company controlled by the Pittas family and affiliated with the Company’s Chief Executive Officer, as further supplemented on December 20, 2019 and March 30, 2020, to draw down a $2.5 million loan to finance the special survey and WBT system installation on M/V “Akinada Bridge”. Interest on the loan is 8% per annum and is payable quarterly. Euroseas will repay the loan in four repayment instalments of a principal amount of $625,000 each. The first repayment instalment will be due on May 15, 2020 and the remaining three instalments will be paid on a quarterly basis thereafter and the loan will be paid in full by November 2020. Under certain circumstances, the Company can pay principal in equity, and the loan is convertible in common stock of the Company at the option of the lender at certain times. The Company paid $51,111 in interest for this loan for the fiscal year 2019.

F-38

Euroseas Ltd. and Subsidiaries

Notes to consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

8.Long-Term Bank Loans – continued

On November 1, 2019, Euroseas signed a second agreement with Colby Trading Ltd. to draw another $2.5 million loan to finance working capital needs. Interest on the loan is 8% per annum and is payable quarterly. There are no principal repayments until December 31, 2020, when the loan matures. Under certain circumstances, the Company can pay principal in equity, and the loan is convertible in common stock of the Company at the option of the lender at certain times.  The Company paid $33,333 in interest for this loan for the fiscal year 2019.

In addition to the terms specific to each loan described above, all the above loans are secured with a pledge of all the issued shares of each borrower.

The loan agreements also contain covenants such as minimum requirements regarding the hull ratio cover  (the ratio of fair value of vessel to outstanding loan less cash in retention accounts ranging from 120% to 140%), restrictions as to changes in management and ownership of the ship-owning companies, distribution of profits or assets (i.e. not permitting dividend payment or other distributions in cases that an event of default has occurred), additional indebtedness and mortgage of vessels without the lender’s prior consent, sale of vessels, maximum fleet-wide leverage, sale of capital stock of our subsidiaries, ability to make investments and other capital expenditures, entering in mergers or acquisitions, minimum cash balance requirements and minimum cash retention accounts (restricted cash).  The loan agreements also require the Company to make deposits in retention accounts with certain banks that can only be used to pay the current loan instalments. Minimum cash balance requirements are in addition to cash held in retention accounts. These cash deposits amounted to $5,717,063 and $4,410,376 as of December 31, 2018 and 2019, respectively, and are included in “Restricted cash” under “Current assets” and “Long-term assets” in the consolidated balance sheets. As of December 31, 2019, all the debt covenants are satisfied.

Interest expense for the years ended December 31, 2017, 2018 and 2019 amounted to $1,380,458, $2,703,845 and $3,219,471 respectively.

F-39

Euroseas Ltd. and Subsidiaries

Notes to consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

9.Income Taxes

Under the laws of the countries of the companies’ incorporation and/or vessels’ registration, the companies are not subject to tax on international shipping income, however, they are subject to registration and tonnage taxes, which have been included in “Vessel operating expenses” in the consolidated statements of operations.

Under the United States Internal Revenue Code of 1986, as amended (the "Code"), the U.S. source gross transportation income of a ship-owning or chartering corporation, such as the Company, is subject to a 4% U.S. Federal income tax without allowance for deduction, unless that corporation qualifies for exemption from tax under Section 883 of the Code and the Treasury Regulations promulgated thereunder. U.S. source gross transportation income consists of 50% of the gross shipping income that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States.

Under the Code, a corporation will be exempt from U.S. federal income tax if its stock is primarily and regularly traded on an established securities market in its country of organization, in another country that grants an "equivalent exemption" to United States corporations, or in the United States, which is referred to as the “Publicly Traded Test”. Under IRS regulations, a Company’s shares will be considered to be regularly traded on an established securities market if (i) one or more classes of its shares representing 50% or more of its outstanding shares, by voting power of all classes of shares of the corporation entitled to vote and of the total value of the shares of the corporation, are listed on the market and (ii) (A) such class of share is traded on the market, other than in minimal quantities, on at least 60 days during the taxable year or one sixth of the days in a short taxable year; and (B) the aggregate number of shares of such class of share traded on such market during the taxable year must be at least 10% of the average number of shares of such class of share outstanding during such year or as appropriately adjusted in the case of a short taxable year.  Notwithstanding the foregoing, the treasury regulations provide, in pertinent part, that a class of the Company’s shares will not be considered to be “regularly traded” on an established securities market for any taxable year in which 50% or more of the vote and value of the outstanding shares of such class are owned, actually or constructively under specified share attribution rules, on more than half the days during the taxable year by persons who each own 5% or more of the vote and value of such class of the Company’s outstanding shares (“5% Override Rule”).

For 2017 and 2018 the Company did not qualify for this exemption. The Company is subject to an effective 2% United States federal tax on the U.S. source shipping income that is attributable to the transport of cargoes to or from the United States which is not considered an income tax. The amount of this tax for the years ended December 31, 2017 and 2018 was $15,135 and $19,726, respectively. The amount of the 2017 tax was paid on September 17, 2018 and the amount of the 2018 tax was paid on June 15, 2019 and was recorded within "Vessel operating expenses" in the consolidated statements of operations when paid.

For the taxable years 2019 the Company believes that it was exempt from U.S. federal income tax of 4% on U.S. source shipping income, as it believes that it satisfies the Publicly Traded Test for this year, although it is subject to the 5% Override Rule, because the non-qualified 5% shareholders did not own more than 50% of the Company’s common stock for more than half of the days during the taxable year.

F-40

Euroseas Ltd. and Subsidiaries

Notes to consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

10. Commitments and Contingencies

(a) As of December 31, 2019 a subsidiary of the Company, Alterwall Business Inc. owner of M/V “Ninos”, is involved in a dispute with a fuel oil supplier who claimed a maritime lien against the vessel after the company which had time-chartered the vessel from the Company went bankrupt in October 2009 and failed to pay certain invoices. The vessel was arrested in Karachi in November 2009 and released after a bank guarantee for an amount of $0.53 million was provided on behalf of the Company, for which the bank has restricted an equal amount of the Company's cash which is presented within “Restricted Cash” in the consolidated balance sheets. The legal proceedings are ongoing.  Although the Company believes it will be successful in its claim, it made a provision of $0.15 million in 2016, for any costs that may be incurred.

(b) On November 7, 2019, Euroseas Ltd. and Synergy Holdings Limited, on the basis of the acquisition of the vessels M/V “Synergy Busan”, M/V “Synergy Keelung”, M/V “Synergy Oakland” and M/V “Synergy Antwerp” (refer Notes 1 and 4), have agreed that Euroseas will issue certain shares of its common stock to Synergy Holdings Limited under the following terms:

If the 12-month New ConTex index for a 4,250 TEU vessel (as published on https://www.vhbs.de/index or any successor website maintained by the Hamburg and Bremen Shipbrokers’ Association) (the “Index Value”) is higher on November 16, 2020 at 4:00 p.m. New York time than the Index Value on November 15, 2019 at 4:00 p.m. New York time, then, on November 16, 2020, Euroseas shall issue to Synergy Holdings Limited, $500,000 divided by the 20-day volume weighted average price of the Company’s common shares calculated on November 16, 2020 at 4:00 p.m. New York time.

The Company based on its assessment of future rates as of December 31, 2019, concluded that it is not probable that it will have to pay the specific contingent consideration.

F-41

Euroseas Ltd. and Subsidiaries

Notes to consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

10. Commitments and Contingencies - continued

There are no other material legal proceedings to which the Company is a party or to which any of its properties are subject, other than routine litigation incidental to the Company’s business.  In the opinion of the management, the disposition of these lawsuits should not have a material impact on the consolidated results of operations, financial position and cash flows.

As of December 31, 2019, future gross minimum revenues under non-cancellable time charter agreements total $17.2 million, all of which is due in the year ending December 31, 2020. This amount does not include the future gross minimum revenues upon collection of hire under non-cancellable time charter agreements of M/V “Synergy Antwerp” which is on index linked charters. In arriving at the future gross minimum revenues, the Company has deducted an estimated one off-hire day per quarter. Such off-hire estimate may not be reflective of the actual off-hire in the future. In addition, the actual revenues could be affected by early delivery of the vessel by the charterers or any exercise of the charterers’ options to extend the terms of the charters, which however cannot be estimated and hence not reflected above.

F-42

Euroseas Ltd. and Subsidiaries

Notes to consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

11.Stock Incentive Plan

On July 31, 2014, the Board of Directors approved the Company’s 2014 Stock Incentive Plan (the“2014 Plan”). On May 5, 2018, the Board of Directors approved a new equity incentive plan (the “2018 Plan”) to replace the 2014 Plan. The 2018 Plan is administered by the Board of Directors which can make awards totaling in aggregate up to 75,000 shares, over 10 years after the 2018 Plan’s adoption date. The persons eligible to receive awards under the 2018 Plan are officers, directors, and executive, managerial, administrative and professional employees of the Company or Eurobulk or Eurochart (collectively, “key persons”) as the Board, in its sole discretion, shall select based upon such factors as the Board shall deem relevant.  Awards may be made under the 2018 Plan in the form of incentive stock options, non-qualified stock options, stock appreciation rights, dividend equivalent rights, restricted stock, unrestricted stock, restricted stock units and performance shares. Details of awards granted under the 2014 Plan and the 2018 Plan during the three year period ended December 31, 2019 are noted below.

a) On November 2, 2017 an award of 12,534 non-vested restricted shares, was made to 18 key persons of which 50% vested on July 1, 2018 and 50% vested on July 1, 2019; awards to officers and directors amounted to 7,213 shares and the remaining 5,321 shares were awarded to employees of Eurobulk.

b) On November 21, 2018 an award of 15,681 non-vested restricted shares, was made to 18 key persons of which 50% vested on November 16, 2019 and 50% will vest on November 16, 2020; awards to officers and directors amounted to 9,021 shares and the remaining 6,660 shares were awarded to employees of Eurobulk.

c) On November 4, 2019 an award of 15,444 non-vested restricted shares, was made to 17 key persons of which 50% will vest on July 1, 2020 and 50% will vest on July 1, 2021; awards to officers and directors amounted to 8,713 shares and the remaining 6,731 shares were awarded to employees of Eurobulk.

All non-vested restricted shares are conditional upon the grantee’s continued service as an employee of the Company, Eurobulk or as a director until the applicable vesting date. The grantee does not have the right to vote on such non-vested restricted shares until they vest or exercise any right as a shareholder of these shares, however, the non-vested shares will accrue dividends as declared and paid which will be retained by the Company until the shares vest at which time they are payable to the grantee. As non-vested restricted share grantees accrue dividends on awards that are expected to vest, such dividends are charged to retained earnings.

The Company accounts for restricted share awards forfeitures as they occur. During 2017, 538 shares were forfeited with a weighted-average grant-date fair value of $22.24 per share. No forfeitures occurred in the years ended December 31, 2018 and 2019.

F-43

Euroseas Ltd. and Subsidiaries

Notes to consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

11.Stock Incentive Plan - continued

The compensation cost that has been charged against income for awards was $116,562, $124,487 and $97,919, for the years ended December 31, 2017, 2018 and 2019, respectively and is included within “General and administrative expenses” in the consolidated statements of operations. The Company has used the straight-line method to recognize the cost of the awards.

A summary of the status of the Company’s non-vested shares as of December 31, 2019 and changes during the year ended December 31, 2019, are presented below:

Non-vested Shares	Shares			Weighted-Average Grant-Date Fair Value
Non-vested on January 1, 2019		21,948			10.16
Granted		15,444			5.84
Vested		(14,108	)		11.01
Non-vested on December 31, 2019		23,284			6.77

As of December 31, 2019, there was $172,887 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the 2018 Plan and is expected to be recognized over a weighted-average period of 0.75 years. The total fair value at grant-date of shares granted during the year ended December 31, 2017, December 31, 2018, and December 31, 2019 was $176,475, $134,232 and $90,193 respectively.

F-44

Euroseas Ltd. and Subsidiaries

Notes to consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

12. Loss Per Share

Basic and diluted loss per common share is computed as follows:

	2017			2018			2019
Income:
Net loss, continuing operations		(6,944,261	)		(663,396	)		(1,682,671	)
Dividends to Series B preferred shares		(1,808,811	)		(1,335,733	)		(1,271,782	)
Preferred deemed dividend		-			-			(504,577	)
Net loss attributable to common shareholders, continuing operations		(8,753,072	)		(1,999,129	)		(3,459,030	)
Weighted average common shares –outstanding , basic and diluted		1,383,440			1,414,775			2,861,928
Basic and diluted loss per share, continuing operations		(6.33	)		(1.41	)		(1.21	)
Net income attributable to common shareholders, discontinued operations		849,701			554,506			-
Net loss attributable to common shareholders		(7,903,371	)		(1,444,623	)		(3,459,030	)
Basic and diluted loss per share		(5.72	)		(1.02	)		(1.21	)

During 2017, 2018 and 2019, the effect of the non-vested stock awards and of Series B Preferred Shares was anti-dilutive. The number of dilutive securities was nil shares in 2017, 2018 and 2019.

F-45

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

13.Voyage and Vessel Operating Expenses

These consisted of:

	Year ended December 31,
	2017		2018		2019
Voyage expenses
Port charges and canal dues		1,156,511		384,893		251,197
Bunkers		407,978		876,195		804,211
Total		1,564,489		1,261,088		1,055,408
Vessel operating expenses
Crew wages and related costs		8,771,386		11,020,924		13,111,682
Insurance		1,261,976		1,537,539		1,844,088
Repairs and maintenance		643,788		1,043,632		1,110,995
Lubricants		1,169,412		1,665,849		2,029,230
Spares and consumable stores		2,391,420		3,445,422		4,758,290
Professional and legal fees		10,037		252,156		259,311
Other		771,323		1,020,648		869,686
Total		15,019,342		19,986,170		23,983,282

14.Derivative Financial Instruments

Interest rate swaps

Effective October 17, 2014, the Company entered into one interest rate swap with Eurobank  Ergasias S.A. (“Eurobank”) for a notional amount of $10.0 million, in order to manage interest costs and the risk associated with changing interest rates of the Company’s loans. Under the terms of the swap, Eurobank made a quarterly payment to the Company equal to the 3-month LIBOR while the Company paid an adjustable rate averaging 1.97% (more specifically, the Company paid the fixed rate of 0.50% until November 28, 2016 then 0.95% until November 28, 2017 and then 3.55% until May 28, 2019) based on the relevant notional amount.

F-46

 Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

14.Derivative Financial Instruments - continued

The interest rate swap contract did not qualify for hedge accounting as of December 31, 2018. As of December 31, 2019, the Company had no interest rate swaps open positions.

Derivatives not designated as hedging instruments	Balance Sheet Location	December 31, 2018	December 31, 2019
Interest rate swap contract	Current liabilities – Derivatives	41,435	-
Total derivative liabilities		41,435	-

Derivatives not designated as hedging instruments	Location of gain (loss) recognized	Year Ended December 31, 2017	Year Ended December 31, 2018	Year Ended December 31, 2019
Interest rate swap contract– Unrealized (loss) / gain	(Gain) / loss on derivatives, net	(5,901)	204,647	-
Interest rate swap contract - Realized  gain / (loss)	Gain / (loss) on derivatives, net	19,071	(201,745)	(2,885)
Total net gain / (loss) on interest rate swap contract		13,170	2,902	(2,885)

Freight Forward Agreements (“FFA”)

In December 2017, the Company entered into three FFA contracts on the Baltic Panamax Index (“BPI”) for the first three calendar months of 2018, totaling 90 days at an average time charter equivalent rate of $11,000 per day. The contracts are settled on a monthly basis using the average of the BPI for the days of the month the BPI is published.  The Company receives a payment if the average BPI for the month is below the contract rate equal to the difference of the contract rate less the average BPI for the month times the number of contract days sold; if the average BPI for the month is greater than the contract rate, the Company makes a payment equal to the difference of the average BPI for the month less the contract rate times the number of contract days sold. If the Company buys contracts previously sold (or the opposite) the Company receives or pays the difference of the two rates for the period covered by the contracts.

F-47

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

14.Derivative Financial Instruments - continued

The FFA contracts did not qualify for hedge accounting. The Company follows guidance relating to “Fair value measurements” to calculate the fair value of the FFA contracts (see Note 16).

FFA contracts not designated as hedging instruments	Location of gain (loss) recognized	Year Ended December 31, 2017	Year Ended December 31, 2018	Year Ended December 31, 2019
FFA contracts – Unrealized loss	Gain / (loss) on derivatives, net	(781)	-	-
FFA contracts – Realized loss	Gain / (loss) on derivatives, net	-	(47,245)	-
Total loss on FFA contracts		(781)	(47,245)	-

F-48

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

15.Preferred shares

	Number of Shares			Preferred Shares Amount			Dividends paid-in-kind			Total
Balance, January 1, 2017		35,505			29,000,000			4,804,948			33,804,948
Dividends declared		1,809			-			1,808,811			1,808,811
Balance, December 31, 2017		37,314			29,000,000			6,613,759			35,613,759
Dividends declared		1,333			-			1,335,733			1,335,733
Shares distributed to EuroDry		(19,042	)		(14,500,000	)		(3,692,131	)		(18,192,131	)
Balance, December 31, 2018		19,605			14,500,000			4,257,361			18,757,361
Dividends declared		81			-			78,639			78,639
Redemption of shares		(11,686	)		(8,155,055	)		(3,530,945	)		(11,686,000	)
Preferred deemed dividend		-			504,577			-			504,577
Balance, December 31, 2019		8,000			6,849,522			805,055			7,654,577

On January 27, 2014, the Company entered into an agreement to sell 25,000 shares of its Series B Convertible Perpetual Preferred Shares ("Series B Preferred Shares") to a fund managed by Tennenbaum Capital Partners, LLC ("TCP") and 5,700 shares to Preferred Friends Investment Company Inc, an affiliate of the Company, for total net proceeds of approximately $29 million. The redemption amount of the Company’s Series B Preferred Shares is $1,000 per share. The Company used the proceeds for the acquisition of vessels and general corporate purposes. The Series B Preferred Shares paid dividends in-kind until January 29, 2019 at a rate of 5%.

F-49

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

15.Preferred shares - continued

The dividend rate increased to 12% for the two years following January 29, 2019 and to 14% thereafter and is payable only in cash. Cash dividends are declared at each quarter and actual payments are made within the following quarter. If a cash dividend is paid on the Company's common stock after January 29, 2019, the holders of Series B Preferred Shares shall receive an additional cash dividend in an amount equal to 40% of the common stock dividend it would have received on an as-converted basis.The Series B Preferred Shares can be converted at the option of their holders at any time, and at the option of the Company only if certain share price and liquidity milestones are met. Each Series B Preferred Share is convertible into common stock at a conversion price of $15.58 (as adjusted in September 2015 following the shareholders’ rights offering of the Company) subject to further adjustment for certain events. The Series B Preferred Shares are redeemable in cash by the Company at any time after the fifth anniversary of the original issue date. Holders of the Series B Preferred Shares may require the Company to redeem their shares only upon the occurrence of certain corporate events.

At the Spin-off date Euroseas distributed EuroDry Series B Preferred Shares to holders of Euroseas' Series B Preferred Shares in exchange for a number of such Euroseas Series B Preferred Shares, representing 50% of Euroseas Series B Preferred Stock, i.e. $14,500,000 of the initial preferred shares amount of the Company and $3,692,131 of dividends paid in kind. Euroseas contributed to EuroDry its interests in seven of its drybulk subsidiaries and related intercompany debts andobligations in exchange for approximately 2,254,830 of EuroDry common shares and 19,042 of EuroDry Series B Preferred Shares (representing all of the EuroDry's issued and outstanding stock as of that time). Euroseas made a special dividend of 100% of EuroDry's outstanding common shares to holders of Euroseas' common stock as of the record date of the special dividend. In addition, Euroseas distributed 100% of EuroDry Series B Preferred Shares to holders of Euroseas' Series B Preferred Shares as described above.

On June 10, 2019 the Company proceeded in the redemption of $11.7 million of value, or about 59.4%, of its outstanding Series B Preferred Shares with a simultaneous reduction of 4% of the dividend rate for the $8 million value of preferred shares remaining outstanding until January 2021. After that date the dividend rate will increase to 14%. The difference between (1) the fair value of the consideration transferred to the holders of the Series B Preferred Shares (comprising the cash payment offered) and (2) the carrying amount of the Series B Preferred Shares before the redemption (net of issuance costs) amounted to $504,577, and was recorded as a preferred deemed dividend.

For each of the years ended December 31, 2017 and 2018, the Company declared four consecutive dividends totaling $1.81 million and $1.34 million, respectively, all of which were paid in kind. For the year ended December 31, 2019 the Company declared dividends of $1.27 million, of which $0.08 million were paid in-kind, $1.03 million were paid in cash during 2019 and another $0.16 million were accrued as of December 31, 2019 and were paid in cash in the first quarter of 2020. The redemption liability as of December 31, 2019 is $8,000,000.

F-50

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

15.Preferred shares - continued

Subject to certain ownership thresholds, holders of Series B Preferred Shares have the right to appoint one director to the Company's board of directors and TCP also has consent rights over certain corporate actions. In addition, the holders of Series B Preferred Shares will vote as one class with the Company's common stock on all matters on which shareholders are entitled to vote, with each Series B Preferred Share having a number of votes equal to 50% of the numbers of shares of common stock of the Company into which such Series B Preferred Share would be convertible on the applicable record date.

16.Financial Instruments

The principal financial assets of the Company consist of cash and cash equivalents, restricted cash, trade accounts receivable and other receivables. The principal financial liabilities of the Company consist of long-term bank loans, derivatives, trade accounts payable, accrued expenses and amount due to related company.

Interest rate risk

From time to time, the Company enters into interest rate swap contracts as economic hedges to manage some of its exposure to variability in its floating rate long term bank loans. Under the terms of the interest rate swaps the Company and the bank agree to exchange, at specified intervals the difference between a paying fixed rate and receiving floating rate interest amount calculated by reference to the agreed principal amounts and maturities.  Interest rate swaps allow the Company to convert long-term borrowings issued at floating rates into equivalent fixed rates. Even though, historically, the interest rate swaps were entered into for economic hedging purposes, as noted in Note 14 they did not qualify for hedge accounting, under the guidance relating to Derivatives and Hedging, as the Company did not have written contemporaneous documentation identifying the risk being hedged and, both on a prospective and retrospective basis, performing an effectiveness test to support that the hedging relationship is highly effective. Consequently, the Company recognized the change in fair value of these derivatives in the “Gain / (loss) on derivatives, net” in the consolidated statements of operations. As of December 31, 2018, the Company had one open swap contract for a notional amount of $10.0 million. As described above in Note 14, this contract matured at the end of May 2019 and as of December 31, 2019 the Company had no interest rate swaps open positions.

Concentration of credit risk

Financial instruments, which potentially subject the Company to significant concentration of credit risk consist primarily of cash and trade accounts receivable. The Company places its temporary cash investments, consisting mostly of deposits, with high credit qualified financial institutions. The Company performs periodic evaluation of the relative credit standing of these financial institutions that are considered in the Company’s investment strategy. The Company limits its credit risk with trade accounts receivable by performing ongoing credit evaluations of its customers’ financial condition and generally does not require collateral for its trade accounts receivable.

F-51

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

16.Financial Instruments - continued

Fair value of financial instruments

The Company follows guidance relating to “Fair value measurements”, which establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosure about fair value measurements.  This statement enables the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. The statement requires that assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities;

Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data;

Level 3: Unobservable inputs that are not corroborated by market data.

The fair value of the Company’s investments in FFA contracts are determined based on quoted prices in active markets and therefore are considered Level 1 of the fair value hierarchy as defined in guidance relating to "Fair value measurements".

The fair value of the Company’s interest rate swap agreements is determined using a discounted cash flow approach based on market-based LIBOR swap rates.  LIBOR swap rates are observable at commonly quoted intervals for the full terms of the swaps and therefore are considered Level 2 items. The fair values of the interest rate swap determined through Level 2 of the fair value hierarchy as defined in guidance relating to "Fair value measurements" are derived principally from or corroborated by observable market data. Inputs include quoted prices for similar assets, liabilities (risk adjusted) and market-corroborated inputs, such as market comparables, interest rates, yield curves and other items that allow value to be determined.

F-52

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

16.Financial Instruments - continued

Recurring Fair Value Measurements

	Fair Value Measurement as of December 31, 2018
	Total,		(Level 1)		(Level 2)		(Level 3)
Liabilities
Interest rate swap contract, current portion	$	41,435		-	$	41,435		-

F-53

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

16.Financial Instruments - continued

Asset Measured at Fair Value on a Non-recurring Basis

On June 15, 2017, the Company entered into a profit sharing agreement with Credit Agricole whereby it would share with the bank 35% of the excess of the fair market value of M/V “EM Astoria” over the outstanding loan when the vessel was sold or when the loan matured. As a result of the lender's entitlement to participate in the appreciation of the market value of the mortgaged vessel, the Company recognized a participation liability of amount $1,067,500 as of December 31, 2018, presented in "Vessel profit participation liability" in the consolidated balance sheets, with a corresponding debit to a debt discount account, presented contra to the loan balance. The fair value of this participation agreement is considered Level 2, as it directly depends on the fair value or expected fair value of M/V “EM Astoria”. The Company completed the refinancing of the specific loan in June 2019 using its revolving loan facility with Eurobank Ergasias S.A., as explained in Note 8-c above, with the final participation liability paid amounting to $950,000.

As of September 30, 2017 the vessel M/V “Monica P” with a carrying amount of $8.23 million, was classified as vessel held for sale and written down to its fair value of $5.0 million, less estimated costs to sell of $0.10 million, resulting in a loss of $3.33 million, which was included in the consolidated statements of operations under “Loss on write-down of vessels held for sale”. The fair value of M/V “Monica P” is considered Level 2.

As of September 30, 2017 the vessel M/V “Aggeliki P” with a carrying amount of $5.39 million, was classified as vessel held for sale and written down to its fair value of $4.3 million, less estimated costs to sell of $0.17 million, resulting in a loss of $1.26 million, which was included in the accompanying consolidated statements of operations under “Loss on write-down of vessels held for sale”. The fair value of M/V “Aggeliki P” is considered Level 2.

F-54

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

16.Financial Instruments - continued

Asset Measured at Fair Value on a Non-recurring Basis - continued

Nonrecurring Fair Value Measurements at Reporting Date

	December 31, 2017
	Fair Value		Level 1		Level 2		Level 3		Loss 2017
Vessel profit participating liability	$	1,297,100		-	$	1,297,100		-		-
Vessels held for sale	$	5,000,000		-	$	5,000,000		-	$	4,595,819
	December 31, 2018
	Fair Value		Level 1		Level 2		Level 3		Loss 2018
Vessel profit participating liability	$	1,067,500		-	$	1,067,500		-		-
	December 31, 2019
	Fair Value		Level 1		Level 2		Level 3		Loss 2019
Vessel profit participating liability		-		-		-		-		-

The estimated fair values of the Company’s financial instruments such as cash and cash equivalents and restricted cash approximate their individual carrying amounts as of December 31, 2018 and 2019, due to their short-term maturity.  Cash and cash equivalents and restricted cash are considered Level 1 items as they represent liquid assets with short-term maturities. The fair value of the Company’s total borrowings approximates $87.1 million as of December 31, 2019 or $3.1 million less than their carrying value of $90.2 million. The fair value of the long term borrowings is estimated based on current interest rates offered to the Company for similar loans. LIBOR rates are observable at commonly quoted intervals for the full terms of the loans and hence fair values of the long-term bank loans are considered Level 2 items in accordance with the fair value hierarchy due to their variable interest rate, being the LIBOR.

F-55

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

17. Discontinued Operations

Following the close of trading on the Nasdaq Capital Market on May 30, 2018, the Company completed the spin-off of its drybulk fleet (excluding M/V Monica P, a handymax drybulk carrier, which was agreed to be sold) to EuroDry Ltd (Note 1). Accordingly, the results of operations and financial condition of EuroDry have been presented in discontinued operations for all historical comparative periods presented. The revenue and loss for the discontinued operations for the periods ended December 31, 2017, 2018 and 2019 are analyzed as follows:

				Year Ended December 31 (discontinued operations)
	2017			2018			2019
Statement of Operations Data
Voyage revenue		20,280,215			25,934,204			-
Commissions (including, $253,503, $324,178 and nil respectively, to related party)		(1,122,196	)		(1,411,333	)		-
Voyage expenses		(2,396,318	)		(410,676	)		-
Vessel operating expenses (including, $102,131, $115,026 and nil, respectively, to related party)		(6,892,388	)		(9,183,152	)		-
Drydocking expenses		(127,509	)		(1,465,079	)		-
Related party management fees		(1,409,716	)		(1,701,340	)		-
Vessel depreciation		(4,786,272	)		(5,422,155	)		-
General and administrative expenses (including $693,524, $731,456 and nil, respectively, to related party)		(917,160	)		(2,346,502	)		-
Operating income		2,628,656			3,993,967			-
Total other expenses, net		(1,778,955	)		(2,874,232	)		-
Net income		849,701			1,119,735			-
Dividend Series B Preferred Shares		-			(565,229	)		-
Net income attributable to common shareholders		849,701			554,506			-

F-56

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

17. Discontinued Operations - continued

Euroseas contributed to EuroDry its interests in seven of its drybulk subsidiaries and related intercompany debts and obligations in exchange for 2,254,830 of EuroDry common shares and 19,042 of EuroDry Series B Preferred Shares (representing all of EuroDry's issued and outstanding stock as of May 30, 2018). 

Up to the Spin-off date, Euroseas had contributed to EuroDry an amount of $52.52 million as equity in order to partly finance the acquisition of the vessels contributed to EuroDry (M/V Pantelis, M/V Eirini, M/V Xenia and M/V Ekaterini), other general and administrative expenses allocated from the Company to EuroDry as well as the amounts recognized as loss on termination and impairment of shipbuilding contracts described above. An amount of $9.66 million was also allocated to EuroDry from the Company’s accumulated deficit, comprising the accumulated deficit of the Subsidiaries. In total an amount of $42.86 million was allocated from the Company’s shareholders’ equity to EuroDry’s shareholders’ equity.

18.Common Stock

As per the Company’s Amended and Restated Articles of Incorporation, the Company is authorized to issue 200,000,000 shares of common stock, par value $0.03 per share.

Each outstanding share of common stock is entitled to one vote, either in person or by proxy, on all matters that may be voted upon by their holders at meetings of the shareholders. Subject to preferences that may be applicable to any outstanding preferred shares, holders of our common stock (i) have equal ratable rights to dividends from funds legally available therefore, if declared by the Board of Directors; (ii) are entitled to share ratably in all of the Company’s assets available for distribution upon liquidation, dissolution or winding up; and (iii) do not have preemptive, subscription or conversion rights or redemption or sinking fund provisions. All issued shares of our common stock when issued will be fully paid for and non-assessable. The rights, preferences and privileges of holders of common shares are subject to the rights of the holders of any preferred shares which the Company has issued or may issue in the future.

During January 2017, following the Company’s prospectus filed with the SEC on December 20, 2016, as further supplemented by the prospectus dated January 13, 2017, the Company issued and sold at-the-market (ATM) 37,723 shares of common stock for gross proceeds net of commissions of $0.6 million.

In addition, during the year ended December 31, 2017, the Company issued 12,534 common shares to the Company’s directors and officers and employees of the Manager in connection with its equity incentive plans (Note 11).

During November 2018, following the Company’s prospectus supplement filed with the SEC on December 20, 2016, as further supplemented by the prospectus dated January 13, 2017 and October 30, 2018, the Company issued and sold at-the-market (ATM) 139,509 shares of common stock for gross proceeds net of commissions of $2.0 million.

F-57

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

18.Common Stock-continued

In addition, during the year ended December 31, 2018, the Company issued 15,681 common shares to the Company’s directors and officers and employees of the Manager in connection with its equity incentive plans (Note 11).

During October 2019, following the Company’s prospectus supplement filed with the SEC on December 20, 2016, as further supplemented by the prospectus dated January 13, 2017,  October 30, 2018 and May 30, 2019, the Company issued and sold at-the-market (ATM) 144,727 shares of common stock for gross proceeds net of commissions of $0.9 million.

As further discussed in Note 1, during the year ended December 31, 2019, the Company issued 2,816,901 common shares and 1,056,338 common shares in connection with the Trinity/Diamantis Vessel Acquisition and the Synergy Vessel Acquisition.

In addition, during the year ended December 31, 2019, the Company issued 15,444 common shares to the Company’s directors and officers and employees of the Manager in connection with its equity incentive plans (Note 11).

On December 19, 2019, the Company announced that it has completed a 1-for- 8 reverse stock split, effective at the close of trading on December 18, 2019. The Company’s common shares began trading on a split-adjusted basis on December 19, 2019.

F-58

Euroseas Ltd. and Subsidiaries

Notes to the consolidated financial statements

as of December 31, 2018 and 2019 and for the

Years ended December 31, 2017, 2018 and 2019

(All amounts expressed in U.S. Dollars)

19. Subsequent Events

The following events occurred after December 31, 2019:

(a) In January 2020, M/V EM Oinousses experienced an engine room fire while sailing off Mozambique carrying empty containers. The fire was extinguished without any injuries to the crew. The vessel is currently undergoing evaluation for the type of repairs required and is idle during the evaluations. It is expected that the Company’s insurance will cover the majority of the costs. It is possible that the vessel may be scrapped after the insurance process is complete.

(b) In February 2020, we entered into an agreement to sell the M/V Manolis P for scrap. The vessel reached her destination port on April 7, 2020, but so far has not been delivered to her new owners due to COVID-19 restrictions and port lockdowns in the territory of arrival (Alang, India).  The scrap price has dropped since the date of the agreement to sell the M/V Manolis P, and the buyers are now seeking to terminate the agreement on the basis that timely delivery did not occur.  The Company is in the process of seeking a settlement with the buyers.

(c) In April 2020, the Company entered into one interest rate swap with Eurobank for a notional amount of $30.0 million, in order to manage interest costs and the risk associated with changing interest rates of the Company’s loans. Under the terms of the swap, Eurobank makes a quarterly payment to the Company equal to the 3-month LIBOR while the Company pays a fixed rate of 0.78% based on the notional amount. The swap is effective from April 24, 2020 until April 24, 2025.

(d) Coronavirus Outbreak: On March 11, 2020, the World Health Organization declared the 2019 Novel Coronavirus (the “COVID-19”) outbreak a pandemic. In response to the outbreak, many countries, ports and organizations, including those where the Company conducts a large part of its operations, have implemented measures to combat the outbreak, such as quarantines and travel restrictions. Such measures have and will likely continue to cause severe trade disruptions. The extent to which COVID-19 will impact the Company’s results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the virus and the actions to contain or treat its impact, among others. Accordingly, an estimate of the impact cannot be made at this time.

F-59

EX-4.15

Exhibit 4.15

ADDENDUM NO 10
to
MASTER MANAGEMENT AGREEMENT dated February 7^th, 2008 between
Euroseas Ltd and Eurobulk Ltd

This Addendum is made as of November 15^th 2019 between Euroseas Ltd. (the “Company”), in its own capacity and as agent for each of its vessel owning subsidiaries identified in Schedule A hereto together with any additional subsidiaries that may acquire vessels in the future (the “Subsidiaries”)and Eurobulk Ltd. (the “Manager”).

REMUNERATION

Daily management fees were kept at Euro 685/day/vessel, while with effect of November 16^th 2019 due to the increased requirement for corporate & executive services covered by this Agreement resulting from the recent acquisition of vessels and increase of the number of the vessels covered by this Agreement, executive services fees will be increased by US$750,000 per annum and will thus be adjusted to US$2,000,000 per annum.

As a result for year 2019 only the executive services fee will be $1,250,000 pro rated for the period 01/01/19 until 15/11/19 and $2,000,000 thereafter for the period 16/11/19 - 31/12/19.

IN WITNESS WHEREOF, the parties have executed this Addendum to the Management Agreement as of the date first written above.

Euroseas Ltd.
By:	/s/ Aristides J. Pittas
Name:	Aristides J. Pittas
Title:	CEO
Eurobulk Ltd.
By:	/s/ Nikolaos Pittas
Name:	Nikolaos Pittas
Title:	Director

EX-4.17

Exhibit 4.17

DATED: 30^Th MAY 2019

EUROBANK ERGASIAS S.A.

(THE BANK)

-AND-

EUROSEAS LTD.
(AS “BORROWER”)

SUPPLEMENTAL LETTER To FACILITY AGREEMENT (No.167)
OF UP TO $45,000,000

Alassia Building, 13 Defteras Merchias Street 185 35 Piraeus Greece. Tel +30 210 4138800, 210 8226801, Fax +30 210 4138809, 210 8217869

In cooperation with Kyriakides Georgopoulos Law Firm www.daniolos.gr

INDEX

CLAUSE		PAGE
1.	AGREEMENT	2
2.	AMENDMENTS TO THE PRINCIPAL AGREEMENT	2
3.	CONDITIONS	4
4.	REPRESENTATIONS AND WARRANTIES	5
5.	UNDERTAKING AND COVENANTS	5
6.	CONTINUED FORCE AND EFFECT	5
7.	FEES AND EXPENSES	5
8.	NOTICES	5
9.	COUNTERPARTS	5
10.	LAW AND JURISDICTION	5
SCHEDULE		10

SUPPLEMENTAL LETTER

To: EUROSEAS LTD.
(as Borrower)

To: Jonathan John Shipping Ltd
Joanna Maritime Ltd
Allendale Investments S.A.
Manolis Shipping Limited
Alterwall Business Inc.
Athens shipping Ltd
Oinousses Navigation Ltd
Corfu Navigation Ltd
and
Bridge Shipping Ltd
(as Guarantors and Existing Owners)

To: Eurobulk Ltd.
(as Approved Manager)

Date: 30 May 2019

Dear Sirs

Facility agreement dated 21 November 2018 relating to a reducing revolving credit facility of up to $45,000.000

We refer to:

(a) a reducing revolving credit facility agreement dated 21 November 2018 (the “Principal Agreement” and as the same is hereby supplemented and/or amended and as it may further amended, supplemented, novated or varied from time to time, the “Facility Agreement”) made between (i) Euroseas Ltd. as borrower, (ii) the banks and financial institutions listed in Schedule 1 of the Principal Agreement, which on the date thereof and on the date hereof comprised only Eurobank Ergasias S.A., as lenders (the “Lenders” or “a Lender”) and (iii) Eurobank Ergasias S.A., as security trustee (the “Security Trustee”), as agent (the “Agent”), as arranger (the “Arranger”) and as account bank (the “Account Bank” and together with the Lenders, the Security Trustee, the Agent, the Arranger and the Account Bank, the “Creditor Parties”), pursuant to which it was agreed that the Lender would make available for drawing through multiple advances to the Borrower a reducing revolving credit facility of up to Forty Five Million Dollars ($45,000,000) (the “Facility”, which expression shall, where the context permits, also mean the amount of the facility from time to time outstanding) for the purposes and upon the terms and conditions set out therein, of which the aggregate amount of Thirty Million Dollars ($30,000,000) representing all Existing Ship-Related Advances has been made available to the Borrower, out of which the amount of twenty eight million two hundred thousand Dollars ($28,200,000) currently remains outstanding;

(b) an Agency and Trust Deed dated 21 November 2018 and entered into pursuant to the Principal Agreement, it was, inter alia, agreed that the Security Trustee would hold the Trust Property on trust for the Lenders;

(c) the Borrower’s request that:

(i)the Lender make available to the Borrower in accordance with the terms of the Principal Agreement two (2) New Ship-Related Advances in the aggregate amount of up to Twelve Million Dollars ($12,000,000) or 55% of the aggregate Market Value of the New Ship A and the New Ship B described in Schedule 2 (Ship Information) of the Principal Agreement as amended by this Supplemental Letter, both meeting the New Ship Financing Criteria;

(ii)the Creditor Parties provide their consent to the reduction of the Margin from four point forty per cent (4.40%) per annum to three point ninety per cent (3,90%) per annum from the Effective Date; and

(iii)the Creditor Parties provide their consent to the reduction of the amount to be held during the Facility Period as cash collateral to the Cash Collateral Deposit Account from the amount of Five Million Dollars ($5,000,000) to One Million Dollars ($1,000,000) and the release of the balance in the amount of Four Million Dollars ($4,000,000).

Words and expressions defined in the Principal Agreement shall, unless the context otherwise requires or unless otherwise defined herein, have the same meanings when used in this Supplemental Letter.

1.Agreement. Subject to the satisfaction (or, as the case may be, in respect of some conditions, the waiver by us) of the conditions set out in clause 3 of this Supplemental Letter (which includes the Borrower, the Existing Owners and the Approved Manager countersigning this Supplemental Letter), we hereby confirm our consent to the requests referred to in paragraph (c) above and agree subject to Capital Control Approval to make available to the Borrower the two (2) New Ship-Related Advances referred thereto and the Principal Agreement to be amended as set out in clause 3 of this Supplemental Letter.

2.Amendments to the Principal Agreement. The Principal Agreement shall, with effect on and from the Effective Date (as such term is defined below), be (and it is hereby) amended in accordance with the following provisions (and the Principal Agreement (as so amended) will continue to be binding upon each Obligor upon such terms as so amended):

2.1 by inserting the following new definitions of “Effective Date” and “Supplemental Letter” in clause 1.2 of the Principal Agreement in the correct alphabetical order:

“Effective Date” has the meaning given to such term in the Supplemental Letter;”; and

‘“‘Supplemental Letter” means the supplemental letter dated 30 May 2019, supplemental to this Agreement issued by the Lender and the other Creditor Parties, accepted by the Borrower and countersigned (inter alias) by the Existing Owners and the Approved Manager at the time by way of confirmation of their obligations and consent to the arrangements of such letter;”;

2.2 by inserting the words “(j) the Supplemental Letter;” after the words “(i) this Agreement;” and re-lettering accordingly the remaining paragraphs in the definition of “Finance Documents” in clause 1.2 of the Principal Agreement;

2

2.3 by deleting the definitions of “Cash Collateral Deposit” and “Margin” in clause 1.2 of the Principal Agreement in their entirety and by inserting in their place the following new definitions of “Cash Collateral Deposit” and “Margin”:

““Cash Collateral Deposit” means an interest bearing amount corresponding to One Million Dollars ($1,000,000) which is to be held during the Facility Period as cash collateral to the Cash Collateral Deposit Account;”;

““Margin” means three point ninety per cent (3.90%) per annum;”;

2.4 by inserting the following new paragraph (c) after paragraph b) of clause 19.3 of the Principal Agreement:

“the Borrower does not comply with both terms of the written undertaking referred to in clause 3.2 (i) of the Supplemental Letter by 15 June 2019;”;

2.5 by inserting in Schedule 2 (Ship information) of the Principal Agreement after the block in relation to Ship 1, blocks for the New Ship A and the New Ship B as follows:

New Ship A

Name of Ship	EM ASTORIA
Description	Container
Owner	GREGOS SHIPPING LIMITED
Year of Built	2004
Flag State	Liberia
IMO Number	9243617
Register/Official Number	15321
Ship Commitment	$6,600,000

New Ship B

Name of Ship	EVRIDIKI G
Description	Container
Owner	NOUMEA SHIPPING LTD
Year of Built	2001
Flag State	Liberia
IMO Number	9231482
Register/Official Number	13898
Ship Commitment	$5,400,000

3

and by replacing Schedule 2 (Ship information) of the Principal Agreement by the Schedule attached hereto;

2.6 by deleting paragraph 9. of Part C of Schedule 4 (Condition Precedent Documents)of the Principal Agreement in its entirety and by inserting in its place the following new paragraph 6.

“9.Evidence that the sum of One Million Dollars ($1,000,000) is standing to the credit of the Cash Collateral Deposit Account pursuant to the provisions of clause 12.5 of this Agreement.”;

2.7 by construing all references in the Principal Agreement to “this Agreement”, “hereunder” and the like and in the Finance Documents to the “Facility Agreement” as references to the Principal Agreement as amended and supplemented by this Supplemental Letter.

3.Conditions.The agreement set out in clause 1 of this Supplemental Letter, with theexception of the reduction of Margin from four point forty per cent (4.40%) per annum to three point ninety per cent (3,90%) per annum referred to in clause 2.3 above which shall become effective as of 21 May 2019, shall become effective on the date all the following conditions are either satisfied or, as the case may be in respect of certain conditions, waived (such date being the “Effective Date”):

3.1the Borrower, the Existing Owners and the Approved Manager confirm theirobligations under the Finance Documents to which they are a party and their agreement to the arrangements of this Supplemental Letter by accepting and counter-signing this Supplemental Letter by a duly authorised signatory or (as the case may be) by a director acceptable to us in all respects;

3.2 the Borrower deliver to us:

(i)a written undertaking executed by the Borrower that it will procure so that prior to 15/06/2019, the outstanding “Preferred Equity Instrument” will be reduced to Eight Million Dollars ($8,000,000), of which an amount not exceeding Four Million Three Hundred and Fifty Thousand Dollars ($4,350,000) shall be held by entities affiliated and/or controlled by Blackrock and Three Million Six Hundred and Fifty Thousand Dollars ($3,650,000) shall be held by Preferred Friends Investment Company Inc., a Marshall Islands corporation affiliated to a family disclosed in writing and approved by us prior to the date of such undertaking (the “Nominated Family”) and that the “Preferred Equity” coupon will be reduced to eight percent (8%) with effect from the date of reduction of the outstanding “Preferred Equity Instrument” to Eight Million Dollars ($8,000,000) until 29/01/2021, when it will be increased to fourteen percent (14%) (the “Preferred Equity Instrument Undertaking”); and

(ii)a legal opinion from a counselor with experience on the federal laws of the United States of America appointed by the Borrower and accepted by us, analyzing the risks for the Borrower under the “Preferred Equity Instrument”, in case the Borrower fails to service the preferred equity scheduled payments (or is otherwise in default) and confirming the seniority of all Borrower’s loans (including the Facility Agreement) towards the “Preferred Equity instrument”;

4

3.3 all conditions of clause 4.1 to 4.6 and clause 9.1 of the Principal Agreement in relation to the advance of the two (2) New Ship-Related Advances have been fully satisfied and all documents and evidences described in Schedule 4, Part C of the Principal Agreement have been received in form and substance satisfactory to the Agent and its lawyers on or before the Drawdown Date of such New Ship-Related Advances;

4.Representations and Warranties. Each of the Borrower and the Existing Owners by countersigning this Supplemental Letter represents and warrants to us that:

(a) the representations and warranties contained in clause 10 of the Principal Agreement and in clause 10 of the Guarantee granted by each existing Owner are true and correct on the date of this Supplemental Letter as if all references therein to “this Agreement” were references to the Principal Agreement as supplemented by this Supplemental Letter; and

(b) this Supplemental Letter comprises the legal, valid and binding obligations of the Borrower and the Existing Owners enforceable in accordance with its terms.

5.Undertakings and Covenants. Each of the undertakings and covenants contained in the Principal Agreement (including those contained in clause 11, clause 12, clause 13, clause 14 and clause 15 of the Principal Agreement) shall be deemed to be repeated by the Borrower on the date of this Supplemental Letter.

6.Continued force and effect. Save as amended or deemed amended by this Supplemental Letter, the provisions of the Principal Agreement and the Finance Documents shall be continue in full force and effect and the Principal Agreement and this Supplemental Letter shall be read and construed as one instrument.

7.Fees and Expenses. The provisions of clause 20 (Fees and Expenses) of the Principal Agreement, as amended and supplemented by this Supplemental Letter, shall apply to this Supplemental Letter as if they were expressly incorporated in this Supplemental Letter with any necessary modification.

8.Notices. Clause 28 (Notices) of the Principal Agreement shall extend and apply to this Supplemental Letter as if the same were (mutatis mutandis) herein expressly set forth.

9.Counterparts. This Supplemental Letter (and any non-contractual obligations connected with it) shall be governed by and construed in accordance with English law, and may be executed in any number of counterparts, each of which shall be deemed an original).

10.Law and Jurisdiction. This Supplemental Letter (and any non-contractualobligations connected with it) shall be governed by and construed in accordance with English law and clause 30 (Law and Jurisdiction) of the Principal Agreement shall extend and apply to this Supplemental Letter as if the same were (mutatis mutandis) herein expressly set forth.

Please confirm your acceptance to the foregoing terms and conditions by signing the acceptance at the foot of this Supplemental Letter.

5

Yours faithfully,

/s/ Stavros Yagos	/s/ Maria Gripaiou
Stavros Yagos and Maria Gripaiou	Maria Gripaiou
Attorney -in-fact
for and on behalf of
EUROBANK ERGASIAS S.A
as Lender, Security Trustee, Agent, Arranger and Account Bank
Accepted and agreed
/s/ S. Karmiri
by S. Karmiri
for and on behalf of
EUROSEAS LTD.
as Borrower
Dated: 30 May 2019

COUNTERSIGNED this 30^th day of May 2019 by Jonathan John Shipping Ltd which by its execution hereof, confirms and acknowledges that it has read and understood the terms and conditions of this Supplemental Letter, that it agrees in all respects to the same and that it confirms that the Finance Documents in connection with the Facility Agreement to which it is a party shall remain in full force and effect and shall continue to stand as security for the obligations of the Borrower under the Facility Agreement notwithstanding the arrangements contained in Supplemental Letter.

/s/ S. Karmiri

by S. Karmiri

for and on behalf of

JONATHAN JOHN SHIPPING LTD

as Guarantor/Existing Owner

Dated: 30 May 2019

COUNTERSIGNED this 30^th day of May 2019 by Joanna Maritime Ltd which by its execution hereof, confirms and acknowledges that it has read and understood the terms and conditions of this Supplemental Letter, that it agrees in all respects to the same and that it confirms that the Finance Documents in connection with the Facility Agreement to which it is a party shall remain in full force and effect and shall continue to stand as security for the obligations of the Borrower under the Facility Agreement notwithstanding the arrangements contained in its Supplemental Letter.

/s/ S. Karmiri

by S. Karmiri

for and on behalf of

JOANNA MARITIME LTD

as Guarantor/Existing Owner

Dated: 30 May 2019

6

COUNTERSIGNED this 30^th day of May 2019 by Allendale Investments S.A. which by its execution hereof, confirms and acknowledges that it has read and understood the terms and conditions of this Supplemental Letter, that it agrees in all respects to the same and that it confirms that the Finance Documents in connection with the Facility Agreement to which it is a party shall remain in full force and effect and shall continue to stand as security for the obligations of the Borrower under the Facility Agreement notwithstanding the arrangements contained in this Supplemental Letter.

/s/ S. Karmiri

by S. Karmiri

for and on behalf of

ALLENDALE INVESTMENTS S.A.

as Guarantor/Existing Owner

Dated: 30 May 2019

COUNTERSIGNED this 30^th day of May 2019 by Manolis Shipping Limited which by its execution hereof, confirms and acknowledges that it has read and understood the terms and conditions of this Supplemental Letter, that it agrees in all respects to the same and that it confirms that the Finance Documents in connection with the Facility Agreement to which it is a party shall remain in full force and effect and shall continue to stand as security for the obligations of the Borrower under the Facility Agreement notwithstanding the arrangements contained in this Supplemental Letter.

/s/ S. Karmiri

by S. Karmiri

for and on behalf of

MANOLIS SHIPPING LIMITED

as Guarantor/Existing Owner

Dated: 30 May 2019

COUNTERSIGNED this 30^th day of May 2019 by Alterwall Business Inc. which by its execution hereof, confirms and acknowledges that it has read and understood the terms and conditions of this Supplemental Letter, that it agrees in all respects to the same and that it confirms that the Finance Documents in connection with the Facility Agreement to which it is a party shall remain in full force and effect and shall continue to stand as security for the obligations of the Borrower under the Facility Agreement notwithstanding the arrangements contained in this Supplemental Letter.

/s/ S. Karmiri

by S. Karmiri

for and on behalf of

ALTERWALL BUSINESS INC.

as Guarantor/Existing Owner

Dated: 30 May 2019

7

COUNTERSIGNED this 30^th day of May 2019 by Athens shipping Ltd which by its execution hereof, confirms and acknowledges that it has read and understood the terms and conditions of this Supplemental Letter, that it agrees in all respects to the same and that it confirms that the Finance Documents in connection with the Facility Agreement to which it is a party shall remain in full force and effect and shall continue to stand as security for the obligations of the Borrower under the Facility Agreement notwithstanding the arrangements contained in is Supplemental Letter.

/s/ S. Karmiri

by S. Karmiri

for and on behalf of

ATHENS SHIPPING LTD

as Guarantor/Existing Owner

Dated: 30 May 2019

COUNTERSIGNED this 30^th day of May 2019 by Oinousses Navigation Ltd which by its execution hereof, confirms and acknowledges that it has read and understood the terms and conditions of this Supplemental Letter, that it agrees in all respects to the same and that it confirms that the Finance Documents in connection with the Facility Agreement to which it is a party shall remain in full force and effect and shall continue to stand as security for the obligations of the Borrower under the Facility Agreement notwithstanding the arrangements contained in this Supplemental Letter.

/s/ S. Karmiri

by S. Karmiri

for and on behalf of

OINOUSSES NAVIGATION LTD

as Guarantor/Existing Owner

Dated: 30 May 2019

COUNTERSIGNED this 30^th day of May 2019 by Corfu Navigation Ltd which by its execution hereof, confirms and acknowledges that it has read and understood the terms and conditions of this Supplemental Letter, that it agrees in all respects to the same and that it confirms that the Finance Documents in connection with the Facility Agreement to which it is a party shall remain in full force and effect and shall continue to stand as security for the obligations of the Borrower under the Facility Agreement notwithstanding the arrangements contained in this Supplemental Letter.

/s/ S. Karmiri

by S. Karmiri

for and on behalf of

CORFU NAVIGATION LTD

as Guarantor/Existing Owner

Dated: 30 May 2019

8

COUNTERSIGNED this 30^th day of May 2019 by Bridge Shipping Ltd which by its execution hereof, confirms and acknowledges that it has read and understood the terms and conditions of this Supplemental Letter, that it agrees in all respects to the same and that it confirms that the Finance Documents in connection with the Facility Agreement to which it is a party shall remain in full force and effect and shall continue to stand as security for the obligations of the Borrower under the Facility Agreement notwithstanding the arrangements contained in this Supplemental Letter.

/s/ S. Karmiri

by S. Karmiri

for and on behalf of

BRIDGE SHIPPING LTD

as Guarantor/Existing Owner

Dated: 30 May 2019

COUNTERSIGNED this 30^th day of May 2019 by Eurobulk Ltd. which by its execution hereof, confirms and acknowledges that it has read and understood the terms and conditions of this Supplemental Letter, that it agrees in all respects to the same and that it confirms that the Finance Documents in connection with the Facility Agreement to which it is a party shall remain in full force and effect and shall continue to stand as security for the obligations of the Borrower under the Facility Agreement notwithstanding the arrangements contained in this Supplemental Letter.

/s/ S. Karmiri

by S. Karmiri

for and on behalf of

EUROBULK LTD.

as Approved Manager

Dated: 30 May 2019

9

SCHEDULE

Ship information

Ship A

Name of Ship	AEGEAN EXPRESS
Description	Container
Owner	JONATHAN JOHN SHIPPING LTD
Year of Built	1997
Flag State	Panama
IMO Number	9138161
Register/Official Number	26618-PEXT-5
Ship Commitment	$2,375,000

Ship B

Name of Ship	JOANNA
Description	Container
Owner	JOANNA MARITIME LTD
Year of Built	1999
Flag State	Liberia
IMO Number	9204477
Register/Official Number	16118
Ship Commitment	$3,250,000

Ship C

Name of Ship	KUO HSIUNG
Description	Container
Owner	ALLENDALE INVESTMENTS S.A.
Year of Built	1993
Flag State	Panama
IMO Number	9055448
Register/Official Number	20825-93-F
Ship Commitment	$1,875,000

10

Ship D

Name of Ship	MANOLIS P.
Description	Container
Owner	MANOLIS SHIPPING LIMITED
Year of Built	1995
Flag State	Marshall Islands
IMO Number	9101493
Register/Official Number	2849
Ship Commitment	$2,375,000

Ship E

Name of Ship	NINOS
Description	Container
Owner	ALTERWALL BUSINESS INC.
Year of Built	1990
Flag State	Panama
IMO Number	8909082
Register/Official Number	27893-01-F
Ship Commitment	$1,500,000

Ship F

Name of Ship	EM ATHENS
Description	Container
Owner	ATHENS SHIPPING LTD
Year of Built	2000
Flag State	Marshall Islands
IMO Number	9203538
Register/Official Number	4019
Ship Commitment	$4,250,000

11

Ship G

Name of Ship	EM OINOUSSES
Description	Container
Owner	OINOUSSES NAVIGATION LTD
Year of Built	2000
Flag State	Marshall Islands
IMO Number	9203514
Register/Official Number	4018
Ship Commitment	$4,250,000

Ship H

Name of Ship	EM CORFU
Description	Container
Owner	CORFU NAVIGATION LTD
Year of Built	2001
Flag State	Marshall Islands
IMO Number	9231494
Register/Official Number	7209
Ship Commitment	$4,750,000

Ship I

Name of Ship	AKINADA BRIDGE
Description	Container
Owner	BRIDGE SHIPPING LTD
Year of Built	2001
Flag State	Panama
IMO Number	9224532
Register/Official Number	21874-01-D
Ship Commitment	$5,375,000

12

New Ship A

Name of Ship	EM ASTORIA
Description	Container
Owner	GREGOS SHIPPING LIMITED
Year of Built	2004
Flag State	Liberia
IMO Number	9243617
Register/Official Number	15321
Ship Commitment	$6,600,000

New Ship B

Name of Ship	EVRIDIKI G
Description	Container
Owner	NOUMEA SHIPPING LTD
Year of Built	2001
Flag State	Liberia
IMO Number	9231482
Register/Official Number	13898
Ship Commitment	$5,400,000

13

EX-4.18

Exhibit 4.18

Private and Confidential

DATED 29^th  July 2019

DIAMANTIS SHIPOWNERS LTD (1)

- and -

PIRAEUS BANK S.A. (2)

FACILITY AGREEMENT
in respect of a loan of
up to USD4,000,000

INCE

PIRAEUS

Index

Clause		Page
1	Purpose, definitions and construction	3
2	The Commitment and cancellation	17
3	Interest and Interest Periods	18
4	Repayment and prepayment	21
5	Fees and expenses	23
6	Payments and taxes; accounts and calculations	24
7	Representations and warranties	26
8	Undertakings	31
9	Conditions	42
10	Events of Default	43
11	Indemnities	47
12	Unlawfulness, increased costs and bail-in	48
13	Application of moneys, set off, pro-rata payments and miscellaneous	50
14	Accounts	52
15	Assignment, transfer and lending office	53
16	Notices and other matters	54
17	Governing law	56
18	Jurisdiction	56
Schedule 1 Form of Drawdown Notice		59
Schedule 2 Conditions precedent		60
Schedule 3 Form of Compliance Certificate		65
Execution Page		66

2

THIS AGREEMENT dated 29^th July 2019 is made BY and BETWEEN:

(1) DIAMANTIS SHIPOWNERS LTD as Borrower; and

(2) PIRAEUS BANK S.A. as Lender.

NOW IT IS HEREBY AGREED AS FOLLOWS:

1 PURPOSE, DEFINITIONS AND CONSTRUCTION

1.1 Purpose

This Agreement sets out the terms and conditions upon which the Lender agrees to make available to the Borrower a loan facility of up to four million Dollars (USD4,000,000) in a single advance for the purposes of enabling the Borrower to partially finance the purchase of the Vessel.

1.2 Definitions

In this Agreement, unless the context otherwise requires:

“Approved Broker” means such second-hand ship sale and purchase broker as the Lender may agree is an Approved Broker for the purposes of this Agreement;

“Bail-In Action” means the exercise of any Write-down and Conversion Powers;

“Bail-In Legislation” means, in relation to an EEA Member Country which has implemented, or which at any time implements, Article 55 of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms, the relevant implementing law or regulation as described in the EU Bail-In Legislation Schedule from time to time;

“Balloon Instalment” has the meaning given to it in clause 4.1.1, as the same may reduce from time to time;

“Banking Day” means a day on which dealings in deposits in USD are carried on in the London Interbank Eurocurrency Market and (other than Saturday or Sunday) on which banks are open for business in London, Athens, Piraeus and New York City (or any other relevant place of payment under clause 6);

“Borrowed Money” means Indebtedness in respect of (i) money borrowed or raised and debit balances at banks, (ii) any bond, note, loan stock, debenture or similar debt instrument, (iii) acceptance or documentary credit facilities, (iv) receivables sold or discounted (otherwise than on a non-recourse basis), (v) deferred payments for assets or services acquired, (vi) finance leases and hire purchase contracts, (vii) swaps, forward exchange contracts, futures and other derivatives, (viii) any other transaction (including without limitation forward sale or purchase agreements) having the commercial effect of a borrowing or raising of money or of any of (ii) to (vii) above and (ix) guarantees in respect of Indebtedness of any person falling within any of (i) to (viii) above;

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“Borrower” means Diamantis Shipowners Ltd, a corporation incorporated in Liberia and having its registered office at 80 Broad Street, Monrovia, Liberia;

“Break Costs” means the aggregate amount of all losses, premiums, penalties, costs and expenses whatsoever certified by the Lender at any time and from time to time as having been incurred by the Lender in maintaining or funding the Loan or in liquidating or re-employing fixed deposits acquired to maintain the same as a result of either:

(a) any repayment or prepayment of the Loan or any part thereof otherwise than (i) in accordance with clause 4.1, or (ii) on an Interest Payment Date whether on a voluntary or involuntary basis or otherwise howsoever; or

(b) the Borrower failing or being incapable of drawing the Loan after the Drawdown Notice has been given;

“Casualty Amount” means three hundred thousand Dollars (USD300,000) (or the equivalent in any other currency);

“Certified Copy” means in relation to any document delivered or issued by or on behalf of any company, a copy of such document certified as a true, complete and up to date copy of the original by any of the directors or officers for the time being of such company or by such company’s attorneys or solicitors;

“Charter Assignment” means a specific assignment of any Extended Employment Contract required to be executed hereunder by the Borrower in favour of the Lender (including any notices and/or acknowledgements and/or undertakings associated therewith) in such form as the Lender may require in its sole discretion;

“Classification” means, in relation to the Vessel, the highest class available for a vessel of her type with the Classification Society;

“Classification Society” means any classification society which is a member of the International Association of Classification Societies which the Lender shall, at the request of the Borrower, have agreed in writing shall be treated as the classification society in relation to the Vessel for the purposes of the relevant Ship Security Documents;

“Code” means the US Internal Revenue Code of 1986, as amended, and the regulations promulgated and rulings issued thereunder;

“Commitment” means four million Dollars (USD4,000,000) which the Lender is obliged to lend to the Borrower under this Agreement, as such amount may be reduced and/or cancelled under this Agreement;

“Compliance Certificate” means a certificate substantially in the form set out in schedule 3 signed by the chief financial officer of the Corporate Guarantor;

“Compulsory Acquisition” means, in respect of the Vessel, requisition for title or other compulsory acquisition including, if the Vessel is not released therefrom within the Relevant Period, capture, appropriation, forfeiture, seizure, detention, deprivation or confiscation howsoever for any reason (but excluding requisition for use or hire) by or on behalf of any Government Entity or other competent authority or by pirates,

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hijackers, terrorists or similar persons; “Relevant Period” means for the purposes of this definition of Compulsory Acquisition either (i) one (1) calendar month or, (ii) in respect of pirates, hijackers, terrorists or similar persons, if relevant underwriters confirm in writing (in terms satisfactory to the Lender) prior to the end of such one (1) month period that such capture, appropriation, forfeiture, seizure, detention, deprivation or confiscation will be fully covered by the Borrower’s relevant insurances, the shorter of twelve (12) months after the date upon which the relevant incident occurred and such period at the end of which the relevant cover expires;

“Corporate Guarantee” means the unconditional, irrevocable and on demand guarantee of the obligations of the Borrower under this Agreement required to be executed by the Corporate Guarantor in favour of the Lender in such form as the Lender may require;

“Corporate Guarantor” means Euroseas Ltd., a corporation listed on NASDAQ and incorporated in the Marshall Islands with its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960;

“Default” means any Event of Default or any event or circumstance which with the giving of notice or lapse of time or the satisfaction of any other condition (or any combination thereof) would constitute an Event of Default;

“Dollars” and “USD” mean the lawful currency of the USA and in respect of all payments to be made under any of the Security Documents means funds which are for same day settlement in the New York Clearing House Interbank Payments System (or such other US dollar funds as may at the relevant time be customary for the settlement of international banking transactions denominated in US dollars);

“Drawdown Date” means any date being a Banking Day falling during the Drawdown Period on which the Loan is, or is to be, made available;

“Drawdown Notice” means a notice substantially in the form of schedule 1;

“Drawdown Period” means the period commencing on the Execution Date and ending on the earliest, of (i) 31 July 2019, (ii) such later date as the Lender may agree in its sole discretion and (iii) any date on which the Commitment is finally cancelled or fully drawn under the terms of this Agreement;

“Earnings” means all moneys whatsoever from time to time due or payable to the Borrower during the Facility Period arising out of the use or operation of the Vessel including (but without limiting the generality of the foregoing) all freight, hire and passage moneys, income arising under pooling arrangements, compensation payable to the Borrower in event of requisition of the Vessel for hire, remuneration for salvage and towage services, demurrage and detention moneys, and damages for breach (or payments for variation or termination) of any charterparty or other contract (including any contract of affreightment) for the employment of the Vessel (including any proceeds under any loss of hire insurance, if applicable);

“Earnings Account” means an interest bearing USD current account opened or (as the context may require) to be opened by the Borrower with the Lender and includes any sub-accounts thereof and any other account designated in writing by the Lender to be the Earnings Account for the purposes of this Agreement;

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“Earnings Account Pledge” means a first priority pledge required to be executed hereunder between the Borrower and the Lender in respect of the Earnings Account in such form as the Lender may require;

“EIAPP Certificate” means the Engine International Air Pollution Prevention Certificate issued or to be issued pursuant to Annex VI of the International Convention for the Prevention of Pollution from Ships, MARPOL 73/78 (Regulations for the Prevention of Air Pollution from Ships) in relation to the Vessel;

“Encumbrance” means any mortgage, charge, pledge, lien, hypothecation, assignment, title retention having a similar effect, preferential right, option, trust arrangement or security interest or other encumbrance, security or arrangement conferring howsoever a priority of payment in respect of any obligation of any person (excluding preferential payment rights granted by preferred shares);

“Environmental Affiliate” means any agent or employee of the Borrower, the Manager or any other Group Member or any other person having a contractual relationship with the Borrower, the Manager or any other Group Member in connection with the Vessel or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from the Vessel;

“Environmental Approvals” means all authorisations, consents, licences, permits, exemptions or other approvals required under applicable Environmental Laws;

“Environmental Claim” means (i) any claim by, or directive from, any applicable Government Entity alleging breach of, or non-compliance with, any Environmental Laws or Environmental Approvals or otherwise howsoever relating to or arising out of an Environmental Incident or (ii) any claim by any other third party howsoever relating to or arising out of an Environmental Incident (and, in each such case, “claim” shall include a claim for damages and/or direction for and/or enforcement relating to clean-up costs, removal, compliance, remedial action or otherwise) or (iii) any Proceedings arising from any of the foregoing;

“Environmental Incident” means, regardless of cause, (i) any discharge or release of Environmentally Sensitive Material from any Relevant Ship; (ii) any incident in which Environmentally Sensitive Material is discharged or released from a vessel other than a Relevant Ship which involves collision between a Relevant Ship and such other vessel or some other incident of navigation or operation, in either case, where the Relevant Ship, the Manager and/or the Borrower and/or the relevant Group Member and/or the relevant Operator are actually, contingently or allegedly at fault or otherwise howsoever liable (in whole or in part) or (iii) any incident in which Environmentally Sensitive Material is discharged or released from a vessel other than a Relevant Ship and where such Relevant Ship is actually or potentially liable to be arrested as a resull and/or where the Manager and/or the Borrower and/or other Group Member and/or the relevant Operator are actually, contingently or allegedly at fault or otherwise howsoever liable;

“Environmental Laws” means all laws, regulations, conventions and agreements whatsoever relating to pollution, human or wildlife well-being or protection of the environment (including, without limitation, the United States Oil Pollution Act of 1990 and any comparable laws of the individual States of the USA);

6

“Environmentally Sensitive Material” means oil, oil products or any other products or substance which are polluting, toxic or hazardous or any substance the release of which into the environment is howsoever regulated, prohibited or penalised by or pursuant to any Environmental Law;

“EU Bail-In Legislation Schedule” means the document described as such and published by the Loan Market Association (or any successor person) from time to time;

“Event of Default” means any of the events or circumstances listed in clause 10.1;

“Execution Date” means the date on which this Agreement has been executed by all the parties hereto;

“Extended Employment Contract” means, in respect of the Vessel and at any relevant time, any bareboat charterparty (irrespective of the duration of such charterparty) or any time charterparty or other contract of employment of such ship (including the entry of the Vessel in any pool) which has a remaining tenor exceeding twelve (12) months (including any options to renew or extend such tenor) at such time;

“Facility Period” means the period starting on the date of this Agreement and ending on such date as all obligations whatsoever of all of the Security Parties under or pursuant to the Security Documents whensoever arising, actual or contingent, have been irrevocably paid, performed and/or complied with;

“FATCA” means:

(i) sections 1471 to 1474 of the US Internal Revenue Code of 1986 (the “Code”) or any associated regulations or other official guidance;

(ii) any treaty, law, regulation or other official guidance enacted in any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of paragraph (a) above; or

(iii) any agreement pursuant to the implementation of paragraphs (a) or (b) above with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction;

“FATCA Application Date” means:

(i) in relation to a “withholdable payment” described in section 1473(1)(A)(i) of the Code (which relates to payments of interest and certain other payments from sources within the US), 1 July 2014; or

(ii) in relation to a “passthru payment” described in section 1471(d)(7) of the Code not falling within paragraph (a) above, the first date from which such payment may become subject to a deduction or withholding required by FATCA;

“FATCA Deduction” means a deduction or withholding from a payment under a Security Document required by FATCA;

“FATCA Exempt Party” means a party to a Security Document that is entitled to receive payments free from any FATCA Deduction;

7

“FATCA FFI” means a foreign financial institution as defined in section 1471(d)(4) of the Code which, if the Bank is not a FATCA Exempt Party, could be required to make a FATCA Deduction;

“Flag State” means the country, which is acceptable to the Lender, on whose flag the Vessel is or is to be registered in the ownership of the Borrower;

“General Assignment” means, in respect of the Vessel, the deed of assignment of its earnings, insurances and requisition compensation executed or to be executed by the Borrower in favour of the Lender in such form as the Lender may require;

“Government Entity” means any national or local government body, tribunal, court or regulatory or other agency and any organisation of which such body, tribunal, court or agency is a part or to which it is subject;

“Group” means, at any relevant time, the Corporate Guarantor and its Subsidiaries (including the Borrower);

“Group Member” means any member of the Group;

“IAPP Certificate” means the International Air Pollution Prevention Certificate issued or to be issued pursuant to Annex VI of the International Convention for the Prevention of Pollution from Ships, MARPOL 73/78 (Regulations for the Prevention of Air Pollution from Ships) in relation to the Vessel;

“Indebtedness” means any obligation howsoever arising (whether present or future, actual or contingent, secured or unsecured as principal, surety or otherwise) for the payment or repayment of money;

“Insurances” means all policies and contracts of insurance (which expression includes all entries of the Vessel in a protection and indemnity or war risks association) which are from time to time during the Facility Period in place or taken out or entered into by or for the benefit of the Borrower (whether in the sole name of the Borrower, or in the joint names of the Borrower and the Mortgagee or otherwise) in respect of the Vessel or otherwise howsoever in connection with the Vessel and all benefits thereof (including claims of whatsoever nature and return of premiums);

“Interest Payment Date” means the last day of an Interest Period and, if an Interest Period is longer than three (3) months, the date falling at the end of each successive period of three (3) months from the start of such Interest Period;

“Interest Period” means each period for the calculation of interest in respect of the Loan ascertained in accordance with clauses 3.2 and 3.3;

“Interest Rate Determination Date” means, in relation to any period for which an interest rate is to be determined, the date falling two (2) Banking Days before the first day of that period unless market practice differs in the London interbank market, in which case the Interest Rate Determination Date will be determined by the Lender in accordance with market practice in the London interbank market (and if quotations would normally be given by leading banks in the London interbank market on more than one day, the Interest Rate Determination Date will be the last of those days);

8

“ISM Code” means in relation to its application to the Borrower, the Vessel and its operation:

(a) ‘The International Management Code for the Safe Operation of Ships and for Pollution Prevention’, currently known or referred to as the ‘ISM Code’, adopted by the Assembly of the International Maritime Organisation by Resolution A.741(18) on 4 December 1993 and incorporated on 19 May 1994 into Chapter IX of the International Convention for Safety of Life at Sea 1974 (SOLAS 1974); and

(b) all further resolutions, circulars, codes, guidelines, regulations and recommendations which are now or in the future issued by or on behalf of the International Maritime Organisation or any other entity with responsibility for implementing the ISM Code, including, without limitation, the ‘Guidelines on implementation or administering of the International Safety Management (ISM) Code by Administrations’ produced by the International Maritime Organisation pursuant to Resolution A.788(19) adopted on 25 December 1995,

as the same may be amended, supplemented or replaced from time to time;

“ISM Code Documentation” means, in relation to the Vessel, the document of compliance (DOC) and safety management certificate (SMC) issued by a Classification Society pursuant to the ISM Code in relation to the Vessel within the periods specified by the ISM Code;

“ISM SMS” means the safety management system which is required to be developed, implemented and maintained under the ISM Code;

“ISPS Code” means the International Ship and Port Security Code of the International Maritime Organisation and includes any amendments or extensions thereto and any regulations issued pursuant thereto;

“ISSC” means an International Ship Security Certificate issued in respect of the Vessel pursuant to the ISPS Code;

“Latest Accounts” means, in respect of any fiscal year of the Corporate Guarantor, the latest annual audited consolidated accounts of the Corporate Guarantor required to be prepared pursuant to clause 8.1.6;

“Lender” means Piraeus Bank S.A. having its registered office at 4 Amerikis Street, 105 64 Athens, Greece, acting through its branch at 170 Alexandras Ave., 115 21 Athens, Greece (fax no. +30 210 373 9783);

“LIBOR” means for an Interest Period in relation to the Loan or any part thereof:

(a) the London interbank offered rate administered by ICE Benchmark Administration Limited (“ICE”) (or any other person which takes over the administration of that rate) for deposits in Dollars for a period equal to, or as near as possible equal to, the relevant Interest Period which appears on page LIBOR 1 of the REUTERS screen at or about 11.45 a.m. (London time) on the Interest Rate Determination Date for that Interest Period (and, for the purposes of this Agreement, “REUTERS LIBOR page 01” means the display designated as

9

the “REUTERS LIBOR 01” on the Reuters Money News Service or such other page as may replace REUTERS LIBOR page 01 on that service for the purpose of displaying rates comparable to that rate or on such other service as may be nominated by ICE as the information vendor for the purpose of displaying ICE Interest Settlement Rates for Dollars); or

(b) if on such date no rate is quoted on REUTERS LIBOR page 01, LIBOR for such period shall be the rate per annum (rounded upward if necessary to five decimal place) at which the Lender is able in accordance with its usual practices to obtain deposits in Dollars in an amount approximately equal to the amount in relation to which LIBOR is to be determined for a period equivalent to such period in the London Interbank Market at or about 11:45 a.m. (London time) on the Interest Rate Determination Date for that Interest Period for a period equal to that Interest Period and for delivery on the first Banking Day of it,

Provided, however, that in case LIBOR is below zero, LIBOR shall be deemed to be zero;

“Lightweight” means the lightweight tonnage of the Ship as provided in (i) the Ship’s capacity plan or (ii) at the Lender’s discretion the Ship’s trim and stability booklet;

“Loan” means the aggregate principal amount in respect of the Loan Facility owing to the Lender under this Agreement at any relevant time;

“Loan Facility” means the loan facility provided by the Lender on the terms and subject to the conditions of this Agreement in an amount not exceeding the lesser of (i) four million Dollars (USD4,000,000) and (ii) 90% of the Scrap Value of the Vessel (to be determined immediately prior to the Drawdown Date);

“Management Agreement” means, in respect of the Vessel, the agreement between the Borrower and the Manager, in a form approved by the Lender;

“Manager” means Eurobulk Ltd., a corporation incorporated in Liberia with its registered office at 80 Broad Street, Monrovia, Liberia and having its place of business at 4 Messogiou & Evropis Street, 151 24 Maroussi, Greece, or any other commercial and/or technical manager appointed by the Borrower, with the prior written consent of the Lender, as the manager of the Vessel;

“Manager’s Undertaking” means, in respect of the Vessel, the undertaking and assignment of insurances required to be executed hereunder by the Manager in favour of the Lender in such form as the Lender may require;

“Margin” means 3.50% (three point five per cent) per annum;

“Material Adverse Effect” means a material adverse effect on (i) the Lender’s rights under, or the security provided by, any Security Document, (ii) the ability of any Security Party to perform or comply with any of its obligations under any Security Document to which it is a party or (iii) the value or nature of the financial condition of any Security Party (other than the Manager);

“Maturity Date” means the date falling 3 years after the Drawdown Date;

10

“MII & MAP Policy” means a mortgagee’s interest and (if required by the Lender) pollution risks insurance policy (including, but not limited to, additional perils (pollution) cover) in respect of the Vessel to be effected by the Lender on or before the Drawdown Date to cover the Vessel as the same may be renewed or replaced annually thereafter and maintained throughout the Facility Period through such brokers, with such underwriters and containing such coverage as may be acceptable to the Lender in its sole discretion, insuring a sum of at least one hundred and ten per cent (110%) of the Loan in respect of mortgagee’s interest insurance and one hundred and ten per cent (110%) of the Loan in respect of additional perils (pollution) cover;

“MOA” means the memorandum of agreement dated 31st May 2019 (as amended by Addendum No.1 dated 5 July 2019, Addendum No.2 dated 8 July 2019 and addendum No.3 dated 17 July 2019 and as the same may be further amended and/or supplemented from time to time) in respect of the Vessel made between the Seller as seller and the Borrower as buyer of the Vessel;

“month” means a period beginning in one calendar month and ending in the next calendar month on the day numerically corresponding to the day of the calendar month on which it started, provided that (a) if the period started on the last Banking Day in a calendar month or if there is no such numerically corresponding day, it shall end on the last Banking Day in such next calendar month and (b) if such numerically corresponding day is not a Banking Day, the period shall end on the next following Banking Day in the same calendar month but if there is no the Banking Day it shall end on the preceding Banking Day and “months” and “monthly” shall be construed accordingly;

“Mortgage” means the first preferred Liberia ship mortgage of the Vessel required to be executed hereunder by the Borrower, to be in such form as the Lender may require in its sole discretion;

“NASDAQ” means the stock exchange run by the US National Association of Securities Dealers with the main exchange located in the United States of America, originally an acronym for the National Association of Securities Dealers Automatic Quotations;

“Net Worth” means by reference to the Latest Accounts, the Total Assets less Total Liabilities of the Group;

“Operator” means any person who is from time to time during the Facility Period concerned in the operation of a Relevant Ship and falls within the definition of “Company” set out in rule 1.1.2 of the ISM Code;

“Permitted Encumbrance” means any Encumbrance in favour of the Lender created pursuant to the Security Documents any Encumbrance created in favour of a plaintiff or defendant in any proceedings or arbitration as security for costs and expenses while the Borrower is actively prosecuting or defending such proceedings or arbitration in good faith; Encumbrances arising by operation of law in respect of taxes which are not overdue for payment or in respect of taxes being contested in good faith by appropriate steps and in respect of which appropriate reserves have been made and Permitted Liens;

“Permitted Liens” means any lien on the Vessel for master’s, officer’s or crew’s wages outstanding in the ordinary course of trading, any lien for salvage and any ship

11

repairer’s or outfitter’s possessory lien for a sum not (except with the prior written consent of the Lender) exceeding the Casualty Amount any lien arising in the ordinary course of trading by statute or by operation of law in respect of obligations which are not overdue (and while such obligations are not overdue) or which are being contested in good faith by bona fide and appropriate proceedings (and for the payment of which adequate, freely-available reserves have been provided) unless such proceedings or the continued existence of such lien makes likely the sale, forfeiture or loss of, or of any interest in, the Vessel, and liens securing liabilities for Taxes against which adequate, freely-available reserves have been provided;

“Pertinent Jurisdiction” means any jurisdiction in which or where any Security Party is incorporated, resident, domiciled, has a permanent establishment or assets, carries on, or has a place of business or is otherwise howsoever effectively connected;

“Proceedings” means any litigation, arbitration, legal action or complaint or judicial, quasi-judicial or administrative proceedings whatsoever arising or instigated by anyone (private or governmental) in any court, tribunal, public office or other forum whatsoever and wheresoever (including, without limitation, any action for provisional or permanent attachment of any thing or for injunctive remedies or interim relief and any action instigated on an ex parte basis);

“Registry” means the office of the registrar, commissioner or representative of the Flag State, who is duly empowered to register the Vessel, the Borrower’s title thereto and the Mortgage under the laws and flag of the Flag State;

“Relevant Ship” means the Vessel and any other ship from time to time (whether before or after the date of this Agreement) owned by any Group Member;

“Repayment Date” means the date on which any instalment of the Loan is repayable under the provisions of clause 4.1.1;

“Repayment Instalment” means in respect of the Loan, each of the repayment instalments falling due under and in accordance with clause 4.1.1, as the same may be reduced in accordance with this Agreement;

“Required Authorisation” means any authorisation, consent, declaration, licence, permit, exemption, approval or other document, whether imposed by or arising in connection with any law, regulation, custom, contract, security or otherwise howsoever which must be obtained at any time from any person, Government Entity, central bank or other self-regulating or supra-national authority in order to enable the Borrower lawfully to borrow the Loan and/or to enable any Security Party lawfully and continuously to continue its corporate existence and/or perform all its obligations whatsoever whensoever arising and/or grant security under the relevant Security Documents and/or to ensure the continuous validity and enforceability thereof;

“Required Security Amount” means the amount in USD (as certified by the Lender) which is, until the first anniversary of the Drawdown Date, one hundred and ten per cent (110%) and, at all time thereafter, one hundred and twenty per cent (120%), of the Loan;

12

“Requisition Compensation” means all moneys or other compensation from time to time payable during the Facility Period by reason of Compulsory Acquisition of the Vessel;

“Resolution Authority” means any body which has authority to exercise any Write-down and Conversion Powers;

“Restricted Person” means a person that is:

(i) listed on, or directly or indirectly owned or controlled (as such terms are defined by the relevant Sanctions Authority) by a person listed on, any Sanctions List;

(ii) located in, incorporated under the laws of, or owned or controlled by, or acting on behalf of, a person located in or organised under the laws of, a country or territory that is the target of country or territory-wide Sanctions (“Sanctions Restricted Jurisdiction”); or

(iii) otherwise a target of Sanctions;

“Sanctions” means any economic, financial or trade sanctions laws, regulations, embargoes or restrictive measures administered, enacted or enforced by:

(i) the United States government;

(ii) the United Nations;

(iii) the European Union or any of its Member States;

(iv) the United Kingdom;

(v) any country to which any Security Party or any other member of the Group or any affiliate of any of them is bound; or

(vi) the respective governmental institutions and agencies of any of the foregoing, including without limitation, the Office of Foreign Assets Control of the US Department of Treasury (“OFAC”), the United States Department of State, and Her Majesty’s Treasury (“HMT”) (together “Sanctions Authorities” and each, “Sanctions Authority”);

“Sanctions List” means the “Specially Designated Nationals and Blocked Persons” list issued by OFAC, the “Consolidated List of Financial Sanctions Targets in the UK” issued by HMT, or any similar list issued or maintained or made public by any of the Sanctions Authorities;

“Scrap Price” means, in relation to a the Vessel, the Dollars price per ton for a vessel of the Vessel’s type quoted by scrap-yards in the Indian subcontinent as such price is reported at any relevant time in the most recent Clarksons Weekly Report or any other report acceptable to the Lender;

“Scrap Value” means, in relation to a the Ship, a sum in Dollars (as certified by the Lender whose certificate shall, in the absence of manifest error, be conclusive and binding on the Borrower) which is equal to the Lightweight of the Vessel multiplied by the Scrap Price of the Vessel, as such sum may be adjusted by the Lender in accordance with clause 8.2.2;

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“Security Documents” means this Agreement, the Mortgage, the Corporate Guarantee, the General Assignment, any Charter Assignment, the Earnings Account Pledge, the Shares Pledge, the Manager’s Undertaking, any Tripartite Deed and any other documents as may have been or shall from time to time after the date of this Agreement be executed to guarantee and/or to govern and/or secure all or any part of the Loan, interest thereon and other moneys from time to time owing by the Borrower pursuant to this Agreement (whether or not any such document also secures moneys from time to time owing pursuant to any other document or agreement);

“Security Party” means the Borrower, the Corporate Guarantor, the Shareholder, the Manager or any other person who may at any time be a party to any of the Security Documents (other than the Lender);

“Security Value” means the amount in USD (as certified by the Lender) which is, at any relevant time, the aggregate of (a) the Scrap Value of the Vessel and (b) the net realizable market value of any additional security for the time being actually provided to the Lender pursuant to clause 8.2.1(b), it being agreed however that in case of additional security in the form of cash in Dollars, the same will be valued on a Dollar for Dollar basis;

“Seller” means Diamantis Shipping Ltd of Liberia;

“Shareholder” means Eurocon Ltd., a corporation incorporated in the Marshall Islands with its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960;

“Shares Pledge” means the pledge of the shares of and in the Borrower to be executed by the Shareholder in favour of the Lender, to be in such form as the Lender may require in its sole discretion;

“Ship Security Documents” means the Mortgage, the General Assignment, any Charter Assignment, any Tripartite Deed and the Manager’s Undertaking;

“Subsidiary” of a person means any company or entity directly or indirectly controlled by such person, and for this purpose “control” means either the ownership of more than fifty per cent (50%) of the voting share capital (or equivalent rights of ownership) of such company or entity or the power to direct its policies and management, whether by contract or otherwise;

“Taxes” includes all present and future income, corporation, capital or value-added taxes and all stamp and other taxes and levies, imposts, deductions, duties, charges and withholdings whatsoever together with interest thereon and penalties in respect thereto, if any, and charges, fees or other amounts made on or in respect thereof (and “Taxation” shall be construed accordingly);

“Total Assets” and “Total Liabilities” mean, respectively, the total assets and total liabilities of the Group as evidenced at any relevant time by the Latest Accounts, in which they shall have been calculated by reference to the meanings assigned to them in accordance with International Financial Reporting Standards or US GAAP provided that the value of any ship shall be the market value thereof calculated in accordance with clause 8.2.5(i) and not as set out in the Latest Accounts;

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“Total Commitment” means, at any relevant time, the aggregate of the Commitments of the Lender at such time;

“Total Loss” means, in relation to the Vessel: the actual, constructive, compromised or arranged total loss of the Vessel; or

(ii) Compulsory Acquisition; or

(iii) any hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of the Vessel not falling within the definition of Compulsory Acquisition, unless the Vessel be released and restored to the Borrower within sixty (60) days after such incident;

“Tripartite Deed” means, if the Vessel is subject to a bareboat charter, a deed containing (inter alia) an assignment of the relevant charterer’s interest in the insurances of the Vessel, required to be executed by the Borrower and the relevant charterer in favour of the Lender in such form as the Lender may require in its sole discretion and the relevant charterer may agree;

“Underlying Documents” means, together, the MOA, any Extended Employment Contracts and the Management Agreements;

“Unlawfulness” means any event or circumstance which is the subject of a notification by the Lender to the Borrower under clause 12.1;

“USA” means the United States of America;

“US Tax Obligor” means:

(a) the Borrower if it is resident for tax purposes in the USA; or

(b) a Security Party some or all of whose payments under the Security Documents are from sources within the USA for US federal income tax purposes;

“Vessel” means the 1998-built container vessel of 2,078 TEU and 10,602 lwt named “DIAMANTIS P.” registered in the name of the Seller under the Liberia flag and which is to be acquired by the Borrower pursuant to the MOA and to be registered in the name of the Borrower under the Liberia flag with the name “DIAMANTIS P.”;

“Write-down and Conversion Powers” means, in relation to any Bail-In Legislation described in the EU Bail-In Legislation Schedule from time to time, the powers described as such in relation to that Bail-In Legislation in the EU Bail-In Legislation Schedule.

1.3 Construction

In this Agreement, unless the context otherwise requires:

1.3.1 clause headings and the index are inserted for convenience of reference only and shall be ignored in the construction of this Agreement;

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1.3.2 references to clauses and schedules are to be construed as references to clauses of, and schedules to, this Agreement and references to this Agreement include its schedules and any supplemental agreements executed pursuant hereto;

1.3.3 references to (or to any specified provision of) this Agreement or any other document shall be construed as references to this Agreement, that provision or that document as in force for the time being and as duly amended and/or supplemented and/or novated;

1.3.4 references to a “regulation” include any present or future regulation, rule, directive, requirement, request or guideline (whether or not having the force of law) of any Government Entity, central bank or any self-regulatory or other supra-national authority;

1.3.5 references to any person in or party to this Agreement shall include reference to such person’s lawful successors and assigns and references to the Lender shall also include a Transferee Lender;

1.3.6 words importing the plural shall include the singular and vice versa;

1.3.7 references to a time of day are, unless otherwise stated, to Athens time;

1.3.8 references to a person shall be construed as references to an individual, firm, company, corporation or unincorporated body of persons or any Government Entity;

1.3.9 references to a “guarantee” include references to an indemnity or any other kind of assurance whatsoever (including, without limitation, any kind of negotiable instrument, bill or note) against financial loss or other liability including, without limitation, an obligation to purchase assets or services as a consequence of a default by any other person to pay any Indebtedness and “guaranteed” shall be construed accordingly;

1.3.10 references to any statute or other legislative provision are to be construed as references to any such statute or other legislative provision as the same may be re enacted or modified or substituted by any subsequent statute or legislative provision (whether before or after the date hereof) and shall include any regulations, orders, instruments or other subordinate legislation issued or made under such statute or legislative provision;

1.3.11 a certificate by the Lender as to any amount due or calculation made or any matter whatsoever determined in connection with this Agreement shall be conclusive and binding on the Borrower except for manifest error;

1.3.12 if any document, term or other matter or thing is required to be approved, agreed or consented to by the Lender such approval, agreement or consent must be obtained in writing unless the contrary is stated;

1.3.13 time shall be of the essence in respect of all obligations whatsoever of the Borrower under this Agreement, howsoever and whensoever arising;

1.3.14 and the words “other” and “otherwise” shall not be construed eiusdem generis with any foregoing words where a wider construction is possible.

1.4 References to currencies

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Currencies are referred to in this Agreement by the three letter currency codes (ISO 4217) allocated to them by the International Organisation for Standardisation.

1.5 Contracts (Rights of Third Parties Act) 1999

Except for clause 18, no part of this Agreement shall be enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Agreement.

2 THE COMMITMENT AND CANCELLATION

2.1 Agreement to lend

The Lender, relying upon each of the representations and warranties in clause 7, agrees to make available to the Borrower upon and subject to the terms of this Agreement, the Loan Facility in a single advance for the purposes of enabling the Borrower to partially finance the purchase of the Vessel by the Borrower.

2.2 Drawdown

2.2.1 Subject to the terms and conditions of this Agreement, the Loan shall be made available to the Borrower following receipt by the Lender from the Borrower of a Drawdown Notice not later than 10:00 a.m. on the third Banking Day before the date, which shall be a Banking Day falling within the Drawdown Period, on which the Borrower proposes the Loan is made available.

2.2.2 The Drawdown Notice shall be effective on actual receipt by the Lender and, once given, shall, subject as provided in clause 3.5, be irrevocable.

2.3 Limitation and application of the Loan

2.3.1 The amount of the Loan shall not exceed the amount of the Loan Facility.

2.3.2 The principal amount specified in the Drawdown Notice for borrowing on the Drawdown Date shall, subject to the terms of this Agreement, not exceed the lesser of (i) four million Dollars (USD4,000,000) and (ii) 90% of the Scrap Value of the Vessel (to be determined immediately prior to the Drawdown Date), to be applied in or towards financing the purchase of the Vessel by the Borrower.

2.3.3 The Loan shall be paid forthwith upon drawdown to such account as the Borrower shall stipulate in the Drawdown Notice.

2.4 Availability

2.4.1 The Borrower acknowledges that payment of the Loan referred to in clause 2.3.2 to the account or accounts specified in the Drawdown Notice shall satisfy the obligation of the Lender to lend the Loan to the Borrower under this Agreement.

2.5 Cancellation in changed circumstances

2.5.1 The Borrower may at any time during the Facility Period by notice to the Lender (effective only on actual receipt) cancel with effect from a date not less than ten (10) Banking Days after receipt by the Lender of such notice, all or part of the undrawn Total Commitment.

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2.5.2 The Borrower may also at any time during the Facility Period by notice to the Lender (effective only on actual receipt) prepay and/or cancel with effect from a date not less than ten (10) Banking Days after receipt by the Lender of such notice, the whole but not part only, but without prejudice to the Borrower’s obligations under clauses 3.5, 6.6 and 12, of the Commitment (if any). Upon any notice of such prepayment and cancellation being given, the Commitment shall be reduced to zero, the Borrower shall be obliged to prepay the Loan and the Lender’s related costs (including but not limited to Break Costs, if any) on such date, but always without any premium or penalty if such prepayment is effected on the next Interest Payment Date, and the Lender shall be under no obligation to make available the Loan.

2.6 Use of proceeds

2.6.1 Without prejudice to the Borrower’s obligations under clause 8.1.4, the Lender shall not have any responsibility for the application of the proceeds of the Loan or any part thereof by the Borrower.

2.6.2 The Borrower shall not, and shall procure that each Security Party and each other Group Member and any Subsidiary of any of them shall not, permit or authorise any other person to, directly or indirectly, use, lend, make payments of, contribute or otherwise make available, all or any part of the proceeds of the Loan or other transactions contemplated by this Agreement to fund or facilitate trade, business or other activities: (i) involving or for the benefit of any Restricted Person; or (ii) in any other manner that could result in the Borrower or any other Security Party being in breach of any Sanctions or becoming a Restricted Person.

2.6.3 It is prohibited to use any part of the proceeds of the Loan for the purposes of acquiring shares in the share capital of the Lender or other banks and/or financial institutions or acquiring hybrid capital debentures (T12Aoug u(3gibticdiv Kupculaicov) of the Lender or other banks and/or financial institutions.

3 INTEREST AND INTEREST PERIODS

3.1 Normal interest rate

The Borrowermust pay interest on the Loan in respect of each Interest Period relating thereto on each Interest Payment Date at the rate per annum determined by the Lender to be the aggregate of (a) the Margin in respect thereof and (b) LIBOR for such period.

3.2 Selection of Interest Periods

Subject to clause 3.3, the Borrower may by notice received by the Lender not later than 10:00 a.m. on the second Banking Day before the beginning of each Interest Period specify whether such Interest Period shall have a duration of one (1), three (3) or six (6) months or such other period as the Borrower may select and the Lender may agree.

3.3 Determination of Interest Periods

Subject to clause 3.3.1 every Interest Period shall be of the duration specified by the Borrower pursuant to clause 3.2 but so that:

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3.3.1 the first Interest Period in respect of the Loan shall start on the date the Loan is drawn and each subsequent Interest Period shall start on the last day of the previous Interest Period;

3.3.2 if any Interest Period would otherwise overrun a Repayment Date, then, in the case of the last Interest Period, such Interest Period shall end on the Maturity Date, and in the case of any other Interest Period, the Loan shall be divided into parts so that there is one part in the amount of the Repayment Instalment due on such Repayment Date and having an Interest Period ending on the relevant Repayment Date and another part in the amount of the balance of the Loan having an Interest Period ascertained in accordance with clause 3.2 and the other provisions of this clause 3.3; and

3.3.3 if the Borrower fails to specify the duration of an Interest Period in accordance with the provisions of clause 3.2 and this clause 3.3, such Interest Period shall have a duration of three (3) months or such other period as shall comply with this clause 3.3.

3.4 Default interest

If the Borrower fails to pay any sum (including, without limitation, any sum payable pursuant to this clause 3.4) on its due date for payment under any of the Security Documents, the Borrower must pay interest on such sum on demand from the due date up to the date of actual payment (as well after as before judgment) at a rate determined by the Lender pursuant to this clause 3.4. The period starting on such due date and ending on such date of payment shall be divided into successive periods selected by the Lender each of which (other than the first, which shall start on such due date) shall start on the last day of the preceding such period. The rate of interest applicable to each such period shall be the aggregate (as determined by the Lender) of (a) two per cent (2%) per annum, (b) the Margin and (c) LIBOR for such periods. Such interest shall be due and payable on demand, or, if no demand is made, then on the last day of each such period as determined by the Lender and on the day on which all amounts in respect of which interest is being paid under this clause are paid, and each such day shall, for the purposes of this Agreement, be treated as an Interest Payment Date, provided that if such unpaid sum is an amount of principal which became due and payable by reason of a declaration by the Lender under clause 10.2.2 or a prepayment pursuant to clauses 4.3, 4.4, 8.2.1(a) or 12.1, on a date other than an Interest Payment Date relating thereto, the first such period selected by the Lender shall be of a duration equal to the period between the due date of such principal sum and such Interest Payment Date and interest shall be payable on such principal sum during such period at a rate of two per cent (2%) above the rate applicable thereto immediately before it shall have become so due and payable. If, for the reasons specified in clause 3.5.1, the Lender is unable to determine a rate in accordance with the foregoing provisions of this clause 3.4, interest on any sum not paid on its due date for payment shall be calculated at a rate determined by the Lender to be two per cent (2%) per annum above the aggregate of the Margin and the cost of funds to the Lender compounded at such intervals as the Lender selects.

3.5 Market disruption; non-availability

3.5.1 If at any time prior to the commencement of any Interest Period:

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(a) the Lender for any reason is unable to obtain Dollars in the London Interbank Market in order to fund the Loan (or any part of it) during that Interest Period; or

(b) the Lender considers that LIBOR would not accurately reflect the cost to it of funding the Loan (or any part of them) during that Interest Period 

then the Lender must promptly give notice (a “Determination Notice”) thereof to the Borrower. A Determination Notice shall contain particulars of the relevant circumstances giving rise to its issue. After the giving of any Determination Notice, regardless of any other provision of this Agreement, no Commitment shall be borrowed until notice to the contrary is given to the Borrower by the Lender.

3.5.2 Within ten (10) Banking Days of any Determination Notice being given by the Lender under clause 3.5.1, the Lender must certify an alternative basis in place of LIBOR (the “Alternative Basis”) for maintaining the Loan. The Alternative Basis may at the Lender’s sole discretion include (without limitation) alternative interest periods, alternative currencies or alternative rates of interest but shall include the relevant Margin above the cost of funds to the Lender.

Once the Alternative Basis has been received by the Borrower, the Borrower and the Lender shall negotiate in good faith for a period of thirty (30) Banking Days in order to arrive at a mutually acceptable substitute basis for the Lender to continue to make available the Loan and, if within such thirty (30) Banking Day period the Borrower and the Lender shall agree in writing upon such an alternative basis (the “Substitute Basis”) the Substitute Basis should be retroactive to and effective from the first day of the relevant Interest Period.

The Substitute Basis so certified shall be binding upon the Borrower, and shall take effect in accordance with its terms from the date specified in the Determination Notice until such time as the Lender notifies the Borrower that none of the circumstances specified in clause 3.5.1 continues to exist whereupon the normal interest rate fixing provisions of this Agreement shall again apply and, subject to the other provisions of this Agreement, the Commitment may again be borrowed.

If the Borrower does not agree the Substitute Basis, then the Borrower shall have the right to repay the Loan without any premium or penalty on the next Interest Payment Date after receiving notice of the Substitute Basis, together with accrued interest thereon payable to the Lender at the rate certified by the Lender and notified to the Borrower as being a reasonable interest reflecting the cost to the Lender of funding the Loan during the period ending on the date of such prepayment, plus the Margin.

So long as any Substitute Basis is in force, the Lender shall from time to time (but at least monthly) review whether or not the circumstances are such that such Substitute Basis is no longer necessary and, if the Lender so determines it shall notify the Borrower that the Substitute Basis shall cease to be effective from such date as the Lender shall reasonably specify.

3.5.3 Interest Rate Swaps

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The Borrower may not enter into any interest hedging arrangements without the prior written consent of the Lender.

4 REPAYMENT AND PREPAYMENT

4.1 Repayment

4.1.1 Subject to any obligation to pay earlier under this Agreement, the Borrower must repay the Loan by:

(a) twelve (12) equal quarterly instalments of USD175,000 each; and

(b) an instalment (the “Balloon Instalment”) of USD1,900,000, the first repayment instalment falling due 3 months after the Drawdown Date and subsequent instalments falling due at quarterly intervals thereafter, with the final instalment falling due on the Maturity Date and the Balloon Instalment being repayable together with the final such instalment.

4.1.2 If less than the full amount of the Loan is drawn down, then each of the said repayment instalments and the Balloon Instalment shall be reduced pro rata by the amount of, in aggregate, such undrawn amount.

4.1.3 The Borrower shall on the Maturity Date also pay to the Lender all other amounts in respect of interest or otherwise then due and payable under this Agreement and the Security Documents.

4.2 Voluntary prepayment

Subject to clauses 4.3, 4.4, 4.5 and 4.6, the Borrower may, subject to having given 15 days’ prior written notice thereof to the Lender, prepay any specified amount (such part being in an amount of one hundred thousand Dollars (USD 100,000) or any larger sum which is an integral multiple of such amount) of the Loan on any relevant Interest Payment Date without premium or penalty.

4.3 Mandatory Prepayment on Total Loss

On the date falling one hundred and eighty (180) days after that on which the Vessel became a Total Loss or, if earlier, on the date upon which the relevant insurance proceeds are, or Requisition Compensation is, received by the Borrower (or the Lender pursuant to the Security Documents) the Borrower must prepay the Loan in full.

4.3.1 Interpretation

For the purpose of this Agreement, a Total Loss shall be deemed to have occurred:

(a) in the case of an actual total loss of the Vessel, on the actual date and at the time the Vessel was lost or, if such date is not known, on the date on which the Vessel was last reported;

(b) in the case of a constructive total loss of the Vessel, upon the date and at the time notice of abandonment of the Vessel is given to the then insurers of the Vessel (provided a claim for total loss is admitted by such insurers) or, if such

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insurers do not immediately admit such a claim, at the date and at the time at which either a total loss is subsequently admitted by such insurers or a total loss is subsequently adjudged by a competent court of law or arbitration tribunal to have occurred;

(c) in the case of a compromised or arranged total loss of the Vessel, on the date upon which a binding agreement as to such compromised or arranged total loss has been entered into by the then insurers of the Vessel;

(d) in the case of Compulsory Acquisition, on the date upon which the relevant requisition of title or other compulsory acquisition occurs; and

(e) in the case of hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of the Vessel (other than within the definition of Compulsory Acquisition) by any Government Entity, or by persons allegedly acting or purporting to act on behalf of any Government Entity, which deprives the Borrower of the use of the Vessel for more than sixty (60) days, upon the expiry of the period of sixty (60) days after the date upon which the relevant incident occurred.

4.4 Mandatory prepayment on sale of the Vessel

On the date of completion of the sale of the Vessel, the Borrower must prepay the Loan in full.

4.5 Amounts payable on prepayment

4.5.1 Any prepayment of all or part of the Loan under this Agreement shall be made together with:

(a) accrued interest on the amount to be prepaid to the date of such prepayment;

(b) any additional amount payable under clauses 3.5, 6.6 or 12.2; and

(c) all other sums payable by the Borrower to the Lender under this Agreement or any of the other Security Documents including, without limitation any Break Costs.

4.6 Notice of prepayment; reduction of Repayment Instalments

4.6.1 Every notice of prepayment shall be effective only on actual receipt by the Lender, shall be irrevocable, shall specify the amount to be prepaid and shall oblige the Borrower to make such prepayment on the date specified.

4.6.2 Any amount prepaid pursuant to clause 4.2 shall be applied pro rata against the remaining Repayment Instalments (including the Balloon Instalment) specified in clause 4.1.1.

4.6.3 The Borrower may not prepay the Loan or any part thereof except as expressly provided in this Agreement.

4.6.4 No amount repaid or prepaid may be re-borrowed.

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5 FEES AND EXPENSES

5.1 Arrangement fee

The Borrower agrees to pay to the Lender on the Drawdown Date a non-refundable arrangement fee equal to zero point nine per cent (0.9%) of the amount of the Loan which is made available on the Drawdown Date.

5.2 Expenses

The Borrower agrees to reimburse the Lender on a full indemnity basis within ten (10) days of demand all reasonable expenses and/or disbursements whatsoever (including without limitation legal, printing and out of pocket expenses) certified by the Lender as having been incurred by them from time to time:

5.2.1 in connection with the negotiation, preparation, execution and, where relevant, registration of the Security Documents and of any contemplated or actual amendment, or indulgence or the granting of any waiver or consent howsoever in connection with, any of the Security Documents (including legal fees) (but excluding any such expense incurred in connection with the transfer, assignment or sub-participation of any of the rights and/or obligations of the Lender under the Security Documents);

5.2.2 in contemplation or furtherance of, or otherwise howsoever in connection with, the exercise or enforcement of, or preservation of any rights, powers, remedies or discretions under any of the Security Documents, or in consideration of the Lender’s rights thereunder or any action proposed or taken following the occurrence of a Default or otherwise in respect of the moneys owing under any of the Security Documents; and

5.2.3 in connection with obtaining a written report from a maritime insurance consultant or broker acceptable to the Lender in relation to the Insurances of the Vessel (which the Lender may obtain not more than once a year, and at any time when there has been a change of insurer or terms of cover for the Vessel, other than in respect of the insured value of the Vessel),

together with interest at the rate referred to in clause 3.4 from the date on which reimbursement of such expenses and/or disbursements were due following demand to the date of payment (as well after as before judgment).

5.3 Value added tax

All fees and expenses payable pursuant to this Agreement must be paid together with value added tax or any similar tax (if any) properly chargeable thereon in any jurisdiction. Any value added tax chargeable in respect of any services supplied by the Lender under this Agreement shall, on delivery of the value added tax invoice, be paid in addition to any sum agreed to be paid hereunder.

5.4 Stamp and other duties

The Borrower must pay all stamp, documentary, registration or other like duties or taxes, but excluding any FATCA Deduction (except for any such Taxes incurred in connection with any transfer, assignment or sub-participation of any of the rights and/or obligations of the Lender under any of the Security Documents) (including any duties or taxes payable by the Lender) imposed on or in connection with any of the

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Underlying Documents, the Security Documents or the Loan and agree to indemnify the Lender against any liability arising by reason of any delay or omission by the Borrower to pay such duties or taxes.

6 PAYMENTS AND TAXES; ACCOUNTS AND CALCULATIONS

6.1 No set-off or counterclaim

All payments to be made by the Borrower under any of the Security Documents must be made in full, without any set off or counterclaim whatsoever and, subject as provided in clause 6.6, free and clear of any deductions or withholdings, in USD on or before 11:00 am (London time) on the due date in freely available funds to such account at the Lender and in such place as the Lender may from time to time specify for this purpose.

6.2 Payment by the Lender

All sums to be advanced by the Lender to the Borrower under this Agreement shall be remitted in USD on the Drawdown Date to the account specified in the Drawdown Notice.

6.3 Non-Banking Days

When any payment under any of the Security Documents would otherwise be due on a day which is not a Banking Day, the due date for payment shall be extended to the next following Banking Day unless the Banking Day falls in the next calendar month in which case payment shall be made on the immediately preceding Banking Day.

6.4 Calculations

All interest and other payments of an annual nature under any of the Security Documents shall accrue from day to day and be calculated on the basis of actual days elapsed and a three hundred and sixty (360) day year.

6.5 Currency of account

If any sum due from the Borrower under any of the Security Documents, or under any order or judgment given or made in relation thereto, must be converted from the currency (“the first currency”) in which the same is payable thereunder into another currency (“the second currency”) for the purpose of (i) making or filing a claim or proof against the Borrower, (ii) obtaining an order or judgment in any court or other tribunal or (iii) enforcing any order or judgment given or made in relation thereto, the Borrower undertakes to indemnify and hold harmless the Lender from and against any loss suffered as a result of any discrepancy between (a) the rate of exchange used for such purpose to convert the sum in question from the first currency into the second currency and (b) the rate or rates of exchange at which the Lender may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof. Any amount due from the Borrower under this clause 6.5 shall be due as a separate debt and shall not be affected by judgment being obtained for any other sums due under or in respect of any of the Security Documents and the term “rate of

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exchange” includes any premium and costs of exchange payable in connection with the purchase of the first currency with the second currency.

6.6 Grossing-up for Taxes - by the Borrower

If at any time the Borrower must make any deduction or withholding in respect of Taxes (other than a FATCA Deduction) or otherwise from any payment due under any of the Security Documents for the account of the Lender or withholding in respect of Taxes from any payment due under any of the Security Documents, the sum due from the Borrower in respect of such payment must be increased to the extent necessary to ensure that, after the making of such deduction or withholding, the Lender receives on the due date for such payment (and retains, free from any liability in respect of such deduction or withholding), a net sum equal to the sum which it would have received had no such deduction or withholding been required to be made and the Borrower must indemnify the Lender against any losses or costs incurred by it by reason of any failure of the Borrower to make any such deduction or withholding or by reason of any increased payment not being made on the due date for such payment. The Borrower must promptly deliver to the Lender any receipts, certificates or other proof evidencing the amounts (if any) paid or payable in respect of any deduction or withholding as aforesaid.

6.7 Claw back of Tax benefit

If, following any such deduction or withholding as is referred to in clause 6.6 from any payment by the Borrower, the Lender shall receive or be granted a credit against or remission for any Taxes payable by it, the Lender shall, and to the extent that it can do so without prejudicing the retention of the amount of such credit or remission and without prejudice to the right of the Lender to obtain any other relief or allowance which may be available to it, reimburse the Borrower with such amount as Lender shall in its absolute discretion certify to be the proportion of such credit or remission as will leave the Lender (after such reimbursement) in no worse position than it would have been in had there been no such deduction or withholding from the payment by the Borrower as aforesaid. Such reimbursement shall be made forthwith upon the Lender certifying that the amount of such credit or remission has been received by it. Nothing contained in this Agreement shall oblige the Lender to rearrange its tax affairs or to disclose any information regarding its tax affairs and computations. Without prejudice to the generality of the foregoing, the Borrower shall not, by virtue of this clause 6.7, be entitled to enquire about the Lender’s tax affairs.

6.8 Loan account

The Lender shall maintain, in accordance with its usual practice, an account evidencing the amounts from time to time lent by, owing to and paid to it under the Security Documents. The Lender shall maintain a control account or accounts (as the Lender may deem necessary) showing the Loan and other sums owing by the Borrower under the Security Documents and all payments in respect thereof being made from time to time. The control account shall, in the absence of manifest error, be prima facie evidence of the amount from time to time owing by the Borrower under ate Securily Documents.

6.9 Partial payments

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If, on any date on which a payment is due to be made by the Borrower under any of the Security Documents, the amount received by the Lender from the Borrower falls short of the total amount of the payment due to be made by the Borrower on such date then, without prejudice to any rights or remedies available to the Lender under any of the Security Documents, the Lender must apply the amount actually received from the Borrower in or towards discharge of the obligations of the Borrower under the Security Documents in the following order, notwithstanding any appropriation made, or purported to be made, by the Borrower:

6.9.1 first, in or towards payment, in such order as the Lender may decide, of any unpaid costs and expenses of the Lender under any of the Security Documents;

6.9.2 secondly, in or towards payment of any fees payable to the Lender under, or in relation to, the Security Documents which remain unpaid;

6.9.3 thirdly, in or towards payment to the Lender of any accrued default interest owing pursuant to clause 3.4 but remains unpaid;

6.9.4 fourthly, in or towards payment to the Lender of any accrued interest owing in respect of the Loan which shall have become due under any of the Security Documents but remains unpaid;

6.9.5 fifthly, in or towards payment to the Lender of any due but unpaid Repayment Instalments; and

6.9.6 sixthly, in or towards payment to the Lender, on a pro rata basis, for any loss suffered by reason of any such payment in respect of principal not being effected on an Interest Payment Date relating to the part of the Loan repaid and which amounts are so payable under this Agreement and any other sum relating to the Loan which shall have become due under any of the Security Documents but remains unpaid.

The order of application set out in clauses 6.9.1 to 6.9.6 may be varied by the Lender without any reference to, or consent or approval from, the Borrower.

7 REPRESENTATIONS AND WARRANTIES

7.1 Continuing representations and warranties

The Borrower represents and warrants to the Lender that:

7.1.1 Due incorporation

each of the corporate Security Parties is duly incorporated, validly existing and in good standing under the laws of its respective country of incorporation, in each case, as a corporation and has power to carry on its respective businesses as it is now being conducted and to own its respective property and other assets, to which it has unencumbered legal and beneficial title except as disclosed to the Lender, and the shares of the Borrower are in registered form;

7.1.2 Corporate power

each of the Security Parties has power to execute, deliver and perform its obligations and, as the case may be, to exercise its rights under the Underlying Documents and the

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Security Documents to which it is a party; all necessary corporate, shareholder (if applicable) and other action has been taken to authorise the execution, delivery and on the execution of the Security Documents performance of the same and no limitation on the powers of the Borrower to borrow or any other Security Party to howsoever incur liability and/or to provide or grant security will be exceeded as a result of borrowing any part of the Loan;

7.1.3 Binding obligations

the Underlying Documents and the Security Documents, when executed, will constitute valid and legally binding obligations of the relevant Security Parties enforceable in accordance with their respective terms;

7.1.4 No conflict with other obligations

the execution and delivery of, the performance of their obligations under, and compliance with the provisions of, the Underlying Documents and the Security Documents by the relevant Security Parties will not (i) contravene any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which any Security Party or other member of the Group is subject, (ii) conflict with, or result in any breach of any of the terms of, or constitute a default under, any agreement or other instrument to which any Security Party or other member of the Group is a party or is subject or by which it or any of its property is bound, (iii) contravene or conflict with any provision of the constitutional documents of any Security Party or (iv) result in the creation or imposition of, or oblige any of the Security Parties to create, any Encumbrance (other than a Permitted Encumbrance) on any of the undertakings, assets, rights or revenues of any of the Security Parties;

7.1.5 No default

no Event of Default has occurred;

7.1.6 No litigation or judgments

no Proceedings are current, pending or threatened against any of the Security Parties or their assets which could have a Material Adverse Effect and there exist no judgments, orders, injunctions which would materially affect the obligations of the Security Parties under the Security Documents to which they are a party;

7.1.7 No filings required

except for the registration of the Mortgage in the relevant register under the laws of the Flag State through the Registry, it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of any of the Underlying Documents or any of the Security Documents that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Pertinent Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Pertinent Jurisdiction on or in relation to any of the Underlying Documents or the Security Documents and each of the Underlying Documents and the Security Documents is in proper form for its enforcement in the courts of each Pertinent Jurisdiction;

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7.1.8 Required Authorisations and legal compliance

all Required Authorisations have been obtained or effected or waived by the person requiring the same and, to the extent no such waiver exists, are in full force and effect and no Security Party has in any way contravened any applicable law, statute, rule or regulation (including all such as relate to money laundering) to which such Security Party is subject;

7.1.9 Choice of law

the choice of English law to govern the Underlying Documents and the Security Documents (other than the Mortgage and the Earnings Account Pledge), the choice of the law of the Flag State to govern the Mortgage, the choice of Greek law to govern the Earnings Account Pledge and the submissions by the Security Parties to the jurisdiction of the English courts and the obligations of such Security Parties associated therewith, are valid and binding;

7.1.10 No immunity

no Security Party nor any of their assets is entitled to immunity on the grounds of sovereignty or otherwise from any Proceedings whatsoever;

7.1.11 Financial statements correct and complete

the latest audited consolidated accounts of the Corporate Guarantor in respect of the relevant financial year as delivered to the Lender present or will present fairly and accurately the consolidated financial position of the Corporate Guarantor as at the date thereof and the results of the operations of the Corporate Guarantor and, as at such date, the Corporate Guarantor does not have any significant liabilities (contingent or otherwise) or any unrealised or anticipated losses which are not disclosed by, or reserved against or provided for in, such financial statements;

7.1.12 Pari passu

the obligations of the Borrower under this Agreement are direct, general and unconditional obligations of the Borrower and rank at least pari passu with all other present and future unsecured and unsubordinated Indebtedness of the Borrower except for obligations which are rnandatorily preferred by operation of law and not by contract;

7.1.13 Information

all information, whatsoever provided by any Security Party to the Lender in connection with the negotiation and preparation of the Security Documents or otherwise provided hereafter in relation to, or pursuant to this Agreement is, or will be, true and accurate in all material respects and not misleading, does or will not omit material facts and all reasonable enquiries have been, or shall have been, made to verify the facts and statements contained therein; there are, or will be, no other facts the omission of which would make any fact or statement therein misleading in any (in the reasonable opinion of the Lender) material respect;

7.1.14 No withholding Taxes

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no Taxes anywhere are imposed whatsoever by withholding or otherwise on any payment to be made by any Security Party under the Underlying Documents or the Security Documents to which such Security Party is or is to be a party or are imposed on or by virtue of the execution or delivery by the Security Parties of the Underlying Documents or the Security Documents or any other document or instrument to be executed or delivered under any of the Security Documents;

7.1.15 No Default under Underlying Documents

except as disclosed in writing by the Borrower to the Lender, no Security Party is in material default of any of its obligations under any relevant Underlying Document;

7.1.16 Use of proceeds

the Borrower shall apply the Loan only for the purposes specified in clause 2.1;

7.1.17 Copies true and complete

the Certified Copies of the Underlying Documents delivered or to be delivered to the Lender pursuant to clause 9.1 are, or will when delivered be, true and complete copies or, as the case may be, originals of such documents; and such documents constitute valid and binding obligations of the parties thereto enforceable in accordance with their respective terms and there have been no amendments or variations thereof or defaults thereunder;

7.1.18 Ownership of Borrower

all the shares in the Borrower are legally owned by the Shareholder and ultimately owned and controlled by the Corporate Guarantor and are not held on trust for any third party;

7.1.19 No Indebtedness

the Borrower has not incurred any Borrowed Moneys save as envisaged by this Agreement or as otherwise disclosed to the Lender or incurred in the ordinary course of its business of owning, operating and chartering the Vessel;

7.1.20 Tax returns

the Borrower and the Corporate Guarantor have filed all tax and other fiscal returns (if any) which may be required to be filed by any tax authority to which they are subject;

7.1.21 Freedom from Encumbrances

neither the Vessel nor its Earnings, Insurances or Requisition Compensation (each as defined in the relevant Ship Security Documents) nor the Earnings Account nor any Extended Employment Contract in respect of the Vessel nor any other properties or rights which are, or are to be, the subject of any of the Security Documents nor any part thereof will be subject to any Encumbrance except Permitted Encumbrances;

7.1.22 Environmental Matters

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except as may already have been disclosed by the Borrower in writing to, and acknowledged in writing by, the Lender:

(a) the Borrower, the Manager and the other Group Members and, to the best of the Borrower’s knowledge and belief (having made due enquiry), their respective Environmental Affiliates have complied with the provisions of all Environmental Laws;

(b) the Borrower, the Manager and the other Group Members and, to the best of the Borrower’s knowledge and belief (having made due enquiry), their respective Environmental Affiliates have obtained all Environmental Approvals and are in compliance with all such Environmental Approvals;

(c) no Environmental Claim has been made or threatened or pending against any of the Borrower, the Manager, any other Group Member or, to the best of the Borrower’s knowledge and belief (having made due enquiry), any of their respective Environmental Affiliates; and

(d) there has been no Environmental Incident;

7.1.23 ISM and ISPS Code

the Borrower has complied with and continue to comply with and have procured that the Manager of the Vessel has complied with and continues to comply with the ISM Code, the ISPS Code and all other statutory and other requirements relative to their business and in particular they or the Manager have obtained and maintains a valid DOC, IAPP Certificate, EIAPP Certificate (if applicable) and SMC for the Vessel and that they and the Manager have implemented and continue to implement an ISM SMS;

7.1.24 Accounting reference date

the Borrower’s and the Corporate Guarantor’s accounting reference date is 31 December.

7.1.25 Office

the Borrower does not have an office in England or the United States of America;

7.1.26 Restricted Persons, unlawful activity

(a) none of the shares in the Borrower, in (to the best of its knowledge) the Corporate Guarantor, or in any other Security Party or the Vessel are or will be at any time during the Facility Period legally or beneficially owned or controlled by a Restricted Person;

(b) no Restricted Person has or will have at any time during the Facility Period any legal or beneficial interest of any nature whatsoever in any of the shares of the Borrower, (to the best of its knowledge) the Corporate Guarantor, or any other Security Party or the Vessel;

7.1.27 Sanctions

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(to the best of its knowledge only in respect of an agent) no Security Party nor any director, officer, agent, employee of any Security Party or any person acting on behalf of any Security Party, is a Restricted Person nor acts directly or indirectly on behalf of a Restricted Person; and

7.1.28 FATCA

none of the Security Parties is a FATCA FFI or a US Tax Obligor.

7.2 Repetition of representations and warranties

On each day throughout the Facility Period, the Borrower shall be deemed to repeat the representations and warranties in clause 7 updated mutatis mutandis as if made with reference to the facts and circumstances existing on such day and in clause 7.1.11 as if made with reference to the Latest Account at any relevant time.

8 UNDERTAKINGS

8.1 General

The Borrower undertakes with the Lender that, from the Execution Date until the end of the Facility Period, it will:

8.1.1 Notice of Event of Default and Proceedings

promptly inform the Lender of (a) any Event of Default and of any other circumstances or occurrence which might adversely affect the ability of any Security Party to perform its obligations under any of the Security Documents to which it is a party and (b) as soon as the same is commenced or threatened, details of any Proceedings involving any Security Party which could have a Material Adverse Effect on that Security Party and/or the operation of the Vessel (including, but not limited to any Total Loss of the Vessel or the occurrence of any Environmental Incident) and will from time to time, if so requested by the Lender, confirm to the Lender in writing that, save as otherwise stated in such confirmation, no Event of Default has occurred and is continuing unremedied and unwaived and no such Proceedings have been commenced or threatened;

8.1.2 Authorisation

to the extent a waiver has not been obtained, obtain or cause to be obtained, maintain in full force and effect and comply fully with all Required Authorisations, provide the Lender with Certified Copies of the same and do, or cause to be done, all other acts and things which may from time to time be necessary or desirable under any applicable law (whether or not in the Pertinent Jurisdiction) for the continued due performance of all the obligations of the Security Parties under each of the Security Documents;

8.1.3 Corporate Existence

ensure that each Security Party maintains its corporate existence as a body corporate duly organised and validly existing and in good standing under the laws of the Pertinent Jurisdiction;

8.1.4 Use of proceeds

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use the Loan exclusively for the purposes specified in clauses 1.1 and 2.1;

8.1.5 Pari passu

ensure that its obligations under this Agreement shall, without prejudice to the provisions of clause 8.3, at all times rank at least pari passu with all its other present and future unsecured and unsubordinated Indebtedness with the exception of any obligations which are mandatorily preferred by law and not by contract;

8.1.6 Financial statements

as soon as possible, but in no event later than 180 days after the end of each of its financial years, annual audited (prepared in accordance with US GAAP by a first class international firm of accountants) consolidated financial statements of the Corporate Guarantor (commencing with the financial year ending 31 December 2018), together with updated details (in a form acceptable to the Lender) of all off-balance sheet and time-charter hire commitments of the Vessel; and the first audited accounts of the Corporate Guarantor shall evidence that all amounts payable under the MOA (in addition to the part to be financed by the Loan) have been funded by the Borrower through equity contribution and/or common shares contribution provided exclusively by the Corporate Guarantor;

8.1.7 Compliance Certificates

deliver to the Lender on the date on which the audited consolidated accounts are delivered under clause 8.1.6 a Compliance Certificate together with such supporting information as the Lender may reasonably require;

8.1.8 Financial Covenants

procure that

(a) the Net Worth of the Group will at all times exceed USD15,000,000; and

(b) the Total Liabilities divided by the Total Assets (each net of cash balance) shall at all times be no more than 75%;

8.1.9 Reimbursement of MII & MAP Policy premiums

reimburse the Lender on the Lender’s written demand the amount of the premium payable by the Lender for the inception or, as the case may be, extension and/or continuance of the MII & MAP Policy (including any insurance tax thereon);

8.1.10 Provision of further information

provide the Lender, and procure that the Corporate Guarantor (including its Subsidiaries), shall provide the Lender, with such financial or other information (including, but not limited to, financial standing, Indebtedness, balance sheet, off-balance sheet commitments, repayment schedules, operating expenses, charter arrangements concerning the Borrower, the Corporate Guarantor (including its Subsidiaries), the Group and their respective affairs, activities, financial standing, Indebtedness and operations and the performance of the Vessel as the Lender may from time to time reasonably require save for any information which is confidential in

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relation to arms-length third parties or is not disclosable by law, convention or regulatory requirements;

8.1.11 Obligations under Security Documents, etc.

duly and punctually perform each of the obligations expressed to be imposed or assumed by them under the Security Documents and any Extended Employment Contact and will procure that each of the other Security Parties will, duly and punctually perform each of the obligations expressed to be assumed by it under the Security Documents and any Extended Employment Contract to which it is a party;

8.1.12 Compliance with ISM Code

and will procure that any Operator will, comply with and ensure that the Vessel and any Operator complies with the requirements of the ISM Code, including (but not limited to) the maintenance and renewal of valid certificates pursuant thereto throughout the Security Period (as defined in the relevant Ship Security Documents);

8.1.13 Withdrawal of DOC and SMC

immediately inform the Lender if there is any actual withdrawal of its or any Operator’s DOC, IAPP Certificate, EIAPP Certificate or the SMC of the Vessel;

8.1.14 Issuance of DOC and SMC

and will procure that any Operator will promptly inform the Lender of the receipt by the Borrower or any Operator of notification that its application for a DOC or any application for an SMC or IAPP Certificate or EIAPP Certificate for the Vessel has been refused;

8.1.15 ISPS Code Compliance

and will procure that the Manager or any Operator will:

(a) maintain at all times a valid and current ISSC in respect of the Vessel;

(b) immediately notify the Lender in writing of any actual or threatened withdrawal, suspension, cancellation or material modification of the ISSC in respect of the Vessel; and

(c) procure that the Vessel will comply at all times with the ISPS Code;

8.1.16 Compliance with Laws and payment of taxes

(a) comply with all relevant Environmental Laws, laws, statutes and regulations applicable to it and pay all taxes for which it is liable as they fall due; and

(b) comply in all respects with, and will procure that each Security Party and each other Group Member will comply in all respects with, all Sanctions;

8.1.17 Inspection

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ensure that the Lender, by independent marine surveyors or other persons appointed by it for such purpose (who shall be appointed by the Lender at the Borrower’s expense), may board the Vessel, once per calendar year or whenever the Lender deems necessary after the occurrence of an Event of Default which is continuing, provided in each case that the Lender shall use reasonable endeavours to ensure that such inspections or surveys shall not interfere with the operation of the Vessel, for the purpose of inspecting or surveying her and will afford all proper facilities for such inspections or survey and for this purpose will give the Lender reasonable advance notice of any intended drydocking of the Vessel (whether for the purpose of classification, survey or otherwise) and will pay the costs in respect of each such inspection or survey and will provide the Lender with or ensure that the Lender receives on request all reports of such inspections, to be in such form as the Lender may approve, and, if the Vessel shall not be in a condition and state which complies with the requirements of this Agreement and the other Security Documents, will effect such repairs as in the opinion of the Lender be desirable to ensure such compliance;

8.1.18 The Vessel

ensure that throughout the Facility Period the Vessel will at all times after her delivery (except as the Lender may otherwise permit) be:

(i) in the absolute sole, legal and beneficial ownership of the Borrower and not held on trust for any third party;

(ii) registered through the offices of the Registry as a ship under the laws and flag of the Flag State;

(iii) in compliance with the ISM Code and the ISPS Code and operationally seaworthy and in every way fit for service;

(iv) classed with the Classification free of all overdue requirements and recommendations of the Classification Society affecting the Classification;

(v) insured in accordance with the Ship Security Documents; and

(vi) managed by the Manager in accordance with the terms of the Management Agreement, which shall be acceptable to the Lender.

8.1.19 Charters

deliver to the Lender, a Certified Copy of each Extended Employment Contract upon its execution, forthwith on the Lender’s request execute (a) a Charter Assignment in respect thereof and (b) any notice of assignment required in connection therewith and use reasonable efforts to procure the acknowledgement of any such notice of assignment by the relevant charterer (provided that any failure to procure the acknowledgement shall not constitute an Event of Default) and (c) (if the Vessel is subject to a bareboat charter) procure execution by the Borrower and the charterer of a Tripartite Deed, together with all notices required to be determined thereunder and will provide evidence acceptable to the Lender that such notice has been given to the relevant charterer and the Borrower shall pay all legal and other costs incurred by the Lender in connection with any such Charter Assignment and Tripartite Deed, forthwith following the Lender’s demand;

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8.1.20 Chartering

not without the prior written consent of the Lender and, if such consent is given, only subject to such conditions as the Lender may impose (and in the case of (b) only, such consent not to be unreasonably withheld), to let the Vessel:

(a) on demise charter for any period; or

(b) by any time or consecutive voyage charter for a term which exceeds or which by virtue of any optional extensions therein contained might exceed twelve (12) months’ duration; or

(c) on terms whereby more than two (2) months’ hire (or the equivalent) is payable in advance;

8.1.21 Sanctions

(a) (to the best of its knowledge only in respect of an agent) not be, and shall procure that any Security Party and other Group Member, or any director, officer, agent, employee or person acting on behalf of the foregoing is not, a Restricted Person and does not act directly or indirectly on behalf of a Restricted Person;

(b) and shall procure that each Security Party and each other Group Member shall, not use any revenue or benefit derived from any activity or dealing with a Restricted Person in discharging any obligation due or owing to the Lender;

(c) procure that no proceeds from any activity or dealing with a Restricted Person are credited to any bank account held with the Lender in its name or in the name of any other member of the Group;

(d) take, and shall procure that each Security Party and each other Group Member has taken, reasonable measures to ensure compliance with Sanctions;

(e) and shall procure that each Security Party and each other Group Member shall, to the extent permitted by law promptly upon becoming aware of them, supply to the Lender details of any claim, action, suit, proceedings or investigation against it with respect to Sanctions by any Sanctions Authority; and

(f) not accept, obtain or receive any goods or services from any Restricted Person, except (without limiting clause 8.1.21(b)), to the extent relating to any warranties and/or guarantees given and/or liabilities incurred in respect of an activity or dealing with a Restricted Person by the Borrower, any other Security Party or any other Group Member in accordance with this Agreement;

8.1.22 Ownership

ensure that all the shares in the Borrower are legally owned by the Shareholder and ultimately owned and controlled by the Corporate Guarantor and are not held on trust for any third party;

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8.1.23 Unencumbered liquidity

procure that at all times during the Facility Period, the Corporate Guarantor shall maintain in an account or accounts with the Lender free deposit cash which is (other than the Earnings Account Pledge) free of any Encumbrance in an average aggregate amount of not less than USD250,000 for the preceding six-months period, to be tested first on the date falling six months after the Drawdown date and semi-annually thereafter;

8.1.24 Listing

procure that the Corporate Guarantor shall maintain its listing as a public limited company on NASDAQ or any other stock exchange acceptable to the Lender and comply with all of the listing rules, laws and regulations applicable to public companies listed on NASDAQ or such other acceptable stock exchange and shall take no steps to de-list without the prior consent of the Lender (such consent not to be unreasonably withheld);

8.1.25 Shipping activities

procure that the Corporate Guarantor shall at all times remain the ultimate holding company of shipowning companies engaged in shipping activities acceptable to the Lender;

8.1.26 Executive management

procure that at all times throughout the Facility Period:

(a) Mr Aristeidis Pittas shall be the Chief Executive Officer or Chairman of the Corporate Guarantor; and

(b) the manager shall be managed and/or controlled by Mr Aristeidis Pittas or any other person acceptable to the Lender;

8.1.27 FATCA Information

(a) subject to paragraph (c) below each party to any Security Document shall, within 10 Banking Days of a reasonable request by the other party to that Security Documents:

(i) confirm to that other party whether it is:

(A) a FATCA Exempt Party; or

(B) not a FATCA Exempt Party; and

(ii) supply to that other party such forms, documentation and other information relating to its status under FATCA as that other party reasonably requests for the purposes of that other party’s compliance with FATCA;

(iii) supply to that other party such forms, documentation and other information relating to its status as that other party reasonably requests for

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the purposes of that other party’s compliance with any other law, regulation, or exchange of information regime;

(b) if a party to any Security Document confirms to another party pursuant to paragraph (a)(i) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, that party shall notify the other party reasonably promptly;

(c) paragraph (a) above shall not oblige the Lender to do anything, and paragraph (a)(iii) above shall not oblige any other party to any Security Document to do anything, which would or might in its reasonable opinion constitute a breach of:

(i) any law or regulation;

(ii) any policy of the Lender;

(iii) any fiduciary duty; or

(iv) any duty of confidentiality;

(d) paragraph (a) above shall not oblige the Lender to do anything, and paragraph (a)(iii) above shall not oblige any other party to any Security Document to do anything, which would or might in its reasonable opinion cause it to disclose any confidential information (including, without limitation, its tax returns and calculations); provided, however, that information required (or equivalent to the information so required) by United States Internal Revenue Service Forms W-8 or W-9 (or any successor forms) shall not be treated as confidential information of such Lender for purposes of this paragraph (d);

(e) if a party to any Security Document fails to confirm whether or not it is a FATCA Exempt Party, or to supply forms, documentation or other information requested in accordance with paragraph (a) (i) or (ii) above (including, for the avoidance of doubt, where paragraph (c) above applies), then such party shall be treated for the purposes of the Security Documents (and payments under them) as if it is not a FATCA Exempt Party until (in each case) such time as that party provides the requested confirmation, forms, documentation or other information.

8.1.28 FATCA Deduction

(a) A party to any Security Document may make any FATCA Deduction it is required to make by FATCA, and any payment required in connection with that FATCA Deduction, and no party to any Security Document shall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction.

(b) A party to any Security Document shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction) notify the party to whom it is making the payment and, in addition, shall notify the Borrower and the Lender.

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8.1.29 Equal treatment of lenders

If the Corporate Guarantor enters into an agreement or instrument with any of its banks, financiers or any other financial institution pursuant to which the Corporate Guarantor grants to such banks, financiers or other financial institutions any financial covenant, or amends any financial covenant given to such banks, financiers or other financial institutions, measured by reference to the financial statements of the Corporate Guarantor, the Borrower must give immediate notice of those new or amended financial covenants to the Lender, and if the Lender (acting reasonably) considers those covenants (taken as a whole) to be more favourable to those banks, financiers or other financial institutions than those contained in clause 8.1.8 of this Agreement (also taken as a whole) then the Borrower and/or the Corporate Guarantor shall enter into such documentation as the Lender shall reasonably require so that additional or amended financial covenants (taken as a whole) are given also to the Lender until the end of (i) the Facility Period or (ii) the period during which the additional or amended financial covenants will apply in favour of such banks, financiers or other financial institutions (whichever is the earlier) (PROVIDED THAT, for the avoidance of doubt, for the purpose of this clause any covenant regarding the provision of cash collateral or restricted cash of any sort granted to other banks, financiers or other financial institutions shall not constitute a financial covenant under this clause requiring the Borrower and/or the Corporate Guarantor to extend the same to the Lender as well).

8.2 Security value maintenance

8.2.1 Security shortfall

If at any time throughout the Facility Period the Security Value shall be less than the Required Security Amount, the Lender shall give notice to the Borrower requiring that such deficiency be remedied and then the Borrower must within 30 days of receipt of the Lender’s said notice, either:

(a) prepay such part of the Loan as will result in the Security Value after such prepayment (taking into account any other repayment of the Loan made between the date of the notice and the date of such prepayment) being equal to or higher than the Required Security Amount; or

(b) constitute to the satisfaction of the Lender such further security for the Loan as shall be acceptable to the Lender having a value for security purposes (as determined by the Lender in accordance with clause 8.2.5) at the date upon which such further security shall be constituted which, when added to the Security Value, shall not be less than the Required Security Amount as at such date.

The provisions of clauses 4.5 and 4.6 shall apply to prepayments under clause 8.2.1(a) provided that the Lender shall apply such prepayments pro rata against the Loan and the amount of the Loan prepaid hereunder shall not be available to be re-borrowed.

8.2.2 Valuation of the Vessel

The Lender shall calculate the Scrap Value of the Vessel as and when the Lender shall require in its sole discretion.

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The calculation of the Scrap Value of the Vessel made in accordance with the provisions of this clause 8.2.2 shall be binding upon the parties hereto (absent manifest error) until such time as any such further calculation shall be made by the Lender.

8.2.3 Information

The Borrower undertakes with the Lender to supply to the Lender such information concerning the Vessel and its condition as the Lender may require for the purpose of determining the Scrap Value.

8.2.4 Costs

The Borrower shall pay all costs in connection with any determination of the Scrap Value (which the Lender may determine at any time).

8.2.5 Valuation of additional security

For the purposes of this clause 8.2, the market value (i) of any additional security over a ship (other than the Vessel) shall be determined (at the Borrower’s expense) in USD by an Approved Broker appointed by, and reporting to, the Lender, such valuation to be made without physical inspection, and on the basis of a sale for prompt delivery for cash at arms’ length, on normal commercial terms, as between a willing buyer and a willing seller, without taking into account the benefit or burden of any charterparty or other engagement concerning the Vessel and (ii) of any other additional security provided or to be provided to the Lender shall be determined by the Lender in its absolute discretion, Provided that additional security in the form of cash in Dollars will be valued on a Dollar for Dollar basis.

8.2.6 Documents and evidence

In connection with any additional security provided in accordance with this clause 8.2, the Lender shall be entitled to receive (at the Borrower’s expense) such evidence and documents of the kind referred to in schedule 2 as may in the Lender’s opinion be appropriate and such favourable legal opinions as the Lender shall in its absolute discretion require.

8.2.7 Release of Security

If the Security Value shall at any time exceeds the Required Security Amount, and the Borrower shall previously have provided further security to the Lender pursuant to clause 8.2.1, the Lender shall, as soon as reasonably practicable after notice from the Borrower to do so and subject to being indemnified to its reasonable satisfaction against the cost of doing so, release any such further security specified by the Borrower provided that the Lender is satisfied that, immediately following such release, the Security Value will equal or exceed the Required Security Amount.

8.3 Negative undertakings relating to the Borrower

The Borrower undertakes with the Lender that, from the Execution Date until the end of the Facility Period, it will procure that, except with the prior written consent of the Lender (and such consent in respect of any change of name of the Vessel not to be unreasonably withheld), it will not:

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8.3.1 Negative pledge

permit any Encumbrance (other than a Permitted Encumbrance) to subsist, arise or be created or extended over all or any part of its present or future undertakings, assets, rights or revenues to secure or prefer any present or future Indebtedness or other liability or obligation of any Group Member or any other person;

8.3.2 No merger or transfer

merge or consolidate with any other person or permit any change to the legal or beneficial ownership of its shares from that existing at the Execution Date (and for the avoidance of doubt any change in the ownership of shares of and in the Corporate Guarantor occurring in the normal course of business shall not constitute a breach of this clause);

8.3.3 Disposals

sell, transfer, assign, create security or option over, pledge, pool, abandon, lend or otherwise dispose of or cease to exercise direct control over any part of their present or future undertaking, assets, rights or revenues (otherwise than by transfers, sales or disposals for full consideration in the ordinary course of trading) whether by one or a series of transactions related or not;

8.3.4 Other business or manager

undertake any type of business other than the ownership and operation of the Vessel or (without the prior consent of the Lender) employ anyone other than the Manager as commercial and technical manager of the Vessel;

8.3.5 Acquisitions

acquire, any assets other than the Vessel and rights arising under contracts entered into by or on behalf of the Borrower in the ordinary course of its business of owning, operating and chartering the Vessel;

8.3.6 Other obligations

incur, any obligations except for obligations arising under the Underlying Documents or the Security Documents or contracts entered into in the ordinary course of its business of owning, operating and chartering the Vessel;

8.3.7 No borrowing

incur any Borrowed Money except for Borrowed Money pursuant to the Security Documents or incurred in the ordinary course of its business of owning, operating and chartering the Vessel;

8.3.8 Repayment of borrowings

repay or prepay the principal of, or pay interest on or any other sum in connection with any of their Borrowed Money except for Borrowed Money pursuant to the Security Documents;

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8.3.9 Guarantees

issue any guarantees or otherwise become directly or contingently liable for the obligations of any person, firm, or corporation except pursuant to the Security Documents and except for guarantees from time to time required in the ordinary course by any protection and indemnity or war risks association with which the Vessel is entered, guarantees required to procure the release of the Vessel from any arrest, detention, attachment or levy or guarantees required for the salvage of the Vessel;

8.3.10 Loans

make any loans or grant any credit (save for normal trade credit in the ordinary course of business) to any person or agree to do so;

8.3.11 Sureties

permit any Indebtedness of the Borrower to any person (other than to the Lender pursuant to the Security Documents) to be guaranteed by any person (except for guarantees from time to time required in the ordinary course by any protection and indemnity or war risks association with which the Vessel is entered, guarantees required to procure the release of the Vessel from any arrest, detention, attachment or levy or guarantees or undertakings required for the salvage of the Vessel); or

8.3.12 Flag, Class etc.

permit:

(a) any change in the name or flag of the Vessel;

(b) any change of Classification or Classification Society in respect of the Vessel;

(c) any change of Manager in respect of the Vessel; or

(d) any change in the ownership (including ultimate beneficial ownership) or control of the Borrower from that existing as at the date hereof and shall procure that there is no change in the ownership (including ultimate beneficial ownership) or control of the Manager (if other than the Corporate Guarantor) from that existing as at the date hereof (and for the avoidance of doubt any change in the ownership of shares of and in the Corporate Guarantor occurring in the normal course of business shall not constitute a breach of this clause);

8.3.13 Underlying Documents

terminate or materially amend or vary an Extended Employment Contract or a Management Agreement (and for the avoidance of doubt, material amendments include, but are not limited to, reductions of rate of hire, increase of management fees not already provided for in the Management Agreement and termination rights); or

8.3.14 Lay-up

de-activate or lay up the Vessel; or

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8.3.15 Place of business

own or operate and will procure that no Security Party shall own or operate a place of business situate in England or the United States of America (save that the Lender acknowledges and agrees that the Corporate Guarantor is listed as a public limited company on NASDAQ); or

8.3.16 Share capital and distribution

declare or pay any dividends if an Event of Default has occurred and is continuing or would occur as a result of such declaration or payment or distribute any of its present or future assets, undertakings, rights or revenue;

8.3.17 Sharing of Earnings

permit there to be any agreement or arrangement whereby the Earnings (as defined in the relevant Ship Security Documents) of the Vessel may be shared or pooled howsoever with any other person except for customary profit sharing arrangements under a charterparty;

8.3.18 Lawful use

permit the Vessel to be employed:

(i) in any way or in any activity with a Restricted Person or in any Sanctions Restricted Jurisdiction or which is (i) unlawful under international law or the domestic laws of any relevant country or (ii) contrary to any Sanctions;

(ii) to the best of its knowledge, in carrying illicit or prohibited goods;

(iii) in a way which may make the Vessel liable to be condemned by a prize court or destroyed, seized or confiscated;

(iv) in any part of the world where there are hostilities (whether war has been declared or not), unless such employment has been notified to, and approved by, the relevant insurers of the Vessel; or

(v) to the best of its knowledge, in carrying contraband goods,

and the Borrower shall procure that the persons responsible for the operation of the Vessel shall take all necessary and proper precautions to ensure that this does not happen, including participation in industry or other voluntary schemes available to the Vessel and in which leading operators of ships operating under the same flag or engaged in similar trades generally participate at the relevant time;

8.3.19 FATCA

become a FATCA FFI or a US Tax Obligor and shall procure that no Security Party shall do so.

9 CONDITIONS

9.1 Availability of the Loan

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The obligation of the Lender to make available the Loan is conditional upon:

9.1.1 the Lender, or its authorised representative, having received, not later than two (2) Banking Days before the day on which the Drawdown Notice is given, the documents and evidence specified in Part 1 of schedule 2 in form and substance satisfactory to the Lender; and

9.1.2 the representations and warranties contained in clause 7 being then true and correct as if each was made with respect to the facts and circumstances existing at such time and the same being unaffected by the drawdown of the Loan; and

9.1.3 no Default having occurred and being continuing and there being no Default which would result from the lending of the Loan.

9.2 Advance of the Loan

The obligation of the Lender to make available the Loan is conditional upon the Lender, or its authorised representative, having received, on or prior to the Drawdown Date, the documents and evidence specified in Part 2 of schedule 2 in form and substance satisfactory to the Lender.

9.3 Waiver of conditions precedent

The conditions specified in this clause 9 are inserted solely for the benefit of the Lender and may be waived by the Lender in whole or in part and with or without conditions.

9.4 Further conditions precedent

Not later than five (5) Banking Days prior to the Drawdown Date the Lender may request and the Borrower must, not later than two (2) Banking Days prior to such date, deliver to the Lender (at the Borrower’s expense) on such request further favourable certificates and/or opinions as to any or all of the matters which are the subject of clauses 7, 8, 9 and 10.

10 EVENTS OF DEFAULT

10.1 Events

Each of the following events shall constitute an Event of Default (whether such event shall occur voluntarily or involuntarily or by operation of law or regulation or in connection with any judgment, decree or order of any court or other authority or otherwise, howsoever):

10.1.1 Non-payment: any Security Party fails to pay any sum payable by it under any of the Security Documents to which it is a party at the time, in the currency and in the manner stipulated in the Security Documents (and so that, for this purpose, sums payable (i) under clauses 3.1 and 4.1 shall be treated as having been paid at the stipulated time if (aa) received by the Lender within three (3) Banking Days of the dates therein referred to and (bb) such delay in receipt is caused by administrative or other delays or errors within the banking system and (ii) on demand shall be treated as having been paid at the stipulated time if paid within three (3) Banking Days of demand); or

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10.1.2 Breach of Insurance and certain other obligations: the Borrower or, as the context may require, the Manager or any other person fails to obtain and/or maintain the Insurances (as defined in, and in accordance with the requirements of, the Ship Security Documents) for the Vessel or if any insurer in respect of such Insurances cancels the Insurances or disclaims liability by reason, in either case, of mis-statement in any proposal for the Insurances or for any other failure or default on the part of the Borrower or any other person or the Borrower commits any breach of or omits to observe any of the obligations or undertakings expressed to be assumed by it under clause 8 or clause 14; or

10.1.3 Breach of other obligations: any Security Party commits any breach of or omits to observe Documents (other than those referred to in clauses 10.1.1 and 10.1.2 above) unless such breach or omission, in the opinion of the Lender is capable of remedy, in which case the same shall constitute an Event of Default if it has not been remedied within fifteen (15) days of the occurrence thereof; or

10.1.4 Misrepresentation: any representation or warranty made or deemed to be made or repeated by or in respect of any Security Party in or pursuant to any of the Security Documents or in any notice, certificate or statement referred to in or delivered under any of the Security Documents is or proves to have been incorrect or misleading in any material respect; or

10.1.5 Cross-default: any Indebtedness of the Borrower or any Indebtedness of the Corporate Guarantor exceeding USD1,000,000 is not paid when due (subject to applicable grace periods) or any Indebtedness of the Borrower or any Indebtedness of the Corporate Guarantor exceeding USD1,000,000 becomes (whether by declaration or automatically in accordance with the relevant agreement or instrument constituting the same) due and payable prior to the date when it would otherwise have become due (unless as a result of the exercise by the Borrower or the Corporate Guarantor of a voluntary right of prepayment), or any creditor of the Borrower or the Corporate Guarantor becomes entitled to declare any such Indebtedness due and payable or any facility or commitment available to the Borrower or the Corporate Guarantor relating to Indebtedness is withdrawn, suspended or cancelled by reason of any default (however described) of the person concerned, and such Indebtedness of the Borrower or the Corporate Guarantor (as the case may be) is not paid within fourteen (14) Banking Days from the due date for payment; or

10.1.6 Execution: any uninsured judgment or order made against any Security Party is not stayed, appealed against or complied with within fifteen (15) days or a creditor attaches or takes possession of, or a distress, execution, sequestration or other process is levied or enforced upon or sued out against, any of the undertakings, assets, rights or revenues of any Security Party and is not discharged within twenty (20) days; or

10.1.7 Insolvency: any Security Party is unable or admits inability to pay its debts as they fall due; suspends making payments on any of its debts or announces an intention to do so; becomes insolvent; or has negative net worth (taking into account contingent liabilities); or suffers the declaration of a moratorium in respect of any of its Indebtedness; or

10.1.8 Dissolution: any corporate action, Proceedings or other steps are taken to dissolve or wind-up any Security Party unless the Borrower can demonstrate to the satisfaction of the Lender, by providing an opinion of leading counsel that such corporate action,

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Proceedings or other steps are frivolous, vexatious or an abuse of the process of the court or an order is made or resolution passed for the dissolution or winding up of any Security Party or a notice is issued convening a meeting for such purpose; or

10.1.9 Administration: any petition is presented, notice given or other steps are taken anywhere to appoint an administrator of any Security Party or an administration order is made in relation to any Security Party; or

10.1.10 Appointment of receivers and managers: any administrative or other receiver is appointed anywhere of any Security Party or any material part of its assets and/or undertaking or any other steps are taken to enforce any Encumbrance over all or any substantial part of the assets of any Security Party; or

10.1.11 Compositions: any corporate action, legal proceedings or other procedures or steps are taken or negotiations commenced, by any Security Party or by any of its creditors with a view to the general readjustment or rescheduling of all or a substantial part of its Indebtedness or to proposing any kind of composition, compromise or arrangement involving such company and any of its creditors (excluding always negotiations with holders of preferred shares); or

10.1.12 Analogous proceedings: there occurs, in relation to any Security Party, in any country or territory in which any of them carries on business or to the jurisdiction of whose courts any part of their assets is subject, any event which, in the reasonable opinion of the Lender, appears in that country or territory to correspond with, or have an effect equivalent or similar to, any of those mentioned in clauses 10.1.6 to 10.1.11 (inclusive) or any Security Party otherwise becomes subject, in any such country or territory, to the operation of any law relating to insolvency, bankruptcy or liquidation; or

10.1.13 Cessation of business: any Security Party suspends or ceases or threatens to suspend or cease to carry on its business without the prior consent of the Tender; or

10.1.14 Seizure: all or a material part of the undertaking, assets, rights or revenues of, or shares or other ownership interests in, any Security Party are seized, nationalised, expropriated or compulsorily acquired by or under the authority of any Government Entity and the same are not returned to the relevant Security Party within 45 days of such seizure, nationalisation, expropriation or compulsory acquisition; or

10.1.15 Invalidity: any of the Security Documents shall at any time and for any reason become invalid or unenforceable or otherwise cease to remain in full force and effect, or if the validity or enforceability of any of the Security Documents shall at any time and for any reason be contested by any Security Party which is a party thereto, or if any such Security Party shall deny that it has any, or any further, liability thereunder; or

10.1.16 Unlawfulness: any Unlawfulness occurs or it becomes impossible or unlawful at any time for any Security Party, to fulfil any of the covenants and obligations expressed to be assumed by it in any of the Security Documents or for the Lender to exercise the rights or any of them vested in it under any of the Security Documents or otherwise; or

10.1.17 Repudiation: any Security Party repudiates any of the Security Documents or does or causes or permits to be done any act or thing evidencing an intention to repudiate any of the Security Documents; or

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10.1.18 Encumbrances enforceable: any Encumbrance (other than Permitted Encumbrances) in respect of any of the property (or part thereof) which is the subject of any of the Security Documents becomes enforceable; or

10.1.19 Arrest: the Vessel is arrested, confiscated, seized, taken in execution, impounded, forfeited, detained in exercise or purported exercise of any possessory lien or other claim or otherwise taken from the possession of the Borrower and the Borrower shall fail to procure the release of the Vessel within a period of fifteen (15) days thereafter; or

10.1.20 Registration: the registration of the Vessel under the laws and flag of the Flag State is cancelled or terminated without the prior written consent of the Lender; or

10.1.21 Unrest: the Flag State of the Vessel becomes involved in hostilities or civil war or there is a seizure of power in the Flag State by unconstitutional means unless the Borrower shall have transferred the Vessel onto a new flag acceptable to the Lender within thirty (30) days of the Lender’s written request to the Borrower to effect such transfer; or

10.1.22 Environmental Incidents: an Environmental Incident occurs which gives rise, or may give rise, to an Environmental Claim which could, in the opinion of the Lender be expected to have a Material Adverse Effect (i) on the financial condition of any Security Party or the Group taken as a whole or (ii) on the security constituted by any of the Security Documents or the enforceability of that security in accordance with its terms; or

10.1.23 P&I: the Borrower or the Manager or any other person fails or omits to comply with any requirements of the protection and indemnity association or other insurer with which the Vessel is entered for insurance or insured against protection and indemnity risks (including oil pollution risks) to the effect that any cover (including, without limitation, any cover in respect of liability for Environmental Claims arising in jurisdictions where the Vessel operates or trades) is or may be liable to cancellation, qualification or exclusion at any time; or

10.1.24 Material events: any other event occurs or circumstance arises which, in the reasonable opinion of the Lender, is likely materially and adversely to affect either (i) the ability of any Security Party to perform all or any of its obligations under or otherwise to comply with the terms of any of the Security Documents to which it is a party or (ii) the security created by any of the Security Documents or (iii) the value or nature of the financial condition of any Security Party (other than the Manager); or

10.1.25 Required Authorisations: to the extent it has not been waived, any Required Authorisation is revoked or withheld or modified or is otherwise not granted or fails to remain in full force and effect; or

10.1.26 Money Laundering: any Security Party is in breach of or fails to observe any law, requirement, measure or procedure implemented to combat “money laundering” as defined in Article 1 of the Directive (91/308 EEC) of the Council of the European Communities; or

10.1.27 Management Agreement: a Management Agreement is terminated, revoked, suspended, rescinded, transferred, novated or otherwise ceases to remain in full force and effect for any reason except with the prior consent of the Lender; or

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10.1.28 Change of Ownership: there is any change in the immediate and/or ultimate legal and/or beneficial ownership or control of any of the shares of the Borrower or the Shareholder from that existing on the Execution Date (and for the avoidance of doubt any change in the ownership of shares of and in the Corporate Guarantor occurring in the normal course of business shall not constitute a breach of this clause); or

10.1.29 Sanctions: A Security Party fails to comply with clauses 7.1.25 (Restricted Persons, unlawful activity), 7.1.26 (Sanctions) or 8.1.21 (Sanctions) of this Agreement.

10.2 Acceleration

The Lender may at any time after the occurrence of an Event of Default, and only while the same is continuing and has not been remedied or waived, by notice to the Borrower declare that:

10.2.1 the obligation of the Lender to make its Commitment available shall be terminated, whereupon the Total Commitment shall be reduced to zero forthwith; and/or

10.2.2 the Loan and all interest accrued and all other sums payable whatsoever under the Security Documents have become due and payable, whereupon the same shall, immediately or in accordance with the terms of such notice, become due and payable.

10.3 Demand Basis

If,under clause 10.2.2, the Lender has declared the Loan to be due and payable on demand, at any time thereafter the Lender shall by written notice to the Borrower (a) demand repayment of the Loan on such date as may be specified whereupon, regardless of any other provision of this Agreement, the Loan shall become due and payable on the date so specified together with all interest accrued and all other sums payable under this Agreement or (b) withdraw such declaration with effect from the date specified in such notice.

11 INDEMNITIES

11.1 General indemnity

The Borrower agrees to indemnify the Lender on demand, without prejudice to any of the Lender’s other rights under any of the Security Documents, against any loss (including loss of Margin) or expense (including, without limitation, Break Costs) which the Lender shall certify as sustained by it as a consequence of any Default, any prepayment of the Loan being made under clauses 4.3, 4.4, 8.2.1(a) or 12.1 or any other repayment or prepayment of the Loan being made otherwise than on an Interest Payment Date relating to the part of the Loan prepaid or repaid; and/or the Loan not being made for any reason (excluding any default by the Lender) after the Drawdown Notice has been given.

11.2 Environmental indemnity

The Borrower shall indemnify the Lender on demand and hold it harmless from and against all costs, claims, expenses, payments, charges, losses, demands, liabilities, actions, Proceedings, penalties, fines, damages, judgements, orders, sanctions or other outgoings of whatever nature which may be incurred or made or asserted whensoever against the Lender at any time, whether before or after the repayment in full of

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principal and interest under this Agreement, arising howsoever out of an Environmental Claim made or asserted against the Lender which would not have been, or been capable of being, made or asserted against the Lender had it not entered into any of the Security Documents or been involved in any of the resulting or associated transactions.

11.3 Capital adequacy and reserve requirements indemnity

The Borrower shall promptly indemnify the Lender on demand against any cost incurred or loss suffered by the Lender as a result of its complying with (i) the minimum reserve requirements from time to time of the European Central Bank (ii) any capital adequacy directive of the European Union and/or (iii) any revised framework for international convergence of capital measurements and capital standards and/or any regulation imposed by any Government Entity in connection therewith, and/or in connection with maintaining required reserves with a relevant national central bank to the extent that such compliance or maintenance relates to the Commitment and/or the Loan or deposits obtained by it to fund the whole or part thereof and to the extent such cost or loss is not recoverable by the Lender under clause 12.2.

12 UNLAWFULNESS, INCREASED COSTS AND BAIL-IN

12.1 Unlawfulness

If it is or becomes contrary to any law, directive or regulation for the Lender to contribute to the Loan or to maintain its Commitment or fund the Loan, the Lender shall promptly give notice to the Borrower whereupon (a) the Loan and Commitment shall be reduced to zero and (b) the Borrower shall be obliged to prepay the Loan either (i) forthwith or (ii) on a future specified date not being earlier than the latest date permitted by the relevant law, directive or regulation together with interest accrued to the date of prepayment and all other sums payable by the Borrower under this Agreement.

Provided that if circumstances arise which would result in a notification under this clause 12.1 then, prior to giving such notice, the Lender shall use reasonable endeavours to transfer its obligations, liabilities and rights under this Agreement and the Security Documents to another office of the Lender not affected by the circumstances but the Lender shall not be under any obligation to take any such action if, in its opinion, to do would or might:

(a) have an adverse effect on its business, operations or financial condition; or

(b) involve it in any activity which is unlawful or prohibited or any activity that is contrary to, or inconsistent with, any regulation; or

(c) involve it in any expense (unless indemnified to its satisfaction) or tax disadvantage.

12.2 Increased costs

If the result of any change in, or in the interpretation or application of, or the introduction of, any law or any regulation, request or requirement (whether or not having the force of law, but, if not having the force of law, with which the Lender or, as

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the case may be, its holding company habitually complies), including (without limitation) those relating to Taxation, capital adequacy, liquidity, reserve assets, cash ratio deposits and special deposits, is to:

12.2.1 subject the Lender to Taxes or change the basis of Taxation of the Lender with respect to any payment under any of the Security Documents (other than Taxes or Taxation on the overall net income, profits or gains of the Lender imposed in the jurisdiction in which its principal or lending office under this Agreement is located); and/or

12.2.2 increase the cost to, or impose an additional cost on, the Lender or its holding company in making or keeping the Commitment available or maintaining or funding all or part of the Loan; and/or

12.2.3 reduce the amount payable or the effective return to the Lender under any of the Security Documents; and/or

12.2.4 reduce the Lender’s or its holding company’s rate of return on its overall capital by reason of a change in the manner in which it is required to allocate capital resources to its obligations under any of the Security Documents; and/or

12.2.5 require the Lender or its holding company to make a payment or forgo a return on or calculated by reference to any amount received or receivable by it under any of the Security Documents; and/or

12.2.6 require the Lender or its holding company to incur or sustain a loss (including a loss of future potential profits) by reason of being obliged to deduct all or part of the Commitment or the Loan from its capital for regulatory purposes, then and in each such case (subject to clause 12.3);

(a) the Lender shall notify the Borrower in writing of such event promptly upon its becoming aware of the same; and

(b) the Borrower shall on demand made at any time whether or not the Loan has been repaid, pay to the Lender the amount which the Lender specifies (in a certificate setting forth the basis of the computation of such amount but not including any matters which the Lender or its holding company regards as confidential) is required to compensate the Lender and/or (as the case may be) its holding company for such liability to Taxes, cost, reduction, payment, forgone return or loss.

For the purposes of this clause 12.2 “holding company” means the company or entity (if any) within the consolidated supervision of which the Lender is included.

12.3 Exception

Nothing in clause 12. shall entitle the Lender to receive any amount in respect of compensation for any such liability to Taxes, increased or additional cost, reduction, payment, foregone return or loss to the extent that the same is the subject of an additional payment under clause 6.6.

12.4 Contractual recognition of bail-in

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Notwithstanding any other term of any Security Document or any other agreement, arrangement or understanding between the parties to this Agreement, each such party acknowledges and accepts that any liability of any party to this Agreement to any other party to this Agreement under or in connection with the Security Documents may be subject to Bail-In Action by the relevant Resolution Authority and acknowledges and accepts to be bound by the effect of:

(a) any Bail-In Action in relation to any such liability, including (without limitation):

(i) a reduction, in full or in part, in the principal amount, or outstanding amount due (including any accrued but unpaid interest) in respect of any such liability;

(ii) a conversion of all, or part of, any such liability into shares or other instruments of ownership that may be issued to, or conferred on, it; and

(iii) a cancellation of any such liability; and

(b) a variation of any term of any Security Document to the extent necessary to give effect to any Bail-In Action in relation to any such liability

13 APPLICATION OF MONEYS, SET OFF, PRO-RATA PAYMENTS AND MISCELLANEOUS

13.1 Application of moneys

All moneys received by the Lender under or pursuant to any of the Security Documents and expressed to be applicable in accordance with the provisions of this clause 13.1 or in a manner determined in the Lender’s discretion, shall be applied in the following manner:

13.1.1 first, in or towards payment, in such order as the Lender may decide, of any unpaid costs and expenses of the Lender and the Lender under any of the Security Documents;

13.1.2 secondly, in or towards payment of any fees payable to the Lender under, or in relation to, the Security Documents which remain unpaid;

13.1.3 thirdly, in or towards payment to the Lender of any accrued default interest owing pursuant to clause 3.4 but remains unpaid;

13.1.4 fourthly, in or towards payment to the Lender of any accrued interest owing in respect of the Loan which shall have become due under any of the Security Documents but remains unpaid;

13.1.5 fifthly, in or towards payment to the Lender of any due but unpaid Repayment Instalments;

13.1.6 sixthly, in or towards payment to the Lender in application in repayment of the Loan in accordance with clause 4.6.2;

13.1.7 seventhly, in or towards payment for any loss suffered by reason of any such payment in respect of principal not being effected on an Interest Payment Date relating to the

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part of the Loan repaid and which amounts are so payable under this Agreement and any other sum relating to the Loan which shall have become due under any of the Security Documents but remains unpaid; and

13.1.8 eighthly, the surplus (if any) shall be paid to the Borrower or to whomsoever else may then be entitled to receive such surplus.

The order of application set out in clauses 13.1.1 to 13.1.8 may be varied by the Lender without any reference to, or consent or approval from, the Borrower.

13.2 Set-off

13.2.1 The Borrower irrevocably authorises the Lender (without prejudice to any of the Lender’s rights at law, in equity or otherwise), following the occurrence of an Event of Default which is continuing and without notice to the Borrower, to apply any credit balance to which the Borrower is then entitled standing upon any account of the Borrower with any branch of the Lender in or towards satisfaction of any sum due and payable from the Borrower to the Lender under any of the Security Documents. For this purpose, the Lender is authorised to purchase with the moneys standing to the credit of such account such other currencies as may be necessary to effect such application.

13.2.2 The Lender shall not be obliged to exercise any right given to it by this clause 13.2. The Lender shall notify the Borrower forthwith upon the exercise or purported exercise of any right of set off giving full details in relation thereto.

13.2.3 Nothing in this clause 13.2 shall be effective to create a charge or other security interest.

13.3 Further assurance

The Borrower undertakes with the Lender that the Security Documents shall both at the date of execution and delivery thereof and throughout the Facility Period be valid and binding obligations of the respective parties thereto which, with the rights of the Lender thereunder, are enforceable in accordance with their respective terms and that it will, at its expense, execute, sign, perfect. and do, and will procure the execution, signing, perfecting and doing by each of the other Security Parties of, any and every such further assurance, document, act or thing as in the reasonable opinion of the Lender may be necessary for perfecting the security contemplated or constituted by the Security Documents.

13.4 Conflicts

In the event of any conflict between this Agreement and any of the other Security Documents, the provisions of this Agreement shall prevail.

13.5 No implied waivers, remedies cumulative

No failure or delay on the part of the Lender to exercise any power, right or remedy under any of the Security Documents shall operate as a waiver thereof, nor shall any single or partial exercise by the Lender of any power, right or remedy preclude any other or further exercise thereof or the exercise of any other power, right or remedy. The remedies provided in the Security Documents are cumulative and are not exclusive

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of any remedies provided by law. No waiver by the Lender shall be effective unless it is in writing.

13.6 Severability

If any provision of this Agreement is prohibited, invalid, illegal or unenforceable in any jurisdiction, such prohibition, invalidity, illegality or unenforceability shall not affect or impair howsoever the remaining provisions thereof or affect the validity, legality or enforceability of such provision in any other jurisdiction.

13.7 Force Majeure

Regardless of any other provision of this Agreement, the Lender shall not be liable for any failure to perform the whole or any part of this Agreement resulting directly or indirectly from (i) the action or inaction or purported action of any governmental or local authority (ii) any strike, lockout, boycott or blockade (including any strike, lockout, boycott or blockade effected by or upon the Lender or any of its representatives or employees) (iii) any act of God (iv) any act of war (whether declared or not) or terrorism or (v) any other circumstances whatsoever outside the Lender’s control.

13.8 Amendments

This Agreement may be amended or varied only by an instrument in writing executed by all parties hereto who irrevocably agree that the provisions of this clause 13.8 may not be waived or modified except by an instrument in writing to that effect signed by all of them.

13.9 Counterparts

This Agreement may be executed in any number of counterparts and all such counterparts taken together shall be deemed to constitute one and the same agreement which may be sufficiently evidenced by one counterpart.

13.10 English language

All documents required to be delivered under and/or supplied whensoever in connection howsoever with any of the Security Documents and all notices, communications, information and other written material whatsoever given or provided in connection howsoever therewith must either be in the English language or accompanied, at the Lender’s request, by an English translation certified by a notary, lawyer or consulate acceptable to the Lender.

14 ACCOUNTS

14.1 General

The Borrower undertakes with the Lender that it will ensure that:

14.1.1 it will on or before the Drawdown Date, open the Earnings Account in its name; and

14.1.2 all moneys payable to the Borrower in respect of the Earnings of the Vessel shall, unless and until the Lender directs to the contrary pursuant to the provisions of the Mortgage, be paid to the Earnings Account, Provided however that if any of the moneys paid to

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such Earnings Account are payable in a currency other than USD, they shall be paid to a sub-account of that Earnings Account denominated in such currency (except that if the Borrower fails to open such a sub-account, the Lender shall then convert such moneys into USD at the Lender’s spot rate of exchange at the relevant time for the purchase of USD with such currency and the term “spot rate of exchange” shall include any premium and costs of exchange payable in connection with the purchase of USD with such currency).

14.2 Earnings Account: withdrawals

Any sums standing to the credit of the Earnings Account may be applied by the Borrower from time to time, subject to no Event of Default having occurred which is continuing unremedied and unwaived, in (i) making the payments required under this Agreement (ii) the supply, crewing, management, maintenance, repair, insurance, operation and trading of the Vessel and (iii) payment of dividends to their shareholders annually.

14.3 Application of accounts

At any time after the occurrence of an Event of Default and while the same is continuing unwaived and unremedied, the Lender may, without prior notice to the Borrower apply all moneys then standing to the credit of the Earnings Account (together with interest from time to time accruing or accrued thereon) in or towards satisfaction of any sums due to Lender under the Security Documents at the time of such applications in the manner specified in clause 13.1. Following such application, the Lender shall give notice thereof to the Borrower.

15 ASSIGNMENT, TRANSFER AND LENDING OFFICE

15.1 Benefit and burden

This Agreement shall be binding upon, and ensure for the benefit of, the Lender and the Borrower and their respective successors in title.

15.2 No assignment by Borrower

The Borrower may not assign or transfer any of its rights or obligations under this Agreement.

15.3 Transfer by Lender

The Lender may at any time (i) change its office through which the Loan is made available or (ii) cause all or any part of its rights, benefits and/or obligations under this Agreement and the other Security Documents to be transferred or assigned without the consent of the Borrower to a wholly-owned banking subsidiary or associated company of the Lender or to any third party (in either case a “Transferee Lender”) provided always that any such Transferee Lender, by delivery of such undertaking as the Lender may approve, becomes bound by the terms of this Agreement and agrees to perform all or, as the case may be, relevant part of the Lender’s obligations under this Agreement the rights and equities of the Borrower or of any other Security Party referred to above include, but are not limited to, any right of set-off and any other kind of cross-claim.

15.4 Documenting transfers

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If the Lender assigns all or any part of its rights or transfers all or any part of its rights, benefits and/or obligations as provided in clause 15.3, the Borrower undertakes, immediately on being requested to do so by the Lender and at the cost of the Transferee Lender, to enter into, and procure that the other Security Parties shall (at the cost of the Transferee Lender) enter into, such documents as may be necessary or desirable to transfer to the Transferee Lender all or the relevant part of the Lender’s interest in the Security Documents and all relevant references in this Agreement to the Lender shall thereafter be construed as a reference to the Lender and/or its Transferee Lender (as the case may be) to the extent of their respective interests. For the avoidance of doubt there will be no expense for the Borrower in connection with an assignment or transfer, as provided in clauses 15.3 and 15.5.

15.5 Sub-Participation

The Lender may sub-participate all or any part of its rights and/or obligations under the Security Documents at its own expense without the consent of, or notice to, the Borrower. Any such sub-participation shall have no effect on the Lender’s rights under the Security Documents and shall not affect the Borrower at all.

15.6 Disclosure of information

The Lender may disclose to a prospective assignee, transferee or to any other person (a “Prospective Assignee”) who may propose entering into contractual relations with the Lender in relation to this Agreement such information about the Borrower and/or the other Security Parties as the Lender shall consider appropriate, but only if the Prospective assignee has first undertaken to the Borrower to keep secret and confidential and, not without the prior written consent of the Borrower, disclose to any third party, any of the information, reports or documents to be supplied by the Lender.

15.7 No additional costs

If at the time of, or immediately after, any assignment or transfer by the Lender of all or any part of its rights or benefits or obligations under this Agreement, or any change in the office through which it lends for the purposes of this Agreement, the Borrower would be obliged to pay to the Lender or, as the case may be, the Transferee Lender under clause 3.5, 6.6 or clause 12.2 any sum in excess of the sum (if any) which it would have been obliged to pay to the Lender or the Transferor Lender, as the case may be, under the relevant clause in the absence of such assignment, transfer or change, the Borrower shall not be obliged to pay that excess.

16 NOTICES AND OTHER MATTERS

16.1 Notices

16.1.1 unless otherwise specifically provided herein, every notice under or in connection with this Agreement shall be given in English by letter delivered personally and/or sent by post and/or transmitted by fax and/or electronically;

16.1.2 in this clause “notice” includes any demand, consent, authorisation, approval, instruction, certificate, request, waiver or other communication.

16.2 Addresses for communications, effective date of notices

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16.2.1 Subject to clause 16.2.2 and clause 16.2.5 notices to the Borrower shall be deemed to have been given and shall take effect when received in full legible form by the Borrower at the address and/or the fax number appearing below (or at such other address or fax number as the Borrower may hereafter specify for such purpose to the Lender by notice in writing);

Address: c/o Euroseas Ltd.

4 Messogiou & Evropis Street
151 24 Maroussi
Greece

Fax: +30 211 1804097

Attn: Anastasios Aslidis / George Kavalis

Email: aha@euroseas.gr / gik@euroseas.gr

16.2.2 notwithstanding the provisions of clause 16.2.1 or clause 16.2.5, a notice of Default and/or a notice given pursuant to clause 10.2 or clause 10.3 to the Borrower shall be deemed to have been given and shall take effect when delivered, sent or transmitted by the Lender to the Borrower to the address or fax number referred to in clause 16.2.1;

16.2.3 subject to clause 16.2.5, notices to the Lender shall be deemed to be given, and shall take effect, when received in full legible form by the Lender at the address and/or the fax number appearing below (or at any such other address or fax number as the Lender may hereafter specify for such purpose to the Borrower in writing);

Address: 170 Alexandras Ave.

11521 Athens
Greece

Fax No. +30 210 3739783

Attention: Thanassis Doudoulas / Olga Voutsa

Email: DoudouiasA@piraeusbank.gr / VoutsaOlOpiraeusbank.gr

16.2.4 subject to clause 16.2.5, notices to the Lender shall be deemed to be given and shall take effect when received in full legible form by the Lender at its address and/or fax number specified in the definition of “Lender” (or at any other address or fax number as the Lender may hereafter specify for such purpose); and

16.2.5 if under clause 16.2.1 or clause 16.2.3 a notice would be deemed to have been given and effective on a day which is not a working day in the place of receipt or is outside the normal business hours in the place of receipt, the notice shall be deemed to have been given and to have taken effect at the opening of business on the next working day in such place.

16.3 Electronic Communication

16.3.1 Any communication to be made by and/or between the Lender and the Security Parties or any of them under or in connection with the Security Documents or any of them may be made by electronic mail or other electronic means, if and provided that all such parties:

55

(a) notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and

(b) notify each other of any change to their electronic mail address or any other such information supplied by them.

16.3.2 Any electronic communication made by and/or between the Lender and the Security Parties or any of them will be effective only when actually received in readable form.

17 GOVERNING LAW

This Agreement and any non-contractual obligations arising out of or in connection with it is governed by and shall be construed in accordance with English law.

18 JURISDICTION

18.1 Exclusive Jurisdiction

For the benefit of the Lender, and subject to clause 18.4 below, the Borrower hereby irrevocably agrees that the courts of England shall have exclusive jurisdiction:

18.1.1 to settle any disputes or other matters whatsoever arising under or in connection with this Agreement or any non-contractual obligation arising out of or in connection with this Agreement and any disputes or other such matters arising in connection with the negotiation, validity or enforceability of this Agreement or any part thereof, whether the alleged liability shall arise under the laws of England or under the laws of some other country and regardless of whether a particular cause of action may successfully be brought in the English courts; and

18.1.2 to grant interim remedies or other provisional or protective relief.

18.2 Submission and service of process

The Borrower accordingly irrevocably and unconditionally submits to the jurisdiction of the English courts. Without prejudice to any other mode of service the Borrower:

18.2.1 irrevocably empowers and appoints Messrs Hill Dickinson Services (London) Ltd at present of The Broadgate Tower, 20 Primrose Street, London EC2A 2EW, England, as its agent to receive and accept on its behalf any process or other document relating to any proceedings before the English courts in connection with this Agreement;

18.2.2 agrees to maintain such an agent for service of process in England from the date hereof until the end of the Facility Period;

18.2.3 agrees that failure by a process agent to notify the Borrower of service of process will not invalidate the proceedings concerned;

18.2.4 without prejudice to the effectiveness of service of process on its agent under clause 18.2.1 above but as an alternative method, consents to the service of process relating to any such proceedings by mailing or delivering a copy of the process to its address for the time being applying under clause 16.2; and

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18.2.5 agrees that if the appointment of any person mentioned in clause 18.2.1 ceases to be effective, the Borrower shall immediately appoint a further person in England to accept service of process on its behalf in England and, failing such appointment within seven (7) days the Lender shall thereupon be entitled and is hereby irrevocably authorised by the Borrower in those circumstances to appoint such person by notice to the Borrower.

18.3 Forum non conveniens and enforcement abroad

The Borrower:

18.3.1 waives any right and agrees not to apply to the English court or other court in any jurisdiction whatsoever to stay or strike out any proceedings commenced in England on the ground that England is an inappropriate forum and/or that Proceedings have been or will be started in any other jurisdiction in connection with any dispute or related matter falling within clause 18.1; and

18.3.2 agrees that a judgment or order of an English court in a dispute or other matter falling within clause 18.1 shall be conclusive and binding on the Borrower and may be enforced against it in the courts of any other jurisdiction.

18.4 Right of Lender, but not Borrower, to bring proceedings in any other jurisdiction

18.4.1 Nothing in this clause 18 limits the right of the Lender to bring Proceedings, including third party proceedings, against the Borrower, or to apply for interim remedies, in connection with this Agreement in any other court and/or concurrently in more than one jurisdiction;

18.4.2 the obtaining by the Lender of judgment in one jurisdiction shall not prevent the Lender from bringing or continuing proceedings in any other jurisdiction, whether or not these shall be founded on the same cause of action.

18.5 Enforceability despite invalidity of Agreement

Without prejudice to the generality of clause 13.6, the jurisdiction agreement contained in this clause 18 shall be severable from the rest of this Agreement and shall remain valid, binding and in full force and shall continue to apply notwithstanding this Agreement or any part thereof being held to be avoided, rescinded, terminated, discharged, frustrated, invalid, unenforceable, illegal and/or otherwise of no effect for any reason.

18.6 Effect in relation to claims by and against non-parties

18.6.1 For the purpose of this clause “Foreign Proceedings” shall mean any Proceedings except proceedings brought or pursued in England arising out of or in connection with (i) or in any way related to any of the Security Documents or any assets subject thereto or (ii) any action of any kind whatsoever taken by the Lender pursuant thereto or which would, if brought by the Borrower against the Lender, have been required to be brought in the English courts;

18.6.2 the Borrower shall not bring or pursue any Foreign Proceedings against the Lender and the Borrower shall use its best endeavours to prevent persons not party to this Agreement from bringing or pursuing any Foreign Proceedings against the Lender;

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18.6.3 If, for any reason whatsoever, any Security Party and/or any person connected howsoever with any Security Party (including but not limited to any shareholder of the Borrower) brings or pursues against the Lender any Foreign Proceedings, the Borrower shall indemnify the Lender on demand in respect of any and all claims, losses, damages, demands, causes of action, liabilities, costs and expenses (including, but not limited to, legal costs) of whatsoever nature howsoever arising from or in connection with such Foreign Proceedings which the Lender certifies as having been incurred by it;

the Lender and the Borrower hereby agree and declare that the benefit of this clause 18 shall extend to and may be enforced by any officer, employee, agent or business associate of the Lender against whom the Borrower brings a claim in connection howsoever with any of the Security Documents or any assets subject thereto or any action of any kind whatsoever taken by, or on behalf of or for the purported benefit of the Lender pursuant thereto or which, if it were brought against the Lender, would fall within the material scope of clause 18.1. In those circumstances this clause 18 shall be read and construed as if references to the Lender were references to such officer, employee, agent or business associate, as the case may be.

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Schedule 1
Form of Drawdown Notice

To: Piraeus Bank S.A.
170 Alexandras Ave.
11521 Athens Greece

[•] 2019

Dear Sirs

Re: Facility agreement dated              July 2019 in respect of a loan of up to USD4,000,000 (the “Loan Agreement”) made between (1) Diamantis Shipowners Ltd as Borrower and (2) Piraeus Bank S.A. as Lender

We refer to the Loan Agreement. Words and expressions whose meanings are defined therein shall have the same meanings when used herein.

We hereby give you notice that we wish to draw the sum of USD[      ] on [date]        2019 and select a first Interest Period in respect of such drawing of [•] months. The funds should be credited to the account of [                       ] and numbered [                       ] with [                       ] of [                       ].

We confirm that:

(a) no Default has occurred and is continuing;

(b) the representations and warranties contained in clause 7 of the Loan Agreement are true and correct at the date hereof as if made with respect to the facts and circumstances existing at such date;

(c) the borrowing to be effected by the drawdown of the Loan will be within our corporate powers, has been validly authorised by appropriate corporate action and will not cause any limit on our borrowings (whether imposed by statute, regulation, agreement or otherwise howsoever) to be exceeded;

(d) there has been no material adverse change in our financial position or in the consolidated financial position of the Borrower or the Corporate Guarantor from that described by us to the Lender in the negotiation of the Loan Agreement and/or in any documents or statements already delivered to the Lender in connection therewith;

(e) there are no Required Authorisations;

(f) there has occurred nothing which would have a Material Adverse Effect; and

(g) no part of the proceeds of the Loan shall be used for the purpose of acquiring shares in the share capital of the Lender or other banks and/or financial institutions or acquiring hybrid capital debentures (thAouc u(3Qt.bucv icepoulotimv) of the Lender or other banks and/or financial institutions.

By
	Authorised Signatory
	DIAMANTIS SHIPOWNERS LTD

59

Schedule 2
Conditions precedent

Part 1

(referred to in clause 9.1)

(a) Corporate documents

Certified Copies of all documents which evidence or relate to the constitution of each Security Party and its current corporate existence;

(b) Corporate authorities

(i) Certified Copies of resolutions of the directors of each Security Party and shareholders of the Borrower approving such of the MOA and the Security Documents to which such Security Party is a party and authorising the execution and delivery thereof and performance of such Security Party’s obligations thereunder, additionally certified by an officer of such Security Party, as having been duly passed at a duly convened meeting of the directors and shareholders of such Security Party and not having been amended, modified or revoked and being in full force and effect; and

(ii) an original of any power of attorney issued by each Security Party pursuant to such resolutions;

(c) Required Authorisations

a certificate (dated no earlier than 5 Banking Days prior to the Drawdown Date) that there are no Required Authorisations or that there are no Required Authorisations except those described in such certificate and Certified Copies of which as duly executed (including any conditions and/or documents ancillary thereto) are appended thereto;

(d) Certificate of incumbency

a list of directors, shareholders and officers of each Security Party specifying the names and positions of such persons, certified by an officer of the relevant Security Party to be true, complete and up to date;

(e) Shareholders

evidence acceptable to the Lender that all of the issued shares of and in the Borrower are issued in registered form and legally owned by the Shareholder and ultimately beneficially owned and controlled by the Corporate Guarantor;

(f) Security Documents

the Corporate Guarantee and the Shares Pledge duly executed and delivered, and all documents to be executed and delivered thereunder;

(g) Declaration of compliance / “know your customer”

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written confirmation (in a form acceptable to the Lender) that:

(i) the Borrower has complied at all times and in all respects with (i) any relevant employment legislation and employment regulations applicable to it, (ii) all documentation required by the Lender in relation to the Lender’s “know your customer” requirements and (iii) all documentation required by the Lender for the opening of the Earnings Account with the Lender; and

(ii) the Guarantor and the Shareholder has complied at all times and in all respects with all documentation required by the Lender in relation to the Lender’s “know your customer” requirements; and

(h) process agent

a letter from the agent for receipt of service of proceedings referred to in clause 18.2.1 accepting its appointment under the said clause and under each of the other Security Documents in which it is or is to be appointed as the agent for any Security Party.

Part 2

(a) Approval of drawdown

the approval of the competent authorities of Greece of the drawdown and application of the Loan in accordance with the applicable regulations of the Bank of Greece and legislation relating to capital controls and/or other economic measures imposed by the Government of Greece;

(b) Copies of Underlying Documents

a Certified Copy of the MOA, the Management Agreement, any Extended Employment Contract and all ISM Code Documentation for the Vessel;

(c) Evidence satisfactory to the Lender that the Vessel:

(i) Purchase

has been unconditionally delivered by the Seller to, and accepted by, the Borrower under the MOA, and all other amounts payable under the MOA (in addition to the part to be financed by the Loan) has been duly paid (and funded by the Borrower through equity contribution and/or common shares contribution provided exclusively by the Corporate Guarantor), together with copies of the bill of sale and protocol of delivery and acceptance relating thereto, certificate showing the Vessel as being free of encumbrance (other than the Mortgage) relating thereto;

(ii) Registration and Encumbrances

is registered in the name of the Borrower through the Registry and that the Vessel, her Earnings, Insurances and Requisition Compensation are free of EncuinbranLes except Permitted Encumbrances (such evidence to include relevant certificates issued by the Flag State and results of searches carried out against the said Registry by the Lender or its lawyers);

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(iii) Classification

maintains the Classification free of all overdue recommendations and requirements of the Classification Society affecting the Classification;

(iv) Insurance

is insured in accordance with the provisions of the relevant Ship Security Documents and all requirements of such Ship Security Documents in respect of such insurance have been complied with (including without limitation, receipt by the Lender of customary brokers’ letters of undertaking regarding the placing of hull and machinery and war risks cover and confirmation from the protection and indemnity association or other insurer with which the Vessel is, or is to be, entered for insurance or insured against protection and indemnity risks, that any necessary declarations required by the association or insurer for the removal of any oil pollution exclusion have been made and that any such exclusion does not apply to the Vessel); and

(v) Management

is managed by the Manager on terms in all material respects acceptable to the Lender;

(vi) Charter

is employed under the time charterparty dated 25 January 2019 initially made between the Seller as owner and Mediterranean Shipping Co. S.A. of Switzerland as charterer of the Vessel, as amended by an Addendum No. 1 dated 29 April 2019;

(d) Security Documents

the Mortgage, the Earnings Account Pledge, the General Assignment and any Charter Assignment duly executed by the Borrower and the Manager’s Undertaking duly executed by the Manager;

(e) Notices of assignment and acknowledgments

counterpart originals of duly executed notices of assignment and acknowledgments (where relevant) required by the terms of the Security Documents referred to in (c) above in the forms prescribed by those Security Documents and any other documents required to be delivered pursuant thereto;

(f) Mortgage registration

evidence that the Mortgage has been duly registered against the Vessel in accordance with the laws of the Registry;

(g) Bank accounts

evidence that the Earnings Account has been opened by the Borrower and duly completed mandates in relation thereto have been delivered to the Lender;

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(h) Laws of Marshall Islands: opinion

an opinion of Messrs Ince, special legal advisers to the Lender on the laws of Marshal Islands;

(a) Laws of Liberia: opinion

an opinion of Messrs Ince, special legal advisers to the Lender on the laws of Liberia;

(i) ISPS Code

evidence satisfactory to the Lender that the Vessel is subject to a ship security plan which complies with the ISPS Code and a copy of the ISSC for the Vessel;

(j) DOC and Application for SMC

Certified Copies of the DOC, ISSC, (if applicable) IAPP and EIAPP Certificates in respect of the Vessel and a Certified Copy of the SMC therefor and evidence that the Vessel and the Manager are in compliance with the ISM Code;

(k) Additional Vessel’s Certificates

Certified Copies of Classification Certificate, Safety Radio Equipment Certificate, Safety Equipment Certificate, International Oil Pollution Certificate, International Loadline Certificate, Safety Construction Certificate, International Tonnage Certificate, Minimum Safety Manning Certificate and Continuous Synopsis Record for the Vessel;

(l) Lightweight

evidence satisfactory to the Lender of the Lightweight tonnage of the Vessel;

(m) Scrap Value

evidence satisfactory to the Lender of the Scrap Value of the Vessel;

(n) Manager’s confirmation

written confirmation addressed by the Manager to the Lender that the representations and warranties set out in clause 7.1.22 (Environmental Matters) and clause 7.1.23 (ISM Code) are true and correct;

(o) Insurance Report

a written report from a maritime insurance consultant or broker acceptable to the Lender in a form and content acceptable to the Lender (at the cost of the Borrower) in respect of the insurances on the Vessel which report shall certify that such insurances are placed through or with insurance brokers and clubs, in amounts, covering risks and on terms acceptable to the Lender and that the same are in accordance with the terms of the Mortgage in respect of the Vessel;

(p) Fees

evidence that all fees due and payable have been paid in full;

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(q) Material Adverse Effect

the Lender is satisfied that there has occurred nothing which would have a Material Adverse Effect, including in respect of the Manager;

(r) MIT and MAP Policy premium

evidence that the Borrower has reimbursed the Lender in the amount of the first annual premium or, as the case may be, any additional premium for the MII and MAP Policy; and

(s) Further conditions precedent

such further evidence or opinions as may reasonably be required by the Lender.

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Schedule 3

Form of Compliance Certificate

To: Piraeus Bank S.A.

From: Euroseas Ltd.

Date [          ] 200[ ]

Dear Sirs

Loan facility agreement dated [•] July 2019 (the “Loan Agreement”) for a loan of up to USD4,000,000 made between (1) Diamantis Shipowners Ltd as Borrower and (2) Piraeus Bank S.A. as Lender

We refer to the Loan Agreement. Words and expressions whose meanings are defined in the Loan Agreement shall have the same meanings when used herein.

We hereby confirm that [except as stated below] as at the date hereof to the best of our knowledge and belief after due inquiry:-

1. all the Borrower’s financial covenants in the Loan Agreement set out in clause 8 are being fully complied with, and, in particular, by reference to the latest audited financial statements, management accounts and all other current relevant information available to us:

(a) the Net Worth of the Group is USD [        ];

(b) the Total Liabilities are USD [        ] and the Total Assets (adjusted for market values of vessels calculated in accordance with clause 8.2.5(i)) are USD [        ]; and

(c) the Total Liabilities divided by the Total Assets (each net of cash balance) (adjusted for market values of vessels calculated in accordance with clause 8.2.5(i)) is [        ]%;

2. no Default has occurred which is continuing;

3. the representations set out in clause 7 of the Loan Agreement are true and accurate with reference to all facts and circumstances now existing and all Required Authorisations have been obtained and are in full force and effect.

[State any exceptions/qualifications to the above statements]

Yours faithfully

Euroseas Ltd.

By

Chief Financial Officer: Euroseas Ltd.

65

Execution Page

IN WITNESS whereof the parties to this Agreement have caused this Agreement to be duly executed on the date first above written.

SIGNED by STEFANIA KARMIRI	)
attorney-in-fact for and on behalf of	)
DIAMANTIS SHIPOWNERS LTD	)
pursuant to a Power of Attorney	)	/s/ STEFANIA KARMIRI
dated 15 July 2019	)	Attorney-in-fact

SIGNED by OLGA VOUTSA	)
and by EUGENIA KOUVARA	)
for and on behalf of	)	/s/ Olga Voutsa	/s/ Eugenia Kouvara
PIRAEUS BANK S.A.	)	Olga Voutsa	Eugenia Kouvara
		Authorised signatories

Witness to all the above signatures		)
Name:	VASILIKI TZOANNOU	)
Address:	47-49 Akti Miaouli	)	/s/ VASILIKI TZOANNOU
	185 36 Piraeus
	Greece

66

EX-4.19

Exhibit 4.19

US$12,500,000

Secured Loan Agreement

Dated  30 July  2019

(1) Kea Shipowners Ltd
Spetses Shipowners Ltd
Hydra Shipowners Ltd
(as Borrowers)

(2) HSBC Bank plc
(as Lender)

Contents

1	Definitions and Interpretation	2
2	The Loan	21
3	Purpose	21
4	Conditions of Utilisation	21
5	Advance	23
6	Repayment	24
7	Illegality, Prepayment and Cancellation	25
8	Interest	28
9	Interest Periods	28
10	Changes to the Calculation of Interest	29
11	Fees	30
12	Tax Gross Up and Indemnities	31
13	Increased Costs	37
14	Other Indemnities	38
15	Mitigation by the Lender	40
16	Costs and Expenses	40
17	Security Documents and Application of Moneys	42
18	Representations	46
19	Information Undertakings	52
20	Financial Covenants	54
21	General Undertakings	56
22	Events of Default	62
23	Changes to the Lender	68
24	Changes to the Obligors	69
25	Conduct of Business by the Lender	70
26	Payment Mechanics	71
27	Set-Off	75

28	Notices	75
29	Calculations and Certificates	76
30	Partial Invalidity	77
31	Remedies and Waivers	77
32	Confidentiality	77
33	Counterparts	81
34	Governing Law	82
35	Enforcement	82
Schedule 1	Part I Conditions Precedent	83
Schedule 2	Utilisation Request	88
Schedule 3	Form of Compliance Certificate	89

Loan Agreement

Dated 30 July 2019

Between:

(1) Kea Shipowners Ltd, a company incorporated under the law of the Republic of Liberia, with its registered office at 80 Broad Street, Monrovia, Republic of Liberia and company number C-120948 (“Kea”); Spetses Shipowners Ltd, a company incorporated under the law of the Republic of Liberia, with its registered office at 80 Broad Street, Monrovia, Republic of Liberia and company number C-120949 (“Spetses”) and Hydra Shipowners Ltd, a company incorporated under the law of the Republic of Liberia, with its registered office at 80 Broad Street, Monrovia, Republic of Liberia and company number C-120950 (“Hydra” and, together with Kea and Spetses, the “Borrowers” and each a “Borrower”); and

(2) HSBC BANK plc, of 8 Canada Square, London, E14 SHQ, England (the “Lender”). Preliminary

(A) Kea has agreed to purchase the Kea Vessel from the Kea Seller on the terms of the Kea MOA and intends to register the Kea Vessel in its ownership under the laws and the flag of the Republic of Liberia.

(B) Spetses has agreed to purchase the Spetses Vessel from the Spetses Seller on the terms of the Spetses MOA and intends to register the Spetses Vessel in its ownership under the laws and the flag of the Republic of Liberia.

(C) Hydra has agreed to purchase the Hydra Vessel from the Hydra Seller on the terms of the Hydra MOA and intends to register the Hydra Vessel in its ownership under the laws and the flag of the Republic of Liberia.

(D) The Lender has agreed to advance to the Borrowers on a joint and several basis up to the lesser of (a) $12,500,000 and (b) 49.9% of the aggregate Market Values of the Vessels to assist the Borrowers to finance part of the purchase prices of the Vessels.

It is agreed as follows:

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Section 1 Interpretation

1 Definitions and Interpretation

1.1 Definitions In this Agreement:

“Account Holder” means HSBC BANK plc of 8 Canada Square, London, E14 5HQ, England or any other branch of the Lender or any other bank or financial institution which at any time, with the Lender’s prior written consent, holds the Earnings Account.

“Accounts” means the Earnings Accounts and the Cash Collateral Account and “Account” means any of them.

“Account Security Deeds” means the account security deeds referred to In Clauses 17.1.5 and 17.1.6 (Security Documents).

“Administration” has the meaning given to it in paragraph 1.1.3 of the ISM Code.

“Affiliate” means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company.

“Annex VI” means Annex VI (Regulations for the Prevention of Air Pollution from Ships) to the International Convention for the Prevention of Pollution from Ships 1973 (as modified in 1978 and 1997).

“Approved Shipbroker” means each of Hartland Shipping Services Limited, H. Clarkson & Company Limited, Maersk Brokers K/S, Arrow Sale and Purchase (U.K.) Ltd., Fearnley AS, Simpson Spence & Young (SSY), Barry Rogliano Salles of France, Galbraith’s Limited Shipbrokers, Braemar Shipping Services PLC, Banchero-Costa & C. S.p.A, Associated Shipbroking S.A.M., Howe Robinson & Co Ltd., Maritime Strategies International (MSI), E.A. Gibson Shipbrokers Ltd., Oslo Shipbrokers A.S, Inge Steensland Shipbrokers AS and any other reputable, independent and first class firm of ship brokers appointed by a Borrower with the Lender’s prior approval.

“Assignments” means all the forms of assignment referred to in Clause 17.1.2 (Security Documents).

“Authorisation” means an authorisation, consent, approval, resolution, licence, exemption, filing, notarisation or registration.

“Availability Period” means the period from and including the date of this Agreement to and including 31 August 2019 or any other later date acceptable to the Lender in its absolute discretion.

“Basel III” means (a) the agreements on capital requirements, a leverage ratio and liquidity standards contained in “Basel III: A global regulatory framework for more resilient banks and banking systems”, “Basel III: International framework for liquidity risk measurement, standards and monitoring” and “Guidance for national authorities operating the countercyclical capital buffer” published by the Basel Committee on Banking Supervision in December 2010, each as amended, supplemented or restated, (b) the rules for global systemically important banks contained in “Global systemically important banks: assessment methodology and the

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additional Doss absorbency requirement - Rules text” published by the Basel Committee on Banking Supervision in November 2011, (c) any further guidance or standards published by the Basel Committee on Banking Supervision relating to “Basel III” and (d) CRD IV or CRR.

“Break Costs” means the amount (if any) by which:

(a) the interest which the Lender should have received Per the period from the date of receipt of all or tiny part of the Loan or an Unpaid Sum to the last day of the current Interest Period in respect of the Loan or Unpaid Sum, had the principal amount or Unpaid Sum received been paid on the last day of that Interest Period,

exceeds:

(b) the amount which the Lender would be able to obtain by placing an amount equal to the principal amount or Unpaid Sum received by it on deposit with a leading bank in the Relevant Interbank Market for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period.

“Business Day” means  they (other than a Saturday or Sunday) on which banks are open for general business in London, New York and Athens.

“Cash Collateral Account" means the bank account opened or to be opened in the name of the Borrowers with the Account Holder and designated “HSBC Bank Plc, Re: Kea Shipowners Ltd, Spetses Shipowners Ltd, Hydra Shipowners Ltd - Cash Collateral Account”.

“Cash Collateral Amount” means the amounts set out under Clause 20.2 (Cash Collateral Amount).

“Charged Property” means all of the assets of the Obligors which from time to time are, or are expressed to be, the subject of the Security Documents,

“Chargor” means Eurocon Ltd. a company incorporated under the laws of the Republic of the Marshall islands, with its registered address at Trust Company Complex„ Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands.

“Charter“ means, in respect of a Vessel, any charter, or other contract for its employment of twelve (12) months or more duration (including any extension options), whether or not already in existence, entered or to be entered into from time to time between the relevant Borrower, as owner of the relevant Vessel and a Charterer, as charterer of the relevant Vessel,” as approved by the Lender.

“Charterer" means, in respect of a Vessel, any person who enters into any Charter with the relevant Borrower.

“Charter Rights” means the benefit of any Charter and any and all Earnings due and/or to become, due to a Borrower under or pursuant to any Charter.

“Code” means the US Internal Revenue Code of 1986.

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“Commitment Fee” means the commitment fee to be paid by the Borrowers to the Lender under Clause 11.1 (Commitment Fee).

“Compliance Certificate” means a certificate substantially in the form set out in Schedule 3 (Form of Compliance Certificate).

“Confidential Information” means all information relating to any Obligor, any other member of the Group, the Finance Documents or the Loan of which the Lender becomes aware in its capacity as, or for the purpose of becoming, the Lender which is received by the Lender in relation to, or for the purpose of becoming the Lender under, the Finance Documents or the Loan from any Obligor, any other member of the Group or any of its advisers in whatever form, and includes information given orally and any document, electronic file or any other way of representing or recording information which contains or is derived or copied from such information but excludes information that:

(i) is or becomes public information other than as a direct or indirect result of any breach by the Lender of Clause 32 (Confidentiality); or

(ii) is identified in writing at the time of delivery as non-confidential by any Obligor, any other member of the Group or any of its advisers; or

(iii) is known by the Lender before the date the information is disclosed to it by any Obligor, any other member of the Group or any of its advisers or is lawfully obtained by the Lender after that date, from a source which is, as far as the Lender is aware, unconnected with any Obligor or any other member of the Group and which, in either case, as far as the Lender is aware, has not been obtained in breach of, and is not otherwise subject to, any obligation of confidentiality.

“Confidentiality Undertaking” means a confidentiality undertaking substantially in a recommended form of the Loan Market Association at the relevant time.

“CRD IV” means Directive 2013/36/EU of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directive 2006/48/EC and 2006/49/EC.

“CRR” means Regulation (EU) no. 575/2013 of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending regulation (EU) No. 648/2012.

“CTA” means the Corporation Tax Act 2009.

“Default” means an Event of Default or any event or circumstance which would (with the expiry of a grace period, the giving of notice, the making of any determination under the Finance Documents or any combination of any of the foregoing) be an Event of Default.

“Delegate” means any delegate, agent or attorney or co-trustee appointed by the Lender as holder of any of the Security Documents.

“Disruption Event” means either or both of:

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(a) a material disruption to those payment or communications systems or to those financial markets which are, in each case„ required to operate in order for payments to be made in connection with the Loan (or otherwise in order for the transactions contemplated by the Finance’ Documents to be carried out) which disruption is not caused by. and is beyond the control of, any of the Parties; or

(b) the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to the treasury or payments operations of a Party preventing that, or any other Party:

(i) from performing its payment obligations under the Finance Documents; or

(ii) from communicating with other Parties in accordance with the terms of the Finanog Documents,

and which (in either such case) is not caused by, and is beyond the contrail of the Party whose operations are disrupted.

“DOC’” means, in relation to the ISM Company, a valid Document of Compliance issued for the ISM Company by the Administration under paragraph 13.2 of the ISM Code.

“Earnings” means all hires, freights, pool income and other sums payable to or for the account of a Borrower in respect of a Vessel including (without limitation) all remuneration for salvage and towage services demurrage and detention moneys, contributions in general average, compensation in respect of any requisition for hire, and damages and other payments (whether awarded by any court or arbitral tribunal or by agreement or otherwise) for breach, termination or variation of any  contract for the operation, employment or use of a Vessel.

“Earnings Accounts” means, together, the Kea Earnings Account, the Spetses Earnings Account and the Hydra Earnings Account and “Earnings Account” means either of them.

“Encumbrance” means a mortgage, charge, assignment, pledge, lien or other security interest securing any obligation of any person or any other agreement or arrangement having a similar effect.

“Environmental Approval” means any present or future permit, ruling, variance or other Authorisation required under Environmental Laws.

“Environmental Claim” means any claim, proceeding, formal notice or investigation by any governmental, judicial or regulatory authority or any other person which arises ^,out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law and, for this purpose, “claim” includes claim for damages, compensation, contribution, injury, fines, losses and penalties or any other payment of any kind, including in relation to clean-up and removal, whether or oat similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset.

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“Environmental Incident” means:

(a) any release, emission, spill or discharge into a Vessel or into or upon the air, sea, land or soils (including the seabed) or surface water of Environmentally Sensitive Material within or from a Vessel; or

(b) any incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, sea, land or soils (including the seabed) or surface water from a vessel other than a Vessel and which involves a collision between a Vessel and such other vessel or some other incident of navigation or operation, in either case, in connection with which a Vessel is actually or potentially liable to be arrested, attached, detained or injuncted and/or a Vessel and/or any Obligor and/or any operator or manager of a Vessel is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or

(c) any other incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, sea, land or soils (including the seabed) or surface water otherwise than from a Vessel and in connection with which a Vessel is actually or potentially liable to be arrested and/or where any Obligor and/or any operator or manager of a Vessel is at fault or allegedly at fault or otherwise liable to any legal or administrative action, other than in accordance with an Environmental Approval.

“Environmental Law” means any present or future law or regulation relating to pollution or protection of human health or the environment, to conditions in the workplace, to the carriage, generation, handling, storage, use, release or spillage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material.

“Environmentally Sensitive Material” means and includes all contaminants, oil, oil products, toxic substances and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous.

“Event of Default” means any event or circumstance specified as such in Clause 22 (Events of Default).

“Facility Office’ means the Lender’s office at 8 Canada Square, London E14 5HQ, England or such other office as the Lender may designate in writing.

“Facility Period” means the period beginning on the date of this Agreement and ending on the date on which the Lender is satisfied that there is no outstanding amount under the Loan in force and that the Indebtedness has been irrevocably and unconditionally paid and discharged in full.

“FATCA” means:

(a) sections 1471 to 1474 of the Code or any associated regulations;

(b) any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction,

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which (in either case) facilitates the implementation of any law or regulation referred to in (a) or

(c) any agreement pursuant to the implementation of any treaty, law or regulation referred to in (a) or (b) with the US Internal Revenue Service, the US government or any government& or taxation authority in any other jurisdiction.

“FATCA Deduction” means a deduction or withholding from a payment under a Finance Document required by FATCA.

"FATCA Exempt Party" means a Party that is entitled to receive payments free from any FATCA Deduction.

“FCPA,” means the US Foreign Corrupt Practices Act of 1977.

“Finance Documents” means this Agreement„ the Security Documents and any other document designated as such by the Lender and the Borrowers and “Finance Documents” means any one of them.

“Financial Indebtedness” means any^, indebtedness for or in respect of:

(a) moneys borrowed and debit balances at banks or other financial institutons;

(b) any acceptance under any acceptance credit or bill discounting facility (or dematerialised equivalent);

(c) any note purchase facility or the issue of bonds„ notes, debentures, loan stock or any similar instrument°

(d) the amount of any liability in respect of any finance or capital lease;

(e) receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis);

(f) any Treasury Transaction (and, when calculating the value of that Treasury Transaction, only the marked to market value (or, if any actual amount is due as a result of the termination or dose-out of that Treasury Transaction, that amount) shall be taken into account);

(g) any counter-indemnity obligation in respect of a guarantee, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution in respect of (i) an underlying liability of an entity which is not an Obligor which liability would fall within one of the other sections of this definition or (ii) any liabilities of any Obligor relating to any post-retirement benefit scheme;

(h) any amount raised by the issue of shares which are redeemable (other than at the option of the issuer) before the Termination Date or are otherwise classified as borrowings under GAAP;

(i) any amount of any liability under an advance or deferred purchase agreement if (i) one of the primary reasons behind entering into the agreement is to raise finance or to finance the acquisition or construction of Page 7

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the asset or service in question or (ii) the agreement is in respect of the supply of assets or services and payment is due more than thirty (30) days after the date of supply;

(j) any amount raised under any other transaction (including any forward sale or purchase, sale and sale back or sale and leaseback agreement) having the commercial effect of a borrowing or otherwise classified as borrowings under GAAP; and

(k) the amount of any liability in respect of any guarantee or indemnity for any of the Items referred to in (a) to (j).

“GAAP” means generally accepted accounting principles in the United States of America.

“Group” means the Borrowers, the Guarantor and each company which is a Subsidiary of the Guarantor from time to time.

“Guarantee” means the guarantee and indemnity of the Guarantor referred to in Clause 17.1.3 (Security Documents).

“Guarantor” means Euroseas Ltd., a company incorporated under the laws of the Republic of the Marshall Islands, with its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands and/or (where the context permits) any other person who shall at any time during the Facility Period issue to the Lender a guarantee and/or indemnity for the payment of all or part of the Indebtedness.

“Holding Company” means, in relation to a person, any other person in respect of which it is a Subsidiary.

“Hydra Earnings Account” means the bank account opened in the name of Hydra with the Account Holder and designated “HSBC Bank plc - Hydra Shipowners Ltd”.

“Hydra MOA” means the memorandum of agreement dated 31 May 2019 madeby and between the Hydra Seller, as seller and Hydra, as buyer, on the terms and subject to the conditions of which the Hydra Seller will sell the Hydra Vessel to Hydra.

“Hydra Seller” means Hydra Seaways Ltd, a company incorporated under the law of the Republic of Liberia, with its registered office at 80 Broad Street, Monrovia, Republic of Liberia.

“Hydra Vessel” means the containership of approximately 23,679 dwt “EM HYDRA” with IMO no. 9338967 built in 2005 in the People’s Republic of China currently registered under the flag of the Republic of Liberia in the ownership of the Hydra Seller and intended to be sold by the Hydra Seller to Hydra on the terms of the Hydra MOA, and to remain upon acquisition by Hydra under the flag of the Republic of Liberia in the ownership of Hydra and everything now or in the future belonging to her on board and ashore.

“Hydra Vessel Loan” means, in respect of Hydra Vessel, an amount not exceeding the relevant Maximum Vessel Loan Amount, advanced or to be advanced by the

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Lender to the Borrowers under Clause 2 (the Loan) or, where the context permits, the aggregate principal amount so advanced and for the time being outstanding.

“IAPPC” means a valid international air pollution prevention certificate for a Vessel issued under Annex VI.

“Increased Costs” have the meaning given to them in Clause 13.1 (Increased Costs).

“Indebtedness” means the aggregate from time to time of: the amount of the Loan outstanding; all accrued and unpaid interest on the Loan; and all other sums of any nature (together with all accrued and unpaid interest on any of those sums) payable to the Lender under all or any of the Finance Documents.

“Initial Market Value” means the Market Value of a Vessel calculated in accordance with the valuation relative thereto referred to in Part I 2 (e) of Schedule 1 (Conditions Precedent).

“Insurances” means all policies and contracts of insurance (including all entries in protection and indemnity or war risks associations) which are from time to time taken out or entered into in respect of or in connection with a Vessel or her increased value and (where the context permits) all benefits under such contracts and policies, including all claims of any nature and returns of premium.

“Interest Payment Date” means each date for the payment of interest in accordance with Clause 8.2 (Payment of interest).

“Interest Period” means each period determined in accordance with Clause 9 (Interest Periods) and, in relation to an Unpaid Sum, each period determined in accordance with Clause 8.3 (Default interest).

“ISM Code” means the International Management Code for the Safe Operation of Ships and for Pollution Prevention.

“ISM Company” means, at any given time, the company responsible for a Vessel’s compliance with the ISM Code under paragraph 1.1.2 of the ISM Code.

“ISPS Code” means the International Ship and Port Facility Security Code.

“ISSC” means a valid international ship security certificate for a Vessel issued under the ISPS Code.

“ITA” means the Income Tax Act 2007.

“Joint Venture” means any joint venture entity, whether a company, unincorporated firm, undertaking, association, joint venture or partnership or any other entity.

“Kea Earnings Account” means the bank account opened in the name of Kea with the Account Holder and designated “HSBC Bank plc -Kea Shipowners Ltd”.

“Kea MOA” means the memorandum of agreement dated 31 May 2019 made by and between the Kea Seller, as seller and Kea, as buyer, on the terms and subject to the conditions of which the Kea Seller will sell the Kea Vessel to Kea.

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“Kea Seller” means Kea Seaways Ltd, a company incorporated under the law of the Republic of Liberia, with its registered office at 80 Broad Street, Monrovia, Republic of Liberia.

“Kea Vessel” means the containership of approximately 42,166 dwt “EM KEA” with IMO no. 9334351 built in 2007 in the Republic of Poland currently registered under the flag of the Republic of Liberia in the ownership of the Kea Seller and intended to be sold by the Kea Seller to Kea on the terms of the Kea MOA, and to remain upon acquisition by Kea under the flag of the Republic of Liberia in the ownership of Kea and everything now or in the future belonging to her on board and ashore.

“Kea Vessel Loan” means, in respect of Kea Vessel, an amount not exceeding the relevant Maximum Vessel Loan Amount, advanced or to be advanced by the Lender to the Borrowers under Clause 2 (the Loan) or, where the context permits, the aggregate principal amount so advanced and for the time being outstanding.

“Legal Opinion” means any legal opinion delivered to HSBC Bank plc under Clause 4.1 (Initial conditions precedent) or Clause 4.3 (Conditions subsequent).

“Legal Reservations” means:

(a) the principle that equitable remedies may be granted or refused at the discretion of a court and the limitation of enforcement by laws relating to insolvency,. reorganisation and other laws generally affecting the rights of creditors;

(b) the time barring of claims under the Limitation Acts, the possibility that an undertaking to assume liability for or indemnify a person against non-payment of UK stamp duty may be void and defences of set-off or counterclaim;

(c) similar principles, rights and defences under the laws of any Relevant Jurisdiction; and any other matters which are set out as qualifications or reservations as to matters of law of genera/ application in the Legal Opinions.

“LIBOR” means:

(a) the applicable Screen Rate; or

(b) (if (i) no Screen Rate is available for the currency of the Loan or (ii) no Screen Rate is available for the relevant Interest Period) the Reference Bank Rate,

as of 11.00 a.m. on the Quotation Day for dollars and for a period equal in length to the relevant Interest Period and, if that rate is less than zero, LIBOR shall be deemed to be zero.

“Limitation Acts” means the Limitation Act 1980 and the Foreign Limitation Periods Act 1984.

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“Loan” means the aggregate amount advanced or to be advanced by the Lender to the Borrowers under Clause 2 (The Loan) or, where the context permits, the principal amount advanced and for the time being outstanding.

“Management Agreements” means the agreement for the commercial and technical management of a Vessel made between the relevant Borrower and the Managers and “Management Agreement” means any one of them.

“Managers” means, in relation to the commercial and technical management of a Vessel, Eurobulk Ltd. of 80 Broad Street Monrovia, Republic of Liberia or, in either case, such other commercial and/or technical managers of a Vessel nominated by the relevant Borrower as the Lender may approve.

“Managers’ Undertaking” means the written undertaking of the Managers whereby, throughout the Facility Period unless otherwise agreed by the Lender:

(a) it will remain the commercial or technical manager of that Vessel (as the case may be); and

(b) it will not, without the prior written consent of the Lender, subcontract or delegate the commercial or technical management of that Vessel (as the case may be) to any third party; and

(c) the interests of the Managers in the Insurances (other than the right to be reimbursed for protection and indemnity claims under the “pay and be paid” rule) will be assigned to the Lender with first priority; and

(d) (following the occurrence of an Event of Default which is continuing) all claims of the Managers against a Borrower shall be subordinated to the claims of the Lender under the Finance Documents.

“Margin” means two point ninety five (2.95) per cent per annum.

“Market Value” means the value of a Vessel conclusively determined by the arithmetic average of two valuations (and in the case of the Initial Market Value determination shown by one valuation) obtained by two Approved Shipbrokers (and in the case of the Initial Market Value determination obtained by one Approved Shipbroker) selected and appointed by the relevant Borrower for and on behalf of the Lender and approved by and reporting to the Lender on the basis of a charter free sale for prompt delivery and free of encumbrances for cash at arm’s length on normal commercial terms as between a willing seller and a willing buyer and evidenced by two valuations (and in the case of the Initial Market Value determination evidenced by one valuation) of that Vessel addressed to the Lender certifying a value for that Vessel.

“Material Adverse Effect” means a material adverse change of circumstances or any event or series of events which, in the reasonable opinion of the Lender, is likely to have a material adverse effect on the business, assets, financial condition or credit worthiness of an Obligor (other than the Managers) or an Obligor’s ability (other than the Managers) to repay the Loan.

“Maximum Loan Amount” means an amount up to $12,500,000.

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"Maximum Vessel Loan Amount" means:

(a) in respect of the Kea Vesscl Loan, an amocirit up to the lesser of (i) $4,900,10100 and (li) 49.9% of the Market lilalue of Keg Vessell as evidenced by a Valuation of that Vessel to be obtained pursuant to Schedule 1 Part I 2(f);

(b) in respect of the Spetses Vessel Loan, an amount up to the lesser of (i) 4,100,000 and 00 49.9% of the Market Value of Spetses Vessel as evidenced by a Vaination of that Vessel to be obtained pursuant to Schedule 1 Part I 2 (f); and

(c) In respect of Hydra Veessel Loan, an amount up to thelesser of (i) $3,5002000 and (ii) 49.9% of the Market Value of Hydra Vessel as evidenced by a valuation of that Vessel to be obtained pursuant to Schedule Part I 2 (f).

"MOAs” means together„ the Kea Mak, the Spetses MOA and the Hydra MOA and "MOA” means either of them.

“Mortgages” means the first preferred mortagages referred to in Clause 17.1.1 (Security Documents) and “Mortgage” means any one or them.

“Nominated Family” means the family disclosed in writing and approved by tie Lender prior to the date of this Agreement and "members of the Nominated Family” shall be construed accordingly.

"Obligors"  means the Borrowers, the Guarantor, the Charidor the Managers and any other person who rnay at any time during the Facility Period be liabie for, or provide security for, all or any part of the Indebtedness, and “Obligors“ means any one of hem.

"Original Financial Statements” means the audited consolidated financial statements of the Guarantor for the financial year ended 31 December 201 (including profit and loss accounts and annual balance sheets).

"Original Jurisdiction” means, in relation to an Obligor, the jurisdiction under whose laws that Obligor is incorporated as at the date of this Agreement.

“Party” means a party to this Agreement.

“Permitted Encumbrance” means:

(a) any Encumbrance created by the Finance Documents;

(b) any netting or set-off arrangement entered into by any Obligor in the ordinary course of its banking arrangements for the purpose of netting debit and credit balances;

(c) liens for unpaid master’s and crew’s wages in accordance with first class ship ownership and management practice and not being enforced through arrest;

(d) liens for salvage;

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(e) liens for master’s disbursements incurred in the ordinary course of trading in accordance with first class ship ownership and management practice and not being enforced through arrest; and

(f) any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of a Vessel:

(I) not as a result of any default or omission by a Borrower; and

(ii) not being enforced through arrest, provided such liens do not secure amounts more than 30 days overdue (unless the overdue amount is being contested in good faith by appropriate steps).

“Prohibited Person” means any person (whether designated by name or by reason of being included in a class of persons) against whom Sanctions are directed.

“Quasi-Security” has the meaning given to that term in Clause 21.9 (Negative pledge).

“Quotation Day” means, in relation to any period for which an interest rate is to be determined (for dollars) two (2) Business Days before the first day of that period, unless market practice differs in the Relevant Interbank Market, in which case the Quotation Day will be determined by the Lender in accordance with market practice in the Relevant Interbank Market (and if quotations would normally be given by leading banks in the Relevant Interbank Market on more than one day, the Quotation Day will be the last of those days).

“Receiver” means a receiver or receiver and manager or administrative receiver of the whole or any part of the Charged Property.

“Reference Bank Rate” means the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Lender at its request by the Reference Banks, in relation to LIBOR, as the rate at which the relevant Reference Bank could borrow funds in the London interbank market in dollars and for the relevant period, were it to do so by asking for and then accepting interbank offers for deposits in reasonable market size in dollars and for that period.

“Reference Banks” means in relation to LIBOR, such banks as may be appointed by the Lender in consultation with the Borrowers.

“Related Fund” in relation to a fund (the “first fund”), means a fund which is managed or advised by the same investment manager or investment adviser as the first fund or, if it is managed by a different investment manager or investment adviser, a fund whose investment manager or investment adviser is an Affiliate of the investment manager or investment adviser of the first fund.

“Relevant Documents” means the Finance Documents, the MOAs, the Charters and the Management Agreements.

“Relevant Interbank Market” means the London interbank market.

“Relevant jurisdiction” means, in relation to an Obligor:

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(a) its Original Jurisdiction;

(b) any jurisdiction where any asset (other than a Vessel) subject to or intended to be subject to a Security Document to be executed by it is situated and, in relation to a Vessel, the flag of that Vessel;

(c) any jurisdiction where it conducts its business; and

the jurisdiction whose laws govern the perfection of any of the Security Documents entered into by it.

“Repayment Date” means the date for payment of any Repayment Instalment in accordance with Clause 6 (Repayment).

“Repayment Instalment” means any instalment of the Loan to be repaid by the Borrowers under Clause 6 (Repayment).

“Repeating Representations” means each of the representations set out in Clause 18.1.1 (Status) to Clause 18.1.6 (Governing law and enforcement), Clause 18.1.10 (No default) to Clause 18.1.19 (Pari passu ranking) and Clause 18.1.21 (Ownership of a Borrower and Chargor).

“Representative” means any delegate, agent, manager, administrator, nominee, attorney, trustee or custodian.

“Requisition Compensation” means all compensation or other money which may from time to time be payable to a Borrower as a result of a Vessel being requisitioned for title or in any other way compulsorily acquired (other than by way of requisition for hire).

“Sanctions” means any sanctions, embargoes, freezing provisions, prohibitions or other restrictions relating to trading, doing business, investment, exporting, financing or making assets available (or other activities similar to or connected with any of the foregoing):

(a) imposed by any law or regulation of the US Department of the Treasury’s Office of Foreign Assets Control, the US Department of State , the United Nations Security Council, the European Union, Her Majesty’s Treasury or the Hong Kong Monetary Authority, whether or not any Obligor or any other member of the Group or any Affiliate is legally bound to comply with the Forgoing; or

(b) otherwise imposed by any law or regulation by which any Obligor, any other member of the Group or any Affiliate of any of them is bound or, as regards a regulation, compliance with which is reasonable in the ordinary course of business of any Obligor, any other member of the Group or any Affiliate of any of them.

“Sellers” means, together, the Kea Seller, the Spetses Seller and the Hydra Seller and “Seller” means any of them.

“Screen Rate” means, in relation to LIBOR, the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which

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takes over the administration of that rate) for the relevant currency and period displayed on pages LIBOR01 or LIBOR02 of the Reuters screen (or any replacement Reuters page which displays that rate), in each case, or on the appropriate page of such other information service which publishes that rate from time to time in place of Reuters. If such page or the service ceases to be available, the Lender may specify another page or service displaying the relevant rate after consultation with the Borrowers.

“Secured Parties” means the Lender and any Receiver or Delegate.

“Security Cover Ratio” means, at any relevant time, the aggregate of (a) the Market Values of the Vessels, (b) the Cash Collateral Amount and (c) the net realisable value of any additional security provided at that time under Clause 17.14 (Additional security), expressed as a percentage of the Loan.

“Security Documents” means the Mortgages, the Assignments, the Guarantee, the Account Security Deeds, the Shares Charges and the Managers’ Undertakings or (where the context permits) any one or more of them, and any other agreement or document which may at any time be executed by any person as security for the payment of all or any part of the Indebtedness and “Security Document” means any one of them.

“Shares Charges” means the charges of the issued share capital of each Borrower referred to in Clause 17.1.4 (Security Documents).

“SMC” means a valid safety management certificate issued for a Vessel by or on behalf of the Administration under paragraph 13.7 of the ISM Code.

“Spetses Earnings Account” means the bank account opened in the name of Spetses with the Account Holder and designated “HSBC Bank plc - Spetses Shipowners Ltd”.

“Spetses MOA” means the memorandum of agreement dated 31 May 2019 made by and between the Spetses Seller, as seller and Spetses, as buyer, on the terms and subject to the conditions of which the Spetses Seller will sell the Spetses Vessel to Spetses.

“Spetses Seller” means Spetses Seaways Ltd, a company incorporated under the law of the Republic of Liberia, with its registered office at 80 Broad Street, Monrovia, Republic of Liberia.

“Spetses Vessel” means the containership of approximately 23,579 dwt “EM SPETSES” with IMO no. 9403413 built in 2007 in the People’s Republic of China currently registered under the flag of the Republic of Liberia in the ownership of the Spetses Seller and intended to be sold by the relevant Seller to Spetses on the terms of the Spetses MOA, and to remain upon acquisition by Spetses under the flag of the Republic of Liberia in the ownership of Spetses and everything now or in the future belonging to her on board and ashore.

“Spetses Vessel Loan” means, in respect of Spetses Vessel, an amount not exceeding the relevant Maximum Vessel Loan Amount, advanced or to be advanced by the Lender to the Borrowers under Clause 2 (the Loan) or, where the context

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permits, the aggregate principal amount so advanced and for the time being outstanding.

“Subsidiary” means asubsidiary within the meaning of section 1159 of the Companies Act 2006.

“Tax” means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in connection with any failure to pay or any delay In paying anyof the same).

“Tax Deduction” has the meaning given to it in Clause 12 (Tax Gross-Up and Indemnities).

“Termination Date” means the date falling 42 months from the Utilisation Date in respect of the last Vessel Loan to be drawn.

“Total Loss” means:

(a) an actual, constructive, arranged, agreed or compromised total loss of a Vessel; or

(b) the requisition for title or compulsory acquisition of a Vessel by any government or other competent authority (other than by way of requisition for hire); or

(c) the capture, seizure, arrest, detention, hijacking, theft, condemnation as prize, confiscation or forfeiture of a Vessel (not falling within (b)), unless a Vessel is released and returned to the possession of the relevant Borrower within 60 days after the capture, seizure, arrest, detention, hijacking, theft, condemnation as prize, confiscation or forfeiture in question.

“Treasury Transaction” means any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price.

“UK Bribery Act” means the United Kingdom Bribery Act 2010.

“Unpaid Sum” means any sum due and payable but unpaid by any Obligor under the Finance Documents.

“US” means the United States of America.

“US Tax Obligor” means:

(a) an Obligor which is resident for tax purposes in the US; or

(b) an Obligor some or all of whose payments under the Finance Documents are from sources within the US for US federal income tax purposes.

“Utilisation Date” means the date on which the relevant Vessel Loan is advanced under Clause 5 (Advance).

“Utilisation Request” means a notice substantially in the form set out in Schedule 2 (Utilisation Request).

“VAT” means:

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(a) any tax imposed in compliance with the Council  Directive of 28 November 2006 on the common system of value added tax (EC Directive 2006/112); and

(b) any other tax of a similar nature, whether imposed in a member state of the European Union in substitution for, or levied in addition to, such tax referred to in (a), or imposed elsewhere.

“Vessel Loans" means the aggregate of Kea Vessel Loan, Spetses Vessel Loan and Hydra Vessel Loan and “Vessel Loans” means any of them.

“Vessels” means, together, the Kea Vessel, the Spetses Vessel and the Hydra Vessel and “Vessel" means either of them.

“VTL Coverage” has the meaning given to it in Clause 17.14 (Additional security).

1.2 Construction     Unless  a contrary indication appears, any reference in this Agreement to:

1.2.1 the “Lender”, any “Borrower”, any “Secured Party” or any “Party” shall be construed so as to include its successors in title permitted assignees and permitted transferees;

1.2.2 a document in “agreed form" is a document which is previously agreed in writing by or on behalf of the Borrowers and the Lender  or, if not so agreed, is in the form specified by the Lender;

1.2.3 “assets” includes present and future properties, revenues and rights of every description;

1.2.4 a “Finance Document”, a “Security Document”, a “Relevant Document” orany other document is a reference to that Finance Document, Security Document, Relevant Document or other document as amended, novated, supplemented, extended or restated from time to time;

1.2.5 “indebtedness" includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;

1.2.6 a "person includes any individual, firm, company, corporation„ government state or agency of a state or any association, trust, joint venture, consortium or partnership or other entity (whether or not having separate legal personality);

1.2.7 a “regulation” includes any regulation„ rule, official directive, request or guideline (whether or not having the force^, of law) of any governmental intergovernmental or supranational body, agency, department or of any regulatory, self-regulatory or other authority or organisation;

1.2.8 a provision of law, is a reference to that provision as amended or re-enacted from time to time; and

1.29 a time of day (unless otherwise specified) is a reference to London time.

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1.3 Headings Section, Clause and Schedule headings are for ease of reference only.

1.4 Defined terms Unless a contrary indication appears, a term used in any other Finance Document or in any notice given under or in connection with any Finance Document has the same meaning in that Finance Document or notice as in this Agreement.

1.5 Default A Default (and/or an Event of Default) is “continuing” if it has not been remedied or waived.

1.6 Currency symbols and definitions “$”, “USD” and “dollars” denote the lawful currency of the United States of America.

1.7 Third party rights A person who is not a Party has no right under the Contracts (Rights of Third Parties) Act 1999 (the “Third Parties Act”) to enforce or to enjoy the benefit of any term of this Agreement.

1.8 Offer letter This Agreement supersedes the terms and conditions contained in any correspondence relating to the subject matter of this Agreement exchanged between the Lender and the Borrowers or their representatives before the date of this Agreement.

1.9 Contractual recognition of bail-in

1.9.1 In this Clause 1.9:

“Article 55 BRRD” means Article 55 of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms.

“Bail-In Action” means the exercise of any Write-down and Conversion Powers,

“Bail-In Legislation” means:

(a) in relation to an EEA Member Country which has implemented, or which at any time implements, Article 55 of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms, the relevant implementing law or regulation as described in the EU Bail-In Legislation Schedule from time to time; and

(b) in relation to any other state, any analogous law or regulation from time to time which requires contractual recognition of any Write-down and Conversion Powers contained in that law or regulation.

“EEA Member Country” means any member state of the European Union, Iceland, Liechtenstein and Norway.

“EU Bail-In Legislation Schedule” means the document described as such and published by the Loan Market Association (or any successor person) from time to time.

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“Resolution Authority” means any body which has authority to exercise any Write-down and Conversion Powers.

“UK Bail-In Legislation” means (to the extent that the United Kingdom is not an EEA Member Country which has implemented, or implements, Article 55 BRRD) Part I of the United Kingdom Banking Act 2009 and any other law or regulation applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (otherwise than through liquidation, administration or other insolvency proceedings).

“Write-down and Conversion Powers” means:

(a) in relation to any Bail-In Legislation described in the EU Bail-In Legislation Schedule from time to time, the powers described as such in relation to that Bail-In Legislation in the EU Bail-In Legislation Schedule; and

(b) in relation to any other applicable Bail-In Legislation:

(i) any powers under that Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers; and

(ii) any similar or analogous powers under that Bail-In Legislation; and

(c) in relation to any UK Bail-In Legislation:

(i) any powers under that UK Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that UK Bail-In

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Legislation that are related to or ancillary to any of those powers; and

(ii) any similar or analogous powers under that UK Bail-In Legislation.

1.9.2 Notwithstanding any other term of any Finance Document or any other agreement, arrangement or understanding between the Parties, each Party acknowledges and accepts that any liability of any Party to any other Party under or in connection with the Finance Documents may be subject to Bail-In Action by the relevant Resolution Authority and acknowledges and accepts to be bound by the effect of:

(a) any Bail-In Action in relation to any such liability, including (without limitation):

(i) a reduction, in full or in part, in the principal amount, or outstanding amount due (including any accrued but unpaid interest) in respect of any such liability;

(ii) a conversion of all, or part of, any such liability into shares or other instruments of ownership that may be issued to, or conferred on, it; and

(iii) a cancellation of any such liability; and

(b) a variation of any term of any Finance Document to the extent necessary to give effect to any Bail-In Action in relation to any such liability.

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Section 2 The Loan

2 The Loan

Subject to the terms of this Agreement, the Lender agrees to make available to the Borrowers on a joint and several basis a term loan in an aggregate amount (in dollars) not exceeding the Maximum Loan Amount in up to three Vessel Loans.

3 Purpose

3.1 PurposeThe Borrowers shall apply the Loan for the purposes referred to in Preliminary (B).

3.2 Monitoring The Lender shall not be bound to monitor or verify the application of any amount borrowed under this Agreement.

4 Conditions of Utilisation

4.1 Initial conditions precedent

The Lender will only be obliged to comply with Clause 5.3 (Lender’s compliance with an Utilisation Request) in relation to the advance of a Vessel Loan if on or before the relevant Utilisation Date, the Lender has received all of the documents and other evidence listed in Part I of Schedule 1 (Conditions Precedent) in form and substance satisfactory to the Lender save that references in Section 2 of that Part I to “the Vessel” or to any person or document relating to a Vessel shall be deemed to relate solely to the Vessel specified in the relevant Utilisation Request or to any person or document relating to that Vessel respectively. The Lender shall notify the Borrowers promptly upon being so satisfied.

4.2 Further conditions precedent

4.2.1 The Lender will only be obliged to advance a Vessel Loan if on the date of the relevant Utilisation Request and on the proposed Utilisation Date:

(a) no Default is continuing or would result from the advance of that Vessel Loan;

(b) the representations made by the Borrowers under Clause 18 (Representations) are true in all material respects; and

(c) no event or series of events has occurred which is likely to have a Material Adverse Effect.

4.2.2 The Lender will only be obliged to advance a Vessel Loan if:

(a) that Vessel Loan will not be in excess of the relevant Maximum Vessel Loan Amount; and

(b) that Vessel Loan will not increase the Loan to a sum in excess of the Maximum Loan Amount.

4.3 Conditions subsequent The Borrowers undertake to deliver or to cause to be delivered to the Lender within 14 days after the relevant Utilisation Date the

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additional documents and other evidence listed in Part II of Schedule 1 (Conditions Subsequent), save that references in that Part II to “the Vessel” or to any person or document relating to a Vessel shall be deemed to relate solely to the Vessel specified In the relevant Utilisation Request or to any person or document relating to that Vessel respectively.

4.4 No waiver If the Lender in its sole discretion agrees to advance a Vessel Loan to the Borrowers before all of the documents and evidence required by Clause 4.1 (Initial conditions precedent) have been delivered to or to the order of the Lender, the Borrowers undertake to deliver all outstanding documents and evidence to or to the order of the Lender no later than 30 days after the relevant Utilisation Date or such other date specified by the Lender.

The advance of a Vessel Loan under this Clause 4.4 shall not be taken as a waiver of the Lender’s right to require production of all the documents and evidence required by Clause 4.1 (Initial conditions precedent).

4.5 Form and content Al! documents and evidence delivered to the Lender under this Clause shall:

4.5.1 be in form and substance acceptable to the Lender; and

4.5.2 if required by the Lender, be certified, notarised, legalised or attested in a manner acceptable to the Lender.

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Section 3 Utilisation

5 Advance

5.1 Delivery of an Utilisation Request The Borrower may request a Vessel Loan to be advanced by delivery to the Lender of a duly completed Utilisation Request not more than ten and not fewer than three Business Days before the proposed Utilisation Date.

5.2 Completion of an Utilisation Request An Utilisation Request is irrevocable and will not be regarded as having been duly completed unless:

5.2.1 it is signed by an authorised signatory of each Borrower;

5.2.2 the proposed Utilisation Date is a Business Day within the Availability Period; and

5.2.3 the proposed Interest Period complies with Clause 9 (Interest Periods).

5.3 Lender’s compliance with an Utilisation Request Subject to Clauses 2 (The Loan), 3 (Purpose) and 4 (Conditions of Utilisation), the Lender shall comply with an Utilisation Request by advancing the relevant Vessel Loan through the Facility Office.

5.4 Cancellation of undrawn amount The availability of the Loan shall be cancelled at the end of the Availability Period to the extent that it is undrawn at that time.

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Section 4 Repayment, Prepayment and Cancellation

6 Repayment

6.1 Repayment of Vessel Loans The Borrowers agree to repay each Vessel Loan to the Lender as follows:

6.1.1 the Kea Vessel Loan, by 14 equal quarterly instalments, the first 13 (1^5t to 13^th) such instalments each in the amount of $120,000 and the 14^th and final such instalment in the sum of $3,340,000, comprising of an instalment of $120,000 and a balloon payment in the amount of $3,220,000 (the “Kea Balloon”), the first instalment falling due on the date which is three calendar months after the Utilisation Date in respect of Kea Vessel Loan and subsequent instalments falling due at consecutive intervals of three calendar months thereafter and the 14^th and final instalment falling due not later the Termination Date;

6.1.2 the Spetses Vessel Loan, by 14 equal quarterly instalments, the first 13 (15t to 13^th) such instalments each in the amount of $200,000 and the 14^th and final such instalment in the sum of $1,500,000, comprising of an instalment of $200,000 and a balloon payment in the amount of $1,300,000 (the “Spetses Balloon”), the first instalment falling due on the date which is three calendar months after the Utilisation Date in respect of Spetses Vessel Loan and subsequent instalments falling due at consecutive intervals of three calendar months thereafter and the 14^th and final instalment falling due not later the Termination Date; and

6.1.3 the Hydra Vessel Loan, by 14 equal quarterly instalments, the first 13 (1^st to 13^th) such instalments each in the amount of $130,000 and the 14^th and final such instalment in the sum of $1,810,000, comprising of an instalment of $130,000 and a balloon payment in the amount of $1,680,000 (the “Hydra Balloon” and together with the Kea Balloon and the Spetses Balloon, the “Balloons” and each a “Balloon), the first instalment falling due on the date which is three calendar months after the Utilisation Date in respect of Hydra Vessel Loan and subsequent instalments falling due at consecutive intervals of three calendar months thereafter and the 14^th and final instalment falling due not later the Termination Date.

6.2 Reduction of Repayment Instalments If the aggregate amount advanced to the Borrowers is less than:

6.2.1 $4,900,000 in respect of Kea Vessel;

6.2.2 $4,100,000 in respect of Spetses Vessel; or

6.2.3 $3,500,000 in respect of Hydra Vessel,

the amount of each Repayment Instalment in respect of the relevant Vessel Loan (including the relevant Balloon in respect of that Vessel Loan) shall be reduced pro rata to the amount actually advanced under the relevant Vessel Loan.

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6.3 Reborrowing The Borrowers may not reborrow any part of a Vessel Loan which is repaid or prepaid.

7 Illegality, Prepayment and Cancellation

7.1 Illegality If it becomes unlawful in any jurisdiction (other than by reason of Sanctions) for the Lender to perform any of its obligations as contemplated by this Agreement or to fund or maintain the Loan or it becomes unlawful for any Affiliate of the Lender for the Lender to do so:

7.1.1 the Lender shall promptly notify the Borrowers upon becoming aware of that event;

7.1.2 upon the Lender notifying the Borrowers, the availability of the Loan will be Immediately cancelled; and

7.1.3 the Borrowers shall repay each Vessel Loan on the last day of its current Interest Period or, if earlier, the date specified by the Lender in the notice delivered to the Borrowers (being no earlier than the last day of any applicable grace period permitted by law).

7.2 Voluntary cancellation The Borrowers may, if it gives the Lender not less than 14 Business Days’ (or such shorter period as the Lender may agree) prior notice, cancel the whole or any part (being a minimum amount of $200,000) of the undrawn amount of a Vessel Loan.

7.3 Voluntary prepayment of Loan The Borrowers may prepay the whole or any part of the Loan freely and without penalty on the final day of an Interest Period (but, if in part, being an amount that reduces a Vessel Loan by an amount which is an integral multiple of (a) $120,000 in respect of Kea Vessel Loan, (b) $200,000 in respect of Spetses Vessel Loan or (c) $130,000 in respect of Hydra Vessel Loan, subject as follows:

7.3.1 they give the Lender not less than five Business Days’ (or such shorter period as the Lender may agree) prior notice;

7.3.2 the Loan may only be prepaid after the last day of the Availability Period; and

7.3.3 any prepayment under this Clause 7.3 shall satisfy the obligations under Clause 6.1 (Repayment of Vessel Loans) by reducing the amount of the repayment instalments (i) on a pro rata basis in respect of each Vessel Loan and (ii) within each Vessel Loan, on a pro rata basis including the relevant Balloon.

7.4 Right of cancellation and prepayment

7.4.1If:

(a) any sum payable to the Lender by the Borrowers is required to be increased under Clause 12.2.2 (Tax gross-up); or

(b) the Lender claims indemnification from the Borrowers under Clause 12.3 (Tax indemnity) or Clause 13.1 (Increased costs);

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the Borrowers may, whilst the circumstance giving rise to the requirement for that increase or indemnification continues, give the Lender notice of cancellation of the Loan and its intention to procure the repayment of the Loan.

7.4.2 On the last day of the Interest Period, in respect of each Vessel Loan, which ends after the Borrowers have given notice under Clause 7.4.1 (or, if earlier, the date specified by the Borrowers in that notice), the Borrowers shall repay that Vessel Loan together with all interest and other amounts accrued under the Finance Documents.

7.5 Mandatory prepayment on sale or Total Loss If a Vessel is sold by a Borrower or becomes a Total Loss, the Borrowers shall, simultaneously with any such sale or on the earlier of the date falling 120 days after any such Total Loss and the date on which the proceeds of any such Total Loss are realised, make a prepayment of the Loan in an amount equivalent to the aggregate of (a) the full outstanding amount in respect of the Vessel Loan relevant to that Vessel and (b) any additional amount in respect of the remaining Vessel Loans as may be required to ensure that the VTL Coverage in respect of the remaining Vessels is fully complied with following such sale or Total Loss.

7.6 Mandatory prepayment on change of ownership of Guarantor

7.6.1 If, without the prior written consent of the Lender (such consent not be unreasonably withheld), there is a Change of Control, the Borrowers shall promptly notify the Lender upon becoming aware of that event and, if the Lender so requires, the Lender shall, by no less than 10 days’ notice to the Borrowers declare the Loan, together with accrued interest and ail other amounts accrued under the Finance Documents immediately due and payable, whereupon the Loan and all such outstanding interest and amounts will become immediately due and payable provided that in the case of Clause 7.6.2 (b) below, the Borrowers will first have the option to rectify the Security Cover Ratio within 15 Business Days.

7.6.2 For the purpose of paragraph (a) above, “Change of Control” means:

(a) the members of the Nominated Family cease to own directly or indirectly more than 10% of the shares (and the voting rights attaching to those shares) in the Guarantor; or

(b) the members of the Nominated Family own directly or indirectly between 10.1% to 19.9%, (inclusive) of the shares (and the voting rights attaching to those shares) in the Guarantor and the Security Cover Ratio is equal to or less than 143% of the Loan.

7.6.3 The Borrowers shall (and shall procure that the Guarantor shall) promptly notify the Lender of any covenants regarding the Change of Control of the Guarantor agreed with its financiers and if the Lender (acting reasonably) considers that those terms agreed with any other financiers are more favourable than those set out in this Clause 7.6, then the Borrowers shall (and shall procure that the Guarantor shall) provide amended terms on

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equivalent terms to those deemed by the Lender (acting reasonably) to be more favourable and acceptable to the Lender (acting reasonably).

7.7 Restrictions Any notice of prepayment or cancellation given under this Clause 7 shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specify the date or dates upon which the relevant prepayment or cancellation is to be made and the amount of that prepayment or cancellation.

Any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and, subject to any Break Costs (if paid on a date that is not an Interest Payment Date) and subject to Clause 7.3 (Voluntary prepayment of Loan), Clause 7.5 (Mandatory prepayment on sale or Total Loss) and Clause 7.6 (Mandatory prepayment on change of ownership of Guarantor), without premium or penalty.

The Borrowers shall not repay, prepay or cancel all or any part of a Vessel Loan except at the times and in the manner expressly provided for in this Agreement.

No amount of the Loan cancelled under this Agreement may be subsequently reinstated.

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Section 5 Costs of Utilisation

8 Interest

8.1 Calculation of interest The rate of interest on each Vessel Loan for each Interest Period is the percentage rate per annum which is the aggregate of the applicable:

8.1.1 Margin; and

8.1.2 LIBOR.

8.2 Payment of interest The Borrowers shall pay accrued Interest on each Vessel Loan on the last day of each Interest Period (and, if the Interest Period is longer than three (3) months, on the dates falling at three (3) monthly intervals after the first day of the Interest Period).

8.3 Default Interest In the event of a failure by the Borrowers to pay any amount on the date on which such amount is due and payable pursuant to this Agreement and/or any of the other Finance Documents (unless otherwise specifically provided in any Finance Document) and irrespective of any notice by the Lender or any other person to the Borrowers in respect of such failure, the Borrowers shall pay interest at the rate of two per cent (2%) higher than the rate provided under Clause 8.2 (Payment of Interest) up to the date of actual payment (both before and after judgment), compounded at such intervals as the Lender shall in its discretion determine. Any Interest accruing under this Clause 8.3 (Default Interest) in respect of an unpaid amount shall be compounded with the overdue amount at the end of each Interest Period applicable to that overdue amount and shall be due and payable at the end of the period by reference to which it is calculated or such other date or dates as the Lender may specify by written notice to the Borrowers.

8.4 Notification of rates of interest The Lender shall promptly notify the Borrowers of the determination of a rate of interest under this Agreement.

9 Interest Periods

9.1 Selection of Interest Periods The Borrowers may select in a written notice to the Lender the duration of an Interest Period for each Vessel Loan subject as follows:

9.1.1 each notice is irrevocable and must be delivered to the Lender by the Borrowers not later than 11.00 a.m. on the Quotation Day;

9.1.2 if the Borrowers fail to give a notice in accordance with Clause 9.1.1, the relevant Interest Period will, subject to Clauses 9.2 (Second and subsequent Vessel Loans) 9.3, (Interest Periods to meet Repayment Dates) and 9.4 (Non-Business Days), be three (3) months;

9.1.3 subject to this Clause 9, the Borrowers may select an Interest Period of three (3), or six (6) or twelve (12) months or any other period agreed between the Borrowers and the Lender;

9.1.4 an Interest Period shall not extend beyond the Termination Date; and

9.1.5 each Interest Period shall start on the Utilisation Date in respect of the first Vessel Loan or (if the first Vessel Loan is already made) on the last day of

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the preceding Interest Period and end on the date which numerically corresponds to the Utilisation Date in respect of the first Vessel Loan or the last day of the preceding Interest Period in the relevant calendar month except that, if there is no numerically corresponding date in that calendar month, the Interest Period shall end on the last Business Day in that month.

9.2 Second and subsequent Vessel Loans If the second or any subsequent Vessel Loan is made otherwise than on the first day of an Interest Period for the balance of the Loan, there shall be a separate initial Interest Period for that Vessel Loan commencing on its Utilisation Date and expiring on the final date of the current Interest Period for the balance of the Loan.

9.3 Interest Periods to meet Repayment Dates If an Interest Period will expire after the next Repayment Date in respect of the relevant Vessel Loan, there shall be a separate Interest Period for a part of that Vessel Loan equal to the Repayment Instalment due on that next Repayment Date and that separate Interest Period shall expire on that next Repayment Date.

9.4 Non-Business Days If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).

10 Changes to the Calculation of Interest

10.1 Absence of quotations Subject to Clause 10.2 (Market disruption), if LIBOR is to be determined by reference to the Reference Banks but a Reference Bank does not supply a quotation by 11.00 am on the Quotation Day, the applicable LIBOR shall be determined on the basis of the quotations of the remaining Reference Banks.

10.2 Market disruption If a Market Disruption Event occurs for any Interest Period, then the rate of interest on the Loan for that Interest Period shall be the percentage rate per annum which is the sum of:

10.2.1 the Margin; and

10.2.2 the rate notified to the Borrowers by the Lender as soon as practicable, and in any event by close of business on the date falling three (3) Business Days after the Quotation Day (or, if earlier, on the date falling three (3) Business Days prior to the date on which interest is due to be paid in respect of that Interest Period), to be that which expresses as a percentage rate per annum the cost to the Lender of funding the Loan from whatever source it may reasonably select.

In this Agreement “‘Market Disruption Event” means:

(a) at or about noon on the Quotation Day for the relevant Interest Period LIBOR is to be determined by reference to the Reference Banks and none or only one of the Reference Banks supplies a rate to the Lender to determine LIBOR for dollars and the relevant Interest Period; or

(b) before close of business in London on the Quotation Day for the relevant Interest Period, the Borrowers receive notification from the Lender that the

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cost to it of funding the Loan from whatever source it may reasonably select would be in excess of LIBOR.

10.3 Alternative basis of interest or funding

10.3.1 If a Market Disruption Event occurs and the Lender or the Borrowers so requires, the Lender and the Borrowers shall enter into negotiations (for a period of not more than thirty (30) days) with a view to agreeing a substitute basis for determining the rate of interest.

10.3.2 Any alternative basis agreed pursuant to Clause 10.3.1 shall be binding on all Parties.

10.4 Break Costs The Borrowers shall, within three Business Days of demand by the Lender, pay to the Lender its Break Costs attributable to all or any part of the Loan or Unpaid Sum being paid by the Borrowers on a day other than the last day of an Interest Period for the Loan, that Vessel Loan or Unpaid Sum.

The Lender shall, as soon as reasonably practicable after a demand by the Borrowers, provide a certificate confirming the amount of its Break Costs for any Interest Period in which they accrue.

11 Fees

11.1 Commitment Fee The Borrowers shall pay to the Lender a fee computed at the rate of zero point five per cent (0.5⁰/0) per annum on the undrawn amount of the Loan for the period commencing on the date of this Agreement and ending on the earlier to occur of (a) the last day of the Availability Period and (b) the relevant Utilisation Date in respect of the last Vessel Loan to be drawn.

The accrued commitment fee is payable on the last day of each successive period of three (3) months which ends during the Availability Period, on the earlier of (a) the last day of the Availability Period or (b) the relevant Utilisation Date and (on the cancelled amount of the Loan) at the time the cancellation is effective.

11.2 Arrangement fee The Borrowers shall pay to the Lender on the relevant Utilisation Date in respect of a Vessel Loan an arrangement fee in an amount equal to zero point five per cent (0.5%) of the final amount to be advanced to the Borrowers in respect of that Vessel Loan by the Lender under this Agreement.

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Section 6 Additional Payment Obligations

12 Tax Gross Up and Indemnities

12.1 Definitions In this Agreement:

“Protected Party” means the Lender if it is or will be subject to any liability or required to make any payment for or on account of Tax In relation to a sum received or receivable (or any sum deemed for the purposes of Tax to be received or receivable) under a Finance Document.

“Qualifying Lender” means the Lender if it is beneficially entitled to interest payable to it in respect of an advance under a Finance Document and:

(a) is a bank (as defined for the purpose of section 879 of the ITA) making an advance under a Finance Document and is within the charge to United Kingdom corporation tax as respects any payments of interest made in respect of that advance or would be within such charge as respects such payments apart from section 18A of the CTA; or in respect of an advance made under a Finance Document by a person that was a bank (as defined for the purpose of section 879 of the ITA) at the time that that advance was made and within the charge to United Kingdom corporation tax as respects any payments of interest made in respect of that advance; or

(b) is:

(i) a company resident in the United Kingdom for United Kingdom tax purposes;

(ii) a partnership each member of which is:

(A) a company so resident in the United Kingdom; or

(B) a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account in computing its chargeable profits (within the meaning of section 19 of the CTA) the whole of any share of interest payable in respect of that advance that falls to it by reason of Part 17 of the CTA; or (iii)a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account interest payable in respect of that advance in computing the chargeable profits (within the meaning of section 19 of the CTA) of that company; or

(c) is a Treaty Lender.

“Tax Confirmation” means a confirmation by the Lender that the person beneficially entitled to interest payable to the Lender in respect of an advance under a Finance Document is either:

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(a) a company resident in the United Kingdom for United Kingdom tax purposes;

(b) a partnership each member of which is:

(i) a company so resident in the United Kingdom; or

(ii) a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account in computing its chargeable profits (within the meaning of section 19 of the CTA) the whole of any share of interest payable in respect of that advance that falls to it by reason of Part 17 of the CTA; or

(c) a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account interest payable in respect of that advance in computing the chargeable profits (within the meaning of section 19 of the CTA) of that company.

“Tax Credit” means a credit against, relief or remission for, or repayment of any Tax.

“Tax Deduction” means a deduction or withholding for or on account of Tax from a payment under a Finance Document, other than a FATCA Deduction.

“Tax Payment” means either the increase in a payment made by an Obligor to the Lender under Clause 12.2 (Tax gross-up) or a payment by the Borrowers under Clause 12.3 (Tax indemnity).

“Treaty Lender” means the Lender if it:

(a) is treated as a resident of a Treaty State for the purposes of the Treaty;

(b) does not carry on a business in the United Kingdom through a permanent establishment with which the Loan is effectively connected.

“Treaty State” means a jurisdiction having a double taxation agreement (a “Treaty”) with the United Kingdom which makes provision for full exemption from tax imposed by the United Kingdom on interest.

12.2 Tax gross-up Each Borrower shall (and shall procure that each other Obligor shall) make all payments to be made by it without any Tax Deduction, unless a Tax Deduction is required by law, subject as follows:

12.2.1 the Borrowers shall promptly upon becoming aware that any Obligor must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Lender accordingly. Similarly, the Lender shall notify the Borrowers and any such other Obligor on becoming so aware in respect of a payment payable to the Lender;

12.2.2 if a Tax Deduction is required by law to be made by a Borrower or any other Obligor, the amount of the payment due from the Borrowers or that other Obligor shall be increased to an amount which (after making any Tax

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Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required;

12.2.3 a payment shall not be increased under Clause 12.2.2 by reason of a Tax Deduction on account of Tax imposed by the United Kingdom, if on the date on which the payment falls due:

(a) the payment could have been made to the Lender without a Tax Deduction if the Lender had been a Qualifying Lender, but on that date the Lender is not or has ceased to be a Qualifying Lender other than as a result of any change after the date it became a Lender under this Agreement in (or in the interpretation, administration, or application of) any law or Treaty or any published practice or published concession of any relevant taxing authority; or

(b) the Lender is a Qualifying Lender solely by virtue of (b) of the definition of Qualifying Lender and:

(i) an officer of H.M. Revenue & Customs has given (and not revoked) a direction (a “Direction”) under section 931 of the ITA which relates to the payment and that Lender has received from the Borrowers or from any other Obligor making the payment a certified copy of that Direction; and

(ii) the payment could have been made to the Lender without any Tax Deduction if that Direction had not been made; or

(c) the Lender is a Qualifying Lender solely by virtue of (b) of the definition of Qualifying Lender and:

(i) the Lender has not given a Tax Confirmation to the Borrowers; and

(ii) the payment could have been made to the Lender without any Tax Deduction if the Lender had given a Tax Confirmation to the Borrowers, on the basis that the Tax Confirmation would have enabled the Borrowers to have formed a reasonable belief that the payment was an “excepted payment” for the purpose of section 930 of the ITA; or

(d) the Lender is a Treaty Lender and a Borrower or the other Obligor making the payment is able to demonstrate that the payment could have been made to the Lender without the Tax Deduction had the Lender complied with its obligations under Clause 12.2.6;

12.2.4 if a Borrower or any other Obligor is required to make a Tax Deduction, the Borrowers shall (and shall procure that such other Obligor shall) make that Tax Deduction and any payment required in connection with that Tax Deduction within the time allowed and in the minimum amount required by law;

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12.2.5 within thirty (30) days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Borrowers shall (and shall procure that such other Obligor shall) deliver to the Lender a statement under section 975 of the ITA or other evidence reasonably satisfactory to the Lender that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority;

12.2.6 (a) Subject to (b), if the Lender is a Treaty Lender, the Lender and the Borrowers shall co-operate (and the Borrowers shall procure that each other Obligor which makes a payment to which that Treaty Lender is entitled will co-operate) in completing any procedural formalities necessary for that Borrower or that other Obligor to obtain authorisation to make that payment without a Tax Deduction.

(b) If the Lender is a Treaty Lender which holds a passport under the HMRC DT Treaty Passport scheme, and which wishes that scheme to apply to this Agreement, the Lender shall confirm its scheme reference number and its jurisdiction of tax residence to the Borrowers, and, having done so, the Lender shall be under no obligation pursuant to (a).

12.3 Tax indemnity

12.3.1 The Borrowers shall (within three (3) Business Days of demand by the Lender) pay to the Lender, if the Lender is a Protected Party, an amount equal to the loss, liability or cost which the Lender determines will be or has been (directly or indirectly) suffered for or on account of Tax by the Lender in respect of a Finance Document.

12.3.2 Clause 12.3.1 shall not apply:

(a) with respect to any Tax assessed on the Lender:

(i) under the law of the jurisdiction in which the Lender is incorporated or, if different, the jurisdiction (or jurisdictions) in which the Lender is treated as resident for tax purposes; or

(ii) under the law of the jurisdiction in which the Facility Office is located in respect of amounts received or receivable in that jurisdiction, if that Tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) by the Lender; or

(b) to the extent a loss, liability or cost:

(i) is compensated for by an increased payment under Clause 12.2 (Tax gross-up);

(ii) would have been compensated for by an increased payment under Clause 12.2 (Tax gross-up) but was not so

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compensated solely because one of the exclusions in Clause 12.2.3 (Tax gross-up) applied; or

(iii) relates to a FATCA Deduction required to be made by a Party.

12.3.3 If the Lender makes or intends to make a claim under Clause 12.3.1 as a Protected Party, the Lender shall promptly notify the Borrowers of the event which will give, or has given, rise to the claim.

12.4 Tax Credit If a Borrower or any other Obligor makes a Tax Payment and the Lender determines that:

12.4.1 a Tax Credit is attributable to an increased payment of which that Tax Payment forms part, to that Tax Payment or to a Tax Deduction in consequence of which that Tax Payment was required; and

12.4.2 the Lender has obtained and utilised that Tax Credit, the Lender shall pay an amount to the Borrowers or to that other Obligor which the Lender determines will leave it (after that payment) in the same after-Tax position as it would have been in had the Tax Payment not been made by the Borrowers or that other Obligor.

12.5 Stamp taxes The Borrowers shall pay and, within five Business Days of written demand, indemnify the Lender against any cost, loss or liability the Lender incurs in relation to all stamp duty, registration and other similar Taxes payable in respect of any Finance Document.

12.6 VAT

12.6.1 All amounts expressed to be payable under a Finance Document by any Obligor to the Lender which (in whole or in part) constitute the consideration for any supply for VAT purposes are deemed to be exclusive of any VAT which is chargeable on that supply, and accordingly, if VAT is or becomes chargeable on any supply made by the Lender to any Obligor under a Finance Document and the Lender is required to account to the relevant tax authority for the VAT, that Obligor must pay to the Lender (in addition to and at the same time as paying any other consideration for such supply) an amount equal to the amount of the VAT (and the Lender must promptly provide an appropriate VAT invoice to the Borrowers).

12.6.2 Where a Finance Document requires any Obligor to reimburse or indemnify the Lender for any cost or expense, that Obligor shall reimburse or indemnify (as the case may be) the Lender for the full amount of such cost or expense, including such part thereof as represents VAT, save to the extent that the Lender reasonably determines that it is entitled to credit or repayment in respect of such VAT from the relevant tax authority.

12.6.3 Any reference in this Clause 12.6 to any Obligor shall, at any time when such Obligor is treated as a member of a group for VAT purposes, include (where appropriate and unless the context otherwise requires) a reference to the representative member of such group at such time (the term

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“representative member” to have the same meaning as in the Value Added Tax Act 1994).

12.6.4 In relation to any supply made by the Lender to any Obligor under a Finance Document, if reasonably requested by the Lender, that Obligor must promptly provide the Lender with details of that Obligor’s VAT registration and such other information as is reasonably requested in connection with the Lender’s VAT reporting requirements in relation to such supply.

12.7 FATCA information

12.7.1 Subject to Clause 12.7.3, each Party shall, within ten (10) Business Days of a reasonable request by another Party:

(a) confirm to that other Party whether it is:

(i) a FATCA Exempt Party; or

(ii) not a FATCA Exempt Party; and

(b) supply to that other Party such forms, documentation and other information relating to its status under FATCA as that other Party reasonably requests for the purposes of that other Party’s compliance with FATCA; and

(c) supply to that other Party such forms, documentation and other information relating to its status as that other Party reasonably requests for the purposes of that other Party’s compliance with any other law, regulation, or exchange of information regime.

12.7.2 If a Party confirms to another Party pursuant to Clause 12.7.1(a)(i) that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, that Party shall notify that other Party reasonably promptly.

12.7.3 Clause 12.7.1 shall not oblige the Lender to do anything, and Clause (c) shall not oblige any other Party to do anything, which would or might in its reasonable opinion constitute a breach of:

(a) any law or regulation;

(b) any fiduciary duty; or

(c) any duty of confidentiality.

12.7.4 If a Party fails to confirm whether or not it is a FATCA Exempt Party or to supply forms, documentation or other information requested in accordance with Clause(a) or (b) (including, for the avoidance of doubt, where Clause 12.7.3 applies), then such Party shall be treated for the purposes of the Finance Documents (and payments under them) as if it is not a FATCA Exempt Party until such time as the Party in question provides the requested confirmation, forms, documentation or other information.

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12.7.5 If a Borrower is a US Tax Obligor or the Lender reasonably believes that its obligations under FATCA or any other applicable law or regulation require it, the Lender shall, within ten Business Days of:

(a) where a Borrower is a US Tax Obligor, the date of this Agreement; or

(b) where a Borrower is not a US Tax Obligor, the date of a request from that Borrower, supply to the Borrowers:

(i) a withholding certificate on Form W-8 or Form W-9 or any other relevant form; or

(ii) any withholding statement or other document, authorisation or waiver as the Borrowers may require to certify or establish the status of the Lender under FATCA or that other law or regulation.

12.7.6 If any withholding certificate, withholding statement, document, authorisation or waiver provided to the Borrowers by the Lender pursuant to Clause 12.7.5 is or becomes materially inaccurate or incomplete, the Lender shall promptly update it and provide such updated withholding certificate, withholding statement, document, authorisation or waiver to the Borrowers unless it is unlawful for the Lender to do so (in which case the Lender shall promptly notify the Borrowers).

12.8 FATCA Deduction

12.8.1 Each Party may make any FATCA Deduction it is required to make by FATCA, and any payment required in connection with that FATCA Deduction, and no Party shall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction.

12.8.2 Each Party shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction) notify the Party to whom it is making the payment.

13 Increased Costs

13.1 Increased costs Subject to Clause 13.3 (Exceptions) the Borrowers shall, within five Business Days of a demand by the Lender, pay to the Lender the amount of any Increased Costs incurred by the Lender or any of its Affiliates as a result of (i) the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation or (ii) compliance with any law or regulation or any request from or requirement of any central bank or other fiscal, monetary or other authority made after the date of this Agreement (including Basel III (as defined in Clause 13.3) and any other which relates to capital adequacy or liquidity controls or which affects the manner in which the Lender allocates capital resources to obligations under this Agreement or (iii) any change in the risk weight allocated by the Lender to the Borrowers after the date of this Agreement.

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In this Agreement “Increased Costs” means:

(a) a reduction in the rate of return from the Loan or on the Lender’s (or its Affiliate’s) overall capital;

(b) an additional or increased cost; or

(c) a reduction of any amount due and payable under any Finance Document, which is incurred or suffered by the Lender or any of its Affiliates as a result of the events referred to in Clause 13.1 to the extent that it is attributable to the Lender having entered into any Finance Document or funding or performing its obligations under any Finance Document.

13.2 Increased cost claims

13.2.1 If the Lender intends to make a claim pursuant to Clause 13.1 (Increased costs) the Lender shall promptly notify the Borrowers of the event giving rise to the claim.

13.22 The Lender shall, as soon as practicable after a demand by the Borrowers, provide a certificate confirming the amount of its Increased Costs.

13.3 ExceptionsClause 13.1 (Increased costs) does not apply to the extent any Increased Cost is:

13.3.1 attributable to a Tax Deduction required by law to be made by the Borrowers;

13.3.2 attributable to a FATCA Deduction required to be made by a Party;

13.3.3 compensated for by Clause 12.3 (Tax indemnity) (or would have been compensated for under Clause 12.3 but was not so compensated solely because any of the exclusions in Clause 12.3 applied); or

13.3.4 attributable to the wilful breach by the Lender or its Affiliates of any law or regulation.

14 Other Indemnities

14.1 Currency indemnityIf any sum due from a Borrower under the Finance Documents (a “Sum”), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency (the “First Currency”) in which that Sum is payable into another currency (the “Second Currency”) for the purpose of:

14.1.1 making or filing a claim or proof against that Borrower, or

14.1.2 obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,

that Borrower shall as an independent obligation, within three (3) Business Days of demand, indemnify the Lender against any cost, loss or liability arising out of or as a result of the conversion including any discrepancy between (a) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (b)

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the rate or rates of exchange available to the Lender at the time of its receipt of that Sum.

Each Borrower waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other than that in which it is expressed to be payable.

14.2 Other indemnities

14.2.1 The Borrowers shall, within five Business Days of demand, indemnify the Lender against any cost, loss or liability incurred by the Lender as a result of:

(a) the occurrence of any Event of Default which is continuing;

(b) a failure by an Obligor to pay any amount due under a Finance Document on its due date;

(c) funding, or making arrangements to fund, a Vessel Loan following delivery by the Borrowers of an Utilisation Request but that Vessel Loan not being advanced by reason of the operation of any one or more of the provisions of this Agreement (other than by reason of default or negligence by the Lender alone); or

(d) the Loan (or part of the Loan) not being prepaid in accordance with a notice of prepayment given by the Borrowers.

14.2.2 The Borrowers shall promptly indemnify the Lender, each Affiliate of the Lender and each officer or employee of the Lender or its Affiliate (each such person for the purposes of this Clause 14.2 an “Indemnified Person”)against any cost, loss or liability incurred by that Indemnified Person pursuant to or in connection with any litigation, arbitration or administrative proceedings or regulatory enquiry, in connection with or arising out of the entry into and the transactions contemplated by the Finance Documents, having the benefit of any Encumbrance constituted by the Finance Documents or which relates to the condition or operation of, or any incident occurring in relation to, a Vessel, unless such cost, loss or liability is caused by the gross negligence or wilful misconduct of that Indemnified Person.

14.2.3 Subject to any limitations set out in Clause 14.2.2, the indemnity in that Clause shall cover any cost, loss or liability incurred by each Indemnified Person in any jurisdiction:

(a) arising or asserted under or in connection with any law relating to safety at sea, the ISM Code, any Environmental Law or any Sanctions; or

(b) in connection with any Environmental Claim.

14.2.4 The Borrowers shall promptly indemnify the Lender as holder of any of the Security Documents and every Receiver and Delegate against any cost, loss or liability incurred by any of them as a result of:

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(a) any failure by the Borrowers to comply with its obligations under Clause 16 (Costs and Expenses);

(b) acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised;

(c) the taking, holding, protection or enforcement of the Security Documents;

(d) the exercise of any of the rights, powers, discretions, authorities and remedies vested in the Lender and each Receiver and Delegate by the Finance Documents or by law;

(e) any default by any Obligor in the performance of any of the obligations expressed to be assumed by it in the Finance Documents to which it is a party; or

(f) acting as holder of any of the Security Documents, Receiver or Delegate or otherwise relating to any of the Charged Property (otherwise, in each case, than by reason of the relevant Lender’s, Receiver’s or Delegate’s gross negligence or wilful misconduct).

14.3 Indemnity survival The indemnities contained in this Agreement shall survive repayment of the Loan.

15 Mitigation by the Lender

15.1 Mitigation The Lender shall, in consultation with the Borrowers, take all reasonable steps to mitigate any circumstances which arise and which would result in the Loan ceasing to be available or any amount becoming payable under or pursuant to any of Clause 7.1 (Illegality), Clause 12 (Tax Gross Up and Indemnities) or Clause 13 (Increased Costs) including (but not limited to) transferring its rights and obligations under the Finance Documents to another Affiliate or Facility Office. The above does not in any way limit the obligations of any Obligor under the Finance Documents.

15.2 Limitation of liability The Borrowers shall promptly indemnify the Lender for all costs and expenses reasonably incurred by the Lender as a result of steps taken by it under Clause 15.1 (Mitigation). The Lender is not obliged to take any steps under Clause 15.1 if, in its opinion (acting reasonably), to do so might be prejudicial to it.

16 Costs and Expenses

16.1 Transaction expenses The Borrowers shall on demand and in any event by not later than thirty (30) days following such demand, pay the Lender the amount of all costs and expenses (including, without limitation, all agreed legal fees, VAT, disbursements and correspondent lawyers’ fees provided that the demand for payment is accompanied by the respective invoice) reasonably incurred by any of them in connection with the negotiation, preparation, printing, execution, syndication and perfection of:

16.1.1 this Agreement and any other documents referred to in this Agreement;

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16.1.2 any other Finance Documents executed after the date of this Agreement;

16.1.3 any other document which may at any time be required by the Lender to give effect to any Finance Document or which the Lender is entitled to call for or obtain under any Finance Document (including, without limitation, any valuation of a Vessel and a Fleet Vessel, subject to Clause 17.15); and

16.1.4 any discharge, release or reassignment of any of the Security Documents.

16.2 Amendment costs If an Obligor requests an amendment, waiver or consent, the Borrowers shall, within three Business Days of demand, reimburse the Lender for the amount of all costs and expenses (including legal fees and currency exchange costs) reasonably incurred by the Lender and any Receiver or Delegate in responding to, evaluating, negotiating or complying with that request or requirement provided that no sum shall be payable under this Clause if the relevant request for an amendment, notice, waiver or consent are rejected by the Lender and/or are not granted.

16.3 Enforcement and preservation costs The Borrowers shall, within three Business Days of written demand, pay to the Lender and each other Secured Party the amount of all costs and expenses (including legal fees) incurred by the Lender and that other Secured Party in connection with the enforcement of, or the preservation of any rights under, any Finance Document and any proceedings instituted by or against the Lender as a consequence of taking or holding the Security Documents or enforcing those rights including (without limitation) any losses, costs and expenses which the Lender or that other Secured Party may from time to time sustain, incur or become liable for by reason of the Lender or that other Secured Party being mortgagee of a Vessel and/or a lender to a Borrower, or by reason of the Lender or that other Secured Party being deemed by any court or authority to be an operator or controller, or in any way concerned in the operation or control, of a Vessel.

16.4 Other costs The Borrowers shall, within three Business Days of written demand, pay to the Lender and each other Secured Party the amount of all sums which the Lender or that other Secured Party may pay or become actually or contingently liable for on account of a Borrower in connection with a Vessel (whether alone or jointly or jointly and severally with any other person) including (without limitation) all sums which the Lender or that other Secured Party may pay or guarantees which it may give in respect of the Insurances, any expenses incurred by the Lender or that other Secured Party in connection with the maintenance or repair of a Vessel or in discharging any lien, bond or other claim relating in any way to a Vessel, and any sums which the Lender or that other Secured Party may pay or guarantees which it may give to procure the release of a Vessel from arrest or detention.

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Section 7 Security and Application of Moneys

17 Security Documents and Application of Moneys

17.1 Security Documents As security for the payment of the Indebtedness, the Borrowers shall execute and deliver to the Lender or cause to be executed and delivered to the Lender the following documents in such forms and containing such terms and conditions as the Lender shall require:

17.1.1 first preferred mortgages over the Vessels;

17.1.2 first priority deed or deeds of assignment of the Insurances, Earnings, Charter Rights and Requisition Compensation of the Vessels from the Borrowers;

17.1.3 a guarantee and indemnity from the Guarantor;

17.1.4 first priority charges of all the issued shares of the Borrowers from the Chargor;

17.1.5 first priority account security deeds in respect of all amounts from time to time standing to the credit of the Earnings Accounts;

17.1.6 a first priority account security deed in respect of all amounts from time to time standing to the credit of the Cash Collateral Account; and

17.1.7 letters of undertaking, including an assignment of the Vessels’ Insurances, from the Managers in respect of the Vessels.

17.2 Accounts The Borrowers shall maintain the Earnings Accounts and the Cash Collateral Account with the Account Holder for the duration of the Facility Period free of Encumbrances and rights of set off other than those created by or under the Finance Documents.

17.3 Earnings The Borrowers shall procure that all Earnings and any Requisition Compensation are credited to the relevant Earnings Account.

17.4 Application of the Earnings Accounts The Borrowers shall procure that there is transferred from the Earnings Accounts to the Lender:-

17.4.1 on each Repayment Date, in respect of the relevant Vessel Loan, the amount of the Repayment Instalment then due; and

17.4.2 on each Interest Payment Date, in respect of the relevant Vessel Loan, the amount of Interest then due and the Borrowers irrevocably authorises the Lender to instruct the Account Holder to make those transfers.

17.5 Borrowers’ obligations not affected If for any reason the amount standing to the credit of the Earnings Accounts is insufficient to pay any Repayment Instalment or to make any payment of interest when due, the Borrowers’ obligation to pay that Repayment Instalment or to make that payment of interest shall not be affected.

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17.6 Release of surplus Any amount remaining to the credit of the Earnings Accounts following the making of any transfer required by Clause 17.4 (Application of the Earnings Accounts) shall (unless a Default shall have occurred and be continuing) be released to or to the order of the Borrowers.

17.7 Restriction on withdrawal During the Facility Period no sum may be withdrawn from:

17.7.1 the Earnings Accounts without the prior written consent of the Lender (except in accordance with this Clause 17); and

17.7.2 the Cash Collateral Account without the prior written consent of the Lender. No Account shall be overdrawn.

17.8 Relocation of the Accounts At any time following the occurrence and during the continuation of a Default, the Lender may without the consent of the Borrowers instruct the Account Holder to relocate any of the Accounts to any other branch of the Account Holder, without prejudice to the continued application of this Clause 17 and the rights of the Secured Parties under the Finance Documents.

17.9 Access to information The Borrowers agree that the Lender (and its nominees) may from time to time during the Facility Period review the records held by the Account Holder (whether in written or electronic form) in relation to the Accounts, and irrevocably waives any right of confidentiality which may exist in relation to those records.

17.10 StatementsWithout prejudice to the rights of the Lender under Clause 17.9 (Access to information), the Borrowers shall procure that the Account Holder provides to the Lender, no less frequently than each calendar month during the Facility Period, written statements of account showing all entries made to the credit and debit of each of the Accounts during the immediately preceding calendar month.

17.11 Application after acceleration From and after the giving of notice to the Borrowers by the Lender under Clause 22.2 (Acceleration), the Borrowers shall procure that all sums from time to time standing to the credit of any of the Accounts are immediately transferred to the Lender or any Receiver or Delegate for application in accordance with Clause 17.12 (Application of moneys by Lender) and the Borrowers irrevocably authorise the Lender to instruct the Account Holder to make those transfers.

17.12 Application of moneys by Lender The Borrowers irrevocably authorise the Lender or any Receiver or Delegate to apply all moneys which it receives and is entitled to receive:

17.12.1 pursuant to a sale or other disposition of a Vessel or any right, title or interest in that Vessel; or

17.12.2 by way of payment of any sum in respect of the Insurances, Earnings, Charter Rights or Requisition Compensation; or

17.12.3 by way of transfer of any sum from any of the Accounts; or

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17.12.4 otherwise under or in connection with any Security Document,

in or towards satisfaction of the Indebtedness in the following order:

(a) first, in or towards payment of any unpaid fees, costs, expenses and default interest due to the Lender and any Receiver or Delegate under all or any of the Finance Documents, such application to be apportioned between the Lender and any Receiver or Delegate pro rata to the aggregate amount of such items due to each of them;

(b) second, in or towards payment of any accrued interest, fee or commission due but unpaid under this Agreement;

(c) third, in or towards payment of any principal due but unpaid under this Agreement;

(d) fourth, in or towards payment of any other sum due and payable to the Lender but unpaid under all or any of the Finance Documents,

provided that the balance (if any) of the moneys received shall be paid to the Obligors from whom or from whose assets those sums were received or recovered or to any other person entitled to them.

17.13 Retention on account Moneys to be applied by the Lender or any Receiver or Delegate under Clause 17.12 (Application of moneys by Lender) shall be applied as soon as practicable after the relevant moneys are received by it, or otherwise become available to it.

17.14 Additional security Subject to Clause 7.6 (Mandatory Prepayment on change of ownership of Guarantor), if at any time the aggregate of the Market Values of the Vessels and the value of any additional security (such value to be the face amount of the deposit (in the case of cash), determined conclusively by appropriate advisers appointed by the Lender (in the case ❑f other charged assets), and determined by the Lender in its discretion (in all other cases)) for the time being provided to the Lender under this Clause 17.14 is less than 130% of the Loan then outstanding (the “VTL Coverage”), the Borrowers shall, within 30 days of the Lender’s request, at the Borrowers’ option:

17.14.1 pay to the Lender or to its nominee a cash deposit in the amount of the shortfall to be secured in favour of the Lender as additional security for the payment of the Indebtedness; or

17.14.2 give to the Lender other additional security in amount and form acceptable to the Lender in its discretion; or

17.14.3 prepay the Loan in the amount of the shortfall.

Clauses 6.3 (Reborrowing), 7.3.3 (Voluntary prepayment of Loan) and 7.7 (Restrictions) shall apply, mutatis mutandis, to any prepayment made under this Clause 17.14 and the value of any additional security provided shall be determined by the Lender in its discretion.

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If, at any time after the Borrowers have provided additional security in accordance with the Lender’s request under this Clause 17.14, the Lender shall determine when testing compliance with the VTL Coverage that all or any part of that additional security may be released without resulting in a shortfall in the VTL Coverage, then provided that no Default is continuing, the Lender shall effect a release of all or any part of that additional security, but this shall be without prejudice to the Lender’s right to make a further request under this Clause 17.14 should the value of the remaining security subsequently merit it.

17.15 Valuation certificates The Lender may obtain at the cost and expense of the Borrowers:

17.15.1 one valuation from an Approved Shipbroker in order to certify the Initial Market Value of a Vessel for the purposes of determining the Maximum Vessel Loan Amount;

17.15.2 one set of valuations per year from the required number of Approved Shipbrokers (a) for the purposes of determining the relevant percentage referred to in Clause 17.14 (Additional Security) and (b) for the purposes of determining the relevant percentage referred to in Clause 7.6 (Mandatory prepayment on change of ownership of Guarantor);

17.15.3 two sets of valuations from the required number of Approved Shipbrokers for the purposes of determining compliance with Clause 20.1 (Guarantor’s Covenants); and

17.15.4 following the occurrence of an Event of Default which is continuing, as many sets of valuations per year as may be necessary or desirable to the Lender from the required number of Approved Shipbrokers in order to certify the Market Value of a Vessel and any Fleet Market Value.

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Section 8 Representations, Undertakings and Events of Default

18 Representations

18.1 Representations Each Borrower makes the representations and warranties set out in this Clause 18 to the Lender:-

18.1.1 Status Each of the Obligors:

(a) is duly incorporated and validly existing under the law of its jurisdiction of incorporation; and

(b) has the power to own its assets and carry on its business as it is being conducted.

18.1.2 Binding obligations Subject to the Legal Reservations:

(a) the obligations expressed to be assumed by each of the Obligors in each of the Relevant Documents to which it is a party are legal, valid, binding and enforceable obligations; and

(b) (without limiting the generality of Clause 18.1.2(a)) each Security Document to which it is a party creates the security interests which that Security Document purports to create and those security interests are valid and effective.

18.1.3 Non-conflict with other obligations The entry into and performance by each of the Obligors of, and the transactions contemplated by, the Relevant Documents do not conflict with:

(a) any law or regulation applicable to such Obligor;

(b) the constitutional documents of such Obligor; or

(c) any agreement or instrument binding upon such Obligor or any of such Obligor’s assets or constitute a default or termination event (however described) under any such agreement or instrument.

18.1.4 Power and authority

(a) Each of the Obligors has the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry Into, performance and delivery of, the Relevant Documents to which it is or will be a party and the transactions contemplated by those Relevant Documents.

(b) No limit on the powers of any Obligor will be exceeded as a result of the borrowing, grant of security or giving of guarantees or indemnities contemplated by the Relevant Documents to which it is a party.

18,1,5 Validity and admissibility in evidence All Authorisations required or desirable:

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(a) to enable each of the Obligors lawfully to enter into, exercise its rights and comply with its obligations in the Relevant Documents to which it is a party or to enable the Lender to enforce and exercise all its rights under the Relevant Documents; and

(b) to make the Relevant Documents to which any Obligor is a party admissible in evidence in its Relevant Jurisdictions,

(c) have been obtained or effected and are in full force and effect, with the exception only of the registrations referred to in Part II of Schedule 1 (Conditions Subsequent).

18.1.6 Governing law and enforcement

(a) The choice of governing law of any Finance Document will be recognised and enforced in the Relevant Jurisdictions of each relevant Obligor.

(b) Any judgment obtained in relation to any Finance Document in the jurisdiction of the governing law of that Finance Document will be recognised and enforced in the Relevant Jurisdictions of each relevant Obligor.

18.1.7 Insolvency No corporate action, legal proceeding or other procedure or step described in Clause 22.1.7 (Insolvency proceedings) or creditors’ process described in Clause 22.1.8 (Creditors’ process) has been taken or, to the knowledge of any Borrower, threatened in relation to an Obligor; and none of the circumstances described in Clause 22.1.6 (Insolvency) applies to an Obligor.

18.1.8 No filing or stamp taxes Under the laws of the Relevant Jurisdictions of each relevant Obligor it is not necessary that the Finance Documents be filed, recorded or enrolled with any court or other authority in any of those jurisdictions or that any stamp, registration, notarial or similar tax or fees be paid on or in relation to the Finance Documents or the transactions contemplated by the Finance Documents except for the registration of each Mortgage at the Ships Registry where title to the relevant Vessel is registered in the ownership of the relevant Borrower and payment of associated fees, which registration and fees will be made and paid promptly after the date of the relevant Finance Document.

18.1.9 Deduction of Tax None of the Obligors is required under the law of its jurisdiction of incorporation to make any deduction for or on account of Tax from any payment it may make under any Finance Document to a Lender which is:

(a) a Qualifying Lender falling within (a) of the definition of Qualifying Lender; or, except where a Direction has been given under section 931 of the ITA in relation to the payment concerned, a Qualifying Lender falling within (b) of the definition of Qualifying Lender; or

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(b) a Treaty Lender and the payment is one specified in a direction given by the Commissioners of Revenue & Customs under Regulation 2 of the Double Taxation Relief (Taxes on Income) (General) Regulations 1970 (SI 1970/488).

18.1.10 No default

(a) No Event of Default and, on the date of this Agreement and on each Utilisation Date, no Default is continuing or Is reasonably likely to result from the advance of any Vessel Loan or the entry into, the performance of, or any transaction contemplated by, any of the Relevant Documents.

(b) No other event or circumstance is outstanding which constitutes (or, with the expiry of a grace period, the giving of notice, the making of any determination or any combination of any of the foregoing, would constitute) a default or termination event (howsoever described) under any other agreement or instrument which is binding on any of the Obligors or to which its assets are subject which has or is reasonably likely to have a Material Adverse Effect.

18.1.11 No misleading information Save as disclosed in writing to the Lender prior to the date of this Agreement:

(a) all material information provided to the Lender by or on behalf of any of the Obligors or any other member of the Group on or before the date of this Agreement and not superseded before that date is accurate and not misleading in any material respect and all projections provided to the Lender on or before the date of this Agreement have been prepared in good faith on the basis of assumptions which were reasonable at the time at which they were prepared and supplied; and

(b) all other written information provided by any of the Obligors or any other member of the Group (including its advisers) to the Lender was true, complete and accurate in all material respects as at the date it was provided and is not misleading in any respect.

18 1 12 Financial statements

(a) The Original Financial Statements were prepared in accordance with GAAP consistently applied unless expressly disclosed to the Lender in writing to the contrary.

(b) The unaudited Original Financial Statements fairly represent the Guarantor’s consolidated financial condition and results of operations for the relevant financial year unless expressly disclosed to the Lender in writing to the contrary prior to the date of this Agreement.

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(c) The audited Original Financial Statements give a true and fair view of the Guarantor’s consolidated financial condition and results of operations during the relevant financial year unless expressly disclosed to the Lender in writing to the contrary prior to the date of this Agreement.

(d) There has been no material adverse change in any Obligor’s assets, business or financial condition since the date of the Original Financial Statements.

(e) The Guarantor’s most recent financial statements delivered pursuant to Clause 19.1 (Financial statements):

(i) have been prepared in accordance with GAAP as applied to the Original Financial Statements; and

(ii) give a true and fair view of (if audited) or fairly represent (if unaudited) its consolidated financial condition as at the end of, and consolidated results of operations for, the period to which they relate.

(f) Since the date of the most recent financial statements delivered pursuant to Clause 19.1 (Financial statements) there has been no material adverse change in the business, assets or financial condition of any of the Obligors.

18.1.13 No proceedings pending or threatenedNo litigation, arbitration, or administrative proceedings of or before any court, arbitral body or agency which, if adversely determined, are reasonably likely to have a Material Adverse Effect have (to the best of its knowledge and belief) been started or threatened against any of the Obligors.

18.1.14 No breach of laws None of the Obligors or any other member of the Group has breached any law or regulation which breach has or is reasonably likely to have a Material Adverse Effect.

18.1.15 Environmental laws

(a) Each of the Obligors and each other member of the Group is in compliance with Clause 21.3 (Environmental compliance) and to the best of its knowledge and belief (having made due and careful enquiry) no circumstances have occurred which would prevent such compliance in a manner or to an extent which has or is reasonably likely to have a Material Adverse Effect.

(b) No Environmental Claim has been commenced or (to the best of its knowledge and belief (having made due and careful enquiry)) is threatened against any of the Obligors or any other member of the Group where that claim has or is reasonably likely, if determined against that Obligor or other member of the Group, to have a Material Adverse Effect.

18.1.16 Taxation

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(a) None of the Obligors is materially overdue in the filing of any Tax returns or is overdue in the payment of any amount in respect of Tax.

(b) No claims or investigations are being, or are reasonably likely to be, made or conducted against any of the Obligors with respect to Taxes.

(c) Each of the Obligors (other than the Managers) is resident for Tax purposes only in its Original Jurisdiction.

18.117 Anti-corruption law None of the Obligors, or any member of the Group nor, to the knowledge of any Borrower, any director, officer, agent, employee, Affiliate or other person acting on behalf of any of the Borrowers, an Obligor or any of their Subsidiaries is aware of or has taken any action, directly or indirectly, that would result in a violation by such persons of any applicable anti-corruption and anti-bribery law, including but not limited to, the UK Bribery Act and the FCPA. Furthermore, the Borrowers and, to the knowledge of each Borrower, their Affiliates, any member of the Group and each Obligor have conducted their businesses in compliance with the UK Bribery Act, the FCPA and similar laws, rules or regulations and have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith.

18.1.18 No Encumbrance or Financial Indebtedness

(a) No Encumbrance (other than any Permitted Encumbrance) exists over (i) all or any of the present or future assets of a Borrower and (ii) the shares of the Chargor in each Borrower; and

(b) No Borrower has any other Financial Indebtedness outstanding other than as permitted by this Agreement.

18.1.19 Pari passu ranking The payment obligations of each of the Obligors under the Finance Documents to which it is a party rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally.

18.1.20 No adverse consequences

(a) It is not necessary under the laws of the Relevant Jurisdictions of any of the Obligors:

(i) in order to enable the Lender to enforce its rights under any Finance Document; or

(ii) by reason of the execution of any Finance Document or the performance by it of its obligations under any Finance Document,

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that the Lender should be licensed, qualified or otherwise entitled to carry on business in any of the Relevant Jurisdictions of any of the Obligors.

(b) The Lender is not and will not be deemed to be resident, domiciled or carrying on business in any of the Relevant Jurisdictions of any of the Obligors by reason only of the execution, performance and/or enforcement of any Finance Document.

18.1.21 Ownership of a Borrower and ChargorEach Borrower is a wholly owned subsidiary of the Chargor and the Chargor is a wholly owned subsidiary of the Guarantor.

18.1.22 Disclosure of material facts No Borrower is aware of any material facts or circumstances which have not been disclosed to the Lender and which might, if disclosed, have adversely affected the decision of a person considering whether or not to make loan facilities of the nature contemplated by this Agreement available to the Borrowers.

18.1.23 Completeness of Relevant Documents The copies of any Relevant Documents provided or to be provided by the Borrowers to the Lender in accordance with Clause 4 (Conditions of Utilisation) are, or will be, true and accurate copies of the originals and represent, or will represent, the full agreement between the parties to those Relevant Documents in relation to the subject matter of those Relevant Documents and there are no commissions, rebates, premiums or other payments due or to become due in connection with the subject matter of those Relevant Documents other than in the ordinary course of business or as disclosed to, and approved in writing by, the Lender.

18.1.24 No Immunity No Obligor or any of its assets is immune to any legal action or proceeding.

18.1.25 Money laundering Any borrowing by a Borrower under this Agreement, and the performance of its obligations under this Agreement and under the other Finance Documents, will be for its own account and will not involve any breach by it of any law or regulatory measure relating to “money laundering” as defined in Article 1 of the Directive (2005/EC/60) of the European Parliament and of the Council of the European Communities.

18.1.26 Sanctions None of the Obligors, or any of their respective Subsidiaries or any director or officer, or any employee, agent, or Affiliate, of any of the Obligors or any of their respective Subsidiaries is an individual or entity (“Person”) that is, or is owned or controlled by Persons that are, (i) the target of any sanctions administered or enforced by the US Department of the Treasury’s Office of Foreign Assets Control, the US Department of State, the United Nations Security Council, the European Union, Her Majesty’s Treasury or the Hong Kong Monetary Authority, or (ii) located, organised or resident in a country or territory that is, or whose government is, the target of Sanctions, including, without limitation, the Crimea region, Cuba, Iran, North Korea, Sudan and Syria.

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18.1.27 US Tax Obligor No Obligor is a US Tax Obligor.

18.2 Repetition Each Repeating Representation is deemed to be repeated by each Borrower by reference to the facts and circumstances then existing on the date of each Utilisation Request, on each Utilisation Date, on the first day of each Interest Period and, in the case or those contained in Clauses 18.1.12(d) and 18.1.12(f) (Financial statements) and for so long as any amount is outstanding under the Finance Documents or any part of the Loan is undrawn and available, on each day.

19 Information Undertakings

The undertakings in this Clause 19 remain in force for the duration of the Facility Period.

19.1 Financial statements Each Borrower shall procure that the Guarantor supplies to the Lender:

19.1.1 as soon as the same become available, but in any event within 180 days after the end of each of the Guarantor’s financial years, the Guarantor’s consolidated audited financial statements (including profit and loss accounts and balance sheets) for that financial year; and

19.1.2 as soon as the same become available, but in any event within 90 days after the end of each half year during each of the Guarantor’s financial years, the Guarantor’s consolidated unaudited semi-annual financial statements for that half year.

19.2 Compliance Certificate

19.2.1 Each Borrower shall procure that the Guarantor supplies to the Lender, with each set of its annual consolidated financial statements delivered pursuant to Clause 19.1.1 (Financial statements) and each set of its semi-annual consolidated financial statements delivered pursuant to Clause 19.1.2 (Financial statements), a Compliance Certificate setting out (in reasonable detail) computations as to compliance with Clause 20 (Financial Covenants) as at the date as at which those financial statements were drawn up.

19.2.2 Each Compliance Certificate shall be signed by two directors of each Borrower and the Guarantor shall be reported on by the Guarantor’s auditors in the form agreed by the Borrowers, the Guarantor and the Lender before the date of this Agreement.

19.3 Requirements as to financial statements

Each set of financial statements delivered by a Borrower or the Guarantor (as applicable) under Clause 19.1 (Financial statements):

19.3.1 shall be certified by a director of the Guarantor as giving a true and fair view of (in the case of annual financial statements), or fairly representing (in other cases), its financial condition as at the date as at which those financial statements were drawn up;

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19.3.2 shall be prepared using GAAP, accounting practices and financial reference periods consistent with those applied in the preparation of the Original Financial Statements unless, in relation to any set of financial statements, it notifies the Lender that there has been a change in GAAP, the accounting practices or reference periods and its auditors deliver to the Lender:

(a) a description of any change necessary for those financial statements to reflect the GAAP, accounting practices and reference periods upon which the Original Financial Statements were prepared; and

(b) sufficient information, in form and substance as may be reasonably required by the Lender, to enable the Lender to determine whether Clause 20 (Financial Covenants) has been complied with and make an accurate comparison between the financial position indicated in those financial statements and the Original Financial Statements.

Any reference in this Agreement to those financial statements shall be construed as a reference to those financial statements as adjusted to reflect the basis upon which the Original Financial Statements were prepared.

19.4 Information: miscellaneous Each Borrower shall supply to the Lender:

19.4.1 at the same time as they are dispatched, copies of all documents dispatched by that Borrower to its shareholders generally (or any class of them) or dispatched by that Borrower or any other Obligor to its creditors generally (or any class of them);

19.4.2 promptly upon becoming aware of them, the details of any litigation, arbitration or administrative proceedings which are current, threatened or pending against any Obligor and which, if adversely determined, are reasonably likely to have a Material Adverse Effect;

19.4.3 promptly, such information as the Lender may reasonably require about the Charged Property and compliance of the Obligors with the terms of any Security Document including without limitation cash flow analyses and details of the operating costs of any Vessel; and

19.4.4 promptly on request, such further information regarding the financial condition, affairs, commitments, assets and operations of any Obligor or any other member of the Group (including any requested amplification or explanation of any item in the financial statements, budgets or other material provided by any Obligor under this Agreement and an up to date copy of its shareholders’ register (or equivalent in its Original Jurisdiction)) as the Lender may reasonably request.

19.5 Notification of default

19.5.1 Each Borrower shall notify the Lender of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence.

19.5.2 Promptly upon a request by the Lender, each Borrower shall supply to the Lender a certificate signed by two of its directors or senior officers on its

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behalf certifying that no Default is continuing (or if a Default is continuing, specifying the Default and the steps, if any, being taken to remedy it).

19.6 “Know your customer” checks If:

196.1 the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;

19.6.2 any change in the status of an Obligor after the date of this Agreement; or

19.6.3 a proposed assignment or transfer by the Lender of any of its rights and obligations under this Agreement; or

19.6.4 any of the Lender’s internal compliance rules, policies and procedures, obliges the Lender (or, in the case of Clause 19.6.3, any prospective new Lender) to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, each Borrower, the Guarantor or any other member of the Group which has a loan with the Lender and has issued registered shares shall promptly upon the request of the Lender, supply, or procure the supply of, such documentation and other evidence as is requested by the Lender at its absolute satisfaction, prior to the date of this Agreement (for itself or, in the case of the event described in Clause 19.6.3, on behalf of any prospective new Lender) in order for the Lender or, in the case of the event described in Clause 19.6,3, any prospective new Lender to carry out and be satisfied it has complied with or has refreshed all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.

20 Financial Covenants

20.1 Guarantor’s Covenants Each Borrower shall procure that the Guarantor shall maintain at all times during the Facility Period:

20.1.1 Maximum Leverage not higher than 75%; and

20.1.2 Liquidity of an amount of not less than:

(a) $200,000 in respect of each Fleet Vessel from the date of this Agreement up to and including 29 September 2020; and

(b) $300,000 in respect of each Fleet Vessel from 30 September 2020 and throughout the remainder of the Facility Period; and

20.1.3 Net Worth of not less than fifteen million dollars ($15,000,000).

20.2 Cash Collateral Amount The Borrowers shall maintain in the Cash Collateral Account:

20.2.1 an amount of $300,000 during the period commencing on the first Utilisation Date up to but excluding the second Utilisation Date, or, if only one Utilisation is made, throughout the remainder of the Facility Period;

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20.2.2 an amount of $600,000 during the period commencing on the second Utilisation Date up to but excluding the third Utilisation Date, or, if only two Utilisations are made, throughout the remainder of the Facility Period; and

20.2.3 an amount of $900,000 during the period commencing on the third Utilisation Date and throughout the remainder of the Facility Period,

in each case, such amount to be pledged In favour of the Lender free of any Encumbrances other than in favour of the Lender.

The expressions used in this Clause shall be construed in accordance with GAAP, and for the purposes of this Agreement:-

“Cash” means, in respect of the Guarantor, cash at bank or in hand which is not subject to any Encumbrance (other than in favour of the Lender or the other financiers of the Group).

“Fleet Market Value” means the value of a Fleet Vessel conclusively determined by the arithmetic average of two valuations obtained by two Approved Shipbrokers selected and appointed by the Borrowers on behalf of the Lender and approved by and reporting to the Lender on the basis of a charter free sale for prompt delivery and free of encumbrances for cash at arm’s length on normal commercial terms as between a willing seller and a willing buyer and evidenced by two valuations of that Fleet Vessel addressed to the Lender certifying a value for that Fleet Vessel.

“Fleet Vessels” means any vessel (including the Vessels) from time to time wholly owned by a Subsidiary of the Guarantor (directly or indirectly) and each a “Fleet Vessel”.

“Liquidity” means, in respect of each period during which the consolidated financial statements delivered pursuant to Clause 19.1 (Financial statements) are delivered by the Guarantor, Cash, as shown in the applicable financial statements of the Guarantor, for such accounting period and determined in accordance with GAAP.

“Maximum Leverage” means, in respect of each period during which financial statements are required to be delivered pursuant to Clause 19.1 (Financial statements), the ratio of Total Consolidated Liabilities, to Value Adjusted Total Assets, as shown in the applicable consolidated financial statements of the Guarantor for such accounting period and determined in accordance with GAAP.

“Net Worth” means equity payments already advanced in respect of the Fleet Vessel less accumulated dividends plus retained earnings of the Fleet Vessels, as each such term is defined in the applicable consolidated financial statements (as provided in Clause 19.1 (Financial statements)) for the Guarantor determined in accordance with GAAP.

“Total Consolidated Liabilities” means, in respect of the Guarantor at any time on a consolidated basis, the ratio of total indebtedness (long-term debt including the current portion of long-term debt) of the Guarantor which would be included in the applicable consolidated financial statements of the Guarantor as total liabilities in accordance with GAAP.

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“Total Assets” means the amount of total assets of the Guarantor at any time on a consolidated basis which would be included in the applicable consolidated financial statements (as provided in Clause 19.1 (Financial statements)) of the Guarantor as total assets determined in accordance with GAAP.

“Value Adjusted Total Assets” means the Total Assets of the Guarantor as adjusted for the difference of the book value of the Fleet Vessels (as evidenced in the most recent financial statements (pursuant to Clause 19.1 (Financial statements)) and the Fleet Market Value.

21 General Undertakings

The undertakings in this Clause 21 remain in force for the duration of the Facility Period.

21.1 Authorisations Each Borrower shall promptly:

21.1.1 obtain, comply with and do all that is necessary to maintain in full force and effect;

21.1.2 supply certified copies to the Lender of,

any Authorisation required under any law or regulation of a Relevant Jurisdiction to:

(a) enable any Obligor to perform its obligations under the Finance Documents to which it is a party;

(b) ensure the legality, validity, enforceability or admissibility in evidence of any Finance Document; and

(c) enable any Obligor to carry on its business where failure to do so has or is reasonably likely to have a Material Adverse Effect.

21.2 Compliance with laws

21.2.1 Each Borrower shall comply (and shall procure that each other Obligor, each other member of the Group and each Affiliate of any of them shall comply), in all respects with all laws to which it may be subject, if (except as regards Sanctions, to which Clause 21.2.2 applies, and anti-corruption laws to which Clause 20.5 applies) failure so to comply has or is reasonably likely to have a Material Adverse Effect.

21.2.2 Each Borrower shall comply (and shall procure that each other Obligor, each other member of the Group and each Affiliate of any of them shall comply) in all respects with all Sanctions.

21.3 Environmental compliance Each Borrower shall:

21.3.1 comply with all Environmental Laws;

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21.3.2 obtain, maintain and ensure compliance with all requisite Environmental Approvals; and

21.3.3 implement procedures to monitor compliance with and to prevent liability under any Environmental Law,

where failure to do so has or is reasonably likely to have a Material Adverse Effect.

21.4 Environmental Claims

Each Borrower shall promptly upon becoming aware of the same, inform the Lender in writing of:

21.4.1 any Environmental Claim against any of the Obligors or any other member of the Group which is current, pending or threatened; and

21.4.2 any facts or circumstances which are reasonably likely to result in any Environmental Claim being commenced or threatened against any of the Obligors or any other member of the Group,

where the claim, if determined against that Obligor or other member of the Group, has or is reasonably likely to have a Material Adverse Effect.

21.5Anti-corruption law

21.5.1 No part of the proceeds of the Loan will be used, directly or indirectly, for any payments that could constitute a violation of any applicable anti-bribery law, including, without limitation the UK Bribery Act, the FCPA or other similar legislation in other jurisdictions.

21.5.2 Each Borrower shall (and shall procure that each other Obligor, each other member of the Group and each Affiliate of any of them shall):

(a) conduct its businesses in compliance with applicable anti-corruption laws; and

(b) maintain policies and procedures designed to promote and achieve compliance with such laws.

21.6 Taxation

21.6.1 Each Borrower shall (and shall procure that each other Obligor shall) pay and discharge all Taxes imposed upon it or its assets within the time period allowed without incurring penalties unless and only to the extent that:

(a) such payment is being contested in good faith;

(b) adequate reserves are being maintained for those Taxes and the costs required to contest them which have been disclosed in its latest financial statements delivered to the Lender under Clause 19.1 (Financial statements); and

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(c) such payment can be lawfully withheld and failure to pay those Taxes does not have or is not reasonably likely to have a Material Adverse Effect.

21.6.2 No Borrower may (and each Borrower shall procure that no other Obligor may) change its residence for Tax purposes.

21.7 Evidence of good standing Each Borrower will from time to time if requested by the Lender provide the Lender with evidence in form and substance satisfactory to the Lender that the Obligors and all corporate shareholders of any of the Obligors (other than in respect of the Guarantor’s corporate shareholders) remain in good standing.

21.8 Pari passu ranking Each Borrower shall (and shall procure that each other Obligor shall) ensure that at all times any unsecured and unsubordinated claims of the Lender against it under the Finance Documents rank at least pan passu with the claims of all its other unsecured and unsubordinated creditors except those creditors whose claims are mandatorily preferred by laws of general application to companies.

21.9 Negative pledge

21.9.1 Each Borrower shall:

(a) not create nor permit to subsist any Encumbrance (other than any Permitted Encumbrance) over any of its assets; and

(b) procure that the Chargor will not create nor permit to subsist any Encumbrance over the shares of the Chargor in a Borrower.

21.9.2 No Borrower shall:

(a) sell, transfer or otherwise dispose of any of its assets on terms whereby they are or may be leased to or re-acquired by an Obligor;

(b) sell, transfer or otherwise dispose of any of its receivables on recourse terms;

(c) enter into any arrangement under which money or the benefit of a bank or other account may be applied, set-off or made subject to a combination of accounts; or

(d) enter into any other preferential arrangement having a similar effect,

in circumstances where the arrangement or transaction is entered into primarily as a method of raising Financial Indebtedness or of financing the acquisition of an asset.

21.10 Disposals

21.10.1 No Borrower shall (and each Borrower shall procure that no other Obligor other than the Guarantor will) enter into a single transaction or a series of transactions (whether related or not) and whether voluntary or involuntary to sell, lease, transfer or otherwise dispose of any asset.

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21.10.2 Each Borrower shall procure that the Chargor shall not enter into a single transaction or a series of transactions (whether related or not) and whether voluntary or involuntary to sell, transfer or otherwise dispose of its shares in a Borrower.

21.11 Arm’s length basis

21.11.1 No Borrower shall enter into any transaction with any person except on arm’s length terms and for full market value.

21.11.2 Fees, costs and expenses payable under the Relevant Documents in the amounts set out in the Relevant Documents delivered to the Lender under Clause 4.1 (Initial conditions precedent) or agreed by the Lender shall not be a breach of this Clause 21.11.

21.12 Merger No Borrower shall (and each Borrower shall procure that no other Obligor will) enter into any amalgamation, demerger, merger, consolidation or corporate reconstruction without the prior written consent of the Lender.

21.13 Change of business No Borrower shall (and each Borrower shall procure that no other Obligor will) make any substantial change to the general nature of its business from that carried on at the date of this Agreement.

21.14 No other business No Borrower shall (and each Borrower shall procure that no other Obligor other than the Guarantor will) engage in any business other than the ownership, operation, chartering and management of a Vessel.

21.15 No acquisitions No Borrower shall acquire a company or any shares or securities or a business or undertaking (or, in each case, any interest in any of them) or incorporate a company.

21.16 No Joint Ventures No Borrower shall:

21.16.1 enter into, invest in or acquire (or agree to acquire) any shares, stocks, securities or other interest in any Joint Venture; or

21.16.2 transfer any assets or lend to or guarantee or give an indemnity for or give security for the obligations of a Joint Venture or maintain the solvency of or provide working capital to any Joint Venture (or agree to do any of the foregoing).

21.17 No borrowingsNo Borrower shall incur or allow to remain outstanding any Financial Indebtedness (except for the Loan).

21.18 No substantial liabilities Except in the ordinary course of business, no Borrower shall incur any liability to any third party which is of a substantial nature.

21.19 No loans or credit No Borrower shall, without the Lender’s prior written consent, be a creditor in respect of any Financial Indebtedness unless it is a loan made in the ordinary course of business in connection with the chartering, operation or repair of its Vessel.

21.20 No guarantees or indemnitiesNo Borrower shall incur or allow to remain outstanding any guarantee in respect of any obligation of any person.

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21.21 No dividends

21.21.1 No Borrower shall (and each Borrower shall procure that the Guarantor will not):

(a) declare, make or pay any dividend, charge, fee or other distribution (or interest on any unpaid dividend, charge, fee or other distribution) (whether in cash or in kind) on or in respect of the Borrower’s share capital and the Guarantor’s common share capital (or any class of the Borrower’s share capital and any class of the Guarantor’s common share capital (as applicable));

(b) repay or distribute any dividend or share premium reserve in respect of the Borrower and repay or distribute any dividend or common share premium reserve in respect of the Guarantor (as applicable); or

(c) redeem, repurchase, defease, retire or repay any of the Borrower’s share capital and the Guarantor’s common share capital (as applicable) or resolve to do so,

following (I) any breach of Clause 17.14 (Additional Security), (ii) the occurrence and during the continuation of an Event of Default or (iii) where the making or payment of such dividend or distribution would result in the occurrence of an Event of Default.

21.22 Ownership and management of a Borrower No change in the management or the legal or beneficial ownership of a Borrower shall occur from that advised to the Lender by the Borrowers at the date of this Agreement. Subject to Clause 7.6 (Mandatory prepayment on change of ownership of Guarantor), for the avoidance of doubt, the Lender consents and agrees to any changes relating to the shareholders of the Guarantor’s trading shares in the normal course of business,

21.23 No change of CEO The Borrowers shall ensure (and shall procure that the Guarantor shall ensure) that throughout the Facility Period no change in the chief executive officer of the board of directors and/or the chairman of the Guarantor shall occur, without the Lender’s prior written consent.

21.24 Inspection of records Each Borrower will permit the inspection of its financial records and accounts from time to time by the Lender or its nominee.

21.25 No change in Relevant Documents Without the prior written consent of the Lender, no Borrower shall (and each Borrower shall procure that no other Obligor will) materially amend (and for the avoidance of doubt, but without limitation, any amendment in respect of the fees (but excluding any amendment in respect of the fees already agreed under the Management Agreements), reduction of hire, duration of a Charter, termination events of a Charter and governing law of any of the Relevant Documents will be considered material), vary, novate, supplement, supersede, waive or terminate any term of, any of the Relevant Documents which are not Fknance Documents, or any other document delivered to the Lender pursuant to Clause 4.1 (Initial conditions precedent) or Clause 4.2 (Further conditions precedent) or Clause 4.3 (Conditions subsequent).

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21.26 Sanctions No Borrower will, directly or indirectly, use the proceeds of the Loan, or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other Person, (i) to fund any activities or business of or with any Person, or in any country or territory, that, at the time of such funding, is, or whose government is, the target of Sanctions or (ii) in any other manner that would result in a violation of Sanctions by any Person (including any Person participating in the Loan, whether as underwriter, advisor, investor or otherwise).

21.27 Banking operations Each Borrower shall conduct all banking operations in connection with its Vessel through the Lender or any other branch nominated by the Lender in its discretion.

21.28 Vessels’ Trading No Borrower shall allow its Vessel to trade in areas prohibited by (a) the law applicable to that Vessel’s flag, (b) the applicable law of the country of incorporation of that Borrower and (c) the applicable law of the nationality of the officers and crew of that Vessel.

21.29 No change of Vessels’ ownership or management There shall be no change in the ownership or management of a Vessel, without the Lender’s prior written consent.

21.30 ISM Code compliance Each Borrower shall comply and shall procure that each of the Guarantor and the Manager comply with the ISM Code.

21.31 Further assurance

21.31.1 Each Borrower shall (and shall procure that each other Obligor shall) promptly do all such acts or execute all such documents (including assignments, transfers, mortgages, charges, notices and instructions) as the Lender may reasonably specify (and in such form as the Lender may reasonably require in favour of the Lender or its nominee(s)):

(a) to perfect any Encumbrance created or intended to be created under or evidenced by the Security Documents (which may include the execution of a mortgage, charge, assignment or other Encumbrance over all or any of the assets which are, or are intended to be, the subject of the Security Documents) or for the exercise of any rights, powers and remedies of the Lender or the Secured Parties provided by or pursuant to the Finance Documents or by law;

(b) to confer on the Lender or confer on the Secured Parties an Encumbrance over any property and assets of that Borrower (or that other Obligor as the case may be) located in any jurisdiction equivalent or similar to the Encumbrance intended to be conferred by or pursuant to the Security Documents; and/or

(c) to facilitate the realisation of the assets which are, or are intended to be, the subject of the Security Documents, in respect of which any Encumbrance has become enforceable following the occurrence of an Event of Default which is continuing.

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21.31.2 Each Borrower shall (and shall procure that each other Obligor shall) take all such action as is available to it (including making all filings and registrations) as may be necessary for the purpose of the creation, perfection, protection or maintenance of any Encumbrance conferred or intended to be conferred on the Lender or the Secured Parties by or pursuant to the Finance Documents.

22 Events of Default

22.1 Events of Default Each of the events or circumstances set out in this Clause 22.1 is an Event of Default.

22.1.1 Non-payment An Obligor does not pay on the due date any amount payable by it under a Finance Document at the place at and in the currency in which it is expressed to be payable unless:-

(a) its failure to pay is caused by:

(i) administrative or technical error; or

(ii) a Disruption Event; and

(b) payment is made within two (2) Business Days of its due date.

22.1.2 Other specific obligations

An Obligor does not comply with any obligation in a Finance Document relating to (a) the Insurances or (b) Clause 17.14 (Additional security).

22.1.3 Other obligations

(a) Art Obligor does not comply with any provision of a Finance Document (other than those referred to in Clause 22.1.1 (Non-payment) and Clause 22.1.2 (Other specific obligations).

(b) NO Event of Default under this Clause 22.1.3 will occur if the failure to comply is capable of remedy and is remedied within ten (10) Business Days of the earlier of (i) the Lender giving notice to the Borrowers and (ii) the Borrowers becoming aware of the failure to comply.

22.1.4 Misrepresentation Any representation or statement made or deemed to be repeated by an Obligor in any Finance Document or any other document delivered by or on behalf of an Obligor under or in connection with any Finance Document is or proves to have been incorrect or misleading when made or deemed to be made.

22.1.5 Cross default Any Financial Indebtedness of an Obligor (other than the Managers):

(a) is not paid when due nor within any originally applicable grace period; or

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(b) is declared to be, or otherwise becomes, due and payable prior to its specified maturity as a result of an event of default (however described); or

(c) is capable of being declared by a creditor to be due and payable prior to its specified maturity as a result of such an event.

No Event of Default will occur under this Clause 22.1.5 if the aggregate amount of Financial Indebtedness or commitment for Financial Indebtedness falling within (a) to (c) is less than USD1,000,000 (or its equivalent in any other currency or currencies).

22.1.6 Insolvency

(a) An Obligor is unable or admits inability to pay its debts as they fall due, is deemed to, or is declared to, be unable to pay its debts under applicable law, suspends or threatens to suspend making payments on any of its debts, or, by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors with a view to rescheduling any of its indebtedness.

(b) The value of the assets of an Obligor is less than its liabilities (taking into account contingent and prospective liabilities).

(c) A moratorium is declared in respect of any indebtedness of an Obligor or any other member of the Group. If a moratorium occurs, the ending of the moratorium will not remedy any Event of Default caused by that moratorium.

22.1.7 Insolvency proceedings Any corporate action, legal proceedings or other procedure or step is taken for:

(a) the suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, administration,bankruptcy or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) of an Obligor;

(b) a composition, compromise, assignment or arrangement with any creditor of an Obligor ;

(c) the appointment of a liquidator, receiver, administrative receiver, administrator, compulsory manager, or trustee or other similar officer in respect of an Obligor or any of its assets; or

(d) enforcement of any Encumbrance over any assets of an Obligor,

or any analogous procedure or step is taken in any jurisdiction.

This Clause 22.1.7 shall not apply to any winding-up petition which is frivolous or vexatious and is discharged, stayed or dismissed within 30 days of commencement.

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22.1.8 Creditors’ process Any expropriation, attachment, sequestration, distress or execution affects any asset or assets of a Borrower, the Guarantor or the Chargor.

22.1.9 Ownership of a Borrower A Borrower is not or ceases to be a 100% directly owned Subsidiary of the Chargor.

22.1.10 Change of chairman or CEO of Guarantor Mr Aristeidis J. Pittas ceases to be throughout the Facility Period the chief executive officer of the board of directors and/or the chairman of the Guarantor.

22.1.11 Delisting of Guarantor The Guarantor is delisted for any reason whatsoever from the Nasdaq stock exchange.

22.1.12 Unlawfulness and invalidity

(a) It is or becomes unlawful for an Obligor to perform any of its obligations under the Finance Documents to which it is a party or any Encumbrance created or expressed to be created or evidenced by the Security Documents ceases to be effective.

(b) Any obligation or obligations of any Obligor under any Finance Documents to which it is a party are not (subject to the Legal Reservations) or cease to be legal, valid, binding or enforceable and the cessation individually or cumulatively materially and adversely affects the interests of the Lender under the Finance Documents.

(c) Any Finance Document ceases to be in full force and effect or any Encumbrance created or expressed to be created or evidenced by the Security Documents ceases to be legal, valid, binding, enforceable or effective or is alleged by a party to it (other than the Lender) to be ineffective,

22.1.13 Cessation of business An Obligor ceases, or threatens to cease, to carry on all or a substantial part of its business,

22.1.14 Change in management, ownership or control of a Borrower There is any change in the management, beneficial ownership or control of a Borrower from that advised to the Lender by that Borrower at the date of this Agreement. Subject to Clause 7.6 (Mandatory prepayment on change of ownership of Guarantor), for the avoidance of doubt, the Lender consents and agrees to any changes relating to the shareholders of the Guarantor’s trading shares in the normal course of business and confirms thatsuch changes do not violate the terms of this Agreement.

22.1.15 Expropriation The authority or ability of an Obligor to conduct its business is limited or wholly or substantially curtailed by any seizure, expropriation, nationalisation, intervention, restriction or other action by or on behalf of any governmental, regulatory or other authority (excluding requisition of hire not involving requisition of title) or other person in relation to an Obligor or any of its assets.

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22.1.16 Repudiation and rescission of agreements

(a) An Obligor rescinds or purports to rescind or repudiates or purports to repudiate a Finance Document or evidences an intention to rescind or repudiate a Finance Document.

(b) Subject to Clause 22.1.16 (c), any party to any of the Relevant Documents that is not a Finance Document rescinds or purports to rescind or repudiates or purports to repudiate that Relevant Document in whole or in part where to do so has or is, in the reasonable opinion of the Lender, likely to have a material adverse effect on the interests of the Lender under the Finance Documents.

(c) The Management Agreement is terminated, cancelled or otherwise ceases to remain in full force and effect at any time prior to its contractual expiry date and is not immediately replaced by a similar agreement in form and substance satisfactory to the Lender.

22.1.17 Conditions subsequent Any of the conditions referred to in Clause 4.3 (Conditions subsequent) is not satisfied within the time reasonably required by the Lender.

22.1.18 Revocation or modification of Authorisation Any Authorisation of any governmental, judicial or other public body or authority which is now, or which at any time during the Facility Period becomes, necessary to enable any of the Obligors or any other person (except the Lender) to comply with any of their obligations under any Relevant Document is not obtained, is revoked, suspended, withdrawn or withheld, or is modified in a manner which the Lender considers is, or may be, prejudicial to the interests of the Lender, or ceases to remain in full force and effect.

22.1.19 Reduction of capital An Obligor (other than the Guarantor) reduces its issued or subscribed capital.

22.1.20 Loss of Vessel A Vessel suffers a Total Loss or is otherwise destroyed or abandoned, or a similar event occurs in relation to any other vessel which may from time to time be mortgaged to the Lender as security for the payment of all or any part of the Indebtedness, except that a Total Loss (which term shall for the purposes of the remainder of this Clause 22.1.20 include an event similar to a Total Loss in relation to any other vessel) shall not be an Event of Default if:

(a) that Vessel or other vessel is insured in accordance with the Security Documents and a claim for Total Loss is available under the terms of the relevant insurances; and

(b) no insurer has refused to meet or has disputed the claim for Total Loss and it is not apparent to the Lender in its discretion that any such refusal or dispute is likely to occur; and

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(c) payment of all insurance proceeds in respect of the Total Loss is made in full to the Lender within 180 days of the occurrence of the casualty giving rise to the Total Loss in question or such longer period as the Lender may in its discretion agree.

22.1.21 Challenge to registration The registration of a Vessel or a Mortgage is contested or becomes void or voidable or liable to cancellation or termination, or the validity or priority of a Mortgage is contested.

22.1.22 War The country of registration of a Vessel becomes involved in war (whether or not declared) or civil war or is occupied by any other power and the Lender in its discretion considers that, as a result, the security conferred by any of the Security Documents is materially prejudiced and the relevant Borrower fails to comply with the Lender’s request to (a) change the flag of its Vessel to a country acceptable to the Lender in its absolute discretion by paying promptly any costs and expenses related to such registration under the new flag, (b) provide any additional documentation including any additional security documents required pursuant to such registration under the new flag and (c) record a substitute mortgage over its Vessel and any additional security required pursuant to such recordation within 15 Business Days.

22.1.23 Notice of determination The Guarantor gives notice to the Lender to determine any obligations under the Guarantee.

22.1.24 Litigation Any litigation, arbitration, administrative, governmental, regulatory or other investigations, proceedings or disputes are commenced or threatened in relation to the Relevant Documents or the transactions contemplated in the Relevant Documents or against an Obligor or its assets which have or are reasonably likely to have a Material Adverse Effect.

22.1.25 Material adverse change Any event or circumstance occurs which the Lender reasonably believes has or is reasonably likely to have a Material Adverse Effect.

22.1.26 Sanctions

(a) Any of the Obligors, any other member of the Group or any Affiliate of any of them becomes a Prohibited Person or becomes owned or controlled by, or acts directly or indirectly on behalf of, a Prohibited Person or any of such persons becomes the owner or controller of a Prohibited Person.

(b) Any proceeds of the Loan are made available, directly or indirectly, to or for the benefit of a Prohibited Person or otherwise is, directly or indirectly, applied in a manner or for a purpose prohibited by Sanctions.

(c) Any of the Obligors, any other member of the Group or any Affiliate of any of them is not in compliance with all Sanctions.

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22.2 Acceleration On and at any time after the occurrence of an Event of Default which is continuing the Lender may:

22.2.1 by notice to the Borrowers, cancel the availability of the Loan, at which time it shall immediately be cancelled;

22.2.2 by notice to the Borrowers, declare that the Loan, together with accrued interest, and all other amounts accrued or outstanding under the Finance Documents are immediately due and payable, at which time they shall become immediately due and payable;

22.2.3 by notice to the Borrowers, declare that the Loan is payable on demand, at which time it shall immediately become payable on demand by the Lender; and/or

22.2.4 exercise any or all of its rights, remedies, powers or discretions under the Finance Documents.

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Section 9 Changes to Parties

23 Changes to the Lender

23.1 Assignments and transfers by the Lender Subject to this Clause 23, the Lender may:

23.1.1 assign any of its rights; or

23.1.2 transfer by novation any of its rights and obligations, under any Finance Document to another bank or financial institution or to a trust, fund or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets (the “New Lender”).

23.2 Conditions of assignment or transfer

23.2.1 The Lender shall not be required to consult with the Borrowers or obtain the Borrowers’ prior consent in connection with an assignment or transfer pursuant to Clause 23.1 (Assignments and transfers by the Lender).

23.2.2 If:

(a) the Lender assigns or transfers any of its rights or obligations under the Finance Documents or changes its Facility Office; and

(b) as a result of circumstances existing at the date the assignment, transfer or change occurs, the Borrowers would be obliged to make a payment to the New Lender or the Lender acting through its new Facility Office under Clause 12 (Tax Gross Up and Indemnities) or Clause 13 (Increased Costs), then the New Lender or the Lender acting through its new Facility Office is only entitled to receive payment under those Clauses to the same extent as the Lender or the Lender acting through its previous Facility Office would have been if the assignment, transfer or change had not occurred.

23.3 Limitation of responsibility of Lender

23.3.1 Unless expressly agreed to the contrary, the Lender makes no representation or warranty and assumes no responsibility to a New Lender for:

(a) the legality, validity, effectiveness, adequacy or enforceability of the Relevant Documents or any other documents;

(b) the financial condition of any Obligor;

(c) the performance and observance by any Obligor of its obligations under the Relevant Documents or any other documents; or

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(d) the accuracy of any statements (whether written or oral) made in or in connection with any of the Relevant Documents or any other document,

and any representations or warranties implied by law are excluded.

23.3.2 Each New Lender confirms to the Lender that it:

(a) has made (and shall continue to make) its own independent investigation and assessment of the financial condition and affairs of each Obligor and its related entities in connection with its participation in this Agreement and has not relied exclusively on any information provided to it by the Lender in connection with any of the Relevant Documents; and

(b) will continue to make its own independent appraisal of the creditworthiness of each Obligor and its related entities whilst any amount is or may be outstanding under the Finance Documents or any part of the Loan is undrawn and available.

23.3.3 Nothing in any Finance Document obliges the Lender to:

(a) accept a re-transfer or re-assignment from a New Lender of any of the rights and obligations assigned or transferred under this Clause 23; or

(b) support any losses directly or indirectly Incurred by the New Lender by reason of the non-performance by any Obligor of its obligations under the Relevant Documents or otherwise.

23.4 Securitisation The Lender may disclose the size and term of the Loan and the name of each of the Obligors to any investor or potential investor in a securitisation (or similar transaction of broadly equivalent economic effect) of the Lender’s rights or obligations under the Finance Documents.

24 Changes to the Obligors

24.1 No assignment or transfer by ObligorsNo Obligor may assign any of its rights or transfer any of its rights or obligations under the Finance Documents.

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Section 10 The Lender’s Business

25 Conduct of Business by the Lender

No provision of this Agreement will:

25.1 interfere with the right of the Lender to arrange its affairs (tax or otherwise) in whatever manner it thinks fit;

25.2 oblige the Lender to investigate or claim any credit, relief, remission or repayment available to it or the extent, order and manner of any claim; or

25.3 oblige the Lender to disclose any information relating to its affairs (tax or otherwise) or any computations in respect of Tax.

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Section 11 Administration

26 Payment Mechanics

26.1 Payments to the Lender On each date on which an Obligor is required to make a payment under a Finance Document, that Obligor shall make the same available to the Lender for value on the due date at the time and, in such funds, as required by the Finance Documents or, if not specified therein, as specified by the Lender as being customary at the time for settlement of transactions in the relevant currency in the place of payment.

Payment shall be made to such account in the principal financial centre of the country of that currency with such bank as the Lender specifies.

26.2 Partial payments

26.2.1 If the Lender receives a payment that is insufficient to discharge all the amounts then due and payable by an Obligor under the Finance Documents, the Lender shall apply that payment towards the obligations of that Obligor under the Finance Documents, in the following order:

(a) first, in or towards payment pro rata of any unpaid fees, costs and expenses of the Lender under the Finance Documents;

(b) second, in or towards payment of any accrued interest, fee or commission due but unpaid under this Agreement;

(c) third, in or towards payment of any principal due but unpaid under this Agreement;

(d) fourth, in or towards payment pro rata of any other sum due but unpaid under the Finance Documents.

26.2.2 The Lender may vary the order set out in Clauses 26.2.1(b) to 26.2.1(d).

26.2.3 Clauses 26.2.1 and 26.2.2 will override any appropriation made by an Obligor.

26.3 No set-off by Obligors All payments to be made by an Obligor under the Finance Documents shall be calculated and be made without (and free and clear of any deduction for) set-off, counterclaim, taxes, stamp duties, levies of any governmental or other authority.

26.4 Business Days Any payment which is due to be made on a day that is not a Business Day shall be made on the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not).

During any extension of the due date for payment of any principal or Unpaid Sum under this Agreement interest is payable on the principal or Unpaid Sum at the rate payable on the original due date.

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26.5 Currency of account

26.5.1 Subject to Clauses 26.5.2 to 26.5.5, dollars is the currency of account and payment for any sum due from an Obligor under any Finance Document.

26.5.2 A repayment or payment of all or part of the Loan or an Unpaid Sum shall be made in the currency in which the Loan or Unpaid Sum is denominated on its due date.

26.5.3 Each payment of interest shall be made in the currency in which the sum in respect of which the interest is payable was denominated when that interest accrued.

26.5.4 Each payment in respect of costs, expenses or Taxes shall be made in the currency in which the costs, expenses or Taxes are incurred.

26.5.5 Any amount expressed to be payable in a currency other than dollars shall be paid in that other currency.

26.6 Control account The Lender shall open and maintain on its books a control account in the name of the Borrowers showing the advance of the Loan and the computation and payment of interest and all other sums due under this Agreement. The Borrowers’ obligations to repay the Loan and to pay interest and all other sums due under this Agreement shall be evidenced by the entries from time to time made in the control account opened and maintained under this Clause 26.6 and those entries will, in the absence of manifest error, be conclusive and binding.

26.7 Disruption to payment systems etc. If either the Lender determines in its discretion that a Disruption Event has occurred or the Lender is notified by the Borrowers that a Disruption Event has occurred which negatively affects the ability of the Borrowers to repay the Loan and at the same has a Material Adverse Effect:

26.7.1 the Lender may, and shall if requested to do so by the Borrowers, consult with the Borrowers with a view to agreeing with the Borrowers such changes to the operation or administration of the Loan as the Lender may deem necessary in the circumstances;

26.7.2 the Lender shall not be obliged to consult with the Borrowers in relation to any changes mentioned in Clause 26.7.1 if, in its opinion, it is not practicable to do so in the circumstances and, in any event, shall have no obligation to agree to any such changes;

26.7.3 any such changes agreed upon by the Lender and the Borrowers shall (whether or not it is finally determined that a Disruption Event has occurred) be binding upon the Parties as an amendment to (or, as the case may be, waiver of) the terms of the Finance Documents; and

26.7.4 the Lender shall not be liable for any damages, costs or losses whatsoever (including, without limitation, for negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Lender) arising as a result of its taking, or failing to take, any actions pursuant to or in connection with this Clause 26.7.

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26.8 Replacement of Screen Rate

If a Screen Rate Replacement Event has occurred in relation to any Screen Rate for a currency which can be selected for a Loan, any amendment or waiver which relates to:

(a) providing for the use of a Replacement Benchmark in relation to that currency in place of (or in addition to) the affected Screen Rate; and

(b)

(i) aligning any provision of any Finance Document to the use of that Replacement Benchmark;

(ii) enabling that Replacement Benchmark to be used for the calculation of interest under this Agreement (including, without limitation, any consequential changes required to enable that Replacement Benchmark to be used for the purposes of this Agreement);

(iii) implementing market conventions applicable to that Replacement Benchmark;

(iv) providing for appropriate fallback (and market disruption) provisions for that Replacement Benchmark; or

(v) adjusting the pricing to reduce or eliminate, to the extent reasonably practicable, any transfer of economic value from one Party to another as a result of the application of that Replacement Benchmark (and if any adjustment or method for calculating any adjustment has been formally designated, nominated or recommended by the Relevant Nominating Body, the adjustment shall be determined on the basis of that designation, nomination or recommendation),

may be made with the consent of the Lender and the Borrowers. For the purpose of this Agreement:

“Relevant Nominating Body” means any applicable central bank, regulator or other supervisory authority or a group of them, or any working group or committee sponsored or chaired by, or constituted at the request of, any of them or the Financial Stability Board.

“Replacement Benchmark” means a benchmark rate which is:

(a) formally designated, nominated or recommended as the replacement for a Screen Rate by:

(i) the administrator of that Screen Rate (provided that the market or economic reality that such benchmark rate measures is the same as that measured by that Screen Rate); or

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(ii) any Relevant Nominating Body,

and if replacements have, at the relevant time, been formally designated, nominated or recommended under both paragraphs, the “Replacement Benchmark” will be the replacement under paragraph (ii) above;

(b) in the opinion of the Lender and the Borrowers, generally accepted in the international or any relevant domestic syndicated loan markets as the appropriate successor to a Screen Rate; or

(c) in the opinion of the Lender and the Borrowers, an appropriate successor to a Screen Rate.

“Screen Rate Replacement Event” means, in relation to a Screen Rate:

(a) the methodology, formula or other means of determining that Screen Rate has, in the opinion of the Lender and the Borrowers materially changed;

(b)

(i)

(A) the administrator of that Screen Rate or its supervisor publicly announces that such administrator is insolvent; or

(B) Information is published in any order, decree, notice, petition or filing, however described, of or filed with a court, tribunal, exchange, regulatory authority or similar administrative, regulatory or judicial body which reasonably confirms that the administrator of that Screen Rate is insolvent,

provided that, in each case, at that time, there is no successor administrator to continue to provide that Screen Rate;

(ii) the administrator of that Screen Rate publicly announces that it has ceased or will cease, to provide that Screen Rate permanently or indefinitely and, at that time, there is no successor administrator to continue to provide that Screen Rate;

(iii) the supervisor of the administrator of that Screen Rate publicly announces that such Screen Rate has been or will be permanently or indefinitely discontinued; or

(iv) the administrator of that Screen Rate or its supervisor announces that that Screen Rate may no longer be used; or

(c) the administrator of that Screen Rate determines that that Screen Rate should be calculated in accordance with its reduced

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submissions or other contingency or fallback policies or arrangements and either:

(i) the circumstance(s) or event(s) leading to such determination are not (in the opinion of the Lender and the Borrowers) temporary; or

(ii) that Screen Rate Is calculated in accordance with any such policy or arrangement for a period no less than 15 Business Days; or

(d) in the opinion of the Lender and the Borrowers, that Screen Rate is otherwise no longer appropriate for the purposes of calculating interest under this Agreement.

27 Set-Off

27.1 Finance Documents The Lender may set off any matured obligation due from an Obligor under the Finance Documents (to the extent beneficially owned by the Lender) against any matured obligation owed by the Lender to that Obligor, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Lender may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.

28 Notices

28.1 Communications in writing Any communication to be made under or in connection with the Finance Documents shall be made in writing and, unless otherwise stated, may be made by fax or letter.

28.2 Addresses The address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of each Party for any communication or document to be made or delivered under or in connection with the Finance Documents is:

28.2.1 in the case of each Borrower, that identified with its name below; and

28.2.2 in the case of the Lender, that identified with its name below,

or any substitute address, fax number, or department or officer as the Party may notify to the other by not less than five Business Days’ notice.

28.3 DeliveryAny communication or document made or delivered by one Party to another under or in connection with the Finance Documents will only be effective:

28.3.1 if by way of fax, when received in legible form; or

28.3.2 if by way of letter, when it has been left at the relevant address or five (5) Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address;

and, if a particular department or officer is specified as part of its address details provided under Clause 28.2 (Addresses), if addressed to that department or officer.

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Any communication or document to be made or delivered to the Lender will be effective only when actually received by the Lender and then only if it is expressly marked for the attention of the department or officer identified with the Lender’s signature below (or any substitute department or officer as the Lender shall specify for this purpose).

Any communication or document which becomes effective, in accordance with this Clause 28.3, after 5.00 p.m. in the place of receipt shall be deemed only to become effective on the following day.

28.4 Electronic communication

28.4.1 Any communication to be made between any two Parties under or in connection with the Finance Documents may be made by electronic mail or other electronic means to the extent that those two Parties agree that, unless and until notified to the contrary, this is to be an accepted form of communication and if those two Parties:

(a) notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and

(b) notify each other of any change to their address or any other such information supplied by them by not less than five Business Days’ notice.

28.4.2 Any electronic communication made between those two Parties will be effective only when actually received in readable form and in the case of any electronic communication made by a Party to the Lender only if it is addressed in such a manner as the Lender shall specify for this purpose.

28.4.3 Any electronic communication which becomes effective, in accordance with Clause 28.4.2, after 5.00 p.m. in the place of receipt shall be deemed only to become effective on the following day.

28.5 English language Any notice given under or in connection with any Finance Document must be in English. All other documents provided under or in connection with any Finance Document must be:

28.5.1 in English; or

28.5.2 if not in English, and if so required by the Lender, accompanied by a certified English translation and, in this case, the English translation will prevail unless the document is a constitutional, statutory or other official document.

29 Calculations and Certificates

29.1 Accounts In any litigation or arbitration proceedings arising out of or in connection with a Finance Document, the entries made in the accounts maintained by the Lender pursuant to Clause 26.6 (Control account) are, in the absence of manifest error, prima fade evidence of the matters to which they relate.

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29.2 Certificates and determinations Any certification or determination by the Lender of a rate or amount under any Finance Document is, in the absence of manifest error, conclusive evidence of the matters to which it relates.

29.3 Day count convention Any interest, commission or fee accruing under a Finance Document will accrue from day to day and is calculated on the basis of the actual number of days elapsed and a year of 360 days or, in any case where the practice in the Relevant Interbank Market differs, in accordance with that market practice.

30 Partial Invalidity

If, at any time, any provision of the Finance Documents is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.

31 Remedies and Waivers

No failure to exercise, nor any delay in exercising, on the part of the Lender or any Secured Party, any right or remedy under a Finance Document shall operate as a waiver of any such right or remedy or constitute an election to affirm any Finance Document. No election to affirm any Finance Document on the part of the Lender or any Secured Party shall be effective unless it is in writing. No single or partial exercise of any right or remedy shall prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in this Agreement are cumulative and not exclusive of any rights or remedies provided by law.

32 Confidentiality

32.1 Confidential Information The Lender agrees to keep all Confidential Information confidential and not to disclose it to anyone, save to the extent permitted by Clause 32.2 (Disclosure of Confidential Information) and Clause 32.3 (Disclosure to numbering service providers).

32.2 Disclosure of Confidential Information The Lender may disclose:

32.2.1 to any of its Affiliates and Related Funds and any of its or their officers, directors, employees, professional advisers, auditors, partners and Representatives such Confidential Information as the Lender shall consider appropriate if any person to whom the Confidential Information is to be given pursuant to this Clause 32.2.1 is informed in writing of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no such requirement to so inform if the recipient is subject to professional obligations to maintain the confidentiality of the information or is otherwise bound by requirements of confidentiality in relation to the Confidential Information;

32.2.2 to any person:

(a) to (or through) whom it assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under

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one or more Finance Documents and to any of that person’s Affiliates, Related Funds, Representatives and professional advisers;

(b) with (or through) whom it enters into (or may potentially enter into), whether directly or indirectly, any sub-participation in relation to, or any other transaction under which payments are to be made or may be made by reference to, one or more Finance Documents and/or one or more Obligors and to any of that person’s Affiliates, Related Funds, Representatives and professional advisers;

(c) appointed by the Lender or by a person to whom Clause 32.2.2(a) or 32.2.2(b) applies to receive communications, notices, information or documents delivered pursuant to the Finance Documents on its behalf;

(d) who invests in or otherwise finances (or may potentially invest in or otherwise finance), directly or indirectly, any transaction referred to in Clause 32.2.2(a) or 32.2.2(b);

(e) to whom information is required or requested to be disclosed by any court of competent jurisdiction or any governmental, banking, taxation or other regulatory authority or similar body, the rules of any relevant stock exchange or pursuant to any applicable law or regulation;

(f) to whom information is required to be disclosed in connection with, and for the purposes of, any litigation, arbitration, administrative or other investigations, proceedings or disputes;

(g) who is a Party; or

(h) with the consent of the Borrowers;

in each case, such Confidential Information as the Lender shall consider appropriate if:

(i) in relation to Clauses 32.2.2(a), 32.2.2(b) and 32.2.2(c), the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking except that there shall be no requirement for a Confidentiality Undertaking if the recipient is a professional adviser and is subject to professional obligations to maintain the confidentiality of the Confidential Information;

(ii) in relation to Clause 32.2.2(d), the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking or is otherwise bound by requirements of confidentiality in relation to the Confidential Information they receive and is informed that

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some or all of such Confidential Information may be price-sensitive information;

(iii) in relation to Clauses 32.2.2(e) and 32.2.2(f), the person to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no requirement to so inform if, in the opinion of the Lender, it is not practicable so to do in the circumstances;

32.2.3 to any person appointed by the Lender or by a person to whom Clause 32.2.2(a) or 32.2.2(b) applies to provide administration or settlement services in respect of one or more of the Finance Documents including without limitation, in relation to the trading of participations in respect of the Finance Documents, such Confidential Information as may be required to be disclosed to enable such service provider to provide any of the services referred to in this Clause 32.2.3 if the service provider to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking; and

32.2.4 to any rating agency (including its professional advisers) such Confidential Information as may be required to be disclosed to enable such rating agency to carry out its normal rating activities in relation to the Finance Documents and/or the Obligors and/or the Group if the rating agency to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Information may be price-sensitive information.

32.3 Disclosure to numbering service providers

32.3.1 The Lender may disclose to any national or international numbering service provider appointed by the Lender to provide identification numbering services in respect of this Agreement, the Loan and/or one or more Obligors the following information:

(a) names of Obligors;

(b) country of domicile of Obligors;

(c) place of incorporation of Obligors;

(d) date of this Agreement;

(e) Clause 34 (Governing law);

(f) date of each amendment and restatement of this Agreement;

(g) amount of the Loan;

(h) currencies of the Loan;

(i) type of Loan;

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(j) ranking of the Loan;

(k) Termination Date;

(I) changes to any of the Information previously supplied pursuant to (a) to (I); and

(m) such other information agreed between the Lender and that Obligor,

to enable such numbering service provider to provide its usual syndicated loan numbering identification services.

32.3.2 The Parties acknowledge and agree that each identification number assigned to this Agreement, the Loan and/or one or more Obligors by a numbering service provider and the information associated with each such number may be disclosed to users of its services in accordance with the standard terms and conditions of that numbering service provider.

32.3.3 Each Borrower represents that none of the information set out in Clauses 32.3.1(a) to 32,3.1(m) is, nor will at any time be, unpublished price-sensitive information.

32.4 Entire agreement This Clause 32 constitutes the entire agreement between the Parties in relation to the obligations of the Lender under the Finance Documents regarding Confidential Information and supersedes any previous agreement, whether express or implied, regarding Confidential Information.

32.5 Inside information The Lender acknowledges that some or all of the Confidential Information is or may be price-sensitive information and that the use of such information may be regulated or prohibited by applicable legislation including securities law relating to insider dealing and market abuse and the Lender undertakes not to use any Confidential Information for any unlawful purpose.

32.6 Notification of disclosure The Lender agrees (to the extent permitted by law and regulation) to inform the Borrowers:

32.6.1 of the circumstances of any disclosure of Confidential Information made pursuant to Clause 32.2.2(e) (Disclosure of Confidential Information) except where such disclosure is made to any of the persons referred to in that Clause during the ordinary course of its supervisory or regulatory function; and

32.6.2 upon becoming aware that Confidential Information has been disclosed in breach of this Clause 32.

32.7 Continuing obligations The obligations in this Clause 32 are continuing and, in particular, shall survive and remain binding on the Lender for a period of 12 months from the earlier of:

32.7.1 the date on which all amounts payable by the Obligors under or in connection with the Finance Documents have been paid in full and the Loan has been cancelled or otherwise ceases to be available; and Page 80

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32.7.2 the date on which the Lender otherwise ceases to be the Lender.

33 Counterparts

Each Finance Document may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of the Finance Document.

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Section 12 Governing Law and Enforcement

34 Governing Law

This Agreement and any non-contractual obligations arising out of or in connection with it are governed by English law.

35 Enforcement

35.1 Jurisdiction of English courts The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement (including a dispute relating to the existence, validity or termination of this Agreement or any non-contractual obligation arising out of or in connection with this Agreement) (a “Dispute”). Each Party agrees that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary.

This Clause 35.1 is for the benefit of the Lender only. As a result, the Lender shall not be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Lender may take concurrent proceedings in any number of jurisdictions.

35.2 Service of process

35.2.1 Without prejudice to any other mode of service allowed under any relevant law, each Borrower:

(a) irrevocably appoints Hill Dickinson Services (London) Ltd of Broadgate Tower, 20 Primrose Street, London EC2A 2E, United Kingdom as its agent for service of process in relation to any proceedings before the English courts in connection with any Finance Document; and

(b) agrees that failure by a process agent to notify that Borrower of the process will not invalidate the proceedings concerned.

35.2.2 If any person appointed as an agent for service of process is unable for any reason to act as agent for service of process or terminates its appointment as agent for service of process, the relevant Borrower must immediately (and in any event within five days of such event taking place) appoint another agent on terms acceptable to the Lender„ Failing this, the Lender may appoint another agent for this purpose.

This Agreement has been entered into on the date stated at the beginning of this Agreement.

Page 82

Page 82

Schedule 1.

Part I

Conditions Precedent

1 Obligors

(a) Constitutional documentsCopies of the constitutional documents of each Obligor together with such other evidence as the Lender may reasonably require that each Obligor is duly incorporated in its country of incorporation and remains in existence with power to enter into, and perform its obligations under, the Relevant Documents to which it is or is to become a party.

(b) Certificates of good standing A certificate of good standing in respect of each Obligor (if such a certificate can be obtained).

(c) Board resolutions A copy of a resolution of the board of directors of each Obligor:

(i) approving the terms of, and the transactions contemplated by, the Relevant Documents to which it is a party and resolving that it execute those Relevant Documents; and

(ii) authorising a specified person or persons to execute those Relevant Documents (and all documents and notices to be signed and/or dispatched under those documents) on its behalf.

(d) Specimen signatures or Copy passports A specimen of the signature or copy of the passport of each person authorised by the resolutions referred to in (c).

(e) Shareholder resolutions A copy of a resolution signed by all the holders of the issued shares in each Obligor (other than the Guarantor and the Manager), approving the terms of, and the transactions contemplated by, the Relevant Documents to which that Obligor (other than the Guarantor and the Manager) is a party.

(f) Extract of Shareholder resolutions A copy of the extract of a resolution signed by the Secretary of the Manager, approving the terms of, and the transactions contemplated by, the Relevant Documents to which the Manager is a party.

(g) Officer’s certificates An original certificate of a duly authorised officer of each Obligor:

(i) certifying that each copy document relating to it specified in this Part I of Schedule 1 is correct, complete and in full force and effect;

(ii) setting out the names of the directors, officers and shareholders of that Obligor (other than in respect of the shareholders of the

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Guarantor and the Manager) and the proportion of shares held by each shareholder; and

(iii) confirming that borrowing or guaranteeing or securing, as appropriate, the Loan would not cause any borrowing, guarantee, security or similar limit binding on that Obligor to be exceeded.

(h) Powers of attorney The original notarially attested and legalised power of attorney of each of the Obligors under which the Relevant Documents to which it is or is to become a party are to be executed or transactions undertaken by that Obligor.

2 Security and related documents

(a) Vessel documents Photocopies, certified as true, accurate and complete by a director or the secretary or the legal advisers of the Borrowers, of:

(i) the MOA in respect of the Vessel;

(ii) the bill of sale transferring title in the Vessel to the relevant Borrower free of all encumbrances, maritime liens or other debts;

(iii) the protocol of delivery and acceptance evidencing the unconditional physical delivery of the Vessel by the relevant Seller to the relevant Borrower pursuant to the MOA;

(ii) any charterparty or other contract of employment of the Vessel which will be in force on the Utilisation Date;

(ii) the Management Agreements in respect of the Vessel;

(iii) the Vessel’s current Safety Construction, Safety Equipment, Safety Radio, Oil Pollution Prevention and Load Line Certificates;

(iv) evidence of the Vessel’s current Certificate of Financial Responsibility issued pursuant to the United States Oil Pollution Act 1990;

(v) the Vessel’s current SMC;

(vi) the ISM Company’s current DOC;

(vii) the Vessel’s current ISSC;

(viii) the Vessel’s current IAPPC; and

(ix) the Vessel’s current Tonnage Certificate;

in each case together with all addenda, amendments or supplements.

(b) Evidence of relevant Seller’s titleCertificate of ownership and encumbrance (or equivalent) issued by the Registrar of Ships (or equivalent official) of the Vessel’s current flag confirming that the Vessel is owned by

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the relevant Seller and free of registered Encumbrances, other than in favour of the Lender.

(c) Evidence of Borrower’s title Evidence that on the Utilisation Date (i) the Vessel will be at least provisionally registered under the flag stated in Preliminary (A) in the ownership of the relevant Borrower and (ii) the Mortgage will be capable of being registered against the Vessel with first priority.

(d) Evidence of insurance Evidence that the Vessel is insured in the manner required by the Security Documents and that letters of undertaking will be issued in the manner required by the Security Documents, together with (if required by the Lender) the written approval of the Insurances by an insurance adviser appointed by the Lender.

(e) Confirmation of class A  Class Certificate and/or Certificate of Confirmation of Class for hull and machinery confirming that the Vessel is classed with the highest class applicable to vessels of her type with Lloyd’s Register or such other classification society as may be acceptable to the Lender free of any recommendations affecting class.

(f) Valuation Not more than 20 days prior to the relevant Utilisation Date, a valuation of the Vessel addressed to the Lender from an Approved Shipbroker certifying the Market Value for the Vessel, acceptable to the Lender.

(g) Security Documents The Security Documents, together with all other documents required by any of them, including, without limitation, all notices of assignment and/or charge and evidence that those notices will be duly acknowledged by the recipients.

(h) Clause 20.2 In respect of the relevant Utilisation Date, evidence that Clause 20.2 (Cash Collateral Amount) has been complied with to the absolute satisfaction of the Lender.

(i) Mandates Such duly signed forms of mandate, and/or other evidence of the opening of the Earnings Accounts, as the Lender may require.

(j) No disputes The written confirmation of the Borrowers that there is no dispute under any of the Relevant Documents as between the parties to any such document.

(k) Ultimate beneficial owner Evidence of the Borrowers’ ultimate beneficial owner(s) in a form and substance acceptable to the Lender prior to the date of this Agreement.

(l) Other Relevant Documents Copies of each of the Relevant Documents not otherwise comprised in the documents listed in this Part I of Schedule 1.

(m) Equity Contribution If applicable, evidence of full payment to the Seller of any part of the purchase price of the Vessel under the relevant MOA which is payable on or before the relevant Utilisation Date and which is not being financed by the Loan.

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3 Legal opinions

The following legal opinions, each addressed to the Lender, or confirmation satisfactory to the Lender that such opinions will be given:

(a) a legal opinion of Stephenson Harwood LLP, legal advisers to the Lender as to English law substantially in the form provided to the Lender prior to signing this Agreement;

(b) a legal opinion of the following legal advisers to the Lender:

(i) Herring Parry Khan Law Office (part of Ince Gordon Dadds International), as to Liberian law; and

(ii) Herring Parry Khan Law Office (part of Ince Gordon Dadds International), as to Marshal Islands law.

4 Other documents and evidence

(a) Utilisation Request A duly completed Utilisation Request.

(b) Process agent Evidence that any process agent referred to in Clause 35.2 (Service of process) and any process agent appointed under any other Finance Document has accepted its appointment.

(c) Other Authorisations A copy of any other Authorisation or other  document, opinion or assurance which the Lender considers to be necessary or desirable (if it has notified the Borrowers accordingly) in connection with the entry into and performance of the transactions contemplated by any Relevant Document or for the validity and enforceability of any Relevant Document.

(d) Financial statements A copy of the Original Financial Statements of the Guarantor.

(e) FeesEvidence that the fees, costs and expenses then due from the
Borrowers under Clause 11 (Fees) and Clause 16 (Costs and Expenses) have been paid or will be paid by the relevant Utilisation Date.

(f) “Know your customer” documents Such documentation and other  evidence as is reasonably requested by the Lender prior to the execution of this Agreement in order for the Lender to comply with all necessary “know your customer” or similar identification procedures in relation to the transactions contemplated in the Finance Documents including (without limitation) all documents required under any regulation or laws in force in the United Kingdom and the Regulation 281/2009 of the Central Bank of Greece, such documents to be to the absolute satisfaction of the Lender. The Borrowers shall provide the Lender with evidence that the Borrowers, the Guarantor and all their respective corporate shareholders (if any) have issued registered shares.

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Part II

Conditions Subsequent

1 Evidence of Borrower’s titleCertificate of ownership and encumbrance (or equivalent) issued by the Registrar of Ships (or equivalent official) of the flag stated in Preliminary (A) confirming that (a) the Vessel is permanently registered under that flag in the ownership of the relevant Borrower, (b) the Mortgage has been registered with first priority against the Vessel and (c) there are no further Encumbrances registered against the Vessel.

2 Letters of undertaking Letters of undertaking in respect of the Insurances as required by the Security Documents together with copies of the relevant policies or cover notes or entry certificates duly endorsed with the interest of the Lender.

3 Acknowledgements of notices Acknowledgements of all notices of assignment and/or charge given pursuant to the Security Documents.

4 Legal opinions Such of the legal opinions specified in Part I of this Schedule 1 as have riot already been provided to the Lender.

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Schedule 2

Utilisation Request

From: Kea Shipowners Ltd
Spetses Shipowners Ltd
Hydra Shipowners Ltd

To: HSBC BANK plc

Dated: ________________   2019

Dear Sirs

Kea Shipowners Ltd, Spetses Shipowners Ltd and Hydra Shipowners Ltd, as joint and several borrowers— US$12,500,000 Loan Agreement dated _______________2019 (the “Agreement”)

1 We refer to the Agreement. This is the Utilisation Request. Terms defined in the Agreement have the same meaning in this Utilisation Request unless given a different meaning in this Utilisation Request.

2 We wish to borrow the Loan on the following terms:

Proposed Utilisation Date: [          ] (or, if that is not a Business Day, the next Business Day)

Currency of Loan:dollars

Amount: [          ]

Interest Period: [             ]

3 We confirm that each condition specified in Clause 4.2 (Further conditions precedent) is satisfied on the date of this Utilisation Request.

4 The proceeds of the Loan should be paid towards [

5 This Utilisation Request is irrevocable.

Yours faithfully

_____________________

authorised signatory for

Kea Shipowners Ltd
Spetses Shipowners Ltd
Hydra Shipowners Ltd

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Schedule 3

Form of Compliance Certificate

To: HS BC BANK plc

From: Kea Shipowners Ltd
Spetses Shipowners Ltd
Hydra Shipowners Ltd
Euroseas Ltd.

Dated:

Dear Sirs

Kea Shipowners Ltd, Spetses Shipowners Ltd and Hydra Shipowners Ltd, as joint and several borrowers -  US$12,500,000 Loan Agreement dated  _________ 2019

1 Werefer to the Agreement. This is El Compliance Certificate. TerrnS defined M the Agreement have the same meaning when used in this Compilionce Certificate unlless given a different meaning in this Compliance Certificate%

2 We confirm that Euroseas Ltd. maintains:

(a) Maximmum Leverage of not higher ^,tilan 75%;

(b) Liquidity of an amount: of not less than:

(a) $200,00o in respect of each Fleet Vessel from the date of theis Agreement up to and including 29 September 2020; and

(b) $300,000 from 30 September 2020 and throughout the remainder of the Facility Period; and

(c) Net Worth of not less than $15,000,000.

3 We confirm that no Default is continuing.

Signed
	Director	Director
	of Kea Shipowners Ltd	of Kea Shipowners Ltd

Page 89

Director	Director
of Spetses Shipowners Ltd	of Spetses Shipowners Ltd

Director	Director
of Hydra Shipowners Ltd	of Hydra Shipowners Ltd

Director	Director
of Euroseas Ltd.	of Euroseas Ltd.

[insert applicable certification language]

_______________

[for and on behalf of

[name of auditors of Euroseas Ltd.

Page 90

Signatures

The Borrowers

Kea Shipowners Ltd	)
By: STEFANIA KARMIRI	)
Address: c/o o Eurobulk Ltd.	)
4 Messogiou & Evropis	)	/s/ STEFANIA KARMIRI
Maroussi, Athens, Greece	)
Fax no.: +30 211 180 4097	)
Department/Officer: Legal department	)

Spetses Shipowners Ltd	)
By: STEFANIA KARMIRI	)
Address: c/o o Eurobulk Ltd.	)
4 Messogiou & Evropis	)	s/ STEFANIA KARMIRI
Maroussi, Athens, Greece	)
Fax no.: +30 211 180 4097	)
Department/Officer: Legal department	)

Hydra Shipowners Ltd	)
By: STEFANIA KARMIRI
Address: c/o o Eurobulk Ltd.	)	s/ STEFANIA KARMIRI
4 Messogiou & Evropis	)
Maroussi, Athens, Greece	)
Fax no.: +30 211 180 4097	)
Department/Officer: Legal department	)

Page 91

The Lender

HSBC BANK plc	)
By:	)
Address: 8 Canada Square,	)
London E14 5HQ,	)
England	)
Fax no.: +44 (0)20 7991 4619	)
Department/Officer: Alastair Muir/	)
Head of European Corporate Banking Centre

Page 92

EX-4.20

Exhibit 4.20

Private and Confidential

DATED 8November 2019

ANTWERP SHIPPING LTD
IJUSAN SHIPPING LTD
KEELUNG SHIPPING LTD
and
OAKLAND SHIPPING LTD (1)

- and -

PIRAEUS BANK S.A. (2)

FACILITY AGREEMENT
in respect of a loan of
up to USD32,000,000

Ince

PIRAEUS

Index

Clause Page

1	Purpose, definitions and construction	1
2	The Commitment and cancellation	18
3	Interest and Interest Periods	20
4	Repayment and prepayment	24
5	Fees and expenses	27
6	Payments and taxes; accounts and calculations	28
7	Representations and warranties	30
8	Undertakings	35
9	Conditions	47
10	Events of Default	48
11	Indemnities	52
12	Unlawfulness, increased costs and bail-in	53
13	Application of moneys, set off, pro-rata payments and miscellaneous	55
14	Accounts	57
15	Assignment, transfer and lending office	58
16	Notices and other matters	59
17	Governing law	61
18	Jurisdiction	61
19	Borrowers' obligations	63
Schedule 1 Form of Drawdown Notice		66
Schedule 2 Conditions precedent		68
Schedule 3 Form of Compliance Certificate		73
Execution Page		75

THIS AGREEMENT dated 8 November 2019 is made BY and BETWEEN:

(1) ANTWERP SHIPPING LTD, BUSAN SHIPPING LTD, KEELUNG SHIPPING LTD and OAKLAND SHIPPING LTD as joint and several Borrowers; and

(2) PIRAEUS BANK S.A. as Lender.
NOW IT IS HEREBY AGREED AS FOLLOWS:

1 PURPOSE, DEFINITIONS AND CONSTRUCTION

1.1 Purpose

This Agreement sets out the terms and conditions upon which the Lender agrees to make available to the Borrowers a loan facility of up to USD32,000,000 in four advances for the purposes of enabling the Borrowers to partially finance the purchase of the Vessels.

1.2 Definitions

In this Agreement, unless the context otherwise requires:

"Advance"means each of Advance A, Advance B, Advance C and Advance D and in the plural means all of them;

"Advance A"means the amount equal to the least of (i) eight million Dollars (USD8,000,000), (ii) 80% of the Purchase Price of Vessel A and (iii) 65.05% of the Valuation Amount of Vessel A (to be determined no more than 15 days prior to the Drawdown Date in respect of Advance A) or, as the context requires, the amount thereof outstanding from time to time;

"Advance B"means the amount equal to the least of (i) eight million Dollars (USD8,000,000), (ii) 80% of the Purchase Price of Vessel B and (iii) 65.05% of the Valuation Amount of Vessel B (to be determined no more than 15 days prior to the Drawdown Date in respect of Advance B) or, as the context requires, the amount thereof outstanding from time to time;

"Advance C"means the amount equal to the least of (i) eight million Dollars (USD8,000,000), (ii) 80% of the Purchase Price of Vessel C and (iii) 65.05% of the Valuation Amount of Vessel C (to be determined no more than 15 days prior to the Drawdown Date in respect of Advance C) or, as the context requires, the amount thereof outstanding from time to time;

"Advance D"means the amount equal to the least of (i) eight million Dollars (USD8,000,000), (ii) 80% of the Purchase Price of Vessel C and (iii) 65.05% of the Valuation Amount of Vessel D (to be determined no more than 15 days prior to the Drawdown Date in respect of Advance D) or, as the context requires, the amount thereof outstanding from time to time;

"Approved Broker"means such second-hand ship sale and purchase broker as the Lender may agree is an Approved Broker for the purposes of this Agreement;

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"Approved Charter"means Approved Charter B, Approved Charter C, Approved Charter D and, in respect of a Vessel, any other time charterparty entered into between (or novated to) the Owner thereof and a charterer acceptable to the Lender, for a duration (computed from the Drawdown Date in respect of the Advance relating to that Vessel) of not less than nine (9) months (including any extension of a charter already in existence at that Drawdown Date) and at a daily hire rate which, when combined with the net daily hire rates under any other Approved Charter under which the other Mortgage Vessels are employed on each Drawdown Date, gives an average for each Vessel of not less than USD10,700, in form and substance satisfactory to the Lender or such other charterparty acceptable to the Lender;

"Approved Charter B"means, the charter dated 9 November 2018 (as amended and/or supplemented and/or novated from time to time) made between Antwerp as owner and Maersk Line A/S as charterer in respect of Vessel B;

"Approved Charter C"means, the charter dated 5 February 2019 (as amended and/or supplemented and/or novated from time to time) made between Oakland as owner and Maersk Line A/S as charterer in respect of Vessel C;

"Approved Charter D"means, the charter dated 29 May 2019 (as amended and/or supplemented and/or novated from time to time) made between Keelung as owner and Maersk Line A/S as charterer in respect of Vessel D;

"Bail-In Action"means the exercise of any Write-down and Conversion Powers;

"Bail-In Legislation"means, in relation to an EEA Member Country which has implemented, or which at any time implements, Article 55 of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms, the relevant implementing law or regulation as described in the EU Bail-In Legislation Schedule from time to time;

"Balloon Instalment"has the meaning given to it in clause 4.1.1, as the same may reduce from time to time;

"Banking Day"means a day on which dealings in deposits in USD are carried on in the London Interbank Eurocurrency Market and (other than Saturday or Sunday) on which banks are open for business in London, Piraeus and New York City (or any other relevant place of payment under clause 6);

"Borrowed Money"means Indebtedness in respect of (i) money borrowed or raised and debit balances at banks, (ii) any bond, note, loan stock, debenture or similar debt instrument, (iii) acceptance or documentary credit facilities, (iv) receivables sold or discounted (otherwise than on a non-recourse basis), (v) deferred payments for assets or services acquired, (vi) finance leases and hire purchase contracts, (vii) swaps, forward exchange contracts, futures and other derivatives, (viii) any other transaction (including without limitation forward sale or purchase agreements) having the commercial effect of a borrowing or raising of money or of any of (ii) to (vii) above and (ix) guarantees in respect of Indebtedness of any person falling within any of (i) to (viii) above;

"Borrowers"means each of Antwerp Shipping Ltd ("Antwerp"), Busan Shipping Ltd ("Busan"), Keelung Shipping Ltd ("Keelung") and Oakland Shipping Ltd ("Oakland"), each a company incorporated in the Marshall Islands and having its registered office at

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Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro MH96960, Marshall Islands, and in the plural means all of them;

"Break Costs"means the aggregate amount of all losses, premiums, penalties, costs and expenses whatsoever certified by the Lender at any time and from time to time as having been incurred by the Lender in maintaining or funding the Loan or in liquidating or re-employing fixed deposits acquired to maintain the same as a result of either:

(a) any repayment or prepayment of the Loan or any part thereof otherwise than (i) in accordance with clause 4.1, or (ii) on an Interest Payment Date whether on a voluntary or involuntary basis or otherwise howsoever; or

(b) the Borrowers failing or being incapable of drawing the Loan after the Drawdown Notice has been given;

"Cash Collateral"has the meaning given to it in clause 8.1.23;

"Casualty Amount"means five hundred thousand Dollars (USD500,000) (or the equivalent in any other currency);

"Certified Copy"means in relation to any document delivered or issued by or on behalf of any company, a copy of such document certified as a true, complete and up to date copy of the original by any of the directors or officers for the time being of such company or by such company's attorneys or solicitors;

"Charter Assignment"means a specific assignment of Approved Charter B, Approved Charter C, Approved Charter D and any Extended Employment Contract required to be executed hereunder by any Owner in favour of the Lender (including any notices and/or acknowledgements and/or undertakings associated therewith) in such form as the Lender may require in its sole discretion;

"Classification"means, in relation to each Mortgaged Vessel, the highest class available for a vessel of her type with the relevant Classification Society;

"Classification Society"means, in relation to each Mortgaged Vessel, any classification society which is a member of the International Association of Classification Societies which the Lender shall, at the request of the Borrowers, have agreed in writing shall be treated as the classification society in relation to such Mortgaged Vessel for the purposes of the relevant Ship Security Documents;

"Code"means the US Internal Revenue Code of 1986, as amended, and the regulations promulgated and rulings issued thereunder;

"Commitment"means thirty two million Dollars (USD32,000,000) which the Lender is obliged to lend to the Borrowers under this Agreement, as such amount may be reduced and/or cancelled under this Agreement;

"Compliance Certificate"means a certificate substantially in the form set out in schedule 3 signed by the chief financial officer of the Corporate Guarantor;

"Compulsory Acquisition"means, in respect of a Mortgaged Vessel, requisition for title or other compulsory acquisition including, if that Mortgaged Vessel is not released

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therefrom within the Relevant Period, capture, appropriation, forfeiture, seizure, detention, deprivation or confiscation howsoever for any reason (but excluding requisition for use or hire) by or on behalf of any Government Entity or other competent authority or by pirates, hijackers, terrorists or similar persons; "Relevant Period"means for the purposes of this definition of Compulsory Acquisition either (i) one (1) calendar month or, (ii) in respect of pirates, hijackers, terrorists or similar persons, if relevant underwriters confirm in writing (in terms satisfactory to the Lender) prior to the end of such one (1) month period that such capture, appropriation, forfeiture, seizure, detention, deprivation or confiscation will be fully covered by the Owner's relevant insurances, the shorter of twelve (12) months after the date upon which the relevant incident occurred and such period at the end of which the relevant cover expires;

"Corporate Guarantee"means the unconditional, irrevocable and on demand guarantee of the obligations of the Borrowers under this Agreement required to be executed by the Corporate Guarantor in favour of the Lender in such form as the Lender may require;

"Corporate Guarantor"means Euroseas Ltd., a corporation listed on NASDAQ and incorporated in the Marshall Islands with its registered office at Trust Company

Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960;

"Default"means any Event of Default or any event or circumstance which with the giving of notice or lapse of time or the satisfaction of any other condition (or any combination thereof) would constitute an Event of Default;

"Dollars"and "USD"mean the lawful currency of the USA and in respect of all payments to be made under any of the Security Documents means funds which are for same day settlement in the New York Clearing House Interbank Payments System (or such other US dollar funds as may at the relevant time be customary for the settlement of international banking transactions denominated in US dollars);

"Drawdown Date"means, in relation to each Advance, any date being a Banking Day falling during the Drawdown Period, on which the relevant Advance is, or is to be, made available;

"Drawdown Notice"means, in relation to each Advance, a notice substantially in the form of schedule 1;

"Drawdown Period"means the period commencing on the Execution Date and ending on the earliest of (i) 15 January 2020, (ii) such later date as the Lender may agree in its sole discretion and (iii) any date on which the Commitment is finally cancelled or fully drawn under the terms of this Agreement;

"Earnings"means, in respect of a Vessel, all moneys whatsoever from time to time due or payable to its Owner during the Facility Period arising out of the use or operation of that Vessel including (hut without limiting the generality of the foregoing) all freight, hire and passage moneys, income arising under pooling arrangements, compensation payable to that Owner in event of requisition of that Vessel for hire, remuneration for salvage and towage services, demurrage and detention moneys, and damages for breach (or payments for variation or termination) of any charterparty or other contract

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(including any contract of affreightment) for the employment of that Vessel (including any proceeds under any loss of hire insurance, if applicable);

"Earnings Account"means, in respect of each Borrower, an interest bearing USD current account opened or (as the context may require) to be opened by such Borrower with the Lender and includes any sub-accounts thereof and any other account designated in writing by the Lender to be an Earnings Account for the purposes of this Agreement, and in the plural means all of them;

"Earnings Account Pledge"means, in respect of each Earnings Account, a first priority pledge required to be executed hereunder between the Borrower which is the owner thereof and the Lender in respect of such Borrower's Earnings Account in such form as the Lender may require, and in the plural means all of them;

"EIAPP Certificate"means the Engine International Air Pollution Prevention Certificate issued or to be issued pursuant to Annex VI of the International Convention for the Prevention of Pollution from Ships, MARPOL 73/78 (Regulations for the Prevention of Air Pollution from Ships) in relation to a Vessel;

"Encumbrance"means any mortgage, charge, pledge, lien, hypothecation, assignment, title retention having a similar effect, preferential right, option, trust arrangement or security interest or other encumbrance, security or arrangement conferring howsoever a priority of payment in respect of any obligation of any person (excluding preferential payment rights granted by preferred shares);

"Environmental Affiliate"means any agent or employee of any Borrower, the Manager or any other Group Member or any other person having a contractual relationship with any Borrower, the Manager or any other Group Member in connection with any Mortgaged Vessel or its operation or the carriage of cargo and/or passengers thereon and/or the provision of goods and/or services on or from any Mortgaged Vessel;

"Environmental Approvals"means all authorisations, consents, licences, permits,

exemptions or other approvals required under applicable Environmental Laws;

"Environmental Claim"means (i) any claim by, or directive from, any applicable Government Entity alleging breach of, or non-compliance with, any Environmental Laws or Environmental Approvals or otherwise howsoever relating to or arising out of an Environmental Incident or (ii) any claim by any other third party howsoever relating to or arising out of an Environmental Incident (and, in each such case, "claim" shall include a claim for damages and/or direction for and/or enforcement relating to clean-up costs, removal, compliance, remedial action or otherwise) or (iii) any Proceedings arising from any of the foregoing;

"Environmental Incident"means, regardless of cause, (i) any discharge or release of Environmentally Sensitive Material from any Relevant Ship; (ii) any incident in which Environmentally Sensitive Material is discharged or released from a vessel other than a Relevant Ship which involves collision between a Relevant Ship and such other vessel or some other incident of navigation or operation, in either case, where the Relevant Ship, the Manager and/or the relevant Owner and/or the relevant Group Member and/or the relevant Operator are actually, contingently or allegedly at fault or otherwise howsoever liable (in whole or in part) or (iii) any incident in which Environmentally

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Sensitive Material is discharged or released from a vessel other than a Relevant Ship and where such Relevant Ship is actually or potentially liable to be arrested as a result and/or where the Manager and/or the relevant Owner and/or other Group Member and/or the relevant Operator are actually, contingently or allegedly at fault or otherwise howsoever liable;

"Environmental Laws"means all laws, regulations, conventions and agreements whatsoever relating to pollution, human or wildlife well-being or protection of the environment (including, without limitation, the United States Oil Pollution Act of 1990 and any comparable laws of the individual States of the USA);

"Environmentally Sensitive Material"means oil, oil products or any other products or substance which are polluting, toxic or hazardous or any substance the release of which into the environment is howsoever regulated, prohibited or penalised by or pursuant to any Environmental Law;

"EU Bail-In Legislation Schedule"means the document described as such and published by the Loan Market Association (or any successor person) from time to time;

"Event of Default"means any of the events or circumstances listed in clause 10.1;

"Execution Date"means the date on which this Agreement has been executed by all the parties hereto;

"Extended Employment Contract"means, in respect of a Mortgaged Vessel and at any relevant time, any bareboat charterparty (irrespective of the duration of such charterparty) or any time charterparty or other contract of employment of such ship (including the entry of a Vessel in any pool) which has a remaining tenor exceeding nine (9) months (including any options to renew or extend such tenor) at such time;

"Facility Period"means the period starting on the date of this Agreement and ending on such date as all obligations whatsoever of all of the Security Parties under or pursuant to the Security Documents whensoever arising, actual or contingent, have been irrevocably paid, performed and/or complied with;

"FATCA"means:

(i) sections 1471 to 1474 of the US Internal Revenue Code of 1986 (the "Code") or any associated regulations or other official guidance;

(ii) any treaty, law, regulation or other official guidance enacted in any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of paragraph (a) above; or

(iii) any agreement pursuant to the implementation of paragraphs (a) or (b) above with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction;

"FATCA Application Date" means:

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(i) in relation to a "withholdable payment" described in section 1473(1)(A)(i) of the Code (which relates to payments of interest and certain other payments from sources within the US), 1 July 2014; or

(ii) in relation to a "passthru payment" described in section 1471(d)(7) of the Code not falling within paragraph (a) above, the first date from which such payment may become subject to a deduction or withholding required by FATCA;

"FATCA Deduction"means a deduction or withholding from a payment under a Security Document required by FATCA;

"FATCA Exempt Party"means a party to a Security Document that is entitled to receive payments free from any FATCA Deduction;

"FATCA FFI"means a foreign financial institution as defined in section 1471(d)(4) of the Code which, if the Bank is not a FATCA Exempt Party, could be required to make a FATCA Deduction;

"Flag State"means in respect of each Vessel, the country, which is acceptable to the Lender, on whose flag such Vessel is or is to be registered in the ownership of her Owner;

"General Assignment"means, in respect of each Mortgaged Vessel, the deed of assignment of its earnings, insurances and requisition compensation executed or to be executed by the relevant Owner in favour of the Lender in such form as the Lender may require, and in the plural means all of them;

"Government Entity"means any national or local government body, tribunal, court or regulatory or other agency and any organisation of which such body, tribunal, court or agency is a part or to which it is subject;

"Group"means, at any relevant time, the Corporate Guarantor and its Subsidiaries (including the Borrowers);

"Group Member"means any member of the Group;

"IAPP Certificate"means the International Air Pollution Prevention Certificate issued or to be issued pursuant to Annex VI of the International Convention for the Prevention of Pollution from Ships, MARPOL 73/78 (Regulations for the Prevention of Air Pollution from Ships) in relation to the Vessel;

"Indebtedness"means any obligation howsoever arising (whether present or future, actual or contingent, secured or unsecured as principal, surety or otherwise) for the payment or repayment of money;

"Insurances"means, in respect of a Vessel, all policies and contracts of insurance (which expression includes all entries of that Vessel in a protection and indemnity or war risks association) which are from time to time during the Facility Period in place or taken out or entered into by or for the benefit of its Owner (whether in the sole name of that Owner, or in the joint names of that Owner and the Mortgagee or otherwise) in respect of that Vessel or otherwise howsoever in connection with that Vessel and all benefits thereof (including claims of whatsoever nature and return of premiums);

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"Interest Payment Date"means the last day of an Interest Period and, if an Interest Period is longer than three (3) months, the date falling at the end of each successive period of three (3) months from the start of such Interest Period;

"Interest Period"means each period for the calculation of interest in respect of the Loan ascertained in accordance with clauses 3.2 and 3.3;

"Interest Rate Determination Date"means, in relation to any period for which an interest rate is to be determined, the date falling two (2) Banking Days before the first day of that period unless market practice differs in the London interbank market, in which case the Interest Rate Determination Date will be determined by the Lender in accordance with market practice in the London interbank market (and if quotations would normally be given by leading banks in the London interbank market on more than one day, the Interest Rate Determination Date will be the last of those days);

"ISM Code"means in relation to its application to the Borrowers, the Vessels and their operation:

(a) 'The International Management Code for the Safe Operation of Ships and for Pollution Prevention', currently known or referred to as the 'ISM Code', adopted by the Assembly of the International Maritime Organisation by Resolution A.741(18) on 4 December 1993 and incorporated on 19 May 1994 into Chapter IX of the International Convention for Safety of Life at Sea 1974 (SOLAS 1974); and

(b) all further resolutions, circulars, codes, guidelines, regulations and recommendations which are now or in the future issued by or on behalf of the International Maritime Organisation or any other entity with responsibility for implementing the ISM Code, including, without limitation, the 'Guidelines on implementation or administering of the International Safety Management (ISM) Code by Administrations' produced by the International Maritime Organisation pursuant to Resolution A.788(19) adopted on 25 December 1995,

as the same may be amended, supplemented or replaced from time to time;

"ISM Code Documentation"means, in relation to a Mortgaged Vessel, the document of compliance (DOC) and safety management certificate (SMC) issued by a Classification Society pursuant to the ISM Code in relation to that Mortgaged Vessel within the periods specified by the ISM Code;

"ISM SMS" means the safety management system which is required to be developed, implemented and maintained under the ISM Code;

"ISPS Code"means the International Ship and Port Security Code of the International Maritime Organisation and includes any amendments or extensions thereto and any regulations issued pursuant thereto;

"ISSC" means an International Ship Security Certificate issued in respect of a Mortgaged Vessel pursuant to the ISPS Code;

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"Latest Accounts" means, in respect of any fiscal year of the Corporate Guarantor, the latest annual audited consolidated accounts of the Corporate Guarantor required to be prepared pursuant to clause 8.1.6;

"Lender"means Piraeus Bank S.A. having its registered office at 4 Amerikis Street, 105 64 Athens, Greece, acting through its branch at 170 Alexandras Ave., 115 21 Athens, Greece (fax no. +30 210 373 9783);

"LIBOR"means, in relation to the Loan or any part of the Loan:

(a) the applicable Screen Rate at or about 11.45 a.m. (London time) on the Quotation Day for Dollars and for a period equal in length to the Interest Period then applicable to the Loan or that part of the Loan; or

(b) in case of Screen Rate Replacement Event, the Replacement Benchmark on the Quotation Day for Dollars and for a period equal in length to the Interest Period,

and if, in either case, that rate is less than zero, LIBOR shall be deemed to be zero;

"Loan"means the aggregate principal amount in respect of the Loan Facility owing to the Lender under this Agreement at any relevant time;

"Loan Facility"means the loan facility provided by the Lender on the terms and subject to the conditions of this Agreement in an amount not exceeding the aggregate amounts of Advance A, Advance B, Advance C and Advance D;

"Management Agreement"means, in respect of each Mortgaged Vessel, the agreement between the relevant Owner and the Manager, in a form approved by the Lender, and in the plural means all of them;

"Manager"means Eurobulk Ltd., a corporation incorporated in Liberia with its registered office at 80 Broad Street, Monrovia, Liberia and having its place of business at 4 Messogiou & Evropis Street, 151 24 Maroussi, Greece, or any other commercial and/or technical manager appointed by the Borrower, with the prior written consent of the Lender, as the manager of the Vessel;

"Manager's Undertaking"means, in respect of each Mortgaged Vessel, the undertaking and assignment of insurances required to be executed hereunder by the Manager in favour of the Lender in such form as the Lender may require and in the plural means all of them;

"Margin"means 3.50% (three point five per cent) per annum;

"Material Adverse Effect"means a material adverse effect on (i) the Lender's rights under, or the security provided by, any Security Document, (ii) the ability of any Security Party to perform or comply with any of its obligations under any Security Document to which it is a party or (iii) the value or nature of the financial condition of any Security Party (other than the Manager);

"Maturity Date"means the date falling 48 months after the last Drawdown Date;

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"Mil & MAP Policy"means a mortgagee's interest and (if required by the Lender) pollution risks insurance policy (including, but not limited to, additional perils (pollution) cover) in respect of each Mortgaged Vessel to be effected by the Lender on or before the Drawdown Date to cover the Mortgaged Vessels as the same may be renewed or replaced annually thereafter and maintained throughout the Facility Period through such brokers, with such underwriters and containing such coverage as may be acceptable to the Lender in its sole discretion, insuring a sum of at least one hundred and ten per cent (110%) of the Loan in respect of mortgagee's interest insurance and one hundred and ten per cent (110%) of the Loan in respect of additional perils (pollution) cover;

"MOA"means each of the Vessel A MOA, the Vessel B MOA, the Vessel C MOA and the Vessel D MOA, and in the plural means all of them;

"month"means a period beginning in one calendar month and ending in the next calendar month on the day numerically corresponding to the day of the calendar month on which it started, provided that (a) if the period started on the last Banking Day in a calendar month or if there is no such numerically corresponding day, it shall end on the last Banking Day in such next calendar month and (b) if such numerically corresponding day is not a Banking Day, the period shall end on the next following Banking Day in the same calendar month but if there is no the Banking Day it shall end on the preceding Banking Day and "months" and "monthly"shall be construed accordingly;

"Mortgage"means:

(a) in relation to each of Vessel A and Vessel B, the first preferred Marshall Islands mortgage of such Vessel required to be executed hereunder by the Owner thereof; and

(b) in relation to each of Vessel C and Vessel D, the first priority Cypriot statutory mortgage and deed of covenant collateral thereto required to be executed hereunder by the Owner thereof,

each of which to be in such form as the Lender may require in its sole discretion, and in the plural means all of them;

"Mortgaged Vessel"means, at any relevant time, a Vessel which is al such lime subject to a Mortgage and/or the Earnings, Insurances and Requisition Compensation of which are subject to an Encumbrance pursuant to the relevant Ship Security Documents and a Vessel shall, for the purposes of this Agreement, be regarded as a Mortgaged Vessel as from the date on which the Mortgage of that Vessel has been executed and registered in accordance with this Agreement until whichever shall be the earlier of (i) the payment in full of the amount required to be paid to the Lender pursuant lo clause 4.3 or 4.4 following the Total Loss or sale respectively of such Vessel and (ii) the end of the Facility Period;

"NASDAQ"means the stock exchange run by the US National Association of Securities Dealers with the main exchange located in the United States of America, originally an acronym for the National Association of Securities Dealers Automatic Quotations;

"Net Worth"means by reference to the Latest Accounts, the Total Assets less Total Liabilities of the Group;

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"Operator"means any person who is from time to time during the Facility Period concerned in the operation of a Relevant Ship and falls within the definition of "Company" set out in rule 1.1.2 of the ISM Code;

"Owner"means, in respect of each Vessel, the Borrower which is the owner thereof;

"Permitted Encumbrance"means any Encumbrance in favour of the Lender created pursuant to the Security Documents; any Encumbrance created in favour of a plaintiff or defendant in any proceedings or arbitration as security for costs and expenses while the Borrowers or any of them are actively prosecuting or defending such proceedings or arbitration in good faith; Encumbrances arising by operation of law in respect of taxes which are not overdue for payment or in respect of taxes being contested in good faith by appropriate steps and in respect of which appropriate reserves have been made and Permitted Liens;

"Permitted Liens"means any lien on any Mortgaged Vessel for master's, officer's or crew's wages outstanding in the ordinary course of trading, any lien for salvage and any ship repairer's or outfitter's possessory lien for a sum not (except with the prior written consent of the Lender) exceeding the Casualty Amount any lien arising in the ordinary course of trading by statute or by operation of law in respect of obligations which are not overdue (and while such obligations are not overdue) or which are being contested in good faith by bona fide and appropriate proceedings (and for the payment of which adequate, freely-available reserves have been provided) unless such proceedings or the continued existence of such lien makes likely the sale, forfeiture or loss of, or of any interest in, any Mortgaged Vessel, and liens securing liabilities for Taxes against which adequate, freely-available reserves have been provided;

"Pertinent Jurisdiction"means any jurisdiction in which or where any Security Party is incorporated, resident, domiciled, has a permanent establishment or assets, carries on, or has a place of business or is otherwise howsoever effectively connected;

"Prepayment Security Value"means the amount in USD (as certified by the Lender) which is, at any relevant time, the aggregate of the Valuation Amounts of the then remaining Mortgaged Vessels subject to a Mortgage, as most recently determined in accordance with clause 8.2.2 hereof;

"Proceedings"means any litigation, arbitration, legal action or complaint or judicial, quasi-judicial or administrative proceedings whatsoever arising or instigated by anyone (private or governmental) in any court, tribunal, public office or other forum whatsoever and wheresoever (including, without limitation, any action for provisional or permanent attachment of any thing or for injunctive remedies or interim relief and any action instigated on an ex parte basis);

"Purchase Price"means, in respect of a Vessel, the "Purchase Price" as defined in the MOA relating thereto;

"Quotation Day"means, in respect of any period in respect of which LIBOR falls to be determined under this Agreement, the second Banking Day before the first day of such period;

"Registry"means, in relation to each Vessel, the office of the registrar, commissioner or representative of the Flag State, who is duly empowered to register such Vessel, the

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relevant Owner's title thereto and the relevant Mortgage under the laws and flag of the Flag State;

"Relevant Advance"means, in respect of Vessel A, Advance A, in respect of Vessel B, Advance B, in respect of Vessel C, Advance C and in respect of Vessel D, Advance D;

"Relevant Ship"means each of the Mortgaged Vessels and any other ship from time to time (whether before or after the date of this Agreement) owned by any Group Member;

"Relevant Nominating Body"means any applicable central bank, regulator or other supervisory authority or a group of them, or any working group or committee sponsored or chaired by, or constituted at the request of, any of them or the Financial Stability Board;

"Repayment Date"means the date on which any instalment of the Loan is repayable under the provisions of clause 4.1.1;

"Repayment Instalment"means in respect of each Advance, each of the repayment instalments (including the Balloon Instalment) falling due under and in accordance with clause 4.1.1, as the same may be reduced in accordance with this Agreement;

"Replacement Benchmark"means a benchmark rate which is:

(a) formally designated, nominated or recommended as the replacement for a Screen Rate by:

(i) the administrator of that Screen Rate (provided that the market or economic reality that such benchmark rate measures is the same as that measured by that Screen Rate); or

(ii) any Relevant Nominating Body,

and if replacements have, at the relevant time, been formally designated, nominated or recommended under both paragraphs, the "Replacement Benchmark" will be the replacement under paragraph (ii) above; or

(b) in the opinion of the Lender and the Borrower, generally accepted in the international loan markets as the appropriate successor to a Screen Rate; or

(c) in the opinion of the Lender and the Borrower, an appropriate successor to a Screen Rate;

"Required Authorisation"means any authorisation, consent, declaration, licence, permit, exemption, approval or other document, whether imposed by or arising in connection with any law, regulation, custom, contract, security or otherwise howsoever which must be obtained at any time from any person, Government Entity, central bank or other self-regulating or supra-national authority in order to enable the Borrowers lawfully to borrow the Loan and/or to enable any Security Party lawfully and continuously to continue its corporate existence and/or perform all its obligations whatsoever whensoever arising and/or grant security under the relevant Security Documents and/or to ensure the continuous validity and enforceability thereof;

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"Required Security Amount"means the amount in USD (as certified by the Lender) which is at any relevant time one hundred and twenty five per cent (125%) of the Loan;

"Requisition Compensation"means, in respect of a Vessel, all moneys or other compensation from time to time payable during the Facility Period by reason of Compulsory Acquisition of that Vessel;

"Resolution Authority"means any body which has authority to exercise any Write-down and Conversion Powers;

"Restricted Person"means a person that is:

(i) listed on, or directly or indirectly owned or controlled (as such terms are defined by the relevant Sanctions Authority) by a person listed on, any Sanctions List;

(ii) located in, incorporated under the laws of, or owned or controlled by, or acting on behalf of, a person located in or organised under the laws of, a country or territory that is the target of country or territory -wide Sanctions ("Sanctions Restricted Jurisdiction"); or

(iii) otherwise a target of Sanctions;

"Sanctions"means any economic, financial or trade sanctions laws, regulations, embargoes or restrictive measures administered, enacted or enforced by:

(i) the United States government;

(ii) the United Nations;

(iii) the European Union or any of its Member States;

(iv) the United Kingdom;

(v) any country to which any Security Party or any other member of the Group or any affiliate of any of them is bound; or

(vi) the respective governmental institutions and agencies of any of the foregoing, including without limitation, the Office of Foreign Assets Control of the US Department of Treasury ("OFAC"), the United States Department of State, and Her Majesty's Treasury ("HMT") (together "Sanctions Authorities"and each, "Sanctions Authority");

"Sanctions List"means the "Specially Designated Nationals and Blocked Persons" list issued by OFAC, the "Consolidated List of Financial Sanctions Targets in the UK" issued by HMT, or any similar list issued or maintained or made public by any of the Sanctions Authorities;

"Screen Rate"means the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for Dollars for the relevant period displayed (before any correction, recalculation or republication by the administrator) on page LIBOR01 or LIBOR02 of the Thomson Reuters screen (or any replacement Thomson Reuters page which displays that rate) or on the appropriate page of such other information service

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which publishes that rate from time to time in place of Thomson Reuters. If such page or service ceases to be available, the Lender may specify another page or service displaying the relevant rate after consultation with the Borrower;

"Screen Rate Replacement Event"means, in relation to a Screen Rate:

(a) the methodology, formula or other means of determining that Screen Rate has, in the opinion of the Lender and the Borrower, materially changed;

(A) the administrator of that Screen Rate or its supervisor publicly announces that such administrator is insolvent; or

(B) information is published in any order, decree, notice, petition or filing, however described, or filed with a court, tribunal, exchange, regulatory authority or similar administrative, regulatory or judicial body which reasonably confirms that the administrator of that Screen Rate is insolvent,

provided that, in each case, at that time, there is no successor administrator to continue to provide that Screen Rate;

(ii) the administrator of that Screen Rate publicly announces that it has ceased or will cease, to provide that Screen Rate permanently or indefinitely and, at that time, there is no successor administrator to continue to provide that Screen Rate;

(iii) the supervisor of the administrator of that Screen Rate publicly announces that such Screen Rate has been or will be permanently or indefinitely discontinued; or

(iv) the administrator of that Screen Rate or its supervisor announces that that Screen Rate may no longer be used; or

(v) in the opinion of the Lender and the Borrower, that Screen Rate is otherwise no longer appropriate for the purposes of calculating interest under this Agreement;

"Security Documents"means this Agreement, the Mortgages, the Corporate Guarantee, the General Assignments, any Charter Assignments, the Earnings Account Pledges, the Shares Pledges, the Manager's Undertakings, any Tripartite Deed and any other documents as may have been or shall from time to time after the date of this Agreement be executed to guarantee and/or to govern and/or secure all or any part of the Loan, interest thereon and other moneys from time to time owing by the Borrowers pursuant to this Agreement (whether or not any such document also secures moneys from time to time owing pursuant to any other document or agreement);

"Security Party"means the Borrowers, the Corporate Guarantor, the Shareholder, the Manager or any other person who may at any time be a party to any of the Security Documents (other than the Lender);

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"Security Value"means the amount in USD (as certified by the Lender) which is, at any relevant time, the aggregate of (a) the Valuation Amounts of the Mortgaged Vessels, as most recently determined in accordance with clause 8.2.2 hereof, (b) the aggregate Cash Collateral at any relevant time and (c) the net realizable market value of any additional security for the time being actually provided to the Lender pursuant to clause 8.2.1(b), it being agreed however that in case of additional security in the formof cash in Dollars, the same will be valued on a Dollar for Dollar basis;

"Seller"means Blue Lake LLC of the Marshall Islands

"Shareholder"means Eurocon Ltd., a corporation incorporated in the Marshall Islands with its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960;

"Shares Pledge"means the pledge of the shares of and in each Borrower to be executed by the Shareholder in favour of the Lender, to be in such form as the Lender may require in its sole discretion, and in the plural means all of them;

"Ship Security Documents"means, in relation to each Mortgaged Vessel, the relevant Mortgage, the relevant General Assignment, any relevant Charter Assignment, any relevant Tripartite Deed and the relevant Manager's Undertaking;

"Subsidiary"of a person means any company or entity directly or indirectly controlled by such person, and for this purpose "control" means either the ownership of more than fifty per cent (50%) of the voting share capital (or equivalent rights of ownership) of such company or entity or the power to direct its policies and management, whether by contract or otherwise;

"Taxes"includes all present and future income, corporation, capital or value-added taxes and all stamp and other taxes and levies, imposts, deductions, duties, charges and withholdings whatsoever together with interest thereon and penalties in respect thereto, if any, and charges, fees or other amounts made on or in respect thereof (and "Taxation" shall be construed accordingly);

"Total Assets" and "Total Liabilities"mean, respectively, the total assets and total liabilities of the Group as evidenced at any relevant time by the Latest Accounts, in which they shall have been calculated by reference to the meanings assigned to them in accordance with International Financial Reporting Standards or US GAAP provided that the value of any ship shall be the market value thereof calculated in accordance with clause 8.2.5(i) and not as set out in the Latest Accounts;

"Total Commitment"means, at any relevant time, the aggregate of the Commitments of the Lender at such time;

"Total Loss"means, in relation to a Mortgaged Vessel:

(i) the actual, constructive, compromised or arranged total loss of such Mortgaged Vessel; or

(ii) Compulsory Acquisition; or

(iii) any hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of such Mortgaged Vessel not falling within the definition of

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Compulsory Acquisition, unless such Mortgaged Vessel be released and restored to the relevant Owner within sixty (60) days after such incident;

"Tripartite Deed"means, if a Vessel is subject to a bareboat charter, a deed containing (inter alia) an assignment of the relevant charterer's interest in the insurances of that Vessel, required to be executed by Borrower who is the owner thereof and the relevant charterer in favour of the Lender in such form as the Lender may require in its sole discretion and the relevant charterer may agree;

"Underlying Documents"means, together, the MOAs, any Extended Employment Contracts and the Management Agreements;

"Unlawfulness"means any event or circumstance which is the subject of a notification by the Lender to the Borrowers under clause 12.1;

"USA"means the United States of America; "US Tax Obligor"means:

(a) a Borrower if it is resident for tax purposes in the USA; or

(b) a Security Party some or all of whose payments under the Security Documents are from sources within the USA for US federal income tax purposes;

"Valuation Amount"means, in respect of each Vessel, the value thereof most recently determined under clause 8.2.2;

"Vessel A" means the 2009-built container vessel of 4,253 TEU and 16,423 lwt named "SYNERGY BUSAN" registered in the name of Magic Peninsula Limited of Hong Kong under Hong Kong flag and which is to be acquired by the Sellers and immediately thereafter to be acquired by Busan pursuant to the Vessel A MOA and to be registered in the name of Busan under the Marshall Islands flag with the name "SYNERGY BUSAN";

"Vessel A MOA"means the memorandum of agreement dated 31 October 2019 (as amended by addendum no. 1 dated 1 November 2019) and made between Seller A as seller and Busan as buyer in respect of Vessel A for a purchase price of USD10,000,000, as further amended and/or supplemented from time to time;

"Vessel B"means the 2008-built container vessel of 4,253 TEU and 16,423 lwt named "SYNERGY ANTWERP" registered in the name of Able Challenger Limited of Hong Kong under Hong Kong flag and which is to be acquired by the Sellers and immediately thereafter to be acquired by Antwerp pursuant to the Vessel B MOA and to be registered in the name of Antwerp under the Marshall Islands flag with the name "SYNERGY ANTWERP";

"Vessel B MOA"means the memorandum of agreement dated 31 October 2019 (as amended by addendum no. 1 dated 1 November 2019) and made between Seller B as seller and Antwerp as buyer in respect of Vessel A for a purchase price of USD10,000,000, as further amended and/or supplemented from time to time;

"Vessel C" means the 2009-built container vessel of 4,253 TEU and 16,423 lwt named "SYNERGY OAKLAND" registered in the name of Metropolitan Vitality Limited of

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Hong Kong under Hong Kong flag and which is to be acquired by the Sellers and immediately thereafter to be acquired by Oakland pursuant to the Vessel C MOA and to be registered in the name of Oakland under the Cypriot flag with the name "SYNERGY OAKLAND";

"Vessel C MOA"means the memorandum of agreement dated 31 October 2019 (as amended by addendum no. 1 dated 1 November 2019) and made between Seller C as seller and Oakland as buyer in respect of Vessel A for a purchase price of USD10,000,000, as further amended and/or supplemented from time to time;

"Vessel D"means the 2009-built container vessel of 4,253 TEU and 16,423 lwt named "SYNERGY KEELUNG" registered in the name of Superior Integrity Limited of Hong Kong under Hong Kong flag and which is to be acquired by the Sellers and immediately thereafter to be acquired by Keelung pursuant to the Vessel D MOA and to be registered in the name of Keelung under the Cypriot flag with the name "SYNERGY KEELUNG";

"Vessel D MOA"means the memorandum of agreement dated 31 October 2019 (as amended by addendum no. 1 dated 1 November 2019) and made between Seller D as seller and Keelung as buyer in respect of Vessel A for a purchase price of USD10,000,000, as further amended and/or supplemented from time to time;

"Vessels"means, together, Vessel A, Vessel B, Vessel C and Vessel D; and

"Write-down and Conversion Powers"means, in relation to any Bail-In Legislation described in the EU Bail-In Legislation Schedule from time to time, the powers described as such in relation to that Bail-In Legislation in the EU Bail-In Legislation Schedule.

1.3 Construction

In this Agreement, unless the context otherwise requires:

1.3.1 clause headings and the index are inserted for convenience of reference only and shall be ignored in the construction of this Agreement;

1.3.2 references to clauses and schedules are to be construed as references to clauses of, and schedules to, this Agreement and references to this Agreement include its schedules and any supplemental agreements executed pursuant hereto;

1.3.3 references to (or to any specified provision of) this Agreement or any other document shall be construed as references to this Agreement, that provision or that document as in force for the time being and as duly amended and/or supplemented and/or novated;

1.3.4 references to a "regulation" include any present or future regulation, rule, directive, requirement, request or guideline (whether or not having the force of law) of any Government Entity, central bank or any self-regulatory or other supra-national authority;

1.3.5 references to any person in or party to this Agreement shall include reference to such person's lawful successors and assigns and references to the Lender shall also include a Transferee Lender;

1.3.6 words importing the plural shall include the singular and vice versa;

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1.3.7 references to a time of day are, unless otherwise stated, to Athens time;

1.3.8 references to a person shall be construed as references to an individual, firm, company, corporation or unincorporated body of persons or any Government Entity;

1.3.9 references to a "guarantee" include references to an indemnity or any other kind of assurance whatsoever (including, without limitation, any kind of negotiable instrument, bill or note) against financial loss or other liability including, without limitation, an obligation to purchase assets or services as a consequence of a default by any other person to pay any Indebtedness and "guaranteed" shall be construed accordingly;

1.3.10 references to any statute or other legislative provision are to be construed as references to any such statute or other legislative provision as the same may be re enacted or modified or substituted by any subsequent statute or legislative provision (whether before or after the date hereof) and shall include any regulations, orders, instruments or other subordinate legislation issued or made under such statute or legislative provision;

1.3.11 a certificate by the Lender as to any amount due or calculation made or any matter whatsoever determined in connection with this Agreement shall be conclusive and binding on the Borrowers except for manifest error;

1.3.12 if any document, term or other matter or thing is required to he approved, agreed or consented to by the Lender such approval, agreement or consent must be obtained in writing unless the contrary is stated;

1.3.13 time shall be of the essence in respect of all obligations whatsoever of the Borrowers under this Agreement, howsoever and whensoever arising;

1.3.14 and the words "other" and "otherwise" shall not be construed eiusdem generis with any foregoing words where a wider construction is possible;

1.3.15 a Default and an Event of Default) is "continuing" if it has not been remedied or waived.

1.4 References to currencies

Currencies are referred to in this Agreement by the three letter currency codes (ISO 4217) allocated to them by the International Organisation for Standardisation.

1.5 Contracts (Rights of Third Parties Act) 1999

Except for clause 18, no part of this Agreement shall be enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Agreement.

2 THE COMMITMENT AND CANCELLATION

2.1 Agreement to lend

The Lender, relying upon each of the representations and warranties in clause 7, agrees to make available to the Borrowers upon and subject to the terms of this Agreement, the Loan Facility for the purposes of enabling the Borrowers to partially finance the purchase of the Vessels.

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2.2 Drawdown

2.2.1 Subject to the terms and conditions of this Agreement, each Advance shall be made available to the Borrowers following receipt by the Lender from the Borrowers of a Drawdown Notice not later than 10:00 a.m. on the third Banking Day before the date, which shall be a Banking Day falling within the Drawdown Period, on which the Borrowers propose that Advance is made available.

2.2.2 The Drawdown Notice shall be effective on actual receipt by the Lender and, once given, shall, subject as provided in clause 3.5, be irrevocable.

2.3 Limitation and application of Advances

2.3.1 The amount of the Loan shall not exceed the amount of the Loan Facility.

2.3.2 The principal amount specified in the Drawdown Notice for borrowing on a Drawdown Date shall, subject to the terms of this Agreement, not exceed:

(a) in respect of Advance A, an amount equal to the least of (i) eight million Dollars (USD8,000,000), (ii) 80% of the Purchase Price of Vessel A and (iii) 65.05% of the Valuation Amount of Vessel A (to be determined no more than 15 days prior to the Drawdown Date in respect of Advance A), to be made available by the Lender to the Borrowers and be applied in or towards part-financing the purchase of Vessel A by Busan;

(b) in respect of Advance B, an amount equal to the least of (i) eight million Dollars (USD8,000,000), (ii) 80% of the Purchase Price of Vessel B and (iii) 65.05% of the Valuation Amount of Vessel B (to be determined no more than 15 days prior to the Drawdown Date in respect of Advance B), to be made available by the Lender to the Borrowers and be applied in or towards part-financing the purchase of Vessel B by Antwerp;

(c) in respect of Advance C, an amount equal to the least of (i) eight million Dollars (USD8,000,000), (ii) 80% of the Purchase Price of Vessel C and (iii) 65.05% of the Valuation Amount of Vessel C (to be determined no more than 15 days prior to the Drawdown Date in respect of Advance C), to be made available by the Lender to the Borrowers and be applied in or towards part-financing the purchase of Vessel C by Oakland; and

(d) in respect of Advance D, an amount equal to the least of (i) eight million Dollars (USD8,000,000), (ii) 80% of the Purchase Price of Vessel D and (iii) 65.05% of the Valuation Amount of Vessel D (to be determined no more than 15 days prior to the Drawdown Date in respect of Advance D), to be made available by the Lender to the Borrowers and be applied in or towards part-financing the purchase of Vessel D by Keelung;

2.3.3 Each Advance shall be paid forthwith upon drawdown to such account of the Lender as the Borrowers shall stipulate in the relevant Drawdown Notice.

2.4 Availability

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2.4.1 The Borrowers acknowledge that payment of an Advance referred to in clause 2.3.2 to the account or accounts specified in the Drawdown Notice shall satisfy the obligation of the Lender to lend that Advance to the Borrowers under this Agreement.

2.5 Cancellation in changed circumstances

2.5.1 The Borrowers may at any time during the Facility Period by notice to the Lender (effective only on actual receipt) cancel with effect from a date not less than ten (10) Banking Days after receipt by the Lender of such notice, all or part of the undrawn Total Commitment.

2.5.2 The Borrowers may also at any time during the Facility Period by notice to the Lender (effective only on actual receipt) prepay and/or cancel with effect from a date not less than ten (10) Banking Days after receipt by the Lender of such notice, the whole but not part only, but without prejudice to the Borrowers' obligations under clauses 3.5, 6.6 and 12, of the Commitment (if any). Upon any notice of such prepayment and cancellation being given, the Commitment shall be reduced to zero, the Borrowers shall be obliged to prepay the Loan and the Lender's related costs (including but not limited to Break Costs, if any) on such date, but always without any premium or penalty if such prepayment is effected on the next Interest Payment Date, and the Lender shall be under no obligation to make available the Loan.

2.6 Use of proceeds

2.6.1 Without prejudice to the Borrowers' obligations under clause 8.1.4, the Lender shall not have any responsibility for the application of the proceeds of any Advance or any part thereof by the Borrowers.

2.6.2 The Borrowers shall not, and shall procure that each Security Party and each other Group Member and any Subsidiary of any of them shall not, permit or authorise any other person to, directly or indirectly, use, lend, make payments of, contribute or otherwise make available, all or any part of the proceeds of the Loan or other transactions contemplated by this Agreement to fund or facilitate trade, business or other activities: (i) involving or for the benefit of any Restricted Person; or (ii) in any other manner that could result in a Borrower or any other Security Party being in breach of any Sanctions or becoming a Restricted Person.

2.6.3 It is prohibited to use any part of the proceeds of the Loan for the purposes of acquiring shares in the share capital of the Lender or other banks and/or financial institutions or acquiring hybrid capital debentures (TITAmc v(3Q1bucc3v icapaAaicov) of the Lender or other banks and/or financial institutions.

3 INTEREST AND INTEREST PERIODS

3.1 Normal interest rate

The Borrowers must pay interest on the Loan in respect of each Interest Period relating thereto on each Interest Payment Date at the rate per annum determined by the Lender to be the aggregate of (a) the Margin in respect thereof and (b) LIBOR for such period.

3.2 Selection of Interest Periods

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Subject to clause 3.3, the Borrowers may by notice received by the Lender not later than 10:00 a.m. on the second Banking Day before the beginning of each Interest Period specify whether such Interest Period shall have a duration of one (1), three (3) or six (6) months or such other period as the Borrowers may select and the Lender may agree.

3.3 Determination of Interest Periods

Subject to clause 3.3.1 every Interest Period shall be of the duration specified by the Borrowers pursuant to clause 3.2 but so that:

3.3.1 the first Interest Period in respect of the first Advance to be made hereunder shall start on the Drawdown Date in respect thereof, and each subsequent Interest Period relating to the first Advance shall start the day falling the day after the last day of the previous Interest Period;

3.3.2 the first Interest Period in respect of each subsequent Advance to be made hereunder shall commence on its Drawdown Date and each subsequent Interest Period shall start the day falling the day after the last day of the previous Interest Period;

3.3.3 if any Interest Period would otherwise overrun a Repayment Date, then in the case of the last Repayment Date, such Interest Period shall end on the Maturity Date, and in the case of any other Repayment Date, the Loan shall be divided into parts so that there is one part in the amount of the Repayment Instalment due on such Repayment Date and having an Interest Period ending on the relevant Repayment Date and another part in the amount of the balance of the Loan having an Interest Period ascertained in accordance with clause 3.2 and the other provisions of this clause 3.3;

3.3.4 if the Borrowers fail to specify the duration of an Interest Period in accordance with the provisions of clause 3.2 and this clause 3.3, such Interest Period shall have a duration of three (3) months or such other period as shall comply with this clause 3.3.

3.4 Default interest

If the Borrowers fail to pay any sum (including, without limitation, any sum payable pursuant to this clause 3.4) on its due date for payment under any of the Security Documents, the Borrowers must pay interest on such sum on demand from the due date up to the date of actual payment (as well after as before judgment) at a rate determined by the Lender pursuant to this clause 3.4. The period starting on such due date and ending on such date of payment shall be divided into successive periods selected by the Lender each of which (other than the first, which shall start on such due date) shall start on the last day of the preceding such period. The rate of interest applicable to each such period shall be the aggregate (as determined by the Lender) of (a) two per cent (2%) per annum, (b) the Margin and (c) LIBOR for such periods. Such interest shall be due and payable on demand, or, if no demand is made, then on the last day of each such period as determined by the Lender and on the day on which all amounts in respect of which interest is being paid under this clause are paid, and each such day shall, for the purposes of this Agreement, he treated as an Interest Payment Date, provided that if such unpaid sum is an amount of principal which became due and payable by reason of a declaration by the Lender under clause 10.2.2 or a prepayment pursuant to clauses 4.3, 4.4, 8.2.1(a) or 12.1, on a date other than an Interest Payment Date relating thereto, the first such period selected by the Lender shall be of a duration equal to the period between the due date of such principal sum and such

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Interest Payment Date and interest shall be payable on such principal sum during such period at a rate of two per cent (2%) above the rate applicable thereto immediately before it shall have become so due and payable. If, for the reasons specified in clause 3.5.1, the Lender is unable to determine a rate in accordance with the foregoing provisions of this clause 3.4, interest on any sum not paid on its due date for payment shall be calculated at a rate determined by the Lender to be two per cent (2%) per annum above the aggregate of the Margin and the cost of funds to the Lender compounded at such intervals as the Lender selects.

3.5 Market disruption; non-availability

3.5.1 Market Disruption Event: If and whenever, at any time prior to the commencement of any Interest Period, the Lender (in its discretion) shall have determined (which determination shall be conclusive in the absence of manifest error) that a Market Disruption Event has occurred in relation to the Loan for any such Interest Period, then the Lender shall forthwith give notice thereof (a "Determination Notice") to the Borrowers and the rate of interest on the Loan (or the relevant part thereof) for that Interest Period shall be the percentage rate per annum which is the sum of

(a) the Margin; and

(b) the rate which expresses as a percentage rate per annum the cost to the Lender of funding the Loan (or the relevant part thereof) from whatever source it may select.

3.5.2 Suspension of drawdown: If the Determination Notice is given before the Commitment (or a part thereof) is advanced, the Lender's obligation to make the Commitment (or a part thereof) available shall be suspended while the circumstances referred to in the Determination Notice continue.

3.5.3 Meaning of "Market Disruption Event": In this Agreement "Market Disruption Event" means:

(a) at or about noon on the Quotation Day for the relevant Interest Period no Screen Rate is available for Dollars or Replacement Benchmark; and/or

(b) before close of business on the Quotation Day for the relevant Interest Period, the Lender determines (in its sole discretion) that the cost to it of obtaining matching deposits in the London Interbank Market or the international market relevant to the Replacement Benchmark (as the case may be) to fund the Loan (or the relevant part thereof) for such Interest Period would be in excess of the Screen Rate or, as the case may be, the Replacement Benchmark for that Interest Period; and/or

(c) before close of business on the Quotation Day for the relevant Interest Period, deposits in Dollars are not available to the Lender in the London Interbank Market or the international market relevant to the Replacement Benchmark (as the case may be) in the ordinary course of business in sufficient amounts to fund the Loan (or the relevant part thereof) for that Interest Period.

3.5.4 Alternative basis of interest or funding

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(a) If a Market Disruption Event occurs and the Lender or the Borrowers so require, the Lender and the Borrowers shall enter into negotiations (for a period of not more than fifteen (15) days (the "Negotiation Period")) after the giving of the relevant Determination Notice with a view to agreeing a substitute basis for determining the rate of interest.

(b) Any alternative basis agreed pursuant to paragraph (i) above shall be binding on the Lender and all Security Parties.

3.5.5 Alternative basis of interest in absence of agreement: If the Lender and the Borrowers will not enter into negotiations as provided in Clause 3.5.4(a) or if an alternative interest rate or alternative basis is not agreed within the Negotiation Period, and the relevant circumstances are continuing at the end of the Negotiation Period, then the Lender shall set the following Interest Period and an interest rate representing the cost of funding of the Lender in Dollars of the Loan (or the relevant part thereof) plus the Margin for such Interest Period; if the relevant circumstances are continuing at the end of the Interest Period so set by the Lender, the Lender shall continue to set the following Interest Period and an interest rate representing its cost of funding in Dollars of the Loan (or the relevant part thereof) plus the Margin for such Interest Period.

3.5.6 Notice of prepayment: If the Borrowers do not agree with an interest rate set by the Lender under Clause 3.5.5 (Alternative basis of interest in absence of agreement), the Borrowers may give the Lender not less than 5 Banking Days' notice of its intention to prepay the Loan at the end of the interest period set by the Lender.

3.5.7 Prepayment; termination of Commitment: A notice under Clause 3.5.4 (Alternative basis of interest or funding) shall be irrevocable; and on the last Banking Day of the interest period set by the Lender the Borrowers shall prepay (without premium or penalty) the Loan, together with accrued interest thereon at the applicable rate plus the Margin and the balance of all other amounts payable under this Agreement and the other Security Documents or, if the Commitment has not been advanced, the Commitment shall be reduced to zero and the Loan shall not be made to the Borrowers under this Agreement thereafter.

3.5.8 Application of prepayment: The provisions of Clause 4 (Repayment and Prepayment) shall apply in relation to the prepayment made hereunder.

3.6 Replacement of Screen Rate

If a Screen Rate Replacement Event has occurred in relation to the Screen Rate for dollars, any amendment or waiver which relates to:

(a) providing for the use of a Replacement Benchmark in relation to that currency in place of that Screen Rate ; and

(b)

(i) aligning any provision of any Security Document to the use of that Replacement Benchmark;

(ii) enabling that Replacement Benchmark to be used for the calculation of interest under this Agreement (including, without limitation, any

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consequential changes required to enable that Replacement Benchmark to be used for the purposes of this Agreement);

(iii) implementing market conventions applicable to that Replacement Benchmark;

(iv) providing for appropriate fallback (and market disruption) provisions for that Replacement Benchmark; or

(v) adjusting the pricing to reduce or eliminate, to the extent reasonably practicable, any transfer of economic value from one party hereto to another as a result of the application of that Replacement Benchmark (and if any adjustment or method for calculating any adjustment has been formally designated, nominated or recommended by the Relevant Nominating Body, the adjustment shall be determined on the basis of that designation, nomination or recommendation),

may be made with the consent of the Lender and the Borrowers.

3.6.2 Interest Rate Swaps

The Borrowers may not enter into any interest hedging arrangements without the prior written consent of the Lender.

4 REPAYMENT AND PREPAYMENT

4.1 Repayment

4.1.1 Subject as otherwise provided in this Agreement, the Borrowers must repay each Advance by (i) sixteen (16) consecutive instalments, the first three (3) in the amount of three hundred and fifty thousand Dollars (USD350,000) each and the next thirteen (13) in the amount of two hundred thousand Dollars (USD200,000) each and (ii) an instalment (the "Balloon Instalment") of four million three hundred and fifty thousand Dollars (USD4,350,000), with the first such instalment falling due on the date falling three months after the Drawdown Date and subsequent instalments falling due al quarterly intervals thereafter, with the final instalment and the Balloon Instalment falling due on the last Repayment Date for that Advance.

4.1.2 If an Advance is not drawn in full, the amount of each Repayment Instalment including the Balloon Instalment relating to that Advance shall be reduced pro rata.

4.1.3 The Borrowers shall on the Maturity Date also pay to the Lender all other amounts in respect of interest or otherwise then due and payable under this Agreement and the Security Documents.

4.2 Voluntary prepayment

Subject to clauses 4.3, 4.4, 4.5, 4.6 and 4.7, the Borrowers may, subject to having given 15 days' prior written notice thereof to the Lender, prepay any specified amount (such part being in an amount of one hundred thousand Dollars (USD 100,000) or any larger sum which is an integral multiple of such amount) of any Advance on any relevant Interest Payment Date without premium or penalty.

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4.3 Mandatory Prepayment on Total Loss

On the date falling one hundred and eighty (180) days after that on which a Mortgaged Vessel became a Total Loss or, if earlier, on the date upon which the relevant insurance proceeds are, or Requisition Compensation is, received by the Owner thereof (or the Lender pursuant to the Security Documents) the Borrowers must prepay the Loan by an amount equal to the greater of:

(a) the Relevant Advance; and

(b) such amount as would be required to ensure that the Prepayment Security Value after such prepayment is at least equal to one hundred and thirty per cent (130%) of the Loan.

4.3.1 Interpretation

For the purpose of this Agreement, a Total Loss shall be deemed to have occurred:

(a) in the case of an actual total loss of a Mortgaged Vessel, on the actual date and at the time such Mortgaged Vessel was lost or, if such date is not known, on the date on which such Mortgaged Vessel was last reported;

(b) in the case of a constructive total loss of a Mortgaged Vessel, upon the date and at the time notice of abandonment of such Mortgaged Vessel is given to the then insurers of such Mortgaged Vessel (provided a claim for total loss is admitted by such insurers) or, if such insurers do not immediately admit such a claim, at the date and at the time at which either a total loss is subsequently admitted by such insurers or a total loss is subsequently adjudged by a competent court of law or arbitration tribunal to have occurred;

(c) in the case of a compromised or arranged total loss of a Mortgaged Vessel, on the date upon which a binding agreement as to such compromised or arranged total loss has been entered into by the then insurers of such Mortgaged Vessel;

(d) in the case of Compulsory Acquisition, on the date upon which the relevant requisition of title or other compulsory acquisition occurs; and

(e) in the case of hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of a Mortgaged Vessel (other than within the definition of Compulsory Acquisition) by any Government Entity, or by persons allegedly acting or purporting to act on behalf of any Government Entity, which deprives its Owner of the use of that Mortgaged Vessel for more than sixty (60) days, upon the expiry of the period of sixty (60) days after the date upon which the relevant incident occurred.

4.4 Mandatory prepayment on sale of Mortgaged Vessel

On the date of completion of the sale or transfer of ownership of a Mortgaged Vessel ale Borrowers must prepay the Loan by an amount equal to the greater of:

(a) the Relevant Advance; and

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(b) such amount as would be required to ensure that the Prepayment Security Value after such prepayment is at least equal to one hundred and thirty per cent (130%) of the Loan.

4.5 Mandatory prepayment on failure to acquire the Vessel

In the event of:

(a) the Lender prepositioning an Advance or any part thereof with a Seller's bank in advance of the delivery of a Vessel to the relevant Borrower under SWIFT MT199 release instructions or equivalent; and

(b) funds representing that Advance or any part thereof being returned by the relevant Seller's bank to the relevant Earnings Account in accordance with the said SWIFT MT199 release instructions or equivalent,

the Borrowers shall prepay the Advance or the part thereof so returned on the day such funds are received in the Earnings Account and, in this regard, the Borrowers hereby provide the Lender with unconditional and irrevocable authority to apply such funds to prepayment of the Loan or any part thereof pursuant to this clause without provision of further instructions to the Lender from its part.

4.6 Amounts payable on prepayment

Any prepayment of all or part of the Loan under this Agreement shall be made together with:

4.6.1 accrued interest on the amount to be prepaid to the date of such prepayment;

4.6.2 any additional amount payable under clauses 3.5, 6.6 or 12.2; and

4.6.3 all other sums payable by the Borrowers to the Lender under this Agreement or any of the other Security Documents including, without limitation any Break Costs.

4.7 Notice of prepayment; reduction of Repayment Instalments

4.7.1 Every notice of prepayment shall be effective only on actual receipt by the Lender, shall be irrevocable, shall specify the amount to be prepaid and the Advance which is to be prepaid and shall oblige the Borrowers to make such prepayment on the date specified.

4.7.2 Any amount prepaid pursuant to clause 4.2 shall be applied against the relevant Advance in reducing each Repayment Instalment (including the Balloon Instalment) pro rata.

4.7.3 Any amounts prepaid pursuant to clauses 4.3 and 4.4 shall be applied fully against the Relevant Advance and thereafter shall be applied pro rata against the Repayment Instalments of the remaining Advances which are at that time outstanding (including the Balloon Instalments).

4.7.4 The Borrowers may not prepay the Loan or any part thereof except as expressly provided in this Agreement.

4.7.5 No amount repaid or prepaid may be re-borrowed

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5 FEES AND EXPENSES

5.1 Arrangement fee

The Borrower agrees to pay to the Lender on each Drawdown Date a non-refundable arrangement fee equal to one point one per cent (1.1%) of the amount of the Advance which is made available on that Drawdown Date.

5.2 Expenses

The Borrowers agree to reimburse the Lender on a full indemnity basis within ten (10) days of demand all reasonable expenses and/or disbursements whatsoever (including without limitation legal, printing and out of pocket expenses) certified by the Lender as having been incurred by them from time to time:

5.2.1 in connection with the negotiation, preparation, execution and, where relevant, registration of the Security Documents and of any contemplated or actual amendment, or indulgence or the granting of any waiver or consent howsoever in connection with, any of the Security Documents (including legal fees) (but excluding any such expense incurred in connection with the transfer, assignment or sub-participation of any of the rights and/or obligations of the Lender under the Security Documents);

5.2.2 in contemplation or furtherance of, or otherwise howsoever in connection with, the exercise or enforcement of, or preservation of any rights, powers, remedies or discretions under any of the Security Documents, or in consideration of the Lender's rights thereunder or any action proposed or taken following the occurrence of a Default or otherwise in respect of the moneys owing under any of the Security Documents; and

5.2.3 in connection with obtaining a written report from a maritime insurance consultant or broker acceptable to the Lender in relation to the Insurances of each Mortgaged Vessel (which the Lender may obtain not more than once a year, and at any time when there has been a change of insurer or terms of cover for any Mortgaged Vessel, other than in respect of the insured value of that Mortgaged Vessel),

together with interest at the rate referred to in clause 3.4 from the date on which reimbursement of such expenses and/or disbursements were due following demand to the date of payment (as well after as before judgment).

5.3 Value added tax

All fees and expenses payable pursuant to this Agreement must be paid together with value added tax or any similar tax (if any) properly chargeable thereon in any jurisdiction. Any value added tax chargeable in respect of any services supplied by the Lender under this Agreement shall, on delivery of the value added tax invoice, be paid in addition to any sum agreed to be paid hereunder.

5.4 Stamp and other duties

The Borrowers must pay all stamp, documentary, registration or other like duties or taxes, but excluding any FATCA Deduction (except for any such Taxes incurred in connection with any transfer, assignment or sub-participation of any of the rights and/or obligations of the Lender under any of the Security Documents) (including any duties or taxes payable by the Lender) imposed on or in connection with any of the

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Underlying Documents, the Security Documents or the Loan and agree to indemnify the Lender against any liability arising by reason of any delay or omission by the Borrowers to pay such duties or taxes.

6 PAYMENTS AND TAXES; ACCOUNTS AND CALCULATIONS

6.1 No set-off or counterclaim

All payments to be made by any Borrower under any of the Security Documents must be made in full, without any set off or counterclaim whatsoever and, subject as provided in clause 6.6, free and clear of any deductions or withholdings, in USD on or before 11:00 am (London time) on the due date in freely available funds to such account at the Lender and in such place as the Lender may from time to time specify for this purpose.

6.2 Payment by the Lender

All sums to be advanced by the Lender to the Borrowers under this Agreement shall be remitted in USD on the Drawdown Date to the account specified in the Drawdown Notice.

6.3 Non-Banking Days

When any payment under any of the Security Documents would otherwise be due on a day which is not a Banking Day, the due date for payment shall be extended to the next following Banking Day unless the Banking Day falls in the next calendar month in which case payment shall be made on the immediately preceding Banking Day.

6.4 Calculations

All interest and other payments of an annual nature under any of the Security Documents shall accrue from day to day and be calculated on the basis of actual days elapsed and a three hundred and sixty (360) day year.

6.5 Currency of account

If any sum due from a Borrower under any of the Security Documents, or under any order or judgment given or made in relation thereto, must be converted from the currency ("the first currency") in which the same is payable thereunder into another currency ("the second currency") for the purpose of (i) making or filing a claim or proof against such Borrower, (ii) obtaining an order or judgment in any court or other tribunal or (iii) enforcing any order or judgment given or made in relation thereto, the Borrowers undertake to indemnify and hold harmless the Lender from and against any loss suffered as a result of any discrepancy between (a) the rate of exchange used for such purpose to convert the sum in question from the first currency into the second currency and (b) the rate or rates of exchange at which the Lender may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof. Any amount due from a Borrower under this clause 6.5 shall be due as a separate debt and shall not be affected by judgment being obtained for any other sums due under or in respect of any of the Security Documents and the term "rate of

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exchange" includes any premium and costs of exchange payable in connection with the purchase of the first currency with the second currency.

6.6 Grossing-up for Taxes - by the Borrowers

If at any time a Borrower must make any deduction or withholding in respect of Taxes (other than a FATCA Deduction) or otherwise from any payment due under any of the Security Documents for the account of the Lender or withholding in respect of Taxes from any payment due under any of the Security Documents, the sum due from such Borrower in respect of such payment must be increased to the extent necessary to ensure that, after the making of such deduction or withholding, the Lender receives on the due date for such payment (and retains, free from any liability in respect of such deduction or withholding), a net sum equal to the sum which it would have received had no such deduction or withholding been required to be made and the Borrowers must indemnify the Lender against any losses or costs incurred by it by reason of any failure of a Borrower to make any such deduction or withholding or by reason of any increased payment not being made on the due date for such payment. The Borrowers must promptly deliver to the Lender any receipts, certificates or other proof evidencing the amounts (if any) paid or payable in respect of any deduction or withholding as aforesaid.

6.7 Claw back of Tax benefit

If, following any such deduction or withholding as is referred to in clause 6.6 from any payment by a Borrower, the Lender shall receive or be granted a credit against or remission for any Taxes payable by it, the Lender shall, and to the extent that it can do so without prejudicing the retention of the amount of such credit or remission and without prejudice to the right of the Lender to obtain any other relief or allowance which may be available to it, reimburse the relevant Borrower with such amount as Lender shall in its absolute discretion certify to be the proportion of such credit or remission as will leave the Lender (after such reimbursement) in no worse position than it would have been in had there been no such deduction or withholding from the payment by such Borrower as aforesaid. Such reimbursement shall be made forthwith upon the Lender certifying that the amount of such credit or remission has been received by it. Nothing contained in this Agreement shall oblige the Lender to rearrange its tax affairs or to disclose any information regarding its tax affairs and computations. Without prejudice to the generality of the foregoing, the Borrowers shall not, by virtue of this clause 6.7, be entitled to enquire about the Lender's tax affairs.

6.8 Loan account

The Lender shall maintain, in accordance with its usual practice, an account or accounts (as the Lender may deem necessary) evidencing the amounts from time to time lent by, owing to and paid to it under the Security Documents. The Lender shall maintain a control account or accounts (as the Lender may deem necessary) showing the Loan and other sums owing by the Borrowers under the Security Documents and all payments in respect thereof being made from time to time. The control account shall, in the absence of manifest error, be prima facie evidence of the amount from time to time owing by the Borrowers under the Security Documents.

6.9 Partial payments

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If, on any date on which a payment is due to be made by any Borrower under any of the Security Documents, the amount received by the Lender from such Borrower falls short of the total amount of the payment due to be made by such Borrower on such date then, without prejudice to any rights or remedies available to the Lender under any of the Security Documents, the Lender must apply the amount actually received from that Borrower in or towards discharge of the obligations of the Borrowers under the Security Documents in the following order, notwithstanding any appropriation made, or purported to be made, by any Borrower:

6.9.1 first, in or towards payment, in such order as the Lender may decide, of any unpaid costs and expenses of the Lender under any of the Security Documents;

6.9.2 secondly, in or towards payment of any fees payable to the Lender under, or in relation to, the Security Documents which remain unpaid;

6.9.3 thirdly, in or towards payment to the Lender of any accrued default interest owing pursuant to clause 3.4 but remains unpaid;

6.9.4 fourthly, in or towards payment to the Lender of any accrued interest owing in respect of the Loan which shall have become due under any of the Security Documents but remains unpaid;

6.9.5 fifthly, in or towards payment to the Lender of any due hot unpaid Repayment Instalments; and

6.9.6 sixthly, in or towards payment to the Lender, on a pro rata basis, for any loss suffered by reason of any such payment in respect of principal not being effected on an Interest Payment Date relating to the part of the Loan repaid and which amounts are so payable under this Agreement and any other sum relating to the Loan which shall have become due under any of the Security Documents but remains unpaid.

The order of application set out in clauses 6.9.1 to 6.9.6 may be varied by the Lender without any reference to, or consent or approval from, the Borrowers.

7 REPRESENTATIONS AND WARRANTIES

7.1 Continuing representations and warranties

Each Borrower represents and warrants to the Lender that:

7.1.1 Due incorporation

each of the corporate Security Parties is duly incorporated, validly existing and in good standing under the laws of its respective country of incorporation, in each case, as a corporation and has power to carry on its respective businesses as it is now being conducted and to own its respective property and other assets, to which it has unencumbered legal and beneficial title except as disclosed to the Lender, and the shares of the Borrower are in registered form;

7.1.2 Corporate power

each of the Security Parties has power to execute, deliver and perform its obligations and, as the case may be, to exercise its rights under the Underlying Documents and the

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Security Documents to which it is a party; all necessary corporate, shareholder (if applicable) and other action has been taken to authorise the execution, delivery and on the execution of the Security Documents performance of the same and no limitation on the powers of the Borrowers to borrow or any other Security Party to howsoever incur liability and/or to provide or grant security will be exceeded as a result of borrowing any part of the Loan;

7.1.3 Binding obligations

the Underlying Documents and the Security Documents, when executed, will constitute valid and legally binding obligations of the relevant Security Parties enforceable in accordance with their respective terms;

7.1.4 No conflict with other obligations

the execution and delivery of, the performance of their obligations under, and compliance with the provisions of, the Underlying Documents and the Security Documents by the relevant Security Parties will not (i) contravene any existing applicable law, statute, rule or regulation or any judgment, decree or permit to which any Security Party or other member of the Group is subject, (ii) conflict with, or result in any breach of any of the terms of, or constitute a default under, any agreement or other instrument to which any Security Party or other member of the Group is a party or is subject or by which it or any of its property is bound, (iii) contravene or conflict with any provision of the constitutional documents of any Security Party or (iv) result in the creation or imposition of, or oblige any of the Security Parties to create, any Encumbrance (other than a Permitted Encumbrance) on any of the undertakings, assets, rights or revenues of any of the Security Parties;

7.1.5 No default

no Event of Default has occurred;

7.1.6 No litigation or judgments

no Proceedings are current, pending or threatened against any of the Security Parties or their assets which could have a Material Adverse Effect and there exist no judgments, orders, injunctions which would materially affect the obligations of the Security Parties under the Security Documents to which they are a party;

7.1.7 No filings required

except for the registration of the Mortgages in the relevant register under the laws of the relevant Flag State through the relevant Registry, it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of any of the Underlying Documents or any of the Security Documents that they or any other instrument be notarised, filed, recorded, registered or enrolled in any court, public office or elsewhere in any Pertinent Jurisdiction or that any stamp, registration or similar tax or charge be paid in any Pertinent Jurisdiction on or in relation to any of the Underlying Documents or the Security Documents and each of the Underlying Documents and the Security Documents is in proper form for its enforcement in the courts of each Pertinent Jurisdiction;

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7.1.8 Required Authorisations and legal compliance

all Required Authorisations have been obtained or effected or waived by the person requiring the same and, to the extent no such waiver exists, are in full force and effect and no Security Party has in any way contravened any applicable law, statute, rule or regulation (including all such as relate to money laundering) to which such Security Party is subject;

7.1.9 Choice of law

the choice of English law to govern the Underlying Documents and the Security Documents (other than the Mortgages and the Earnings Account Pledges), the choice of the law of the Flag State to govern the Mortgages, the choice of Greek law to govern the Earnings Account Pledges and the submissions by the Security Parties to the jurisdiction of the English courts and the obligations of such Security Parties associated therewith, are valid and binding;

7.1.10 No immunity

no Security Party nor any of their assets is entitled to immunity on the grounds of sovereignty or otherwise from any Proceedings whatsoever;

7.1.11 Financial statements correct and complete

the latest audited consolidated accounts of the Corporate Guarantor in respect of the relevant financial year as delivered to the Lender present or will present fairly and accurately the consolidated financial position of the Corporate Guarantor as at the date thereof and the results of the operations of the Corporate Guarantor and, as at such date, the Corporate Guarantor does not have any significant liabilities (contingent or otherwise) or any unrealised or anticipated losses which arc not disclosed by, or reserved against or provided for in, such financial statements;

7.1.12 Pari passu

the obligations of the Borrowers under this Agreement are direct, general and unconditional obligations of the Borrowers and rank at least pari passu with all other present and future unsecured and unsubordinated Indebtedness of the Borrowers except for obligations which are mandatorily preferred by operation of law and not by contract;

7.1.13 Information

all information, whatsoever provided by any Security Party to the Lender in connection with the negotiation and preparation of the Security Documents or otherwise provided hereafter in relation to, or pursuant to this Agreement is, or will be, true and accurate in all material respects and not misleading, does or will not omit material facts and all reasonable enquiries have been, or shall have been, made to verify the facts and statements contained therein; there are, or will be, no other facts the omission of which would make any fact or statement therein misleading in any (in the reasonable opinion of the Lender) material respect;

7.1.14 No withholding Taxes

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no Taxes anywhere are imposed whatsoever by withholding or otherwise on any payment to be made by any Security Party under the Underlying Documents or the Security Documents to which such Security Party is or is to be a party or are imposed on or by virtue of the execution or delivery by the Security Parties of the Underlying Documents or the Security Documents or any other document or instrument to be executed or delivered under any of the Security Documents;

7.1.15 No Default under Underlying Documents

except as disclosed in writing by the Borrowers to the Lender, no Security Party is in material default of any of its obligations under any relevant Underlying Document;

7.1.16Use of proceeds

the Borrowers shall apply the Advances only for the purposes specified in clause 2.1;

7.1.17 Copies true and complete

the Certified Copies of the Underlying Documents delivered or to be delivered to the Lender pursuant to clause 9.1 are, or will when delivered be, true and complete copies or, as the case may be, originals of such documents; and such documents constitute valid and binding obligations of the parties thereto enforceable in accordance with their respective terms and there have been no amendments or variations thereof or defaults thereunder;

7.1.18 Ownership of Borrowers

all the shares in each Borrower are legally owned by the Shareholder and ultimately owned and controlled by the Corporate Guarantor and are not held on trust for any third party;

7.1.19 No Indebtedness

no Borrower has incurred any Borrowed Moneys save as envisaged by this Agreement or as otherwise disclosed to the Lender or incurred in the ordinary course of its business of owning, operating and chartering the Vessel owned by it;

7.1.20 Tax returns

the Borrowers and the Corporate Guarantor have filed all tax and other fiscal returns required to be filed by any tax authority to which they are subject;

7.1.21 Freedom from Encumbrances

none of the Vessels nor their Earnings, Insurances or Requisition Compensation nor the Earnings Accounts nor any Extended Employment Contract in respect of a Vessel nor any other properties or rights which are, or are to be, the subject of any of the Security Documents nor any part thereof will be subject to any Encumbrance except Permitted Encumbrances;

7.1.22 Environmental Matters

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except as may already have been disclosed by the Borrowers in writing to, and acknowledged in writing by, the Lender:

(a) the Borrowers, the Manager and the other Group Members and, to the best of the Borrowers' knowledge and belief (having made due enquiry), their respective Environmental Affiliates have complied with the provisions of all Environmental Laws;

(b) the Borrowers, the Manager and the other Group Members and, to the best of the Borrowers' knowledge and belief (having made due enquiry), their respective Environmental Affiliates have obtained all Environmental Approvals and are in compliance with all such Environmental Approvals;

(c) no Environmental Claim has been made or threatened or pending against any of the Borrowers, the Manager, any other Group Member or, to the best of the Borrowers' knowledge and belief (having made due enquiry), any of their respective Environmental Affiliates; and

(d) there has been no Environmental Incident;

7.1.23 ISM and ISPS Code

the Owners have complied with and continue to comply with and have procured that the Manager of the Vessels has complied with and continues to comply with the ISM Code, the ISPS Code and all other statutory and other requirements relative to their business and in particular they or the Manager have obtained and maintain a valid DOC, IAPP Certificate, EIAPP Certificate (if applicable) and SMC for the Vessels and that they and the Manager have implemented and continue to implement an ISM SMS;

7.1.24 Accounting reference date

the Borrowers' and the Corporate Guarantor's accounting reference date is 31 December;

7.1.25 Office

no Borrower has an office in England or the United States of America;

7.1.26 Restricted Persons, unlawful activity

(a) none of the shares in any Borrower, in (to the best of its knowledge) the Corporate Guarantor, or in any other Security Party or any Vessel are or will be at any time during the Facility Period legally or beneficially owned or controlled by a Restricted Person;

(b) no Restricted Person has or will have at any time during the Facility Period any legal or beneficial interest of any nature whatsoever in any of the shares of any of the Borrowers, (to the best of its knowledge) the Corporate Guarantor, or any other Security Party or any Vessel;

7.1.27 Sanctions

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(to the best of its knowledge only in respect of an agent) no Security Party nor any director, officer, agent, employee of any Security Party or any person acting on behalf of any Security Party, is a Restricted Person nor acts directly or indirectly on behalf of a Restricted Person; and

7.1.28 FATCA

none of the Security Parties is a FATCA FFI or a US Tax Obligor.

7.2 Repetition of representations and warranties

On each day throughout the Facility Period, the Borrowers shall be deemed to repeat the representations and warranties in clause 7 updated mutatis mutandis as if made with reference to the facts and circumstances existing on such day and in clause 7.1.11 as if made with reference to the Latest Account at any relevant time.

8 UNDERTAKINGS

8.1 General

Each Borrower undertakes with the Lender that, from the Execution Date until the end of the Facility Period, it will:

8.1.1 Notice of Event of Default and Proceedings

promptly inform the Lender of (a) any Event of Default and of any other circumstances or occurrence which might adversely affect the ability of any Security Party to perform its obligations under any of the Security Documents to which it is a party and (b) as soon as the same is commenced or threatened, details of any Proceedings involving any Security Party which could have a Material Adverse Effect on that Security Party and/or the operation of any of the Mortgaged Vessels (including, but not limited to any Total Loss of a Vessel or the occurrence of any Environmental Incident) and will from time to time, if so requested by the Lender, confirm to the Lender in writing that, save as otherwise stated in such confirmation, no Event of Default has occurred and is continuing unremedied and unwaived and no such Proceedings have been commenced or threatened;

8.1.2 Authorisation

to the extent a waiver has not been obtained, obtain or cause to be obtained, maintain in full force and effect and comply fully with all Required Authorisations, provide the Lender with Certified Copies of the same and do, or cause to be done, all other acts and things which may from time to time be necessary or desirable under any applicable law (whether or not in the Pertinent Jurisdiction) for the continued due performance of all the obligations of the Security Parties under each of the Security Documents;

8.1.3 Corporate Existence

ensure that each Security Party maintains its corporate existence as a body corporate duly organised and validly existing and in good standing under the laws of the Pertinent Jurisdiction;

8.1.4 Use of proceeds

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use the Advances exclusively for the purposes specified in clauses 1.1 and 2.1;

8.1.5 Pari passu

ensure that its obligations under this Agreement shall, without prejudice to the provisions of clause 8.3, at all times rank at least pari passu with all its other present and future unsecured and unsubordinated Indebtedness with the exception of any obligations which are mandatorily preferred by law and not by contract;

8.1.6 Financial statements

as soon as possible, but in no event later than 180 days after the end of each of its financial years, annual audited (prepared in accordance with US GAAP by a first class international firm of accountants) financial statements of each Borrower (commencing with the financial year ending 31 December 2019), together with updated details (in a form acceptable to the Lender) of all off-balance sheet and time-charter hire commitments of the Vessels; and the first audited accounts of each Borrower shall evidence that all amounts payable under each MOA (in addition to the part to be financed by the Loan) have been funded by the relevant Borrower through equity contribution and/or common or preferred shares contribution provided exclusively by the Corporate Guarantor;

8.1.7 Compliance Certificates

deliver to the Lender on the date on which the audited consolidated accounts are delivered under clause 8.1.6 a Compliance Certificate together with such supporting information as the Lender may reasonably require;

8.1.8 Financial Covenants

procure that

(a) the Net Worth of the Group will at all times exceed USD15,000,000; and

(b) the Total Liabilities divided by the Total Assets (each net of cash balance) shall at all times be no more than 75%;

8.1.9 Reimbursement of MII & MAP Policy premiums

reimburse the Lender on the Lender's written demand the amount of the premium payable by the Lender for the inception or, as the case may be, extension and/or continuance of the MII & MAP Policy (including any insurance tax thereon);

8.1.10 Provision of further information

provide the Lender, and procure that the Corporate Guarantor (including its Subsidiaries), shall provide the Lender with such financial or other information (including, but not limited to, financial standing, Indebtedness, balance sheet, off-balance sheet commitments, repayment schedules, operating expenses, charter arrangements) concerning the Borrowers, the Corporate Guarantor (including its Subsidiaries), the Group and their respective affairs, activities, financial standing, Indebtedness and operations and the performance of the Mortgaged Vessels as the Lender may from time to time reasonably require save for any information which is

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confidential in relation to arms-length third parties or is not disclosable by law, convention or regulatory requirements;

8.1.11 Obligations under Security Documents, etc.

duly and punctually perform each of the obligations expressed to be imposed or assumed by them under the Security Documents and any Extended Employment Contact and will procure that each of the other Security Parties will, duly and punctually perform each of the obligations expressed to be assumed by it under the Security Documents and any Extended Employment Contract to which it is a party;

8.1.12 Compliance with ISM Code

and will procure that any Operator will, comply with and ensure that the Mortgaged Vessels and any Operator complies with the requirements of the ISM Code, including (but not limited to) the maintenance and renewal of valid certificates pursuant thereto throughout the Facility Period;

8.1.13 Withdrawal of DOC and SMC

immediately inform the Lender if there is any actual withdrawal of its or any Operator's DOC, IAPP Certificate, EIAPP Certificate or the SMC of any Mortgaged Vessel;

8.1.14 Issuance of DOC and SMC

and will procure that any Operator will promptly inform the Lender of the receipt by any Owner or any Operator of notification that its application for a DOC or any application for an SMC or IAPP Certificate or EIAPP Certificate for any Mortgaged Vessel has been refused;

8.1.15 ISPS Code Compliance

and will procure that the Manager or any Operator will:

(a) maintain at all times a valid and current ISSC in respect of each Mortgaged Vessel;

(b) immediately notify the Lender in writing of any actual or threatened withdrawal, suspension, cancellation or material modification of the ISSC in respect of a Mortgaged Vessel; and

(c) procure that each Mortgaged Vessel will comply at all times with the ISPS Code;

8.1.16 Compliance with Laws and payment of taxes

(a) comply with all relevant Environmental Laws, laws, statutes and regulations applicable to it and pay all taxes for which it is liable as they fall due; and

(b) comply in all respects with, and will procure that each Security Party and each other Group Member will comply in all respects with, all Sanctions;

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8.1.17 Inspection

ensure that the Lender, by independent marine surveyors or other persons appointed by it for such purpose (who shall be appointed by the Lender at the Borrowers' expense), may board each Mortgaged Vessel, once per calendar year or whenever the Lender deems necessary after the occurrence of an Event of Default which is continuing, provided in each case that the Lender shall use reasonable endeavours to ensure that such inspections or surveys shall not interfere with the operation of such Mortgaged Vessel, for the purpose of inspecting or surveying her and will afford all proper facilities for such inspections or survey and for this purpose will give the Lender reasonable advance notice of any intended drydocking of each Mortgaged Vessel (whether for the purpose of classification, survey or otherwise) and will pay the costs in respect of each such inspection or survey and will provide the Lender with or ensure that the Lender receives on request all reports of such inspections, to be in such form as the Lender may approve, and, if a Mortgaged Vessel shall not be in a condition and state which complies with the requirements of this Agreement and the other Security Documents, will effect such repairs as in the opinion of the Lender be desirable to ensure such compliance;

8.1.18 The Mortgaged Vessels

ensure that throughout the Facility Period, each Mortgaged Vessel will at all times after her delivery (except as the Lender may otherwise permit) be:

(a) in the absolute sole, legal and beneficial ownership of the relevant Owner and not held on trust for any third party;

(b) registered through the offices of the relevant Registry as a ship under the laws and flag of the relevant Flag State;

(c) in compliance with the ISM Code and the ISPS Code and operationally seaworthy and in every way fit for service;

(d) classed with the Classification free of all overdue requirements and recommendations of the Classification Society affecting the Classification;

(e) insured in accordance with the Ship Security Documents relating thereto; and

(f) managed by the Manager in accordance with the terms of the Management Agreement, which shall be acceptable to the Lender;

8.1.19 Charters

deliver to the Lender, a Certified Copy of each Extended Employment Contract upon its execution, forthwith on the Lender's request execute (a) a Charter Assignment in respect thereof and (b) any notice of assignment required in connection therewith and use reasonable efforts to procure the acknowledgement of any such notice of assignment by the relevant charterer (provided that any failure to procure the acknowledgement shall not constitute an Event of Default) and (c) (if any Mortgaged Vessel is subject to a bareboat charter) procure execution by the relevant Borrower and the charterer of a Tripartite Deed, together with all notices required to be determined thereunder and will provide evidence acceptable to the Lender that such notice has

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been given to the relevant charterer and the Borrowers shall pay all legal and other costs incurred by the Lender in connection with any such Charter Assignments and Tripartite Deed, forthwith following the Lender's demand;

8.1.20 Chartering

not without the prior written consent of the Lender and, if such consent is given, only subject to such conditions as the Lender may impose (and in the case of (b) only, such consent not to be unreasonably withheld), to let any Vessel:

(a) on demise charter for any period; or

(b) by any time or consecutive voyage charter for a term which exceeds or which by virtue of any optional extensions therein contained might exceed nine (9) months' duration; or

(c) on terms whereby more than two (2) months' hire (or the equivalent) is payable in advance;

8.1.21 Sanctions

(a) (to the best of its knowledge only in respect of an agent) not be, and shall procure that any Security Party and other Group Member, or any director, officer, agent, employee or person acting on behalf of the foregoing is not, a Restricted Person and does not act directly or indirectly on behalf of a Restricted Person;

(b) , and shall procure that each Security Party and each other Group Member shall, not use any revenue or benefit derived from any activity or dealing with a Restricted Person in discharging any obligation due or owing to the Lender;

(c) procure that no proceeds from any activity or dealing with a Restricted Person are credited to any bank account held with the Lender in its name or in the name of any other member of the Group;

(d) take, and shall procure that each Security Party and each other Group Member has taken, reasonable measures to ensure compliance with Sanctions;

(e) , and shall procure that each Security Party and each other Group Member shall, to the extent permitted by law promptly upon becoming aware of them, supply to the Lender details of any claim, action, suit, proceedings or investigation against it with respect to Sanctions by any Sanctions Authority;

(f) not accept, obtain or receive any goods or services from any Restricted Person, except (without limiting clause 8.1.21(b)), to the extent relating to any warranties and/or guarantees given and/or liabilities incurred in respect of an activity or dealing with a Restricted Person by any Borrower, any other Security Party or any other Group Member in accordance with this Agreement;

8.1.22 Ownership

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ensure that all the shares in each Borrower are legally owned by the Shareholder and ultimately owned and controlled by the Corporate Guarantor and are not held on trust for any third party;

8.1.23 Cash Collateral

ensure that on each Drawdown Date there is standing to the credit of the Earnings Account of the Owner of the relevant Vessel an amount equivalent to 7.5% of the amount of the relevant Advance drawn (each, the "Cash Collateral") which may be applied only as follows:

(a) if on each Drawdown Date in respect of Vessel B, Vessel C and Vessel D, the relevant Vessel is and will remain employed under its respective Approved Charter, the Cash Collateral will be immediately released to the Borrowers;

(b) on the Drawdown Date in respect of Vessel A the Cash Collateral will be released to the Borrowers PROVIDED THAT the Borrowers shall procure that, no later than the date falling 75 days after the Drawdown Date in respect of Vessel A, Vessel A is employed under an Approved Charter and if on the date falling 75 days after the Drawdown Date in respect of Vessel A, Vessel A is not employed under an Approved Charter the Borrowers shall prepay the Loan in an amount equivalent to the Cash Collateral in respect of Advance A, and the amount prepaid shall be applied against Advance A, first against the first three Repayment Instalments in order of maturity until each of such Repayment Instalments has been reduced to USD200,000 and thereafter against the Balloon Instalment of Advance A;

8.1.24 Unencumbered liquidity

procure that at all times during the Facility Period, the Corporate Guarantor or the Borrowers shall maintain in an account or accounts with the Lender free deposit cash which is (other than the Earnings Account Pledge) free of any Encumbrance in an average aggregate amount of not less than USD350,000 multiplied by the number of Mortgaged Vessels for the preceding twelve-months period, to be tested first on the date falling on the first anniversary of the last Drawdown Date and annually thereafter;

8.1.25 Listing

procure that the Corporate Guarantor shall maintain its listing as a public limited company on NASDAQ or any other stock exchange acceptable to the Lender and comply with all of the listing rules, laws and regulations applicable to public companies listed on NASDAQ or such other acceptable stock exchange and shall take no steps to de-list without the prior consent of the Lender (such consent not to be unreasonably withheld);

8.1.26 Shipping activities

procure that the Corporate Guarantor shall at all times remain the ultimate holding company of shipowning companies engaged in shipping activities acceptable to the Lender;

8.1.27 Executive management

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procure that at all times throughout the Facility Period:

(a) Mr Aristeidis Pittas shall be the Chief Executive Officer or Chairman of the Corporate Guarantor; and

(b) the manager shall be managed and/or controlled by Mr Aristeidis Pittas or any other person acceptable to the Lender.

8.1.28 FATCA Information

(a) Subject to paragraph (c) below each party to any Security Document shall, within 10 Banking Days of a reasonable request by the other party to that Security Documents:

(i) confirm to that other party whether it is:

(A) a FATCA Exempt Party; or

(B) not a FATCA Exempt Party; and

(ii) supply to that other party such forms, documentation and other information relating to its status under FATCA as that other party reasonably requests for the purposes of that other party's compliance with FATCA;

(iii) supply to that other party such forms, documentation and other information relating to its status as that other party reasonably requests for the purposes of that other party's compliance with any other law, regulation, or exchange of information regime;

(b) if a party to any Security Document confirms to another party pursuant to paragraph (a)(i) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, that party shall notify the other party reasonably promptly;

(c) paragraph (a) above shall not oblige the Lender to do anything, and paragraph (a)(iii) above shall not oblige any other party to any Security Document to do anything, which would or might in its reasonable opinion constitute a breach of:

(i) any law or regulation;

(ii) any policy of the Lender;

(iii) any fiduciary duty; or

(iv) any duty of confidentiality;

(d) paragraph (a) above shall not oblige the Lender to do anything, and paragraph (a)(iii) above shall not oblige any other party to any Security Document to do anything, which would or might in its reasonable opinion cause it to disclose any confidential information (including, without limitation, its tax returns and calculations); provided, however, that information required (or equivalent to

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the information so required) by United States Internal Revenue Service Forms W-8 or W-9 (or any successor forms) shall not be treated as confidential information of such Lender for purposes of this paragraph (d);

(e) if a party to any Security Document fails to confirm whether or not it is a FATCA Exempt Party, or to supply forms, documentation or other information requested in accordance with paragraph (a) (i) or (ii) above (including, for the avoidance of doubt, where paragraph (c) above applies), then such party shall be treated for the purposes of the Security Documents (and payments under them) as if it is not a FATCA Exempt Party until (in each case) such time as that party provides the requested confirmation, forms, documentation or other information.

8.1.29 FATCA Deduction

(a) A party to any Security Document may make any FATCA Deduction it is required to make by FATCA, and any payment required in connection with that FATCA Deduction, and no party to any Security Document shall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction.

(b) A party to any Security Document shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate

or the basis of such FATCA Deduction) notify the party to whom it is making the payment and, in addition, shall notify the Borrowers and the Lender.

8.1.30 Equal treatment of lenders

If the Corporate Guarantor enters into an agreement or instrument with any of its banks, financiers or any other financial institution pursuant to which the Corporate Guarantor grants to such banks, financiers or other financial institutions any financial covenant, or amends any financial covenant given to such banks, financiers or other financial institutions, measured by reference to the financial statements of the Corporate Guarantor, the Borrowers must give immediate notice of those new or amended financial covenants to the Lender, and if the Lender (acting reasonably) considers those covenants (taken as a whole) to be more favourable to those banks, financiers or other financial institutions than those contained in clause 8.1.8 of this Agreement (also taken as a whole) then the Borrowers and/or the Corporate Guarantor shall enter into such documentation as the Lender shall reasonably require so that additional or amended financial covenants (taken as a whole) are given also to the Lender until the end of (i) the Facility Period or (ii) the period during which the additional or amended financial covenants will apply in favour of such banks, financiers or other financial institutions (whichever is the earlier) (PROVIDED THAT, for the avoidance of doubt, for the purpose of this clause any covenant regarding the provision of cash collateral or restricted cash of any sort granted to other banks, financiers or other financial institutions shall not constitute a financial covenant under this clause requiring the Borrowers and/or the Corporate Guarantor to extend the same to the Lender as well).

8.2 Security value maintenance

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8.2.1 Security shortfall

If at any time throughout the Facility Period the Security Value shall be less than the Required Security Amount, the Lender shall give notice to the Borrowers requiring that such deficiency be remedied and then the Borrowers must within 30 days of receipt of the Lender's said notice, either:

(a) prepay such part of the Loan as will result in the Security Value after such prepayment (taking into account any other repayment of the Loan made between the date of the notice and the date of such prepayment) being equal to or higher than the Required Security Amount; or

(b) constitute to the satisfaction of the Lender such further security for the Loan as shall be acceptable to the Lender having a value for security purposes (as determined by the Lender in accordance with clause 8.2.5) at the date upon which such further security shall be constituted which, when added to the Security Value, shall not be less than the Required Security Amount as at such date.

The provisions of clauses 4.6 and 4.7 shall apply to prepayments under clause 8.2.1(a) provided that the Lender shall apply such prepayments pro rata against the Repayment Instalments of the Advances which are at that time outstanding (including the Balloon Instalments) and the amount of the Loan prepaid hereunder shall not be available to be re-borrowed.

8.2.2 Valuation of Mortgaged Vessels

Each Mortgaged Vessel shall, for the purposes of this Agreement, be valued (at the Borrowers' expense) in USD by an Approved Broker appointed by, and reporting to, the Lender, such valuations to be made without physical inspection, and on the basis of a sale for prompt delivery for cash at arms' length, on normal commercial terms, as between a willing buyer and a willing seller, without taking into account the benefit or burden of any charterparty or other engagement concerning the relevant Mortgaged Vessel, at any time as the Lender shall require and at least once a year.

The Approved Broker's valuations for each Mortgaged Vessel on each such occasion shall constitute the Valuation Amount of such Mortgaged Vessel for the purposes of this Agreement until superseded by the next such valuation.

8.2.3 Information

The Borrowers undertake with the Lender to supply to the Lender and to the Approved Broker such information concerning the relevant Mortgaged Vessel and its condition as such shipbrokers may require for the purpose of determining any Valuation Amount.

8.2.4 Costs

The Borrowers shall pay all costs in connection with any determination of the Valuation Amount (which the Lender may obtain at any time, and at least once a year).

8.2.5 Valuation of additional security

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For the purposes of this clause 8.2, the market value (i) of any additional security over a ship (other than the Vessels) shall be determined in accordance with clause 8.2.2 and (ii) of any other additional security provided or to be provided to the Lender shall be determined by the Lender in its absolute discretion, Provided that additional security in the form of cash in Dollars will be valued on a Dollar for Dollar basis.

8.2.6 Documents and evidence

In connection with any additional security provided in accordance with this clause 8.2, the Lender shall be entitled to receive (at the Borrowers' expense) such evidence and documents of the kind referred to in schedule 2 as may in the Lender's opinion be appropriate and such favourable legal opinions as the Lender shall in its absolute discretion require.

8.2.7 Release of Security

If the Security Value shall at any time exceeds the Required Security Amount, and the Borrowers shall previously have provided further security to the Lender pursuant to clause 8.2.1, the Lender shall, as soon as reasonably practicable after notice from the Borrowers to do so and subject to being indemnified to its reasonable satisfaction against the cost of doing so, release any such further security specified by the Borrowers provided that the Lender is satisfied that, immediately following such release, the Security Value will equal or exceed the Required Security Amount.

8.3 Negative undertakings relating to the Borrowers

Each Borrower undertakes with the Lender that, from the Execution Date until the end of the Facility Period, it will procure that, except with the prior written consent of the Lender (and such consent in respect of any change of name of the Vessel not to be unreasonably withheld), it will not:

8.3.1 Negative pledge

permit any Encumbrance (other than a Permitted Encumbrance) to subsist, arise or be created or extended over all or any part of their respective present or future undertakings, assets, rights or revenues to secure or prefer any present or future Indebtedness or other liability or obligation of any Group Member or any other person;

8.3.2 No merger or transfer

merge or consolidate with any other person or permit any change to the legal or beneficial ownership of their shares from that existing at the Execution Date (and for the avoidance of doubt any change in the ownership of shares of and in the Corporate Guarantor occurring in the normal course of business shall not constitute a breach of this clause);

8.3.3 Disposals

sell, transfer, assign, create security or option over, pledge, pool, abandon, lend or otherwise dispose of or cease to exercise direct control over any part of their present or future undertaking, assets, rights or revenues (otherwise than by transfers, sales or disposals for full consideration in the ordinary course of trading) whether by one or a series of transactions related or not;

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8.3.4 Other business or manager

undertake any type of business other than the ownership and operation of the Vessels or (without the prior consent of the Lender) employ anyone other than the Manager as commercial and technical manager of the relevant Vessel;

8.3.5 Acquisitions

acquire, any assets other than the Vessels and rights arising under contracts entered into by or on behalf of the Owners in the ordinary course of their business of owning, operating and chartering the Vessels;

8.3.6 Other obligations

incur, any obligations except for obligations arising under the Underlying Documents or the Security Documents or contracts entered into in the ordinary course of their business of owning, operating and chartering the Vessels;

8.3.7 No borrowing

incur any Borrowed Money except for Borrowed Money pursuant to the Security Documents or incurred in the ordinary course of its business of owning, operating and chartering the Vessel;

8.3.8 Repayment of borrowings

repay or prepay the principal of, or pay interest on or any other sum in connection with any of their Borrowed Money except for Borrowed Money pursuant to the Security Documents;

8.3.9 Guarantees

issue any guarantees or otherwise become directly or contingently liable for the obligations of any person, firm, or corporation except pursuant to the Security Documents and except for guarantees from time to time required in the ordinary course of business or by any protection and indemnity or war risks association with which a Vessel is entered, guarantees required to procure the release of such Vessel from any arrest, detention, attachment or levy or guarantees required for the salvage of a Vessel;

8.3.10 Loans

make any loans or grant any credit (save for normal trade credit in the ordinary course of business) to any person or agree to do so;

8.3.11 Sureties

permit any Indebtedness of any Borrower to any person (other than to the Lender pursuant to the Security Documents) to be guaranteed by any person (except for guarantees from time to time required in the ordinary course of business or by any protection and indemnity or war risks association with which a Vessel is entered, guarantees required to procure the release of such Vessel from any arrest, detention, attachment or levy or guarantees or undertakings required for the salvage of a Vessel);

Or

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8.3.12 Flag, Class etc.

permit:

(a) any change in the name or flag of a Vessel;

(b) any change of Classification or Classification Society in respect of a Vessel;

(c) any change of Manager in respect of a Vessel; or

(d) any change in the ownership (including ultimate beneficial ownership) or control of a Borrower from that existing as at the date hereof and shall procure that there is no change in the ownership (including ultimate beneficial ownership) or control of the Manager (if other than the Corporate Guarantor) from that existing as at the date hereof (and for the avoidance of doubt any change in the ownership of shares of and in the Corporate Guarantor occurring in the normal course of business shall not constitute a breach of this clause);

8.3.13 Underlying Documents

terminate or materially amend or vary an Extended Employment Contract or a Management Agreement (and for the avoidance of doubt, material amendments include, but are not limited to, reductions of rate of hire, increase of management fees not already provided for in the Management Agreement and termination rights); or

8.3.14 Lay-up

de-activate or lay up a Vessel; or

8.3.15 Place of business

own or operate and will procure that no Security Party shall own or operate a place of business situate in England or the United States of America (save that the Lender acknowledges and agrees that the Corporate Guarantor is listed as a public limited company on NASDAQ); or

8.3.16 Share capital and distribution

declare or pay any dividends if an Event of Default has occurred and is continuing or would occur as a result of such declaration or payment or distribute any of its present or future assets, undertakings, rights or revenue;

8.3.17 Sharing of Earnings

permit there to he any agreement or arrangement whereby the Earnings of a Vessel may be shared or pooled howsoever with any other person except for customary profit sharing arrangeuieiils wider a cliar lerparty;

8.3.18 Lawful use

permit a Vessel to be employed:

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(a) in any way or in any activity with a Restricted Person or in any Sanctions Restricted Jurisdiction or which is (i) unlawful under international law or the domestic laws of any relevant country or (ii) contrary to any Sanctions;

(b) to the best of its knowledge, in carrying illicit or prohibited goods;

(c) in a way which may make that Vessel liable to be condemned by a prize court or destroyed, seized or confiscated;

(d) in any part of the world where there are hostilities (whether war has been declared or not), unless such employment has been notified to, and approved by, the relevant insurers of that Vessel; or

(e) to the best of its knowledge, in carrying contraband goods,

and the Borrowers shall procure that the persons responsible for the operation of such Vessel shall take all necessary and proper precautions to ensure that this does not happen, including participation in industry or other voluntary schemes available to that Vessel and in which leading operators of ships operating under the same flag or engaged in similar trades generally participate at the relevant time;

8.3.19 FATCA

become a FATCA FFI or a US Tax Obligor and shall procure that no Security Party shall do so;

8.3.20 Sale or transfer of ownership of Vessel

sell, or otherwise transfer its ownership of, the Vessel owned by it.

9 CONDITIONS

9.1 Availability of the Advances

The obligation of the Lender to make available any Advance is conditional upon:

9.1.1 the Lender, or its authorised representative, having received, not later than two (2) Banking Days before the day on which the Drawdown Notice is given, the documents and evidence specified in Part 1 of schedule 2 in form and substance satisfactory to the Lender; and

9.1.2 the representations and warranties contained in clause 7 being then true and correct as if each was made with respect to the facts and circumstances existing at such time and the same being unaffected by the drawdown of the Loan; and

9.1.3 no Default having occurred and being continuing and there being no Default which would result from the lending of the Advances.

9.2 Advance of the Advances

9.2.1 the obligation of the Lender to make available an Advance is conditional upon the Lender, or its authorised representative, having received, on or prior to the relevant Drawdown Date, the documents and evidence specified in Part 2 of schedule 2 in form

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and substance satisfactory to the Lender.

9.3 Waiver of conditions precedent

The conditions specified in this clause 9 are inserted solely for the benefit of the Lender and may be waived by the Lender in whole or in part and with or without conditions.

9.4 Further conditions precedent

Not later than five (5) Banking Days prior to a Drawdown Date the Lender may request and the Borrowers must, not later than two (2) Banking Days prior to such date, deliver to the Lender (at the Borrowers' expense) on such request further favourable certificates and/or opinions as to any or all of the matters which are the subject of clauses 7, 8, 9 and 10.

10 EVENTS OF DEFAULT

10.1 Events

Each of the following events shall constitute an Event of Default (whether such event shall occur voluntarily or involuntarily or by operation of law or regulation or in connection with any judgment, decree or order of any court or other authority or otherwise, howsoever):

10.1.1 Non-payment: any Security Party fails to pay any sum payable by it under any of the Security Documents to which it is a party at the time, in the currency and in the manner stipulated in the Security Documents (and so that, for this purpose, sums payable (i) under clauses 3.1 and 4.1 shall be treated as having been paid at the stipulated time if (aa) received by the Lender within three (3) Banking Days of the dates therein referred to and (bb) such delay in receipt is caused by administrative or other delays or errors within the banking system and (ii) on demand shall be treated as having been paid at the stipulated time if paid within three (3) Banking Days of demand); or

10.1.2 Breach of Insurance and certain other obligations: a Borrower or, as the context may require, the Manager or any other person fails to obtain and/or maintain the Insurances for any of the Mortgaged Vessels or if any insurer in respect of such Insurances cancels the Insurances or disclaims liability by reason, in either case, of mis-statement in any proposal for the Insurances or for any other failure or default on the part of a Borrower or any other person or a Borrower commits any breach of or omits to observe any of the obligations or undertakings expressed to be assumed by it under clause 8 or clause 14;

Or

10.1.3 Breach of other obligations: any Security Party commits any breach of or omits to observe any of its obligations or undertakings expressed to be assumed by it under any of the Security Documents (other than those referred to in clauses 10.1.1 and 10.1.2 above) unless such breach or omission, in the opinion of the Lender is capable of remedy, in which case the same shall constitute an Event of Default if it has not been remedied within fifteen (15) days of the occurrence thereof; or

10.1.4 Misrepresentation: any representation or warranty made or deemed to be made or repeated by or in respect of any Security Party in or pursuant to any of the Security Documents or in any notice, certificate or statement referred to in or delivered under

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any of the Security Documents is or proves to have been incorrect or misleading in any material respect; or

10.1.5 Cross-default: any Indebtedness of any Borrower or any Indebtedness of the Corporate Guarantor exceeding USD1,000,000 is not paid when due (subject to applicable grace periods) or any Indebtedness of any Borrower or any Indebtedness of the Corporate Guarantor exceeding USD1,000,000 becomes (whether by declaration or automatically in accordance with the relevant agreement or instrument constituting the same) due and payable prior to the date when it would otherwise have become due (unless as a result of the exercise by a Borrower or the Corporate Guarantor of a voluntary right of prepayment), or any creditor of a Borrower or the Corporate Guarantor becomes entitled to declare any such Indebtedness due and payable or any facility or commitment available to a Borrower or the Corporate Guarantor relating to Indebtedness is withdrawn, suspended or cancelled by reason of any default (however described) of the person concerned, and such Indebtedness of a Borrower or the Corporate Guarantor (as the case may be) is not paid within fourteen (14) Banking Days from the due date for payment; or

10.1.6 Execution: any uninsured judgment or order made against any Security Party is not stayed, appealed against or complied with within fifteen (15) days or a creditor attaches or takes possession of, or a distress, execution, sequestration or other process is levied or enforced upon or sued out against, any of the undertakings, assets, rights or revenues of any Security Party and is not discharged within twenty (20) days; or

10.1.7 Insolvency: any Security Party is unable or admits inability to pay its debts as they fall due; suspends making payments on any of its debts or announces an intention to do so; becomes insolvent; or has negative net worth (taking into account contingent liabilities); or suffers the declaration of a moratorium in respect of any of its Indebtedness; or

10.1.8 Dissolution: any corporate action, Proceedings or other steps are taken to dissolve or wind-up any Security Party unless the Borrowers can demonstrate to the satisfaction of the Lender, by providing an opinion of leading counsel that such corporate action, Proceedings or other steps are frivolous, vexatious or an abuse of the process of the court or an order is made or resolution passed for the dissolution or winding up of any Security Party or a notice is issued convening a meeting for such purpose; or

10.1.9 Administration: any petition is presented, notice given or other steps are taken anywhere to appoint an administrator of any Security Party or an administration order is made in relation to any Security Party; or

10.1.10 Appointment of receivers and managers: any administrative or other receiver is appointed anywhere of any Security Party or any material part of its assets and/or undertaking or any other steps are taken to enforce any Encumbrance over all or any substantial part of the assets of any Security Party; or

10.1.11 Compositions: any corporate action, legal proceedings or other procedures or steps are taken or negotiations commenced, by any Security Party or by any of its creditors with a view to the general readjustment or rescheduling of all or a substantial part of its Indebtedness or to proposing any kind of composition, compromise or arrangement involving such company and any of its creditors (excluding always negotiations with holders of preferred shares); or

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10.1.12 Analogous proceedings: there occurs, in relation to any Security Party, in any country or territory in which any of them carries on business or to the jurisdiction of whose courts any part of their assets is subject, any event which, in the reasonable opinion of the Lender, appears in that country or territory to correspond with, or have an effect equivalent or similar to, any of those mentioned in clauses 10.1.6 to 10.1.11 (inclusive) or any Security Party otherwise becomes subject, in any such country or territory, to the operation of any law relating to insolvency, bankruptcy or liquidation; or

10.1.13 Cessation of business: any Security Party suspends or ceases or threatens to suspend or cease to carry on its business without the prior consent of the Lender; or

10.1.14 Seizure: all or a material part of the undertaking, assets, rights or revenues of, or shares or other ownership interests in, any Security Party are seized, nationalised, expropriated or compulsorily acquired by or under the authority of any Government Entity and the same are not returned to the relevant Security Party within 45 days of such seizure, nationalisation, expropriation or compulsory acquisition; or

10.1.15 Invalidity: any of the Security Documents shall at any time and for any reason become invalid or unenforceable or otherwise cease to remain in full force and effect, or if the validity or enforceability of any of the Security Documents shall at any time and for any reason be contested by any Security Party which is a party thereto, or if any such Security Party shall deny that it has any, or any further, liability thereunder; or

10.1.16 Unlawfulness: any Unlawfulness occurs or it becomes impossible or unlawful at any time for any Security Party, to fulfil any of the covenants and obligations expressed to be assumed by it in any of the Security Documents or for the Lender to exercise the rights or any of them vested in it under any of the Security Documents or otherwise; or

10.1.17 Repudiation: any Security Party repudiates any of the Security Documents or does or causes or permits to be done any act or thing evidencing an intention to repudiate any of the Security Documents; or

10.1.18 Encumbrances enforceable: any Encumbrance (other than Permitted Encumbrances) in respect of any of the property (or part thereof) which is the subject of any of the Security Documents becomes enforceable; or

10.1.19 Arrest: a Mortgaged Vessel is arrested, confiscated, seized, taken in execution, impounded, forfeited, detained in exercise or purported exercise of any possessory lien or other claim or otherwise taken from the possession of its Owner and that Owner shall fail to procure the release of such Mortgaged Vessel within a period of fifteen (15) days thereafter; or

10.1.20 Registration: the registration of any Mortgaged Vessel under the laws and flag of the relevant Flag State is cancelled or terminated without the prior written consent of the Lender; or

10.1.21 Unrest: the Flag State of a Vessel becomes involved in hostilities or civil war or there is a seizure of power in the Flag State by unconstitutional means unless the Owner of the Vessel registered in such Flag State shall have transferred its Vessel onto a new flag acceptable to the Lender within thirty (30) days of the Lender's written request to the Borrowers to effect such transfer; or

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10.1.22 Environmental Incidents: an Environmental Incident occurs which gives rise, or may give rise, to an Environmental Claim which could, in the opinion of the Lender be expected to have a Material Adverse Effect (i) on the financial condition of any Security Party or the Group taken as a whole or (ii) on the security constituted by any of the Security Documents or the enforceability of that security in accordance with its terms; or

10.1.23 P&I: an Owner or the Manager or any other person fails or omits to comply with any requirements of the protection and indemnity association or other insurer with which a Mortgaged Vessel is entered for insurance or insured against protection and indemnity risks (including oil pollution risks) to the effect that any cover (including, without limitation, any cover in respect of liability for Environmental Claims arising in jurisdictions where such Mortgaged Vessel operates or trades) is or may be liable to cancellation, qualification or exclusion at any time; or

10.1.24 Material events: any other event occurs or circumstance arises which, in the reasonable opinion of the Lender, is likely materially and adversely to affect either (i) the ability of any Security Party to perform all or any of its obligations under or otherwise to comply with the terms of any of the Security Documents to which it is a party or (ii) the security created by any of the Security Documents or (iii) the value or nature of the financial condition of any Security Party (other than the Manager); or

10.1.25 Required Authorisations: to the extent it has not been waived, any Required Authorisation is revoked or withheld or modified or is otherwise not granted or fails to remain in full force and effect;

10.1.26 Money Laundering: any Security Party is in breach of or fails to observe any law, requirement, measure or procedure implemented to combat "money laundering" as defined in Article 1 of the Directive (91/308 EEC) of the Council of the European Communities; or

10.1.27 Management Agreement: a Management Agreement is terminated, revoked, suspended, rescinded, transferred, novated or otherwise ceases to remain in full force and effect for any reason except with the prior consent of the Lender; or

10.1.28 Change of Ownership: there is any change in the immediate and/or ultimate legal and/or beneficial ownership or control of any of the shares of a Borrower or the Shareholder from that existing on the Execution Date (and for the avoidance of doubt any change in the ownership of shares of and in the Corporate Guarantor occurring in the normal course of business shall not constitute a breach of this clause); or

10.1.29 Sanctions: a Security Party fails to comply with clauses 7.1.26 (Restricted Persons, unlawful activity), 7.1.27 (Sanctions) or 8.1.21 (Sanctions) of this Agreement.

10.2 Acceleration

The Lender may at any time after the occurrence of an Event of Default, and only while the same is continuing and has not been remedied or waived, by notice to the Borrowers declare that:

10.2.1 the obligation of the Lender to make its Commitment available shall be terminated, whereupon the Total Commitment shall be reduced to zero forthwith; and/or

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10.2.2 the Loan and all interest accrued and all other sums payable whatsoever under the Security Documents have become due and payable, whereupon the same shall, immediately or in accordance with the terms of such notice, become due and payable.

10.3 Demand Basis

If, under clause 10.2.2, the Lender has declared the Loan to be due and payable on demand, at any time thereafter the Lender shall by written notice to the Borrowers (a) demand repayment of the Loan on such date as may be specified whereupon, regardless of any other provision of this Agreement, the Loan shall become due and payable on the date so specified together with all interest accrued and all other sums payable under this Agreement or (b) withdraw such declaration with effect from the date specified in such notice.

11 INDEMNITIES

11.1 General indemnity

Each Borrower agrees to indemnify the Lender on demand, without prejudice to any of the Lender's other rights under any of the Security Documents, against any loss (including loss of Margin) or expense (including, without limitation, Break Costs) which the Lender shall certify as sustained by it as a consequence of any Default, any prepayment of the Loan being made under clauses 4.3, 4.4, 8.2.1(a) or 12.1 or any other repayment or prepayment of the Loan being made otherwise than on an Interest Payment Date relating to the part of the Loan prepaid or repaid; and/or the Loan not being made for any reason (excluding any default by the Lender) after the Drawdown Notice has been given.

11.2 Environmental indemnity

The Borrowers shall indemnify the Lender on demand and hold it harmless from and against all costs, claims, expenses, payments, charges, losses, demands, liabilities, actions, Proceedings, penalties, fines, damages, judgements, orders, sanctions or other outgoings of whatever nature which may be incurred or made or asserted whensoever against the Lender at any time, whether before or after the repayment in full of principal and interest under this Agreement, arising howsoever out of an Environmental Claim made or asserted against the Lender which would not have been, or been capable of being, made or asserted against the Lender had it not entered into any of the Security Documents or been involved in any of the resulting or associated transactions.

11.3 Capital adequacy and reserve requirements indemnity

The Borrowers shall promptly indemnify the Lender on demand against any cost incurred or loss suffered by the Lender as a result of its complying with (i) the minimum reserve requirements from time to time of the European Central Bank (ii) any capital adequacy directive of the European Union and/or (iii) any revised framework for international convergence of capital measurements and capital standards and/or any regulation imposed by any Government Entity in connection therewith, and/or in connection with maintaining required reserves with a relevant national central bank to the extent that such compliance or maintenance relates to the Commitment and/or the

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Loan or deposits obtained by it to fund the whole or part thereof and to the extent such cost or loss is not recoverable by the Lender under clause 12.2.

12 UNLAWFULNESS, INCREASED COSTS AND BAIL-IN

12.1 Unlawfulness

If it is or becomes contrary to any law, directive or regulation for the Lender to contribute to the Loan or to maintain its Commitment or fund the Loan, the Lender shall promptly give notice to the Borrowers whereupon (a) the Loan and Commitment shall be reduced to zero and (b) the Borrowers shall be obliged to prepay the Loan either (i) forthwith (without premium or penalty) or (ii) on a future specified date not being earlier than the latest date permitted by the relevant law, directive or regulation together with interest accrued to the date of prepayment and all other sums payable by the Borrowers under this Agreement.

Provided that if circumstances arise which would result in a notification under this clause 12.1 then, prior to giving such notice, the Lender shall use reasonable endeavours to transfer its obligations, liabilities and rights under this Agreement and the Security Documents to another office of the Lender not affected by the circumstances but the Lender shall not be under any obligation to take any such action if, in its opinion, to do would or might:

(a) have an adverse effect on its business, operations or financial condition; or

(b) involve it in any activity which is unlawful or prohibited or any activity that is contrary to, or inconsistent with, any regulation; or

(c) involve it in any expense (unless indemnified to its satisfaction) or tax disadvantage.

12.2 Increased costs

If the result of any change in, or in the interpretation or application of, or the introduction of, any law or any regulation, request or requirement (whether or not having the force of law, but, if not having the force of law, with which the Lender or, as the case may be, its holding company habitually complies), including (without limitation) those relating to Taxation, capital adequacy, liquidity, reserve assets, cash ratio deposits and special deposits, is to:

12.2.1 subject the Lender to Taxes or change the basis of Taxation of the Lender with respect to any payment under any of the Security Documents (other than Taxes or Taxation on the overall net income, profits or gains of the Lender imposed in the jurisdiction in which its principal or lending office under this Agreement is located); and/or

12.2.2 increase the cost to, or impose an additional cost on, the Lender or its holding company in making or keeping the Commitment available or maintaining or funding all or part of the Loan; and/or

12.2.3 reduce the amount payable or the effective return to the Lender under any of the Security Documents; and/or

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12.2.4 reduce the Lender's or its holding company's rate of return on its overall capital by reason of a change in the manner in which it is required to allocate capital resources to its obligations under any of the Security Documents; and/or

12.2.5 require the Lender or its holding company to make a payment or forgo a return on or calculated by reference to any amount received or receivable by it under any of the Security Documents; and/or

12.2.6 require the Lender or its holding company to incur or sustain a loss (including a loss of future potential profits) by reason of being obliged to deduct all or part of the Commitment or the Loan from its capital for regulatory purposes,

then and in each such case (subject to clause 12.3):

(a) the Lender shall notify the Borrowers in writing of such event promptly upon its becoming aware of the same; and

(b) the Borrowers shall on demand made at any time whether or not the Loan has been repaid, pay to the Lender the amount which the Lender specifies (in a certificate setting forth the basis of the computation of such amount but not including any matters which the Lender or its holding company regards as confidential) is required to compensate the Lender and/or (as the case may be) its holding company for such liability to Taxes, cost, reduction, payment , forgone return or loss.

For the purposes of this clause 12.2 "holding company" means the company or entity (if any) within the consolidated supervision of which the Lender is included.

12.3 Exception

Nothing in clause 12. shall entitle the Lender to receive any amount in respect of compensation for any such liability to Taxes, increased or additional cost, reduction, payment, foregone return or loss to the extent that the same is the subject of an additional payment under clause 6.6.

12.4 Contractual recognition of bail-in

Notwithstanding any other term of any Security Document or any other agreement, arrangement or understanding between the parties to this Agreement, each such party acknowledges and accepts that any liability of any party to this Agreement to any other party to this Agreement under or in connection with the Security Documents may be subject to Bail-In Action by the relevant Resolution Authority and acknowledges and accepts to be bound by the effect of:

(a) any Bail-In Action in relation to any such liability, including (without limitation):

(i) a reduction, in full or in part, in the principal amount, or outstanding amount due (including any accrued but unpaid interest) in respect of any such liability;

(ii) a conversion of all, or part of, any such liability into shares or other instruments of ownership that may be issued to, or conferred on, it; and

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(iii) a cancellation of any such liability; and

(b) a variation of any term of any Security Document to the extent necessary to give effect to any Bail-In Action in relation to any such liability

13 APPLICATION OF MONEYS, SET OFF, PRO-RATA PAYMENTS AND MISCELLANEOUS

13.1 Application of moneys

All moneys received by the Lender under or pursuant to any of the Security Documents and expressed to be applicable in accordance with the provisions of this clause 13.1 or in a manner determined in the Lender's discretion, shall be applied in the following manner:

13.1.1 first, in or towards payment, in such order as the Lender may decide, of any unpaid costs and expenses of the Lender under any of the Security Documents;

13.1.2 secondly, in or towards payment of any fees payable to the Lender under, or in relation to, the Security Documents which remain unpaid;

13.1.3 thirdly, in or towards payment to the Lender of any accrued default interest owing pursuant to clause 3.4 but remains unpaid;

13.1.4 fourthly, in or towards payment to the Lender of any accrued interest owing in respect of the Loan which shall have become due under any of the Security Documents but remains unpaid;

13.1.5 fifthly, in or towards payment to the Lender of any due but unpaid Repayment Instalments;

13.1.6 sixthly, in or towards payment to the Lender in application in repayment of the Loan in accordance with clause 4.7.2;

13.1.7 seventhly, in or towards payment for any loss suffered by reason of any such payment in respect of principal not being effected on an Interest Payment Date relating to the part of the Loan repaid and which amounts are so payable under this Agreement and any other sum relating to the Loan which shall have become due under any of the Security Documents but remains unpaid; and

13.1.8 eighthly, the surplus (if any) shall be paid to the Borrowers or to whomsoever else may then be entitled to receive such surplus.

The order of application set out in clauses 13.1.1 to 13.1.8 may be varied by the Lender without any reference to, or consent or approval from, the Borrowers.

13.2 Set-off

13.2.1 Each Borrower irrevocably authorises the. Tender (without prejudice to any of the Lender's rights at law, in equity or otherwise), following the occurrence of an Event of Default which is continuing, and without notice to the Borrowers, to apply any credit balance to which any Borrower is then entitled standing upon any account of any Borrower with any branch of the Lender in or towards satisfaction of any sum due and

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payable from any Borrower to the Lender under any of the Security Documents. For this purpose, the Lender is authorised to purchase with the moneys standing to the credit of such account such other currencies as may be necessary to effect such application.

13.2.2 The Lender shall not be obliged to exercise any right given to it by this clause 13.2. The Lender shall notify the Borrowers forthwith upon the exercise or purported exercise of any right of set off giving full details in relation thereto.

13.2.3 Nothing in this clause 13.2 shall be effective to create a charge or other security interest.

13.3 Further assurance

Each Borrower undertakes with the Lender that the Security Documents shall both at the date of execution and delivery thereof and throughout the Facility Period be valid and binding obligations of the respective parties thereto which, with the rights of the Lender thereunder, are enforceable in accordance with their respective terms and that it will, at its expense, execute, sign, perfect and do, and will procure the execution, signing, perfecting and doing by each of the other Security Parties of, any and every such further assurance, document, act or thing as in the reasonable opinion of the Lender may be necessary for perfecting the security contemplated or constituted by the Security Documents.

13.4 Conflicts

In the event of any conflict between this Agreement and any of the other Security Documents, the provisions of this Agreement shall prevail.

13.5 No implied waivers, remedies cumulative

No failure or delay on the part of the Lender to exercise any power, right or remedy under any of the Security Documents shall operate as a waiver thereof, nor shall any single or partial exercise by the Lender of any power, right or remedy preclude any other or further exercise thereof or the exercise of any other power, right or remedy. The remedies provided in the Security Documents are cumulative and are not exclusive of any remedies provided by law. No waiver by the Lender shall be effective unless it is in writing.

13.6 Scvcrability

If any provision of this Agreement is prohibited, invalid, illegal or unenforceable in any jurisdiction, such prohibition, invalidity, illegality or unenforceability shall not affect or impair howsoever the remaining provisions thereof or affect the validity, legality or enforceability of such provision in any other jurisdiction.

13.7 Force Majeure

Regardless of any other provision of this Agreement, the Lender shall not be liable for any failure to perform the whole or any part of this Agreement resulting directly or indirectly from (i) the action or inaction or purported action of any governmental or local authority (ii) any strike, lockout, boycott or blockade (including any strike, lockout, boycott or blockade effected by or upon the Lender or any of its representatives

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or employees) (iii) any act of God (iv) any act of war (whether declared or not) or terrorism or (v) any other circumstances whatsoever outside the Lender's control.

13.8 Amendments

This Agreement may be amended or varied only by an instrument in writing executed by all parties hereto who irrevocably agree that the provisions of this clause 13.8 may not be waived or modified except by an instrument in writing to that effect signed by all of them.

13.9 Counterparts

This Agreement may be executed in any number of counterparts and all such counterparts taken together shall be deemed to constitute one and the same agreement which may be sufficiently evidenced by one counterpart.

13.10 English language

All documents required to be delivered under and/or supplied whensoever in connection howsoever with any of the Security Documents and all notices, communications, information and other written material whatsoever given or provided in connection howsoever therewith must either be in the English language or accompanied, at the Lender's request, by an English translation certified by a notary, lawyer or consulate acceptable to the Lender.

14 ACCOUNTS

14.1 General

Each Borrower undertakes with the Lender that it will ensure that:

14.1.1 it will on or before the Drawdown Date, open an Earnings Account in its name; and

14.1.2 all moneys payable to any Borrower in respect of the Earnings of its Mortgaged Vessel shall, unless and until the Lender directs to the contrary pursuant to the provisions of the relevant Mortgage, be paid to the Earnings Account in the name of that Borrower, Provided however that if any of the moneys paid to such Earnings Account are payable in a currency other than USD, they shall be paid to a sub-account of that Earnings Account denominated in such currency (except that if the relevant Borrower fails to open such a sub-account, the Lender shall then convert such moneys into USD at the Lender's spot rate of exchange at the relevant time for the purchase of USD with such currency and the term "spot rate of exchange" shall include any premium and costs of exchange payable in connection with the purchase of USD with such currency).

14.2 Earnings Account: withdrawals

Any sums standing to the credit of an Earnings Account may be applied by the Borrowers from time to time, subject to no Event of Default having occurred which is continuing unremedied and unwaived, in (i) making the payments required under this Agreement, (ii) the supply, crewing, management, maintenance, repair, insurance, operation and trading of the Mortgaged Vessels and (iii) payment of dividends to their shareholders annually.

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14.3 Application of accounts

At any time after the occurrence of an Event of Default and while the same is continuing unwaived and unremedied, the Lender may, without prior notice to the Borrowers, apply all moneys then standing to the credit of the Earnings Account (together with interest from time to time accruing or accrued thereon) in or towards satisfaction of any sums due to Lender under the Security Documents at the time of such applications in the manner specified in clause 13.1. Following such application, the Lender shall give notice thereof to the Borrowers.

15 ASSIGNMENT, TRANSFER AND LENDING OFFICE

15.1 Benefit and burden

This Agreement shall be binding upon, and ensure for the benefit of, the Lender and the Borrowers and their respective successors in title.

15.2 No assignment by Borrowers

No Borrower may assign or transfer any of its rights or obligations under this Agreement.

15.3 Transfer by Lender

The Lender may at any time (i) change its office through which the Loan is made available or (ii) cause all or any part of its rights, benefits and/or obligations under this Agreement and the other Security Documents to be transferred or assigned without the consent of the Borrowers to a wholly-owned banking subsidiary or associated company of the Lender or to any third party (in either case a "Transferee Lender") provided always that any such Transferee Lender, by delivery of such undertaking as the Lender may approve, becomes bound by the terms of this Agreement and agrees to perform all or, as the case may be, relevant part of the Lender's obligations under this Agreement the rights and equities of the Borrowers or of any other Security Party referred to above include, but are not limited to, any right of set-off and any other kind of cross-claim.

15.4 Documenting transfers

If the Lender assigns all or any part of its rights or transfers all or any part of its rights, benefits and/or obligations as provided in clause 15.3, each Borrower undertakes, immediately on being requested to do so by the Lender and at the cost of the Transferee Lender, to enter into, and procure that the other Security Parties shall (at the cost of the Transferee Lender) enter into, such documents as may be necessary or desirable to transfer to the Transferee Lender all or the relevant part of the Lender's interest in the Security Documents and all relevant references in this Agreement to the Lender shall thereafter be construed as a reference to the Lender and/or its Transferee Lender (as the case may be) to the extent of their respective interests. For the avoidance of doubt there will be no expense for the Borrower in connection with an assignment or transfer, as provided in clauses 15.3 and 15.5

15.5 Sub-Participation

The Lender may sub-participate all or any part of its rights and/or obligations under the Security Documents at its own expense without the consent of, or notice to, the

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Borrowers. Any such sub-participation shall have no effect on the Lender's rights under the Security Documents and shall not affect the Borrowers at all.

15.6 Disclosure of information

The Lender may disclose to a prospective assignee, transferee or to any other person (a "Prospective Assignee") who may propose entering into contractual relations with the Lender in relation to this Agreement such information about the Borrowers and/or the other Security Parties as the Lender shall consider appropriate, but only if the Prospective assignee has first undertaken to the Borrowers to keep secret and confidential and, not without the prior written consent of the Borrowers, disclose to any third party, any of the information, reports or documents to be supplied by the Lender.

15.7No additional costs

If at the time of, or immediately after, any assignment or transfer by the Lender of all or any part of its rights or benefits or obligations under this Agreement, or any change in the office through which it lends for the purposes of this Agreement, the Borrowers would be obliged to pay to the Lender or, as the case may be, the Transferee Lender under clause 3.5, 6.6 or clause 12.2 any sum in excess of the sum (if any) which it would have been obliged to pay to the Lender or the Transferor Lender, as the case may be, under the relevant clause in the absence of such assignment, transfer or change, the Borrowers shall not be obliged to pay that excess.

16 NOTICES AND OTHER MATTERS

16.1 Notices

16.1.1 unless otherwise specifically provided herein, every notice under or in connection with this Agreement shall be given in English by letter delivered personally and/or sent by post and/or transmitted by fax and/or electronically;

16.1.2 in this clause "notice" includes any demand, consent, authorisation, approval, instruction, certificate, request, waiver or other communication.

16.2 Addresses for communications, effective date of notices

16.2.1 Subject to clause 16.2.2 and clause 16.2.5 notices to the Borrowers shall be deemed to have been given and shall take effect when received in full legible form by the Borrowers at the address and/or the fax number appearing below (or at such other address or fax number or email address as the Borrowers may hereafter specify for such purpose to the Lender by notice in writing);

Address:	c/o Euroseas Ltd.
	4 Messogiou & Evropis Street
	151 24 Maroussi
	Greece
Fax:	+30 211 1804097
Attn:	Anastasios Aslidis
Email:	aha@euroseas.gr

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16.2.2 notwithstanding the provisions of clause 16.2.1 or clause 16.2.5, a notice of Default and/or a notice given pursuant to clause 10.2 or clause 10.3 to the Borrowers shall be deemed to have been given and shall take effect when delivered, sent or transmitted by the Lender to the Borrowers to the address or fax number referred to in clause 16.2.1;

16.2.3 subject to clause 16.2.5, notices to the Lender shall be deemed to be given, and shall take effect, when received in full legible form by the Lender at the address and/or the fax number appearing below (or at any such other address or fax number as the Lender may hereafter specify for such purpose to the Borrowers in writing);

Address:	170 Alexandras Ave.
	11521 Athens
	Greece
Fax No.	+30 210 3739783
Attention:	Thanassis Doudoulas / Olga Voutsa
Email:	DoudoulasA@piraeusbank.gr / VoutsaOl@piraeusbank.gr

16.2.4 subject to clause 16.2.5, notices to the Lender shall be deemed to be given and shall take effect when received in full legible form by the Lender at its address and/or fax number specified in the definition of "Lender" (or at any other address or fax number as the Lender may hereafter specify for such purpose); and

16.2.5 if under clause 16.2.1 or clause 16.2.3 a notice would be deemed to have been given and effective on a day which is not a working day in the place of receipt or is outside the normal business hours in the place of receipt, the notice shall be deemed to have been given and to have taken effect at the opening of business on the next working day in such place.

16.3 Electronic Communication

16.3.1 Any communication to be made by and/or between the Lender and the Security Parties or any of them under or in connection with the Security Documents or any of them may be made by electronic mail or other electronic means, if and provided that all such parties:

(a) notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and

(b) notify each other of any change to their electronic mail address or any other such information supplied by them.

16.3.2 Any electronic communication made by and/or between the Lender and the Security Parties or any of them will be effective only when actually received in readable form.

16.3.3 The Lender and the Borrowers further agree that information may be sent via email to (or from) third parties involved in the provision of services. In particular, the Borrowers are aware that:

(a) the unencrypted information is transported over an open, publicly accessible network and can, in principle, be viewed by others, thereby allowing conclusions to be drawn about a banking relationship;

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(b) the information can be changed and manipulated by a third party;

(c) the sender's identity (sender of the e-mail) can be assumed or otherwise manipulated;

(d) the exchange of information can be delayed or disrupted due to transmission errors, technical faults, disruptions, malfunctions, illegal interventions, network overload, the malicious blocking of electronic access by third parties, or other shortcomings on the part of the network provider. In certain situations, time-critical orders and instructions might not be processed on time;

(e) the Lender assumes no liability for any loss incurred as a result of manipulation of the e-mail address or content nor is it liable for any loss incurred by the Borrowers and any other Security Party due to interruptions and delays in transmission caused by technical problems.

16.3.4 The Lender is entitled to assume that all the orders and instructions, and communications in general, received from the Borrowers or a third party are from an authorized individual, irrespective of the existing signatory rights in accordance with the commercial register (or any other applicable equivalent document) or the specimen signature provided to the Lender. The Borrowers shall further procure that all third parties referred to herein agree with the use of emails and are aware of the above terms and conditions related to the use of email.

17 GOVERNING LAW

This Agreement and any non-contractual obligations arising out of or in connection with it is governed by and shall be construed in accordance with English law.

18 JURISDICTION

18.1 Exclusive Jurisdiction

For the benefit of the Lender, and subject to clause 18.4 below, each Borrower hereby irrevocably agrees that the courts of England shall have exclusive jurisdiction:

18.1.1 to settle any disputes or other matters whatsoever arising under or in connection with this Agreement or any non-contractual obligation arising out of or in connection with this Agreement and any disputes or other such matters arising in connection with the negotiation, validity or enforceability of this Agreement or any part thereof, whether the alleged liability shall arise under the laws of England or under the laws of some other country and regardless of whether a particular cause of action may successfully be brought in the English courts; and

18.1.2 to grant interim remedies or other provisional or protective relief.

18.2 Submission and service of process

Each Borrower accordingly irrevocably and unconditionally submits to the jurisdiction of the English courts. Without prejudice to any other mode of service each Borrower:

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18.2.1 irrevocably empowers and appoints Messrs Hill Dickinson Services (London) Ltd at present of The Broadgate Tower, 20 Primrose Street, London EC2A 2EW, England as its agent to receive and accept on its behalf any process or other document relating to any proceedings before the English courts in connection with this Agreement;

18.2.2 agrees to maintain such an agent for service of process in England from the date hereof until the end of the Facility Period;

18.2.3 agrees that failure by a process agent to notify the Borrowers of service of process will not invalidate the proceedings concerned;

18.2.4 without prejudice to the effectiveness of service of process on its agent under clause 18.2.1 above but as an alternative method, consents to the service of process relating to any such proceedings by mailing or delivering a copy of the process to its address for the time being applying under clause 16.2; and

18.2.5 agrees that if the appointment of any person mentioned in clause 18.2.1 ceases to be effective, the Borrowers shall immediately appoint a further person in England to accept service of process on its behalf in England and, failing such appointment within seven (7) days the Lender shall thereupon be entitled and is hereby irrevocably authorised by the Borrowers in those circumstances to appoint such person by notice to the Borrowers.

18.3 Forum non conveniens and enforcement abroad

Each Borrower:

18.3.1 waives any right and agrees not to apply to the English court or other court in any jurisdiction whatsoever to stay or strike out any proceedings commenced in England on the ground that England is an inappropriate forum and/or that Proceedings have been or will be started in any other jurisdiction in connection with any dispute or related matter falling within clause 18.1; and

18.3.2 agrees that a judgment or order of an English court in a dispute or other matter falling within clause 18.1 shall be conclusive and binding on the Borrowers and may be enforced against it in the courts of any other jurisdiction.

18.4 Right of Lender, but not Borrowers, to bring proceedings in any other jurisdiction

18.4.1 Nothing in this clause 18 limits the right of the Lender to bring Proceedings, including third party proceedings, against the Borrowers or any of them, or to apply for interim remedies, in connection with this Agreement in any other court and/or concurrently in more than one jurisdiction;

18.4.2 the obtaining by the Lender of judgment in one jurisdiction shall not prevent the Lender from bringing or continuing proceedings in any other jurisdiction, whether or not these shall be founded on the same cause of action.

18.5 Enforceability despite invalidity of Agreement

Without prejudice to the generality of clause 13.6, the jurisdiction agreement contained in this clause 18 shall be severable from the rest of this Agreement and shall remain valid, binding and in full force and shall continue to apply notwithstanding this

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Agreement or any part thereof being held to be avoided, rescinded, terminated, discharged, frustrated, invalid, unenforceable, illegal and/or otherwise of no effect for any reason.

18.6 Effect in relation to claims by and against non-parties

18.6.1 For the purpose of this clause "Foreign Proceedings" shall mean any Proceedings except proceedings brought or pursued in England arising out of or in connection with (i) or in any way related to any of the Security Documents or any assets subject thereto or (ii) any action of any kind whatsoever taken by the Lender pursuant thereto or which would, if brought by the Borrowers or any of them against the Lender, have been required to be brought in the English courts;

18.6.2 no Borrower shall not bring or pursue any Foreign Proceedings against the Lender and each Borrower shall use its best endeavours to prevent persons not party to this Agreement from bringing or pursuing any Foreign Proceedings against the Lender;

18.6.3 If, for any reason whatsoever, any Security Party and/or any person connected howsoever with any Security Party (including but not limited to any shareholder of any Borrower) brings or pursues against the Lender any Foreign Proceedings, the Borrowers shall indemnify the Lender on demand in respect of any and all claims, losses, damages, demands, causes of action, liabilities, costs and expenses (including, but not limited to, legal costs) of whatsoever nature howsoever arising from or in connection with such Foreign Proceedings which the Lender certifies as having been incurred by it;

the Lender and the Borrowers hereby agree and declare that the benefit of this clause 18 shall extend to and may be enforced by any officer, employee, agent or business associate of the Lender against whom any Borrower brings a claim in connection howsoever with any of the Security Documents or any assets subject thereto or any action of any kind whatsoever taken by, or on behalf of or for the purported benefit of the Lender pursuant thereto or which, if it were brought against the Lender, would fall within the material scope of clause 18.1. In those circumstances this clause 18 shall be read and construed as if references to the Lender were references to such officer, employee, agent or business associate, as the case may be.

19 Borrowers' obligations

19.1 Joint and several

Regardless of any other provision in any of the Security Documents, all obligations and liabilities whatsoever of the Borrowers herein contained are joint and several and shall be construed accordingly. Each of the Borrowers agrees and consents to be bound by the Security Documents to which it becomes a party notwithstanding that the other Borrowers may not do so or be effectually bound and notwithstanding that any of the Security Documents may be invalid or unenforceable against the other Borrowers, whether or not the deficiency is known to the Lender.

19.2 Borrowers as principal debtors

Each Borrower acknowledges that it is a principal and original debtor in respect of all amounts which may become payable by the Borrowers in accordance with the terms of

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any of the Security Documents and agrees that the Lender may continue to treat it as such, whether or not the Lender is or becomes aware that such Borrower is or has become a surety for the other Borrowers.

19.3 Indemnity

The Borrowers undertake to keep the Lender fully indemnified on demand against all claims, damages, losses, costs and expenses arising from any failure of any Borrower to perform or discharge any purported obligation or liability of that Borrower which would have been the subject of this Agreement or any other Security Document had it been valid and enforceable and which is not or ceases to be valid and enforceable against the other Borrowers on any ground whatsoever, whether or not known to the Lender including, without limitation, any irregular exercise or absence of any corporate power or lack of authority of, or breach of duty by, any person purporting to act on behalf of the other Borrowers (or any legal or other limitation, whether under the Limitation Acts or otherwise or any disability or death, bankruptcy, unsoundness of mind, insolvency, liquidation, dissolution, winding up, administration, receivership, amalgamation, reconstruction or any other incapacity of any person whatsoever (including, in the case of a partnership, a termination or change in the composition of the partnership) or any change of name or style or constitution of any Security Party)).

19.4 Liability unconditional

None of the obligations or liabilities of the Borrowers under any Security Document shall be discharged or reduced by reason of:

19.4.1 the death, bankruptcy, unsoundness of mind, insolvency, liquidation, dissolution, winding-up, administration, receivership, amalgamation, reconstruction or other incapacity of any person whatsoever (including, in the case of a partnership, a termination or change in the composition of the partnership) or any change of name or style or constitution of any Borrower or any other person liable;

19.4.2 the Lender granting any time, indulgence or concession to, or compounding with, discharging, releasing or varying the liability of, any Borrower or any other person liable or renewing, determining, varying or increasing any accommodation, facility or transaction or otherwise dealing with the same in any manner whatsoever or concurring in, accepting, varying any compromise, arrangement or settlement or omitting to claim or enforce payment from any Borrower or any other person liable; or

19.4.3 anything done or omitted which but for this provision might operate to exonerate the Borrowers or any of them.

19.5 Recourse to other security

The Lender shall not be obliged to make any claim or demand or to resort to any security or other means of payment now or hereafter held by or available to them for enforcing any of the Security Documents against any Borrower or any other person liable and no action taken or omitted by the Lender in connection with any such security or other means of payment will discharge, reduce, prejudice or affect the liability of the Borrowers under the Security Documents to which any of them is, or is to be, a party.

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19.6 Waiver of Borrowers' rights

Each Borrower agrees with the Lender that, throughout the Facility Period, it will not, without the prior written consent of the Lender:

19.6.1 exercise any right of subrogation, reimbursement and indemnity against the other Borrowers or any other person liable under the Security Documents;

19.6.2 demand or accept repayment in whole or in part of any Indebtedness now or hereafter due to such Borrower from the other Borrower or from any other person liable for such Indebtedness or demand or accept any guarantee against financial loss or any document or instrument created or evidencing an Encumbrance in respect of the same or dispose of the same;

19.6.3 take any steps to enforce any right against the other Borrowers or any other person liable in respect of any such moneys; or

claim any set-off or counterclaim against the other Borrowers or any other person liable or claim or prove in competition with the Lender in the liquidation of the other Borrowers or any other person liable or have the benefit of, or share in, any payment from or composition with, the other Borrowers or any other person liable or any security granted under any Security Document now or hereafter held by the Lender for any moneys owing under this Agreement or for the obligations or liabilities of any other person liable but so that, if so directed by the Lender, it will prove for the whole or any part of its claim in the liquidation of the other Borrowers or other person liable on terms that the benefit of such proof and all money received by it in respect thereof shall be held on trust for the Lender and applied in or towards discharge of any moneys owing under this Agreement in such manner as the Lender shall require

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Schedule 1

Form of Drawdown Notice

To:Piraeus Bank S.A.

170 Alexandras Ave.

11521 Athens

Greece

[●] November 2019

Dear Sirs

Re: Facility agreement dated [                              ] November 2019 in respect of a loan of up to USD32,000,000 (the "Loan Agreement") made between (1) [                      ], [                                  ], [                             ] and [                         ] as Borrowers and (2) Piraeus Bank S.A. as Lender

We refer to the Loan Agreement. Words and expressions whose meanings are defined therein shall have the same meanings when used herein.

We hereby give you notice that we wish to draw the sum of USD[                            ] on [   ] November 2019 in respect of the Loan Facility and select a first Interest Period in respect of such drawing of [●] months. The funds should be credited to the account of [                           ] and numbered [                ] with [                     ] of [                                 ].

We confirm that:

(a) no Default has occurred and is continuing;

(b) the representations and warranties contained in clause 7 of the Loan Agreement are true and correct at the date hereof as if made with respect to the facts and circumstances existing at such date;

(c) the borrowing to be effected by the drawdown of the Loan will be within our corporate powers, has been validly authorised by appropriate corporate action and will not cause any limit on our borrowings (whether imposed by statute, regulation, agreement or otherwise howsoever) to be exceeded;

(d) there has been no material adverse change in our financial position or in the consolidated financial position of the Borrowers or the Corporate Guarantor from that described by us to the Lender in the negotiation of the Loan Agreement and/or in any documents or statements already delivered to the Lender in connection therewith;

(e) there are no Required Authorisations;

(f) there has occurred nothing which would have a Material Adverse Effect; and

(g) no part of the proceeds of the Loan shall be used for the purpose of acquiring shares in the share capital of the Lender or other banks and/or financial institutions or acquiring hybrid capital debentures (TI'rAouc u(3obuccbv icapaAai.cov) of the Lender or other banks and/or financial institutions.

By  _______________________________

Authorised Signatory

ANTWERP SHIPPING LTD

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BUSAN SHIPPING LTD

KEELUNG SHIPPING LTD

OAKLAND SHIPPING LTD

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Schedule 2

Conditions precedent

Part 1

(referred to in clause 9.1)

(a) Corporate documents

Certified Copies of all documents which evidence or relate to the constitution of each Security Party and its current corporate existence;

(b) Corporate authorities

(i) Certified Copies of resolutions of the directors of each Security Party and shareholders of each Borrower approving such of the MOA and the Security Documents to which such Security Party is a party and authorising the execution and delivery thereof and performance of such Security Party's obligations thereunder, additionally certified by an officer of such Security Party, as having been duly passed at a duly convened meeting of the directors and shareholders of such Security Party and not having been amended, modified or revoked and being in full force and effect; and

(ii) an original of any power of attorney issued by each Security Party pursuant to such resolutions;

(c) Required Authorisations

a certificate (dated no earlier than 5 Banking Days prior to the Drawdown Date) that there are no Required Authorisations or that there are no Required Authorisations except those described in such certificate and Certified Copies of which as duly executed (including any conditions and/or documents ancillary thereto) are appended thereto.

(d) Certificate of incumbency

a list of directors, shareholders and officers of each Security Party specifying the names and positions of such persons, certified by an officer of the relevant Security Party to be true, complete and up to date;

(e) Shareholders

evidence acceptable to the Lender that all of the issued shares of and in each Borrower are issued in registered form and legally owned by the Shareholder and ultimately beneficially owned and controlled by the Corporate Guarantor;

(f) Security Documents

the Corporate Guarantee, the Earnings Account Pledges and the Shares Pledges duly executed and delivered, and all documents to be executed and delivered thereunder;

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(g) Declaration of compliance / "know your customer"

written confirmation (in a form acceptable to the Lender) that:

(a) each Borrower has complied at all times and in all respects with (i) any relevant employment legislation and employment regulations applicable to it, (ii) all documentation required by the Lender in relation to the Lender's "know your customer" requirements and (iii) all documentation required by the Lender for the opening of its Earnings Account with the Lender; and

(b) the Guarantor and the Shareholder have complied at all times and in all respects with all documentation required by the Lender in relation to the Lender's "know your customer" requirements; and

(h) Bank accounts

evidence that:

(i) the Earnings Accounts have been opened by Antwerp, Busan, Keelung and Oakland respectively and duly completed mandates in relation thereto have been delivered to the Lender;

(ii) all mandate forms and other legal documents required for the opening of an account under any applicable law, such as the account for the securitization of the Shares Pledge as well as signature cards and properly adopted authorizations have been duly delivered to and have been accepted by the compliance department of the Lender;

(i) process agent

a letter from the agent for receipt of service of proceedings referred to in clause 18.2.1 accepting its appointment under the said clause and under each of the other Security Documents in which it is or is to be appointed as the agent for any Security Party.

Part 2

(a) Copies of Underlying Documents

a Certified Copy of the MOA, the Management Agreement, any Extended Employment Contract and all ISM Code Documentation for the relevant Vessel;

(b) Evidence satisfactory to the Lender that the relevant Vessel:

i. Purchase

has been unconditionally delivered by the relevant Seller to, and accepted by, the relevant Owner under the relevant MOA, and all other amounts payable under the relevant MOA (in addition to the part to be financed by the Loan) has been duly paid (and funded by the relevant Owner through equity contribution and/or common shares contribution provided exclusively by the Corporate Guarantor), together with copies of the bill of sale and protocol of delivery and acceptance

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relating thereto, certificate showing the relevant Vessel as being free of encumbrance (other than the relevant Mortgage) relating thereto;

ii. Registration and Encumbrances

is registered in the name of the relevant Owner through the relevant Registry and that such Vessel, her Earnings, Insurances and Requisition Compensation are free of Encumbrances except Permitted Encumbrances (such evidence to include relevant certificates issued by the relevant Flag State and results of searches carried out against the said Registry by the Lender or its lawyers);

iii. Classification

maintains the Classification free of all overdue recommendations and requirements of the Classification Society affecting the Classification;

iv. Insurance

is insured in accordance with the provisions of the relevant Ship Security Documents and all requirements of such Ship Security Documents in respect of such insurance have been complied with (including without limitation, receipt by the Lender of customary brokers' letters of undertaking regarding the placing of hull and machinery and war risks cover and confirmation from the protection and indemnity association or other insurer with which such Vessel is, or is to be, entered for insurance or insured against protection and indemnity risks, that any necessary declarations required by the association or insurer for the removal of any oil pollution exclusion have been made and that any such exclusion does not apply to such Vessel ); and

v. Management.

is managed by the Manager on terms in all material respects acceptable to the Lender;

(c) Security Documents

the Mortgage, the General Assignment, any Charter Assignment in respect of any existing Extended Employment Contract and the Manager's Undertaking in respect of the relevant Vessel duly executed and delivered;

(d) Notices of assignment and acknowledgements

counterpart originals of duly executed notices of assignment and acknowledgments (where relevant) required by the terms of the Security Documents referred to in (c) above in the forms prescribed by those Security Documents and any other documents required to be delivered pursuant thereto;

(e) Mortgage registration

evidence that the relevant Mortgage has been duly registered against the relevant Vessel in accordance with the laws of the relevant Registry;

(j) Laws of Liberia: opinion

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an opinion of Messrs Ince, special legal advisers to the Lender on the laws of Liberia;

(k) Laws of Marshall Islands: opinion

an opinion of Messrs Ince, special legal advisers to the Lender on the laws of Marshall Islands;

(1) Laws of Cyprus: opinion

an opinion of Messrs Scordis, Papapelrou & Co LLC, special legal advisers to the Lender on the laws of Cyprus;

(m) ISPS Code

evidence satisfactory to the Lender that each Vessel is subject to a ship security plan which complies with the ISPS Code and a copy of the ISSC for each Vessel;

(n) DOC and Application for SMC

Certified Copies of the DOC, ISSC, (if applicable) IAPP and EIAPP Certificates in respect of each Vessel and a Certified Copy of the SMC therefor and evidence that each Vessel and the Manager are in compliance with the ISM Code;

(o) Additional Vessels' Certificates

Certified Copies of Classification Certificate, Safety Radio Equipment Certificate, Safety Equipment Certificate, International Oil Pollution Certificate, International Loadline Certificate, Safety Construction Certificate, International Tonnage Certificate, Minimum Safety Manning Certificate and Continuous Synopsis Record for the relevant Vessel;

(p) Lightweight

evidence satisfactory to the Lender of the lightweight tonnage of the relevant Vessel;

(q) Manager's confirmation

written confirmation addressed by the Manager to the Lender that the representations and warranties set out in clause 7.1.22 (Environmental Matters) and clause 7.1.23 (ISM Code) are true and correct;

(r) Insurance Report

a written report from a maritime insurance consultant or broker acceptable to the Lender in a form and content acceptable to the Lender (at the cost of the Borrowers) in respect of the insurances on each Vessel which report shall certify that such insurances are placed through or with insurance brokers and clubs, in amounts, covering risks and on terms acceptable to the Lender and that the same are in accordance with the terms of the relevant Mortgage in respect of the relevant Vessel;

(s) Valuation

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a satisfactory, in the opinion of the Lender, Valuation Amount (at the cost of the Borrowers) of the relevant Vessel addressed to the Lender from an Approved Broker dated no more than 15 days before the Drawdown Date;

(t) Fees

evidence that all fees due and payable have been paid in full;

(u) Material Adverse Effect

the Lender is satisfied that there has occurred nothing which would have a Material Adverse Effect, including in respect of the Manager;

(v) MII and MAP Policy premium

evidence that the Borrowers have reimbursed the Lender in the amount of the first annual premium or, as the case may be, any additional premium for the MII and MAP Policy;

(w) Equity contribution

evidence satisfactory to the Lender that an amount representing in aggregate no less than USD1,250,000 multiplied by the number of Mortgaged Vessels (including the Vessel to be financed by the relevant Advance) representing part of the equity contribution of the Purchase Price has been deposited with the Lender prior to be remitted to the relevant Seller; and

(x) Further conditions precedent

such further evidence or opinions as may reasonably be required by the Lender.

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Schedule 3

Form of Compliance Certificate

To:Piraeus Bank S.A.

From: Euroseas Ltd.

Date [                 ] 200[ ]

Dear Sirs

Facility agreement dated [ ] November 2019 in respect of a loan of up to USD32,000,000 (the "Loan Agreement") made between (1) Antwerp Shipping Ltd, Busan Shipping Ltd, Keelung Shipping Ltd and Oakland Shipping Ltd as joint and several Borrowers and (2) Piraeus Bank S.A. as Lender

We refer to the Loan Agreement. Words and expressions whose meanings are defined in the Loan Agreement shall have the same meanings when used herein.

We hereby confirm that [except as stated below] as at the date hereof to the best of our knowledge and belief after due inquiry:-

1. all the Borrowers' financial covenants in the Loan Agreement set out in clause 8 are being fully complied with, and, in particular, by reference to the latest audited financial statements, management accounts and all other current relevant information available to us:

(c) the Net Worth of the Group is USD [            ];

(d) the Total Liabilities are USD [ ] and the Total Assets (adjusted for market values of vessels calculated in accordance with clause 8.2.5(i)) are USD [ ]; and

(e) the Total Liabilities divided by the Total Assets (each net of cash balance) (adjusted for market values of vessels calculated in accordance with clause

8.2.5(i)) is [     ]%;

2.no Default has occurred which is continuing;

3. the representations set out in clause 7 of the Loan Agreement are true and accurate with reference to all facts and circumstances now existing and all Required Authorisations have been obtained and are in full force and effect.

[State any exceptions/qualifications to the above statements]

Yours faithfully

Euroseas Ltd.

By

Chief Financial Officer: Euroseas Ltd.

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74

Execution Page

IN WITNESS whereof the parties to this Agreement have caused this Agreement to be duly executed on the date first above written.

SIGNED BY STEFANIA KARMIRI	)
attorney-in-fact for and on behalf of	)
ANTWERP SHIPPING LTD	)
pursuant to a Power of Attorney	)	/s/ Stefania Karmiri
dated 4 November 2019	)	Attorney-in-fact
SIGNED BY STEFANIA KARMIRI	)
attorney-in-fact for and on behalf of	)
BUSAN SHIPPING LTD	)
pursuant to a Power of Attorney	)	/s/ Stefania Karmiri
dated 4 November 2019	)	Attorney-in-fact
SIGNED BY STEFANIA KARMIRI	)
attorney-in-fact for and on behalf of	)
KEELUNG SHIPPING LTD	)
pursuant to a Power of Attorney	)	/s/ Stefania Karmiri
dated 4 November 2019	)	Attorney-in-fact
SIGNED BY STEFANIA KARMIRI	)
attorney-in-fact for and on behalf of	)
OAKLAND SHIPPING LTD	)
pursuant to a Power of Attorney	)	/s/ Stefania Karmiri
dated 4 November 2019	)	Attorney-in-fact
SIGNED BY OLGA VOUTSA	)
and by EUGENIA KOUVARA	)
for and on behalf of	)
PIRAEUS BANK S.A.	)	/s/ Olga Voutsa   /s/ Eugenia Kouvara
		Authorised signatories
Witness to all the above signatures	)
Name: STAVROULA MYLONA	)	/s/ Stavroula Mylona
Address: Ince	)
Akti Miaouli 47-49
Piraeus 185 36 Greece

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EX-4.21

Exhibit 4.21

LETTER AGREEMENT

THIS LETTER AGREEMENT (this “Agreement”) is dated as of November 7, 2019, and made by and among Euroseas Ltd., a Marshall Islands corporation (“Euroseas”), and Synergy Holdings Limited (formerly known as Nautilus Holdings No. 2 Limited), a Bermuda Company (“Seller”).

WHEREAS, Euroseas has agreed to purchase the vessels MV SYNERGY BUSAN (IMO: 9450571), MV SYNERGY KEELUNG (IMO: 9450595), MV SYNERGY OAKLAND (IMO: 9450583) and MV SYNERGY ANTWERP (IMO: 9443580) (the “Vessels”), with each Vessel being purchased in a separate transaction pursuant to a Memorandum of Agreement (“MOA”) for each Vessel;

WHEREAS, in connection with the purchase of the Vessels, Euroseas has agreed to issue certain shares of its common stock, par value $0.03 per share (“Common Stock”) to Seller, subject to the terms and conditions set out in this Agreement;

WHEREAS, Seller and the Company have entered into an agreement of even date hereof pursuant to which Seller has agreed to purchase shares of Common Stock (the “Stock Purchase Agreement”);

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows, intending to be legally bound:

1.     If the 12-month New ConTex index for a 4,250 TEU vessel (as published onhttps://www.vhbs.de/index or any successor website maintained by the Hamburg and Bremen Shipbrokers’ Association) (the “Index Value”) is higher on November 16, 2020 at 4:00 p.m. New York time than the Index Value on November 15, 2019 at 4:00 p.m. New York time, then:

(a)     On November 16, 2020, Euroseas shall issue to Seller the number of Common Shares determined as follows: US$125,000 multiplied by the number of Vessels actually delivered to Euroseas pursuant to and in compliance with the MOAs divided by the 20-day volume weighted average price of the Common Shares calculated on November 16, 2020 at 4:00 p.m. New York time (the “Initial Shares”); and

(b)     On November 16, 2020, Euroseas shall be deemed to have issued such number of Common Shares, having the same value per share as each Initial Share (the “Additional Shares” and, together with the Initial Shares, the “Total Shares”), such that the aggregate value of such Additional Shares constitutes at least the aggregate par value of the Total Shares, and such Additional Shares shall be deemed to have been issued to Seller and returned to Euroseas.

If (i) the Index Value on November 16, 2020 at 4:00 p.m. New York time does not exceed the Index Value on November 15, 2019 at 4:00 p.m. New York time or (ii) Seller does not perform their obligations under Section 1(c) of the Stock Purchase Agreement or (iii) any Vessel seller does not perform all of its post-delivery obligations under the MOAs, except to the extent waived

by parties thereto, then the transactions contemplated in (a) and (b) above shall not complete and Euroseas shall not issue the Initial Shares or the Additional Shares to Seller.

2.     The Total Shares have been duly authorized by all necessary corporate action and, when paid for or issued in accordance with the terms hereof, the Total Shares shall be validly issued and outstanding, fully paid and nonassessable, free and clear of all Encumbrances of any kind.

3.     The delivery and issuance of the Total Shares in accordance with the terms of and in reliance on the accuracy of Buyer’s representations and warranties set forth in this Agreement will be exempt from the registration requirements of the Securities Act.

4.     Euroseas represents that it has not paid, and shall not pay, any commissions or other remuneration, directly or indirectly, to any broker, finder or any other third party in connection with the Shares pursuant to this Agreement.

5.     Prior to the issuance of the Total Shares, the Nasdaq Stock Market shall have confirmed that it has completed its review of this Agreement and the transactions contemplated hereby.

6.     Euroseas and Seller each hereby agree to make such changes to this Agreement as may be reasonably required by the Nasdaq Stock Market to approve the listing of additional shares application relating to the issuance of the Total Shares.

7.     Seller agrees that the issuance of any Initial Shares or Additional Shares will be restricted securities within the meaning of Rule 144 of the Securities Act of 1933 as amended and may include a restrictive legend to such effect.

8.     The representations and warranties of each party contained herein shall survive the date hereof for a period ending on the eighteen (18) month anniversary of the date hereof. Notwithstanding the foregoing, the passing of the above survival period for any representation or warranty shall not terminate or affect any claim with respect to such representation or warranty as to which notice has been delivered to the other party prior to the end of such survival period.

9.     This Agreement may be executed in counterparts, all of which taken together shall constitute one and the same agreement.

10.   This Agreement contains the final and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof superseding all prior oral or written understandings.

11.     Any provisions of this Agreement may be amended or waived if, but only if, such amendment or waiver, as applicable, is in writing and is signed by each of the parties hereto.

12.     This Agreement may not be assigned, in whole or in part, without the prior written consent of each other party.

13.     THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO HEREBY AGREES TO THE EXCLUSIVE JURISDICTION OF ANY FEDERAL COURT LOCATED WITHIN THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER IN ANY OF THE AFOREMENTIONED COURTS AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.

14.     TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE BETWEEN THE PARTIES HERETO ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP BETWEEN ANY OF THEM IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. INSTEAD, ANY SUCH DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

EUROSEAS LTD.
By:	/s/ Dr. Anastasios (Tasos) Aslidis
	Name:	Dr. Anastasios (Tasos) Aslidis
	Title:	CFO & Treasurer
SYNERGY HOLDINGS LIMITED
	(FORMERLY KNOWN AS NAUTILUS HOLDINGS NO. 2 LIMITED)
By:
	Name:
	Title:

Signature Page – Letter Agreement

EX-4.22

Exhibit 4.22

COLBY TRADING LTD

EUROSEAS LTD

September 30, 2019

Dear Sirs

US$2,500,000 LOAN FACILITY

In accordance with our recent discussions, COLBY TRADING LTD, a Marshall Islands corporation (the `Lender’), is pleased to confirm that it will make available to EUROSEAS LTD, a Marshall Islands corporation (the “Borrower”), a loan facility of two million and five hundred thousand United States Dollars (US$2,500,000): for the purpose of financing the special survey and water ballast treatment (“WBT”) plant installation of M/V Akinada Bridge which is owned by a subsidiary of the Borrower and providing working capital financing upon and subject to the terms and conditions contained in this facility letter (the “Agreement”).

ARTICLE 1

DEFINITIONS AND INTERPRETATION

1.1In this Agreement:

“Availability Period” means the period commencing on the date of this Agreement and terminating on the earlier of (a) October 31, 2019 and (b) the date on which the Commitment is fully drawn, terminated or cancelled.

“Business Day” means a day (not being a Saturday or Sunday) on which banks and financial markets in New York, New York, are open for business and, in respect of a day on which a payment is required to be made hereunder, also a day on which banks and financial markets are open for business in New York, New York, London, England and Athens, Greece.

“Commitment” means the obligation of the Lender to make available the Loan to the Borrower up to the amount specified in Clause 2.1, as such amount may be reduced, terminated or cancelled in accordance with the terms of this Agreement.

1

“Dollars” and “$” means the lawful currency for the time being of the United States of America.

“Interest Period” means a period the commencement and length of which shall be determined in accordance with the provisions of Clause 3.2.

“Interest” means eight per cent (8%) per annum (365-day basis).

“Loan” means the principal amount borrowed by the Borrower under this Agreement or (as the context requires) the aggregate principal amount thereof from time to time outstanding hereunder.

“month” means a calendar month (however many days are comprised therein) save where the term is used to describe a period commencing on a given day, in which event the period shall commence on such day and end on the numerically corresponding day in the relevant succeeding calendar month, unless there is no such corresponding day, in which event such period shall be deemed to end on the last day of that succeeding calendar month.

“Taxes” includes any present or future taxes, levies, duties, imposts, charges, fees, deductions or withholdings of any nature, excluding taxes imposed on or measured by the net income or capital gains of the Lender (and “tax” and “taxation” shall be construed accordingly).

1.2In this Agreement, clause headings are inserted for convenience only and shall not affect the construction of this Agreement and, unless the context otherwise requires, words denoting the singular number shall include the plural and vice versa. References to persons include references to bodies corporate and non-corporate.

ARTICLE 2

ADVANCE OF THE LOAN

2.1Subject to the terms of this Agreement, and in reliance on the representations and warranties of the Borrower set out in Clause 6, the Lender agrees to make available to the Borrower a loan facility of a principal amount of two million and five hundred thousand Dollars (US$2,500,000) in one advance.

2.2The Borrower may make a request for the advancing of the Loan by sending to the Lender a duly completed notice of drawing (which shall be irrevocable) by facsimile (to be confirmed in writing), email or letter. Unless if the Lender agrees otherwise, such notice of drawing is to be received by the Lender not later than 11.00 A.M., New York time, on the drawdown date relating to the Loan, provided that the Loan may only be made on a Business Day during the Availability Period.

2.3Subject to the terms of this Agreement, the Lender shall make the proceeds of the Loan available to the Borrower for financing the special survey and water ballast treatment

2

(“WBT”) plant installation of M/V Akinada Bridge which is owned by a subsidiary of the Borrower and working capital purposes.

ARTICLE 3

INTEREST AND INTEREST PERIODS

3.1Save as otherwise provided in this Agreement, the Borrower shall pay Interest on the unpaid principal amount of the Loan for each Interest Period relating thereto in arrears on the last day of such Interest Period until the Loan is paid in full (whether upon final maturity, by prepayment, acceleration or otherwise) which shall be in cash.

3.2The duration of each Interest Period shall be 3 months and will coincide with calendar quarters except for the first Interest Period that will end on December 31, 2019 and the last Interest Period that will end on the date falling 365 days after the completion of the special survey and drydocking of MN Akinada Bridge. As a result the first Interest Period shall commence on the drawdown date relating to the Loan and will end on December 31, 2019 and each subsequent Interest Period shall commence on the last day of the preceding Interest Period but:

(a)if an Interest Period would end on a day which is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day, unless such Business Day falls in the next calendar month, in which case such Interest Period shall end on the immediately preceding Business Day; and

(b)an Interest Period shall end on the repayment date specified in Clause 4.1 (last Interest Period).

3.3In the event that the Lender does not receive within three Business Days of a due date any sum due under this Agreement, the Borrower shall pay to the Lender on demand default interest on such sum from and including the due date therefor to the date of actual payment (as well after as before judgement) at the rate per annum equal to[ the aggregate of (a) three per cent (3%), plus (b) Interest, such rate to be recalculated on the same basis at the end of each such period until such sum is received by the Lender.

3.4By written notice to the Lender at least five Business Days prior to any Interest Period, the Borrower may elect the add the amount of Interest due for such Interest Period to the outstanding principal amount of the Loan (the accreted amount of which shall thereafter bear interest at Interest Rate or the Default Rate, as applicable).

ARTICLE 4

REPAYMENT AND PREPAYMENT

4.1Subject to the terms of this Agreement the Borrower will repay the Loan to the Lender on a calendar quarter basis, the first and the last repayment installments will be of a

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principal amount of US$312,500 each and the other three repayment installments will be of a principal amount of US$625,000 each. The first repayment installment will be due on December 31, 2019 and the Loan will be paid in full on the date falling 365 days after completion of the drydocking of M/V Akinada Bridge.

4.2The Borrower may prepay the whole or part of the Loan at any Interest Period provided it gives the Lender not less than five Business Days prior written notice.

4.3Any notice of prepayment given under this clause shall be irrevocable and shall specify the date or dates when the relevant prepayment is to be made and the amount of that prepayment.

4.4Any prepayment under this clause shall be made together with accrued interest on the amount prepaid and without premium or penalty.

4.5Notwithstanding the foregoing, and only if the Borrowers working capital is not sufficient to make quarterly principal and interest payments to the Lender pursuant to the Loan whilst still maintaining at least US$500,000 in working capital, the Borrower at their option within three Business Days of the date when the Loan is due to be repaid may elect to convert whatever part of the outstanding principal amount of the Loan is required to ascertain that at least US$500,000 remain as working capital, into shares of stock of the Borrower at a rate equal to 75% of the lowest closing share price of the Borrower for the prior last fifteen Business Days

4.6By written notice to the Borrower at least five Business Days prior to any Interest Period, the Lender may elect to convert the outstanding principal amount of the Loan, or part of it, into shares of stock of the Borrower at a rate equal to the lowest closing share price of the Borrower for the prior last fifteen Business Days.

ARTICLE 5

CONDITIONS PRECEDENT

5.1Unless the Lender agrees otherwise (and then on such terms and conditions as the Lender may determine it his sole discretion) the Borrower may not serve a notice of drawing, and the Lender shall not be under any obligation to advance the Loan hereunder, until the Lender has received, and found to be reasonably satisfactory, each of the following documents:

(a)a certified copy of a resolution of the Board of Directors of the Borrower approving this Agreement; and

(b)certified copies of all governmental and other consents, licenses, approval and authorizations required with respect to this Agreement; and

(c)the obligation of the Lender hereunder to make the Loan available is subject to the following further condition precedent that, both at the date of the notice of drawing and the drawdown date of the Loan, the representations and warranties of the Borrower in

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Clause 6 are true and accurate as of each such date, as if made on each such date with reference to the facts then subsisting at the relevant date.

ARTICLE 6

REPRESENTATIONS

6.1The Borrower hereby represents and warrants to the Lender (and so that such representations and warranties shall survive the execution of this Agreement) that:

(a)it is a body corporate duly organized and validly existing under the laws of the Marshall Islands and has full corporate power and authority to enter into, and perform all its obligations under, this Agreement;

(b)this Agreement creates legal, valid and binding obligations enforceable against it in accordance with their respective terms; the entry into and performance by it of this Agreement does not violate in any respect any law or regulation, its constitutional documents or any material agreement to which it is a party;

(d)all consents, licenses, approvals and authorizations required by Borrower in connection with this Agreement and the transactions contemplated hereby and thereby have been obtained and are in full force and effect; and

(e)no action, suit, proceeding or litigation is presently taking place or pending or, to its knowledge, is threatened against the Borrower. which if adversely determined would result in a material adverse effect on Borrower.

(f)The Lender hereby represents and warrants to the Borrower (and so that such representations and warranties shall survive the execution of this Agreement) that:

(g)it is a body corporate duly organized and validly existing under the laws of the Marshall Islands and has full corporate power and authority to enter into, and perform all its obligations under, this Agreement;

(h)this Agreement creates legal, valid and binding obligations enforceable against it in accordance with their respective terms;

(i)the entry into and performance by it of this Agreement does not violate in any respect any law or regulation, its constitutional documents or any material agreement to which it is a party;

(j)all consents, licenses, approvals and authorizations required by Borrower in connection with this Agreement and the transactions contemplated hereby and thereby have been obtained and are in full force and effect; and

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(k)no action, suit, proceeding or litigation is presently taking place or pending or, to its knowledge, is threatened against the Lender, which if adversely determined would result in a material adverse effect on Lender.

ARTICLE 7

UNDERTAKINGS

7.1The Borrower undertakes that, so long as the Commitment is in force or any amount remains outstanding or payable under this Agreement, it will obtain and promptly renew from time to time to the extent required, all authorizations, approvals, consents and licenses required under any applicable law or regulation with respect to this Agreement and it shall comply with the terms of the same.

ARTICLE 8

PAYMENTS

8.1All payments to be made by the Borrower to the Lender under this Agreement shall be made on the due date therefore in Dollars and in same day funds and to such account as the Lender shall specify and shall be made (a) without set-off, counterclaim or condition and (b) free and clear of, and without deduction for or on account of, any present or future Taxes, unless the Borrower is required by law or regulation to make payment subject to any Taxes, in which event such payment shall be increased by such amount as may be necessary to ensure that the Lender receives a net amount, free and clear of all Taxes, equal to the full amount which the Lender would have received had such payment not been subject to such Taxes. The Borrower shall indemnify the Lender against any liability of the Lender in respect of such Taxes and shall promptly supply the Lender with copies of applicable tax receipts.

8.2If any sum payable by the Borrower under this Agreement shall become due on a day which is not a Business Day, the due date therefor shall be extended to the next succeeding Business Day, unless such Business Day falls in the next calendar month, in which event such due date shall be the immediately preceding Business Day.

8.3All payments of Interest and any other payments hereunder of an annual or periodic nature shall accrue from day-to-day and shall be calculated on the basis of the actual number of days elapsed in a 365 day year.

8.4The Borrower shall indemnify the Lender on demand against all costs, expenses, liabilities and losses (including loss of profit and funding losses) sustained or incurred by the Lender as a result of or in connection with: (a) the Loan not being borrowed on the date specified in the notice of drawing as a result of Borrower revoking its notice of drawing; and/or (b) the receipt or recovery of all or any part of the Loan or an overdue sum otherwise than on the last day of an Interest Period relating thereto or other relevant period; and/or (c) (as separate and

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independent obligation) any claim, order or judgement which results in any sum payable under this Agreement being paid in a currency other than the currency due under this Agreement.

ARTICLE 9

CHANGES IN CIRCUMSTANCES

9.1If the Lender shall at any time reasonably determine based on the advice of its counsel, that (a) the effect of any applicable law, regulation or regulatory requirements or the interpretation or application thereof or any change therein (including the imposition of Taxes on payments hereunder), or (b) the effect of complying with any applicable directive, request or requirement (whether or not having the force of law) of any central bank or any governmental, monetary or other authority (including any type or liquidity or capital adequacy controls or other banking or monetary controls) is to increase the cost to the Lender of making, funding or maintaining its commitment hereunder or being a party to this Agreement or on its capital, then the Lender shall notify the Borrower as soon as practicable thereof and the Borrower shall from time to time pay to the Lender within five Business Days such amounts as the Lender shall specify to be necessary to compensate the Lender for such increased cost or such reduction so long as such amount reflects a reasonable basis for the calculation thereof.

ARTICLE 10

FEES AND EXPENSES

10.1The Borrower shall pay to the Lender all costs, fees and expenses (including, but not limited to, legal fees and expenses) and Taxes thereon incurred by the Lender in connection with (a) negotiating, preparing and executing this Agreement, and (b) preserving or enforcing or attempting to preserve or enforce any of its rights under this Agreement. The Borrower shall also pay or indemnify the Lender against all stamp, documentary and other like duties and Taxes to which the Agreement may be subject or give rise.

ARTICLE 11

MISCELLANEOUS

11.1Except as otherwise provided for in this Agreement, all notices or other communications under or in respect of this Agreement to either party hereto shall be in writing and shall be deemed to be duly given or made when delivered (in the case of personal delivery or letter) and when dispatched (in the case of facsimile) to the party to which it is addressed at such address as such party may hereafter specify for such purpose to the other by notice in writing. A written notice includes a notice by facsimile.

11.2The Borrower hereby authorizes the Lender (without prior notice) to apply any credit balance in any currency (whether or not then due) which is at any time held by the Lender for the account of the Borrower in or towards satisfaction of any sums then due from the Borrower to the Lender under this Agreement and unpaid

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11.3A certificate or determination of the Lender as to any matter provided for in this Agreement shall be conclusive and binding on the Borrower in the absence of manifest error.

11.4This Agreement shall be binding upon and inure to the benefit of the Lender and the Borrower and their respective successors and permitted assigns and references in this Agreement to either of them shall be construed accordingly, provided that the Borrower may not assign or transfer any of its rights and/or obligations under this Agreement.

11.5No delay or omission on the part of the Lender in exercising any right, power or remedy under this Agreement shall impair such right, power of remedy or be construed as a waiver thereof or of any other right, power or remedy.

11.6If any one or more of the provisions in this Agreement is or becomes invalid, illegal of unenforceable in any respect under any law or regulation, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be in any way affected or impaired thereby.

11.7This Agreement shall be governed by, and construed in accordance with the laws of England in relation to any dispute arising out of or in connection with this agreement, and for the exclusive benefit or the Lender, the Borrower hereby irrevocably and unconditionally (a) submits to the jurisdiction of the High Court of Justice in England, and waives any objection to proceedings with respect to this Agreement in such Court on the grounds of venue or inconvenient forum, and (b) appoints Hill Dickinson International currently at The Broadgate Tower, 20 Primrose Street, London, EC2A 2EW, England, as its agent for service of process in respect of proceedings before such Courts and undertakes that, throughout the term of this Agreement Nothing in this Clause shall affect the right of the Lender to serve process in any manner permitted by law.

If you are in agreement with the above terms and condition, please sign and return the enclosed copy of this Agreement.

Yours faithfully,

COLBY TRADING LTD

By:	/s/  Nikolaos Priton
	Name:	Nikolaos Priton
	Title:	Attorney – in - fact

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AGREED AND ACCEPTED

We refer to your letter dated September 30, 2019 set out above and we confirm that we accept and agree to be bound by the terms and conditions thereof.

EUROSEAS LTD

By:	/s/ Aristides J. Pittas
	Name:	Aristides J. Pittas
	Title:	Attorney – in - fact

Dated: September 30, 2019

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EX-4.23

Exhibit 4.23

Dated 20th December 2019

EUROSEAS LTD
as Borrower

and

COLBY TRADING LTD
as Lender

FIRST SUPPLEMENTAL AGREEMENT

relating to
a loan agreement dated 30 September 2019
in respect of a loan facility
of U$2,500,000

THIS FIRST SUPPLEMENTAL AGREEMENT is dated 20^th December 2019 and made between

PARTIES

(1) EUROSEAS LTD a company incorporated under the laws of the Marshall Islands, (the “Borrower”)and

(2) COLBY TRADING LTD, a company incorporated under the laws of the Marshall Islands (as “Lender”).

BACKGROUND

(A) By a loan facility dated 30 September 2019 (as from time to time amended or supplemented, the “Loan”)and made between (i) the Borrower and (ii) the Lender, the Lender agreed to make available to the Borrower a loan facility of $2,500,000 for the purpose of financing the special survey and water ballasting treatment ("WBT") plant installation of my Akinanda Bridge which is owned by a subsidiary of the Borrower and providing working capital financing on the terms and conditions contained therein.

(B) Whereas for reasons beyond Borrower's control the special survey and water ballasting treatment ("WBT") plant installation delayed and a result my Akinanda Bridge was delivered to her charterers on 4 December 2019.

(C) The Borrower has requested (the "Request") that the Lender agrees to defer payment of the first repayment instalment in the amount of US$312,500 (which was originally due on 31 December 2019) to be repaid together with the last repayment instalment, i.e. 365 days after completion of the dry docking of my Akinada Bridge.

(D) This First Supplemental Agreement sets out the terms and conditions on which the Lender agrees to:

(i) the Borrower's Request; and

(ii) the consequential amendments to the Loan.

OPERATIVE PROVISIONS

NOW THEREFORE IT IS HEREBY AGREED

1 DEFINITIONS

1.1 Defined Expressions

Words and expressions defined in the Loan (as hereby amended) and the recitals hereto and not otherwise defined herein shall have the same meanings when used in this First Supplemental Agreement.

2 REPRESENTATIONS AND WARRANTIES

2.1 Repetition of Loan representations

The Borrower hereby represents to the Lender, as at the date of this First Supplemental Agreement, that the representations and warranties set forth in Articles 6 and 7 of the Loan (updated mutatis mutandis to the date of this Supplemental Agreement), are true and correct as if all references therein to "this Agreement" were references to the Loan as further amended by this First Supplemental Agreement.

2.2 Further representations and warranties

The Borrower hereby further represents and warrants to the Lender that as at the date of this First Supplemental Agreement:

(a) it has all power to enter into and perform its obligations under this First Supplemental Agreement;

(b) all consents, licences, approvals and authorizations required in connection with this First Supplemental Agreement and the transactions contemplated hereby and thereby have been obtained and are in full force and effect; and

(c) no action, suit, proceeding or litigation is presently taking place or pending or, to its knowledge, is threatened against the Borrower which if adversely determined would result to a Material Adverse Effect on the Borrower;

3 AGREEMENT OF THE LENDER

3.1 Agreement of the Lender

The Lender, relying upon each of the representations and warranties set out in Articles 2.1 and 2.2 of this First Supplemental Agreement, hereby agrees with the Borrower to:

(a) the Request; and

(b) the amendments/variations to the Loan referred to in Article 5.

4 CONDITIONS

4.1 Conditions precedent

The agreement of the Lender contained in Clause 3.1 of this First Supplemental Agreement shall be expressly subject to the condition that the Lender shall have received:

(a) in form and substance satisfactory to it and its legal advisors an original of this First Supplemental Agreement duly executed by the parties hereto; and

(b) such legal opinions as the Lender may reasonably require in respect of the matters contained in this First Supplemental Agreement;

5 VARIATIONS TO LOAN

5.1 Specific amendments to Loan

In consideration of the agreement of the Lender contained in Article 3.1 of this First Supplemental Agreement, the Borrower hereby agrees with the Lender that, the provisions of the Loan shall be varied and/or amended and/or supplemented as follows:

(a) by deleting Article 4.1 and replacing it with the following:

"4.1 Subject to the terms of this Agreement the Borrower will repay the Loan to the Lender in four repayment instalments of a principal amount of US$625,000 each. The first repayment instalment will be due on 31 March, 2020 and quarterly thereafter and the Loan will be paid in full on the date falling 365 days after completion of the drydocking of MN Akinada Bridge"

5.2 Loan to remain in full force and effect

The Loan shall remain in full force and effect and the security provided to the Lender shall continue and remain valid and enforceable as amended and supplemented by:

(a) the amendments to the Loan; and

(b) such further or consequential modifications as may be necessary to make the same consistent with, and to give full effect to, the terms of this First Supplemental Agreement.

6 SUPPLEMENTAL

6.1 Counterparts

This First Supplemental Agreement may be executed in any number of counterparts.

7             LAW AND JURISDICTION

7.1 Governing law

This First Supplemental Agreement shall be governed by and construed in accordance with English law.

7.2 Incorporation of the Loan Agreement provisions

The provisions of Article 11.7 (Jurisdiction) of the Loan, as amended and supplemented by this First Supplemental Agreement, shall apply to this First Supplemental Agreement as if they were expressly incorporated in this First Supplemental Agreement with any necessary medications.

This First Supplemental Agreement has been duly executed by or on behalf of the parties and has, on the date stated at the beginning of this Deed, been delivered as a Deed.

EXECUTION PAGE

BORROWER
SIGNED by Aristides J. Pittas	)	/s/ Aristides J. Pittas
for and behalf of	)
EUROSEAS LTD	)
in the presence of:	)
LENDER
	)
SIGNED by Nikolaos Pittas	)	/s/ Nikolaos Pittas
for and behalf of	)
COLBY TRADING LTD	)
in the presence of:

EX-4.24

Exhibit 4.24

Dated March 20, 2020

EUROSEAS LTD
as Borrower

and

COLBY TRADING LTD
as Lender

SECOND SUPPLEMENTAL AGREEMENT

relating to
a loan agreement dated 30 September 2019
in respect of a loan facility
of U$2,500,000
as supplemented by the First Supplemental Agreement dated 20 December 2019

THIS SECOND SUPPLEMENTAL AGREEMENT is dated 30^th March 2020 and made between

PARTIES

(1) EUROSEAS LTD a company incorporated under the laws of the Marshall Islands, (the “Borrower”)and

(2) COLBY TRADING LTD, a company incorporated under the laws of the Marshall Islands (as “Lender”).

BACKGROUND

(A) By a loan facility dated 30 September 2019 as supplemented by a First Supplemental Agreement dated 20^th December 2019 (as from time to time amended or supplemented, the “Loan”) and made between (i) the Borrower and (ii) the Lender, the Lender agreed to make available to the Borrower a loan facility of $2,500,000 for the purpose of financing the special survey and water ballasting treatment (“WBT”) plant installation of my Akinanda Bridge which is owned by a subsidiary of the Borrower and providing working capital financing on the terms and conditions contained therein.

(B) Whereas the Borrower has requested (the “Request”) that the Lender agrees to defer payment of the first repayment instalment in the amount of US$625,000 (which was originally due on 31 March 2020) to be repaid on 15 May 2020.

(C) This Second Supplemental Agreement sets out the terms and conditions on which the Lender agrees to:

(i) the Borrower’s Request; and

(ii) the consequential amendments to the Loan.

OPERATIVE PROVISIONS

NOW THEREFORE IT IS HEREBY AGREED

1 DEFINITIONS

1.1 Defined Expressions

Words and expressions defined in the Loan (as hereby amended) and the recitals hereto and not otherwise defined herein shall have the same meanings when used in this Second Supplemental Agreement.

2 REPRESENTATIONS AND WARRANTIES

2.1 Repetition of Loan representations

The Borrower hereby represents to the Lender, as at the date of this Second Supplemental Agreement, that the representations and warranties set forth in Articles 6 and 7 of the Loan (updated mutatis mutandis to the date of this Supplemental Agreement), are true and correct as if all references therein to “this Agreement” were references to the Loan as further amended by this Second Supplemental Agreement.

2.2 Further representations and warranties

The Borrower hereby further represents and warrants to the Lender that as at the date of this Second Supplemental Agreement:

(a) it has all power to enter into and perform its obligations under this Second Supplemental Agreement;

(b) all consents, licences, approvals and authorizations required in connection with this Second Supplemental Agreement and the transactions contemplated hereby and thereby have been obtained and are in full force and effect; and

(c) no action, suit, proceeding or litigation is presently taking place or pending or, to its knowledge, is threatened against the Borrower which if adversely determined would result to a Material Adverse Effect on the Borrower;

3 AGREEMENT OF THE LENDER

3.1 Agreement of the Lender

The Lender, relying upon each of the representations and warranties set out in Articles 2.1 and 2.2 of this Second Supplemental Agreement, hereby agrees with the Borrower to:

(a) the Request; and

(b) the amendments/variations to the Loan referred to in Article 5.

4 CONDITIONS

4.1 Conditions precedent

The agreement of the Lender contained in Clause 3.1 of this Second Supplemental Agreement shall be expressly subject to the condition that the Lender shall have received:

(a) in form and substance satisfactory to it and its legal advisors an original of this Second Supplemental Agreement duly executed by the parties hereto; and

(b) such legal opinions as the Lender may reasonably require in respect of the matters contained in this Second Supplemental Agreement;

5 VARIATIONS TO LOAN

5.1 Specific amendments to Loan

In consideration of the agreement of the Lender contained in Article 3.1 of this Second Supplemental Agreement, the Borrower hereby agrees with the Lender that, the provisions of the Loan shall be varied and/or amended and/or supplemented as follows:

(a) by deleting Article 4.1 and replacing it with the following:

“4.1 Subject to the terms of this Agreement the Borrower will repay the Loan to the Lender in four repayment instalments of a principal amount of US$625,000 each. The first repayment instalment will be due on 15 May, 2020 and quarterly thereafter and the Loan will be paid in full on the date falling 365 days after completion of the drydocking of MA Akinada Bridge”

5.2 Loan to remain in full force and effect

The Loan shall remain in full force and effect and the security provided to the Lender shall continue and remain valid and enforceable as amended and supplemented by:

(a) the amendments to the Loan; and

(b) such further or consequential modifications as may be necessary to make the same consistent with, and to give full effect to, the terms of this Second Supplemental Agreement.

6 SUPPLEMENTAL

6.1 Counterparts

This Second Supplemental Agreement may be executed in any number of counterparts.

7 LAW AND JURISDICTION

7.1 Governing law

This Second Supplemental Agreement shall be governed by and construed in accordance with English law.

7.2 Incorporation of the Loan Agreement provisions

The provisions of Article 11.7 (Jurisdiction) of the Loan, as amended and supplemented by this Second Supplemental Agreement, shall apply to this Second Supplemental Agreement as if they were expressly incorporated in this Second Supplemental Agreement with any necessary medications.

This Second Supplemental Agreement has been duly executed by or on behalf of the parties and has, on the date stated at the beginning of this Deed, been delivered as a Deed.

EXECUTION PAGE

BORROWER
SIGNED by Aristides J. Pittas	/s/ Aristides J. Pittas
for and behalf of
EUROSEAS LTD
in the presence of:
LENDER
SIGNED by Nikolaos Pittas	/s/ Nikolaos Pittas
for and behalf of
COLBY TRADING LTD
in the presence of:

EX-4.25

Exhibit 4.25

COLBY TRADING LTD

EUROSEAS LTD

November 1^st, 2019

Dear Sirs

US$2,500,000 LOAN FACILITY

In accordance with our recent discussions, COLBY TRADING LTD, a Marshall Islands corporation (the `Lender’), is pleased to confirm that it will make available to EUROSEAS LTD, a Marshall Islands corporation (the “Borrower”), a loan facility of two million five hundred thousand United States Dollars (US$2,500,000): for the purpose of providing working capital financing upon and subject to the terms and conditions contained in this facility letter (the “Agreement”).

ARTICLE 1

DEFINITIONS AND INTERPRETATION

1.1          In this Agreement:

“Availability Period” means the period commencing on the date of this Agreement and terminating on the earlier of (a) December 31, 2019 and (b) the date on which the Commitment is fully drawn, terminated or cancelled.

“Business Day” means a day (not being a Saturday or Sunday) on which banks and financial markets in New York, New York, are open for business and, in respect of a day on which a payment is required to be made hereunder, also a day on which banks and financial markets are open for business in New York, New York, London, England and Athens, Greece.

“Commitment” means the obligation of the Lender to make available the Loan to the Borrower up to the amount specified in Clause 2.1, as such amount may be reduced, terminated or cancelled in accordance with the terms of this Agreement.

“Dollars” and “$” means the lawful currency for the time being of the United States of America.

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“Interest Period” means a period the commencement and length of which shall be determined in accordance with the provisions of Clause 3.2.

“Interest” means eight per cent (8%) per annum (365 day basis).

“Loan” means the principal amount borrowed by the Borrower under this Agreement or (as the context requires) the aggregate principal amount thereof from time to time outstanding hereunder.

“month” means a calendar month (however many days are comprised therein) save where the term is used to describe a period commencing on a given day, in which event the period shall commence on such day and end on the numerically corresponding day in the relevant succeeding calendar month, unless there is no such corresponding day, in which event such period shall be deemed to end on the last day of that succeeding calendar month.

“Taxes” includes any present or future taxes, levies, duties, imposts, charges, fees, deductions or withholdings of any nature, excluding taxes imposed on or measured by the net income or capital gains of the Lender (and “tax” and “taxation” shall be construed accordingly).

1.2          In this Agreement, clause headings are inserted for convenience only and shall not affect the construction of this Agreement and, unless the context otherwise requires, words denoting the singular number shall include the plural and vice versa. References to persons include references to bodies corporate and non-corporate.

ARTICLE 2

ADVANCE OF THE LOAN

2.1          Subject to the terms of this Agreement, and in reliance on the representations and warranties of the Borrower set out in Clause 6, the Lender agrees to make available to the Borrower a loan facility of a principal amount of two million five hundred thousand Dollars (US$2,500,000) in one advance.

2.2          The Borrower may make a request for the advancing of the Loan by sending to the Lender a duly completed notice of drawing (which shall be irrevocable) by facsimile (to be confirmed in writing), email or letter. Unless if the Lender agrees otherwise, such notice of drawing is to be received by the Lender not later than 11.00 A.M., New York time, two Business Days prior to the drawdown date relating to the Loan, provided that the Loan may only be made on a Business Day during the Availability Period.

2.3           Subject to the terms of this Agreement, the Lender shall make the proceeds of the Loan available to the Borrower for working capital purposes.

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ARTICLE 3

INTEREST AND INTEREST PERIODS

3.1          Save as otherwise provided in this Agreement, the Borrower shall pay Interest on the unpaid principal amount of the Loan for each Interest Period relating thereto in arrears on the last day of such Interest Period until the Loan is paid in full (whether upon final maturity, by prepayment, acceleration or otherwise) which shall be in cash.

3.2          The duration of each Interest Period shall be 3 months. The first Interest Period shall commence on the drawdown date relating to the Loan and each subsequent Interest Period shall commence on the last day of the preceding Interest Period but:

  (a)          if an Interest Period would end on a day which is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day, unless such Business Day falls in the next calendar month, in which case such Interest Period shall end on the immediately preceding Business Day; and

  (b)          an Interest Period shall end on the repayment date specified in Clause 4.1.

3.3           In the event that the Lender does not receive within three Business Days of a due date any sum due under this Agreement, the Borrower shall pay to the Lender on demand default interest on such sum from and including the due date therefor to the date of actual payment (as well after as before judgement) at the rate per annum equal to the aggregate of (a) three per cent (3%), plus (b) Interest, such rate to be recalculated on the same basis at the end of each such period until such sum is received by the Lender.

3.4         By written notice to the Lender at least five Business Days prior to any Interest Period, the Borrower may elect the add the amount of Interest due for such Interest Period to the outstanding principal amount of the Loan (the accreted amount of which shall thereafter bear interest at Interest Rate or the Default Rate, as applicable).

ARTICLE 4

REPAYMENT AND PREPAYMENT

4.1          The Borrower will repay the Loan to the Lender in full on December 31^st, 2020.

4.2          The Borrower may prepay the whole or part of the Loan at any Interest Period provided it gives the Lender not less than five Business Days prior written notice.

4.3          Any notice of prepayment given under this clause shall be irrevocable and shall specify the date or dates when the relevant prepayment is to be made and the amount of that prepayment.

4.4          Any prepayment under this clause shall be made together with accrued interest on the amount prepaid and without premium or penalty.

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4.5          Notwithstanding the foregoing, and only if the Borrower’s working capital is not sufficient to fully repay the Loan whilst still maintaining at least $500,000 in working capital, the Borrower at its option within three Business Days of the date when the Loan is due to be repaid may elect to convert whatever part of the outstanding principal amount of the Loan is required to ascertain that at least $500,000 remain as working capital, into shares of stock of the Borrower at a rate equal to 75% of the lowest closing share price of the Borrower for the prior last fifteen Business Days

4.6          By written notice to the Borrower at least five Business Days prior to any Interest Period, the Lender may elect to convert the outstanding principal amount of the Loan, or part of it, into shares of stock of the Borrower at a rate equal to the lowest closing share price of the Borrower for the prior last fifteen Business Days.

ARTICLE 5

CONDITIONS PRECEDENT

5.1          Unless the Lender agrees otherwise (and then on such terms and conditions as the Lender may determine it his sole discretion) the Borrower may not serve a notice of drawing, and the Lender shall not be under any obligation to advance the Loan hereunder, until the Lender has received, and found to be reasonably satisfactory, each of the following documents:

  (a)          a certified copy of a resolution of the Board of Directors of the Borrower approving this Agreement; and

  (b)          certified copies of all governmental and other consents, licenses, approval and authorizations required with respect to this Agreement; and

  (c)          the obligation of the Lender hereunder to make the Loan available is subject to the following further condition precedent that, both at the date of the notice of drawing and the drawdown date of the Loan, the representations and warranties of the Borrower in Clause 6 are true and accurate as of each such date, as if made on each such date with reference to the facts then subsisting at the relevant date.

ARTICLE 6

REPRESENTATIONS

6.1          The Borrower hereby represents and warrants to the Lender (and so that such representations and warranties shall survive the execution of this Agreement) that:

  (a)          it is a body corporate duly organized and validly existing under the laws of the Marshall Islands and has full corporate power and authority to enter into, and perform all its obligations under, this Agreement;

  (b)          this Agreement creates legal, valid and binding obligations enforceable against it in accordance with their respective terms;

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  (c)          the entry into and performance by it of this Agreement does not violate in any respect any law or regulation, its constitutional documents or any material agreement to which it is a party;

  (d)          all consents, licenses, approvals and authorizations required by Borrower in connection with this Agreement and the transactions contemplated hereby and thereby have been obtained and are in full force and effect; and

  (e)          no action, suit, proceeding or litigation is presently taking place or pending or, to its knowledge, is threatened against the Borrower, which if adversely determined would result in a material adverse effect on Borrower.

6.2          The Lender hereby represents and warrants to the Borrower (and so that such representations and warranties shall survive the execution of this Agreement) that:

  (a)          it is a body corporate duly organized and validly existing under the laws of the Marshall Islands and has full corporate power and authority to enter into, and perform all its obligations under, this Agreement;

  (b)          this Agreement creates legal, valid and binding obligations enforceable against it in accordance with their respective terms;

  (c)          the entry into and performance by it of this Agreement does not violate in any respect any law or regulation, its constitutional documents or any material agreement to which it is a party;

  (d)          all consents, licenses, approvals and authorizations required by Borrower in connection with this Agreement and the transactions contemplated hereby and thereby have been obtained and are in full force and effect; and

  (e)          no action, suit, proceeding or litigation is presently taking place or pending or, to its knowledge, is threatened against the Lender, which if adversely determined would result in a material adverse effect on Lender.

ARTICLE 7

UNDERTAKINGS

7.1          The Borrower undertakes that, so long as the Commitment is in force or any amount remains outstanding or payable under this Agreement, it will obtain and promptly renew from time to time to the extent required, all authorizations, approvals, consents and licenses required under any applicable law or regulation with respect to this Agreement and it shall comply with the terms of the same.

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ARTICLE 8
PAYMENTS

8.1          All payments to be made by the Borrower to the Lender under this Agreement shall be made on the due date therefore in Dollars and in same day funds and to such account as the Lender shall specify and shall be made (a) without set-off, counterclaim or condition and (b) free and clear of, and without deduction for or on account of, any present or future Taxes, unless the Borrower is required by law or regulation to make payment subject to any Taxes, in which event such payment shall be increased by such amount as may be necessary to ensure that the Lender receives a net amount, free and clear of all Taxes, equal to the full amount which the Lender would have received had such payment not been subject to such Taxes. The Borrower shall indemnify the Lender against any liability of the Lender in respect of such Taxes and shall promptly supply the Lender with copies of applicable tax receipts.

8.2          If any sum payable by the Borrower under this Agreement shall become due on a day which is not a Business Day, the due date therefor shall be extended to the next succeeding Business Day, unless such Business Day falls in the next calendar month, in which event such due date shall be the immediately preceding Business Day.

8.3          All payments of Interest and any other payments hereunder of an annual or periodic nature shall accrue from day-to-day and shall be calculated on the basis of the actual number of days elapsed in a 365 day year.

8.4          The Borrower shall indemnify the Lender on demand against all costs, expenses, liabilities and losses (including loss of profit and funding losses) sustained or incurred by the Lender as a result of or in connection with: (a) the Loan not being borrowed on the date specified in the notice of drawing as a result of Borrower revoking its notice of drawing; and/or (b) the receipt or recovery of all or any part of the Loan or an overdue sum otherwise than on the last day of an Interest Period relating thereto or other relevant period; and/or (c) (as separate and independent obligation) any claim, order or judgement which results in any sum payable under this Agreement being paid in a currency other than the currency due under this Agreement.

ARTICLE 9

CHANGES IN CIRCUMSTANCES

9.1          If the Lender shall at any time reasonably determine based on the advice of its counsel, that (a) the effect of any applicable law, regulation or regulatory requirements or the interpretation or application thereof or any change therein (including the imposition of Taxes on payments hereunder), or (b) the effect of complying with any applicable directive, request or requirement (whether or not having the force of law) of any central bank or any governmental, monetary or other authority (including any type or liquidity or capital adequacy controls or other banking or monetary controls) is to increase the cost to the Lender of making, funding or maintaining its commitment hereunder or being a party to this Agreement or on its capital, then the Lender shall notify the Borrower as soon as practicable thereof and the Borrower shall from time to time pay to the Lender within five Business Days such amounts as the Lender shall specify

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to be necessary to compensate the Lender for such increased cost or such reduction so long as such amount reflects a reasonable basis for the calculation thereof..

ARTICLE 10

FEES AND EXPENSES

10.1          The Borrower shall pay to the Lender all costs, fees and expenses (including, but not limited to, legal fees and expenses) and Taxes thereon incurred by the Lender in connection with (a) negotiating, preparing and executing this Agreement, and (b) preserving or enforcing or attempting to preserve or enforce any of its rights under this Agreement. The Borrower shall also pay or indemnify the Lender against all stamp, documentary and other like duties and Taxes to which the Agreement may be subject or give rise.

ARTICLE 11

MISCELLANEOUS

11.1          Except as otherwise provided for in this Agreement, all notices or other communications under or in respect of this Agreement to either party hereto shall be in writing and shall be deemed to be duly given or made when delivered (in the case of personal delivery or letter) and when dispatched (in the case of facsimile) to the party to which it is addressed at such address as such party may hereafter specify for such purpose to the other by notice in writing. A written notice includes a notice by facsimile.

11.2           The Borrower hereby authorizes the Lender (without prior notice) to apply any credit balance in any currency (whether or not then due) which is at any time held by the Lender for the account of the Borrower in or towards satisfaction of any sums then due from the Borrower to the Lender under this Agreement and unpaid

11.3            A certificate or determination of the Lender as to any matter provided for in this Agreement shall be conclusive and binding on the Borrower in the absence of manifest error.

11.4           This Agreement shall be binding upon and inure to the benefit of the Lender and the Borrower and their respective successors and permitted assigns and references in this Agreement to either of them shall be construed accordingly, provided that the Borrower may not assign or transfer any of its rights and/or obligations under this Agreement.

11.5            No delay or omission on the part of the Lender in exercising any right, power or remedy under this Agreement shall impair such right, power of remedy or be construed as a waiver thereof or of any other right, power or remedy.

11.6          If any one or more of the provisions in this Agreement is or becomes invalid, illegal of unenforceable in any respect under any law or regulation, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be in any way affected or impaired thereby.

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11.7          This Agreement shall be governed by, and construed in accordance with the laws of England in relation to any dispute arising out of or in connection with this agreement, and for the exclusive benefit or the Lender, the Borrower hereby irrevocably and unconditionally (a) submits to the jurisdiction of the High Court of Justice in England, and waives any objection to proceedings with respect to this Agreement in such Court on the grounds of venue or inconvenient forum, and (b) appoints Hill Dickinson International currently at The Broadgate Tower, 20 Primrose Street, London, EC2A 2EW, England, as its agent for service of process in respect of proceedings before such Courts and undertakes that, throughout the term of this Agreement Nothing in this Clause shall affect the right of the Lender to serve process in any manner permitted by law.

If you are in agreement with the above terms and condition, please sign and return the enclosed copy of this Agreement.

Yours faithfully,

COLBY TRADING LTD
By:	/s/ Nikaloos Pittan
	Name: Nikaloos Pittan
	Title: Attorney-in-fact

AGREED AND ACCEPTED

We refer to your letter dated November 1^st, 2019 set out above and we confirm that we accept and agree to be bound by the terms and conditions thereof.

EUROSEAS LTD
By:	/s/ Aristides S. Pittan
	Name: Aristides S. Pittan
	Title: Attorney-in-fact

Dated: November 1^st, 2019

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EX-4.29

Exhibit 4.29

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (this “Agreement”) is made and entered into effective as of November 7, 2019, by and among Euroseas Ltd., a Marshall Islands corporation (the “Company”), and the shareholder signatory hereto (the “Investor”).

RECITALS

A.          The Company has agreed pursuant to the Stock Purchase Agreement between the Company and the Investor dated November 7, 2019 (the “SPA”) to issue 4,225,352 shares (the “SPA Shares”) of the Company’s common stock, par value $0.03 per share (the “Common Stock”) and additional shares of Common Stock pursuant to the Letter Agreement between the Company and the Investor dated November 7, 2019 (together with the SPA Shares, the “Sale Shares”) to the Investor.

B.          The offering of the Sale Shares was made by the Company pursuant to an exemption from the registration requirements of the Securities Act.

C.          On the date hereof, the SPA Shares were issued to the Investor.

D.          As a condition to the Investor acquiring the Sale Shares, the Company agreed to grant the Investor certain registration rights with respect to the Sale Shares.

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual representations, warranties, covenants and promises contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.          Definitions. As used in this Agreement, the following terms shall have the following meanings:

“Advice” shall have the meaning set forth in Section 6(b).

“Agreement” shall have the meaning set forth in the preamble above.

“Alternative Transaction” shall have the meaning set forth in Section 2(g)(iv).

“Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday or a day on which banking institutions in the State of New York, Nicosia, Cyprus or Athens, Greece are authorized or required by law or other governmental action to close.

“Commission”means the Securities and Exchange Commission.

“Effectiveness Date” shall have the meaning set forth in Section 2(a).

“Effectiveness Period” shall have the meaning set forth in Section 2(a).

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 “Holder” or “Holders” means the Investor and any subsequent permitted transferees or assignees under Section 6(f) of this Agreement.

“Indemnified Party” shall have the meaning set forth in Section 5(c).

“Indemnifying Party” shall have the meaning set forth in Section 5(c).

“Initiating Shelf Take-Down Holder” shall have the meaning set forth in Section 2(g)(i).

“Investor” shall have the meaning set forth in the preamble.

“Losses” shall have the meaning set forth in Section 5(a).

“Shelf Take-Down” shall have the meaning set forth in Section 2(g)(i).

“Marketed Underwritten Shelf Take-Down” shall have the meaning set forth in Section 2(g)(iii).

“Marketed Underwritten Shelf Take-Down Notice” shall have the meaning set forth in Section 2(g)(iii).

“Participating Holder” means, with respect to any registration, any Holder of Registrable Securities covered by the applicable Registration Statement.

“Person” means any individual, partnership, corporation, limited liability company, unincorporated organization, trust or joint venture, or a governmental authority or political subdivision thereof or any other entity.

“Piggyback Registration” shall have the meaning set forth in Section 2(b).

“Plan of Distribution” shall have the meaning set forth in Section 2(a).

“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened.

“Prospectus” means the prospectus included in the Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by the Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.

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“Registrable Securities” means the Sale Shares (excluding any Sale Shares repurchased by the Company pursuant to Section 3 of the SPA) together with any securities issued or issuable upon any exchange, stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing.

“Registration Statement” means each registration statement required to be filed hereunder, including the Prospectus, amendments and supplements to the registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in the Registration Statement.

“Rule 415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

“Sale Shares” shall have the meaning set forth in the recitals above.

“Securities Act” means the Securities Act of 1933, as amended.

“Shelf Take-Down” shall have the meaning set forth in Section 2(g)(i).

“Suspension Certificate” shall have the meaning set forth in Section 6(d).

“Trading Market” means the New York Stock Exchange, the NASDAQ Global Market or the NASDAQ Capital Market; and, with respect to any particular date, shall mean the Trading Market on which the Common Stock is listed or quoted for trading on such date.

“Underwritten Offering” means a registration in which securities of the Company are sold to an underwriter or underwriters (or other counterparty) for reoffering to the public.

“Underwritten Shelf Take-Down Notice” shall have the meaning set forth in Section 2(g)(ii).

2.          Registration.  (a) As soon as practicable after the date hereof, and in no event more than 60 days after the date hereof, the Company shall prepare and file with the Commission a Registration Statement, covering the offering and resale of all of the Registrable Securities pursuant to Rule 415, or if Rule 415 is not available for offers or sales of the Registrable Securities, for such other means of distribution of Registrable Securities as the Holder may reasonably request (or, at the Holder’s option to delay such registration). The Registration Statement required hereunder shall be on Form F-3 (except if the Company is not then eligible to register for resale the Registrable Securities on Form F-3, in which case the registration shall be on Form F-1 or another appropriate form as shall be selected by the Company upon advice of its counsel). If the rules of the Commission prevent the Company from including any or all of the Registrable Securities on the Registration Statement required to be filed within the time period

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set forth in the first sentence of this Section 2(a), the Company shall continue to use its reasonable best efforts to register all remaining Registrable Securities as set forth in this Section 2, whether by way of amending such Registration Statement or filing a new Registration Statement. The Registration Statement required hereunder shall contain (except if otherwise directed by the Holders) a “Plan of Distribution” acceptable to the Holder. The Company shall use its reasonable best efforts to cause the Registration Statement to be declared effective under the Securities Act as promptly as possible after the filing thereof, and in any event within five (5) Business Days after the Company learns that no review of a particular Registration Statement will be made by the Commission’s staff or that the Commission’s staff has no further comments on a particular Registration Statement (as the case may be) (the “Effectiveness Date”).  The Company shall use its reasonable best efforts to keep such Registration Statement continuously effective under the Securities Act (including the filing of any necessary amendments, post-effective amendments and supplements) until the date which is three years after the date hereof or such later date when all Registrable Securities covered by the Registration Statement (i) have been sold pursuant to the Registration Statement or an exemption from the registration requirements of the Securities Act or (ii) may be sold without volume restrictions pursuant to Rule 144 promulgated under the Securities Act, as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed and reasonably acceptable to the Company’s transfer agent and the affected Holders (the “Effectiveness Period”).

(a)          Right to Piggyback. If the Company does not maintain an effective registration statement for any portion of the Registrable Securities at any time during the Effectiveness Period, the Company proposes to register any of its common equity securities under the Securities Act (other than a registration statement on Form S-8 or on Form F-4 or any similar successor forms thereto or in connection with (A) an employee stock option, stock purchase or compensation plan or securities issued or issuable pursuant to any such plan, (B) a dividend reinvestment plan or (C) a merger or the acquisition of the securities or substantially all the assets of another entity), whether for its own account or for the account of one or more shareholders of the Company, and the registration form to be used may be used for any registration of Registrable Securities (a “Piggyback Registration”), the Company shall give prompt written notice (in any event within 10 Business Days after its receipt of notice of any exercise of other demand registration rights) to all Holders of its intention to effect such a registration and shall, subject to Sections 2(c) and 4(d), include in such registration all such Registrable Securities with respect to which the Company has received written requests for inclusion therein within 15 Business Days after the delivery of the Company’s notice. The Company may postpone or withdraw the filing or the effectiveness of a Piggyback Registration at any time in its sole discretion.

(b)          Priority on Initial Registrations.  If, (i) as a result of applicable law or based upon comments received by the Commission, all of the securities to be included in the Registration Statement for any registration initiated on behalf of the Investor pursuant to Section 2(a) cannot be so included, or (ii) such registration is an underwritten primary registration, and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without having an adverse effect on such offering, then the Company shall include in such registration (i) first, such number of Registrable Securities requested to be included therein (allocated pro rata among the Holders based on the relative number of such Registrable

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Securities then held by each such Holder or in such manner as they may otherwise agree) and (ii) second, the securities proposed to be sold in such registration by holders of securities other than the Registrable Securities.

(c)          Priority on Primary Piggyback Registrations.  If, (i) as a result of applicable law or based upon comments received by the Commission, all of the securities to be included in the registration statement for any Piggyback Registration initiated as a primary registration on behalf of the Company, cannot be so included, or (ii) a Piggyback Registration is an underwritten primary registration on behalf of the Company, and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without having an adverse effect on such offering, then the Company shall include in such registration statement (x) first, the securities the Company proposes to sell, and (y) second, the Registrable Securities and other securities requested to be included therein by the Holders and the holders of such other securities (the “Other Holders”), if any, pro rata among the Holders and the Other Holders on the basis of the number of shares requested to be registered by the Holders and the Other Holders.

(d)          Priority on Secondary Piggyback Registrations. If, (i) as a result of applicable law or based upon comments received by the Commission, all of the securities to be included in the registration statement for any Piggyback Registration initiated as a secondary registration on behalf of a holder of the Company’s securities other than Registrable Securities,  if Registrable Securities are included therein, cannot be so included or (ii) a Piggyback Registration is an underwritten secondary registration on behalf of a holder of the Company’s securities other than Registrable Securities, and the managing underwriters advise the Company in writing that, in their opinion, the number of securities requested to be included in such registration statement exceeds the number which can be sold in such offering without having an adverse effect on such offering, the Company shall include in such registration (x) first, the Registrable Securities and other securities requested to be included therein by the Holders and the Other Holders, if any, pro rata among the Holders and the Other Holders on the basis of the number of shares requested to be registered by the Holders and the Other Holders, and (x) second, the securities the Company proposes to sell, if any.

(e)          Selection of Underwriters. If any Piggyback Registration is an underwritten primary offering, the Company or, if such Piggyback Registration is an underwritten secondary offering, the holder of the Company’s securities initiating such Piggyback Registration, shall have the right to select the managing underwriter or underwriters to administer any such offering.

(f)          Shelf Takedown Registrations.

(i)          An offering or sale of Registrable Securities pursuant to the shelf registration statement (each, a “Shelf Take-Down”) may be initiated only by the Investor (the “Initiating Shelf Take-Down Holder”). Except as set forth in Section 2(g)(iii) with respect to Marketed Underwritten Shelf Take-Downs, the Initiating Shelf Take-Down Holder shall not be required to permit the offer and sale of Registrable Securities by other Holders in connection with any such Shelf Take-Down initiated by such Initiating Shelf Take-Down Holder.

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(ii)          Subject to Section 2(j), if the Initiating Shelf Take-Down Holder elects by written request to the Company, a Shelf Take-Down shall be in the form of an Underwritten Offering (an “Underwritten Shelf Take-Down Notice”) and the Company shall amend or supplement the applicable shelf registration statement for such purpose as soon as practicable. Subject to Section 2(g)(iii) below, such Initiating Shelf Take-Down Holder shall have the right to select the managing underwriter or underwriters, which shall be reasonably acceptable to the Company, to administer such offering.

(iii)          Subject to Section 3(k)(vi), if the plan of distribution set forth in any Underwritten Shelf Take-Down Notice includes a customary “road show” (including an “electronic road show” or other substantial marketing effort by the Company and the underwriters over a period expected to exceed 24 hours (a “Marketed Underwritten Shelf Take-Down”)), promptly upon delivery of such Underwritten Shelf Take-Down Notice (but in no event more than three (3) Business Days thereafter), the Company shall promptly deliver a written notice (a “Marketed Underwritten Shelf Take-Down Notice”) of such Marketed Underwritten Shelf Take-Down to all Holders (other than the Initiating Shelf Take-Down Holder), and the Company shall include in such Marketed Underwritten Shelf Take-Down all such Registrable Securities of such Holders that are registered on such shelf registration statement for which the Company has received written requests, which requests must specify the aggregate amount of such Registrable Securities of such Holder to be offered and sold pursuant to such Marketed Underwritten Shelf Take-Down, for inclusion therein within one (1) Business Day after the date that such Marketed Underwritten Shelf Take-Down Notice has been delivered; provided, that if the managing underwriter or underwriters of any proposed Marketed Underwritten Shelf Take-Down informs the Holders that have requested to participate in such Marketed Underwritten Shelf Take-Down in writing that, in its or their good-faith opinion, the number of securities which such Holders intend to include in such offering exceeds the number of securities that, in the good-faith opinion of the managing underwriter or underwriters in such offering (as evidenced by a written notice to the relevant Holders and the Company), can be sold in such offering without being likely to have a significant adverse effect on the price, timing or the distribution of the securities offered or the market for the securities offered, then the securities to be included in such Marketed Underwritten Shelf Take-Down shall be (i) first, the number of Registrable Securities that, in the opinion of such managing underwriter or underwriters, can be sold without having such adverse effect in such Marketed Underwritten Shelf Take-Down, which number shall be allocated (1) first to the Registrable Securities requested to be included in such Marketed Underwritten Shelf Take-Down by the Initiating Shelf Take-Down Holder, and (2) second to the Registrable Securities requested to be included in such Marketed Underwritten Shelf Take-Down by any requesting Holder who is not the Initiating Shelf Take-Down Holder on a pro rata basis and (ii) second, and only if all the securities referred to in clause (i) above have been included, the number of Registrable Securities that, in the opinion of such managing underwriter or underwriters, can be sold without having such adverse effect in such Marketed Underwritten Shelf Take-Down, which such number shall be allocated pro rata among the Holders (excluding the requesting Holder(s)) that have requested to participate in such Marketed Underwritten Shelf Take-Down based on the relative number of Registrable Securities then held by each such Holder (provided that any securities thereby allocated to a Holder that exceed such Holder’s request shall be reallocated among the remaining requesting Holders in like manner). The Holders of a majority of the Registrable Securities to be included in any Marketed Underwritten Shelf Take-Down shall have the right to select the

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managing underwriter or underwriters to administer such offering. No holder of securities of the Company shall be permitted to include such holder’s securities in any Marketed Underwritten Shelf Take-Down except for Holders who wish to include Registrable Securities pursuant to this Section 2(g)(iii).

(iv)          The Company shall use its reasonable best efforts to cooperate in a timely manner with any request of the requesting Holders in respect of any block trade that is registered pursuant to a shelf registration (each, an “Alternative Transaction”). including (A) having appropriate representatives of the Company, upon reasonable request and at reasonable times, available to answer questions and make presentations to any prospective purchasers of Registrable Securities in such Alternative Transaction and (B) responding to reasonable information requests from prospective purchasers of Registrable Securities in such Alternative Transaction. Notwithstanding the foregoing or anything else to the contrary in this Agreement, the Company will not be required to (I) provide such cooperation with respect to more than two such sales efforts or (2) disclose to the transferee any material the Company deems to constitute material, non-public information to the extent that such information would not otherwise be required under the Securities Act or the rules and regulations promulgated thereunder to be included or incorporated by reference in the Registration Statement.

(g)          Underwritten Offerings.

(i)          Shelf Registrations. If requested by the underwriters for any Underwritten Offering, the Company shall enter into an underwriting agreement with such underwriters for such offering, such agreement to be reasonably satisfactory in substance and form to the Company, each Participating Holder and the underwriters, and to contain such representations and warranties by the Company and such other terms as are generally prevailing in agreements of that type, including indemnities no less favorable to the recipient thereof than those customarily provided by the Company as part of its public offerings. Each Participating Holder shall cooperate reasonably with the Company in the negotiation of such underwriting agreement and shall give consideration to the reasonable suggestions of the Company regarding the form thereof. The Participating Holders shall be parties to such underwriting agreement, which underwriting agreement shall contain such representations and warranties by, and the other agreements on the part of, the Company to and for the benefit of such Participating Holders as are customarily made by issuers to selling shareholders in secondary underwritten public offerings. Any such Participating Holder shall not be required to make any representations or warranties to or agreements with the Company or the underwriters in connection with such underwriting agreement other than representations, warranties or agreements regarding such Participating Holder, such Participating Holder’s title to the Registrable Securities, such Participating Holder’s authority to sell the Registrable Securities, such Participating Holder’s intended method of distribution, absence of liens with respect to the Registrable Securities, receipt of all required consents and approvals with respect to the entry into such underwriting agreement and the sale of such Registrable Securities and any other representations required to be made by such Participating Holder under applicable law, rule or regulation, and the aggregate amount of the liability of such Participating Holder in connection with such underwriting agreement shall not exceed such Participating Holder’s net proceeds from such Underwritten Offering.

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(ii)          Participation in Underwritten Registrations. Subject to the provisions of Section 2(i)(i) above, no Person may participate in any Underwritten Offering hereunder unless such Person (i) agrees to sell such Person’s securities on the basis provided in any underwriting arrangements approved by the Persons entitled to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements.

(iii)          Price and Underwriting Discounts. In the case of an Underwritten Offering, the price, underwriting discount and other financial terms for the Registrable Securities shall be determined by the Investor participating in such Underwritten Offering.

(h)          Limitation on Underwritten Offerings. Notwithstanding the rights and obligations set forth in this Section 2, in no event shall the Company be obligated to take any action to effect any Underwritten Shelf Take-Down or Underwritten Offering unless the Holder initiating such Underwritten Offering propose to sell at least five percent of Registrable Securities.

3.          Registration Procedures.

In connection with the Company’s registration obligations of Registrable Securities hereunder, the Company shall:

(a)          Not less than five (5) Business Days prior to the filing of the Registration Statement or any related Prospectus or any amendment or supplement thereto, (i) furnish to the Holders copies of all such documents proposed to be filed (including documents incorporated or deemed incorporated by reference to the extent requested by such Person) which documents will be subject to the review of such Holders, and (ii) cause its officers and directors, counsel and independent certified public accountants to respond to such inquiries as shall be necessary, in the reasonable opinion of respective legal counsel to conduct a reasonable investigation within the meaning of the Securities Act. The Company shall not file the Registration Statement or any such Prospectus or any amendments or supplements thereto to which the Holders of a majority of the Registrable Securities shall reasonably object in good faith.

(b)          (i) Prepare and file with the Commission such amendments, including post-effective amendments, to the Registration Statement and the Prospectus used in connection therewith as may be necessary to keep the Registration Statement continuously effective as to the Registrable Securities for the Effectiveness Period; (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424; (iii) respond as promptly as reasonably possible to any comments received from the Commission with respect to the Registration Statement or any amendment thereto; and (iv) comply in all material respects with the provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by the Registration Statement in accordance with the intended methods of disposition by the Holders thereof set forth in the Registration Statement as so amended or in such Prospectus as so supplemented.

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(c)          Notify the Holders of Registrable Securities to be sold as promptly as reasonably possible (and, in the case of (i)(A) below, not less than two (2) Business Days prior to such filing) and (if requested by any such Person) confirm such notice in writing promptly following the day (i) (A) when a Prospectus or any Prospectus supplement or post-effective amendment to the Registration Statement is proposed to be filed; (B) when the Commission notifies the Company whether there will be a “review” of the Registration Statement and whenever the Commission comments in writing on the Registration Statement (the Company shall upon request provide true and complete copies thereof and all written responses thereto as promptly as reasonably possible to each of the Holders who so requests provided such requesting Holders agree to keep such information confidential until it is publicly disclosed); and (C) with respect to the Registration Statement or any post-effective amendment, when the same has become effective; (ii) of any request by the Commission or any other Federal or state governmental authority during the period of effectiveness of the Registration Statement for amendments or supplements to the Registration Statement or Prospectus or for additional information; (iii) of the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of the Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose; (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose, and (v) of the occurrence of any event or passage of time that makes the financial statements included in the Registration Statement ineligible for inclusion therein or any statement made in the Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to the Registration Statement, Prospectus or other documents so that, in the case of the Registration Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (provided that such Holder of Registrable Securities agrees to keep such information confidential until it is publicly disclosed).

(d)          Use its reasonable best efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order suspending the effectiveness of the Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment.

(e)          To the extent requested by such Holders, furnish to each Holder, without charge, at least one conformed copy of the Registration Statement and each amendment thereto, including financial statements and schedules, all documents incorporated or deemed to be incorporated therein by reference, and all exhibits (including those previously furnished or incorporated by reference) promptly after the filing of such documents with the Commission.

(f)          Promptly deliver to each Holder, without charge, as many copies of the Prospectus or Prospectuses (including each form of prospectus) and each amendment or supplement thereto as such Persons may reasonably request in connection with resales by the Holder of Registrable Securities. The Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holders in connection with the

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offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto, except after the giving of any notice pursuant to Section 3(c).

(g)          Use its reasonable best efforts to register or qualify or cooperate with the selling Holders in connection with the registration or qualification (or exemption from the registration or qualification) of such Registrable Securities for the resale by the Holder under the securities or blue sky laws of such jurisdictions within the United States as any Holder reasonably requests in writing, to keep each of the registration or qualification (or exemption therefrom) effective during the Effectiveness Period and to do any and all other acts or things reasonably necessary to enable the disposition in such jurisdictions of the Registrable Securities covered by the Registration Statement; provided, that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified, subject the Company to any material tax in any such jurisdiction where it is not then so subject or file a general consent to service of process in any such jurisdiction.

(h)          If requested by the Holders, cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to the Registration Statement, which certificates shall be free, of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as any such Holders may request.

(i)          Upon the occurrence of any event contemplated by Section 3(c)(v), as promptly as reasonably possible, prepare a supplement or amendment, including a post-effective amendment, to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, neither the Registration Statement nor such Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

(j)          Comply with all applicable rules and regulations of the Commission and use its reasonable best efforts to cause all Registrable Securities to be listed for trading on a Trading Market, if the Company is then listed on a Trading Market.

(k)          In the case of an Underwritten Offering:

(i)          make such representations and warranties to the Participating Holders and the underwriters or agents, if any, in form, substance and scope as are customarily made by issuers in secondary underwritten public offerings;

(ii)          enter into such customary agreements (including underwriting agreements) and take all such other actions as any Participating Holder or the managing underwriter or underwriters, if any, reasonably request in order to expedite or facilitate the registration and disposition of such Registrable Securities;

(iii)          make reasonable efforts to obtain for delivery to the Participating Holders and to the underwriter or underwriters, if any, an opinion or opinions from counsel for the Company dated the date of the closing under the underwriting agreement, in customary form,

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scope and substance, which opinions shall be reasonably satisfactory to such Holders or underwriters, as the case may be, and their respective counsel;

(iv)          make reasonable efforts to obtain for delivery to the Company and the managing underwriter or underwriters, with copies to the Participating Holders, a cold comfort letter from the Company’s independent certified public accountants in customary form and covering such matters of the type customarily covered by cold comfort letters as the managing underwriter or underwriters reasonably request, dated the date of execution of the underwriting agreement and brought down to the date of the closing of the Underwritten Offering, as specified in the underwriting agreement;

(v)          subject to the execution of any confidentiality agreements as reasonably requested by the Company, make available upon reasonable notice at reasonable times and for reasonable periods for inspection by any Participating Holder, by any underwriter participating in any disposition to be effected pursuant to such Registration Statement and by any attorney, accountant or other agent retained by such Participating Holder(s) or any such underwriter, all pertinent financial and other records, pertinent corporate documents and properties of the Company as shall be necessary to enable them to exercise their due diligence responsibility, and cause all of the Company’s officers, directors and employees and the independent public accountants who have certified its financial statements to make themselves available to discuss the business of the Company and to supply all information reasonably requested by any such Person in connection with such Registration Statement as shall be necessary to enable them to exercise their due diligence responsibility; and

(vi)          in the case of an Underwritten Offering of Registrable Securities in an amount of at least five percent (5%) of the Company’s then-outstanding common shares, cause executive officers of the Company to participate in customary “road show” presentations that may be reasonably requested by the managing underwriter or underwriters in any such Underwritten Offering no more than once per calendar quarter over a period of no more than 24 hours (provided, however, that such participation is not required to be in person by any such executive officer) and otherwise to facilitate, cooperate with, and participate in each such proposed Underwritten Offering to the extent reasonably requested by the managing underwriter or underwriters.

(l)          Cooperate with each Participating Holder and each underwriter, if any, participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with the FINRA.

(m)          Use its reasonable efforts to comply with all applicable securities laws and make available to its security holders, as soon as reasonably practicable, an earnings statement satisfying the provisions of Section 11(a) of the Securities Act and the rules and regulations promulgated thereunder.

The Company may require each selling Holder to furnish to the Company a certified statement as to the number of shares of Common Stock beneficially owned by such Holder and the person thereof that has voting and dispositive control over the Sale Shares, for purposes of disclosure in the “Selling Stockholder” table in the Registration Statement.

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4.          Registration Expenses. All fees and expenses incident to the performance of or compliance with this Agreement by the Company shall be borne by the Company whether or not any Registrable Securities are sold pursuant to the Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses (A) with respect to filings required to be made with the Trading Market on which the Common Stock is then listed for trading, and (B) for compliance with applicable state securities or blue sky laws), (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities and of printing prospectuses if the printing of prospectuses is reasonably requested by the Holders of a majority of the Registrable Securities included in the Registration Statement), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company and reasonable fees and expenses of one counsel for the holders of Registrable Securities participating in such registration as a group (selected by the holders of a majority of the Registrable Securities included in the registration), (v) Securities Act liability insurance, if the Company so desires such insurance, (vi) “road show” expenses of the Company and any Persons retained by the Company in connection with any offering of securities and (vii) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement. In addition, the Company shall be responsible for all of its internal and accounting expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties and all fees and expenses of the Company’s certified public accountants), the expense of the preparation of all financial statements and any audit or review thereof by the Company’s accountants, including in connection with their rendering a “cold comfort” letter to the underwriters, if requested, and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder. In no event shall the Company be responsible for any broker, underwriter or similar commissions or any legal fees or other costs of the Holders.

5.          Indemnification.

(a)          Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Holder, the officers, directors, agents and employees of each of them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act), and the officers, directors, agents and employees of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred (irrespective of whether they are incurred while investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the Commission, irrespective of whether any such action is pending or threatened, and irrespective of whether such indemnified person is or may reasonably be a party thereto, to which any of them may become subject, or otherwise), to the extent arising out of or relating to any untrue or alleged untrue statement of a material fact contained in the Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in light of the circumstances

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under which they were made) not misleading, or any violation or alleged violation by the Company of the Securities Act, Exchange Act or any state securities law, or any rule or regulation thereunder, except to the extent, but only to the extent, that (1) such untrue statements or omissions are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder’s proposed method of distribution of Registrable Securities as set forth in the Plan of Distributionapproved by such Holder expressly for use in the Registration Statement, such Prospectus or such form of Prospectus or in any amendment or supplement thereto, or (2) in the case of an occurrence of an event of the type specified in Section 3(c)(ii)-(v), the use by such Holder of an outdated or defective Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated or defective and prior to the receipt by such Holder of the Advice contemplated in Section 6(b).

(b)          Indemnification by Holders. Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its officers, directors, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act), and the officers, directors, agents and employees of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all Losses, as incurred, (irrespective of whether they are incurred while investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the Commission, irrespective of whether any such action is pending or threatened, and irrespective of whether such indemnified person is or may reasonably be a party thereto, to which any of them may become subject, or otherwise), to the extent arising out of or based upon any untrue or alleged untrue statement of a material fact contained in the Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading to the extent, but only to the extent, that such untrue statement or omission is contained in any information so furnished in writing by such Holder to the Company specifically for inclusion in the Registration Statement or such Prospectus expressly for use therein; provided, that each Holder’s obligation to indemnify such indemnified parties shall only be to the extent of the net proceeds received by such Holder in the offering to which the Registration Statement relates, or to the extent that such information relates to such Holder or such Holder’s proposed method of distribution of Registrable Securities as set forth in the Plan of Distributionexpressly approved in writing by such Holder expressly for use in the Registration Statement, such Prospectus or such form of Prospectus or in any amendment or supplement thereto, or (3) in the case of an occurrence of an event of the type specified in Section 3(c)(ii)-(v), the use by such Holder of an outdated or defective Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated or defective and prior to the receipt by such Holder of the Advice contemplated in Section 6(b).

(c)          Conduct of Indemnification Proceedings. If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall have the right to

13

assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have prejudiced the Indemnifying Party.

An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses; (2) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been advised by counsel that a conflict of interest is reasonably likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of no more than one separate counsel (the Indemnified Party’s counsel who first notifies the Company of such obligation) shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.

All reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten (10) Business Days of written notice thereof to the Indemnifying Party; provided, that the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and expenses applicable to such actions for which such Indemnified Party is not entitled to indemnification hereunder, determined based upon the relative faults of the parties.

(d)          Contribution. If a claim for indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified Party (by reason of public policy or otherwise), then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied

14

by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in Section 5(c), any reasonable attorneys’ or other reasonable fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms.

The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 5(d), no Holder shall be required to contribute, in the aggregate, any amount in excess of the amount by which the proceeds actually received by such Holder from the sale of the Registrable Securities subject to the Proceeding exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission, except in the case of fraud by such Holder. The indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties.

6.          Miscellaneous.

(a)          Compliance. Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to the Registration Statement.

(b)          Discontinued Disposition. Each Holder agrees that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Section 3(c), such Holder will forthwith discontinue disposition of such Registrable Securities under the Registration Statement until the earlier of (i) the filing of the supplemented Prospectus and/or amended Registration Statement or (ii) such Holder is advised in writing (the “Advice”) by the Company that the use of the applicable Prospectus may be resumed, and, in either case, has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus or Registration Statement. In the event of a discontinued disposition under this Section 6(b), the Company will use its reasonable best efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable and to provide copies of the supplemented Prospectus and/or amended Registration Statement or the Advice as soon as possible in order to enable each Holder to resume dispositions of the Registrable Securities.

(c)          Amendments in Writing. No amendment, modification, waiver, termination or discharge of any provision of this Agreement, or any consent to any departure by the Company and any Holder of the then outstanding Registrable Securities from any provision hereof, shall in any event be effective unless the same shall be in writing and made by the Company and at least a majority of the Holders of the then outstanding Registrable Securities, and each such amendment, modification, waiver, termination or discharge shall be effective only in the specific instance and for the specific purpose for which given. No provision of this

15

Agreement shall be varied, contradicted or explained by any oral agreement, course of dealing or performance or any other matter not set forth in an agreement in writing and signed by the Company and at least a majority of the Holders of the then outstanding Registrable Securities.

(d)          Suspension of Trading. At any time after the Registrable Securities are covered by an effective Registration Statement, the Company may deliver to the Holders of such Registrable Securities a certificate (the “Suspension Certificate”) approved by the Chief Executive Officer of the Company and signed by an officer of the Company stating that the effectiveness of and sales of Registrable Securities under the Registration Statement would:

(i)          materially interfere with any transaction that would require the Company to prepare financial statements under the Securities Act that the Company would otherwise not be required to prepare in order to comply with its obligations under the Exchange Act, or

(ii)          require public disclosure of any transaction of the type discussed in Section 6(d)(i) prior to the time such disclosure might otherwise be required.

After the delivery of a Suspension Certificate by Holders of Registrable Securities, the Company may, in its discretion, require such Holders of Registrable Securities to refrain from selling or otherwise transferring or disposing of any Registrable Securities or other Company securities then held by such Holders for a specified period of time that is customary under the circumstances (not to exceed sixty (60) days). Notwithstanding the foregoing sentence, the Company shall be permitted to cause Holders of Registrable Securities to so refrain from selling or otherwise transferring or disposing of any Registrable Securities or other securities of the Company on only one occasion during each twelve (12) consecutive month period that the Registration Statement remains effective. The Company may impose stop transfer instructions to enforce any required agreement of the Holders under this Section 6(d).

(e)          Notices. All notices, requests, consents and other communications under this Agreement shall be in writing and shall be deemed delivered (i) on the date of transmission when delivered via facsimile prior to 5:00 p.m. (New York City time) on a Business Day, (ii) one Business Day after transmission when delivered via facsimile later than 5:00 p.m. (New York City time) on any date and earlier than 11:59 p.m. (New York City time) on such date, (iii) upon delivery when delivered personally, (iv) three (3) days after being sent by registered or certified mail, return receipt requested, postage prepaid, or (v) one (1) Business Day after being sent via a reputable nationwide overnight courier service guaranteeing next business day delivery, in each case to the intended recipient as set forth below:

If to the Company:

Euroseas Ltd.
4 Messogiou Street & Evropis St.
151 25 Maroussi Greece
Attention: Aristides J. Pittas, Chairman, President & CEO

With a copy (which shall not constitute notice) to:

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Seward & Kissel LLP
One Battery Park Plaza
New York, NY 10004
Attention:  Anthony Tu-Sekine, Esq.

If to the Investor, to:

c/o Synergy Marine Limited

5^th Floor

Lapithion Tower

5 Deligiorgi Street

Nicosia 1066, Cyprus
Attention: Savvas Georghiades

Email: sgeorghiades@synergy-marine.com.cy

With a copy (which shall not constitute notice) to:

Watson Farley & Williams LLP

Attn: Steven Hollander

250 West 55^th Street, 31^st Floor

New York, New York 10019

Any party may change the address to which notices, requests, consents or other communications hereunder are to be delivered by giving the other parties notice in the manner set forth in this Section.

(f)          Successors and Assigns. This Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the parties hereto and their respective successors and assigns. The Company may not assign its rights or obligations hereunder without the prior written consent of all of the Holders of the then-outstanding Registrable Securities, provided a sale of the Company shall not be deemed an assignment. Any Holder may assign its rights hereunder to a purchaser or transferee of Registrable Securities; provided, that (i) the Company is furnished a written notice of the name and address of such transferee or assignee and the Registrable Securities with respect to which such registration rights are being assigned and (ii) such purchaser or transferee shall, as a condition to the effectiveness of such assignment, be required to execute a counterpart to this Agreement agreeing to be treated as a Holder whereupon such purchaser or transferee shall have the benefits of, and shall be subject to the restrictions contained in, this Agreement as if such purchaser or transferee was originally included in the definition of an Holder herein and had originally been a party hereto.

(g)          Execution in Counterparts; Facsimile Signatures. This Agreement and any amendment, waiver or consent hereto may be executed by the parties hereto in separate counterparts, each of which, when so executed and delivered, shall be an original, but all such counterparts shall together constitute one and the same instrument. All such counterparts may be

17

delivered among the parties hereto by facsimile or other electronic transmission, which shall not affect the validity thereof.

(h)          Governing Law; Jurisdiction. This Agreement shall be governed by and construed under the laws of the State of New York without regard to conflicts of laws principles. Any action or proceeding seeking to enforce any provision of, or based on any right arising out of, this Agreement shall be brought against the parties hereto or thereto in the courts of the State of New York, County of New York, or, if it has or can acquire jurisdiction, in the United States District Court for the Southern District of New York, and each of the parties consents to the exclusive jurisdiction of such courts (and of the appropriate appellate courts) in any such action or proceeding and waives any objection to venue laid therein. The parties hereby expressly waive all rights to trial by jury in any suit, action or proceeding arising under this Agreement.

(i)          Cumulative Remedies. All remedies, either under this Agreement or by law, afforded to the parties hereto, shall be cumulative and not alternative.

(j)          Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.

(k)          Section Headings and References. The section headings are for the convenience of the parties and in no way alter, modify, amend, limit or restrict the contractual obligations of the parties. Any reference in this Agreement to a particular section or subsection shall refer to a section or subsection of this Agreement, unless specified otherwise.

 [Remainder of page intentionally left blank; Signature pages follow]

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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.

THE COMPANY:
EUROSEAS LTD.
By:	/s/ Dr. Anastasios (Tasos) Aslidis
	Name: Dr. Anastasios (Tasos) Aslidis
	Title:  CFO & Treasurer

[Investor Signature page follows]

INVESTOR: SYNERGY HOLDINGS LIMITED (formerly known as Nautilus Holdings No. 2 Limited)
By:
	Name:
	Title:

EX-4.30

Exhibit 4.30

EXECUTION VERSION

EUROSEAS LTD.

Up to US$10,000,000 of Common Shares

EQUITY DISTRIBUTION AGREEMENT

October 30, 2018

Maxim Group LLC
405 Lexington Avenue
New York, New York 10174

Ladies and Gentlemen:

Euroseas Ltd., a corporation organized under the laws of the Republic of the Marshall Islands (the “Company”), proposes to issue and sell through Maxim Group LLC (the “Agent”), as sales agent, common shares of the Company, par value $0.03 per share (the “Common Shares”), having an aggregate offering price of up to US$10,000,000 of Common Shares (the Common Shares subject to this Equity Distribution Agreement (this “Agreement”) being referred to herein as the “Shares”) on terms set forth herein. The Shares consist entirely of authorized but unissued Common Shares to be issued and sold by the Company.

The Company hereby confirms its agreement with the Agent with respect to the sale of the Shares.

1.          Representations and Warranties of the Company.

(a)          The Company represents and warrants to, and agrees with, the Agent as follows:

(i)          A registration statement on Form F-3 (File No. 333-208305) (the “registration statement”) was initially declared effective by the Securities and Exchange Commission (the “Commission”) on December 19, 2016, and is currently effective, under the Securities Act of 1933, as amended (the “Securities Act of 1933”), and the rules and regulations promulgated thereunder (the “Rules and Regulations” and collectively with the Securities Act of 1933, the “Securities Act”); since the date of effectiveness of the registration statement, no additional or supplemental information was requested by the Commission; no stop order of the Commission preventing or suspending the use of any Base Prospectus (as defined below), the Prospectus Supplement (as defined below), the Prospectus (as defined below) or any Permitted Free Writing Prospectus (as defined below), or the effectiveness of the Registration Statement, has been issued, and no proceedings for such purpose have been instituted or, to the Company’s knowledge, are contemplated by the Commission. Except where the context otherwise requires, “Registration Statement,” as used herein, means the registration statement, as amended at the time of such registration statement’s effectiveness for purposes of Section 11 of the Securities Act, as such section applies to the Agent, including (1) all documents filed as a part thereof or incorporated or deemed to be incorporated by reference therein, (2) any information contained or incorporated by reference in a prospectus filed with the Commission pursuant to Rule 424(b)

under the Securities Act, to the extent such information is deemed, pursuant to Rule 430B or Rule 430C under the Securities Act, to be part of the registration statement at such time, and (3) any registration statement filed to register the offer and sale of Shares pursuant to Rule 462(b) under the Securities Act (the “462(b) Registration Statement”). Except where the context otherwise requires, “Base Prospectus,” as used herein, means the prospectus filed as part of the Registration Statement, together with any amendments or supplements thereto as of the date of this Agreement. Except where the context otherwise requires, “Prospectus Supplement,” as used herein, means the most recent prospectus supplement relating to the Shares, filed by the Company with the Commission pursuant to Rule 424(b) under the Securities Act and in accordance with the terms of this Agreement. Except where the context otherwise requires, “Prospectus,” as used herein, means the Prospectus Supplement together with the Base Prospectus attached to or used with the Prospectus Supplement, as may be amended or supplemented from time to time. “Permitted Free Writing Prospectus,” as used herein, means the documents, if any, listed on Schedule A attached hereto and, after the date hereof, any “issuer free writing prospectus” as defined in Rule 433 of the Securities Act, that is expressly agreed to by the Company and the Agent in writing to be a Permitted Free Writing Prospectus. Any reference herein to the Registration Statement, the Base Prospectus, the Prospectus Supplement, the Prospectus or any Permitted Free Writing Prospectus shall be deemed to refer to and include the documents, if any, incorporated by reference, or deemed to be incorporated by reference, therein pursuant to Item 6 of Form F-3 (the “Incorporated Documents”), including, unless the context otherwise requires, the documents, if any, filed as exhibits to such Incorporated Documents. For purposes of this Agreement, all references to the Registration Statement, the Rule 462(b) Registration Statement, the Base Prospectus, the Prospectus or any amendment or supplement to any of the foregoing shall be deemed to include the copy filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval System (“EDGAR”). All references in this Agreement to financial statements and schedules and other information which is “described,” “contained,” “included” or “stated” in the Registration Statement, the Base Prospectus, the Prospectus or any Permitted Free Writing Prospectus (or other references of like import) shall be deemed to mean and include all such financial statements and schedules and other information which is incorporated by reference in or otherwise deemed by the Rules and Regulations to be a part of or included in the Registration Statement, the Base Prospectus, the Prospectus or Permitted Free Writing Prospectus as the case may be. Any reference herein to the terms “amend,” “amendment” or “supplement” with respect to the Registration Statement, any Base Prospectus, the Prospectus, the Prospectus Supplement or any Permitted Free Writing Prospectus shall be deemed to refer to and include the filing of any document under the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (collectively, the “Exchange Act”) on or after the initial effective date of the Registration Statement, or the date of such Base Prospectus, the Prospectus, the Prospectus Supplement or such Permitted Free Writing Prospectus, if any, as the case may be, and incorporated or deemed to be incorporated therein by reference pursuant to Item 6 of Form F-3. “Time of Sale” means each time a Share is purchased pursuant to this Agreement.

(ii)         (A)      The Registration Statement complied when it became effective, complies as of the date hereof, and will comply upon the effectiveness of any amendment thereto and at each Time of Sale and each Settlement Date (as applicable), in all material respects, with the requirements of the Securities Act; at all times during which a prospectus is required by the Securities Act to be delivered (whether physically or through

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compliance with Rule 172 under the Securities Act or any similar rule) in connection with any sale of Shares (the “Prospectus Delivery Period”); the Registration Statement, as may be amended, will comply, in all material respects, with the requirements of the Securities Act; the conditions to the use of Form F-3 in connection with the offering and sale of the Shares as contemplated hereby (the “Offering”) have been satisfied, subject to the limitations imposed on transactions conducted pursuant to General Instruction I.B.5 of Form F-3; the Registration Statement meets, and the Offering complies with, the requirements of Rule 415 under the Securities Act (including, without limitation, Rule 415(a)(5)); the Registration Statement did not, as of the time of its effectiveness and as of the date hereof, and will not, as of the effective date of any amendment thereto, at each Time of Sale, if any, and at all times during a Prospectus Delivery Period, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading.

(B)         The Prospectus, as of the date of the Prospectus Supplement, as of the date hereof (if filed with the Commission on or prior to the date hereof), at each Settlement Date and Time of Sale (as applicable), and at all times during a Prospectus Delivery Period, complied, complies or will comply, in all material respects, with the requirements of the Securities Act; and the Prospectus, and each supplement thereto, as of their respective dates, at each Settlement Date or Time of Sale (as applicable), and at all times during a Prospectus Delivery Period, did not and will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

(C)         Each Permitted Free Writing Prospectus, if any, as of its date and as of each Settlement Date and Time of Sale (as applicable), and at all times during a Prospectus Delivery Period (when taken together with the Prospectus at such time) will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

The representations and warranties set forth in subparagraphs (A), (B) and (C) above shall not apply to any statement contained in the Registration Statement, any Base Prospectus, the Prospectus or any Permitted Free Writing Prospectus in reliance upon and in conformity with information concerning the Agent that is furnished in writing by or on behalf of the Agent expressly for use in the Registration Statement, such Base Prospectus, the Prospectus or such Permitted Free Writing Prospectus, if any, it being understood and agreed that only such information furnished by the Agent as of the date hereof consists of the information described in Section 6(b)(ii).

(iii)        Prior to the execution of this Agreement, the Company has not, directly or indirectly, offered or sold any Shares by means of any “prospectus” (within the meaning of the Securities Act) or used any “prospectus” (within the meaning of the Securities Act) in connection with the Offering, in each case other than the Base Prospectus or any Permitted Free Writing Prospectus; the Company has not, directly or indirectly, prepared, used or referred to any Permitted Free Writing Prospectus except in compliance with Rules 164 and 433 under the Securities Act; assuming that a Permitted Free Writing Prospectus, if any, is sent or given after the Registration Statement was filed with the Commission (and after such Permitted

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Free Writing Prospectus, if any, was, if required pursuant to Rule 433(d) under the Securities Act, filed with the Commission), the Company will satisfy the provisions of Rule 164 or Rule 433 necessary for the use of a free writing prospectus (as defined in Rule 405) in connection with the Offering; the conditions set forth in one or more of subclauses (i) through (iv), inclusive, of Rule 433(b)(1) under the Securities Act are satisfied, and the registration statement relating to the Offering, as initially filed with the Commission, includes a prospectus that, other than by reason of Rule 433 or Rule 431 under the Securities Act, satisfies the requirements of Section 10 of the Securities Act; neither the Company nor the Agent is disqualified, by reason of subsection (f) or (g) of Rule 164 under the Securities Act, from using, in connection with the Offering, “free writing prospectuses” (as defined in Rule 405 under the Securities Act) pursuant to Rules 164 and 433 under the Securities Act; the Company is not an “ineligible issuer” (as defined in Rule 405 under the Securities Act) as of the eligibility determination date for purposes of Rules 164 and 433 under the Securities Act with respect to the offering of the Shares contemplated by the Registration Statement; the parties hereto agree and understand that the content of any and all “road shows” (as defined in Rule 433 under the Securities Act) related to the Offering is solely the property of the Company.

(iv)          Each Permitted Free Writing Prospectus, as of its issue date, each Time of Sale and each Settlement Date occurring after such issue date and at all subsequent times through the Prospectus Delivery Period (as defined below) or until any earlier date that the Company notified or notifies the Agent as described in Section 4(c)(iii), did not, does not and will not include any information that conflicted, conflicts or will conflict with the information contained in the Registration Statement, any Base Prospectus or the Prospectus. The foregoing sentence does not apply to statements in or omissions from any Permitted Free Writing Prospectus based upon and in conformity with written information furnished to the Company by the Agent specifically for use therein, it being understood and agreed that only such information furnished by the Agent as of the date hereof consist of the information described in Section  6(b)(ii).

(v)          The consolidated financial statements of the Company and the Subsidiaries (as defined below), together with the related notes, set forth or incorporated by reference in the Registration Statement and the Prospectus comply in all material respects with the requirements of the Securities Act and the Exchange Act and fairly present in all material respects the financial condition of the Company and the Subsidiaries, as a whole, as of the dates indicated and the results of operations and changes in cash flows for the periods therein specified in conformity with U.S. generally accepted accounting principles consistently applied throughout the periods involved. The selected financial data and the summary financial information included in the documents in the Registration Statement and in the Prospectus constitute a fair summary of the information purported to be summarized and have been compiled on a basis consistent with that of the audited financial statements included in the Registration Statement. No other financial statements or supporting schedules are required to be included or incorporated by reference in the Registration Statement or the Prospectus under the Securities Act except as so included or incorporated by reference. All disclosures contained in the Registration Statement or the Prospectus or incorporated by reference therein regarding “non GAAP financial measures” (as such term is defined by the applicable rules and regulations of the Commission) comply with Regulation G of the Exchange Act and Item 10 of Regulation S-K of the Securities Act to the extent applicable. To the Company’s knowledge, Deloitte Certified Public Accountants S.A.,

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which has expressed its opinion with respect to the financial statements and schedules, if any, filed as a part of the Registration Statement and included in the Registration Statement and the Prospectus, is a registered public accounting firm within the meaning of the Securities Act, and in the performance of its work for the Company has not been in violation of the auditor independence requirements of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”).

(vi)        The Company and each of the Subsidiaries has been duly organized and is validly existing as a corporation under the laws of its jurisdiction of incorporation. The Company and each of the Subsidiaries has full corporate power and authority to own its respective properties and conduct its business as currently being carried on and as described in the Registration Statement and the Prospectus, and is duly qualified to do business as a foreign corporation in good standing in each jurisdiction in which it owns or leases real property or in which the conduct of its business makes such qualification necessary and in which the failure to so qualify would have a material adverse effect upon the results of operations, business, management, properties, prospects, conditions (financial or otherwise) or operations, of the Company and the Subsidiaries, either individually or taken as a whole (“Material Adverse Effect”).

(vii)       Except as disclosed in the Prospectus, subsequent to the dates as of which information is given in the Prospectus, the Company (including its Subsidiaries on a consolidated basis) has not incurred any material liabilities or obligations, direct or contingent, or entered into any material transactions, or declared or paid any dividends or made any distribution of any kind with respect to the capital stock of the Company; and there has not been any change in the capital stock of the Company, or issuance of options, warrants, convertible securities or other rights to purchase the capital stock of the Company, or any material change in the short-term or long-term debt of the Company (other than as a result of the exercise of any currently outstanding options or warrants that are disclosed in the Prospectus), or any Material Adverse Effect or any development that would reasonably be expected to result in a Material Adverse Effect. Since the date of the latest balance sheet presented in the Registration Statement and the Prospectus, neither the Company nor any Subsidiary has entered into any transactions, including any acquisition or disposition of any business or asset, which are material to the Company and the Subsidiaries taken as a whole, except for transactions which are disclosed in the Registration Statement and the Prospectus.

(viii)      Except as set forth in the Prospectus, there is not pending or, to the knowledge of the Company, threatened or contemplated, any action, suit or proceeding to which the Company or any of its Subsidiaries or of which any property or assets of the Company or any of its Subsidiaries is the subject before or by any court or governmental agency, authority or body, or any arbitrator or mediator, which, individually or in the aggregate, would reasonably be expected to result in any Material Adverse Effect.

(ix)         There are no statutes, regulations, contracts or documents that are required to be described in the Registration Statement and the Prospectus or be filed as exhibits to the Registration Statement by the Securities Act that have not been so described or filed.

(x)          This Agreement has been duly authorized, executed and delivered by the Company, and constitutes a valid, legal and binding obligation of the Company,

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enforceable against the Company in accordance with its terms, except as rights to indemnity hereunder may be limited by federal or state securities laws and except as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting the rights of creditors generally and subject to general principles of equity. The execution, delivery and performance of this Agreement and the consummation of the transactions herein contemplated will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, (i) any law, rule or regulation to which the Company or any of its Subsidiaries is subject, (ii) any agreement or instrument to which the Company or any of its Subsidiaries or by which it is bound or to which any of its property is subject, (iii) the Company’s Amended and Restated Articles of Incorporation or Bylaws, each as amended, or the organizational documents of any of its Subsidiaries, or (iv) any order, rule, regulation or decree of any court or governmental agency or body having jurisdiction over the Company or any of its Subsidiaries or any of its properties, except, in the case of clauses (i), (ii) and (iv), for such breaches, violations or defaults that would not reasonably be expected to result in a Material Adverse Effect; no consent, approval, authorization or order of, or filing with, any court or governmental agency or body is required for the execution, delivery and performance of this Agreement or for the consummation of the transactions contemplated hereby and thereby, including the issuance or sale of the Shares by the Company, except for such consents, approvals, authorizations, orders or filings as have been obtained or made or as may be required under the Securities Act or state securities or blue sky laws; and the Company has and will have full power and authority to enter into this Agreement and to authorize, issue and sell the Shares as contemplated hereby and thereby.

(xi)        All of the issued and outstanding shares of capital stock of the Company, including the outstanding Common Shares, are duly authorized and validly issued, fully paid and nonassessable, have been issued in compliance with all applicable foreign, federal and state securities laws, were not issued in violation of or subject to any preemptive rights or other rights to subscribe for or purchase securities that have not been waived in writing, and the holders thereof are not subject to personal liability by reason of being such holders; all of the issued and outstanding shares of capital stock of each of the Subsidiaries are duly authorized and validly issued, fully paid and nonassessable, and are owned by the Company, directly or through wholly-owned Subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity except for those arising under any credit facility or loan agreement (“Credit Facilities”) to which the Company or any of its Subsidiaries is a party or their assets are bound as disclosed in the Registration Statement and the Prospectus, have been issued in compliance with all applicable foreign, federal and state securities laws, were not issued in violation of or subject to any preemptive rights or other rights to subscribe for or purchase securities that have not been waived in writing, and the holders thereof are not subject to personal liability by reason of being such holders; the Shares which may be sold under this Agreement by the Company have been duly authorized and, when issued, delivered and paid for in accordance with the terms of this Agreement will have been validly issued and will be fully paid and nonassessable, and the holders thereof will not be subject to personal liability solely by reason of being such holders; and the capital stock of the Company, including the Common Shares, conforms in all material respects to the description thereof in the Registration Statement and the Prospectus. Except as otherwise stated in the Registration Statement and the Prospectus, there are no preemptive rights or other rights to subscribe for or to purchase, or any restriction upon the voting or transfer of, any Common Shares pursuant to the Company’s Amended and

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Restated Articles of Incorporation, as amended, or any agreement or other instrument to which the Company is a party or by which the Company is bound. Neither the filing of the Registration Statement nor the Offering gives rise to any rights for or relating to the registration of any Common Shares or other securities of the Company, except for such registration rights as have been duly waived. Except as described in the Registration Statement and the Prospectus, there are no options, warrants, agreements, contracts or other rights in existence to purchase or acquire from the Company any shares of the capital stock of the Company. The Company has an authorized and outstanding capitalization as set forth in the Registration Statement and the Prospectus as of the dates set forth therein.

(xii)       The Company and each of its Subsidiaries holds, and is operating in compliance with all grants, authorizations, licenses, permits, consents, certificates and orders of any governmental or self-regulatory body required for the conduct of its respective businesses and all such grants, authorizations, licenses, permits, consents, certifications and orders are valid and in full force and effect, except for such noncompliance or failures to be in full force and effect that would not reasonably be expected to result in a Material Adverse Effect; and neither the Company nor any of its Subsidiaries has received notice of any revocation or modification of any such grant, authorization, license, permit, consent, certification or order or has reason to believe that any such grant, authorization, license, permit, consent, certification or order will not be renewed in the ordinary course; and the Company and each of its Subsidiaries is in compliance with all applicable federal, state, local and foreign laws, regulations, orders and decrees, except for such noncompliance that would not reasonably be expected to result in a Material Adverse Effect. No approval, authorization, consent or order of or filing with any foreign, federal, state or local governmental or regulatory commission, board, body, authority or agency is required in connection with the issuance and sale of the Shares or the consummation by the Company of the transactions contemplated hereby, other than (i) registration of the Shares under the Securities Act, (ii) any necessary qualification under the securities or blue sky laws of the various jurisdictions in which the Shares are being offered by the Agent, (iii) the filing of any reports under the Exchange Act, (iv) such approvals as may be required by the Financial Industry Regulatory Authority, Inc. (“FINRA”), (v) approval of the listing of the Shares by the NASDAQ Capital Market or (vi) such approvals as have been obtained or made as of the Time of Sale.

(xiii)      The Company and each of its Subsidiaries has good and marketable title to all property (whether real or personal) described in the Registration Statement and the Prospectus as being owned by it, in each case free and clear of all liens, claims, security interests, other encumbrances or defects except such as are described in the Registration Statement and the Prospectus, except as would not materially impair the use or value thereof. The property held under lease by the Company and each of its Subsidiaries is held by it under valid, subsisting and enforceable leases with only such exceptions with respect to any particular lease as do not interfere in any material respect with the conduct of the business of the Company or such Subsidiary.

(xiv)      The Company and each of its Subsidiaries owns, possesses, or can acquire on reasonable terms, all Intellectual Property (as defined below) necessary for the conduct of their respective businesses as now conducted or as described in the Registration Statement and the Prospectus to be conducted. Except as would not result in a Material Adverse Effect, (A) there are no rights of third parties to any such Intellectual Property owned by the

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Company, except as otherwise disclosed to the Agent in writing by the Company prior to the date hereof; (B) to the knowledge of the Company, there is no infringement, misappropriation or violation by third parties of any such Intellectual Property; (C) there is no pending or, to the knowledge of the Company, threatened, action, suit, proceeding or claim by others challenging the Company’s or any Subsidiary’s rights in or to any such Intellectual Property, and the Company is unaware of any facts which would form a reasonable basis for any such claim; (D) the Intellectual Property owned by the Company and each of the Subsidiaries, and to the knowledge of the Company, the Intellectual Property licensed to the Company, each of the Subsidiaries, has not been adjudged invalid or unenforceable, in whole or in part, and there is no pending or, to the knowledge of the Company, threatened action, suit, proceeding or claim by others challenging the validity or scope of any such Intellectual Property, and the Company is unaware of any facts which would form a reasonable basis for any such claim; (E) there is no pending or, to the knowledge of the Company, threatened action, suit, proceeding or claim by others that the Company or any of its Subsidiaries infringes, misappropriates or otherwise violates any Intellectual Property or other proprietary rights of others, and neither the Company nor any of the Subsidiaries has received any written notice of such claim; and (F) to the Company’s knowledge, no employee of the Company or any of its Subsidiaries is in or has ever been in violation of any term of any employment contract, patent disclosure agreement, invention assignment agreement, non-competition agreement, non-solicitation agreement, nondisclosure agreement or any restrictive covenant to or with a former employer where the basis of such violation relates to such employee’s employment with the Company or any of its Subsidiaries or actions undertaken by the employee while employed with the Company or any of its Subsidiaries. “Intellectual Property” shall mean all patents, patent applications, trade and service marks, trade and service mark registrations, trade names, copyrights, licenses, inventions, trade secrets, domain names, technology, know-how and other intellectual property.

(xv)       Neither the Company nor any of its Subsidiaries is (A) in violation of its articles of incorporation or similar organizational documents, or (B) in breach of or otherwise in default, and no event has occurred which, with notice or lapse of time or both, would constitute such a default in the performance of any material obligation, agreement or condition contained in any bond, debenture, note, indenture, loan agreement, mortgage, deed of trust or any other material contract, lease or other instrument to which it is subject or by which any of them may be bound, or to which any of the material property or assets of the Company or any of its Subsidiaries is subject (collectively, the “Material Contracts”); or (C) in violation of any law or statute or any judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory authority, except in the case of (B) and (C) above, as could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

(xvi)      The Company and each of the Subsidiaries has timely filed all applicable federal, state, local, foreign and other income and franchise tax returns required to be filed and are not in default in the payment of any taxes which were payable pursuant to said returns or any assessments with respect thereto, other than any which the Company or any of its Subsidiaries is contesting in good faith. There is no pending dispute with any taxing authority relating to any of such returns, and the Company has no knowledge of any proposed liability for any tax to be imposed upon the properties or assets of the Company or any of its Subsidiaries for which there is not an adequate reserve reflected in the Company’s financial statements included in the Registration Statement. There are no documentary, stamp or other issuance or transfer

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taxes or duties or similar fees or charges under U.S. federal law or the laws of any U.S. state, the Republic of the Marshall Islands, or any political subdivision of any thereof, required to be paid in connection with the execution and delivery of this Agreement or the issuance, sale and delivery by the Company of the Shares.

(xvii)     The Company has not distributed and will not distribute any prospectus or other offering material in connection with the Offering other than the Registration Statement and the Prospectus or other materials permitted by the Securities Act to be distributed by the Company; provided, however, that the Company has not made and will not make any offer relating to the Shares that would constitute a “free writing prospectus” as defined in Rule 405 under the Securities Act, except in accordance with the provisions of Section 4(o) of this Agreement.

(xviii)    The issuance and sale of the Shares as contemplated in this Agreement does not contravene the rules and regulations of the NASDAQ Capital Market. The Common Shares are registered pursuant to Section 12(b) of the Exchange Act and are listed on the NASDAQ Capital Market and the Company has taken no action designed to, or likely to have the effect of, terminating the registration of the Common Shares under the Exchange Act or delisting the Common Shares from the NASDAQ Capital Market nor, except as disclosed in the Registration Statement or the Prospectus, has the Company received any notification that the Commission or the NASDAQ Capital Market is contemplating terminating such registration or listing. The Company has complied in all material respects with the applicable requirements of the NASDAQ Capital Market for maintaining the listing of the Common Shares thereon. The Company has filed an application to include the Shares on the NASDAQ Capital Market.

(xix)      The Company has no subsidiaries other than those listed on Schedule E hereto (collectively, the “Subsidiaries”). The Company does not own, directly or indirectly, any shares of stock or any other equity or long-term debt securities of any other corporation or have any equity interest in any other corporation, partnership, joint venture, association, trust or other entity.

(xx)       The Company and each of its Subsidiaries have established and maintain systems of internal accounting controls sufficient to provide reasonable assurances that (A) transactions are executed in accordance with management’s general or specific authorization; (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets; (C) access to assets is permitted only in accordance with management’s general or specific authorization; and (D) amounts reflected on the Company’s consolidated balance sheet for assets are compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Except as described in the Registration Statement and the Prospectus, since the filing of the annual report on Form 20-F for the fiscal year ended December 31, 2017, there has been (i) no new material weakness identified to the Company’s board of directors (or committee thereof) in the Company’s internal control over financial reporting (whether or not remediated) and (ii) no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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(xxi)     Except as described in the Registration Statement or the Prospectus, the Company and each of the Subsidiaries: (A) is and at all times since January 1, 2018 has been in material compliance with all United States (federal, state and local) and foreign statutes, rules, regulations, treaties, or guidances applicable to the Company or the Subsidiaries (“Applicable Laws”); (B) since January 1, 2018 has not received any notice of adverse finding, warning letter, untitled letter or other correspondence or notice from any Governmental Authority (as defined below) alleging or asserting noncompliance with any Applicable Laws or any licenses, certificates, approvals, clearances, authorizations, permits and supplements or amendments thereto required by any such Applicable Laws (“Authorizations”); (C) since January 1, 2018 has not received notice of any claim, action, suit, proceeding, hearing, enforcement, investigation, arbitration or other action from any Governmental Authority or third party alleging that any product operation or activity is in violation of any Applicable Laws or Authorizations and has no knowledge that any such Governmental Authority or third party intends to assert any such claim, litigation, arbitration, action, suit, investigation or proceeding; (D) since January 1, 2018 has not received notice that any Governmental Authority has taken, is taking or intends to take action to limit, suspend, modify or revoke any Authorizations and the Company has no knowledge that any such Governmental Authority is considering such action; and (E) has filed, obtained, maintained or submitted all material reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments as required by any Applicable Laws or Authorizations and that all such reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments were complete and correct in all material respects on the date filed (or were corrected or supplemented by a subsequent submission). “Governmental Authority” means any federal, provincial, state, local, foreign or other governmental or quasi-governmental agency or body or any other type of regulatory authority or body, including, without limitation, the NASDAQ Capital Market. The aggregate of all pending legal or governmental proceedings to which the Company or any Subsidiary is a party or of which any of their respective property or assets is the subject which are not described in the Registration Statement and the Prospectus, including ordinary routine litigation incidental to the business, would not result in a Material Adverse Effect.

(xxii)     Other than as contemplated by this Agreement, the Company has not incurred any liability for any finder’s or broker’s fee or agent’s commission in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby. The Company has not entered into any other sales agency agreements or other similar arrangements with any agent or any other representative in respect of “at the market” offerings of the Shares in accordance with Rule 415 under the Securities Act.

(xxiii)    The Company and each of the Subsidiaries carries, or is covered by, insurance in such amounts and covering such risks the Company reasonably believes are adequate for the conduct of its respective business and the value of its properties and as is customary for companies engaged in similar businesses in similar industries; all policies of insurance and any fidelity or surety bonds insuring the Company, each of its Subsidiaries and their respective businesses, assets, employees, officers and directors are in full force and effect; the Company and each of its Subsidiaries is in compliance with the terms of such policies and instruments in all material respects; there are no claims by the Company or any of the Subsidiaries under any such policy or instrument as to which any insurance company is denying liability or defending under a reservation of rights clause; neither the Company nor any of the

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Subsidiaries has been refused any insurance coverage sought or applied for; and the Company has no reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect.

(xxiv)    The Company is not (and is not an affiliate of), and immediately after receipt of payment for the Shares, will not be (and will not be an affiliate of), an “investment company” within the meaning of the Investment Company Act of 1940, as amended. The Company currently intends to conduct its business in a manner so that it will not become subject to the Investment Company Act of 1940, as amended.

(xxv)     The Incorporated Documents, at the time they were or hereinafter are filed with the Commission, complied and will comply in all material respects to the requirements of the Securities Act and the Exchange Act, and were filed on a timely basis with the Commission and no Incorporated Document contained or will contain an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, that, no representation is made herein regarding the representations, warranties and covenants, or any descriptions thereof, contained in any agreements or documents included as exhibits to the Incorporated Documents. There is no material document required to be described in the Registration Statement or the Prospectus or to be filed as an exhibit to the Registration Statement which was not described or filed as required. All material agreements of the Company and all agreements governing or evidencing any and all related party transactions have been filed with the Commission to the extent required and applicable under the Exchange Act. Neither the Company nor any Subsidiaries has sent or received any communication regarding termination of, or intent not to renew, any of the contracts or agreements referred to or described in the Registration Statement and the Prospectus, or referred to or described in, or filed as an exhibit to, the Registration Statement or any Incorporated Document (including, without limitation, all charter parties to which the Company or any Subsidiary is a party), and no such termination or non-renewal has been threatened by the Company or any of its Subsidiaries or, to the Company’s knowledge, any other party to any such contract or agreement. Any descriptions of the terms of any of the foregoing contracts and agreements that are contained in the Registration Statement and the Prospectus are accurate and complete in all material respects. The Shareholders Rights Agreement, dated May 18, 2009, by and between the Company and American Stock Transfer and Trust Company, LLC (as amended, the “Rights Agreement”), constitutes a valid and binding agreement of each such party enforceable against each such party in accordance with its terms; and when issued in accordance with the terms of the Rights Agreement, the preferred stock purchase rights constitute valid and binding obligations of the Company and the Registration Statement and the Prospectus contain a summary of the terms of the Rights Agreement, which summary is accurate and complete in all material respects.

(xxvi)    The Company is in compliance in all material respects with all applicable provisions of the Sarbanes-Oxley Act and the rules and regulations of the Commission thereunder.

(xxvii)   Except as described in the Registration Statement and the Prospectus, the Company has established and maintains disclosure controls and procedures

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(within the meaning of Rule 13a-15(e) of the Exchange Act) and such controls and procedures are designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Commission and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The Company has utilized such controls and procedures in preparing and evaluating the disclosures in the Registration Statement and the Prospectus.

(xxviii) To the knowledge of the Company, neither the Company, the Subsidiaries, nor any director, officer, agent, employee or affiliate of the Company or any Subsidiary, has taken any action directly or indirectly, that would result in a violation by such persons of the FCPA (as defined below), including, without limitation, making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any “Foreign official” (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA, and the Company and each of its Subsidiaries has conducted its business in compliance with the FCPA and has instituted and maintains policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith. “FCPA” means the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder.

(xxix)   The Company and each of its Subsidiaries have complied in all material respects with the money laundering statutes of applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by applicable governmental agencies (collectively, the “Money Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its Subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.

(xxx)    Neither the Company, any of its Subsidiaries, nor, to the knowledge of the Company, any director, officer, employee, representative, agent, or affiliate of the Company or any of its Subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury.

(xxxi)   No transaction has occurred or agreement or understanding entered into between or among the Company or any of its Subsidiaries on the one hand, and any officer, director or 5% or greater stockholder of the Company or any Subsidiary of the Company or any affiliate or affiliates of any such officer, director or 5% or greater stockholder that is required to be described that is not so described in the Registration Statement and the Prospectus. Neither the Company nor any of its Subsidiaries has, directly or indirectly, extended or maintained credit, or arranged for the extension of credit, or renewed an extension of credit, in the form of a personal loan to or for any of its directors or executive officers in violation of applicable laws, including Section 402 of the Sarbanes-Oxley Act.

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(xxxii)                (a) Neither the Company nor any of its Subsidiaries is in violation of any applicable international, national, state or local convention, law, regulation, order, governmental license, convention, treaty (including those promulgated by the International Maritime Organization) or other requirement relating to pollution or protection of human health or safety (as they relate to exposure to Materials of Environmental Concern (as defined below)) or protection of the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or protection of natural resources, including without limitation, conventions, laws or regulations relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum, petroleum products or other hydrocarbons (collectively, “Materials of Environmental Concern”), or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Materials of Environmental Concern (collectively, “Environmental Laws”), nor has the Company or any Subsidiary received any written communication, whether from a Governmental Authority, citizens group, employee or otherwise, that alleges that the Company or any such Subsidiary is in violation of any Environmental Law or governmental license required pursuant to Environmental Law; except, in each case, as would not, individually or in the aggregate, have a Material Adverse Effect; (b) there is no claim, action or cause of action filed with a court or Governmental Authority and no investigation, or other action with respect to which the Company or any Subsidiary has received written notice alleging potential liability for investigatory costs, cleanup costs, governmental response costs, natural resources damages, property damages, personal injuries, attorneys’ fees or penalties arising out of, based on or resulting from the presence, or release into the environment, of any Material of Environmental Concern at any location owned, leased or operated by the Company or any Subsidiary, now or in the past, or from any vessel owned, leased or operated by the Company or any Subsidiary, now or in the past (collectively, “Environmental Claim”), pending or, to the knowledge of the Company, threatened against the Company or any Subsidiary or any person or entity whose liability for any Environmental Claim the Company or any Subsidiary has retained or assumed either contractually or by operation of law, except as would not, individually or in the aggregate, have a Material Adverse Effect; (c) to the knowledge of the Company, there are no past or present actions, activities, circumstances, conditions, events or incidents, including, without limitation, the release, emission, discharge, presence or disposal of any Material of Environmental Concern, that reasonably would be expected to result in a violation of any Environmental Law, require expenditures to be incurred pursuant to Environmental Law, or form the basis of an Environmental Claim against the Company, any Subsidiary or against any person or entity whose liability for any Environmental Claim the Company or any Subsidiary has retained or assumed either contractually or by operation of law, except as would not, individually or in the aggregate, have a Material Adverse Effect (for the avoidance of doubt, the operation of vessels in the ordinary course of business shall not be deemed, by itself, an action, activity, circumstance or condition set forth in this clause (c)); and (d) none of the Company or any Subsidiary is subject to any pending proceeding under Environmental Law to which a Governmental Authority is a party and which the Company reasonably believes is likely to result in monetary sanctions of US$100,000 or more. The Company has reasonably concluded that any existing compliance and remediation costs and liabilities arising under Environmental Laws and resulting from the business, operations or properties of the Company or any Subsidiary would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, except as set forth in or contemplated

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in the Registration Statement and the Prospectus. In the ordinary course of its business, the Company conducts a periodic review of the effect of Environmental Laws on the business, operations and properties of the Company and the Subsidiaries, in the course of which it identifies and evaluates associated costs and liabilities (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties). No facts or circumstances have come to the Company’s attention that could result in costs or liabilities that could be expected, individually or in the aggregate, to have a Material Adverse Effect.

(xxxiii)         The Company and each of the Subsidiaries (A) is in compliance, in all material respects, with applicable foreign, federal, state and local laws, rules, regulations, statutes and codes promulgated by applicable governmental authorities (including pursuant to the Occupational Health and Safety Act) relating to the protection of human health and safety in the workplace (“Occupational Laws”); (B) has received all material permits, licenses or other approvals required of it under applicable Occupational Laws to conduct its business as currently conducted; and (C) is in compliance, in all material respects, with all terms and conditions of such permit, license or approval. No action, proceeding, revocation proceeding, writ, injunction or claim is pending or, to the Company’s knowledge, threatened against the Company or any of its Subsidiaries relating to Occupational Laws, and the Company does not have knowledge of any facts, circumstances or developments relating to its operations or cost accounting practices that could reasonably be expected to form the basis for or give rise to such actions, suits, investigations or proceedings.

(xxxiv)         No material labor problem or dispute with the employees of the Company or any of its Subsidiaries exists or, to the knowledge of the Company, is threatened or imminent.

(xxxv)          The Company has not, and to its knowledge no one acting on its behalf has, (a) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Shares, (b) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Shares or (c) paid or agreed to pay to any person any compensation for soliciting another to purchase any other securities of the Company, other than, in the case of clauses (b) and (c), compensation paid to the Agent in connection with the sale of the Shares.

(xxxvi)         Other than the Agent, no person or entity has the right to act as a placement agent, underwriter or as a financial advisor in connection with the sale of the Shares contemplated hereby, and the Company is not a party to any agreement with an agent or underwriter for any other “at the market” offering or continuous equity transaction.

(xxxvii)        There is no transaction, arrangement or other relationship between the Company or any of its Subsidiaries and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in the Registration Statement or the Prospectus and is not so disclosed or that otherwise could be reasonably likely to have a Material Adverse Effect.

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(xxxviii)        None of the Company, its Subsidiaries, or any of their respective affiliates, nor any person or entity acting on their behalf (excluding the Agent) has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause the transactions contemplated by this Agreement to require approval of stockholders of the Company under any applicable stockholder approval provisions, including, without limitation, under the rules and regulations of the NASDAQ Capital Market. None of the Company, its Subsidiaries, their affiliates nor any person or entity acting on their behalf will take any action or steps that would cause the offering of any of the Shares to be integrated with other offerings of securities of the Company.

(xxxix)          Any statistical and market-related data included in the Registration Statement and the Prospectus are based on or derived from sources that the Company believes to be reliable and accurate and, to the extent required, the Company has obtained the written consent to the use of such data from such sources.

(xl)                 The Registration Statement is not the subject of a pending proceeding or examination under Section 8(d) or 8(e) of the Securities Act, and the Company is not the subject of a pending proceeding under Section 8A of the Securities Act in connection with the offering of the Shares.

(xli)                Except as set forth in the Registration Statement or the Prospectus, the Company and its board of directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s Amended and Restated Articles of Incorporation, as amended, or the laws of the Republic of the Marshall Islands that is or could become applicable to the purchasers of the Shares.

(xlii)                There are no affiliations with any FINRA member firm among the Company’s officers, directors or, to the knowledge of the Company, any five percent (5%) or greater stockholder of the Company, except as set forth in the Registration Statement or the Prospectus.

(xliii)              Neither the Company nor any Subsidiary or any of their respective properties or assets has any immunity from the jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution or otherwise) under the laws of the United States, the Republic of the Marshall Islands, Liberia, Panama or any political subdivisions thereof.

(xliv)              The Company is a “foreign private issuer” as defined in Rule 405 promulgated under the Securities Act.

(xlv)               The Company did not qualify as a “passive foreign investment company” within the meaning of Section 1297 of the United States Internal Revenue Code of 1986, as amended, for its most recently completed taxable year, if any.

(xlvi)              Each “forward-looking statement” (within the meaning of Section 27A of the Securities Act or Section 21E of the Exchange Act) contained in the Registration

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Statement and the Prospectus has been made or reaffirmed with a reasonable basis and has been disclosed in good faith.

(xlvii)            The Company has the power to submit, and pursuant to Section 18 of this Agreement has legally, validly, effectively and irrevocably submitted, to the jurisdiction of any federal or state court in the State of New York, County of New York, and has the power to designate, appoint and empower, and pursuant to Section 18 of this Agreement has legally, validly and effectively designated, appointed and empowered, an agent for service of process in any suit or proceeding based on or arising under this Agreement in any federal or state court in the State of New York.

(xlviii)            The interactive data in eXtensible Business Reporting Language included or incorporated by reference in the Registration Statement fairly presents the information called for in all material respects and has been prepared in accordance with the Commission’s rules and guidelines applicable thereto.

(b)          Any certificate signed by any officer of the Company and delivered to the Agent or the Agent’s counsel shall be deemed a representation and warranty by the Company to the Agent as to the matters covered thereby.

(c)          At each Bringdown Date (as defined herein) and each Time of Sale, the Company shall be deemed to have affirmed each representation and warranty contained in or made pursuant to this Agreement as of such date as though made at and as of such date (except that such representations and warranties shall be deemed to relate to the Registration Statement and the Prospectus as amended and supplemented relating to such Shares on such date).

2. Representations and Warranties of the Company as to Maritime Matters.

(a)          Each of the vessels described in the Registration Statement and the Prospectus as being owned by the Company or any Subsidiary as described therein (“Owned Vessels”) has been duly and validly registered in the name of a Subsidiary under the laws and regulations and flag of the nation of its registration; no other action is necessary to establish and perfect such entity’s title to and interest in any of the Owned Vessels as against any third party; and each Owned Vessel is owned directly by the Company or such Subsidiary free and clear of all liens, claims, security interests or other encumbrances, except such as are described in or contemplated by the Registration Statement or the Prospectus. Each such Subsidiary has good title to the applicable Owned Vessel, free and clear of all mortgages, pledges, liens, security interests and claims and all defects of the title of record except for maritime liens incurred in the ordinary course and those liens arising under Credit Facilities, each as disclosed in the Registration Statement and the Prospectus.

(b)          Each memorandum of agreement or option agreement to which the Company or any of its Subsidiaries is a party to purchase any vessels as described in the Registration Statement and the Prospectus has been duly authorized and has been executed and delivered by the respective parties thereto, and the Company has no reason to believe that such agreements do not constitute valid and binding agreements of each such party enforceable in all material respects against each such party in accordance with its terms. Upon exercise of its

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rights to acquire any vessel as provided for in any such memorandum of agreement or option agreement, the Company or applicable Subsidiary will have an enforceable right to acquire the vessel subject to the same.

(c)          Any vessel currently being built for the Company or any Subsidiary (a “NewBuild Vessel”) is disclosed in the Registration Statement or the Prospectus. Each applicable Subsidiary has all rights, title and interest as purchaser of each NewBuild Vessel under a shipbuilding contract for such NewBuild Vessels (each, a “Shipbuilding Contract”), free of any mortgages, pledges, liens, security interests, claims, restrictions or encumbrances except for those liens arising under Credit Facilities or as disclosed in the Registration Statement or the Prospectus and all installments which were due to be paid under each Shipbuilding Contract up to and including the date hereof have been duly paid or extended upon the mutual consent of the parties to such Shipbuilding Contract and there are no defaults or breaches by the applicable Subsidiary or, to the Company’s knowledge, by the builder of the applicable NewBuild Vessel, under any Shipbuilding Contract, in any such case which would permit the builder to terminate such Shipbuilding Contract or entitle the builder to delay delivery of the applicable NewBuild Vessel for more than ten (10) days. Each Shipbuilding Contract has been duly authorized and has been executed and delivered by the respective parties thereto, and the Company has no reason to believe that such agreements do not constitute valid and binding agreements of each such party enforceable in all material respects against each such party in accordance with its terms.

(d)          Each of the Owned Vessels is in good standing with respect to the payment of past and current taxes, fees and other amounts payable under the laws of the jurisdiction in which it is registered, except where such lien or defect of title or record would not result in a Material Adverse Effect.

(e)          Each of the Owned Vessels is operated in compliance with the rules, codes of practice, conventions, protocols, guidelines or similar requirements or restrictions imposed, published or promulgated by any governmental authority, classification society or insurer applicable to the respective Owned Vessel (collectively, “Maritime Guidelines”) and all applicable international, national, state and local conventions, laws, regulations, orders, governmental licenses and other requirements (including, without limitation, all Environmental Laws), in each case as in effect on the date hereof, except where such failure to be in compliance would not result in a Material Adverse Effect. The Company and each applicable Subsidiary are qualified to own or lease, as the case may be, and operate such Owned Vessels under all applicable international, national, state and local conventions, laws, regulations, orders, governmental licenses and other requirements (including, without limitation, all Environmental Laws) and Maritime Guidelines, including the laws, regulations and orders of each such vessel’s flag state, in each case as in effect on the date hereof, except where such failure to be so qualified would not result in a Material Adverse Effect.

(f)          Each of the Owned Vessels is classed by a classification society which is a full member of the International Association of Classification Societies and such Owned Vessels are in class with valid class and trading certificates, without any overdue recommendations, in each case based on the classification and certification requirements in effect on the date hereof.

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3.          Purchase, Sale and Delivery of Shares.

(a)          At the Market Sales. On the basis of the representations, warranties and agreements herein the Company agrees that, from time to time during the term of this Agreement, on the terms and subject to the conditions set forth herein, it may issue and sell through the Agent, acting as sales agent, the Shares up to an aggregate offering price of US$10,000,000; provided, however, that in no event shall the Company issue or sell through the Agent such number of Shares that (a) exceeds the number or dollar amount of Common Shares registered on the Registration Statement, pursuant to which the Offering is being made, (b) exceeds the number of authorized but unissued Common Shares or (c) would cause the Company or the offering of the Shares to not satisfy the eligibility and transaction requirements for use of Form F-3 (including, if applicable, General Instruction I.B.5 of Form F-3 (the lesser of (a), (b) and (c), the “Maximum Amount”)). Notwithstanding anything to the contrary contained herein, the parties hereto agree that compliance with the limitations set forth in this Section 3(a) on the number and aggregate sales price of Shares issued and sold under this Agreement shall be the sole responsibility of the Company and that Agent shall have no obligation in connection with such compliance. Notwithstanding the foregoing, the Company agrees that it will provide the Agent with written notice no less than one (1) business day prior to the date on which it makes the initial sale of Shares under this Agreement. As used herein, the terms “business day” means any day (other than Saturday, Sunday or any federal holiday in the United States) in which commercial banks in New York, New York are open for business.

(i)          For purposes of selling the Shares through the Agent, the Company hereby appoints the Agent as exclusive agent of the Company for the purpose of soliciting purchases of the Shares from the Company pursuant to this Agreement and the Agent agrees to use its commercially reasonable efforts to sell the Shares on the terms and subject to the conditions stated herein.

(ii)          Each time the Company wishes to issue and sell the Shares hereunder (each, a “Transaction”), it will notify the Agent by telephone (confirmed promptly by facsimile or e-mail to the appropriate individual listed on Schedule D hereto, using a form substantially similar to that set forth on Schedule C hereto (a “Transaction Notice”) as to the maximum number of Shares to be sold by the Agent on such day and in any event not in excess of the amount available for issuance under the Prospectus and the currently effective Registration Statement, the time period during which sales are requested to be made, any limitation on the number of shares that may be sold in any one Trading Day (as defined below), and any minimum price below which sales may not be made. The Transaction Notice shall originate from any of the individuals from the Company set forth on Schedule B (with a copy to each of the other individuals from the Company listed on such Schedule), and shall be addressed to each of the individuals from the Agent set forth on Schedule D, as such Schedule D may be amended from time to time. Subject to the terms and conditions hereof and unless the sale of the Shares described therein has been declined, suspended, or otherwise terminated in accordance with the terms of this Agreement, the Agent shall promptly acknowledge the Transaction Notice by facsimile or e-mail (or by some other method mutually agreed to in writing by the parties) and shall use its commercially reasonable efforts to sell all of the Shares so designated by the Company in, and in accordance with the terms set forth in, the Transaction Notice; provided, however, that any obligation of the Agent to use such commercially reasonable efforts shall be

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subject to the continuing accuracy of the representations and warranties of the Company herein, to the performance by the Company of its obligations hereunder and to the continuing satisfaction of the additional conditions specified in Section 5 of this Agreement. The gross sales price of the Shares sold under this Section 3(a) shall be equal to the market price for the Common Shares sold by the Agent under this Section 3(a) on the NASDAQ Capital Market at the time of such sale. For the purposes hereof, “Trading Day” means any day on which Common Shares are purchased and sold on the principal market on which the Common Shares are listed or quoted.

(iii)         The Company or the Agent may, upon notice to the other party hereto by telephone (confirmed promptly by facsimile or e-mail to the respective individuals of the other party set forth on Schedule D hereto, which confirmation shall be promptly acknowledged by the other party), suspend the Offering for any reason and at any time, whereupon the Agent shall so suspend the offering of Shares until further notice is provided by the other party to the contrary; provided, however, that such suspension or termination shall not affect or impair the parties’ respective obligations with respect to the Shares sold hereunder prior to the receipt by the Agent of such notice. Each of the parties agrees that no such notice under this Section 3(a)(iii) shall be effective against the other unless it is made to one of the individuals named on Schedule D hereto, as such Schedule may be amended from time to time.

(iv)          The Company acknowledges and agrees that (A) there can be no assurance that the Agent will be successful in selling the Shares, (B) the Agent will incur no liability or obligation to the Company or any other person or entity if it does not sell Shares for any reason other than a failure by the Agent to use its commercially reasonable efforts consistent with its normal trading and sales practices and applicable law and regulations to sell such Shares as required under this Agreement, and (C) the Agent shall be under no obligation to purchase shares on a principal basis pursuant to this Agreement.

(v)          The Agent may sell Shares by any method permitted by law to be an “at the market offering” as defined in Rule 415 under the Securities Act, including without limitation sales made directly on the NASDAQ Capital Market, on any other existing trading market for the Common Shares or to or through a market maker. The Agent may also sell Shares in privately negotiated transactions (which, for the avoidance of doubt, shall not include block trades initiated on the NASDAQ Capital Market) with the Company’s prior written approval.

(vi)          The compensation to the Agent for sales of the Shares, as an agent of the Company, shall be a transaction fee (the “Transaction Fee”) equal to three percent (3.0%) of the gross sales price of all the Shares sold pursuant to this Section 3(a). The remaining proceeds, after further deduction for any transaction or other fees imposed by any governmental or self-regulatory organization in respect of such sales, shall constitute the net proceeds to the Company for such Shares (the “Net Proceeds”). The Agent shall notify the Company as promptly as practicable if any deduction referenced in the preceding sentence will be required.

(vii)        In the event the Company and the Agent mutually determine that instead of proceeding with the Offering to proceed with (or concurrently with the Offering engage in) a different offering of the Company’s equity, equity-linked or debt securities (each, an “Alternative Transaction”), the terms and conditions of such offering shall be memorialized in

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a separate agreement, the terms of which shall provide a customary fee to the Agent as well as reimbursement of Agent’s related legal fees and disbursements as agreed to between the parties; provided, that the Company shall pay the Agent a cash fee of six percent (6.0%) of the gross proceeds of the Alternative Transaction, including the gross proceeds derived from the exercise of warrants issued in connection with the Alternative Transaction. In addition, the Agent shall be entitled to a Transaction Fee (whether in connection with the Offering or the Alternative Transaction) with respect to any public or private offering or other financing or capital-raising transactions of the Company or any Subsidiary to the extent such financing or capital is provided to the Company or any such Subsidiary by investors or lenders introduced to the Company by the Agent, but only if such Alternative Transaction is consummated within the twelve (12) month period from the date hereof. This Section 3(a)(vii) shall survive the termination of this Agreement.

(viii)       The Agent shall provide written confirmation (which may be by facsimile or electronic mail) to the Company following the close of trading on the Capital Market each day in which the Shares are sold under this Section 3(a) setting forth the number of the Shares sold on such day, the aggregate gross sale proceeds, the Net Proceeds to the Company, and the compensation payable by the Company to the Agent with respect to such sales.

(ix)        All Shares sold pursuant to this Section 3(a) will be delivered by the Company to Agent for the accounts of the Agent on the second full business day following the date on which such Shares are sold, or at such other time and date as Agent and the Company determine pursuant to Rule 15c6-1(a) under the Exchange Act, each such time and date of delivery being herein referred to as a “Settlement Date.” On each Settlement Date, the Shares sold through the Agent for settlement on such date shall be issued and delivered by the Company to the Agent against payment of the Net Proceeds from the sale of such Shares. Settlement for all such Shares shall be effected by free delivery of the Shares by the Company or its transfer agent (i) to the Agent or its designee’s account (provided the Agent shall have given the Company written notice of such designee prior to the Settlement Date) at The Depository Trust Company (“DTC”) or (ii) by such other means of delivery as may be mutually agreed upon by the parties hereto, which in all cases (provided that such Shares were sold pursuant to the Registration Statement) shall be freely tradable, transferable, registered shares in good deliverable form, in return for payment in same day funds delivered to an account designated by the Company. If the Company or its transfer agent (if applicable) shall default on its obligation to deliver the Shares on any Settlement Date, the Company shall (A) indemnify and hold the Agent harmless against any loss, claim or damage arising from or as a result of such default by the Company and (B) pay the Agent any commission to which it would otherwise be entitled absent such default against payment of the Net Proceeds therefor by wire transfer of same day funds payable to the order of the Company at 9:00 a.m. New York City time. If the Agent breaches this Agreement by failing to deliver the Net Proceeds on any Settlement Date for the shares delivered by the Company, the Agent will pay the Company interest based on the effective prime rate until such proceeds, together with such interest, have been fully paid.

(x)         Under no circumstances shall the Company cause or request the offer or sale of any Shares if, after giving effect to the sale of such Shares, the aggregate gross sales proceeds sold pursuant to this Agreement would exceed the lesser of (A) together with all

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sales of Shares under this Agreement, the Maximum Amount, (B) the amount available for offer and sale under the currently effective Registration Statement and (C) the amount authorized from time to time to be issued and sold under this Agreement by the Company’s board of directors, a duly authorized committee thereof or a duly authorized executive committee, and notified to the Agent in writing. Under no circumstances shall the Company cause or request the offer or sale of any Shares at a price lower than the minimum price authorized from time to time by the Company’s board of directors, duly authorized committee thereof or a duly authorized executive committee, and notified to the Agent in writing. Further, under no circumstances shall the aggregate offering amount of the Shares sold pursuant to this Agreement, including any separate underwriting or similar agreement covering principal transactions, exceed the Maximum Amount.

(xi)        Unless the exceptive provisions set forth in Rule 101(c)(1) of Regulation M under the Exchange Act are satisfied with respect to the Shares, the Company shall give the Agent at least one business day’s prior notice of its intent to sell any Shares in order to allow the Agent time to comply with Regulation M.

(xii)        The Company agrees that during the term of this Agreement, any offer to sell, any solicitation of an offer to buy, or any sales of Shares in an “at the market offering” as defined in Rule 415 under the Securities Act, including pursuant to Section 4(o) of this Agreement, shall only be effected by or through the Agent; provided, however, that the foregoing limitation shall not apply to the exercise of any outstanding option or warrant described in the Registration Statement and the Prospectus.

(b)          Nothing herein contained shall constitute the Agent an unincorporated association or partner with the Company. Under no circumstances shall any Shares be sold pursuant to this Agreement after the date which is three years after the Registration Statement is first declared effective by the Commission.

(c)          Notwithstanding any other provisions of this Agreement, the Company agrees that no sale of Shares shall take place, and the Company shall not request the sale of any Shares, and the Agent shall not be obligated to sell, during any period in which the Company is, or could be deemed to be, in possession of material non-public information or the Company’s insider trading policy would prohibit the purchase and sale of the Company’s Common Shares by its officers and directors.

4.          Covenants. The Company covenants and agrees with the Agent as follows:

(a)          After the date hereof and through any Prospectus Delivery Period, prior to amending or supplementing the Registration Statement (including any Rule 462(b) Registration Statement), Base Prospectus, the Prospectus or any Permitted Free Writing Prospectus, the Company shall furnish to the Agent for review a copy of each such proposed amendment or supplement, allow the Agent a reasonable amount of time to review and comment on such proposed amendment or supplement, and the Company shall not file any such proposed amendment or supplement to which the Agent or counsel to the Agent reasonably object; provided that the foregoing shall not apply with regards to the filing by the Company of any Form 20-F, Form 6-K or other Incorporated Document. Subject to this Section 4(a),

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immediately following execution of this Agreement, the Company will prepare a prospectus supplement describing the selling terms of the Shares hereunder, the plan of distribution thereof and such other information as may be required by the Securities Act or the Rules and Regulations or as the Agent and the Company may deem appropriate, and if requested by the Agent, a Permitted Free Writing Prospectus containing the selling terms of the Shares hereunder and such other information as the Company and the Agent may deem appropriate, and will file or transmit for filing with the Commission, in accordance with Rule 424(b) or Rule 433, as the case may be, copies of the Prospectus as supplemented and each such Permitted Free Writing Prospectus.

(b)          After the date of this Agreement, the Company shall promptly advise the Agent in writing (i) of the receipt of any comments of, or requests for additional or supplemental information from, the Commission or for any amendments or supplements to the Registration Statement, the Base Prospectus, the Prospectus or any Permitted Free Writing Prospectus (excluding any Incorporated Documents), (ii) of the time and date of any filing of any post-effective amendment to the Registration Statement or any amendment or supplement to any Base Prospectus, the Prospectus or any Permitted Free Writing Prospectus(excluding any Incorporated Documents), (iii) of the time and date that any post-effective amendment to the Registration Statement becomes effective, (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto or of any order preventing or suspending its use or the use of any Base Prospectus, the Prospectus or any Permitted Free Writing Prospectus, or (v) of any proceedings to remove, suspend or terminate from listing or quotation the Common Shares from any securities exchange upon which it is listed for trading or included or designated for quotation, or of the threatening or initiation of any proceedings for any of such purposes. If the Commission shall enter any such stop order at any time, the Company may terminate this Agreement. Additionally, the Company agrees that it shall comply with the provisions of Rules 424(b), 430B and 430C, as applicable, under the Securities Act and will use its reasonable efforts to confirm that any filings made by the Company under Rule 424(b), Rule 433 or Rule 462 were received in a timely manner by the Commission (without reliance on Rule 424(b)(8) or Rule 164(b)).

(c)          (i)     From the date hereof through the later of (A) the termination of this Agreement and (B) the end of any applicable Prospectus Delivery Period, the Company will comply with all requirements imposed upon it by the Securities Act, as now and hereafter amended, and by the Rules and Regulations, as from time to time in force, and by the Exchange Act so far as necessary to permit the continuance of sales of or dealings in the Shares as contemplated by the provisions hereof, the Base Prospectus, the Prospectus and any Permitted Free Writing Prospectus. If during any applicable Prospectus Delivery Period any event occurs as a result of which the Base Prospectus, the Prospectus, or any Permitted Free Writing Prospectus would include an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances then existing, not misleading, or if during any applicable Prospectus Delivery Period it is necessary or appropriate in the opinion of the Company or its counsel or in the reasonable opinion of the Agent or counsel to the Agent to amend the Registration Statement or supplement the Base Prospectus, the Prospectus or any Permitted Free Writing Prospectus, to comply with the Securities Act or to file under the Exchange Act any document which would be deemed to be incorporated by reference in the Prospectus in order to comply with the Securities Act or the Exchange Act, the Company

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will promptly notify Agent (or the Agent will notify the Company, as applicable), and the Agent shall suspend the offering and sale of any such Shares, and the Company will amend the Registration Statement or supplement the Base Prospectus, the Prospectus or any Permitted Free Writing Prospectus or file such document (at the expense of the Company) so as to correct such statement or omission or effect such compliance within the time period prescribed by the Securities Act or the Exchange Act.

(ii)          In case the Agent is required to deliver (whether physically or through compliance with Rule 172 under the Securities Act or any similar rule), in connection with the sale of the Shares, a Prospectus after the nine-month period referred to in Section 10(a)(3) of the Securities Act, or after the time a post-effective amendment to the Registration Statement is required pursuant to Item 512(a) of Regulation S-K under the Securities Act, the Company will prepare, at its expense, promptly upon request such amendment or amendments to the Registration Statement and the Prospectus as may be necessary to permit compliance with the requirements of Section 10(a)(3) of the Securities Act or Item 512(a) of Regulation S-K under the Securities Act, as the case may be. The Company shall cause each amendment or supplement to any Base Prospectus or the Prospectus to be filed with the Commission as required pursuant to the applicable paragraph of Rule 424(b) of the Securities Act or, in the case of any document which would be deemed to be incorporated by reference therein, to be filed with the Commission as required pursuant to the Exchange Act, within the time period prescribed. The Company shall promptly notify the Agent if any Material Contract is terminated or if the other party thereto gives written notice of its intent to terminate any such Material Contract.

(iii)          If at any time following issuance of a Permitted Free Writing Prospectus there occurs an event or development as a result of which such Permitted Free Writing Prospectus would conflict with the information contained in the Registration Statement, the Base Prospectus or the Prospectus, or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances prevailing at that subsequent time, not misleading, the Company promptly will notify the Agent and will promptly amend or supplement, at its own expense, such Permitted Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission.

(d)          The Company shall use commercially reasonable efforts to take or cause to be taken all necessary action to qualify the Shares for sale under the securities laws of such jurisdictions as Agent reasonably designates and to continue such qualifications in effect so long as required for the distribution of the Shares, except that the Company shall not be required in connection therewith to qualify as a foreign corporation or to execute a general consent to service of process in any state. The Company shall promptly advise the Agent of the receipt by the Company of any notification with respect to the suspension of the qualification of the Shares for offer or sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose.

(e)          The Company will furnish to the Agent and counsel for the Agent, to the extent requested, copies of the Registration Statement, the Base Prospectus, the Prospectus, any Permitted Free Writing Prospectus, and all amendments and supplements to such documents, in

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each case as soon as available and in such quantities as the Agent may from time to time reasonably request.

(f)          The Company will make generally available to its security holders as soon as practicable an earnings statement (which need not be audited) covering a 12-month period that shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 of the Rules and Regulations. If the Company makes any public announcement or release disclosing its results of operations or financial condition for a completed quarterly, semi-annual or annual fiscal period (each, an “Earnings Release”) and the Company has not yet filed an Annual Report on Form 20-F or a Form 6-K with respect to such information, as applicable, then, prior to any sale of Shares, the Company shall be obligated to (x) file a prospectus supplement with the Commission under the applicable paragraph of Rule 424(b), which prospectus supplement shall include the applicable financial information or (y) file a Report on Form 6-K, which Form 6-K shall include the applicable financial information.

(g)          The Company, whether or not the transactions contemplated hereunder are consummated or this Agreement is terminated, will pay or cause to be paid (i) all expenses (including stock or transfer taxes and stamp or similar duties allocated to the respective transferees) incurred in connection with the registration, issue, sale and delivery of the Shares, (ii) all reasonable expenses and fees (including, without limitation, fees and expenses of the Company’s accountants and counsel) in connection with the preparation, printing, filing, delivery, and shipping of the Registration Statement (including the financial statements therein and all amendments, schedules, and exhibits thereto), the Base Prospectus, each Prospectus, any Permitted Free Writing Prospectus, and any amendment thereof or supplement thereto, and the producing, word-processing, printing, delivery, and shipping of this Agreement and other closing documents, including Blue Sky Memoranda (covering the states and other applicable jurisdictions) prepared by counsel, if required, and including the cost to furnish copies of each thereof to the Agent, (iii) all filing fees, (iv) listing fees, if any, (v) the cost and expenses of the Company relating to investor presentations or any “roadshow” undertaken in connection with marketing of the Shares as agreed to by the Company, and (vi) all other costs and expenses of the Company incident to the performance of its obligations hereunder that are not otherwise specifically provided for herein. The Company has advanced the sum of US$10,000 to the Agent, which pursuant to Rule 5110(f)(2)(C) of FINRA shall be returned to the Company to the extent the expenses have not been actually incurred. The Company shall reimburse the Agent upon request for its reasonable costs and out-of-pocket expenses incurred in connection with this Agreement, including the fees and disbursements of its legal counsel, not to exceed US$65,000, which amount shall be payable in three installments: (A) $20,000 within two (2) business days of the date on which US$1,000,000 in aggregate gross proceeds has been raised hereunder, (B) $20,000 within two (2) business days of the date on which US$2,000,000 in aggregate gross proceeds has been raised hereunder and (C) $25,000 within two (2) business days of the date on which US$10,000,000 in aggregate gross proceeds has been raised hereunder. In addition, the Company shall pay the Agent US$7,500 for its legal fees on each Bringdown Date. All such reimbursements under this Agreement shall be paid in U.S. dollars.

(h)          The Company will apply the net proceeds from the sale of the Shares in the manner set forth under the caption “Use of Proceeds” in the Base Prospectus, the Prospectus, and any Permitted Free Writing Prospectus.

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(i)          The Company will not, without (i) giving the Agent at least three business days’ prior written notice specifying the nature of the proposed sale and the date of such proposed sale and (ii) the Agent’s suspending activity under this Agreement for such period of time as requested by the Company or as deemed appropriate by the Agent in light of the proposed sale, offer for sale, sell, contract to sell, pledge, grant any option for the sale of, enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition (whether by actual disposition or effective economic disposition due to cash settlement or otherwise) by the Company or any Subsidiary, or otherwise issue or dispose of, directly or indirectly (or publicly disclose the intention to make any such offer, sale, pledge, grant, issuance or other disposition), of any Common Shares or any securities convertible into or exchangeable for, or any options or rights to purchase or acquire, Common Shares, or permit the registration under the Securities Act of any Common Shares, such securities, options or rights, except for (i) the registration of the Shares and the sales through the Agent pursuant to this Agreement (ii) the registration of Common Shares issued or issuable with respect to any currently outstanding options and warrants that are described in the Registration Statement and the Prospectus and (iii) a registration statement on Form F-8 relating to employee benefit plans.

(j)          The Company shall not, at any time at or after the execution of this Agreement, offer or sell any Shares by means of any “prospectus” (within the meaning of the Securities Act), or use any “prospectus” (within the meaning of the Securities Act) in connection with the offer or sale of the Shares, in each case other than the Prospectus or any Permitted Free Writing Prospectus.

(k)          Until the termination of this Agreement, the Company will not take, directly or indirectly, any action designed to or that would constitute or that might reasonably be expected to cause or result in, under the Exchange Act or otherwise, stabilization or manipulation in violation of the Securities Act, the Exchange Act or the rules and regulations thereunder of the price of any security of the Company to facilitate the sale or resale of the Shares or otherwise violate any provision of Regulation M under the Exchange Act.

(l)          The Company will not incur any liability for any finder’s or broker’s fee or agent’s commission in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby or thereby, except as contemplated herein.

(m)          During any applicable Prospectus Delivery Period, the Company will file on a timely basis with the Commission such periodic and current reports as required by the Rules and Regulations.

(n)          Except as described in the Company’s annual report on Form 20-F for the fiscal year ended December 31, 2017, the Company has maintained, and will maintain, such controls and other procedures, including without limitation those required by Sections 302 and 906 of the Sarbanes-Oxley Act and the applicable regulations thereunder, that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, including without limitation, controls and procedures designed to ensure that information required to be disclosed by the

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Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive officer and its principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure, to ensure that material information relating to Company is made known to them by others within those entities.

(o)          Each of the Company and Agent represent and agree that, neither the Company nor the Agent has made and will make any offer relating to the Shares that would constitute an “issuer free writing prospectus,” as defined in Rule 433 under the Securities Act, or that would otherwise constitute a “free writing prospectus,” as defined in Rule 405 under the Securities Act, required to be filed with the Commission other than a Permitted Free Writing Prospectus. The Company represents that it has treated or agrees that it will treat each Permitted Free Writing Prospectus as an “issuer free writing prospectus,” as defined in Rule 433, and has complied and will comply with the requirements of Rule 433 applicable to any Permitted Free Writing Prospectus, including timely Commission filing where required, legending and record keeping.

(p)          On the date hereof and each date when the Company (A) amends or supplements (other than a supplement to a Prospectus filed pursuant to Rule 424(b) under the Securities Act relating solely to the offering of securities other than the Shares ) the Registration Statement or Prospectus by means of a post-effective amendment, sticker, or supplement but not by means of incorporation of documents by reference into the Registration Statement or the Prospectus relating to the Shares, (B) files an annual report on Form 20-F under the Exchange Act (including any Form 20-F/A containing amended material financial information or a material amendment to the previously filed Form 20-F) or (C) files a report on Form 6-K containing quarterly or semi-annual financial information that is incorporated by reference in the Registration Statement and Prospectus (each of the dates in (A) through (C) are referred to herein as a “Bringdown Date”), the Agent shall receive a favorable opinion and negative assurances letter of Seward & Kissel LLP, U.S. counsel for the Company, together with a favorable opinion of Seward & Kissel LLP, special counsel for the Company on issues of Marshall Islands law, a favorable opinion of Seward & Kissel LLP, special counsel for the Company on issues of Liberia law, and a favorable opinion of Karnakis & Karnakis, special Panamanian counsel for the Company, each dated as of a date within ten (10) days after the applicable Bringdown Date, addressed to the Agent and modified as necessary to relate to the Registration Statement and the Prospectus as amended and supplemented to the time of delivery of such opinions. With respect to this Section 4(p), in lieu of delivering such opinions or letters for Bringdown Dates subsequent to the date hereof, such counsel may furnish agent with a letter (a “Reliance Letter”) to the effect that Agent may rely upon a prior opinion or letter delivered under this Section 4(p) to the same extent as if it were dated the date of such letter (except that statement in such prior opinion shall be deemed to relate to the Registration Statement and the Prospectus as amended or supplemented as of the date of such Reliance Letter); provided, however, the requirement to provide opinions and letters under this Section 4(p) is hereby waived for any Bringdown Date occurring at a time at which no Transaction Notice is pending, which waiver shall continue until the earlier to occur of the date the Company delivers a Transaction Notice hereunder and the next occurring Bringdown Date. Notwithstanding the foregoing, if the Company subsequently decides to sell Shares following a Bringdown Date when the Company relied on such waiver and did not provide Agent with opinions and letters under this Section 4(p), then before the Company

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delivers the Transaction Notice or Agent sells any Shares, the Company shall cause Seward & Kissel LLP to furnish to the Agent a written opinion and negative assurance letter dated the date of the Transaction Notice.

(q)          On the date hereof, and each date when the Company files an annual report on Form 20-F, or a report on Form 6-K containing quarterly or semi-annual financial information that is incorporated by reference in the Registration Statement and Prospectus, the Company shall cause Deloitte Certified Public Accountants S.A., or other independent accountants satisfactory to the Agent, to deliver to the Agent (x) a letter, dated as of a date within ten (10) days after such date and addressed to Agent, in form and substance satisfactory to Agent (the first such letter, the “Initial Comfort Letter”), confirming that they are independent public accountants within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualifications of accountants under Rule 2-01 of Regulation S-X of the Commission, and stating the conclusions and findings of said firm with respect to the financial information and other matters and (y) a letter updating the Initial Comfort Letter with any information that would have been included in the Initial Comfort Letter had it been given on such date and as modified as necessary to relate to the date of such letter (each such letter, a “Bringdown Comfort Letter”); provided, however, the requirement to provide a Bringdown Comfort Letter under this Section 4(q) is hereby waived for any Bringdown Date occurring at a time at which no Transaction Notice is pending, which waiver shall continue until the earlier to occur of the date the Company delivers a Transaction Notice hereunder and the next occurring Bringdown Date. Notwithstanding the foregoing, if the Company subsequently decides to sell Shares following a Bringdown Date when the Company relied on such waiver and did not provide Agent with a Bringdown Comfort Letter under this Section 4(q), then before the Company delivers the Transaction Notice or Agent sells any Shares, the Company shall cause Deloitte Certified Public Accountants S.A., or other independent accountants satisfactory to the Agent, to deliver to the Agent a Bringdown Comfort Letter dated the date of the Transaction Notice.

(r)          On the date hereof and each Bringdown Date, the Company shall furnish to the Agent a certificate, dated as of a date within ten (10) days after the applicable Bringdown Date and addressed to Agent, signed by the chief executive officer and by the chief financial officer of the Company, to the effect that:

(i)          The representations and warranties of the Company in this Agreement are true and correct in all material respects as if made at and as of the date of the certificate, and the Company has complied in all material respects with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the date of the certificate;

(ii)         No stop order or other order suspending the effectiveness of the Registration Statement or any part thereof or any amendment thereof or the qualification of the Shares for offering or sale or notice that would prevent use of the Registration Statement, nor suspending or preventing the use of the Base Prospectus, the Prospectus or any Permitted Free Writing Prospectus, has been issued, and no proceeding for that purpose has been instituted or, to the best of their knowledge, is contemplated by the Commission or any state or regulatory body;

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(iii)        The Shares to be sold on that date have been duly and validly authorized by the Company and all corporate action required to be taken for the authorization, issuance and sale of the Shares on that date has been validly and sufficiently taken;

(iv)        Subsequent to the respective dates as of which information is given in the Base Prospectus, the Prospectus or any Permitted Free Writing Prospectus, as amended and supplemented, and except for pending transactions disclosed therein, the Company has not incurred any material liabilities or obligations, direct or contingent, or entered into any material transactions, not in the ordinary course of business, or declared or paid any dividends or made any distribution of any kind with respect to its capital stock, and there has not been any change in the capital stock or any issuance of options, warrants, convertible securities or other rights to purchase the capital stock (other than as a result of the exercise of any currently outstanding options or warrants that are disclosed in the Prospectus), or any material change in the short-term or long-term debt, of the Company, or any Material Adverse Effect or any development that would reasonably be likely to result in a Material Adverse Effect (whether or not arising in the ordinary course of business), or any material loss by strike, fire, flood, earthquake, accident or other calamity, whether or not covered by insurance, incurred by the Company; and

(v)          Except as stated in the Base Prospectus, the Prospectus, and any Permitted Free Writing Prospectus, as amended and supplemented, there is not pending, or, to the knowledge of the Company, threatened or contemplated, any action, suit or proceeding to which the Company is a party before or by any court or governmental agency, authority or body, or any arbitrator, which would reasonably be likely to result in any Material Adverse Effect; provided, however, the requirement to provide a certificate under this Section 4(r) is hereby waived for any Bringdown Date occurring at a time at which no Transaction Notice is pending, which waiver shall continue until the earlier to occur of the date the Company delivers a Transaction Notice hereunder and the next occurring Bringdown Date. Notwithstanding the foregoing, if the Company subsequently decides to sell Shares following a Bringdown Date when the Company relied on such waiver and did not provide Agent with a certificate under this Section 4(r), then before the Company delivers the Transaction Notice or Agent sells any Shares, the Company shall provide Agent with a certificate dated the date of the Transaction Notice.

(s)          A reasonable time prior to each Bringdown Date, the Company, if so requested by the Agent, shall conduct a due diligence session, in form and substance, satisfactory to the Agent, which shall include representatives of the management and the accountants of the Company.

(t)          The Company shall disclose in its annual report on Form 20-F and its reports on Form 6-K with quarterly or semi-annual financial information the number of Shares sold through the Agent under this Agreement, the Net Proceeds to the Company and the compensation paid by the Company with respect to sales of the Shares pursuant to this Agreement.

(u)          The Company shall ensure that there are at all times sufficient Common Shares to provide for the issuance, free of any preemptive rights, out of its authorized but unissued Common Shares, of the maximum aggregate number of Shares authorized for issuance by the Company’s board of directors pursuant to the terms of this Agreement. The Company will

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use its reasonable best efforts to cause the Shares to be listed on the NASDAQ Capital Market, and to maintain such listing. The Company shall cooperate with Agent and use its reasonable efforts to permit Shares to be eligible for clearance and settlement through the facilities of DTC.

(v)          At any time during the term of this Agreement, the Company will advise the Agent promptly after it receives notice or obtains knowledge of any information or fact that would alter or affect any opinion, certificate, letter and other document provided to the Agent pursuant to Section 4 herein.

(w)          Subject to compliance with any applicable requirements of Regulation M under the Exchange Act and compliance with applicable securities laws, the Company consents to the Agent trading in Common Shares for the Agent’s own account and for the account of its clients (in compliance with all applicable laws) at the same time as sales of the Shares occur pursuant to this Agreement.

(x)          If to the knowledge of the Company, any condition set forth in Section 5  of this Agreement shall not have been satisfied on the applicable Settlement Date, the Company will offer to any person who has agreed to purchase the Shares on such Settlement Date from the Company as the result of an offer to purchase solicited by the Agent the right to refuse to purchase and pay for such Shares.

(y)          On the date hereof and each Bringdown Date, the Company shall furnish to the Agent an incumbency certificate, dated as of such date and addressed to Agent, signed by the secretary of the Company.

(z)          Each acceptance by the Company of an offer to purchase the Shares hereunder shall be deemed to be an affirmation to the Agent that the representations and warranties of the Company contained in or made pursuant to this Agreement are true and correct as of the date of such acceptance as though made at and as of such date, and an undertaking that such representations and warranties will be true and correct as of the Settlement Date for the Shares relating to such acceptance, as though made at and as of such date (except that such representations and warranties shall be deemed to relate to the Registration Statement and the Prospectus as amended and supplemented relating to such Shares).

(aa)          The Company shall ensure that there are at all times sufficient Common Shares to provide for the issuance, free of any preemptive rights, out of its authorized but unissued Common Shares or Common Shares held in treasury, of the maximum aggregate number of Shares authorized for issuance by the Company’s board of directors pursuant to the terms of this Agreement.

(bb)          During any period when the delivery of a prospectus relating to the Shares is required (including in circumstances where such requirement may be satisfied pursuant to Rule 172, 173 or any similar rule) to be delivered under the Securities Act, the Company will file all documents required to be filed with the Commission pursuant to the Exchange Act within the time periods required by the Exchange Act and the regulations thereunder.

(cc)          The Company shall cooperate with Agent and use its reasonable efforts to permit the Shares to be eligible for clearance and settlement through the facilities of DTC.

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(dd)          The Company will apply the Net Proceeds from the sale of the Shares in the manner set forth in the Prospectus.

(ee)          To the extent that the Registration Statement is not available for the sales of the Shares as contemplated by this Agreement, the Company shall file a new registration statement with respect to any additional shares of Common Stock necessary to complete such sales of the Shares and shall cause such registration statement to become effective as promptly as practicable. After the effectiveness of any such registration statement, all references to “Registration Statement” included in this Agreement shall be deemed to include such new registration statement, including all documents incorporated by reference therein pursuant to Item 6 of Form F-3, and all references to “Base Prospectus” included in this Agreement shall be deemed to include the final form of prospectus, including all documents incorporated therein by reference, included in any such registration statement at the time such registration statement became effective.

5.          Conditions of Agent’s Obligations. The obligations of the Agent hereunder are subject to (i) the accuracy of, as of the date hereof, each Bringdown Date, and each Time of Sale (in each case, as if made at such date), and compliance with, all representations, warranties and agreements of the Company contained herein, (ii) the performance by the Company of its obligations hereunder and (iii) the following additional conditions:

(a)          If the filing of the Prospectus, or any amendment or supplement thereto, or any Permitted Free Writing Prospectus, is required under the Securities Act or the Rules and Regulations, the Company shall have filed the Prospectus (or such amendment or supplement) or such Permitted Free Writing Prospectus with the Commission in the manner and within the time period so required (without reliance on Rule 424(b)(8) or Rule 164(b)); the Registration Statement shall remain effective; no stop order suspending the effectiveness of the Registration Statement or any part thereof, any Rule 462(b) Registration Statement, or any amendment thereof, nor suspending or preventing the use of the Base Prospectus, the Prospectus or any Permitted Free Writing Prospectus shall have been issued; no proceedings for the issuance of such an order shall have been initiated or threatened; and any request of the Commission for additional information (to be included in the Registration Statement, the Base Prospectus, the Prospectus, any Permitted Free Writing Prospectus or otherwise) shall have been complied with to the Agent’s satisfaction.

(b)          The Agent shall not have advised the Company that the Registration Statement, the Base Prospectus, the Prospectus, or any amendment or supplement thereto, or any Permitted Free Writing Prospectus, contains an untrue statement of fact which, in the Agent’s opinion, is material, or omits to state a fact which, in the Agent’s opinion, is material and is required to be stated therein or is necessary to make the statements therein (i) with respect to the Registration Statement, not misleading and (ii) with respect to the Base Prospectus, the Prospectus or any Permitted Free Writing Prospectus, in light of the circumstances under which they were made, not misleading.

(c)          Except as set forth or contemplated in the Base Prospectus, the Prospectus and any Permitted Free Writing Prospectus, subsequent to the respective dates as of which information is given therein, the Company shall not have incurred any material liabilities or

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obligations, direct or contingent, or entered into any material transactions, or declared or paid any dividends or made any distribution of any kind with respect to its capital stock and there shall not have been any change in the capital stock, or any issuance of options, warrants, convertible securities or other rights to purchase the capital stock (other than as a result of the exercise of any currently outstanding options or warrants that are disclosed in the Prospectus), or any material change in the short-term or long-term debt, of the Company, or any Material Adverse Effect or any development that would be reasonably likely to result in a Material Adverse Effect (whether or not arising in the ordinary course of business), or any material loss by strike, fire, flood, earthquake, accident or other calamity, whether or not covered by insurance, incurred by the Company, the effect of which, in any such case described above, in the Agent’s judgment, makes it impractical or inadvisable to offer or deliver the Shares.

(d)          The Company shall have performed each of its obligations under Section

(e)          The Company shall have performed each of its obligations under Section

(f)          The Company shall have performed each of its obligations under Section 4(r).

(g)          FINRA shall not have raised any objection to the fairness and reasonableness of the terms and arrangements under this Agreement.

(h)          All filings with the Commission required by Rule 424 under the Securities Act to have been filed by the Settlement Date shall have been made within the applicable time period prescribed for such filing by Rule 424.

(i)          The Company shall have furnished to Agent and the Agent’s counsel such additional documents, certificates and evidence as they may have reasonably requested.

(j)          Trading in the Common Shares shall not have been suspended on the NASDAQ Capital Market. The Shares shall have been listed and authorized for trading on the NASDAQ Capital Market prior to the first Settlement Date, and satisfactory evidence of such actions shall have been provided to the Agent and its counsel, which may include oral confirmation from a representative of the NASDAQ Capital Market.

All such opinions, certificates, letters and other documents will be in compliance with the provisions hereof only if they are reasonably satisfactory in form and substance to Agent and the Agent’s counsel. The Company will furnish Agent with such conformed copies of such opinions, certificates, letters and other documents as Agent shall reasonably request.

6.          Indemnification and Contribution.

(a)          (i)       The Company agrees to indemnify and hold harmless the Agent and each of the other Indemnified Parties (as defined below) from and against, and pay on demand for, any losses, claims, damages, obligations, penalties, judgments, awards, liabilities, costs, expenses and disbursements, and any and all actions suits proceedings and investigations

31

in respect thereof and any and all legal and other costs, expenses and disbursements in giving testimony or furnishing documents in response to subpoena or otherwise (including, without limitation, the costs, expenses and disbursements, as and when incurred, of investigating, preparing, pursuing or defending any such action, suit, proceeding or investigation (whether or not in connection with litigation in which any Indemnified Party is a party)) (collectively, “Losses”), directly or indirectly, caused by, relating to, based upon, arising out of , or in connection with this Agreement, including, without limitation, any act or omission by the Agent in connection with its acceptance of or the performance or non-performance of its obligations under the Agreement, any breach by the Company of any representation, warranty, covenant or agreement contained in the Agreement (or in any instrument, document or agreement relating thereto, including any agency agreement), or the enforcement by the Agent of its rights under the Agreement or these indemnification provisions, except to the extent that any such Losses are found in a final judgment by a court of competent jurisdiction (not subject to further appeal) to have resulted primarily and directly from the gross negligence or willful misconduct of the Indemnified Party seeking indemnification hereunder. The Company also agrees that no Indemnified Party shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Company for or in connection with this Agreement for any other reason, except to the extent that any such liability is found in a final judgment by a court of competent jurisdiction (not subject to further appeal) to have resulted primarily and directly from such Indemnified Party’s gross negligence or willful misconduct This indemnity agreement will be in addition to any liability that the Company otherwise might have.

(ii)          These indemnification provisions shall extend to the following persons (collectively, the “Indemnified Parties”): Maxim, its present and former affiliated entities, managers, members, officers, employees, legal counsel, agents and controlling persons (within the meaning of the federal securities laws), and the officers, directors, partners, stockholders, members, managers, employees, legal counsel, agents and controlling persons of any of them. These indemnification provisions shall be in addition to any liability which the Company may otherwise have to any Indemnified Party.

(iii)          If any action, suit, proceeding or investigation is commenced, as to which an Indemnified Party proposes to demand indemnification, it shall notify the Company with reasonable promptness; provided, however, that any failure by an Indemnified Party to notify the Company shall not relieve the Company from its obligations hereunder except to the extent that the Company is actually and materially prejudiced by such failure to notify. An Indemnified Party shall have the right to retain counsel of its own choice to represent it, and the fees, expenses and disbursements of such counsel shall be borne by the Company. Any such counsel shall, to the extent consistent with its professional responsibilities, cooperate with the Company and any counsel designated by the Company. The Company shall be liable for any settlement of any claim against any Indemnified Party made with the Company’s written consent. The Company shall not, without the prior written consent of the Agent, settle or compromise any claim, or permit a default or consent to the entry of any judgment in respect thereof, unless such settlement, compromise or consent (i) includes, as an unconditional term thereof, the giving by the claimant to all of the Indemnified Parties of an unconditional release from all liability in respect of such claim, and (ii) does not contain any factual or legal admission by or with respect to an Indemnified Party or an adverse statement with respect to the character,

32

professionalism, expertise or reputation of any Indemnified Party or any action or inaction of any Indemnified Party.

(iv)          In order to provide for just and equitable contribution, if a claim for indemnification pursuant to these indemnification provisions is made but it is found in a final judgment by a court of competent jurisdiction (not subject to further appeal) that such indemnification may not be enforced in such case, even though the express provisions hereof provide for indemnification in such case, then the Company shall contribute to the Losses to which any Indemnified Party may be subject (i) in accordance with the relative benefits received by the Company and its stockholders, subsidiaries and affiliates, on the one hand, and the Indemnified Party, on the other hand, and (ii) if (and only if) the allocation provided in clause (i) of this sentence is not permitted by applicable law, in such proportion as to reflect not only the relative benefits, but also the relative fault of the Company, on the one hand, and the Indemnified Party, on the other hand, in connection with the statements, acts or omissions which resulted in such Losses as well as any relevant equitable considerations. No person found liable for a fraudulent misrepresentation shall be entitled to contribution from any person who is not also found liable for fraudulent misrepresentation. The relative benefits received (or anticipated to be received) by the Company and its stockholders, subsidiaries and affiliates shall be deemed to be equal to the aggregate consideration payable or receivable by such parties in connection with the transaction or transactions to which the Agreement relates relative to the amount of fees actually received by the Agent in connection with such transaction or transactions. Notwithstanding the foregoing, in no event shall the amount contributed by all Indemnified Parties exceed the amount of fees previously received by the Agent pursuant to the Agreement.

(b)          (i)      The Agent will indemnify and hold harmless the Company and its affiliates and directors and each officer of the Company who signed the Registration Statement and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (the “Company Indemnified Parties”) from and against any Losses to which the Company or the Company Indemnified Parties may become subject, under the Securities Act or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the Agent), insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or omission or alleged untrue statement or omission of a material fact contained in the Registration Statement, any Base Prospectus, the Prospectus, or any amendment or supplement thereto or any Permitted Free Writing Prospectus, but only and solely to the extent that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, any Base Prospectus, the Prospectus, or any amendment or supplement thereto, or any Permitted Free Writing Prospectus in reliance upon and in conformity with written information furnished to the Company by Agent expressly for use in the preparation thereof, it being understood and agreed that the only information furnished by the Agent consists of the information described as such in Section 6(b)(ii) hereof, by the Company in connection with investigating or defending against any such loss, claim, damage, liability or action.

(ii)         The Agent confirms and the Company acknowledges that as of the date hereof no information has been furnished in writing to the Company by or on behalf of the Agent specifically for inclusion in the Registration Statement, any Base Prospectus, the

33

Prospectus or any Permitted Free Writing Prospectus except for the second sentence of the seventh paragraph in the section of the Prospectus captioned “Plan of Distribution.”

(c)          If the indemnification provided for in this Section 6 is unavailable or insufficient to hold harmless an indemnified party under subsection (a) or (b) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities referred to in subsection (a) or (b) above, (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Agent on the other from the Offering or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and the Agent on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Agent on the other shall be deemed to be in the same proportion as the total net proceeds from the Offering (before deducting expenses) received by the Company and the total underwriting discounts and commissions received by the Agent, bear to the total public offering price of the Shares. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Agent and the parties’ relevant intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The Company and the Agent agree that it would not be just and equitable if contributions pursuant to this subsection (c) were to be determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the first sentence of this subsection (c). The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (c) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending against any action or claim which is the subject of this subsection (c). Notwithstanding the provisions of this subsection (c), the Agent shall not be required to contribute any amount in excess of the amount by which the total price at which the Shares underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages that the Agent has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

(d)          Neither termination of this Agreement nor completion of the Offering shall affect these indemnification provisions which shall remain operative and in full force and effect. The indemnification provisions shall be binding upon the Company and the Agent and their respective successors and assigns and shall inure to the benefit of the Indemnified Parties and the Company Indemnified Parties and their respective successors, assigns, heirs and personal representatives.

7.          Representations and Agreements to Survive Delivery. All representations and warranties of the Company herein or in certificates delivered pursuant hereto, and agreements of the Agent and the Company herein, including but not limited to the agreements of the Agent and

34

the Company contained in Section 6 hereof, shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Agent or any controlling person thereof, or the Company or any of its officers, directors, or controlling persons, and shall survive delivery of, and payment for, the Shares to and by the Agent hereunder.

8.          Termination of this Agreement.

(a)          The Company shall have the right, by giving written notice as hereinafter specified, to terminate the provisions of this Agreement relating to the solicitation of offers to purchase the Shares in its sole discretion at any time upon thirty (30) days’ prior written notice. Any such termination shall be without liability of any party to any other party except that (i) if the Shares have been sold through the Agent for the Company, then Sections 4(g) and 4(x) shall remain in full force and effect, (ii) with respect to any pending sale, through the Agent for the Company, the obligations of the Company with respect to such pending sale of Shares, including in respect of compensation of the Agent, shall remain in full force and effect notwithstanding such termination and (iii) the provisions of Section 3(a)(vii), Section 4(g), Section 6 and Section 7 of this Agreement shall remain in full force and effect notwithstanding such termination.

(b)          The Agent shall have the right, by giving written notice as hereinafter specified, to terminate the provisions of this Agreement relating to the solicitation of offers to purchase the Shares in its sole discretion at any time. Any such termination shall be without liability of any party to any other party except that (i) the provisions of the last three sentences of Section 4(g) and the entirety of Section 3(a)(vii), Section 6 and Section 7 of this Agreement shall remain in full force and effect notwithstanding such termination and (ii) the provisions of Section 4(g) other than the last three sentences thereof shall remain in full force and effect only if the Agent has terminated this Agreement as a result of the Company’s default of its obligations hereunder and its failure to cure any default within a reasonable period of time.

(c)          This Agreement shall remain in full force and effect for twelve (12) months from the date hereof unless terminated pursuant to Sections 8(a) or (b) above or otherwise by mutual agreement of the parties; provided that any such termination by mutual agreement shall in all cases be deemed to provide that Section 3(a)(vii), Section 4(g), Section 6 and Section 7 shall remain in full force and effect.

(d)          Any termination of this Agreement shall be effective on the date specified in such notice of termination; provided that such termination shall not be effective until the close of business on the date of receipt of such notice by the Agent or the Company, as the case may be. If such termination shall occur prior to the Settlement Date for any sale of the Shares, such sale shall settle in accordance with the provisions of Section 3(a) of this Agreement.

9.          Default by the Company. If the Company shall fail at any Settlement Date to sell and deliver the number of Shares which it is obligated to sell hereunder, then this Agreement shall terminate without any liability on the part of the Agent or, except as provided in Section 4(g) hereof, any non-defaulting party. No action taken pursuant to this Section 9 shall relieve the Company from liability, if any, in respect of such default, and the Company shall (A) hold the Agent harmless against any loss, claim or damage arising from or as a result of such default by

35

the Company and (B) pay the Agent any commission to which it would otherwise be entitled absent such default.

10.          Notices. Except as otherwise provided herein, all communications under this Agreement shall be in writing and, if to the Agent, shall be mailed, delivered or sent by facsimile or email transmission to Maxim Group LLC, 405 Lexington Avenue, New York, New York 10174, Attention: Clifford A. Teller, Executive Managing Director, Head of Investment Banking (fax: (212) 895-3783; email: cteller@maximgrp.com), with a required copy (which shall not constitute notice) to Ellenoff Grossman & Schole LLP, 1345 Avenue of the Americas, New York, New York 10105, Attention: Barry I. Grossman, Esq. (fax: (212) 370-7889; email: bigrossman@egsllp.com). Notices to the Company shall be given to it at 4 Messogiou & Evropis Street, 151 24 Maroussi, Greece, Attention: Simos Pariaros (fax: +30-211-1804097; email: smp@euroseas.gr; aha@euroseas.gr and ajp@euroseas.gr), with a required copy (which shall not constitute notice) to Seward & Kissel LLP, One Battery Park Plaza, New York, New York 10004, Attn: Attention: Anthony Tu-Sekine (fax: 212-480-8421; email: mailto:tu-sekine@sewkis.com). Any party to this Agreement may change such address for notices by sending to the parties to this Agreement written notice of a new address for such purpose.

11.          Persons Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns and the controlling persons, officers and directors referred to in Section 6. Nothing in this Agreement is intended or shall be construed to give to any other person, firm or corporation any legal or equitable remedy or claim under or in respect of this Agreement or any provision herein contained. The term “successors and assigns” as herein used shall not include any purchaser, as such purchaser, of any of the Shares from the Agent.

12.          Absence of Fiduciary Relationship. The Company acknowledges and agrees that: (a) the Agent has been retained solely to act as an sales agent and/or principal in connection with the sale of the Shares and that no fiduciary, advisory or agency relationship between the Company and the Agent has been created in respect of any of the transactions contemplated by this Agreement, irrespective of whether the Agent has advised or are advising the Company on other matters; (b) the price and other terms of the Shares set forth in this Agreement were established by the Company following discussions and arms-length negotiations with the Agent and the Company is capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactions contemplated by this Agreement; (c) it has been advised that the Agent and its affiliates are engaged in a broad range of transactions which may involve interests that differ from those of the Company and that the Agent has no obligation to disclose such interest and transactions to the Company by virtue of any fiduciary, advisory or agency relationship; (d) it has been advised that the Agent is acting, in respect of the transactions contemplated by this Agreement, solely for the benefit of the Agent, and not on behalf of the Company; and (e) it waives to the fullest extent permitted by law, any claims it may have against the Agent for breach of fiduciary duty or alleged breach of fiduciary duty in respect of any of the transactions contemplated by this Agreement and agrees that the Agent shall have no liability (whether direct or indirect) to the Company in respect of such a fiduciary duty claim on behalf of or in right of the Company, including stockholders, employees or creditors of the Company.

36

13.          Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, including Section 5-1401 of the General Obligations Law of the State of New York, but otherwise without regard to conflict of laws rules that would apply the laws of any other jurisdiction.

14.          Counterparts. This Agreement may be executed in one or more counterparts and, if executed in more than one counterpart, the executed counterparts shall each be deemed to be an original and all such counterparts shall together constitute one and the same instrument.

15.          Adjustments for Stock Splits. The parties acknowledge and agree that all share-related numbers contained in this Agreement shall be adjusted to take into account any stock split, stock dividend or similar event effected with respect to the Shares.

16.          Entire Agreement; Amendment; Severability; Headings. This Agreement (including all schedules and exhibits attached hereto and transaction notices issued pursuant hereto) constitutes the entire agreement and supersedes all other prior and contemporaneous agreements and undertakings, both written and oral, among the parties hereto with regard to the subject matter hereof. Neither this Agreement nor any term hereof may be amended except pursuant to a written instrument executed by the Company and the Agent. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable as written by a court of competent jurisdiction, then such provision shall be given full force and effect to the fullest possible extent that it is valid, legal and enforceable, and the remainder of the terms and provisions herein shall be construed as if such invalid, illegal or unenforceable term or provision was not contained herein, but only to the extent that giving effect to such provision and the remainder of the terms and provisions hereof shall be in accordance with the intent of the parties as reflected in this Agreement. The section headings used in this Agreement are for convenience only and shall not affect the construction hereof.

17.          Waiver of Jury Trial. Each of the Company and the Agent hereby waives any right it may have to a trial by jury in respect of any claim based upon or arising out of this Agreement or the transactions contemplated hereby.

18.          Submission to Jurisdiction; Agent for Service. Except as set forth below, no claim arising out of or in any way relating to this Agreement may be commenced, prosecuted or continued in any court other than the courts of the State of New York located in the City and County of New York or in the United States District Court for the Southern District of New York, which courts shall have non-exclusive jurisdiction over the adjudication of such matters, and the Company consents to the jurisdiction of such courts and personal service with respect thereto. The Company hereby consents to personal jurisdiction, service and venue in any court in which any claim arising out of or in any way relating to this Agreement is brought by any third party against the Agent or any indemnified party. The Company has appointed Seward & Kissel LLP, One Battery Park Plaza, New York, New York 10004, as its authorized agent (the “Authorized Agent”) upon whom process may be served in any suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated herein which may be instituted in any New York Court, by the Authorized Agent, the directors, officers, partners, employees and agents of the Authorized Agent and each affiliate of the Authorized Agent, and

37

expressly accept the non-exclusive jurisdiction of any such court in respect of any such suit, action or proceeding. The Company hereby represents and warrants that the Authorized Agent has accepted such appointment and has agreed to act as said agent for service of process, and the Company agrees to take any and all action, including the filing of any and all documents that may be necessary to continue such appointment in full force and effect as aforesaid. The Company hereby authorizes and directs the Authorized Agent to accept such service. Service of process upon the Authorized Agent shall be deemed, in every respect, effective service of process upon the Company. If the Authorized Agent shall cease to act as agent for service of process, the Company shall appoint, without unreasonable delay, another such agent in the United States, and notify you of such appointment. Notwithstanding the foregoing, any action arising out of or based upon this Agreement may be instituted by the Authorized Agent, the directors, officers, partners, employees and agents of the Authorized Agent and each respective affiliate of the Authorized Agent, in any court of competent jurisdiction in the Republic of the Marshall Islands. This paragraph shall survive any termination of this Agreement, in whole or in part. The Company agrees that a final judgment in any such action, proceeding or counterclaim brought in any such court shall be conclusive and binding upon the Company and may be enforced in any other courts to the jurisdiction of which the Company is or may be subject, by suit upon such judgment.

[Signature Page Follows]

38

If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company the enclosed duplicate of this Agreement, whereupon this letter and your acceptance shall represent a binding agreement between the Company and the Agent in accordance with its terms.

Very truly yours, EUROSEAS LTD.
By:	/s/ Dr. Anastasios Aslidis
Name:	Anastasios Aslidis
Title:	Chief Financial Officer

Confirmed as of the date first
above mentioned.

MAXIM GROUP LLC

By:	/s/ Clifford A. Teller
Name:	Clifford A. Teller
Title:	Executive Managing Director, Head of Investment Banking

40

Schedule A

Permitted Free Writing Prospectus

None.

Schedule A-1

Schedule B

Individuals Permitted to Authorize Sales of Shares

• Simos Pariaros - smp@euroseas.gr

• Tasos Aslidis - aha@euroseas.gr

Schedule B-1

Schedule C

Form of Transaction Notice

From: Euroseas Ltd

To: Maxim Group LLC

Subject: Transaction Notice

Date: [•], 201 __

Ladies and Gentlemen:

Pursuant to the terms and subject to the conditions contained in the Equity Distribution Agreement between Euroseas Ltd. (the “Company”), and Maxim Group LLC (“Agent”), dated October 30, 2018, the Company hereby requests that the Agent sell up to [•] of the Company’s common shares, par value $0.03 per share, at a minimum market price of $[•] per share, during the time period beginning [month, day, time] and ending [month, day, time].

Schedule C-1

Schedule D

Individuals to Which Notice Can Be Given

• William Vitale, Head of Equity Trading, bvitale@maximgrp.com

• Rich Vaughan - rvaughan@maximgrp.com

• Robert Sayegh - rsayegh@maximgrp.com

Schedule D-1

Schedule E

List of Subsidiaries

Subsidiary	Country of Incorporation
Gregos Shipping Limited	Liberia
Joanna Maritime Ltd	Liberia
Noumea Shipping Ltd	Liberia
Athens Shipping Ltd	Marshall Islands
Bridge Shipping Ltd	Marshall Islands
Corfu Navigation Ltd	Marshall Islands
Jonathan John Shipping Ltd	Marshall Islands
Manolis Shipping Limited	Marshall Islands
Oinousses Navigation Ltd	Marshall Islands
Allendale Investments S.A.	Panama
Alterwall Business Inc.	Panama

Exhibit E-1

EX-4.31

Exhibit 4.31

ATHENS, 16/04/2020

EUROSEAS LTD
40, Agiou Konstantinou Str.
GR 15124, Marousi
Attn: Mr A. Pittas / Mr. T. Aslidis

RE: SWAP TRANSACTION

Our Ref: 20295-21787

The purpose of this confirmation is to confirm the terms and conditions of the Swap Transaction entered into between EUROBANK SA/ATHENS (“Party A”) and EUROSEAS LTD (“Party B”) on the Trade Date specified below (The Swap Transaction).

The definitions and provisions contained in the 2006 ISDA Definitions, as published by the International Swaps and Derivatives Association, Inc., are incorporated into this Confirmation. In the event of any inconsistency between those definitions and provisions and this Confirmation, this Confirmation will govern.

This Confirmation constitutes a “Confirmation” as referred to in , and supplements, forms part of and is subject to the 1SDA Master Agreement dated as of July 10, 2008 , as amended and supplemented from time to time (the “Agreement”), between EUROBANK SA (“Party A”) and EUROSEAS LTD (“Party B”). All provisions contained in the Agreement govern this Confirmation except as expressly modified below.

THE TERMS OF THE PARTICULAR TRANSACTION TO WHICH THIS CONFIRMATION RELATES ARE A FOLLOWS:

Trade Date:	16/04/2020
Effective Date:	24/04/2020
Termination Date:	24/04/2025, subject to adjustment in accordance with the Modified Following Business Day Convention.
FIXED AMOUNTS:
Fixed Rate Payer:	Party B
Fixed Rate Payer Currency Amount:	USD 30,000,000.00 as set forth in Schedule
Transaction fee:	In relation to each Calculation Period, 0.13% of the Notional Amount for such Calculation Period, embedded in the Fixed Rate. The total Transaction fee in respect of the Transaction is USD 197,816.65.

Fixed Rate Payer Payment Dates:	Quarterly, commencing on 24/07/2020 up to and including the Termination Date subject to adjustment in accordance with the Modified Following Business Day Convention and there will be an adjustment to the Calculation Period.
Initial Calculation Period:	From and including 24/04/2020 to and excluding 24/07/2020.
Fixed Rate:	0.7800000 PERCENT
Fixed Rate Day Count Fraction:	ACT/360
Business Days for Payment Date is:	New York, London and Athens Settlement Days
FLOATING AMOUNTS:
Floating Rate Payer:	Party A
Floating Rate Payer Currency Amount:	USD 30,000,000.00 as set forth in Schedule
Floating Rate Payer Payment Dates:	Quarterly, commencing on 24/0712020 up to and including the Termination Date subject to adjustment in accordance with the Modified Following Business Day Convention and there will be an adjustment to the Calculation Period.
Floor Rate:	From 24/04,2020 up to and including 24/04.2025, 0.00000 PERCENT, in the event that the Relevant Rate determined in respect of a Calculation Period is less than 0.00% the Floating Rate for such Calculation Period shall be 0.00%
Initial Calculation Period	From and including 24/04/2020 to and excluding 24/07/2020.
Floating Rate Option	USD-LIBOR-BBA
Designated Maturity	3 MONTHS
Spread	0.0000 bps
Floating Rate Day Count Fraction	ACT/360
Reset Dates	The First Date of each Calculation Period

Business Days for Payment Dates is:	London, New York and Athens Settlement Days
Account Details
Account(s) for payments to	00260029211200236674
EUROBANK SA:
Account(s) for payments to	0026002921 1200236674
Party B:

Offices:

(a)The Office of EUROBANK SA for the Swap Transaction is: 8, Othonos Str. GR 105 57 Athens

(b)The Office of Party B for the Swap Transaction is: 40, Agiou Konstantinou Str. GR 15124, Marousi

REPRESENTATIONS:

Relationship Between Parties. Each party will be deemed to represent to the other party on the date on which it enters into this Transaction that (absent a written agreement between the parties that expressly imposes affirmative obligations to the contrary for this Transaction):

(a)Non-Reliance. It is acting for its own account, and it has made its own independent decisions to enter into this Transaction and as to whether this Transaction is appropriate or proper for it based upon its own judgment and upon advice from such advisers as it has deemed necessary. It is not relying on any communication (written or oral) of the other party as investment advice or as a recommendation to enter into this Transaction, it being understood that information and explanations related to the terms and conditions of this Transaction shall not be considered investment advice or a recommendation to enter into this Transaction. No communication (written or oral) received from the other party shall be deemed to be an assurance or guarantee as to the expected results of this Transaction.

(b)Assessment and Understanding. It is capable of assessing the merits of an understanding (on its own behalf or through independent professional advice) and understands and accepts the terms, conditions and risks of this Transaction. It is also capable of assuming, and assumes, the risks of this Transaction.

(c)Status of Parties. The other party is not acting as a fiduciary for or an adviser to it in respect of this Transaction.

Please confirm that the foregoing correctly sets forth the terms of our agreement by executing the copy of this confirmation enclosed for that purpose and returning it to us.

		Yours sincerely,
		EUROBANK SA
		By:
Confirmed as of the Date first above written:
By:	/s/ Aristides J. Pittas
Name:	Aristides J. Pittas
Title:
	/s/ Stefania Karmiri
	Stefania Karmiri

PAYMENT SCHEDULE FOR Party A

Notional Amount USD	Calculation Period		Payment Date
	Start Date	End Date
30,000,000.00	24/04/2020	24/07/2020	24/07/2020
30,000,000.00	24/07/2020	26/10/2020	26/10/2020
30,000,000.00	26/10/2020	25/01/2021	25/01/2021
30,000,000.00	25/01/2021	26/04/2021	26/04/2021
30,000,000.00	26/04/2021	26/07/2021	26/07/2021
30,000,000.00	26/07/2021	25/10/2021	25/10/2021
30,000,000.00	25/10/2021	24/01/2022	24/01/2022
30,000,000.00	24/01/2022	26/04/2022	26/04/2022
30,000,000.00	26/04/2022	25/07/2022	25/07/2022
30,000,000.00	25/07/2022	24/10/2022	24/10/2022
30,000,000.00	24/10/2022	24/01/2023	24/01/2023
30,000,000.00	24/01/2023	24/04/2023	24/04/2023
30,000,000.00	24/04/2023	24/07/2023	24/07/2023
30,000,000.00	24/07/2023	24/10/2023	24/10/2023
30,000,000.00	24/10/2023	24/01/2024	24/01/2024
30,000,000.00	24/01/2024	24/04/2024	24/04/2024
30,000,000.00	24/04/2024	24/07/2024	24/07/2024
30,000,000.00	24/07/2024	24/10/2024	24/10/2024
30,000,000.00	24/10/2024	24/01/2025	24/01/2025
30,000,000.00	24/01/2025	24/04/2025	24/04/2025

PAYMENT SCHEDULE FOR Party B

Notional AmountUSD	Calculation Period		Payment Date	Fixed Rate %
	Start Date	End Date
30,000,000.00	24/04/2020	24/07/2020	24/07/2020	0.78000
30,000,000.00	24/07/2020	26/10/2020	26/10/2020	0.78000
30,000,000.00	26/10/2020	25/01/2021	25/01/2021	0.78000
30,000,000.00	25/01/2021	26/04/2021	26/04/2021	0.78000
30,000,000.00	26/04/2021	26/07/2021	26/07/2021	0.78000
30,000,000.00	26/07/2021	25/10/2021	25/10/2021	0.78000
30,000,000.00	25/10/2021	24/01/2022	24/01/2022	0.78000
30,000,000.00	24/01/2022	26/04/2022	26/04/2022	0.78000
30,000,000.00	26/04/2022	25/07/2022	25/07/2022	0.78000
30,000,000.00	25/07/2022	24/10/2022	24/10/2022	0.78000
30,000,000.00	24/10/2022	24/01/2023	24/01/2023	0.78000
30,000,000.00	24/01/2023	24/04/2023	24/04/2023	0.78000
30,000,000.00	24/04/2023	24/07/2023	24/07/2023	0.78000
30,000,000.00	24/07/2023	24/10/2023	24/10/2023	0.78000
30,000,000.00	24/10/2023	24/01/2024	24/01/2024	0.78000
30,000,000.00	24/01/2024	24/04/2024	24/04/2024	0.78000
30,000,000.00	24/04/2024	24/07/2024	24/07/2024	0.78000
30,000,000.00	24/07/2024	24/10/2024	24/10/2024	0.78000
30,000,000.00	24/10/2024	24/01/2025	24/01/2025	0.78000
30,000,000.00	24/01/2025	24/04/2025	24/04/2025	0.78000

EX-8.1

Exhibit 8.1

List of Subsidiaries

Subsidiary	Country of Incorporation
Eleni Shipping Ltd.	Liberia
Aggeliki Shipping Ltd.	Liberia
Joanna Maritime Ltd.	Liberia
Gregos Shipping Ltd.	Liberia
Diamantis Shipowners Ltd.	Liberia
Hydra Shipowners Ltd.	Liberia
Spetses Shipowners Ltd.	Liberia
Kea Shipowners Ltd.	Liberia
Prospero Maritime Inc.	Marshall Islands
Manolis Shipping Ltd.	Marshall Islands
Noumea Shipping Ltd.	Marshall Islands
Johnathan John Shipping Ltd.	Marshall Islands
Athens Shipping Ltd.	Marshall Islands
Corfu Navigation Ltd.	Marshall Islands
Oinousses Navigation Ltd.	Marshall Islands
Bridge Shipping Ltd.	Marshall Islands
Eurocon Ltd.	Marshall Islands
Antwerp Shipping Ltd.	Marshall Islands
Eurocon Ltd.	Marshall Islands
Keelung Shipping Ltd.	Marshall Islands
Oakland Shipping Ltd.	Marshall Islands
Busan Shipping Ltd.	Marshall Islands
Allendale Investment S.A.	Panama
Alterwall Business Inc.	Panama

EX-12.1

Exhibit 12.1

CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER

I, Aristides J. Pittas, certify that:

1. I have reviewed this annual report on Form 20-F of Euroseas Ltd. (the “Company”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4. The Company's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the Company and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the Company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and

5. The Company's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent function):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.

Date: April 30, 2020

/s/ Aristides J. Pittas

Aristides J. Pittas

Chief Executive Officer

EX-12.2

Exhibit 12.2

CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER

I, Anastasios Aslidis, certify that:

1. I have reviewed this annual report on Form 20-F of Euroseas Ltd. (the “Company”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4. The Company's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the Company and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the Company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and

5. The Company's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent function):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.

Date: April 30, 2020

/s/ Anastasios Aslidis
Anastasios Aslidis

Chief Financial Officer

EX-13.1

Exhibit 13.1

CHIEF EXECUTIVE OFFICER CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350

In connection with this Annual Report of Euroseas Ltd. (the “Company”) on Form 20-F for the year ended December 31, 2019 as filed with the Securities and Exchange Commission (the “SEC”) on or about the date hereof (the “Report”), I, Aristides J. Pittas, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.

Date: April 30, 2020

Chief Executive Officer

EX-13.2

Exhibit 13.2

CHIEF FINANCIAL OFFICER CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the Annual Report of Euroseas Ltd. (the “Company”) on Form 20-F for the year ended December 31, 2019 as filed with the Securities and Exchange Commission (the “SEC”) on or about the date hereof (the “Report”), I, Anastasios Aslidis, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.

Date: April 30, 2020

Chief Financial Officer

EX-15.1

Exhibit 15.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement No. 333-237128 on Form F-3 of our report dated April 30, 2020, relating to the consolidated financial statements of Euroseas Ltd., appearing in this Annual Report on Form 20-F for the year ended December 31, 2019.

/s/ Deloitte Certified Public Accountants S.A.

Athens, Greece

April 30, 2020

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Note 13 - Voyage and Vessel Operating Expenses - Summary of Voyage, Vessel, Operating Expenses and Commissions (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Voyage expenses	$ 1,055,408	$ 1,261,088	$ 1,564,489
Vessel operating expenses	23,983,282	19,986,170	15,019,342
Port Charges and Canal Dues [Member]
Voyage expenses	251,197	384,893	1,156,511
Bunkers [Member]
Voyage expenses	804,211	876,195	407,978
Crew Wages and Related Costs [Member]
Vessel operating expenses	13,111,682	11,020,924	8,771,386
Insurance [Member]
Vessel operating expenses	1,844,088	1,537,539	1,261,976
Repairs and Maintenance [Member]
Vessel operating expenses	1,110,995	1,043,632	643,788
Lubricants [Member]
Vessel operating expenses	2,029,230	1,665,849	1,169,412
Spares and Consumable Stores [Member]
Vessel operating expenses	4,758,290	3,445,422	2,391,420
Professional and Legal Fees [Member]
Vessel operating expenses	259,311	252,156	10,037
Other Vessel Operating Expenses [Member]
Vessel operating expenses	$ 869,686	$ 1,020,648	$ 771,323

XML

Note 8 - Long-term Bank Loans - Summary of Long-term Debt (Details) - USD ($)		Dec. 31, 2019	Dec. 31, 2018
Long-term debt, gross		$ 85,207,220	$ 37,491,000
Less: Current portion		(12,541,840)	(5,212,000)
Long-term portion		72,665,380	32,279,000
Deferred charges, current portion		246,520	125,357
Deferred charges, long-term portion		477,595	237,848
Debt discount, current portion			216,402
Debt discount, long-term portion			324,603
Long-term bank loans, current portion net of deferred charges and debt discount		12,295,320	4,870,241
Long-term bank loans, long-term portion net of deferred charges and debt discount		72,187,785	31,716,549
Loan from related party, current		795,562	2,672,895
Euroseas Ltd [Member]
Loan from related party, current	[1]	5,000,000
Noumea Shipping Ltd [Member]
Long-term debt, gross	[2]		3,341,000
Gregos Shiping Ltd. [Member]
Long-term debt, gross	[3]		4,150,000
Deals With 11 Shipbuilders [Member]
Long-term debt, gross	[4]	37,650,000	30,000,000
Diamantis Shipowners Ltd. [Member]
Long-term debt, gross	[5]	3,507,220
Kea Shipowners Ltd. / Spetses Shipowners Ltd. / Hydra Shipowners Ltd. [Member]
Long-term debt, gross	[6]	12,050,000
Antwerp Shipping Ltd. / Busan Shipping Ltd. / Keelung Shipping Ltd. / Oakland Shipping Ltd. [Member]
Long-term debt, gross	[7]	$ 32,000,000

[1] On September 30, 2019, Euroseas signed an agreement with Colby Trading Ltd., a company controlled by the Pittas family and affiliated with the Company's Chief Executive Officer, as further supplemented on December 20,2019 and March 30, 2020, to draw down a $2.5 million loan to finance the special survey and WBT system installation on M/V "Akinada Bridge". Interest on the loan is 8% per annum and is payable quarterly. Euroseas will repay the loan in four repayment instalments of a principal amount of $625,000 each. The first repayment instalment will be due on May 15, 2020 and the remaining three instalments will be paid on a quarterly basis thereafter and the loan will be paid in full by November 2020. Under certain circumstances, the Company can pay principal in equity, and the loan is convertible in common stock of the Company at the option of the lender at certain times. The first instalment of $312,500 payable on December 31, 2019 was waived by the lender and will be paid at the maturity of the loan. The Company paid $51,111 in interest for this loan for the fiscal year 2019. On November 1, 2019, Euroseas signed a second agreement with Colby Trading Ltd. to draw another $2.5 million loan to finance working capital needs. Interest on the loan is 8% per annum and is payable quarterly. There are no principal repayments until December 31, 2020, when the loan matures. Under certain circumstances, the Company can pay principal in equity, and the loan is convertible in common stock of the Company at the option of the lender at certain times. The Company paid $33,333 in interest for this loan for the fiscal year 2019.

[2] On December 22, 2016, the supplemental agreement between Credit Agricole and Noumea Shipping Ltd., owner of M/V "Evridiki G" was signed in order to refinance the final quarterly instalment of $720,000 and the balloon payment of $6,360,000 originally due in December 2016. The borrower and the lender agreed to amend the repayment profile in respect of the loan of which $7,080,000 remained outstanding as of the date of the supplemental agreement and to extend the final maturity date to January 2018. The loan will be repaid with three repayments of $720,000 each, due in December 2016, in July 2017 and in January 2018 together with the balloon payment of $4,920,000 due in January 2018. On February 27, 2018, the Company signed and drew a term loan facility of $4,250,000 with Credit Agricole in order to partly refinance the existing indebtedness of M/V "Evridiki G" with the bank. The loan was payable in thirteen consecutive quarterly instalments of $303,000 each and a final instalment in the amount of $311,000. The margin of the loan was 3.00% above LIBOR. The loan was secured with the following: (i) first priority mortgages over M/V “Evridiki G” and collateral vessel (M/V "EM Astoria"), (ii) first assignment of earnings and insurance and (iii) other covenants and guarantees similar to the remaining loans of the Company. The Company completed the refinancing of the specific loan using its revolving loan facility with Eurobank Ergasias S.A., as explained in note (c) below.

[3] On June 15, 2017, the Company signed a term loan facility with Credit Agricole and on June 19, 2017 a loan of $4,750,000 was drawn by Gregos Shipping Ltd. to partly finance the acquisition of M/V "EM Astoria". The loan was payable in twenty or sixteen consecutive equal quarterly installments of $100,000 plus a balloon amount of $2,750,000 or $3,150,000. The margin of the loan was 2.65% above LIBOR. The loan was secured with (i) first priority mortgage over M/V "EM Astoria", (ii) first assignment of earnings and insurance of M/V "EM Astoria", (iii) a corporate guarantee of Euroseas Ltd. and other covenants and guarantees similar to remaining loans of the Company. The Company paid a loan arrangement fee of $50,000 in 2017 for this loan. The Company had also entered into a profit sharing agreement with Credit Agricole whereby it would share with the bank, 35% of the excess of the fair market value of the vessel over the outstanding loan when the vessel was sold or when the loan matured. As a result of the lender's entitlement to participate in the appreciation of the market value of the mortgaged vessel, the Company recognized a participation liability of an amount of $1,067,500 as of December 31, 2018, presented in "Vessel profit participation liability" in the consolidated balance sheets, with a corresponding debit to a debt discount account, presented contra to the loan balance. In addition, 35% of the cash flow after debt service would be set aside and be used to repay the balloon payment with any excess funds to be paid to the bank. The Company completed the refinancing of the specific loan in June 2019 using its revolving loan facility with Eurobank Ergasias S.A., as explained in note (c) below, with the final participation liability paid amounting to $950,000 included in the "Repayment of long-term bank loans and vessel profit participation liability" in the consolidated statement of cash flows. The portion of debt discount remaining unamortized at the time of the refinancing was written-off and presented as "Loss on debt extinguishment" in the consolidated statement of operations, partly offset by the lower amount of $950,000 at which the vessel profit participation liability was finally settled as described above.

[4] On November 21, 2018, the Company signed a reducing revolving credit facility with Eurobank Ergasias S.A (the "Lender") for an amount of up to $45,000,000. A loan of $30,000,000 was drawn on November 21, 2018 by Alterwall Business Inc., Allendale Investments S.A., Manolis Shipping Ltd., Joanna Maritime Ltd., Jonathan John Shipping Ltd., Athens Shipping Ltd., Oinousses Navigation Ltd., Corfu Navigation Ltd. and Bridge Shipping Ltd. to fully refinance all of the Company’s existing facilities with this bank and provide working capital. The revolving tranche will be available for a period of 18 months from signing of the loan agreement for the purpose of partly financing new vessel acquisitions or providing working capital and can be renewed subject to the bank's approval and a fee to be determined. The loan is payable in 12 equal consecutive quarterly principal installments of $900,000 and the balance will be repaid through balloon payment of $19,200,000 together with the last principal installment in November 2021. Each quarterly principal instalment paid is added to the revolving tranche and may be redrawn. The interest rate margin is 3.90% over LIBOR, reduced from 4.40% as described below. The loan is secured with (i) first priority mortgages over M/V "Ninos”, M/V “Kuo Hsiung", M/V "Aegean Express", M/V "Manolis P." M/V "Joanna", M/V "EM Athens", M/V "EM Oinousses", M/V "EM Corfu" and M/V "Akinada Bridge", (ii) first assignment of earnings and insurance of the aforementioned vessels, (iii) a corporate guarantee of Euroseas Ltd. and other covenants and guarantees similar to the remaining loans of the Company. The Company has the option (at the Lender’s absolute discretion) to substitute a mortgaged vessel by notifying the Lender in writing at least one (1) month prior to the intended substitution date, provided that: a) the substitute vessel is of a similar type, of the same or younger age, having the same or enhanced characteristics (including, without limitation, deadweight, lightweight, shipyard pedigree and technical specifications) and will be 100% owned by a shipowning company, incorporated in a jurisdiction acceptable to the Lender and owned by a ship owning company owned by the Company (directly or indirectly) and b) the new shipowning company provides a first preferred mortgage over the new vessel and a corporate guarantee in favor of the Lender and executes any other security documentation as may be requested by the Lender at its discretion. The Company paid loan arrangement fees of $300,000 within 2018 for this tranche. On May 30, 2019, the Lender made available to the Company two new ship-related (M/V "EM Astoria" and M/V "Evridiki G") advances totaling $12.0 million or 55% of the aggregate market value of the two aforementioned vessels, with a simultaneous reduction of the margin of the loan, from 4.40% to 3.90% per annum. The borrower also agreed, during the remaining facility period, to reduce the amount held as cash collateral from $5.0 million to $1.0 million and release the balance in favor of the borrower. The loan was used to refinance the existing facilities of Noumea Shipping Ltd. and Gregos Shiping Ltd. and to provide working capital. The loan is payable in 16 equal consecutive quarterly principal installments of $375,000 and the balance will be repaid through a balloon payment of $6,000,000 together with the last principal installment in May 2023. The loan is secured with (i) first priority mortgages over M/V "Evridiki G" and M/V "EM Astoria", (ii) first assignment of earnings and insurance of the aforementioned vessels, (iii) a corporate guarantee of Euroseas Ltd. and other covenants and guarantees similar to the remaining loans of the Company. The Company paid a loan arrangement fee of $32,000 within 2019 for this tranche. The security cover ratio covenant for the facility is set to 140%. The remaining $7,350,000 of the revolving facility, after including principal repayments up to December 31, 2019, remains available to the company in order to finance up to 55% of the market value of post 2001-built ships. The new tranches will be repaid through sixteen quarterly principal instalments with the amount of each such instalment being equal to such amount so that the balloon amount to be equal to 50% of the initially drawn relevant tranche. The undrawn amounts available under the revolving facility pay an annual commitment of 0.40% and any amount drawn will pay a 1% underwriting fee.

[5] On July 29, 2019, the Company signed a term loan facility with Piraeus Bank S.A. for an amount not exceeding the lesser between $4,000,000 and 90% of the scrap value pf M/V "Diamantis P". On July 31, 2019, a loan of $3,667,680 was drawn by Diamantis Shipping Ltd. to partly finance the acquisition of M/V "Diamantis P". The loan is payable in twelve equal consecutive quarterly instalments of $160,460 plus a balloon amount of $1,742,160 paid together with the last instalment in July 2022. The margin of the loan is 3.50% over LIBOR. The loan is secured with (i) first priority mortgage over M/V "Diamantis P", (ii) first assignment of earnings and insurance of M/V "Diamantis P", (iii) a corporate guarantee of Euroseas Ltd. and other covenants and guarantees similar to remaining loans of the Company. The Company paid a loan arrangement fee of $32,000 within 2019 for this loan. The security cover ratio covenant for the facility is set to 110% until the first anniversary of the drawdown date and 120% thereafter.

[6] On July 30, 2019, the Company signed a term loan facility with HSBC Bank plc. for an amount of $12,500,000. The loan was used to partly finance the acquisition of M/V "EM Hydra", M/V "EM Kea" and M/V "EM Spetses". The loan was drawn in tranches upon the delivery of each vessel to the Company with the last drawdown taking place on August 8, 2019.The loan is payable in fourteen consecutive equal quarterly installments of $450,000 and a balloon payment of $6,200,000 paid with the last instalment in February 2023. The loan bears interest at LIBOR plus a margin of 2.95%. The loan is secured with (i) first priority mortgages over M/V "EM Hydra", M/V "EM Kea" and M/V "EM Spetses" (ii) first assignment of earnings and insurance of the abovementioned vessels, (iii) a corporate guarantee of Euroseas Ltd. and other covenants and guarantees similar to the remaining loans of the Company. The Company paid loan arrangement fees of $62,500 within 2019 for this loan. The security cover ratio covenant for the facility is set to 130%.

[7] On November 8, 2019, the Company signed a term loan facility with Piraeus Bank S.A. for an amount of $32,000,000. The loan was used to partly finance the acquisition of M/V "Synergy Antwerp", M/V "Synergy Busan", M/V “Synergy Keelung” and M/V "Synergy Oakland". The loan was drawn in tranches upon the delivery of each vessel to the Company with the last drawdown taking place on November 18, 2019. The loan is payable in three consecutive equal quarterly instalments of $1,400,000 followed by thirteen consecutive equal quarterly instalments of $800,000 and a balloon payment of $17,400,000 paid with the last instalment. The loan bears interest at LIBOR plus a margin of 3.50%. The loan is secured with (i) first priority mortgages over M/V "Synergy Antwerp", M/V "Synergy Busan", M/V "Synergy Keelung" and M/V "Synergy Oakland" (ii) first assignment of earnings and insurance of the abovementioned vessels, (iii) a corporate guarantee of Euroseas Ltd. and other covenants and guarantees similar to the remaining loans of the Company. The Company paid loan arrangement fees of $352,000 within 2019 for this loan. The security cover ratio covenant for the facility is set to 125%.

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Note 11 - Stock Incentive Plan (Details Textual)					12 Months Ended
	Nov. 04, 2019 shares	Nov. 21, 2018 shares	Nov. 02, 2017 shares	Jul. 31, 2014 shares	Dec. 31, 2019 USD ($) shares	Dec. 31, 2018 USD ($) shares	Dec. 31, 2017 USD ($) $ / shares shares
Share-based Payment Arrangement, Expense | $					$ 97,919	$ 124,487	$ 116,562
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total | $					$ 172,887
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)					15,444
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period (in shares)					0	0	538
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value (in dollars per share) | $ / shares							$ 22.24
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)					273 days
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other Than Options, Granted in Period, Fair Value | $					$ 90,193	$ 134,232	$ 176,475
The 2014 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in shares)				75,000
Share Based Compensation Arrangement By Share Based Payment Awarded Term (Year)				10 years
The 2014 Plan [Member] | Restricted Stock [Member] | The 18 Key Persons [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)		15,681	12,534			15,681	12,534
Number of Key People Issued Awards		18	18
The 2014 Plan [Member] | Restricted Stock [Member] | The 18 Key Persons [Member] | Share-based Payment Arrangement, Tranche One [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage		50.00%	50.00%
The 2014 Plan [Member] | Restricted Stock [Member] | The 18 Key Persons [Member] | Share-based Payment Arrangement, Tranche Two [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage			50.00%
The 2014 Plan [Member] | Restricted Stock [Member] | Officers and Directors [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)	8,713	9,021	7,213
The 2014 Plan [Member] | Restricted Stock [Member] | Officers and Directors [Member] | Share-based Payment Arrangement, Tranche Two [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage		50.00%
The 2014 Plan [Member] | Restricted Stock [Member] | Eurobulk Employees [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)	6,731	6,660	5,321
The 2014 Plan [Member] | Restricted Stock [Member] | The 17 Key Persons [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)	15,444				15,444
Number of Key People Issued Awards	17
The 2014 Plan [Member] | Restricted Stock [Member] | The 17 Key Persons [Member] | Share-based Payment Arrangement, Tranche One [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage	50.00%
The 2014 Plan [Member] | Restricted Stock [Member] | The 17 Key Persons [Member] | Share-based Payment Arrangement, Tranche Two [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage	50.00%

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Note 13 - Voyage and Vessel Operating Expenses (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Schedule of Voyage Vessel Operating Expenses and Commissions [Table Text Block]

	Year ended December 31,
		2017	2018	2019
Voyage expenses
Port charges and canal dues		1,156,511	384,893	251,197
Bunkers		407,978	876,195	804,211
Total		1,564,489	1,261,088	1,055,408
Vessel operating expenses
Crew wages and related costs		8,771,386	11,020,924	13,111,682
Insurance		1,261,976	1,537,539	1,844,088
Repairs and maintenance		643,788	1,043,632	1,110,995
Lubricants		1,169,412	1,665,849	2,029,230
Spares and consumable stores		2,391,420	3,445,422	4,758,290
Professional and legal fees		10,037	252,156	259,311
Other		771,323	1,020,648	869,686
Total		15,019,342	19,986,170	23,983,282

XML

Note 5 - Accrued Expenses (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Schedule of Accrued Liabilities [Table Text Block]

	As of December 31, 2018	As of December 31, 2019
Accrued payroll expenses	93,404	231,093
Accrued interest expense	565,623	590,216
Accrued general and administrative expenses	348,761	111,720
Accrued commissions	39,545	67,682
Other accrued expenses	254,472	724,610
Total	1,301,805	1,725,321

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Note 17 - Discontinued Operations (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Disposal Groups, Including Discontinued Operations [Table Text Block]

			Year Ended December 31 (discontinued operations)
	2017			2018		2019
Statement of Operations Data
Voyage revenue	20,280,215			25,934,204		-
Commissions (including, $253,503, $324,178 and nil respectively, to related party)	(1,122,196	)		(1,411,333	)	-
Voyage expenses	(2,396,318	)		(410,676	)	-
Vessel operating expenses (including, $102,131, $115,026 and nil, respectively, to related party)	(6,892,388	)		(9,183,152	)	-
Drydocking expenses	(127,509	)		(1,465,079	)	-
Related party management fees	(1,409,716	)		(1,701,340	)	-
Vessel depreciation	(4,786,272	)		(5,422,155	)	-
General and administrative expenses (including $693,524, $731,456 and nil, respectively, to related party)	(917,160	)		(2,346,502	)	-
Operating income	2,628,656			3,993,967		-
Total other expenses, net	(1,778,955	)		(2,874,232	)	-
Net income	849,701			1,119,735		-
Dividend Series B Preferred Shares	-			(565,229	)	-
Net income attributable to common shareholders	849,701			554,506		-

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Note 5 - Accrued Expenses

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Accounts Payable and Accrued Liabilities Disclosure [Text Block]

5. Accrued Expenses

The accrued expenses consisted of:

	As of December 31, 2018	As of December 31, 2019
Accrued payroll expenses	93,404	231,093
Accrued interest expense	565,623	590,216
Accrued general and administrative expenses	348,761	111,720
Accrued commissions	39,545	67,682
Other accrued expenses	254,472	724,610
Total	1,301,805	1,725,321

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Note 9 - Income Taxes

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Income Tax Disclosure [Text Block]

9. Income Taxes

Under the laws of the countries of the companies’ incorporation and/or vessels’ registration, the companies are

not

subject to tax on international shipping income, however, they are subject to registration and tonnage taxes, which have been included in “Vessel operating expenses” in the consolidated statements of operations.

Under the United States Internal Revenue Code of

1986,

as amended (the "Code"), the U.S. source gross transportation income of a ship-owning or chartering corporation, such as the Company, is subject to a

4%

U.S. Federal income tax without allowance for deduction, unless that corporation qualifies for exemption from tax under Section

883

of the Code and the Treasury Regulations promulgated thereunder. U.S. source gross transportation income consists of

50%

of the gross shipping income that is attributable to transportation that begins or ends, but that does

not

both begin and end, in the United States.

Under the Code, a corporation will be exempt from U.S. federal income tax if its stock is primarily and regularly traded on an established securities market in its country of organization, in another country that grants an "equivalent exemption" to United States corporations, or in the United States, which is referred to as the “Publicly Traded Test”. Under IRS regulations, a Company’s shares will be considered to be regularly traded on an established securities market if (i)

one

or more classes of its shares representing

50%

or more of its outstanding shares, by voting power of all classes of shares of the corporation entitled to vote and of the total value of the shares of the corporation, are listed on the market and (ii) (A) such class of share is traded on the market, other than in minimal quantities, on at least

60

days during the taxable year or

one

sixth

of the days in a short taxable year; and (B) the aggregate number of shares of such class of share traded on such market during the taxable year must be at least

10%

of the average number of shares of such class of share outstanding during such year or as appropriately adjusted in the case of a short taxable year.  Notwithstanding the foregoing, the treasury regulations provide, in pertinent part, that a class of the Company’s shares will

not

be considered to be “regularly traded” on an established securities market for any taxable year in which

50%

or more of the vote and value of the outstanding shares of such class are owned, actually or constructively under specified share attribution rules, on more than half the days during the taxable year by persons who each own

5%

or more of the vote and value of such class of the Company’s outstanding shares (

“5%

Override Rule”).

For

2017

and

2019

the Company did

not

qualify for this exemption. The Company is subject to an effective

2%

United States federal tax on the U.S. source shipping income that is attributable to the transport of cargoes to or from the United States which is

not

considered an income tax. The amount of this tax for the years ended

December 31, 2017

and

2018

was

$15,135

and

$19,726,

respectively

.

The amount of the

2017

tax was paid on

September 17, 2018

and the amount of the

2018

tax was paid on

June 15, 2019

and was recorded within "Vessel operating expenses" in the consolidated statements of operations when paid.

For the taxable years

2019

the Company believes that it was exempt from U.S. federal income tax of

4%

on U.S. source shipping income, as it believes that it satisfies the Publicly Traded Test for this year, although it is subject to the

5%

Override Rule, because the non-qualified

5%

shareholders did

not

own more than

50%

of the Company’s common stock for more than half of the days during the taxable year.

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Consolidated Statements of Shareholders' Equity - USD ($)	Private Placement [Member] Common Stock [Member]	Private Placement [Member] Additional Paid-in Capital [Member]	Private Placement [Member] Retained Earnings [Member]	Private Placement [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Balance (in shares) at Dec. 31, 2016					1,359,514
Balance at Dec. 31, 2016					$ 40,785	$ 284,043,237	$ (229,977,258)	$ 54,106,764
Net loss							(6,094,560)	(6,094,560)
Dividends to Series B preferred shares							(1,808,811)	(1,808,811)
Issuance of shares (in shares)					37,723
Issuance of shares					$ 1,133	373,110		374,243
Issuance of restricted shares for stock incentive award and share-based compensation (in shares)					12,534
Issuance of restricted shares for stock incentive award and share-based compensation					$ 376	116,186		116,562
Shares forfeited (in shares)					(505)
Shares forfeited					$ (15)
Shares forfeited, APIC						15
Net loss							(6,094,560)	(6,094,560)
Balance (in shares) at Dec. 31, 2017					1,409,266
Balance at Dec. 31, 2017					$ 42,279	284,532,548	(237,880,629)	46,694,198
Net loss							(663,396)	(663,396)
Dividends to Series B preferred shares							(1,335,733)	(1,335,733)
Issuance of shares (in shares)					139,509
Issuance of shares					$ 4,185	1,860,925		1,865,110
Issuance of restricted shares for stock incentive award and share-based compensation (in shares)					15,681
Issuance of restricted shares for stock incentive award and share-based compensation					$ 470	124,017		124,487
Net loss							(663,396)	(663,396)
Spin-off of EuroDry Ltd. to stockholders						(52,520,821)	9,656,773	(42,864,048)
Balance (in shares) at Dec. 31, 2018					1,564,456
Balance at Dec. 31, 2018					$ 46,934	233,996,669	(230,222,985)	3,820,618
Net loss							(1,682,671)	(1,682,671)
Dividends to Series B preferred shares							(1,271,782)	(1,271,782)
Issuance of shares (in shares)	1,056,338				144,727
Issuance of shares	$ 31,690	$ 5,968,310		$ 6,000,000	$ 4,342	771,190		775,532
Issuance of restricted shares for stock incentive award and share-based compensation (in shares)					15,444
Issuance of restricted shares for stock incentive award and share-based compensation					$ 463	97,456		97,919
Net loss							(1,682,671)	(1,682,671)
Preferred deemed dividend							(504,577)	(504,577)
Rounding of stock split (in shares)					2,393
Rounding of stock split					$ 72	(72)
Balance (in shares) at Dec. 31, 2019					5,600,259
Balance at Dec. 31, 2019					$ 168,008	$ 253,967,708	$ (233,682,015)	$ 20,453,701

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Consolidated Balance Sheets - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Current assets
Cash and cash equivalents	$ 985,418	$ 6,960,258
Restricted cash	610,376	117,063
Trade accounts receivable, net	715,097	958,705
Other receivables	1,570,506	2,031,415
Inventories	1,889,164	1,704,391
Prepaid expenses	526,531	222,336
Total current assets	6,297,092	11,994,168
Long-term assets:
Vessels, net	116,230,333	48,826,128
Restricted cash	4,334,267	6,134,267
Total assets	126,861,692	66,954,563
Current liabilities
Long-term bank loans, current portion	12,295,320	4,870,241
Related party loan, current	5,000,000
Trade accounts payable	3,899,967	2,288,525
Accrued expenses	1,725,321	1,301,805
Accrued preferred dividends	161,315
Deferred revenues	973,774	417,634
Due to related company	795,562	2,672,895
Derivatives		41,435
Total current liabilities	24,851,259	11,592,535
Long-term liabilities
Long-term bank loans, net of current portion	72,187,785	31,716,549
Vessel profit participation liability		1,067,500
Fair value of below market time charters acquired	1,714,370
Total long-term liabilities	73,902,155	32,784,049
Total liabilities	98,753,414	44,376,584
Commitments and contingencies
Mezzanine Equity
Preferred shares (par value $0.01, 20,000,000 shares authorized, 19,605 and 8,000 issued and outstanding, respectively)	7,654,577	18,757,361
Shareholders’ equity
Common stock (par value $0.03, 200,000,000 shares authorized, 1,564,456 and 5,600,259 issued and outstanding)	168,008	46,934
Additional paid-in capital	253,967,708	233,996,669
Accumulated deficit	(233,682,015)	(230,222,985)
Total shareholders’ equity	20,453,701	3,820,618
Total liabilities, mezzanine equity and shareholders’ equity	$ 126,861,692	$ 66,954,563

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Note 1 - Basis of Presentation and General Information (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Schedules of Concentration of Risk, by Risk Factor [Table Text Block]

	Year ended December 31,
Charterer	2017			2018			2019
CMA CGM, Marseille		34	%		51	%		24	%
New Golden Sea Shipping Pte. Ltd., Singapore		31	%		33	%		21	%
Hapag-Lloyd AG, Hamburg		-			-			16	%
MSC Geneva		17	%		11	%		15	%
Maersk Line A/S		-			-			11	%

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Note 13 - Voyage and Vessel Operating Expenses

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Vessel Voyage and Operating Expenses [Text Block]

13. Voyage and Vessel Operating Expenses

These consisted of:

	Year ended December 31,
		2017	2018	2019
Voyage expenses
Port charges and canal dues		1,156,511	384,893	251,197
Bunkers		407,978	876,195	804,211
Total		1,564,489	1,261,088	1,055,408
Vessel operating expenses
Crew wages and related costs		8,771,386	11,020,924	13,111,682
Insurance		1,261,976	1,537,539	1,844,088
Repairs and maintenance		643,788	1,043,632	1,110,995
Lubricants		1,169,412	1,665,849	2,029,230
Spares and consumable stores		2,391,420	3,445,422	4,758,290
Professional and legal fees		10,037	252,156	259,311
Other		771,323	1,020,648	869,686
Total		15,019,342	19,986,170	23,983,282

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Note 17 - Discontinued Operations

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

17. Discontinued Operations

Following the close of trading on the Nasdaq Capital Market on

May 30, 2018,

the Company completed the spin-off of its drybulk fleet (excluding M/V Monica P, a handymax drybulk carrier, which was agreed to be sold) to EuroDry Ltd (Note

1

). Accordingly, the results of operations and financial condition of EuroDry have been presented in discontinued operations for all historical comparative periods presented

. The revenue and loss for the discontinued operations for the periods ended

December 

31,

2017,

2018

and

2019

are analyzed as follows:

			Year Ended December 31 (discontinued operations)
	2017			2018		2019
Statement of Operations Data
Voyage revenue	20,280,215			25,934,204		-
Commissions (including, $253,503, $324,178 and nil respectively, to related party)	(1,122,196	)		(1,411,333	)	-
Voyage expenses	(2,396,318	)		(410,676	)	-
Vessel operating expenses (including, $102,131, $115,026 and nil, respectively, to related party)	(6,892,388	)		(9,183,152	)	-
Drydocking expenses	(127,509	)		(1,465,079	)	-
Related party management fees	(1,409,716	)		(1,701,340	)	-
Vessel depreciation	(4,786,272	)		(5,422,155	)	-
General and administrative expenses (including $693,524, $731,456 and nil, respectively, to related party)	(917,160	)		(2,346,502	)	-
Operating income	2,628,656			3,993,967		-
Total other expenses, net	(1,778,955	)		(2,874,232	)	-
Net income	849,701			1,119,735		-
Dividend Series B Preferred Shares	-			(565,229	)	-
Net income attributable to common shareholders	849,701			554,506		-

Euroseas contributed to EuroDry its interests in

seven

of its drybulk subsidiaries and related intercompany debts and obligations in exchange for

2,254,830

of EuroDry common shares and

19,042

of EuroDry Series B Preferred Shares (representing all of EuroDry's issued and outstanding stock as of

May 30, 2018). 

Up to the Spin-off date, Euroseas had contributed to EuroDry an amount of

$52.52

million as equity in order to partly finance the acquisition of the vessels contributed to EuroDry (M/V Pantelis, M/V Eirini, M/V Xenia and M/V Ekaterini), other general and administrative expenses allocated from the Company to EuroDry as well as the amounts recognized as loss on termination and impairment of shipbuilding contracts described above. An amount of

$9.66

million was also allocated to EuroDry from the Company’s accumulated deficit, comprising the accumulated deficit of the Subsidiaries. In total an amount of

$42.86

million was allocated from the Company’s shareholders’ equity to EuroDry’s shareholders’ equity.

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Note 15 - Preferred Shares (Details Textual) - USD ($)						1 Months Ended	12 Months Ended
	Feb. 01, 2021	Jun. 10, 2019	Jan. 29, 2019	May 30, 2018	Jan. 27, 2014	Jan. 31, 2021	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Preferred Stock, Value, Distributed								$ 18,192,131
Preferred Stock Distributed (in shares)								19,042
Payments for Repurchase of Redeemable Preferred Stock							$ 11,686,000
Dividends, Paid-in-kind, Total							78,640	1,335,733	1,808,811
Dividends, Preferred Stock, Total							$ 1,271,782	1,335,733	1,808,811
Series B Preferred Stock [Member]
Proceeds from Issuance of Convertible Preferred Stock					$ 29,000,000
Preferred Stock, Redemption Price Per Share (in dollars per share)					$ 1,000
Preferred Stock, Dividend Rate, Percentage		4.00%					8.00%
Preferred Stock Additional Cash Dividend Under Specified Conditions Percentage					40.00%
Convertible Preferred Stock, Conversion Price Per Share (in dollars per share)					$ 15.58
Payments for Repurchase of Redeemable Preferred Stock		$ 11,700,000
Percentage of Outstanding Preferred Stock Redeemed		59.40%
Preferred Stock, Value, Outstanding		$ 8,000,000
Preferred Stock Deemed Dividend							$ 504,577
Dividends, Paid-in-kind, Total							80,000	1,340,000	1,810,000
Dividends, Preferred Stock, Total							1,270,000
Dividends, Preferred Stock, Cash							1,030,000
Dividends Payable							160,000
Preferred Stock, Redemption Amount							$ 8,000,000
Preferred Stock Voting Percentage of Number of Shares Convertible of Common Stock							50.00%
Series B Preferred Stock [Member] | Forecast [Member]
Preferred Stock, Dividend Rate, Percentage	14.00%					14.00%
Series B Preferred Stock [Member] | Maximum [Member] | First Five Years [Member]
Preferred Stock, Dividend Rate, Percentage					5.00%
Series B Preferred Stock [Member] | Maximum [Member] | Next Two Years [Member]
Preferred Stock, Dividend Rate, Percentage			12.00%
Series B Preferred Stock [Member] | Maximum [Member] | After Two Years [Member]
Preferred Stock, Dividend Rate, Percentage			14.00%
Ordinary Preferred Stock [Member]
Preferred Stock, Value, Distributed								14,500,000
Preferred Stock Issued as Dividends [Member]
Preferred Stock, Value, Distributed								3,692,131
TCP [Member] | Series B Preferred Stock [Member]
Stock Issued During Period, Shares, New Issues (in shares)					25,000
Friends Investment Company Inc. [Member] | Series B Preferred Stock [Member]
Stock Issued During Period, Shares, New Issues (in shares)					5,700
Eurodry [Member]
Percentage of Preferred Stock Outstanding							50.00%
Preferred Stock, Value, Distributed								$ 18,192,131
Common Stock, Value, Distributed				$ 2,254,830
Eurodry [Member] | Series B Preferred Stock [Member]
Preferred Stock Distributed (in shares)				19,042
Eurodry [Member] | Ordinary Preferred Stock [Member]
Preferred Stock, Value, Distributed				$ 14,500,000
Eurodry [Member] | Preferred Stock Issued as Dividends [Member]
Preferred Stock, Value, Distributed				$ 3,692,131

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Note 16 - Financial Instruments - Fair Value of Company's Investments (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Vessel profit participation liability		$ 1,067,500
Vessels held for sale, impairment loss			$ 4,595,819
Fair Value, Nonrecurring [Member]
Vessel profit participation liability		1,067,500	1,297,100
Fair Value, Nonrecurring [Member] | Vessels [Member]
Vessels held for sale, fair value			5,000,000
Vessels held for sale, impairment loss			4,595,819
Fair Value, Nonrecurring [Member] | Fair Value, Inputs, Level 1 [Member]
Vessel profit participation liability
Fair Value, Nonrecurring [Member] | Fair Value, Inputs, Level 1 [Member] | Vessels [Member]
Vessels held for sale, fair value
Fair Value, Nonrecurring [Member] | Fair Value, Inputs, Level 2 [Member]
Vessel profit participation liability		1,067,500	1,297,100
Fair Value, Nonrecurring [Member] | Fair Value, Inputs, Level 2 [Member] | Vessels [Member]
Vessels held for sale, fair value			5,000,000
Fair Value, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member]
Vessel profit participation liability
Fair Value, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member] | Vessels [Member]
Vessels held for sale, fair value

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Note 4 - Vessels, Net - Summary of Vessels (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Net book value	$ 48,826,128
- Depreciation for the year	(4,178,886)	$ (3,305,951)	$ (3,585,965)
- Vessel improvements	370,000
Net book value	116,230,333	48,826,128
Vessels [Member]
Costs	61,279,976	61,279,976
Accumulated depreciation	(12,453,848)	(9,147,897)
Net book value	48,826,128	52,132,079
- Depreciation for the year	(4,178,886)	(3,305,951)
- Vessel acquisitions	71,214,470
- Vessel improvements	368,621
Costs	132,863,067	61,279,976	61,279,976
Accumulated depreciation	(16,632,734)	(12,453,848)	(9,147,897)
Net book value	$ 116,230,333	$ 48,826,128	$ 52,132,079

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Note 1 - Basis of Presentation and General Information - Charterers Individually Accounted for More than 10% of the Company's Voyage and Time Charter Revenues (Details) - Revenue Benchmark [Member] - Customer Concentration Risk [Member]	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Charterer CMA [Member]
Concentration Risk, Percentage	24.00%	51.00%	34.00%
Charterer GSS [Member]
Concentration Risk, Percentage	21.00%	33.00%	31.00%
Hapag-Lloyd AG [Member]
Concentration Risk, Percentage	16.00%
Charterer MSC [Member]
Concentration Risk, Percentage	15.00%	11.00%	17.00%
Maersk Line A/S [Member]
Concentration Risk, Percentage	11.00%

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Note 8 - Long-term Bank Loans (Details Textual)											1 Months Ended	7 Months Ended	12 Months Ended
	Nov. 08, 2019 USD ($)	Nov. 01, 2019 USD ($)	Sep. 30, 2019 USD ($)	Jul. 30, 2019 USD ($)	Jul. 29, 2019 USD ($)	May 30, 2019 USD ($)	Nov. 21, 2018 USD ($)	Feb. 27, 2018 USD ($)	Jun. 19, 2017 USD ($)	Dec. 22, 2016 USD ($)	Aug. 31, 2019 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Jul. 29, 2020
Long-term Debt, Total												$ 90,200,000	$ 90,200,000
Proceeds from Issuance of Long-term Debt, Total											$ 16,167,680
Restricted Cash, Total												4,410,376	4,410,376	$ 5,717,063
Interest Expense, Total													3,219,471	2,703,845	$ 1,380,458
Eurobank Ergasias S.A. [Member] | Revolving Loan Facility [Member]
Debt Instrument, Periodic Payment Terms, Balloon Payment to be Paid						$ 6,000,000
Debt Instrument, Number of Periodic Payments						16
Payments of Debt Issuance Costs						$ 32,000
Proceeds from Issuance of Long-term Debt, Total						12,000,000
Security Deposit						5,000,000						$ 1,000,000	1,000,000
Debt Instrument, Periodic Payment, Total						$ 375,000
Eurobank Ergasias S.A. [Member] | Revolving Credit Facility [Member]
Debt Instrument, Periodic Payment, Total							$ 900,000
Debt Instrument, Periodic Payment Terms, Balloon Payment to be Paid							$ 19,200,000
Debt Instrument, Number of Periodic Payments							16
Debt Instrument, Number of Quarterly Installment Payments							12
Payments of Debt Issuance Costs							$ 300,000
Line of Credit Facility, Maximum Borrowing Capacity							45,000,000
Long-term Line of Credit, Total							$ 30,000,000
Long-term Debt, Term (Month)							1 year 180 days
Debt Instrument, Covenant, Security Cover Ratio							140.00%
Line of Credit Facility, Remaining Borrowing Capacity							$ 7,350,000
Line of Credit Facility, Remaining Percent of Vessel Market Value to Finance							55.00%
Debt Instrument, Balloon Payment, Percent of Drawn Debt							50.00%
Line of Credit Facility, Commitment Fee Percentage							0.40%
Line of Credit Facility, Underwriting Fee Percentage							1.00%
Piraeus Bank S.A. [Member]
Debt Instrument, Periodic Payment, Total					$ 160,460
Debt Instrument, Periodic Payment Terms, Balloon Payment to be Paid					$ 1,742,160
Debt Instrument, Number of Periodic Payments					12
Payments of Debt Issuance Costs													$ 32,000
Line of Credit Facility, Maximum Borrowing Capacity					$ 4,000,000
Proceeds from Issuance of Long-term Debt, Total					$ 3,667,680
Line of Credit Facility, Maximum Borrowing Amount, Percent of Scrap Value of Vessel					90.00%
Debt Instrument, Security Cover Ratio Covenant												110.00%	110.00%
Piraeus Bank S.A. [Member] | Forecast [Member]
Debt Instrument, Security Cover Ratio Covenant																120.00%
HSBC Bank PLC [Member]
Debt Instrument, Periodic Payment, Total				$ 450,000
Debt Instrument, Periodic Payment Terms, Balloon Payment to be Paid				$ 6,200,000
Debt Instrument, Number of Periodic Payments				14
Payments of Debt Issuance Costs													$ 62,500
Proceeds from Issuance of Long-term Debt, Total				$ 12,500,000
Debt Instrument, Security Cover Ratio Covenant				130.00%
Colby Trading Ltd [Member]
Debt Instrument, Number of Periodic Payments			4
Proceeds from Issuance of Long-term Debt, Total			$ 2,500,000
Debt Instrument, Interest Rate, Stated Percentage			8.00%
Interest Expense, Debt, Total													$ 51,111
Minimum [Member]
Debt Instrument Covenant, Ratio of Fair Value of Vessel to Outstanding Loan Less Cash in Retention Accounts												120.00%	120.00%
Maximum [Member]
Debt Instrument Covenant, Ratio of Fair Value of Vessel to Outstanding Loan Less Cash in Retention Accounts												140.00%	140.00%
London Interbank Offered Rate (LIBOR) [Member] | Eurobank Ergasias S.A. [Member] | Revolving Loan Facility [Member]
Debt Instrument, Basis Spread on Variable Rate						4.40%						3.90%
London Interbank Offered Rate (LIBOR) [Member] | Eurobank Ergasias S.A. [Member] | Revolving Credit Facility [Member]
Debt Instrument, Basis Spread on Variable Rate							4.40%						3.90%
London Interbank Offered Rate (LIBOR) [Member] | Piraeus Bank S.A. [Member]
Debt Instrument, Basis Spread on Variable Rate				2.95%	3.50%
Loan Agreement to Finance Acquisition of M/V EM Astoria [Member]
Debt Instrument, Periodic Payment, Total									$ 100,000
Debt Instrument, Face Amount									4,750,000
Debt Instrument, Periodic Payment Terms, Balloon Payment to be Paid with Twentieth Installment									2,750,000
Debt Instrument, Periodic Payment Terms, Balloon Payment to be Paid with Sixteenth Installment									3,150,000
Payments of Debt Issuance Costs									$ 50,000
Percent Shared With Bank in Excess of Fair Market Value															35.00%
Vessel Profit Parcitipation Liability														$ 1,067,500
Percent of Cash Flow After Debt Service Set Aside															35.00%
Loan Agreement to Finance Acquisition of M/V EM Astoria [Member] | Minimum [Member]
Debt Instrument, Number of Quarterly Installment Payments									20
Loan Agreement to Finance Acquisition of M/V EM Astoria [Member] | Maximum [Member]
Debt Instrument, Number of Quarterly Installment Payments									16
Loan Agreement to Finance Acquisition of M/V EM Astoria [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate									2.65%
Second Debt Agreement [Member] | Piraeus Bank S.A. [Member]
Debt Instrument, Periodic Payment Terms, Balloon Payment to be Paid	$ 17,400,000
Payments of Debt Issuance Costs													$ 352,000
Proceeds from Issuance of Long-term Debt, Total	$ 32,000,000
Debt Instrument, Security Cover Ratio Covenant	125.00%
Second Debt Agreement [Member] | Colby Trading Ltd [Member]
Proceeds from Issuance of Long-term Debt, Total		$ 2,500,000
Debt Instrument, Interest Rate, Stated Percentage		8.00%
Interest Expense, Debt, Total													$ 33,333
Second Debt Agreement [Member] | London Interbank Offered Rate (LIBOR) [Member] | Piraeus Bank S.A. [Member]
Debt Instrument, Basis Spread on Variable Rate	3.50%
Second Debt Agreement, First Payments [Member] | Piraeus Bank S.A. [Member]
Debt Instrument, Periodic Payment, Total	$ 1,400,000
Debt Instrument, Number of Periodic Payments	3
Second Debt Agreement, Second Payments [Member] | Piraeus Bank S.A. [Member]
Debt Instrument, Periodic Payment, Total	$ 800,000
Debt Instrument, Number of Periodic Payments	13
Second Set of Quarterly Payments [Member] | Colby Trading Ltd [Member]
Debt Instrument, Number of Periodic Payments			3
Noumea Shipping Ltd [Member]
Debt Instrument, Periodic Payment, Total										$ 720,000
Debt Instrument, Periodic Payment Terms, Balloon Payment to be Paid										6,360,000
Long-term Debt, Total										7,080,000
Debt Instrument, Face Amount								$ 4,250,000
Noumea Shipping Ltd [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate								3.00%
Noumea Shipping Ltd [Member] | Debt Instrument, Redemption, Period One [Member]
Debt Instrument, Periodic Payment, Total								$ 303,000
Noumea Shipping Ltd [Member] | Debt Instrument, Redemption, Period Two [Member]
Debt Instrument, Periodic Payment, Total								$ 311,000
Noumea Shipping Ltd [Member] | Supplemental Agreement with Noumea Shipping [Member]
Debt Instrument, Periodic Payment, Total										720,000
Debt Instrument, Periodic Payment Terms, Balloon Payment to be Paid										$ 4,920,000
Debt Instrument, Number of Periodic Payments										3

XML

Note 14 - Derivative Financial Instruments

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Derivative Instruments and Hedging Activities Disclosure [Text Block]

14. Derivative Financial Instruments

Interest rate swaps

Effective

October 17, 2014,

the Company entered into

one

interest rate swap with Eurobank – Ergasias S.A. (“Eurobank”) for a notional amount of

$10.0

million, in order to manage interest costs and the risk associated with changing interest rates of the Company’s loans. Under the terms of the swap, Eurobank made a quarterly payment to the Company equal to the

3

-month LIBOR while the Company paid an adjustable rate averaging

1.97%

(more specifically, the Company paid the fixed rate of

0.50%

until

November 28, 2016

then

0.95%

until

November 28, 2017

and then

3.55%

until

May 28, 2019)

based on the relevant notional amount.

The interest rate swap contract did

not

qualify for hedge accounting as of

December 

31,

2018.

As of

December 31, 2019,

the Company had

no

interest rate swaps open positions.

Derivatives not designated as hedging instruments	Balance Sheet Location	December 31, 2018	December 31, 2019
Interest rate swap contract	Current liabilities – Derivatives	41,435	-
Total derivative liabilities		41,435	-

Derivatives not designated as hedging instruments	Location of gain (loss) recognized	Year Ended December 31, 2017		Year Ended December 31, 2018		Year Ended December 31, 2019
Interest rate swap contract– Unrealized (loss) / gain	(Gain) / loss on derivativtes, net	(5,901	)	204,647		-
Interest rate swap contract  - Realized  gain / (loss)	Gain / (loss) on derivatives, net	19,071		(201,745	)	(2,885	)
Total  net gain / (loss) on interest rate swap contract		13,170		2,902		(2,885	)

Freight Forward Agreements (“FFA”)

In

December 2017,

the Company entered into

three

FFA contracts on the Baltic Panamax Index (“BPI”) for the

first

three

calendar months of

2018,

totaling

90

days at an average time charter equivalent rate of

$11,000

per day.

The

contracts are settled on a monthly basis using the average of the BPI for the days of the month the BPI is published.  The Company receives a payment if the average BPI for the month is below the contract rate equal to the difference of the contract rate less the average BPI for the month times the number of contract days sold; if the average BPI for the month is greater than the contract rate, the Company makes a payment equal to the difference of the average BPI for the month less the contract rate times the number of contract days sold. If the Company buys contracts previously sold (or the opposite) the Company receives or pays the difference of the

two

rates for the period covered by the contracts.

The FFA contracts did

not

qualify for hedge accounting. The Company follows guidance relating to “Fair value measurements” to calculate the fair value of the FFA contracts (see Note

16

).

FFA contracts not designated as hedging instruments	Location of gain (loss) recognized	Year Ended December 31, 2017		Year Ended December 31, 2018		Year Ended December 31, 2019
FFA contracts – Unrealized loss	Gain / (loss) on derivatives, net	(781	)	-			-
FFA contracts – Realized loss	Gain / (loss) on derivatives, net	-		(47,245	)		-
Total loss on FFA contracts		(781	)	(47,245	)		-

XML

Note 18 - Common Stock

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

18. Common Stock

As per the Company’s Amended and Restated Articles of Incorporation, the Company is authorized to issue

200,000,000

shares of common stock, par value

$0.03

per share.

Each outstanding share of common stock is entitled to

one

vote, either in person or by proxy, on all matters that

may

be voted upon by their holders at meetings of the shareholders. Subject to preferences that

may

be applicable to any outstanding preferred shares, holders of our common stock (i) have equal ratable rights to dividends from funds legally available therefore, if declared by the Board of Directors; (ii) are entitled to share ratably in all of the Company’s assets available for distribution upon liquidation, dissolution or winding up; and (iii) do

not

have preemptive, subscription or conversion rights or redemption or sinking fund provisions. All issued shares of our common stock when issued will be fully paid for and non-assessable. The rights, preferences and privileges of holders of common shares are subject to the rights of the holders of any preferred shares which the Company has issued or

may

issue in the future.

During

January 2017,

following the Company’s prospectus filed with the SEC on

December 20, 2016,

as further supplemented by the prospectus dated

January 13, 2017,

the Company issued and sold at-the-market (ATM)

37,723

shares of common stock for gross proceeds net of commissions of

$0.6

million.

In addition, during the year ended

December 31, 2017,

the Company issued

12,534

common shares to the Company’s directors and officers and employees of the Manager in connection with its equity incentive plans (Note

11

).

During

November 2018,

following the Company’s prospectus supplement filed with the SEC on

December 20, 2016,

as further supplemented by the prospectus dated

January 13, 2017

and

October 30, 2018,

the Company issued and sold at-the-market (ATM)

139,509

shares of common stock for gross proceeds net of commissions of

$2.0

million.

In addition, during the year ended

December 31, 2018,

the Company issued

15,681

common shares to the Company’s directors and officers and employees of the Manager in connection with its equity incentive plans (Note

11

).

During

October 2019,

following the Company’s prospectus supplement filed with the SEC on

December 20, 2016,

as further supplemented by the prospectus dated

January 13, 2017,

October 30, 2018

and

May 30, 2019,

the Company issued and sold at-the-market (ATM)

144,727

shares of common stock for gross proceeds net of commissions of

$0.9

million.

As further discussed in Note

1,

during the year ended

December 31, 2019,

the Company issued

2,816,901

common shares and

1,056,338

common shares in connection with the Trinity/Diamantis Vessel Acquisition and the Synergy Vessel Acquisition.

In addition, during the year ended

December 31, 2019,

the Company issued

15,444

common shares to the Company’s directors and officers and employees of the Manager in connection with its equity incentive plans (Note

11

).

On

December 19, 2019,

the Company announced that it has completed a

1

-for-

8

reverse stock split, effective at the close of trading on

December 18, 2019.

The Company’s common shares began trading on a split-adjusted basis on

December 19, 2019.

XML

Note 3 - Inventories (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	2018	2019
Lubricants	1,043,763	1,728,861
Victualing	79,965	160,303
Bunkers	580,663	-
Total	1,704,391	1,889,164

XML

Note 15 - Preferred Shares - Dividends Series B Preferred Shares (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Balance (in shares)	19,605	37,314	35,505
Balance	$ 18,757,361	$ 35,613,759	$ 33,804,948
Dividends declared (in shares)	81	1,333	1,809
Dividends declared	$ 78,639	$ 1,335,733	$ 1,808,811
Shares distributed to EuroDry (in shares)		(19,042)
Shares distributed to EuroDry		$ (18,192,131)
Redemption of shares (in shares)	(11,686)
Redemption of shares	$ (11,686,000)
Preferred deemed dividend	$ 504,577
Balance (in shares)	8,000	19,605	37,314
Balance	$ 7,654,577	$ 18,757,361	$ 35,613,759
Ordinary Preferred Stock [Member]
Balance	14,500,000	29,000,000	29,000,000
Dividends declared
Shares distributed to EuroDry		(14,500,000)
Redemption of shares	(8,155,055)
Preferred deemed dividend	504,577
Balance	6,849,522	14,500,000	29,000,000
Preferred Stock Issued as Dividends [Member]
Balance	4,257,361	6,613,759	4,804,948
Dividends declared	78,639	1,335,733	1,808,811
Shares distributed to EuroDry		(3,692,131)
Redemption of shares	(3,530,945)
Preferred deemed dividend
Balance	$ 805,055	$ 4,257,361	$ 6,613,759

XML

Note 17 - Discontinued Operations (Details Textual) - USD ($)		12 Months Ended
	May 30, 2018	Dec. 31, 2018
Eurodry [Member] | Vessel Acquisition [Member]
Related Party Transaction, Amounts of Transaction		$ 52,520,000
Eurodry [Member] | Allocated Equity from Accumulated Deficit [Member]
Related Party Transaction, Amounts of Transaction		9,660,000
Eurodry [Member] | Allocated Equity to Equity [Member]
Related Party Transaction, Amounts of Transaction		$ 42,860,000
Eurodry [Member]
Common Stock, Value, Received	$ 2,254,830
Eurodry [Member] | Series B Preferred Stock [Member]
Preferred Stock, Shares, Received (in shares)	19,042

XML

Note 7 - Related Party Transactions (Details Textual)			1 Months Ended	2 Months Ended	11 Months Ended	12 Months Ended						24 Months Ended
	Jan. 01, 2018	Jan. 01, 2011	Aug. 31, 2019 USD ($) shares	Dec. 31, 2019 USD ($)	Nov. 15, 2019 USD ($)	Dec. 31, 2019 USD ($) shares	Dec. 31, 2019 EUR (€) shares	Dec. 31, 2018 USD ($)	Dec. 31, 2018 EUR (€)	Dec. 31, 2017 USD ($)	Dec. 31, 2017 EUR (€)	Dec. 31, 2018 USD ($)	Nov. 01, 2019 USD ($)	Sep. 30, 2019 USD ($)
Service Management Costs Daily Fee Related Party | €							€ 685		€ 685		€ 685
Related Party Agreement Term (Year)	5 years	5 years
Related Party Transaction Discount Percentage	5.00%
Related Party Transaction Daily Fee Per Vessel Per Day in Operation						$ 720
Related Party Transaction Daily Fee Per Vessel Per Day in Lay Up						360	€ 342.50
Due to Related Parties, Total				$ 795,562		795,562		$ 2,672,895				$ 2,672,895
Payments to Acquire Property, Plant, and Equipment, Total						$ 55,720,226		1,867		$ 30,063,480
Four Feeder Containerships [Member]
Number of Vessels Acquired			4
Payments to Acquire Property, Plant, and Equipment, Total			$ 15,000,000
Stock Issued During Period, Shares, Purchase of Assets (in shares) | shares			2,816,901			2,816,901	2,816,901
Eurobulk Ltd. [Member] | Fixed Management Fees [Member]
Related Party Transaction, Amounts of Transaction				$ 2,000,000	$ 1,250,000							$ 2,000,000
Eurobulk Ltd. [Member] | Fixed Management Fees [Member] | General and Administrative Expense [Member]
Related Party Transaction, Amounts of Transaction						$ 1,344,250		1,561,126		1,306,476
Eurobulk Ltd. [Member] | Vessel Management Fees [Member]
Related Party Transaction, Amounts of Transaction						$ 3,671,335		3,536,094		2,632,637
Colby Trading Ltd [Member] | First Debt Agreement [Member]
Due to Related Parties, Total														$ 2,500,000
Debt Instrument, Interest Rate, Stated Percentage														8.00%
Colby Trading Ltd [Member] | Second Debt Agreement [Member]
Due to Related Parties, Total													$ 2,500,000
Debt Instrument, Interest Rate, Stated Percentage													8.00%
Eurochart [Member] | Vessel Sales [Member]
Related Party Transaction Commission, Percentage						1.00%	1.00%
Related Party Transaction, Expenses from Transactions with Related Party						$ 0		64,500		70,640
Eurochart [Member] | Charter Revenues [Member]
Related Party Transaction Commission, Percentage						1.25%	1.25%
Related Party Transaction, Expenses from Transactions with Related Party						$ 493,341		453,361		310,467
Eurochart [Member] | Vessel Acquisition [Member]
Related Party Transaction, Expenses from Transactions with Related Party						0		0		118,526
Sentinel [Member]
Related Party Transaction, Expenses from Transactions with Related Party						$ 106,749		118,684		89,329
Related Party Transaction Commission on Premium, Maximum, Percentage						5.00%	5.00%
Technomar [Member]
Related Party Transaction, Expenses from Transactions with Related Party						$ 142,332		$ 137,385		$ 101,394
Related Party Transaction Amounts of Transaction Per Crew Member Per Month						$ 50

XML

Note 4 - Vessels, Net (Details Textual) - USD ($)															1 Months Ended	12 Months Ended
	Nov. 21, 2019	Nov. 19, 2019	Nov. 18, 2019	Aug. 07, 2019	Aug. 02, 2019	Jun. 25, 2018	Dec. 21, 2017	Dec. 06, 2017	Oct. 29, 2017	Oct. 23, 2017	Sep. 30, 2017	Sep. 29, 2017	Jun. 20, 2017	Jan. 13, 2017	Jan. 31, 2017	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Cost for Improvements of Vessels																$ 370,000
Proceeds from Sale of Property, Plant, and Equipment, Total																	$ 6,255,735	$ 9,552,260
Gain (Loss) on Disposition of Property Plant Equipment, Total																	1,340,952	803,811
Asset Impairment Charges, Total																		4,595,819
Payments to Acquire Property, Plant, and Equipment, Total																$ 55,720,226	$ 1,867	30,063,480
M/V Aggeliki P. and M/V Monika P. [Member]
Asset Impairment Charges, Total											$ 4,600,000
Impairment Effect on Earnings Per Share, Pretax (in dollars per share)											$ 3.36
M/V Aggeliki P. [Member]
Gain (Loss) on Disposition of Property Plant Equipment, Total																		$ 300,000
M/V Monika P. [Member]
Gain (Loss) on Disposition of Property Plant Equipment, Total						$ 1,340,000
M/V RT Dagr [Member]
Proceeds from Sale of Property, Plant, and Equipment, Total														$ 2,300,000
Gain (Loss) on Disposition of Property Plant Equipment, Total															$ 500,000
M/V Aggeliki P. [Member]
Proceeds from Sale of Property, Plant, and Equipment, Total								$ 4,400,000
Asset Impairment Charges, Total											$ (1,260,000)
M/V EM Astoria [Member]
Payments to Acquire Property, Plant, and Equipment, Total													$ 4,750,000
MV EM Athens [Member]
Payments to Acquire Property, Plant, and Equipment, Total												$ 4,240,000
M/V EM Oinousses [Member]
Payments to Acquire Property, Plant, and Equipment, Total										$ 4,250,000
M/V EM Corfu [Member]
Payments to Acquire Property, Plant, and Equipment, Total									$ 5,660,000
M/V Akinada Bridge [Member]
Payments to Acquire Property, Plant, and Equipment, Total							$ 11,120,000
M/V EM Hydra [Member]
Payments to Acquire Property, Plant, and Equipment, Total					$ 6,730,000
M/V Diamantis [Member]
Payments to Acquire Property, Plant, and Equipment, Total					$ 5,220,000
EM Kea [Member]
Payments to Acquire Property, Plant, and Equipment, Total				$ 9,480,000
EM Spetses [Member]
Payments to Acquire Property, Plant, and Equipment, Total				$ 7,570,000
M/V Synergy Antwerp [Member]
Payments to Acquire Property, Plant, and Equipment, Total		$ 10,110,000
M/V Synergy Keelung [Member]
Payments to Acquire Property, Plant, and Equipment, Total			$ 11,440,000
M/V Synergy Oakland [Member]
Payments to Acquire Property, Plant, and Equipment, Total		$ 10,500,000
M/V Synergy Busan [Member]
Payments to Acquire Property, Plant, and Equipment, Total	$ 10,170,000

XML

Note 1 - Basis of Presentation and General Information (Details Textual)								1 Months Ended		12 Months Ended
	Feb. 01, 2021	Dec. 19, 2019	Dec. 18, 2019	Nov. 21, 2019 USD ($) $ / shares	Nov. 08, 2019 USD ($)	Jul. 29, 2019 USD ($)	Jun. 10, 2019	Jan. 31, 2021	Aug. 31, 2019 USD ($) shares	Dec. 31, 2019 USD ($) shares	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	May 30, 2018 shares
Shareholders Ownership, Percentage										62.00%
Spinoff Transaction, Number of Eurodry Common Share Received by Company’s Shareholders for Every Five Common Shares (in shares) | shares													1
Spinoff Transaction, Number of Company’s Common Shares Exchanged for Each Common Share of Eurodry (in shares) | shares													5
Payments to Acquire Property, Plant, and Equipment, Total										$ 55,720,226	$ 1,867	$ 30,063,480
Proceeds from Issuance of Long-term Debt, Total									$ 16,167,680
Working Capital Surplus										18,600,000
Net Cash Provided by (Used in) Operating Activities, Continuing Operations, Total										3,240,429	$ (1,474,830)	$ 5,053,025
Cash, Ending Balance										1,000,000
Restricted Cash and Cash Equivalents, Total										$ 4,900,000
Series B Preferred Stock [Member]
Preferred Stock, Dividend Rate, Percentage							4.00%			8.00%
Series B Preferred Stock [Member] | Forecast [Member]
Preferred Stock, Dividend Rate, Percentage	14.00%							14.00%
Reverse Stock Split [Member]
Stockholders' Equity Note, Stock Split, Conversion Ratio		8	8
Piraeus Bank S.A. [Member]
Proceeds from Issuance of Long-term Debt, Total						$ 3,667,680
Piraeus Bank S.A. [Member] | Second Debt Agreement [Member]
Proceeds from Issuance of Long-term Debt, Total					$ 32,000,000
Four Feeder Containerships [Member]
Number of Vessels Acquired									4
Consideration to Acquire Property, Plant and Equipment									$ 28,200,000
Payments to Acquire Property, Plant, and Equipment, Total									$ 15,000,000
Stock Issued During Period, Shares, Purchase of Assets (in shares) | shares									2,816,901	2,816,901
Shares Issued, Percent of Outsanding Shares of the Company									64.30%
Synergy Vessels [Member]
Payments to Acquire Property, Plant, and Equipment, Total				$ 2,000,000
Stock Issued During Period, Shares, Purchase of Assets (in shares) | shares										1,056,338
Vessels Acquired During the Period				4
Proceeds from Issuance of Private Placement				$ 6,000,000
Shares Issued, Price Per Share (in dollars per share) | $ / shares				$ 5.68
Acquisition of Property, Plant and Equipment, Contingent Shares Issuable				$ 500,000
Synergy Vessels [Member] | Piraeus Bank S.A. [Member] | Second Debt Agreement [Member]
Proceeds from Issuance of Debt				$ 32,000,000

XML

Note 8 - Long-term Bank Loans - Summary of Future Annual Loan Repayments for Long-term Debt (Details)	Dec. 31, 2019 USD ($)
2020	$ 12,541,840
2021	29,941,840
2022	8,723,540
2023	34,000,000
Total	$ 85,207,220

XML

Note 11 - Stock Incentive Plan - Summary of the Status of the Company's Non-vested Shares (Details) - Restricted Stock [Member]	12 Months Ended
	Dec. 31, 2019 $ / shares shares
Non-vested (in shares) | shares	21,948
Non-vested, weighted average grant date fair value (in dollars per share) | $ / shares	$ 10.16
Granted (in shares) | shares	15,444
Granted, weighted average grant date fair value (in dollars per share) | $ / shares	$ 5.84
Vested (in shares) | shares	(14,108)
Vested, weighted average grant date fair value (in dollars per share) | $ / shares	$ 11.01
Non-vested (in shares) | shares	23,284
Non-vested, weighted average grant date fair value (in dollars per share) | $ / shares	$ 6.77

XML

Note 14 - Derivative Financial Instruments (Details Textual)	1 Months Ended
	Dec. 31, 2017 USD ($)	Dec. 31, 2018 USD ($)	Nov. 28, 2017	Nov. 28, 2016	Oct. 17, 2014 USD ($)
Interest Rate Swap [Member]
Derivative, Number of Instruments Held, Total		1
Derivative, Notional Amount		$ 10,000,000
Interest Rate Swap [Member] | Eurobank [Member]
Derivative, Number of Instruments Held, Total					1
Derivative, Notional Amount					$ 10,000,000
Derivative, Average Fixed Interest Rate					1.97%
Derivative, Fixed Interest Rate			3.55%	0.95%	0.50%
Freight Forward Agreements [Member]
Derivative, Number of Instruments Held, Total	3
Charter Equivalent Rate Per Day	$ 11,000

XML

Note 16 - Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Fair Value Measurements, Recurring and Nonrecurring [Table Text Block]

	Fair Value Measurement as of December 31, 2018
		Total,	(Level 1)		(Level 2)	(Level 3)
Liabilities
Interest rate swap contract, current portion	$	41,435	-	$	41,435	-

Fair Value Measurements, Nonrecurring [Table Text Block]

	December 31, 2017
		Fair Value	Level 1	Level 2	Level 3	Loss 2017
Vessel profit participating liability		$1,297,100	-	$1,297,100	-	-
Vessels held for sale		$5,000,000	-	$5,000,000	-	$4,595,819

	December 31, 2018
		Fair Value	Level 1	Level 2	Level 3	Loss 2018
Vessel profit participating liability		$1,067,500	-	$1,067,500	-	-

	December 31, 2019
	Fair Value	Level 1	Level 2	Level 3	Loss 2019
Vessel profit participating liability	-	-	-	-	-

XML

Note 12 - Loss Per Share (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	2017		2018		2019
Income:
Net loss, continuing operations	(6,944,261	)	(663,396	)	(1,682,671	)
Dividends to Series B preferred shares	(1,808,811	)	(1,335,733	)	(1,271,782	)
Preferred deemed dividend	-		-		(504,577	)
Net loss attributable to common shareholders, continuing operations	(8,753,072	)	(1,999,129	)	(3,459,030	)
Weighted average common shares –outstanding , basic and diluted	1,383,440		1,414,775		2,861,928
Basic and diluted loss per share, continuing operations	(6.33	)	(1.41	)	(1.21	)
Net income attributable to common shareholders, discontinued operations	849,701		554,506		-
Net loss attributable to common shareholders	(7,903,371	)	(1,444,623	)	(3,459,030	)
Basic and diluted loss per share	(5.72	)	(1.02	)	(1.21	)

XML

Note 4 - Vessels, Net (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Property, Plant and Equipment [Table Text Block]

Balance, January 1, 2018	61,279,976	(9,147,897	)	52,132,079
-   Depreciation for the year	-	(3,305,951	)	(3,305,951	)
Balance, December 31, 2018	61,279,976	(12,453,848	)	48,826,128
-   Depreciation for the year	-	(4,178,886	)	(4,178,886	)
-   Vessel acquisitions	71,214,470	-		71,214,470
-   Vessel improvements	368,621	-		368,621
Balance, December 31, 2019	132,863,067	(16,632,734	)	116,230,333

XML

Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Cash flows from operating activities:
Net loss	$ (1,682,671)	$ (663,396)	$ (6,944,261)
Adjustments to reconcile net loss to net cash provided by / (used in) operating activities:
Vessel depreciation	(4,178,886)	(3,305,951)	(3,585,965)
Other operating income			(499,103)
Loss on write-down of vessels held for sale			4,595,819
Amortization and write off of deferred charges	205,590	321,181	113,244
Amortization of debt discount	95,214	465,507	60,988
Net gain on sale of vessels		(1,340,952)	(803,811)
Amortization of fair value of below market time charters acquired	(857,945)
Share-based compensation	97,919	124,487	116,562
Change in the fair value of derivatives	(41,435)	(204,647)	5,901
Loss on debt extinguishment	328,291
Trade accounts receivable	243,608	(73,210)	(91,604)
Prepaid expenses	(304,195)	24,703	(117,793)
Other receivables	460,909	(1,066,378)	(210,741)
Inventories	(184,773)	(511,373)	329,244
Due to related company	(1,877,333)	(2,732,256)	4,314,415
Trade accounts payable	1,539,553	766,052	197,782
Accrued expenses	482,671	282,045	167,016
Deferred revenues	556,140	(172,544)	233,402
Net cash provided by / (used in) operating activities of continuing operations	3,240,429	(1,474,830)	5,053,025
Cash flows from investing activities:
Cash paid for capitalized expenses and acquisition of vessels including attached time charter agreements	(55,720,226)	(1,867)	(30,063,480)
Cash released from other investment			4,000,000
Proceeds from sale of vessels		6,255,735	9,552,260
Net cash (used in) / provided by investing activities of continuing operations	(55,720,226)	6,253,868	(16,511,220)
Cash flows from financing activities:
Redemption of Series B preferred shares	(11,686,000)
Proceeds from issuance of common stock, net of commissions paid	6,853,101	1,975,110	549,495
Investment in subsidiary spun-off		(3,298,356)	(915,525)
Due from spun-off subsidiary			639,312
Preferred dividends paid	(1,031,827)
Offering expenses paid	(136,724)	(22,488)	(341,072)
Loan arrangement fees paid	(566,500)	(419,863)	(187,637)
Proceeds from long-term bank loans	60,167,680	34,250,000	22,250,000
Repayment of long-term bank loans and vessel profit participation liability	(13,401,460)	(32,349,000)	(7,243,915)
Proceeds from related party loan	5,000,000
Repayment of related party loan			(2,000,000)
Net cash provided by financing activities of continuing operations	45,198,270	135,403	12,750,658
Net increase / (decrease) in cash, cash equivalents and restricted cash	(7,281,527)	4,914,441	1,292,463
Cash, cash equivalents and restricted cash at beginning of year	13,211,588	8,297,147	7,004,684
Cash, cash equivalents and restricted cash at end of year, continuing operations	5,930,061	13,211,588	8,297,147
Cash breakdown
Total cash, cash equivalents and restricted cash shown in the statement of cash flows, continuing operations	5,930,061	13,211,588	8,297,147
Net cash provided by operating activities of discontinued operations		3,970,170	2,910,287
Net cash used in investing activities of discontinued operations		(29,045,685)	(9,635,504)
Net cash provided by financing activities of discontinued operations		27,928,885	9,283,359
Cash paid for interest, net of capitalized expenses	3,100,049	2,475,631	1,174,863
Financing, and investing activities fees:
Loan arrangement fees accrued			74,863
Offering expenses accrued	40,846	100,000	12,488
Payment-in-kind dividends	78,640	1,335,733	1,808,811
Capital expenditures included in liabilities	71,890
Accrued preferred dividends	161,315
Shares issued as consideration for acquisition of vessels	13,218,662
Preferred shares distributed to EuroDry		18,192,131
Eurodry [Member]
Financing, and investing activities fees:
Preferred shares distributed to EuroDry		$ 18,192,131

XML

Consolidated Balance Sheets (Parentheticals) - $ / shares	Dec. 31, 2019	Dec. 31, 2018
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	20,000,000	20,000,000
Preferred stock, shares issued (in shares)	8,000	19,605
Preferred stock, shares outstanding (in shares)	8,000	19,605
Common stock, par value (in dollars per share)	$ 0.03	$ 0.03
Common stock, shares authorized (in shares)	200,000,000	200,000,000
Common stock, shares issued (in shares)	5,600,259	1,564,456
Common stock, shares outstanding (in shares)	5,600,259	1,564,456

XML

Note 6 - Fair Value of Below Market Time Charters Acquired

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Below Market Time Charters Acquired [Text Block]

6. Fair Value of Below Market Time Charters Acquired

As part of the Trinity / Diamantis Vessel Acquisition in

August 2019

and with respect to the vessels “EM Hydra”, “EM Kea” and “EM Spetses”, which were acquired by the Company with time charter agreements attached, the Company recognized a liability of

$778,287,

included in “Fair value of below market time charters acquired” in the consolidated balance sheets, since it was determined that the respective charter rates were below market rates on the date of the transfer (Level

2

).

In addition, as part of the Synergy Vessel Acquisition in

November 2019

and with respect to the vessels “Synergy Keelung”, “Synergy Oakland” and “Synergy Busan”, which were acquired by the Company with time charter agreements attached, the Company recognized a liability of

$1,794,028,

included in “Fair value of below market time charters acquired” in the consolidated balance sheets, since it was determined that the respective charter rates were below market rates on the date of the transfer (Level

2

).

For the year ended

December 31, 2019,

the amortization of fair value of the below market acquired time charters was

$857,945

and is included under “Time charter revenue” in the consolidated statement of operations.

The unamortized balance of this intangible liability as of

December 31, 2019

of

$1,714,370

is expected to be amortized within

2020.

XML

Note 10 - Commitments and Contingencies

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

10. Commitments and Contingencies

(a) As of December 31, 2019 a subsidiary of the Company, Alterwall Business Inc. owner of M/V “Ninos”, is involved in a dispute with a fuel oil supplier who claimed a maritime lien against the vessel after the company which had time-chartered the vessel from the Company went bankrupt in October 2009 and failed to pay certain invoices. The vessel was arrested in Karachi in November 2009 and released after a bank guarantee for an amount of $0.53 million was provided on behalf of the Company, for which the bank has restricted an equal amount of the Company's cash which is presented within “Restricted Cash” in the consolidated balance sheets. The legal proceedings are ongoing. Although the Company believes it will be successful in its claim, it made a provision of $0.15 million in 2016, for any costs that may be incurred.

(b) On November 7, 2019, Euroseas Ltd. and Synergy Holdings Limited, on the basis of the acquisition of the vessels M/V “Synergy Busan”, M/V “Synergy Keelung”, M/V “Synergy Oakland” and M/V “Synergy Antwerp” (refer Notes 1 and 4 ), have agreed that Euroseas will issue certain shares of its common stock to Synergy Holdings Limited under the following terms:

If the

12

-month New ConTex index for a

4,250

TEU vessel (as published on https://www.vhbs.de/index or any successor website maintained by the Hamburg and Bremen Shipbrokers’ Association) (the “Index Value”) is higher on

November 16, 2020

at

4:00

p.m. New York time than the Index Value on

November 15, 2019

at

4:00

p.m. New York time, then, on

November 16, 2020,

Euroseas shall issue to Synergy Holdings Limited,

$500,000

divided by the

20

-day volume weighted average price of the Company’s common shares calculated on

November 16, 2020

at

4:00

p.m. New York time.

The Company based on its assessment of future rates as of

December 31, 2019,

concluded that it is

not

probable that it will have to pay the specific contingent consideration.

There are

no

other material legal proceedings to which the Company is a party or to which any of its properties are subject, other than routine litigation incidental to the Company’s business. In the opinion of the management, the disposition of these lawsuits should

not

have a material impact on the consolidated results of operations, financial position and cash flows.

As of

December 31, 2019,

future gross minimum revenues under non-cancellable time charter agreements total

$17.2

million, all of which is due in the year ending

December 31, 2020.

This amount does

not

include the future gross minimum revenues upon collection of hire under non-cancellable time charter agreements of M/V “Synergy Antwerp” which is on index linked charters. In arriving at the future gross minimum revenues, the Company has deducted an estimated

one

off-hire day per quarter. Such off-hire estimate

may

not

be reflective of the actual off-hire in the future. In addition, the actual revenues could be affected by early delivery of the vessel by the charterers or any exercise of the charterers’ options to extend the terms of the charters, which however cannot be estimated and hence

not

reflected above.

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Note 16 - Financial Instruments

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Financial Instruments Disclosure [Text Block]

16. Financial Instruments

The principal financial assets of the Company consist of cash and cash equivalents, restricted cash, trade accounts receivable and other receivables. The principal financial liabilities of the Company consist of long-term bank loans, derivatives, trade accounts payable, accrued expenses and amount due to related company.

Interest rate risk

From time to time, the Company enters into interest rate swap contracts as economic hedges to manage some of its exposure to variability in its floating rate long term bank loans. Under the terms of the interest rate swaps the Company and the bank agree to exchange, at specified intervals the difference between a paying fixed rate and receiving floating rate interest amount calculated by reference to the agreed principal amounts and maturities. Interest rate swaps allow the Company to convert long-term borrowings issued at floating rates into equivalent fixed rates. Even though, historically, the interest rate swaps were entered into for economic hedging purposes, as noted in Note

14

they did

not

qualify for hedge accounting, under the guidance relating to

Derivatives and Hedging

, as the Company did

not

have written contemporaneous documentation identifying the risk being hedged and, both on a prospective and retrospective basis, performing an effectiveness test to support that the hedging relationship is highly effective. Consequently, the Company recognized the change in fair value of these derivatives in the “Gain / (loss) on derivatives, net” in the consolidated statements of operations. As of

December 31, 2018,

the Company had

one

open swap contract for a notional amount of

$10.0

million. As described above in Note

14,

this contract matured at the end of

May 2019

and as of

December 31, 2019

the Company had

no

interest rate swaps open positions.

Concentration of credit risk

Financial instruments, which potentially subject the Company to significant concentration of credit risk consist primarily of cash and trade accounts receivable. The Company places its temporary cash investments, consisting mostly of deposits, with high credit qualified financial institutions. The Company performs periodic evaluation of the relative credit standing of these financial institutions that are considered in the Company’s investment strategy. The Company limits its credit risk with trade accounts receivable by performing ongoing credit evaluations of its customers’ financial condition and generally does

not

require collateral for its trade accounts receivable.

Fair value of financial instruments

The Company follows guidance relating to “Fair value measurements”, which establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosure about fair value measurements.  This statement enables the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. The statement requires that assets and liabilities carried at fair value will be classified and disclosed in

one

of the following

three

categories:

Level

1:

Quoted market prices in active markets for identical assets or liabilities;

Level

2:

Observable market based inputs or unobservable inputs that are corroborated by market data;

Level

3:

Unobservable inputs that are

not

corroborated by market data.

The fair value of the Company’s investments in FFA contracts are determined based on quoted prices in active markets and therefore are considered Level

1

of the fair value hierarchy as defined in guidance relating to "Fair value measurements".

The fair value of the Company’s interest rate swap agreements is determined using a discounted cash flow approach based on market-based LIBOR swap rates.  LIBOR swap rates are observable at commonly quoted intervals for the full terms of the swaps and therefore are considered Level

2

items. The fair values of the interest rate swap determined through Level

2

of the fair value hierarchy as defined in guidance relating to "Fair value measurements" are derived principally from or corroborated by observable market data. Inputs include quoted prices for similar assets, liabilities (risk adjusted) and market-corroborated inputs, such as market comparables, interest rates, yield curves and other items that allow value to be determined.

Recurring Fair Value Measurements

	Fair Value Measurement as of December 31, 2018
		Total,	(Level 1)		(Level 2)	(Level 3)
Liabilities
Interest rate swap contract, current portion	$	41,435	-	$	41,435	-

Asset Measured at Fair Value on a Non-recurring Basis

On

June 15, 2017,

the Company entered into a profit sharing agreement with Credit Agricole whereby it would share with the bank

35%

of the excess of the fair market value of M/V “EM Astoria” over the outstanding loan when the vessel was sold or when the loan matured. As a result of the lender's entitlement to participate in the appreciation of the market value of the mortgaged vessel, the Company recognized a participation liability of amount

$1,067,500

as of

December 31, 2018,

presented in "Vessel profit participation liability" in the consolidated balance sheets, with a corresponding debit to a debt discount account, presented contra to the loan balance. The fair value of this participation agreement is considered Level

2,

as it directly depends on the fair value or expected fair value of M/V “EM Astoria”. The Company completed the refinancing of the specific loan in

June 2019

using its revolving loan facility with Eurobank Ergasias S.A., as explained in Note

8

-c above, with the final participation liability paid amounting to

$950,000.

As of

September 30, 2017

the vessel M/V “Monica P” with a carrying amount of

$8.23

million, was classified as vessel held for sale and written down to its fair value of

$5.0

million, less estimated costs to sell of

$0.10

million, resulting in a loss of

$3.33

million, which was included in the consolidated statements of operations under “Loss on write-down of vessels held for sale”. The fair value of M/V “Monica P” is considered Level

2.

As of

September 30, 2017

the vessel M/V “Aggeliki P” with a carrying amount of

$5.39

million, was classified as vessel held for sale and written down to its fair value of

$4.3

million, less estimated costs to sell of

$0.17

million, resulting in a loss of

$1.26

million, which was included in the accompanying consolidated statements of operations under “Loss on write-down of vessels held for sale”. The fair value of M/V “Aggeliki P” is considered Level

2.

Asset Measured at Fair Value on a Non-recurring Basis - continued

Nonrecurring Fair Value Measurements at Reporting Date

	December 31, 2017
		Fair Value	Level 1	Level 2	Level 3	Loss 2017
Vessel profit participating liability		$1,297,100	-	$1,297,100	-	-
Vessels held for sale		$5,000,000	-	$5,000,000	-	$4,595,819

	December 31, 2018
		Fair Value	Level 1	Level 2	Level 3	Loss 2018
Vessel profit participating liability		$1,067,500	-	$1,067,500	-	-

	December 31, 2019
	Fair Value	Level 1	Level 2	Level 3	Loss 2019
Vessel profit participating liability	-	-	-	-	-

The estimated fair values of the Company’s financial instruments such as cash and cash equivalents and restricted cash approximate their individual carrying amounts as of

December 31, 2018

and

2019,

due to their short-term maturity. Cash and cash equivalents and restricted cash are considered Level

1

items as they represent liquid assets with short-term maturities. The fair value of the Company’s total borrowings approximates

$87.1

million as of

December 31, 2019

or

$3.1

million less than their carrying value of

$90.2

million. The fair value of the long term borrowings is estimated based on current interest rates offered to the Company for similar loans. LIBOR rates are observable at commonly quoted intervals for the full terms of the loans and hence fair values of the long-term bank loans are considered Level

2

items in accordance with the fair value hierarchy due to their variable interest rate, being the LIBOR.

XML

Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

Principles of consolidation

The accompanying consolidated financial statements include the accounts of Euroseas Ltd. and its subsidiaries. Inter-company balances and transactions are eliminated on consolidation.

Use of Estimates, Policy [Policy Text Block]

Use of estimates

The preparation of the accompanying consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the consolidated financial statements, and the stated amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Comprehensive Income, Policy [Policy Text Block]

Other comprehensive income / (loss)

The Company has

no

other comprehensive income / (loss) and accordingly comprehensive income / (loss) equals net income / (loss) for all periods presented. As such,

no

statement of comprehensive income / (loss) has been presented.

Foreign Currency Transactions and Translations Policy [Policy Text Block]

Foreign currency translation

The Company’s functional currency as well as the functional currency of all its subsidiaries is the U.S. dollar. Assets and liabilities denominated in foreign currencies are translated into U.S. dollars at exchange rates prevailing at the balance sheet date. Income and expenses denominated in foreign currencies are translated into U.S. dollars at exchange rates prevailing at the date of the transaction. The resulting exchange gains and/or losses on settlement or translation are included in the accompanying consolidated statements of operations.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash equivalents

Cash equivalents are cash in bank accounts, time deposits or other certificates purchased with an original maturity of

three

months or less.

Cash and Cash Equivalents, Restricted Cash and Cash Equivalents, Policy [Policy Text Block]

Restricted cash

Restricted cash reflects deposits with certain banks that can only be used to pay the current loan installments or are required to be maintained as a certain minimum cash balance per mortgaged vessel and amounts that are pledged, blocked or held as cash collateral.

Accounts Receivable [Policy Text Block]

Trade accounts receivable

The amount shown as trade accounts receivable, at each balance sheet date, includes estimated recoveries from each voyage or time charter. At each balance sheet date, the Company provides for doubtful accounts on the basis of specific identified doubtful receivables.

Inventory, Policy [Policy Text Block]

Inventories

Inventories are stated at the lower of cost and net realizable value, which is the estimated selling prices less reasonably predictable costs of disposal and transportation. Inventories are valued using the FIFO (First-In First-Out) method.

Vessels [Policy Text Block]

Vessels

Vessels are stated at cost, which comprises the vessel contract price, costs of major repairs and improvements upon acquisition, direct delivery and other acquisition expenses, less accumulated depreciation and impairment, if any. Subsequent expenditures for conversions and major improvements are also capitalized when they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels; otherwise these amounts are charged to expense as incurred.

Vessels under construction are presented at cost, which includes shipyard installment payments and other vessel costs incurred during the construction period that are directly attributable to the construction of the vessels, including interest costs incurred during the construction period.

Expenditures for vessel repair and maintenance are charged against income in the period incurred.

Assets Held For Sale [Policy Text Block]

Assets Held for Sale 

The Company

may

dispose of certain of its vessels when suitable opportunities occur, including prior to the end of their useful lives. The Company classifies assets as being held for sale when the following criteria are met: (i) management is committed to sell the asset; (ii) the asset is available for immediate sale in its present condition; (iii) an active program to locate a buyer and other actions required to complete the plan to sell the asset have been initiated; (iv) the sale of the asset is probable, and transfer of the asset is expected to qualify for recognition as a completed sale within

one

year; (v) the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (vi) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

Long-lived assets classified as held for sale are measured at the lower of their carrying amount or fair value less the cost to sell the asset. These assets are

no

longer depreciated once they meet the criteria of being held for sale.

Depreciation, Depletion, and Amortization [Policy Text Block]

Depreciation

Depreciation is calculated on a straight line basis over the estimated useful life of the vessel with reference to the cost of the vessel, and estimated scrap value. Remaining useful lives of vessels are periodically reviewed and revised to recognize changes in conditions and such revisions, if any, are recognized over current and future periods. The Company estimates that its vessels have a useful life of

25

years from the completion of their construction. When regulations place limitations over the ability of a vessel to trade on a worldwide basis, its remaining useful life is adjusted at the date such regulations are adopted. The estimated salvage value of each vessel is

$0.25

per light weight ton as of

December 31, 2019

and

2018,

which is based on the historical average demolition prices.

Insurance Premiums Revenue Recognition, Policy [Policy Text Block]

Insurance claims and insurance proceeds

Claims receivable are recorded on the accrual basis and represent the amounts to be received, net of deductibles incurred through each balance sheet date, for which recovery from insurance companies is probable and the claim is

not

subject to litigation. Any remaining costs to complete the claims are included in accrued liabilities. Insurance proceeds are recorded according to type of claim that gives rise to the proceeds in the consolidated statements of operations and the consolidated statements of cash flow.

Revenue [Policy Text Block]

Revenue and expense recognition

Revenues are generated from time charters and voyage charters. Under a time charter agreement a contract is entered into for the use of a vessel for a specific period of time and a specified daily charter hire rate. Under a voyage charter agreement, a contract is made in the spot market for the use of a vessel for a specific voyage to transport a specified agreed upon cargo at a specified freight rate per ton or occasionally a lump sum amount. Under a voyage charter agreement, the charter party generally has a minimum amount of cargo and the charterer is liable for any short loading of cargo or "dead" freight.

In

February 2016,

the FASB issued ASU

No.

2016

-

02,

“Leases (Topic

842

)”, which amends the existing accounting standard for lease accounting and adds additional disclosures about leasing arrangements. ASC

842

requires lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by most leases, while lessor accounting remains largely unchanged. ASC

842,

as amended, subject to certain transition relief options, allows a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, or allows entities to elect

not

to recast the comparative periods presented when transitioning to ASC

842

and to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. ASC

842

also provides a practical expedient to lessors by class of underlying asset, to

not

separate non lease components from the associated lease component, similar to the expedient provided for lessees, when the following criteria are met: i) the timing and pattern of transfer for the lease

component is the same as those for the non-lease component associated with that lease component and (ii) the lease component, if accounted for separately, would be classified as an operating lease. ASC

842

is effective for public entities with reporting periods beginning after

December 15, 2018,

including interim periods within those fiscal periods. The Company adopted ASC

842

for its reporting period commencing

January 1, 2019

and has elected to use the optional new transition method that results in initial recognition of a cumulative effect adjustment to retained earnings in the year of adoption. As a result, prior periods as reported by the Company, have

not

been impacted by the adoption.

A time charter is a contract for the use of a vessel for a specific period of time and a specified daily charter hire rate, which is generally payable in advance. Time charter revenue is recognized when a charter agreement exists, the vessel is made available to the charterer and collection of the related revenue is reasonably assured. As of

December 31, 2019,

all of the Company’s vessels are employed under time charters with remaining terms ranging from less than

one

month to

12

months based on the minimum duration of the time charter contracts and certain time charter contracts include renewal options for terms ranging from

8

months to

23

months. A time charter generally provides typical warranties and owner protective restrictions. The Company’s time charter agreements are classified as operating leases pursuant to ASC

842,

because (i) the vessel is an identifiable asset, (ii) the Company does

not

have substantive substitution rights and (iii) the charterer has the right to control the use of the vessel, during the term of the contract, and derives the economic benefits from such use. In a time charter contract, the Company is responsible for all the costs incurred for running the vessel such as crew costs, vessel insurance, repairs and maintenance and lubes. The charterer bears the voyage related costs such as bunker expenses, port charges and canal tolls during the hire period.

As discussed above, the transition guidance associated with ASC

842

allows for certain practical expedients to lessors. The Company elected

not

to separate the lease and non-lease components included in the time charter revenue because the pattern of revenue recognition for the lease and non-lease components (included in the daily hire rate) is the same and the lease component, if accounted for separately, would be classified as an operating lease. The nature of the lease component and non-lease component that are combined as a result of applying the respective practical expedient are the hire rate for a bareboat charter as well as the compensation for expenses incurred running the vessel such as crewing expense, repairs, insurance, maintenance and lubricants, respectively. The lease component is the predominant component and the Company accounts for the combined component as an operating lease in accordance with Topic

842.

Both the lease component and non-lease component are earned by the passage of time. Since lessor accounting remains largely unchanged from previous U.S. GAAP, upon adoption of ASC

842,

the timing and recognition of earnings from time charter contracts to which the Company is party did

not

change from prior policy, with the exception of ballast bonuses which were recognized during the ballast leg while they are now deferred and recognized over time during the charter period. The performance obligations in a time charter contract are recognized on a straight-line basis over the term of the respective time charter agreements, beginning when the vessel is delivered to the charterer until it is redelivered back to the Company, and is recorded in “Time charter revenue” in the consolidated statements of operations for the years ended

December 31, 2017,

2018

and

2019.

Voyage charter agreements are considered service contracts that fall under the provisions of ASC

606,

because the Company as the shipowner retains the control over the operation of the vessel such as directing the routes taken or the vessel speed. The Company considered the provisions of ASC

842

and determined that its voyage charter agreements do

not

contain a lease because the charterer under such contracts does

not

have the right to control the use of the vessel since the Company, as the ship-owner, retains control over the operations of the vessel, provided also that the terms are pre-determined and any change requires the Company’s consent. The Company accounts for a voyage charter when all the following criteria are met: (i) the parties to the contract have approved the contract in the form of a written charter agreement or fixture recap and are committed to perform their respective obligations, (ii) the Company can identify each party’s rights regarding the services to be transferred, (iii) the Company can identify the payment terms for the services to be transferred, (iv) the charter agreement has commercial substance (that is, the risk, timing, or amount of the future cash flows is expected to change as a result of the contract) and (v) it is probable that the Company will collect substantially all of the consideration to which it will be entitled in exchange for the services that will be transferred to the charterer. The Company has determined that there is

one

single performance obligation for each of its voyage contracts, which is to provide the charterer with an integrated transportation service within a specified time period. In addition, the Company has concluded that a contract for a voyage charter meets the criteria to recognize revenue over time because the charterer simultaneously receives and consumes the benefits of the Company’s performance as the Company performs. Therefore, since the Company’s performance obligation under each voyage contract is met evenly as the voyage progresses, revenue is recognized on a straight line basis over the voyage days from the loading of cargo to its discharge. The majority of revenue from voyage charter agreements is usually collected in advance.

Demurrage income is included in Voyage charter revenues, represents revenue earned from the charterer when loading or discharging time exceeded the stipulated time in the voyage charter agreement and is recognized when earned and collection is reasonably assured. Demurrage income for the years ended

December 31, 2017,

2018

and

2019

was

not

material.

Charter fees received in advance are recorded as a liability (deferred revenue) until charter services are rendered.

Vessel operating expenses are comprised of all expenses relating to the operation of the vessels, including crewing, insurance, repairs and maintenance, stores, lubricants, spares and consumables, professional and legal fees and miscellaneous expenses. Vessel operating expenses are recognized as incurred; payments in advance of services or use are recorded as prepaid expenses. Under voyage charter agreements, voyage expenses relate to bunkers, port charges, canal tolls, and agency fees and are all paid by the Company. Costs incurred prior to loading which are directly related to the voyage are deferred by the Company if they meet certain conditions, and are amortized over the duration of the voyage from load port to discharge port. Costs incurred during the voyage are expensed as incurred. Under time charter agreements, voyage expenses which are also recognized as incurred by the Company include costs for draft surveys, holds cleaning, postage, extra war risk insurance and other minor miscellaneous expenses related to the voyage. The charterer is responsible for paying the cost of bunkers and other voyage expenses whilst the vessel is on time charter. Certain voyage expenses paid by the Company, such as extra war risk insurance and holds cleaning

may

be recovered from the charterer; such amounts recovered are recorded as other income within time charter revenue.

Commissions (address and brokerage), regardless of charter type, are always paid by the Company, are deferred and amortized over the related charter period and are presented as a separate line item in revenues to arrive at net revenues in the accompanying consolidated statements of operations.

Drydocking and Special Survey Expenses [Policy Text Block]

Dry-docking and special survey expenses

Dry-docking and special survey expenses are expensed as incurred.

Pension and Other Postretirement Plans, Policy [Policy Text Block]

Pension and retirement benefit obligations – crew

The ship-owning companies contract the crews on board the vessels under short-term contracts (usually up to

9

months). Accordingly, they are

not

liable for any pension or post-retirement benefits.

Financing Receivable [Policy Text Block]

Financing costs

Loan arrangement fees are deferred and amortized to interest expense over the duration of the underlying loan using the effective interest method. Unamortized fees relating to loans repaid or refinanced are expensed in the period the repayment or refinancing occurs.

Offering Expenses [Policy Text Block]

Offering expenses

Deferred offering expenses are charged against paid-in capital when financing is completed or expensed to “General and administrative expenses” in the consolidated statements of operations when the offering is aborted.

Fair Value Measurement, Policy [Policy Text Block]

Fair value of above/below market time charters acquired

The Company records all identified tangible and intangible assets or any liabilities associated with the acquisition of a vessel at fair value. Where vessels are acquired with existing time charters, the Company determines the present value of the difference between: (i) the contractual charter rate and (ii) the prevailing market rate for a charter of equivalent duration. In discounting the charter rate differences in future periods, the Company uses its Weighted Average Cost of Capital (WACC) adjusted to account for the credit quality of the counterparties, as deemed necessary. The capitalized above-market (assets) and below-market (liabilities) charters are amortized as a reduction and increase, respectively, to time charter revenues over the remaining term of the assumed time charter.

Share-based Payment Arrangement [Policy Text Block]

Stock incentive plan awards

Share-based compensation represents vested and non-vested restricted shares granted to officers and directors as well as to non-employees and are included in “General and administrative expenses” in the consolidated statements of operations. In

June 2018,

the FASB issued ASU 

2018

-

07,

Improvements to Nonemployee Share-Based Payment Accounting (Topic

718

). ASU 

2018

-

07

simplifies the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. Following the adoption of this ASU, the shares to employees and directors as well as to non-employees are measured at their fair value equal to the market value of the Company's common stock on the grant date. The shares that do

not

contain any future service vesting conditions are considered vested shares and the total fair value of such shares is expensed on the grant date. The shares that contain a time-based service vesting condition are considered non-vested shares on the grant date and the total fair value of such shares is recognized on a straight-line basis over the requisite service period. Prior to the adoption of this ASU, the fair value of the awards granted to non-employees was measured at the fair value at each reporting period until the non-vested shares vested and performance was complete.

Impairment or Disposal of Long-Lived Assets, Including Intangible Assets, Policy [Policy Text Block]

Impairment of long-lived assets

The Company reviews its long-lived assets held for use and their related intangible assets and liabilities for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets

may

not

be recoverable. If indicators of impairment are present, the Company performs an analysis of the future undiscounted net operating cash flows of the related long-lived assets. When the estimate of future undiscounted net operating cash flows, excluding interest charges, expected to be generated by the use and eventual disposition of the asset is less than its carrying amount, the Company evaluates the asset for an impairment loss. Measurement of the impairment loss is based on the fair value of the asset. In this respect, management regularly reviews the carrying amount of the vessels in connection with the estimated recoverable amount for each of the Company’s vessels.

Derivatives, Policy [Policy Text Block]

Derivative financial instruments

Derivative instruments are recorded in the balance sheet as either an asset or liability measured at its fair value with changes in the instruments' fair value recognized as either a component in other comprehensive income if specific hedge accounting criteria are met in accordance with guidance relating to “Derivatives and Hedging” or in earnings if hedging criteria are

not

met.

Stockholders' Equity Note, Redeemable Preferred Stock, Issue, Policy [Policy Text Block]

Preferred shares

Preferred shares are recorded at the initial consideration received less offering expenses and adjusted by including the redemption value of dividends paid in-kind. The Company recognizes changes in the redemption value of the preferred shares immediately as they occur and adjusts the carrying amount of the preferred shares to equal the redemption value at the end of each reporting period to that effect.

Purchase Transactions [Policy Text Block]

Evaluation of purchase transactions

When the Company enters into an acquisition transaction, it determines whether the acquisition transaction was for the purchase of an asset or a business based on the facts and circumstances of the transaction. In accordance with ASU

No.

2017

-

01,

Business Combinations (Topic

805

): Clarifying the Definition of a Business, if substantially all of the fair value of the gross assets acquired in an acquisition transaction are concentrated in a single identifiable asset or group of similar identifiable assets, then the set is

not

a business. To be considered a business, a set must include an input and a substantive process that together significantly contributes to the ability to create an output. All assets acquired and liabilities assumed in a business combination are measured at their acquisition-date fair values. For asset acquisitions, the cost of the acquisition is allocated to individual assets and liabilities on a relative fair value basis. Acquisition costs associated with business combinations are expensed as incurred. Acquisition costs associated with asset acquisitions are capitalized.

Earnings Per Share, Policy [Policy Text Block]

Earnings / (loss) per common share

Basic earnings / (loss) per share is computed by dividing net income / (loss) attributable to common shareholders, after the deduction of dividends paid (in cash or in-kind) to preferred shareholders, by the weighted-average number of common shares outstanding during the period. The weighted-average number of common shares outstanding does

not

include any potentially dilutive securities or any non-vested restricted shares of common stock. These non-vested restricted shares, although classified as issued and outstanding as of

December 31, 2018

and

2019,

are considered contingently returnable until the restrictions lapse and will

not

be included in the basic earnings / (loss) per share calculation until the shares are vested.

Diluted earnings / (loss) per share gives effect to all potentially dilutive securities to the extent that they are dilutive, using the treasury stock method. The Company uses the treasury stock method for non-vested restricted shares, while for the preferred shares issued the Company uses the if-converted method to assess the dilutive effect.

Segment Reporting, Policy [Policy Text Block]

Segment reporting

The Company reports financial information and evaluates its operations by charter revenue and

not

by the type of ship employment for its customers, i.e. voyage or time charters. The Company does

not

use discrete financial information to evaluate the operating results for each such type of charter. Although revenue can be identified for these types of charters, management cannot and does

not

identify expenses, profitability or other financial information for these charters. As a result, management, including the chief operating decision maker, reviews operating results solely by revenue per day and operating results of the fleet and thus the Company has determined that it operates under

one

operating segment. Furthermore, when the Company charters a vessel to a charterer, the charterer is free to trade the vessel worldwide and, as a result, the disclosure of geographical information is impracticable.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent accounting pronouncements

In

June 2016,

the FASB issued Accounting Standards Update (“ASU”)

2016

-

13,

“Financial Instruments - Credit Losses (Topic

326

): Measurement of Credit Losses on Financial Instruments”. The main objective of this update is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The amendments in this update replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The ASU requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. In

November 2018,

FASB issued ASU

2018

-

19

“Codification Improvements to Topic

326,

Financial Instruments-Credit Losses”. The amendments in this update clarify that operating lease receivables are

not

within the scope of ASC

326

-

20

and should instead be accounted for under the new leasing standard, ASC

842.

 For public business entities, the amendments in this update are effective for fiscal years beginning after

December 15, 2019,

including interim periods within those fiscal years. Early application is permitted. The adoption of this ASU is

not

expected to have a material effect on the Company’s consolidated financial statements and accompanying notes.

In

August 2018,

the FASB issued ASU

2018

-

13,

“Fair Value Measurement (Topic

820

): Disclosure Framework – Changes to the disclosure requirements for fair value measurement”. The amendments in this update modify the disclosure requirements on fair value measurements in Topic

820,

Fair Value Measurement, based on the concepts in the Concepts Statement, including the consideration of costs and benefits. The amendments in this update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after

December 15, 2019.

The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level

3

fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted upon issuance of this update. An entity is permitted to early adopt any removed or modified disclosures upon issuance of this update and delay adoption of the additional disclosures until their effective date. The adoption of this ASU is

not

expected to have a material effect on the Company’s consolidated financial statements and accompanying notes.

XML

Note 5 - Accrued Expenses - Summary of Accrued Expenses (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Accrued payroll expenses	$ 231,093	$ 93,404
Accrued interest expense	590,216	565,623
Accrued general and administrative expenses	111,720	348,761
Accrued commissions	67,682	39,545
Other accrued expenses	724,610	254,472
Total	$ 1,725,321	$ 1,301,805

XML

Note 2 - Significant Accounting Policies (Details Textual)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Estimated Salvage Value Per Light Weight Ton of Vessel	0.25	0.25
Ship Owning Crew Contract Term (Day)	9 days
Number of Reportable Segments	1
Vessels [Member]
Property, Plant and Equipment, Useful Life (Year)	25 years

XML

Note 17 - Discontinued Operations - Results of Discontinued Operations (Details) (Parentheticals) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Drybulk Fleet [Member]
General and administrative expenses, related party		$ 731,456	$ 693,524
Discontinued Operations, Disposed of by Means Other than Sale, Spinoff [Member]
Commissions - related party		324,178	253,503
Vessel operating expenses - related party		$ 115,026	$ 102,131

XML

Note 14 - Derivative Financial Instruments - Gain or Loss on Derivatives Not Designated as Hedging Instruments (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Total net gain / (loss) on derivatives	$ (2,885)	$ (44,343)	$ 12,389
Not Designated as Hedging Instrument [Member] | Interest Rate Contracts, Unrealized (Loss) / Gain [Member]
Total net gain / (loss) on derivatives		204,647	(5,901)
Not Designated as Hedging Instrument [Member] | Freight Forward Agreements, Unrealized Gain (Loss) [Member]
Total net gain / (loss) on derivatives			(781)
Not Designated as Hedging Instrument [Member] | Interest Rate Contracts, Realized (Loss) / Gain [Member]
Total net gain / (loss) on derivatives	(2,885)	(201,745)	19,071
Not Designated as Hedging Instrument [Member] | Freight Forward Agreements, Realized Gain (Loss) [Member]
Total net gain / (loss) on derivatives		(47,245)
Not Designated as Hedging Instrument [Member] | Interest Rate Swap Contracts, Fair Value [Member]
Total net gain / (loss) on derivatives	(2,885)	2,902	13,170
Not Designated as Hedging Instrument [Member] | Freight Forward Agreements [Member]
Total net gain / (loss) on derivatives		$ (47,245)	$ (781)

XML

Note 16 - Financial Instruments - Fair Value of Company's Liabilities (Details) - Interest Rate Swap [Member]	Dec. 31, 2018 USD ($)
Interest rate swap contract, current portion	$ 41,435
Fair Value, Inputs, Level 1 [Member]
Interest rate swap contract, current portion
Fair Value, Inputs, Level 2 [Member]
Interest rate swap contract, current portion	41,435
Fair Value, Inputs, Level 3 [Member]
Interest rate swap contract, current portion

XML

Note 10 - Commitments and Contingencies (Details Textual) - USD ($)	Mar. 31, 2020	Dec. 31, 2019	Nov. 07, 2019	Dec. 31, 2018
Common Stock, Par or Stated Value Per Share (in dollars per share)	$ 0.03	$ 0.03	$ 1	$ 0.03
Future Gross Minimum Revenues Under Non-cancellable Time Charter Agreements		$ 17,200,000
Purchase of Vessels [Member]
Cash Issued Per Vessel Purchased			$ 500,000
Alterwall Business Inc. Vs. Fuel Oil Supplier [Member] | Pending Litigation [Member] | Alterwall Business Inc. [Member]
Restricted Cash and Investments, Total		530,000
Estimated Litigation Liability		$ 150,000

XML

Note 12 - Loss Per Share - Summary of Basic and Diluted Loss Per Common Share (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Net loss	$ (1,682,671)	$ (663,396)	$ (6,944,261)
Dividends to Series B preferred shares	(1,271,782)	(1,335,733)	(1,808,811)
Preferred deemed dividend	(504,577)
Net loss attributable to common shareholders, continuing operations	$ (3,459,030)	$ (1,999,129)	$ (8,753,072)
Weighted average common shares –outstanding , basic and diluted (in shares)	2,861,928	1,414,775	1,383,440
Basic and diluted loss per share, continuing operations (in dollars per share)	$ (1.21)	$ (1.41)	$ (6.33)
Net income attributable to common shareholders, discontinued operations		$ 554,506	$ 849,701
Net loss attributable to common shareholders	$ (3,459,030)	$ (1,444,623)	$ (7,903,371)
Basic and diluted loss per share (in dollars per share)	$ (1.21)	$ (1.02)	$ (5.72)
Series B Preferred Stock [Member]
Dividends to Series B preferred shares	$ (1,271,782)	$ (1,335,733)	$ (1,808,811)

XML

Note 18 - Common Stock (Details Textual)						1 Months Ended				12 Months Ended
	Dec. 19, 2019	Dec. 18, 2019	Nov. 04, 2019 shares	Nov. 21, 2018 shares	Nov. 02, 2017 shares	Oct. 31, 2019 USD ($) shares	Aug. 31, 2019 shares	Nov. 30, 2018 USD ($) shares	Jan. 31, 2017 USD ($) shares	Dec. 31, 2019 USD ($) $ / shares shares	Dec. 31, 2018 USD ($) $ / shares shares	Dec. 31, 2017 USD ($) shares	Mar. 31, 2020 $ / shares shares	Nov. 07, 2019 $ / shares
Common Stock, Shares Authorized (in shares)										200,000,000	200,000,000		200,000,000
Common Stock, Par or Stated Value Per Share (in dollars per share) | $ / shares										$ 0.03	$ 0.03		$ 0.03	$ 1
Proceeds from Issuance of Common Stock | $										$ 6,853,101	$ 1,975,110	$ 549,495
Reverse Stock Split [Member]
Stockholders' Equity Note, Stock Split, Conversion Ratio	8	8
Four Feeder Containerships [Member]
Stock Issued During Period, Shares, Purchase of Assets (in shares)							2,816,901			2,816,901
Synergy Vessels [Member]
Stock Issued During Period, Shares, Purchase of Assets (in shares)										1,056,338
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)										15,444
The 2014 Plan [Member] | Restricted Stock [Member] | The 18 Key Persons [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)				15,681	12,534						15,681	12,534
The 2014 Plan [Member] | Restricted Stock [Member] | The 17 Key Persons [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)			15,444							15,444
ATM Common Stock Offering [Member]
Stock Issued During Period, Shares, New Issues (in shares)						144,727		139,509	37,723
Proceeds from Issuance of Common Stock | $						$ 900,000		$ 2,000,000	$ 600,000

XML

Consolidated Statements of Operations (Parentheticals) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Commissions, related party	$ 493,341	$ 453,361	$ 310,467
Vessel operating expenses, related party	249,081	256,069	190,723
Other general and administrative expenses, related party	1,344,250	1,561,126	1,306,476
Net gain on sale of vessels, related party	0	64,500	70,640
Interest and other financing costs, related party	$ 84,444	$ 0	$ 0

XML

Document And Entity Information	12 Months Ended
	Dec. 31, 2019 shares
Document Information [Line Items]
Entity Registrant Name	EUROSEAS LTD.
Entity Central Index Key	0001341170
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Emerging Growth Company	false
Entity Interactive Data Current	Yes
Entity Common Stock, Shares Outstanding (in shares)	5,600,259
Entity Shell Company	false
Document Type	20-F
Document Period End Date	Dec. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Amendment Flag	false
Document Annual Report	true
Document Transition Report	false
Document Shell Company Report	false

XML

Note 12 - Loss Per Share

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Earnings Per Share [Text Block]

12. Loss Per Share

Basic and diluted loss per common share is computed as follows:

	2017		2018		2019
Income:
Net loss, continuing operations	(6,944,261	)	(663,396	)	(1,682,671	)
Dividends to Series B preferred shares	(1,808,811	)	(1,335,733	)	(1,271,782	)
Preferred deemed dividend	-		-		(504,577	)
Net loss attributable to common shareholders, continuing operations	(8,753,072	)	(1,999,129	)	(3,459,030	)
Weighted average common shares –outstanding , basic and diluted	1,383,440		1,414,775		2,861,928
Basic and diluted loss per share, continuing operations	(6.33	)	(1.41	)	(1.21	)
Net income attributable to common shareholders, discontinued operations	849,701		554,506		-
Net loss attributable to common shareholders	(7,903,371	)	(1,444,623	)	(3,459,030	)
Basic and diluted loss per share	(5.72	)	(1.02	)	(1.21	)

During

2017,

2018

and

2019,

the effect of the non-vested stock awards and of Series B Preferred Shares was anti-dilutive. The number of dilutive securities was

nil

shares in

2017,

2018

and

2019.

XML

Note 2 - Significant Accounting Policies

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Significant Accounting Policies [Text Block]

2. Significant Accounting Policies

The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America. The following are the significant accounting policies adopted by the Company:

Principles of consolidation

The accompanying consolidated financial statements include the accounts of Euroseas Ltd. and its subsidiaries. Inter-company balances and transactions are eliminated on consolidation.

Use of estimates

The preparation of the accompanying consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the consolidated financial statements, and the stated amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Other comprehensive income / (loss)

The Company has

no

other comprehensive income / (loss) and accordingly comprehensive income / (loss) equals net income / (loss) for all periods presented. As such,

no

statement of comprehensive income / (loss) has been presented.

Foreign currency translation

The Company’s functional currency as well as the functional currency of all its subsidiaries is the U.S. dollar. Assets and liabilities denominated in foreign currencies are translated into U.S. dollars at exchange rates prevailing at the balance sheet date. Income and expenses denominated in foreign currencies are translated into U.S. dollars at exchange rates prevailing at the date of the transaction. The resulting exchange gains and/or losses on settlement or translation are included in the accompanying consolidated statements of operations.

Cash equivalents

Cash equivalents are cash in bank accounts, time deposits or other certificates purchased with an original maturity of

three

months or less.

Restricted cash

Restricted cash reflects deposits with certain banks that can only be used to pay the current loan installments or are required to be maintained as a certain minimum cash balance per mortgaged vessel and amounts that are pledged, blocked or held as cash collateral.

Trade accounts receivable

The amount shown as trade accounts receivable, at each balance sheet date, includes estimated recoveries from each voyage or time charter. At each balance sheet date, the Company provides for doubtful accounts on the basis of specific identified doubtful receivables.

Inventories

Inventories are stated at the lower of cost and net realizable value, which is the estimated selling prices less reasonably predictable costs of disposal and transportation. Inventories are valued using the FIFO (First-In First-Out) method.

Vessels

Vessels are stated at cost, which comprises the vessel contract price, costs of major repairs and improvements upon acquisition, direct delivery and other acquisition expenses, less accumulated depreciation and impairment, if any. Subsequent expenditures for conversions and major improvements are also capitalized when they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels; otherwise these amounts are charged to expense as incurred.

Vessels under construction are presented at cost, which includes shipyard installment payments and other vessel costs incurred during the construction period that are directly attributable to the construction of the vessels, including interest costs incurred during the construction period.

Expenditures for vessel repair and maintenance are charged against income in the period incurred.

Assets Held for Sale 

The Company

may

dispose of certain of its vessels when suitable opportunities occur, including prior to the end of their useful lives. The Company classifies assets as being held for sale when the following criteria are met: (i) management is committed to sell the asset; (ii) the asset is available for immediate sale in its present condition; (iii) an active program to locate a buyer and other actions required to complete the plan to sell the asset have been initiated; (iv) the sale of the asset is probable, and transfer of the asset is expected to qualify for recognition as a completed sale within

one

year; (v) the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (vi) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

Long-lived assets classified as held for sale are measured at the lower of their carrying amount or fair value less the cost to sell the asset. These assets are

no

longer depreciated once they meet the criteria of being held for sale.

Depreciation

Depreciation is calculated on a straight line basis over the estimated useful life of the vessel with reference to the cost of the vessel, and estimated scrap value. Remaining useful lives of vessels are periodically reviewed and revised to recognize changes in conditions and such revisions, if any, are recognized over current and future periods. The Company estimates that its vessels have a useful life of

25

years from the completion of their construction. When regulations place limitations over the ability of a vessel to trade on a worldwide basis, its remaining useful life is adjusted at the date such regulations are adopted. The estimated salvage value of each vessel is

$0.25

per light weight ton as of

December 31, 2019

and

2018,

which is based on the historical average demolition prices.

Insurance claims and insurance proceeds

Claims receivable are recorded on the accrual basis and represent the amounts to be received, net of deductibles incurred through each balance sheet date, for which recovery from insurance companies is probable and the claim is

not

subject to litigation. Any remaining costs to complete the claims are included in accrued liabilities. Insurance proceeds are recorded according to type of claim that gives rise to the proceeds in the consolidated statements of operations and the consolidated statements of cash flow.

Revenue and expense recognition

Revenues are generated from time charters and voyage charters. Under a time charter agreement a contract is entered into for the use of a vessel for a specific period of time and a specified daily charter hire rate. Under a voyage charter agreement, a contract is made in the spot market for the use of a vessel for a specific voyage to transport a specified agreed upon cargo at a specified freight rate per ton or occasionally a lump sum amount. Under a voyage charter agreement, the charter party generally has a minimum amount of cargo and the charterer is liable for any short loading of cargo or "dead" freight.

In

February 2016,

the FASB issued ASU

No.

2016

-

02,

“Leases (Topic

842

)”, which amends the existing accounting standard for lease accounting and adds additional disclosures about leasing arrangements. ASC

842

requires lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by most leases, while lessor accounting remains largely unchanged. ASC

842,

as amended, subject to certain transition relief options, allows a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, or allows entities to elect

not

to recast the comparative periods presented when transitioning to ASC

842

and to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. ASC

842

also provides a practical expedient to lessors by class of underlying asset, to

not

separate non lease components from the associated lease component, similar to the expedient provided for lessees, when the following criteria are met: i) the timing and pattern of transfer for the lease

component is the same as those for the non-lease component associated with that lease component and (ii) the lease component, if accounted for separately, would be classified as an operating lease. ASC

842

is effective for public entities with reporting periods beginning after

December 15, 2018,

including interim periods within those fiscal periods. The Company adopted ASC

842

for its reporting period commencing

January 1, 2019

and has elected to use the optional new transition method that results in initial recognition of a cumulative effect adjustment to retained earnings in the year of adoption. As a result, prior periods as reported by the Company, have

not

been impacted by the adoption.

A time charter is a contract for the use of a vessel for a specific period of time and a specified daily charter hire rate, which is generally payable in advance. Time charter revenue is recognized when a charter agreement exists, the vessel is made available to the charterer and collection of the related revenue is reasonably assured. As of

December 31, 2019,

all of the Company’s vessels are employed under time charters with remaining terms ranging from less than

one

month to

12

months based on the minimum duration of the time charter contracts and certain time charter contracts include renewal options for terms ranging from

8

months to

23

months. A time charter generally provides typical warranties and owner protective restrictions. The Company’s time charter agreements are classified as operating leases pursuant to ASC

842,

because (i) the vessel is an identifiable asset, (ii) the Company does

not

have substantive substitution rights and (iii) the charterer has the right to control the use of the vessel, during the term of the contract, and derives the economic benefits from such use. In a time charter contract, the Company is responsible for all the costs incurred for running the vessel such as crew costs, vessel insurance, repairs and maintenance and lubes. The charterer bears the voyage related costs such as bunker expenses, port charges and canal tolls during the hire period.

As discussed above, the transition guidance associated with ASC

842

allows for certain practical expedients to lessors. The Company elected

not

to separate the lease and non-lease components included in the time charter revenue because the pattern of revenue recognition for the lease and non-lease components (included in the daily hire rate) is the same and the lease component, if accounted for separately, would be classified as an operating lease. The nature of the lease component and non-lease component that are combined as a result of applying the respective practical expedient are the hire rate for a bareboat charter as well as the compensation for expenses incurred running the vessel such as crewing expense, repairs, insurance, maintenance and lubricants, respectively. The lease component is the predominant component and the Company accounts for the combined component as an operating lease in accordance with Topic

842.

Both the lease component and non-lease component are earned by the passage of time. Since lessor accounting remains largely unchanged from previous U.S. GAAP, upon adoption of ASC

842,

the timing and recognition of earnings from time charter contracts to which the Company is party did

not

change from prior policy, with the exception of ballast bonuses which were recognized during the ballast leg while they are now deferred and recognized over time during the charter period. The performance obligations in a time charter contract are recognized on a straight-line basis over the term of the respective time charter agreements, beginning when the vessel is delivered to the charterer until it is redelivered back to the Company, and is recorded in “Time charter revenue” in the consolidated statements of operations for the years ended

December 31, 2017,

2018

and

2019.

Voyage charter agreements are considered service contracts that fall under the provisions of ASC

606,

because the Company as the shipowner retains the control over the operation of the vessel such as directing the routes taken or the vessel speed. The Company considered the provisions of ASC

842

and determined that its voyage charter agreements do

not

contain a lease because the charterer under such contracts does

not

have the right to control the use of the vessel since the Company, as the ship-owner, retains control over the operations of the vessel, provided also that the terms are pre-determined and any change requires the Company’s consent. The Company accounts for a voyage charter when all the following criteria are met: (i) the parties to the contract have approved the contract in the form of a written charter agreement or fixture recap and are committed to perform their respective obligations, (ii) the Company can identify each party’s rights regarding the services to be transferred, (iii) the Company can identify the payment terms for the services to be transferred, (iv) the charter agreement has commercial substance (that is, the risk, timing, or amount of the future cash flows is expected to change as a result of the contract) and (v) it is probable that the Company will collect substantially all of the consideration to which it will be entitled in exchange for the services that will be transferred to the charterer. The Company has determined that there is

one

single performance obligation for each of its voyage contracts, which is to provide the charterer with an integrated transportation service within a specified time period. In addition, the Company has concluded that a contract for a voyage charter meets the criteria to recognize revenue over time because the charterer simultaneously receives and consumes the benefits of the Company’s performance as the Company performs. Therefore, since the Company’s performance obligation under each voyage contract is met evenly as the voyage progresses, revenue is recognized on a straight line basis over the voyage days from the loading of cargo to its discharge. The majority of revenue from voyage charter agreements is usually collected in advance.

Demurrage income is included in Voyage charter revenues, represents revenue earned from the charterer when loading or discharging time exceeded the stipulated time in the voyage charter agreement and is recognized when earned and collection is reasonably assured. Demurrage income for the years ended

December 31, 2017,

2018

and

2019

was

not

material.

Charter fees received in advance are recorded as a liability (deferred revenue) until charter services are rendered.

Vessel operating expenses are comprised of all expenses relating to the operation of the vessels, including crewing, insurance, repairs and maintenance, stores, lubricants, spares and consumables, professional and legal fees and miscellaneous expenses. Vessel operating expenses are recognized as incurred; payments in advance of services or use are recorded as prepaid expenses. Under voyage charter agreements, voyage expenses relate to bunkers, port charges, canal tolls, and agency fees and are all paid by the Company. Costs incurred prior to loading which are directly related to the voyage are deferred by the Company if they meet certain conditions, and are amortized over the duration of the voyage from load port to discharge port. Costs incurred during the voyage are expensed as incurred. Under time charter agreements, voyage expenses which are also recognized as incurred by the Company include costs for draft surveys, holds cleaning, postage, extra war risk insurance and other minor miscellaneous expenses related to the voyage. The charterer is responsible for paying the cost of bunkers and other voyage expenses whilst the vessel is on time charter. Certain voyage expenses paid by the Company, such as extra war risk insurance and holds cleaning

may

be recovered from the charterer; such amounts recovered are recorded as other income within time charter revenue.

Commissions (address and brokerage), regardless of charter type, are always paid by the Company, are deferred and amortized over the related charter period and are presented as a separate line item in revenues to arrive at net revenues in the accompanying consolidated statements of operations.

Dry-docking and special survey expenses

Dry-docking and special survey expenses are expensed as incurred.

Pension and retirement benefit obligations – crew

The ship-owning companies contract the crews on board the vessels under short-term contracts (usually up to

9

months). Accordingly, they are

not

liable for any pension or post-retirement benefits.

Financing costs

Loan arrangement fees are deferred and amortized to interest expense over the duration of the underlying loan using the effective interest method. Unamortized fees relating to loans repaid or refinanced are expensed in the period the repayment or refinancing occurs.

Offering expenses

Deferred offering expenses are charged against paid-in capital when financing is completed or expensed to “General and administrative expenses” in the consolidated statements of operations when the offering is aborted.

Fair value of above/below market time charters acquired

The Company records all identified tangible and intangible assets or any liabilities associated with the acquisition of a vessel at fair value. Where vessels are acquired with existing time charters, the Company determines the present value of the difference between: (i) the contractual charter rate and (ii) the prevailing market rate for a charter of equivalent duration. In discounting the charter rate differences in future periods, the Company uses its Weighted Average Cost of Capital (WACC) adjusted to account for the credit quality of the counterparties, as deemed necessary. The capitalized above-market (assets) and below-market (liabilities) charters are amortized as a reduction and increase, respectively, to time charter revenues over the remaining term of the assumed time charter.

Stock incentive plan awards

Share-based compensation represents vested and non-vested restricted shares granted to officers and directors as well as to non-employees and are included in “General and administrative expenses” in the consolidated statements of operations. In

June 2018,

the FASB issued ASU 

2018

-

07,

Improvements to Nonemployee Share-Based Payment Accounting (Topic

718

). ASU 

2018

-

07

simplifies the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. Following the adoption of this ASU, the shares to employees and directors as well as to non-employees are measured at their fair value equal to the market value of the Company's common stock on the grant date. The shares that do

not

contain any future service vesting conditions are considered vested shares and the total fair value of such shares is expensed on the grant date. The shares that contain a time-based service vesting condition are considered non-vested shares on the grant date and the total fair value of such shares is recognized on a straight-line basis over the requisite service period. Prior to the adoption of this ASU, the fair value of the awards granted to non-employees was measured at the fair value at each reporting period until the non-vested shares vested and performance was complete.

Impairment of long-lived assets

The Company reviews its long-lived assets held for use and their related intangible assets and liabilities for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets

may

not

be recoverable. If indicators of impairment are present, the Company performs an analysis of the future undiscounted net operating cash flows of the related long-lived assets. When the estimate of future undiscounted net operating cash flows, excluding interest charges, expected to be generated by the use and eventual disposition of the asset is less than its carrying amount, the Company evaluates the asset for an impairment loss. Measurement of the impairment loss is based on the fair value of the asset. In this respect, management regularly reviews the carrying amount of the vessels in connection with the estimated recoverable amount for each of the Company’s vessels.

Derivative financial instruments

Derivative instruments are recorded in the balance sheet as either an asset or liability measured at its fair value with changes in the instruments' fair value recognized as either a component in other comprehensive income if specific hedge accounting criteria are met in accordance with guidance relating to “Derivatives and Hedging” or in earnings if hedging criteria are

not

met.

Preferred shares

Preferred shares are recorded at the initial consideration received less offering expenses and adjusted by including the redemption value of dividends paid in-kind. The Company recognizes changes in the redemption value of the preferred shares immediately as they occur and adjusts the carrying amount of the preferred shares to equal the redemption value at the end of each reporting period to that effect.

Evaluation of purchase transactions

When the Company enters into an acquisition transaction, it determines whether the acquisition transaction was for the purchase of an asset or a business based on the facts and circumstances of the transaction. In accordance with ASU

No.

2017

-

01,

Business Combinations (Topic

805

): Clarifying the Definition of a Business, if substantially all of the fair value of the gross assets acquired in an acquisition transaction are concentrated in a single identifiable asset or group of similar identifiable assets, then the set is

not

a business. To be considered a business, a set must include an input and a substantive process that together significantly contributes to the ability to create an output. All assets acquired and liabilities assumed in a business combination are measured at their acquisition-date fair values. For asset acquisitions, the cost of the acquisition is allocated to individual assets and liabilities on a relative fair value basis. Acquisition costs associated with business combinations are expensed as incurred. Acquisition costs associated with asset acquisitions are capitalized.

Earnings / (loss) per common share

Basic earnings / (loss) per share is computed by dividing net income / (loss) attributable to common shareholders, after the deduction of dividends paid (in cash or in-kind) to preferred shareholders, by the weighted-average number of common shares outstanding during the period. The weighted-average number of common shares outstanding does

not

include any potentially dilutive securities or any non-vested restricted shares of common stock. These non-vested restricted shares, although classified as issued and outstanding as of

December 31, 2018

and

2019,

are considered contingently returnable until the restrictions lapse and will

not

be included in the basic earnings / (loss) per share calculation until the shares are vested.

Diluted earnings / (loss) per share gives effect to all potentially dilutive securities to the extent that they are dilutive, using the treasury stock method. The Company uses the treasury stock method for non-vested restricted shares, while for the preferred shares issued the Company uses the if-converted method to assess the dilutive effect.

Segment reporting

The Company reports financial information and evaluates its operations by charter revenue and

not

by the type of ship employment for its customers, i.e. voyage or time charters. The Company does

not

use discrete financial information to evaluate the operating results for each such type of charter. Although revenue can be identified for these types of charters, management cannot and does

not

identify expenses, profitability or other financial information for these charters. As a result, management, including the chief operating decision maker, reviews operating results solely by revenue per day and operating results of the fleet and thus the Company has determined that it operates under

one

operating segment. Furthermore, when the Company charters a vessel to a charterer, the charterer is free to trade the vessel worldwide and, as a result, the disclosure of geographical information is impracticable.

Recent accounting pronouncements

In

June 2016,

the FASB issued Accounting Standards Update (“ASU”)

2016

-

13,

“Financial Instruments - Credit Losses (Topic

326

): Measurement of Credit Losses on Financial Instruments”. The main objective of this update is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The amendments in this update replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The ASU requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. In

November 2018,

FASB issued ASU

2018

-

19

“Codification Improvements to Topic

326,

Financial Instruments-Credit Losses”. The amendments in this update clarify that operating lease receivables are

not

within the scope of ASC

326

-

20

and should instead be accounted for under the new leasing standard, ASC

842.

 For public business entities, the amendments in this update are effective for fiscal years beginning after

December 15, 2019,

including interim periods within those fiscal years. Early application is permitted. The adoption of this ASU is

not

expected to have a material effect on the Company’s consolidated financial statements and accompanying notes.

In

August 2018,

the FASB issued ASU

2018

-

13,

“Fair Value Measurement (Topic

820

): Disclosure Framework – Changes to the disclosure requirements for fair value measurement”. The amendments in this update modify the disclosure requirements on fair value measurements in Topic

820,

Fair Value Measurement, based on the concepts in the Concepts Statement, including the consideration of costs and benefits. The amendments in this update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after

December 15, 2019.

The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level

3

fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted upon issuance of this update. An entity is permitted to early adopt any removed or modified disclosures upon issuance of this update and delay adoption of the additional disclosures until their effective date. The adoption of this ASU is

not

expected to have a material effect on the Company’s consolidated financial statements and accompanying notes.

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Note 4 - Vessels, Net

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

4. Vessels, net

The amounts in the accompanying consolidated balance sheets are as follows:

Balance, January 1, 2018	61,279,976	(9,147,897	)	52,132,079
-   Depreciation for the year	-	(3,305,951	)	(3,305,951	)
Balance, December 31, 2018	61,279,976	(12,453,848	)	48,826,128
-   Depreciation for the year	-	(4,178,886	)	(4,178,886	)
-   Vessel acquisitions	71,214,470	-		71,214,470
-   Vessel improvements	368,621	-		368,621
Balance, December 31, 2019	132,863,067	(16,632,734	)	116,230,333

Vessel improvements refer to the installation of Water Ballast Treatment (“WBT”) systems. As of

December 31, 2019,

only

one

vessel has completed the installation of the WBT system with a total cost of

$0.37

million.

The Company considers the potential sale of its vessels, for scrap or further trading, depending on a vessel’s age, any additional capital expenditures required the expected revenues from continuing to own the vessel and the overall market prospects.

On

January 13, 2017,

the Company agreed to sell for scrap M/V “RT Dagr”, for a net price of

$2.3

million. The vessel was delivered to its buyers on

January 31, 2017.

The Company recorded a gain on sale of approximately

$0.5

million presented in the “Net gain on sale of vessels” line in the “Operating Expenses” section of the consolidated statements of operations.

On

September 30, 2017

the Company decided to sell for scrap M/V “Aggeliki P.” a

2,008

teu

1998

-built container carrier and M/V “Monica P” a

46,667

dwt

1998

-built drybulk carrier. Both vessels were written down to their fair market value, resulting in a non-cash loss of

$4.6

million, or

$3.36

loss per share basic and diluted. These amounts are presented in the "Loss on write-down of vessels held for sale" line in the "Operating Expenses" section of the consolidated statements of operations. The Company sold M/V “Aggeliki P.” on

December 6, 2017

for net proceeds of approximately

$4.4

million and recorded a gain on sale of approximately

$0.3

million for the year ended

December 31, 2017,

presented in the “Net gain on sale of vessels” line in the "Operating Expenses" section of the consolidated statements of operations. M/V “Monica P” was sold on

June 25, 2018.

The sale resulted in a gain of

$1.34

million for the year ended

December 31, 2018,

which is presented in the “Net gain on sale of vessels” line in the "Operating Expenses" section of the consolidated statements of operations.

On

June 20, 2017

the Company acquired the feeder containership (

2,788

teu,

2004

-built) M/V “EM Astoria” for a purchase price of

$4.75

million.

On

September 29, 2017

the Company acquired the feeder containership (

2,506

teu,

2000

-built) M/V “EM Athens” for a purchase price of

$4.24

million.

On

October 23, 2017

the Company acquired the feeder containership (

2,506

teu,

2000

-built) M/V “EM Oinousses” for a purchase price of

$4.25

million.

On

October 29, 2017

the Company acquired the feeder containership (

2,556

teu,

2001

-built) M/V “EM Corfu” for a purchase price of

$5.66

million.

On

December 21, 2017

the Company acquired the intermediate containership (

5,610

teu,

2001

-built) M/V “Akinada Bridge” for a purchase price of

$11.12

million.

On

August 2, 2019

the Company acquired the feeder containership (

1,740

teu,

2005

-built) M/V “EM Hydra” and its attached time charter for a purchase price of

$6.73

million.

On

August 2, 2019

the Company acquired the feeder containership (

2,008

teu,

1998

-built) M/V “Diamantis P” for a purchase price of

$5.22

million.

On

August 7, 2019

the Company acquired the feeder containership (

3,100

teu,

2007

-built) M/V “EM Kea” and its attached time charter for a purchase price of

$9.48

million.

On

August 7, 2019

the Company acquired the feeder containership (

1,740

teu,

2007

-built) M/V “EM Spetses” and its attached time charter for a purchase price of

$7.57

million.

On

November 19, 2019

the Company acquired the intermediate containership (

4,253

teu,

2008

-built) M/V “Synergy Antwerp” for a purchase price of

$10.11

million.

On

November 18, 2019

the Company acquired the intermediate containership (

4,253

teu,

2009

-built) M/V “Synergy Keelung” for a purchase price of

$11.44

million.

On

November 19, 2019

the Company acquired the intermediate containership (

4,253

teu,

2009

-built) M/V “Synergy Oakland” for a purchase price of

$10.50

million.

On

November 21, 2019

the Company acquired the intermediate containership (

4,253

teu,

2009

-built) M/V “Synergy Busan” for a purchase price of

$10.17

million.

The Company performed the undiscounted cash flow test as of

December 31, 2018

and

2019

for those operating vessels whose carrying values were above their respective market values and determined that the net book value of its vessels held for use was recoverable.

All the Company’s vessels have been mortgaged as security for the Company’s loans (refer Note

8

).

XML

Note 8 - Long-term Bank Loans

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Long-term Debt [Text Block]

8. Long-Term Bank Loans

This consists of bank loans of the ship-owning companies and is as follows:

Borrower		December 31, 2018		December 31, 2019
Noumea Shipping Ltd.	(a)	3,341,000		-
Gregos Shiping Ltd.	(b)	4,150,000		-
Alterwall Business Inc. / Allendale Investments S.A. / Manolis Shipping Ltd. / Joanna Maritime Ltd. / Jonathan John Shipping Ltd. / Athens Shipping Ltd. / Oinousses Navigation Ltd. / Corfu Navigation Ltd. / Bridge Shipping Ltd. / Noumea Shipping Ltd. / Gregos Shiping Ltd.	(c)	30,000,000		37,650,000
Diamantis Shipowners Ltd.	(d)	-		3,507,220
Kea Shipowners Ltd. / Spetses Shipowners Ltd. / Hydra Shipowners Ltd.	(e)	-		12,050,000
Antwerp Shipping Ltd. / Busan Shipping Ltd. / Keelung Shipping Ltd. / Oakland Shipping Ltd.	(f)	-		32,000,000
		37,491,000		85,207,220
Less: Current portion		(5,212,000	)	(12,541,840	)
Long-term portion		32,279,000		72,665,380
Deferred charges, current portion		125,357		246,520
Deferred charges, long-term portion		237,848		477,595
Debt discount, current portion		216,402		-
Debt discount, long-term portion		324,603		-
Long-term bank loans, current portion net of deferred charges and debt discount		4,870,241		12,295,320
Long-term bank loans, long-term portion net of deferred charges and debt discount		31,716,549		72,187,785
Loan from related party, current
Euroseas Ltd.	(g)	-		5,000,000

The future annual loan repayments are as follows:

To December 31:
2020	12,541,840
2021	29,941,840
2022	8,723,540
2023	34,000,000
Total	85,207,220

(a) On December 22, 2016, the supplemental agreement between Credit Agricole and Noumea Shipping Ltd., owner of M/V “Evridiki G” was signed in order to refinance the final quarterly instalment of $720,000 and the balloon payment of $6,360,000 originally due in December 2016. The borrower and the lender agreed to amend the repayment profile in respect of the loan of which $7,080,000 remained outstanding as of the date of the supplemental agreement and to extend the final maturity date to January 2018. The loan will be repaid with three repayments of $720,000 each, due in December 2016, in July 2017 and in January 2018 together with the balloon payment of $4,920,000 due in January 2018. On February 27, 2018, the Company signed and drew a term loan facility of $4,250,000 with Credit Agricole in order to partly refinance the existing indebtedness of M/V “Evridiki G” with the bank. The loan was payable in thirteen consecutive quarterly instalments of $303,000 each and a final instalment in the amount of $311,000. The margin of the loan was 3.00% above LIBOR. The loan was secured with the following: (i) first priority mortgages over M/V “Evridiki G” and collateral vessel (M/V “EM Astoria”), (ii) first assignment of earnings and insurance and (iii) other covenants and guarantees similar to the remaining loans of the Company. The Company completed the refinancing of the specific loan using its revolving loan facility with Eurobank Ergasias S.A., as explained in note (c) below.

(b) On June 15, 2017, the Company signed a term loan facility with Credit Agricole and on June 19, 2017 a loan of $4,750,000 was drawn by Gregos Shipping Ltd. to partly finance the acquisition of M/V “EM Astoria”. The loan was payable in twenty or sixteen consecutive equal quarterly installments of $100,000 plus a balloon amount of $2,750,000 or $3,150,000. The margin of the loan was 2.65% above LIBOR. The loan was secured with (i) first priority mortgage over M/V “EM Astoria”, (ii) first assignment of earnings and insurance of M/V “EM Astoria”, (iii) a corporate guarantee of Euroseas Ltd. and other covenants and guarantees similar to remaining loans of the Company. The Company paid a loan arrangement fee of $50,000 in 2017 for this loan. The Company had also entered into a profit sharing agreement with Credit Agricole whereby it would share with the bank, 35% of the excess of the fair market value of the vessel over the outstanding loan when the vessel was sold or when the loan matured. As a result of the lender's entitlement to participate in the appreciation of the market value of the mortgaged vessel, the Company recognized a participation liability of an amount of $1,067,500 as of December 31, 2018, presented in "Vessel profit participation liability" in the consolidated balance sheets, with a corresponding debit to a debt discount account, presented contra to the loan balance. In addition, 35% of the cash flow after debt service would be set aside and be used to repay the balloon payment with any excess funds to be paid to the bank. The Company completed the refinancing of the specific loan in June 2019 using its revolving loan facility with Eurobank Ergasias S.A., as explained in note (c) below, with the final participation liability paid amounting to $950,000 included in the “Repayment of long-term bank loans and vessel profit participation liability” in the consolidated statement of cash flows. The portion of debt discount remaining unamortized at the time of the refinancing was written-off and presented as “Loss on debt extinguishment” in the consolidated statement of operations, partly offset by the lower amount of $950,000 at which the vessel profit participation liability was finally settled as described above.

(c) On November 21, 2018, the Company signed a reducing revolving credit facility with Eurobank Ergasias S.A (the “Lender”) for an amount of up to $45,000,000. A loan of $30,000,000 was drawn on November 21, 2018 by Alterwall Business Inc., Allendale Investments S.A., Manolis Shipping Ltd., Joanna Maritime Ltd., Jonathan John Shipping Ltd., Athens Shipping Ltd., Oinousses Navigation Ltd., Corfu Navigation Ltd. and Bridge Shipping Ltd. to fully refinance all of the Company’s existing facilities with this bank and provide working capital. The revolving tranche will be available for a period of 18 months from signing of the loan agreement for the purpose of partly financing new vessel acquisitions or providing working capital and can be renewed subject to the bank’s approval and a fee to be determined. The loan is payable in 12 equal consecutive quarterly principal installments of $900,000 and the balance will be repaid through balloon payment of $19,200,000 together with the last principal installment in November 2021. Each quarterly principal instalment paid is added to the revolving tranche and may be redrawn. The interest rate margin is 3.90% over LIBOR, reduced from 4.40% as described below. The loan is secured with (i) first priority mortgages over M/V “Ninos”, M/V “Kuo Hsiung”, M/V “Aegean Express”, M/V “Manolis P.” M/V “Joanna”, M/V “EM Athens”, M/V “EM Oinousses”, M/V “EM Corfu” and M/V “Akinada Bridge”, (ii) first assignment of earnings and insurance of the aforementioned vessels, (iii) a corporate guarantee of Euroseas Ltd. and other covenants and guarantees similar to the remaining loans of the Company. The Company has the option (at the Lender’s absolute discretion) to substitute a mortgaged vessel by notifying the Lender in writing at least one ( 1 ) month prior to the intended substitution date, provided that: a) the substitute vessel is of a similar type, of the same or younger age, having the same or enhanced characteristics (including, without limitation, deadweight, lightweight, shipyard pedigree and technical specifications) and will be 100% owned by a shipowning company, incorporated in a jurisdiction acceptable to the Lender and owned by a ship owning company owned by the Company (directly or indirectly) and b) the new shipowning company provides a first preferred mortgage over the new vessel and a corporate guarantee in favor of the Lender and executes any other security documentation as may be requested by the Lender at its discretion. The Company paid loan arrangement fees of $300,000 within 2018 for this tranche.

On

May 30, 2019,

the Lender made available to the Company

two

new ship-related (M/V “EM Astoria” and M/V “Evridiki G”) advances totaling

$12.0

million or

55%

of the aggregate market value of the

two

aforementioned vessels, with a simultaneous reduction of the margin of the loan, from

4.40%

to

3.90%

per annum. The borrower also agreed, during the remaining facility period, to reduce the amount held as cash collateral from

$5.0

million to

$1.0

million and release the balance in favor of the borrower. The loan was used to refinance the existing facilities of Noumea Shipping Ltd. and Gregos Shiping Ltd. and to provide working capital. The loan is payable in

16

equal consecutive quarterly principal installments of

$375,000

and the balance will be repaid through a balloon payment of

$6,000,000

together with the last principal installment in

May 2023.

The loan is secured with (i)

first

priority mortgages over M/V “Evridiki G” and M/V “EM Astoria”, (ii)

first

assignment of earnings and insurance of the aforementioned vessels, (iii) a corporate guarantee of Euroseas Ltd. and other covenants and guarantees similar to the remaining loans of the Company. The Company paid a loan arrangement fee of

$32,000

within

2019

for this tranche.

The security cover ratio covenant for the facility is set to

140%.

The remaining

$7,350,000

of the revolving facility, after including principal repayments up to

December 31, 2019,

remains available to the company in order to finance up to

55%

of the market value of post

2001

-built ships. The new tranches will be repaid through

sixteen

quarterly principal instalments with the amount of each such instalment being equal to such amount so that the balloon amount to be equal to

50%

of the initially drawn relevant tranche. The undrawn amounts available under the revolving facility pay an annual commitment of

0.40%

and any amount drawn will pay a

1%

underwriting fee.

(d) On July 29, 2019, the Company signed a term loan facility with Piraeus Bank S.A. for an amount not exceeding the lesser between $4,000,000 and 90% of the scrap value pf M/V “Diamantis P”. On July 31, 2019, a loan of $3,667,680 was drawn by Diamantis Shipping Ltd. to partly finance the acquisition of M/V “Diamantis P”. The loan is payable in twelve equal consecutive quarterly instalments of $160,460 plus a balloon amount of $1,742,160 paid together with the last instalment in July 2022. The margin of the loan is 3.50% over LIBOR. The loan is secured with (i) first priority mortgage over M/V “Diamantis P”, (ii) first assignment of earnings and insurance of M/V “Diamantis P”, (iii) a corporate guarantee of Euroseas Ltd. and other covenants and guarantees similar to remaining loans of the Company. The Company paid a loan arrangement fee of $32,000 within 2019 for this loan. The security cover ratio covenant for the facility is set to 110% until the first anniversary of the drawdown date and 120% thereafter.

(e) On July 30, 2019, the Company signed a term loan facility with HSBC Bank plc. for an amount of $12,500,000. The loan was used to partly finance the acquisition of M/V “EM Hydra”, M/V “EM Kea” and M/V “EM Spetses”. The loan was drawn in tranches upon the delivery of each vessel to the Company with the last drawdown taking place on August 8, 2019.The loan is payable in fourteen consecutive equal quarterly installments of $450,000 and a balloon payment of $6,200,000 paid with the last instalment in February 2023. The loan bears interest at LIBOR plus a margin of 2.95%. The loan is secured with (i) first priority mortgages over M/V “EM Hydra”, M/V “EM Kea” and M/V “EM Spetses” (ii) first assignment of earnings and insurance of the abovementioned vessels, (iii) a corporate guarantee of Euroseas Ltd. and other covenants and guarantees similar to the remaining loans of the Company. The Company paid loan arrangement fees of $62,500 within 2019 for this loan. The security cover ratio covenant for the facility is set to 130%.

(f) On November 8, 2019, the Company signed a term loan facility with Piraeus Bank S.A. for an amount of $32,000,000. The loan was used to partly finance the acquisition of M/V “Synergy Antwerp”, M/V “Synergy Busan”, M/V “Synergy Keelung” and M/V “Synergy Oakland”. The loan was drawn in tranches upon the delivery of each vessel to the Company with the last drawdown taking place on November 18, 2019. The loan is payable in three consecutive equal quarterly instalments of $1,400,000 followed by thirteen consecutive equal quarterly instalments of $800,000 and a balloon payment of $17,400,000 paid with the last instalment. The loan bears interest at LIBOR plus a margin of 3.50%. The loan is secured with (i) first priority mortgages over M/V “Synergy Antwerp”, M/V “Synergy Busan”, M/V “Synergy Keelung” and M/V “Synergy Oakland” (ii) first assignment of earnings and insurance of the abovementioned vessels, (iii) a corporate guarantee of Euroseas Ltd. and other covenants and guarantees similar to the remaining loans of the Company. The Company paid loan arrangement fees of $352,000 within 2019 for this loan. The security cover ratio covenant for the facility is set to 125%.

(g) On September 30, 2019, Euroseas signed an agreement with Colby Trading Ltd., a company controlled by the Pittas family and affiliated with the Company’s Chief Executive Officer, as further supplemented on December 20,2019 and March 30, 2020, to draw down a $2.5 million loan to finance the special survey and WBT system installation on M/V “Akinada Bridge”. Interest on the loan is 8% per annum and is payable quarterly. Euroseas will repay the loan in four repayment instalments of a principal amount of $625,000 each. The first repayment instalment will be due on May 15, 2020 and the remaining three instalments will be paid on a quarterly basis thereafter and the loan will be paid in full by November 2020 . Under certain circumstances, the Company can pay principal in equity, and the loan is convertible in common stock of the Company at the option of the lender at certain times. The first instalment of $312,500 payable on December 31,

2019

was waived by the lender and will be paid at the maturity of the loan. The Company paid

$51,111

in interest for this loan for the fiscal year

2019.

On

November 1, 2019,

Euroseas signed a

second

agreement with Colby Trading Ltd. to draw another

$2.5

million loan to finance working capital needs. Interest on the loan is

8%

per annum and is payable quarterly. There are

no

principal repayments until

December 31, 2020,

when the loan matures. Under certain circumstances, the Company can pay principal in equity, and the loan is convertible in common stock of the Company at the option of the lender at certain times. The Company paid

$33,333

in interest for this loan for the fiscal year

2019.

In addition to the terms specific to each loan described above, all the above loans are secured with a pledge of all the issued shares of each borrower.

The loan agreements also contain covenants such as minimum requirements regarding the hull ratio cover (the ratio of fair value of vessel to outstanding loan less cash in retention accounts ranging from

120%

to

140%

), restrictions as to changes in management and ownership of the ship-owning companies, distribution of profits or assets (i.e.

not

permitting dividend payment or other distributions in cases that an event of default has occurred), additional indebtedness and mortgage of vessels without the lender’s prior consent, sale of vessels, maximum fleet-wide leverage, sale of capital stock of our subsidiaries, ability to make investments and other capital expenditures, entering in mergers or acquisitions, minimum cash balance requirements and minimum cash retention accounts (restricted cash). The loan agreements also require the Company to make deposits in retention accounts with certain banks that can only be used to pay the current loan instalments. Minimum cash balance requirements are in addition to cash held in retention accounts. These cash deposits amounted to

$5,717,063

and

$4,410,376

as of

December 31, 2018

and

2019,

respectively, and are included in “Restricted cash” under “Current assets” and “Long-term assets” in the consolidated balance sheets. As of

December 31, 2019,

all the debt covenants are satisfied.

Interest expense for the years ended

December 31, 2017,

2018

and

2019

amounted to

$1,380,458,

$2,703,845

and

$3,219,471

respectively.

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Note 14 - Derivative Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block]

Derivatives not designated as hedging instruments	Balance Sheet Location	December 31, 2018	December 31, 2019
Interest rate swap contract	Current liabilities – Derivatives	41,435	-
Total derivative liabilities		41,435	-

Derivative Instruments, Gain (Loss) [Table Text Block]

Derivatives not designated as hedging instruments	Location of gain (loss) recognized	Year Ended December 31, 2017		Year Ended December 31, 2018		Year Ended December 31, 2019
Interest rate swap contract– Unrealized (loss) / gain	(Gain) / loss on derivativtes, net	(5,901	)	204,647		-
Interest rate swap contract  - Realized  gain / (loss)	Gain / (loss) on derivatives, net	19,071		(201,745	)	(2,885	)
Total  net gain / (loss) on interest rate swap contract		13,170		2,902		(2,885	)

FFA contracts not designated as hedging instruments	Location of gain (loss) recognized	Year Ended December 31, 2017		Year Ended December 31, 2018		Year Ended December 31, 2019
FFA contracts – Unrealized loss	Gain / (loss) on derivatives, net	(781	)	-			-
FFA contracts – Realized loss	Gain / (loss) on derivatives, net	-		(47,245	)		-
Total loss on FFA contracts		(781	)	(47,245	)		-

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Note 8 - Long-term Bank Loans (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Schedule of Long-term Debt Instruments [Table Text Block]

Borrower		December 31, 2018		December 31, 2019
Noumea Shipping Ltd.	(a)	3,341,000		-
Gregos Shiping Ltd.	(b)	4,150,000		-
Alterwall Business Inc. / Allendale Investments S.A. / Manolis Shipping Ltd. / Joanna Maritime Ltd. / Jonathan John Shipping Ltd. / Athens Shipping Ltd. / Oinousses Navigation Ltd. / Corfu Navigation Ltd. / Bridge Shipping Ltd. / Noumea Shipping Ltd. / Gregos Shiping Ltd.	(c)	30,000,000		37,650,000
Diamantis Shipowners Ltd.	(d)	-		3,507,220
Kea Shipowners Ltd. / Spetses Shipowners Ltd. / Hydra Shipowners Ltd.	(e)	-		12,050,000
Antwerp Shipping Ltd. / Busan Shipping Ltd. / Keelung Shipping Ltd. / Oakland Shipping Ltd.	(f)	-		32,000,000
		37,491,000		85,207,220
Less: Current portion		(5,212,000	)	(12,541,840	)
Long-term portion		32,279,000		72,665,380
Deferred charges, current portion		125,357		246,520
Deferred charges, long-term portion		237,848		477,595
Debt discount, current portion		216,402		-
Debt discount, long-term portion		324,603		-
Long-term bank loans, current portion net of deferred charges and debt discount		4,870,241		12,295,320
Long-term bank loans, long-term portion net of deferred charges and debt discount		31,716,549		72,187,785
Loan from related party, current
Euroseas Ltd.	(g)	-		5,000,000

Schedule of Future Annual Loan Repayments [Table Text Block]

To December 31:
2020	12,541,840
2021	29,941,840
2022	8,723,540
2023	34,000,000
Total	85,207,220

XML

Note 9 - Income Taxes (Details Textual) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2019
Effective United States Tax on U.S. Source Shipping	2.00%		4.00%
Effective Tax on U.S. Source Shipping, Amount	$ 19,726	$ 15,135

XML

Note 12 - Loss Per Share (Details Textual) - shares shares in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares)	0	0	0

XML

Note 19 - Subsequent Events (Details Textual) - Interest Rate Swap With Eurobank [Member] - Forecast [Member] $ in Millions	Apr. 24, 2020 USD ($)
Derivative, Notional Amount	$ 30
Derivative, Fixed Interest Rate	0.78%

XML

Note 1 - Basis of Presentation and General Information

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Business Description and Basis of Presentation [Text Block]

1. Basis of Presentation and General Information

Euroseas Ltd. (the “Company” or “Euroseas”) was formed on

May 5, 2005

under the laws of the Republic of the Marshall Islands to consolidate the beneficial owners of certain ship-owning companies. On

June 28, 2005,

the beneficial owners exchanged all their shares in the ship-owning companies for shares in Friends Investment Company Inc., a newly formed Marshall Islands company. On

June 29, 2005,

Friends Investment Company Inc. then exchanged all the shares in the ship-owning companies for shares in Euroseas Ltd., thus becoming the sole shareholder of Euroseas Ltd at that time. In

January 2007,

the Company pursued a public offering and its common shares started trading on the Nasdaq Capital Market under the ticker symbol “ESEA” on

January 31, 2007.  

The operations of the vessels are managed by Eurobulk Ltd. (“Eurobulk” or “Management Company” or “Manager”), a corporation controlled by members of the Pittas family. Eurobulk has an office in Greece located at

4

Messogiou & Evropis Street, Maroussi, Greece. The Manager provides the Company with a wide range of shipping services such as technical support and maintenance, insurance consulting, chartering, financial and accounting services and executive management services, in consideration for fixed and variable fees (see Note

7

).

The Pittas family is the controlling shareholder of Friends Investment Company Inc., Containers Shareholders Trinity Ltd., Eurobulk Marine Holdings Inc. and Diamantis Shareholders Ltd. which, in turn, collectively own

62%

of the Company’s shares as of

December 31, 2019.

Following the close of trading on the Nasdaq Capital Market on

May 30, 2018,

the Company completed the spin-off (the “Spin-off”) of its drybulk fleet (excluding M/V Monica P, a handymax drybulk carrier, which was agreed to be sold) to EuroDry Ltd ("EuroDry"). Shareholders of the Company received

one

EuroDry common share for every

five

common shares of the Company they owned as of

May 23, 2018.

Shares of EuroDry commenced trading on

May 31, 2018

on the Nasdaq Capital Market under the symbol "EDRY." EuroDry operates in the dry cargo, drybulk shipping markets, owning and operating drybulk vessels previously owned and operated by Euroseas, and is now a separate publicly traded company. Euroseas continues to operate in the container shipping market and remains a publicly traded company. Accordingly, the results of operations of EuroDry have been presented in discontinued operations for all historical comparative periods presented.

In

August 2019,

the Company completed the acquisition of

four

feeder containerships, owned by affiliates of the Pittas family including the Company’s Chief Executive Officer, which had been announced in

June 2019

for a consideration of

$28.2

million that included a cash payment of

$15

million and the issuance of

2,816,901

common shares to the sellers (the “Trinity/ Diamantis Vessel Acquisition”). The Company financed the cash portion of the acquisition price via the arrangement of

two

bank loans described below (refer Note

8

-d and

8

-e), drawing a total of

$16,167,680

with the excess amount used for general corporate purposes. The cash portion of the acquisition price was used to repay the existing indebtedness of the vessels with the sellers receiving only payment in Euroseas common shares.  The common shares issued to the sellers represented at that time approximately

64.3%

of Euroseas’ outstanding common shares.

The vessels acquisition transactions were evaluated and approved by a special committee of independent members of the Board of Directors. The

four

vessels are the M/V EM Hydra and the M/V EM Spetses, both

1,700

teu feeder containership built in

2005

and

2007,

respectively, the M/V EM Kea, a

3,100

teu feeder containership built in

2007,

and the M/V Diamantis P, a

2,008

teu feeder containership vessel built in

1998.

On

August 2, 2019,

the Company took delivery of M/V Diamantis P and M/V EM Hydra, and, on

August 7, 2019,

the Company took delivery of M/V EM Spetses and M/V EM Kea (refer Note

4

).

In

November 2019,

the Company acquired and took delivery (from

November 18, 2019

to

November 21, 2019)

of

four

container carrier vessels of intermediate size of

4,253

teu, all built in South Korea,

three

in

2009

and the other in

2008

(refer Note

4

). The vessels were acquired from companies controlled by Synergy Holdings Limited, for approximately

$40

million (the “Synergy Vessel Acquisition”). The acquisition of the

four

vessels (the “Synergy Vessels”) was financed by bank debt of

$32

million described below (refer Note

8

-f), a private placement of

$6

million at a share price of

$5.68

subscribed equally by an entity affiliated with the Company’s Chief Executive Officer and an entity controlled by the seller of the Synergy vessels and

$2

million of existing funds. The Company also assumed the charters the vessels were under on the date of the transfer (refer Note

6

). As part of the transaction, the Company has agreed that the Manager enters into an agreement with Synergy Marine Limited for the provision of certain management services by Synergy Marine Limited for the next

three

years (see Note

7

). Mr. Andreas Papathomas, Chairman of Synergy Holdings Limited, was appointed to the Board of Directors of the Company. The Company has also agreed to issue an additional

$0.5

million in shares of its common stock to Synergy Holdings Limited if certain conditions are fulfilled in

one

year from the acquisition date (see Note

10

-b).

The Company effected a

8

-for-

1

reverse stock split of its issued and outstanding common shares, effective at the close of trading on

December 18, 2019 (

Note

18

).  All share and per share amounts disclosed in the consolidated financial statements give effect to this reverse stock split retroactively, for all periods presented.

The Company is engaged in the ocean transportation of containers through ownership and operation of container carrier ship-owning companies. Details of the Company’s wholly owned subsidiaries are set out below:

· Allendale Investment S.A., incorporated in Panama on January 22, 2002, owner of the Panama flag 18,154 deadweight tons (“DWT”) / 1,169 twenty -foot equivalent (“TEU” – a measure of carrying capacity in containers) container carrier M/V “Kuo Hsiung”, which was built in 1993 and acquired on May 13, 2002.

· Alterwall Business Inc., incorporated in Panama on January 15, 2001, owner of the Panama flag 18,253 DWT / 1,169 TEU container carrier M/V “Ninos” (previously named M/V “Quingdao I”) which was built in 1990 and acquired on February 16, 2001.

· Prospero Maritime Inc., incorporated in the Republic of Marshall Islands on July 21, 2006, owner of the Marshall Islands flag 69,268 DWT dry bulk M/V “Aristides N.P.”, which was built in 1993 and acquired on September 21, 2006. The vessel was sold on January 15, 2016.

· Manolis Shipping Ltd., incorporated in the Republic of Marshall Islands on March 16, 2007, owner of the Marshall Islands flag 20,346 DWT / 1,452 TEU container carrier M/V “Manolis P”, which was built in 1995 and acquired on April 12, 2007.

· Noumea Shipping Ltd, incorporated in the Republic of Marshall Islands on May 14, 2008, owner of the Marshall Islands flag 34,677 DWT / 2,556 TEU container carrier M/V “Maersk Noumea”, renamed “Evridiki G”, which was built in 2001 and acquired on May 22, 2008.

· Eleni Shipping Ltd., incorporated in the Republic of Liberia on February 11, 2009, owner of the Liberian flag 72,119 DWT bulk carrier M/V “Eleni P”, which was built in 1997, acquired on March 6, 2009 and sold on January 26, 2017.

· Aggeliki Shipping Ltd., incorporated in the Republic of Liberia on May 21, 2010, owner of the Liberian flag 30,306 DWT / 2008 TEU container carrier M/V “Aggeliki P”, which was built in 1998, acquired on June 21, 2010 and sold on December 6, 2017.

· Joanna Maritime Ltd., incorporated in Liberia on June 10, 2013, owner of the Liberian flag 22,301 DWT / 1,732 TEU container carrier M/V “Joanna”, which was built in 1999 and acquired on July 4, 2013. On January 8, 2016, the vessel has been renamed M/V “Vento di Grecale”. On March 17, 2017 the vessel was again renamed M/V “Joanna”.

· Jonathan John Shipping Ltd., incorporated in the Republic of the Marshall Islands on August 19, 2016, owner of the Panamanian flag 18,581 DWT / 1,439 TEU container carrier M/V “Aegean Express”, which was built in 1997 and acquired on September 29, 2016.

· Gregos Shipping Ltd., incorporated in the Republic of Liberia on May 25, 2017, owner of the Liberian flag 35,600 DWT / 2,788 TEU container carrier M/V “EM Astoria”, which was built in 2004 and acquired on June 20, 2017.

· Athens Shipping Ltd., incorporated in the Republic of the Marshall Islands on September 18, 2017, owner of the Marshall Islands flag 32,350 DWT / 2,506 TEU container carrier M/V “EM Athens”, which was built in 2000 and acquired on September 29, 2017.

· Corfu Navigation Ltd., incorporated in the Republic of the Marshall Islands on September 18, 2017, owner of the Marshall Islands flag 34,654 DWT / 2,556 TEU container carrier M/V “EM Corfu”, which was built in 2001 and acquired on October 29, 2017.

· Oinousses Navigation Ltd., incorporated in the Republic of the Marshall Islands on September 18, 2017, owner of the Marshall Islands flag 32,350 DWT / 2,506 TEU container carrier M/V “EM Oinousses”, which was built in 2000 and acquired on October 23, 2017.

· Bridge Shipping Ltd., incorporated in the Republic of the Marshall Islands on September 18, 2017, owner of the Marshall Islands flag 71,366 DWT / 5,610 TEU container carrier M/V “Akinada Bridge”, which was built in 2001 and acquired on December 21, 2017.

· Diamantis Shipowners Ltd., incorporated in the Republic of Liberia on June 3, 2019, owner of the Liberian flag 30,360 DWT / 2,008 TEU container carrier M/V “Diamantis P”, which was built in 1998 and acquired on August 2, 2019.

· Hydra Shipowners Ltd., incorporated in the Republic of Liberia on June 3, 2019, owner of the Liberian flag 23,351 DWT / 1,740 TEU container carrier M/V “EM Hydra”, which was built in 2005 and acquired on August 2, 2019.

· Spetses Shipowners Ltd., incorporated in the Republic of Liberia on June 3, 2019, owner of the Liberian flag 23,224 DWT / 1,740 TEU container carrier M/V “EM Spetses”, which was built in 2007 and acquired on August 7, 2019.

· Kea Shipowners Ltd., incorporated in the Republic of Liberia on June 3, 2019, owner of the Liberian flag 42,165 DWT / 3,100 TEU container carrier M/V “EM Kea”, which was built in 2007 and acquired on August 7, 2019.

· Antwerp Shipping Ltd., incorporated in the Republic of the Marshall Islands on November 1, 2019, owner of the Marshall Islands flag 50,726 DWT / 4,253 TEU container carrier M/V “Synergy Antwerp”, which was built in 2008 and acquired on November 19, 2019.

· Keelung Shipping Ltd., incorporated in the Republic of the Marshall Islands on November 1, 2019, owner of the Cypriot flag 50,969 DWT / 4,253 TEU container carrier M/V “Synergy Keelung”, which was built in 2009 and acquired on November 18, 2019.

· Oakland Shipping Ltd., incorporated in the Republic of the Marshall Islands on November 1, 2019, owner of the Cypriot flag 50,787 DWT / 4,253 TEU container carrier M/V “Synergy Oakland”, which was built in 2009 and acquired on November 19, 2019.

· Busan Shipping Ltd., incorporated in the Republic of the Marshall Islands on November 1, 2019, owner of the Marshall Islands flag 50,726 DWT / 4,253 TEU container carrier M/V “Synergy Busan”, which was built in 2009 and acquired on November 21, 2019.

As of

December 31, 2019,

the Company had a working capital deficit of

$18.6

million and has been incurring losses. For the year ended

December 31, 2019,

the Company generated net cash from operating activities of

$3.1

million. The Company’s cash balance amounted to

$1.0

million and cash in restricted retention accounts amounted to

$4.9

million as of

December 31, 2019.

The holders of Series B Preferred Shares will receive a cash dividend at an annual dividend rate of

8%

until

January 2021,

which will increase to

14%

thereafter (Note

15

). The Company intends to fund its working capital requirements and capital commitments via cash at hand and cash flows from operations as well as via the cash proceeds expected to be generated through the sale of certain of the Company’s older vessels for scrap. In the event that these are

not

sufficient, the Company

may

also use funds from debt refinancing and equity offerings and convert to equity the related party loans, if required, among other options. The Company believes it will have adequate funding through the sources described above and, accordingly, it believes it has the ability to continue as a going concern and finance its obligations as they come due over the next

twelve

months following the date of the issuance of these financial statements. Consequently, the consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

During the years ended

December 31, 2017,

2018

and

2019,

the following charterers individually accounted for more than

10%

of the Company’s revenues as follows:

	Year ended December 31,
Charterer	2017			2018			2019
CMA CGM, Marseille		34	%		51	%		24	%
New Golden Sea Shipping Pte. Ltd., Singapore		31	%		33	%		21	%
Hapag-Lloyd AG, Hamburg		-			-			16	%
MSC Geneva		17	%		11	%		15	%
Maersk Line A/S		-			-			11	%

XML

Note 3 - Inventories

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Inventory Disclosure [Text Block]

3. Inventories

Inventories consisted of the following:

	2018	2019
Lubricants	1,043,763	1,728,861
Victualing	79,965	160,303
Bunkers	580,663	-
Total	1,704,391	1,889,164

XML

Note 7 - Related Party Transactions

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

7. Related Party Transactions

The Company’s vessel owning companies are parties to management agreements with the Manager which is controlled by members of the Pittas family, whereby the Manager provides technical and commercial vessel management for a fixed daily fee of Euro

685

for each of

2017,

2018

and

2019,

under the Company’s Master Management Agreement (“MMA”). An additional fixed management fee (see below) is paid to the Manager for the provision of other management services. Vessel management fees paid to the Manager amounted to

$2,632,637,

$3,536,094

and

$3,671,335

in

2017,

2018

and

2019,

respectively, and are recorded in “Related party management fees” in the consolidated statements of operations.

The Company’s MMA with Eurobulk provides for an annual adjustment of the daily management fee due to inflation to take effect

January 1

of each year. The vessel management fee for laid-up vessels is half of the daily fee for the period they are laid-up. The MMA, as periodically amended and restated, will automatically be extended after the initial

five

-year period for an additional

five

-year period unless terminated on or before the

90th

day preceding the initial termination date. Pursuant to the MMA, each ship owning company has signed – and each future ship owning company when a vessel is acquired will sign - with the Manager, a management agreement with the rate and term of these agreements set in the MMA effective at such time.

The MMA was amended and restated as of

January 1, 2012

to provide for a

5%

discount of the daily fixed vessel management fee for the period during which the number of the Euroseas-owned vessels (including vessels in which Euroseas is a part owner) managed by the Manager is greater than

20

(“volume discount”). The daily fixed vessel management fee was adjusted to Euro

720

per day per vessel in operation and Euro

360

per day per vessel in lay-up before the

5%

discount. The Company was entitled to the

5%

discount for each of these years. The fee remained unchanged for the subsequent years starting

January 1, 2014,

2015,

2016,

2017.

The MMA was renewed as of

January 1, 2014

for a new

five

year term until

January 1, 2019.

The MMA was further renewed on

January 1, 2018

for an additional

five

year term until

January 1, 2023

with the

5%

volume discount permanently incorporated in the daily management fee and the daily fixed vessel management fee amounting to Euro

685

per day per vessel in operation and Euro

342.5

for day per vessel in lay-up. The daily fixed vessel management fee remained unchanged for the year

2019

and will be adjusted annually for inflation in the Eurozone. The fee remains unchanged for

2020.

In addition to the vessel management services, the Manager provides executive services to the Company. In

2017

and

2018

up to the Spin-off, compensation for such services to the Company as a public company was

$2,000,000

per annum for the Company pre Spin-off. The amount of such executive compensation allocated to the Company prior to the Spin-off was based on the proportion of the number of calendar days that related to Euroseas post Spin-off vessels to the number of days of the entire fleet of Euroseas. After the Spin-off, the annual compensation for such services was set at

$1,250,000.

On

November 15, 2019,

the Company signed an addendum adjusting the fixed annual executive compensation to

$2,000,000

to compensate the Manager for the increase in the fleet and certain management services provided by Synergy Marine Ltd., a company controlled by Andreas Papathomas and which became affiliated with the Company post-acquisition as a result of his appointment to the Board of Directors of the Company in

November 2019.

As a result, for the year

2019,

the fixed cost was calculated at

$1,250,000

pro-rated for the period of

January 1, 2019

until

November 15, 2019

and at

$2,000,000

for the period of

November 16, 2019

until

December 31, 2019.

The Company incurred costs of

$1,306,476,

$1,561,126

and

$1,344,250

in

2017,

2018

and

2019,

respectively, which are recorded in “General and administrative expenses” in the consolidated statements of operations.

Amounts due to or from related company represent net disbursements and collections made on behalf of the vessel-owning companies by the Management Company during the normal course of operations for which a right of off-set exists. As of

December 31, 2018

and

2019,

the amounts due to related company were

$2,672,895

and

$795,562,

respectively. Based on the MMA between Euroseas Ltd. and Euroseas’ ship owning subsidiaries and the Manager an estimate of the quarter’s operating expenses, expected dry-dock expenses, vessel management fee and fee for management executive services are to be advanced by the Company’s ship-owning subsidiaries in the beginning of each quarter to the Manager.

On

September 30, 2019,

the Company reached an agreement with a related party, Colby Trading Ltd., a company controlled by the Pittas family and affiliated with the Company’s Chief Executive Officer, to draw a

$2.5

million loan to finance the special survey and WBT system installation on M/V “Akinada Bridge”. The interest rate applied is

8%

per annum. Interest on the loan is payable quarterly. For further details refer to Note

8

-g.

On

November 1, 2019,

the Company entered into a

second

agreement with Colby Trading Ltd., to draw another

$2.5

million loan to finance working capital needs. The interest rate applied is

8%

per annum. Interest on the loan is payable quarterly. For further details refer to Note

8

-g.

The Company uses brokers for various services, as is industry practice. Eurochart S.A., an affiliated company controlled by certain members of the Pittas family, provides vessel sale and purchase services, and chartering services to the Company whereby the Company pays commission of

1%

of the vessel sales price and

1.25%

of charter revenues. Commissions to Eurochart S.A. for vessel sales were

$70,640,

$64,500

and

nil

in

2017,

2018

and

2019,

respectively, recorded in “Net gain on sale of vessels” in the consolidated statements of operations. A commission of

1%

of the purchase price is also paid to Eurochart S.A. by the seller of the vessel for the acquisitions the Company makes using Eurochart’s services. The Company withheld, on behalf of Eurochart, commissions of

$118,526,

nil

and

nil

in

2017,

2018

and

2019,

respectively, for vessels the Company acquired. Commissions to Eurochart S.A. for chartering services were,

$310,467,

$453,361

and

$493,341

in

2017,

2018

and

2019,

respectively, recorded in “Commissions” in the consolidated statements of operations.

Certain members of the Pittas family, together with another unrelated ship management company, have formed a joint venture with the insurance broker Sentinel Maritime Services Inc. (“Sentinel”); and with a crewing agent Technomar Crew Management Services Corp (“Technomar”). Technomar is a company owned by certain members of the Pittas family, together with

two

other unrelated ship management companies. Sentinel is paid a commission on insurance premiums

not

exceeding

5%;

Technomar is paid a fee of about

$50

per crew member per month. Total fees charged by Sentinel and Technomar were

$89,329

and

$101,394

in

2017,

$118,684

and

$137,385

in

2018,

and

$106,749

and

$142,332

in

2019

respectively.  These amounts are recorded in “Vessel operating expenses” in the consolidated statements of operations.

In

August 2019,

the Company completed the acquisition of the

four

feeder containerships, owned by affiliates of the Pittas family including the Company’s CEO (see Note

1

), for a consideration of

$28.2

million that included a cash payment of

$15

million and the issuance of

2,816,901

common shares to the sellers. The vessels acquisition transactions were evaluated and approved by a special committee of independent members of the Board of Directors.

XML

Consolidated Statements of Operations - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Time charter revenue	$ 41,769,278	$ 36,062,202	$ 24,278,048
Voyage charter revenue		206,682	559,319
Related party management fee income			240,000
Commissions (including $310,467, $453,361 and $493,341, respectively, to related party)	(1,745,599)	(1,844,147)	(1,318,248)
Net revenue, continuing operations	40,023,679	34,424,737	23,759,119
Operating expenses
Voyage expenses	1,055,408	1,261,088	1,564,489
Vessel operating expenses (including $190,723, $256,069 and $249,081, respectively, to related party)	23,983,282	19,986,170	15,019,342
Other operating income			(499,103)
Dry-docking expenses	2,714,662	2,774,924	571,291
Vessel depreciation	4,178,886	3,305,951	3,585,965
Related party management fees	3,671,335	3,536,094	2,632,637
General and administrative expenses (including $1,306,476, $1,561,126 and $1,344,250, respectively, to related party)	2,444,495	2,565,502	2,502,203
Net gain on sale of vessels		(1,340,952)	(803,811)
Loss on write-down of vessels held for sale			4,595,819
Total operating expenses, continuing operations	38,048,068	32,088,777	29,168,832
Operating (loss) / income, continuing operations	1,975,611	2,335,960	(5,409,713)
Other income/(expenses)
Interest and other financing costs (including $0, $0 and $84,444, respectively, to related party)	(3,424,969)	(3,050,768)	(1,554,695)
Loss on debt extinguishment	(328,291)
Gain / (loss) on derivatives, net	(2,885)	(44,343)	12,389
Foreign exchange (loss) / gain	2,024	13,963	(30,214)
Interest income	95,839	81,792	37,972
Other expenses, net, continuing operations	(3,658,282)	(2,999,356)	(1,534,548)
Net loss, continuing operations	(1,682,671)	(663,396)	(6,944,261)
Dividends to Series B preferred shares	(1,271,782)	(1,335,733)	(1,808,811)
Preferred deemed dividend	(504,577)
Net loss attributable to common shareholders, continuing operations	(3,459,030)	(1,999,129)	(8,753,072)
Net income attributable to common shareholders, discontinued operations		554,506	849,701
Net loss attributable to common shareholders	$ (3,459,030)	$ (1,444,623)	$ (7,903,371)
Weighted average common shares –outstanding , basic and diluted (in shares)	2,861,928	1,414,775	1,383,440
Loss per share attributable to common shareholders - basic and diluted, continuing operations (in dollars per share)	$ (1.21)	$ (1.41)	$ (6.33)
Earnings per share attributable to common shareholders - basic and diluted, discontinued operations (in dollars per share)		0.39	0.61
Loss per share attributable to common shareholders - basic and diluted, (in dollars per share)	$ (1.21)	$ (1.02)	$ (5.72)

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Note 11 - Stock Incentive Plan

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

11. Stock Incentive Plan

On

July 31, 2014,

the Board of Directors approved the Company’s

2014

Stock Incentive Plan (the

“2014

Plan”). On

May 5, 2018,

the Board of Directors approved a new equity incentive plan (the

“2018

Plan”) to replace the

2014

Plan. The

2018

Plan is administered by the Board of Directors which can make awards totaling in aggregate up to

75,000

shares, over

10

years after the

2018

Plan’s adoption date. The persons eligible to receive awards under the

2018

Plan are officers, directors, and executive, managerial, administrative and professional employees of the Company or Eurobulk or Eurochart (collectively, “key persons”) as the Board, in its sole discretion, shall select based upon such factors as the Board shall deem relevant.  Awards

may

be made under the

2018

Plan in the form of incentive stock options, non-qualified stock options, stock appreciation rights, dividend equivalent rights, restricted stock, unrestricted stock, restricted stock units and performance shares. Details of awards granted under the

2014

Plan and the

2018

Plan during the

three

year period ended

December 31, 2019

are noted below.

a) On November 2, 2017 an award of 12,534 non-vested restricted shares, was made to 18 key persons of which 50% vested on July 1, 2018 and 50% vested on July 1, 2019; awards to officers and directors amounted to 7,213 shares and the remaining 5,321 shares were awarded to employees of Eurobulk.

b) On November 21, 2018 an award of 15,681 non-vested restricted shares, was made to 18 key persons of which 50% vested on November 16, 2019 and 50% will vest on November 16, 2020; awards to officers and directors amounted to 9,021 shares and the remaining 6,660 shares were awarded to employees of Eurobulk.

c) On November 4, 2019 an award of 15,444 non-vested restricted shares, was made to 17 key persons of which 50% will vest on July 1, 2020 and 50% will vest on July 1, 2021; awards to officers and directors amounted to 8,713 shares and the remaining 6,731 shares were awarded to employees of Eurobulk.

All non-vested restricted shares are conditional upon the grantee’s continued service as an employee of the Company, Eurobulk or as a director until the applicable vesting date. The grantee does

not

have the right to vote on such non-vested restricted shares until they vest or exercise any right as a shareholder of these shares, however, the non-vested shares will accrue dividends as declared and paid which will be retained by the Company until the shares vest at which time they are payable to the grantee. As non-vested restricted share grantees accrue dividends on awards that are expected to vest, such dividends are charged to retained earnings.

The Company accounts for restricted share awards forfeitures as they occur. During

2017,

538

shares were forfeited with a weighted-average grant-date fair value of

$22.24

per share.

No

forfeitures occurred in the years ended

December 31, 2018

and

2019.

The compensation cost that has been charged against income for awards was

$116,562,

$124,487

and

$97,919,

for the years ended

December 31, 2017,

2018

and

2019,

respectively and is included within “General and administrative expenses” in the consolidated statements of operations. The Company has used the straight-line method to recognize the cost of the awards.

A summary of the status of the Company’s non-vested shares as of

December 31, 2019

and changes during the year ended

December 31, 2019,

are presented below:

Non-vested Shares	Shares		Weighted-Average Grant-Date Fair Value
Non-vested on January 1, 2019	21,948		10.16
Granted	15,444		5.84
Vested	(14,108	)	11.01
Non-vested on December 31, 2019	23,284		6.77

As of

December 31, 2019,

there was

$172,887

of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the

2018

Plan and is expected to be recognized over a weighted-average period of

0.75

years. The total fair value at grant-date of shares granted during the year ended

December 31, 2017,

December 31, 2018,

and

December 31, 2019

was

$176,475,

$134,232

and

$90,193

respectively.

XML

Note 15 - Preferred Shares (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Schedule of Stockholders Equity [Table Text Block]

	Number of Shares		Preferred Shares Amount		Dividends paid-in-kind		Total
Balance, January 1, 2017	35,505		29,000,000		4,804,948		33,804,948
Dividends declared	1,809		-		1,808,811		1,808,811
Balance, December 31, 2017	37,314		29,000,000		6,613,759		35,613,759
Dividends declared	1,333		-		1,335,733		1,335,733
Shares distributed to EuroDry	(19,042	)	(14,500,000	)	(3,692,131	)	(18,192,131	)
Balance, December 31, 2018	19,605		14,500,000		4,257,361		18,757,361
Dividends declared	81		-		78,639		78,639
Redemption of shares	(11,686	)	(8,155,055	)	(3,530,945	)	(11,686,000	)
Preferred deemed dividend	-		504,577		-		504,577
Balance, December 31, 2019	8,000		6,849,522		805,055		7,654,577

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Note 11 - Stock Incentive Plan (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Schedule of Nonvested Share Activity [Table Text Block]

Non-vested Shares	Shares		Weighted-Average Grant-Date Fair Value
Non-vested on January 1, 2019	21,948		10.16
Granted	15,444		5.84
Vested	(14,108	)	11.01
Non-vested on December 31, 2019	23,284		6.77

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Note 15 - Preferred Shares

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Preferred Stock [Text Block]

15. Preferred shares

	Number of Shares		Preferred Shares Amount		Dividends paid-in-kind		Total
Balance, January 1, 2017	35,505		29,000,000		4,804,948		33,804,948
Dividends declared	1,809		-		1,808,811		1,808,811
Balance, December 31, 2017	37,314		29,000,000		6,613,759		35,613,759
Dividends declared	1,333		-		1,335,733		1,335,733
Shares distributed to EuroDry	(19,042	)	(14,500,000	)	(3,692,131	)	(18,192,131	)
Balance, December 31, 2018	19,605		14,500,000		4,257,361		18,757,361
Dividends declared	81		-		78,639		78,639
Redemption of shares	(11,686	)	(8,155,055	)	(3,530,945	)	(11,686,000	)
Preferred deemed dividend	-		504,577		-		504,577
Balance, December 31, 2019	8,000		6,849,522		805,055		7,654,577

On

January 27, 2014,

the Company entered into an agreement to sell

25,000

shares of its Series B Convertible Perpetual Preferred Shares ("Series B Preferred Shares") to a fund managed by Tennenbaum Capital Partners, LLC ("TCP") and

5,700

shares to Preferred Friends Investment Company Inc, an affiliate of the Company, for total net proceeds of approximately

$29

million. The redemption amount of the Company’s Series B Preferred Shares is

$1,000

per share. The Company used the proceeds for the acquisition of vessels and general corporate purposes. The Series B Preferred Shares paid dividends in-kind until

January 29, 2019

at a rate of

5%.

The dividend rate increased to

12%

for the

two

years following

January 29, 2019

and to

14%

thereafter and is payable only in cash. Cash dividends are declared at each quarter and actual payments are made within the following quarter. If a cash dividend is paid on the Company's common stock after

January 29, 2019,

the holders of Series B Preferred Shares shall receive an additional cash dividend in an amount equal to

40%

of the common stock dividend it would have received on an as-converted basis. The Series B Preferred Shares can be converted at the option of their holders at any time, and at the option of the Company only if certain share price and liquidity milestones are met. Each Series B Preferred Share is convertible into common stock at a conversion price of

$15.58

(as adjusted in

September 2015

following the shareholders’ rights offering of the Company) subject to further adjustment for certain events. The Series B Preferred Shares are redeemable in cash by the Company at any time after the

fifth

anniversary of the original issue date. Holders of the Series B Preferred Shares

may

require the Company to redeem their shares only upon the occurrence of certain corporate events.

At the Spin-off date Euroseas distributed EuroDry Series B Preferred Shares to holders of Euroseas' Series B Preferred Shares in exchange for a number of such Euroseas Series B Preferred Shares, representing

50%

of Euroseas Series B Preferred Stock, i.e.

$14,500,000

of the initial preferred shares amount of the Company and

$3,692,131

of dividends paid in kind. Euroseas contributed to EuroDry its interests in

seven

of its drybulk subsidiaries and related intercompany debts and obligations in exchange for approximately

2,254,830

of EuroDry common shares and

19,042

of EuroDry Series B Preferred Shares (representing all of the EuroDry's issued and outstanding stock as of that time). Euroseas made a special dividend of

100%

of EuroDry's outstanding common shares to holders of Euroseas' common stock as of the record date of the special dividend. In addition, Euroseas distributed

100%

of EuroDry Series B Preferred Shares to holders of Euroseas' Series B Preferred Shares as described above.

On

June 10, 2019

the Company proceeded in the redemption of

$11.7

million of value, or about

59.4%,

of its outstanding Series B Preferred Shares with a simultaneous reduction of

4%

of the dividend rate for the

$8

million value of preferred shares remaining outstanding until

January 2021.

After that date the dividend rate will increase to

14%.

The difference between (

1

) the fair value of the consideration transferred to the holders of the Series B Preferred Shares (comprising the cash payment offered) and (

2

) the carrying amount of the Series B Preferred Shares before the redemption (net of issuance costs) amounted to

$504,577,

and was recorded as a preferred deemed dividend.

For each of the years ended

December 31, 2017

and

2018,

the Company declared

four

consecutive dividends totaling

$1.81

million and

$1.34

million, respectively, all of which were paid in kind. For the year ended

December 31, 2019

the Company declared dividends of

$1.27

million, of which

$0.08

million were paid in-kind,

$1.03

million were paid in cash during

2019

and another

$0.16

million were accrued as of

December 31, 2019

and were paid in cash in the

first

quarter of

2020.

The redemption liability as of

December 31, 2019

is

$8,000,000.

Subject to certain ownership thresholds, holders of Series B Preferred Shares have the right to appoint

one

director to the Company's board of directors and TCP also has consent rights over certain corporate actions. In addition, the holders of Series B Preferred Shares will vote as

one

class with the Company's common stock on all matters on which shareholders are entitled to vote, with each Series B Preferred Share having a number of votes equal to

50%

of the numbers of shares of common stock of the Company into which such Series B Preferred Share would be convertible on the applicable record date.

XML

Note 19 - Subsequent Events

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Subsequent Events [Text Block]

19. Subsequent Events

The following events occurred after

December 31, 2019:

(a) In January 2020, M/V EM Oinousses experienced an engine room fire while sailing off Mozambique carrying empty containers. The fire was extinguished without any injuries to the crew. The vessel is currently undergoing evaluation for the type of repairs required and is idle during the evaluations. It is expected that the Company’s insurance will cover the majority of the costs. It is possible that the vessel may be scraped after the insurance process is complete.

(b) In February 2020, we entered into an agreement to sell the M/V Manolis P for scrap. The vessel reached her destination port on April 7, 2020, but so far has not been delivered to her new owners due to COVID- 19 restrictions and port lockdowns in the territory of arrival (Alang, India).  The scrap price has dropped since the date of the agreement to sell the M/V Manolis P, and the new buyers are now seeking to terminate the agreement on the basis that timely delivery did not occur.  We are in the process of seeking a settlement with the new buyers.

(c) In April 2020, the Company entered into one interest rate swap with Eurobank for a notional amount of $30.0 million, in order to manage interest costs and the risk associated with changing interest rates of the Company’s loans. Under the terms of the swap, Eurobank makes a quarterly payment to the Company equal to the 3 -month LIBOR while the Company pays a fixed rate of 0.78% based on the notional amount. The SWAP is effective from April 24, 2020 until April 24, 2025.

(d) Coronavirus Outbreak:  On March 11, 2020, the World Health Organization declared the 2019 Novel Coronavirus (the “COVID- 19” ) outbreak a pandemic. In response to the outbreak, many countries, ports and organizations, including those where the Company conducts a large part of its operations, have implemented measures to combat the outbreak, such as quarantines and travel restrictions. Such measures have and will likely continue to cause severe trade disruptions. The extent to which COVID- 19 will impact the Company’s results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the virus and the actions to contain or treat its impact, among others. Accordingly, an estimate of the impact cannot be made at this time.

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Note 6 - Fair Value of Below Market Time Charters Acquired (Details Textual) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Aug. 31, 2019
Amortization of fair value of below market time charters acquired	$ 857,945
Below Market Time Charters Acquired, Noncurrent	$ 1,714,370
Fair Value, Inputs, Level 2 [Member] | EM Hydra, EM Kea and EM Spetses [Member]
Below Market Time Charters, Fair Value				$ 778,287
Fair Value, Inputs, Level 2 [Member] | Synergy Keelung, Synergy Oakland and Synergy Busan [Member]
Below Market Time Charters, Fair Value				$ 1,794,028

XML

Note 3 - Inventories - Summary of Inventories (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Inventory	$ 1,889,164	$ 1,704,391
Lubricant [Member]
Inventory	1,728,861	1,043,763
Victualing [Member]
Inventory	160,303	79,965
Bunkers [Member]
Inventory		$ 580,663

XML

Note 14 - Derivative Financial Instruments - Derivatives Not Designated as Hedging Instruments by Account Type (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Interest rate swap contract		$ 41,435
Total derivative liabilities		$ 41,435

XML

Note 16 - Financial Instruments (Details Textual)		12 Months Ended
	Sep. 30, 2017 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Jun. 30, 2019 USD ($)	Dec. 20, 2016
Vessel Profit Participation Liability, Noncurrent			$ 1,067,500
Asset Impairment Charges, Total				$ 4,595,819
Long-term Debt, Fair Value		87,100,000
Difference Between Fair Value and Carrying Value		3,100,000
Long-term Debt, Total		$ 90,200,000
M/V Monika P. [Member]
Profit Sharing Agreement, Percentage						35.00%
Vessel Profit Participation Liability, Noncurrent			$ 1,067,500		$ 950,000
Assets Held-for-sale, Not Part of Disposal Group, Total	$ 8,230,000
Assets Held-for-sale, Long Lived, Fair Value Disclosure	5,000,000
Estimated cost to sell, property	100,000
Asset Impairment Charges, Total	3,330,000
M/V Aggeliki P. [Member]
Assets Held-for-sale, Not Part of Disposal Group, Total	5,390,000
Assets Held-for-sale, Long Lived, Fair Value Disclosure	4,300,000
Estimated cost to sell, property	170,000
Asset Impairment Charges, Total	$ (1,260,000)
Interest Rate Swap [Member]
Derivative, Number of Instruments Held, Total			1
Derivative, Notional Amount			$ 10,000,000

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Note 17 - Discontinued Operations - Results of Discontinued Operations (Details) - Drybulk Fleet [Member] - Discontinued Operations, Disposed of by Means Other than Sale, Spinoff [Member] - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Voyage revenue		$ 25,934,204	$ 20,280,215
Commissions (including, $253,503, $324,178 and nil respectively, to related party)		(1,411,333)	(1,122,196)
Voyage expenses		(410,676)	(2,396,318)
Vessel operating expenses (including, $102,131, $115,026 and nil, respectively, to related party)		(9,183,152)	(6,892,388)
Drydocking expenses		(1,465,079)	(127,509)
Related party management fees		(1,701,340)	(1,409,716)
Vessel depreciation		(5,422,155)	(4,786,272)
General and administrative expenses (including $693,524, $731,456 and nil, respectively, to related party)		(2,346,502)	(917,160)
Operating income		3,993,967	2,628,656
Total other expenses, net		(2,874,232)	(1,778,955)
Net income		1,119,735	849,701
Dividend Series B Preferred Shares		(565,229)
Net income attributable to common shareholders		$ 554,506	$ 849,701