EX-99.1 2 d7732063_ex99-1.htm



EXHIBIT 99.1

Forward-Looking Statements

This report contains certain forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements regarding our or our management's expectations, hopes, beliefs, intentions or strategies regarding the future and other statements that are other than statements of historical fact. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words "anticipate", "believe", "continue", "could", "estimate", "expect", "intend", "may", "might", "plan", "possible", "potential", "predict", "project", "should", "would" and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.
 
The forward-looking statements in this report are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management's examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections. As a result, you are cautioned not to rely on any forward-looking statements.
 
In addition to these important factors and matters discussed elsewhere herein, important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include among other things:
 
·
changes in shipping industry trends, including charter rates, vessel values and factors affecting vessel supply and demand;
 
·
changes in seaborne and other transportation patterns;
 
·
changes in the supply of or demand for drybulk commodities, including drybulk commodities carried by sea, generally or in particular regions;
 
·
changes in the number of newbuildings under construction in the drybulk shipping industry;
 
·
changes in the useful lives and the value of our vessels and the related impact on our compliance with loan covenants;
 
·
the aging of our fleet and increases in operating costs;
 
·
changes in our ability to complete future, pending or recent acquisitions or dispositions;
 
·
our ability to achieve successful utilization of our expanded fleet;
 
·
changes to our financial condition and liquidity, including our ability to pay amounts that we owe and obtain additional financing to fund capital expenditures, acquisitions and other general corporate activities;
 
·
risks related to our business strategy, areas of possible expansion or expected capital spending or operating expenses;
 
·
changes in the availability of crew, number of off-hire days, classification survey requirements and insurance costs for the vessels in our fleet;
 
 

·
changes in our ability to leverage the relationships and reputation in the drybulk shipping industry of our third-party managers, V.Ships Limited, our technical manager, and Fidelity Marine Inc., our commercial manager;
 
·
changes in our relationships with our contract counterparties, including the failure of any of our contract counterparties to comply with their agreements with us;
 
·
loss of our customers, charters or vessels;
 
·
damage to our vessels;
 
·
potential liability from future litigation and incidents involving our vessels;
 
·
our future operating or financial results;
 
·
our ability to continue as a going concern;
 
·
acts of terrorism and other hostilities;
 
·
changes in global and regional economic and political conditions;
 
·
changes in governmental rules and regulations or actions taken by regulatory authorities, particularly with respect to the drybulk shipping industry; and
 
·
other factors listed from time to time in registration statements, reports or other materials that we have filed with or furnished to the U.S. Securities and Exchange Commission, including our most recent annual report on Form 20-F.
 
These factors could cause actual results or developments to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could materially harm our results or developments. Consequently, there can be no assurance that actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, us. Given these uncertainties, prospective investors are cautioned not to place undue reliance on such forward-looking statements.
 
We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. If one or more forward-looking statements are updated, no inference should be drawn that additional updates will be made with respect to those or other forward-looking statements.
 



2

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
The following management's discussion and analysis should be read in conjunction with our unaudited interim consolidated financial statements and related notes included herein. Unless the context indicates otherwise, references to the "Company", "we" or "our" include Seanergy Maritime Holdings Corp. and its subsidiaries. This discussion contains forward-looking statements that reflect our current views with respect to future events and financial performance. Our actual results may differ materially from those anticipated in these forward-looking statements.
 
Overview
 
We are an international shipping company specializing in the worldwide seaborne transportation of drybulk commodities. During 2015 we acquired eight drybulk vessels, comprising of six Capesizes and two Supramaxes, while during 2016 we acquired two additional Capesize vessels and in May 2017 we acquired an additional Capesize vessel.
 
Operating Results
 
Factors Affecting our Results of Operations Overview
 
We are an international shipping company specializing in the worldwide seaborne transportation of drybulk commodities. We currently own a modern fleet of eleven dry bulk carriers, consisting of nine Capesizes and two Supramaxes, with a combined cargo-carrying capacity of approximately 1,682,582 dwt and an average fleet age of about 8.5 years.
 
Important Measures for Analyzing Results of Operations
 
We use a variety of financial and operational terms and concepts. These include the following:
 
Ownership days. Ownership days are the total number of calendar days in a period during which we owned each vessel in our fleet. Ownership 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 recorded during that period.
 
Available days. Available days are the number of ownership days less the aggregate number of days that our vessels are off-hire due to major repairs, dry-dockings, lay-up or special or intermediate surveys. The shipping industry uses available days to measure the aggregate number of days in a period during which vessels should be capable of generating revenues.
 
Operating days. Operating days are the number of available days in a period less the aggregate number of days that our vessels are off-hire for any reason, including off-hire days between successive voyages, as well as other unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in a period during which vessels actually generate revenues.
 
Fleet utilization. Fleet utilization is the percentage of time that our vessels were generating revenues, and is determined by dividing operating days by ownership days for the relevant period.
 
Off-hire. The period a vessel is not being chartered or is unable to perform the services for which it is required under a charter.
 
Dry-docking.  We periodically dry-dock each of our vessels for inspection, repairs and maintenance and any modifications to comply with industry certification or governmental requirements.
 
Time charter. A time charter is a contract for the use of a vessel for a specific period of time during which the charterer pays substantially all of the voyage expenses, including port charges, bunker expenses, canal charges and other commissions. The vessel owner pays the vessel operating expenses, which include crew costs, provisions, deck and engine stores and spares, lubricants, insurance, maintenance and repairs. The vessel owner is also responsible for each vessel's dry-docking and intermediate and special survey costs. Time charter rates are usually fixed during the term of the charter. Prevailing time charter rates do fluctuate on a seasonal and year-to-year basis and may be substantially higher or lower from a prior time charter agreement when the subject vessel is seeking to renew the time charter agreement with the existing charterer or enter into a new time charter agreement with another charterer. Fluctuations in time charter rates are influenced by changes in spot charter rates.
 

3

 

 
Voyage charter.  A voyage charter is generally a contract to carry a specific cargo from a load port to a discharge port for an agreed-upon total amount. Under voyage charters, voyage expenses, such as port charges, bunker expenses, canal charges and other commissions, are paid by the vessel owner, who also pays vessel operating expenses.
 
TCE.  Time charter equivalent, or TCE, rate is defined as our net revenue less voyage expenses during a period divided by the number of our operating days during the period. Voyage expenses include port charges, bunker expenses, canal charges and other commissions.
 
Principal Factors Affecting Our Business
 
The principal factors that affect our financial position, results of operations and cash flows include the following:
 
·
number of vessels owned and operated;
 
·
voyage charter rates;
 
·
time charter trip rates;
 
·
period time charter rates;
 
·
the nature and duration of our voyage charters;
 
·
vessels repositioning;
 
·
vessel operating expenses and voyage costs;
 
·
maintenance and upgrade work;
 
·
the age, condition and specifications of our vessels;
 
·
issuance of our common shares and other securities;
 
·
amount of debt obligations; and
 
·
financing costs related to debt obligations.
 
We are also affected by the types of charters we enter into.  Vessels operating on period time charters and bareboat time charters provide more predictable cash flows, but can yield lower profit margins than vessels operating in the spot charter market, either on trip time charters or voyage charters, during periods characterized by favorable market conditions.
 
Vessels operating in the spot charter market generate revenues that are less predictable, but can yield increased profit margins during periods of improvements in drybulk rates. Spot charters also expose vessel owners to the risk of declining drybulk rates and rising fuel costs in case of voyage charters. All of our vessels in the nine month periods ended September 30, 2017 and 2016 operated in the spot charter market, except for the Lordship that we acquired on November 30, 2016 and which had been employed on a short-term time charter under her previous ownership and which time charter was extended for a period of about 18 months to about 22 months after June 2017 in direct continuation of the vessel's time charter and for the Partnership which was employed in June 2017 on a short-term time charter for a period of about 12 months to about 18 months.
 

4
 
 
Results of Operations
 
Nine months ended September 30, 2017 as compared to nine months ended September 30, 2016
 (In thousands of U.S. Dollars, except for share and per share data)
 

   
2017
    
2016
    
Change
  
   
(unaudited)
    
(unaudited)
    
Amount
    
%
  
Revenues:
                        
Vessel revenue, net
    
50,545
      
23,791
      
26,754
      
112
%
                                 
Expenses:
                                
Voyage expenses
    
(26,084
)
    
(15,030
)
    
(11,054
)
    
74
%
Vessel operating expenses
    
(14,049
)
    
(10,112
)
    
(3,937
)
    
39
%
Management fees
    
(752
)
    
(648
)
    
(104
)
    
16
%
General and administrative expenses
    
(3,298
)
    
(2,210
)
    
(1,088
)
    
49
%
Depreciation and amortization
    
(8,384
)
    
(6,677
)
    
(1,707
)
    
26
%
Operating loss
    
(2,022
)
    
(10,886
)
    
8,864
      
(81
)%
Other expenses:
                                
Interest and finance costs
    
(12,440
)
    
(6,817
)
    
(5,623
)
    
82
%
Gain on debt refinancing
    
11,392
      
-
      
11,392
      
-
  
Other, net
    
(27
)
    
(27
)
    
-
      
-
  
Total other expenses, net:
    
(1,075
)
    
(6,844
)
    
5,769
      
(84
)%
Net loss before income taxes
    
(3,097
)
    
(17,730
)
    
14,633
      
(83
)%
Income taxes
    
(22
)
    
-
      
(22
)
    
-
  
Net loss
    
(3,119
)
    
(17,730
)
    
14,611
      
(82
)%
                                 
Net loss per common share, basic
    
(0.09
)
    
(0.90
)
                
Weighted average number of common shares outstanding, basic
    
35,591,170
      
19,594,354
                  
 
Vessel Revenue, Net - The increase was attributable to the increase in prevailing charter rates and the increase in operating days.  We had 2,432 operating days in the first nine months of 2017 as compared to 1,795 operating days in the first six months of 2016. The TCE rate increased for the nine month period ended September 30, 2017 by 106% to $10,058 compared to $4,881 for the nine month period ended September 30, 2016. TCE rate is a non-GAAP measure.  Please see the reconciliation below of TCE rate to net revenues from vessels, the most directly comparable U.S. GAAP measure.
 
Voyage Expenses - The increase was attributable to the increase in ownership days and higher fuel prices. We had 2,852 ownership days in the first nine months of 2017 as compared to 2,192 ownership days in the first nine months of 2016. We acquired two Capesize vessels between November and December 2016 and an additional Capesize vessel in May 2017.
 
Vessel Operating Expenses - The increase was attributable to the increase in ownership days. We had 2,852 ownership days in the first nine months of 2017 as compared to 2,192 ownership days in the first nine months of 2016. We acquired two Capesize vessels between November and December 2016 and an additional Capesize vessel in May 2017.
 
Management Fees - The increase was attributable to the increase in ownership days. We had 2,852 ownership days in the first nine months of 2017 as compared to 2,192 ownership days in the first nine months of 2016. We acquired two Capesize vessels between November and December 2016 and an additional Capesize vessel in May 2017 partly offset by a decrease in monthly management fee. The monthly management fee per vessel payable to our technical manager is $8 as of January 1, 2017, compared to $9.65 up to December 31, 2016.
 
General and Administrative Expenses – The increase is mainly attributable to $0.6 million of stock based compensation amortization in the first nine months of 2017 for shares granted pursuant to our 2011 Equity Incentive Plan and to others, compared to $0.1 million of respective stock based compensation amortization in the first nine months of 2016.
 
Depreciation and Amortization – The increase was attributable to the increase in ownership days. We had 2,852 ownership days in the first nine months of 2017 as compared to 2,192 ownership days in the first nine months of 2016. We acquired two Capesize vessels between November and December 2016 and an additional Capesize vessel in May 2017.
 

5

 
Interest and Finance Costs - The increase was primarily attributable to our new loan facility with NSF entered into in November 2016, the two loan facilities entered into with Jelco Delta Holding Corp., or Jelco, a company affiliated with Claudia Restis, who is also our major shareholder, or Sponsor, in October 2016 and May 2017, and the ATB loan facility entered into in May 2017. The weighted average interest rate on our outstanding debt and convertible promissory notes for the nine months ended 2017 and 2016 was approximately 5.54% and 3.9%, respectively.
 
Gain on debt refinancing - The $11.4 million gain was recognized following the early settlement and refinancing of our Natixis loan facility pursuant to the March 7, 2017 settlement agreement.
 
 
Performance Indicators
 
The figures shown below are non-GAAP statistical ratios used by management to measure performance of our vessels. For the "Fleet Data" figures, there are no comparable US GAAP measures.
 
   
Nine months ended September 30,
  
Fleet Data:
  
2017
    
2016
  
           
Ownership days
    
2,852
      
2,192
  
Available days(1)
    
2,839
      
2,019
  
Operating days(2)
    
2,432
      
1,795
  
Fleet utilization
    
85
%
    
82
%
                 
Average Daily Results:
                
TCE rate(3)
  
$
10,058
    
$
4,881
  
Daily Vessel Operating Expenses(4)
  
$
4,806
    
$
4,613
  
                 
(1)
During the nine months ended September 30, 2017, we incurred 13 off-hire days for one vessel drydocking. During the nine months ended September 30, 2016 we incurred 173 off-hire days for a vessel lay-up.
 
(2)
During the nine months ended September 30, 2017, we incurred 402 off-hire days between voyages and 5 off-hires days due to other unforeseen circumstances. In the nine months ended September 30, 2016, we incurred 217 off-hire days between voyages and 7 off-hires due to other unforeseen circumstances.
 
(3)
We include TCE rate, a non-GAAP measure, as we believe it provides additional meaningful information in conjunction with net revenues from vessels, the most directly comparable U.S. GAAP measure, because it assists our management in making decisions regarding the deployment and use of our vessels and in evaluating their financial performance. Our calculation of TCE rate may not be comparable to that reported by other companies. The following table reconciles our net revenues from vessels to TCE rate.
 
 
Nine months ended September 30,
  
 
2017
  
2016
  
 (In thousands of US Dollars, except operating days and TCE rate)
        
         
Net revenues from vessels
  
$
50,545
    
$
23,791
  
Voyage expenses
    
(26,084
)
    
(15,030
)
Net operating revenues
  
$
24,461
    
$
8,761
  
Operating days
    
2,432
      
1,795
  
Daily time charter equivalent rate
  
$
10,058
    
$
4,881
  
 
(4)          Vessel operating expenses include crew costs, provisions, deck and engine stores, lubricants, insurance, maintenance and repairs. Daily Vessel Operating Expenses are calculated by dividing vessel operating expenses by ownership days for the relevant time periods. The following table reconciles the Company's vessel operating expenses to the daily vessel operating expenses.
 
 
Nine months ended September 30,
  
 
2017
  
2016
  
(In thousands of US Dollars, except ownership days and Daily Vessel Operating Expenses)
        
         
Vessel operating expenses
  
$
14,049
      
10,112
  
Less: Pre-delivery expenses
    
343
      
-
  
Vessel operating expenses before pre-delivery expenses
  
$
13,706
    
$
10,112
  
Ownership days
    
2,852
      
2,192
  
Daily Vessel Operating Expenses
  
$
4,806
    
$
4,613
  


6

 
EBITDA and Adjusted EBITDA
 
   
Nine months ended
September 30,
  
   
2017
    
2016
  
EBITDA reconciliation:
            
Net loss
    
(3,119
)
    
(17,730
)
                 
Add: Net interest expense
    
12,431
      
6,817
  
Add: Depreciation and amortization
    
8,384
      
6,677
  
Add: Taxes
    
22
      
-
  
EBITDA(1)
    
17,718
      
(4,236
)
                 
Less: Gain on debt refinancing
    
11,392
      
-
  
Adjusted EBITDA(1)
    
6,326
      
(4,236
)
 
(1)          Earnings before interest, taxes, depreciation and amortization ("EBITDA") represents the sum of net income/(loss), interest and finance costs, interest income, depreciation and amortization and, if any, income taxes during a period. Adjusted EBITDA represents EBITDA adjusted to exclude the gain on debt refinancing that the Company believes is not indicative of the ongoing performance of its core operations. EBITDA and Adjusted EBITDA are not recognized measurements under U.S. GAAP. These non-GAAP measures should not be considered in isolation from, as a substitute for, or superior to, financial measures prepared in accordance with U.S. GAAP. In addition, these non-GAAP measures do not have standardized meanings, and are therefore unlikely to be comparable to similar measures presented by other companies.
 
Liquidity and Capital Resources
 
Our principal source of funds has been our operating cash flows, long-term borrowings from banks and our Sponsor, and equity provided by the capital markets and our Sponsor. Our principal use of funds has primarily been capital expenditures to establish our fleet, maintain the quality of our drybulk vessels, comply with international shipping standards and environmental laws and regulations, fund working capital requirements and make principal repayments and interest payments on our outstanding debt obligations.
 
Our funding and treasury activities are conducted in accordance to corporate policies to maximize investment returns while maintaining appropriate liquidity for both our short and long term needs. This includes arranging borrowing facilities on a cost-effective basis. Cash and cash equivalents are held primarily in U.S. dollars, with minimal amounts held in Euros.
 
As of September 30, 2017, we had cash and cash equivalents of $8.4 million, as compared to $12.9 million as of December 31, 2016.
 
Working capital is equal to current assets minus current liabilities, including the current portion of long-term debt. As of September 30, 2017, we had a working capital deficit of $14.6 million. Our working capital primarily decreased due to debt principal payments classified to current liabilities from non-current liabilities as of September 30, 2017, as well as a decrease in our cash and cash equivalents balance due to debt installment payments and cash paid for interest.
 
As of September 30, 2017, we had total indebtedness under our credit facilities of $218.6 million, excluding unamortized financing fees, as compared to $216 million as of December 31, 2016.

Our contractual obligations, as of September 30, 2017, primarily relate to debt and interest repayments of approximately $35.9 million under our credit facilities and convertible promissory notes by September 30, 2018. Our cash flow projections indicate that cash on hand and cash to be provided by operating activities, based on current and projected charter rates, will be sufficient to cover the liquidity needs that become due in the twelve-month period ending one year after the financial statements' issuance, as well as meet the debt covenants during that same period.
 

7

 
Cash Flows
 
 
Nine months ended September 30,
  
 
2017
(unaudited)
  
2016
(unaudited)
  
Cash Flow Data:
        
Net cash used in operating activities
    
(2,475
)
    
(12,295
)
Net cash used in investing activities
    
(32,756
)
    
-
  
Net cash provided by financing activities
    
30,221
      
12,900
  

 
Nine months ended September 30, 2017 as compared to nine months ended September 30, 2016

Operating Activities:  Net cash used in operating activities amounted to $2.5 million for the nine month period ended September 30, 2017, consisting of net loss after non-cash items of $3.8 million plus a decrease in working capital of $1.3 million. Net cash used in operating activities for the nine month period ended September 30, 2016, was adjusted by $7.7 million of non-cash items, attributable to depreciation and amortization charges for the period and an increase in working capital of $2.2 million.
 
Investing Activities: The 2017 cash outflow resulted from the acquisition of our vessel Partnership in May 2017.
 
Financing Activities: The 2017 cash inflow resulted from proceeds of $34.5 million obtained from the ATB loan facility, proceeds of $16.2 million obtained from the Jelco loan facility dated May 24, 2017, proceeds of $9 million obtained from convertible promissory note to Jelco dated September 27, 2017 and proceeds of $2.7 million from common stock issuances. The 2017 cash inflow was offset by debt repayments of: $28 million with respect to the Natixis loan facility, $1.6 million with respect to the UniCredit loan facility, $1.1 million with respect to the HSH loan facility, $0.6 million with respect to the ATB loan facility, $0.5 million with respect to the March 2015 Alpha Bank loan facility and $0.6 million loan finance fees payments. The 2016 cash inflow resulted from proceeds of $9.4 million drawn down from our unsecured revolving convertible promissory note issued on September 7, 2015 to Jelco, which proceeds were used for general corporate purposes, proceeds of $4.1 million from the registered direct offering that was completed on August 10, 2016 and debt repayments of $0.6 million related to the March 2015 Alpha Bank loan facility.
 
Description of Indebtedness
 
Credit Facilities
 
March 2015 Alpha Bank A.E. Loan Facility
 
On March 6, 2015, we entered into a $8.75 million secured floating interest rate loan facility with Alpha Bank A.E. to partly finance the acquisition of the Leadership. On December 23, 2015 and July 28, 2016, we and Alpha Bank A.E. entered into a first and second supplemental agreement, respectively, to the facility agreement. As amended to date, the facility provides as follows: the facility bears interest at LIBOR plus a margin of 3.75% and is repayable in twenty consecutive quarterly installments. The first four installments are $0.2 million each, the next installment is $0.25 million, the next four installments are $0.1 million each and the next eleven installments are $0.25 million each, with a final balloon payment of $4.55 million due on March 17, 2020. The borrower under the facility is our applicable vessel-owning subsidiary and the facility is guaranteed by Seanergy Maritime Holdings Corp. The facility is secured by a first preferred mortgage over the vessel, a general assignment covering earnings, insurances, charter parties and requisition compensation, an account pledge agreement and technical and commercial managers' undertakings. The facility also imposes certain operating and financing covenants. Certain of these covenants may significantly limit or prohibit, among other things, the borrower's ability to incur additional indebtedness, create liens, sell capital shares of subsidiaries, engage in mergers, or sell the vessel without the consent of the relevant lenders. Certain other covenants require ongoing compliance, including requirements that we, on a consolidated basis, maintain (i) from June 30, 2018, a percentage ratio of debt minus cash to market value adjusted total assets minus cash that does not exceed 75%, (ii) from June 30, 2018, a ratio of EBITDA to net interest expense that is not less than 2:1, and (iii) liquidity in a specified amount. In addition, from July 1, 2017, the borrower shall ensure that the market value of the vessel plus any additional security to total facility outstanding shall not be less than 125%. The lender may accelerate the maturity of the facility and foreclose upon the collateral securing the indebtedness upon the occurrence of certain events of default, including a failure to comply with any of the covenants contained in the facility. The facility also restricts our ability to distribute dividends to our shareholders in excess of 50% of our net income except if our cash and marketable securities are equal or greater than the amount required to meet our debt service for the following eighteen-month period. As of September 30, 2017, $7.1 million was outstanding under the facility, excluding the unamortized financing fees.
 

8

 
HSH Nordbank AG Loan Facility
 
On September 1, 2015, we entered into a $44.4 million senior secured loan facility with HSH Nordbank AG to finance the acquisition of the Geniuship and Gloriuship. On May 16, 2016 and February 23, 2017 we and HSH Nordbank AG entered into supplemental letter agreements to the facility agreement and related guarantee. As amended to date the facility provides as follows: the facility bears interest at LIBOR plus a margin between 3.25% and 3.6% and is repayable in twelve consecutive quarterly instalments of $1.0 million each, commencing on September 30, 2017, with a final balloon payment of $31.8 million due on June 30, 2020. Effective as of March 1, 2016, a mandatory prepayment of $3 million required under the facility is deferred to June 30, 2018. The borrowers under the facility are our two applicable vessel-owning subsidiaries and the facility is guaranteed by Seanergy Maritime Holdings Corp. The facility was made available in two advances. On October 13, 2015, we drew the first advance of $27.6 million in order to finance the acquisition of the Geniuship. On November 3, 2015, we drew the second advance of $16.8 million in order to finance the acquisition of the Gloriuship. The facility is secured by a first priority mortgage over each of the vessels, a general assignment covering earnings, charter parties, insurances and requisition compensation for each of the vessels, an earnings account pledge agreement for each of the vessels, technical and commercial managers' undertakings, a shares security deed of the two borrowers' shares and a master agreement assignment. The facility also imposes certain operating and financing covenants. Certain of these covenants may significantly limit or prohibit, among other things, the borrowers' ability to incur additional indebtedness, sell capital shares of subsidiaries, make certain investments, engage in mergers and acquisitions, or sell the vessels without the consent of the relevant lenders. Certain other covenants require ongoing compliance, including requirements that we, on a consolidated basis, maintain (i) from June 30, 2018, a percentage ratio of total liabilities (excluding any shareholders' convertible notes)  to total assets (less any activated goodwill) that does not exceed 75%, (ii) from June 30, 2018, a ratio of EBITDA (excluding any gains and losses on the disposal of subsidiaries or vessels and impairments on goodwill and vessels) to net interest expense that is not less than 2:1, and (iii) liquidity in a specified amount. In addition, after April 30, 2018, the borrowers shall ensure that the market value of the Geniuship and Gloriuship plus any additional security to the total facility outstanding and any Swap Exposure (as defined in the HSH Nordbank AG Loan Facility) shall not be less than 120%. The facility also places a restriction on the borrowers' ability to distribute dividends to Seanergy Maritime Holdings Corp., in case the market values of Geniuship and Gloriuship plus any additional security is less than 145% of the total facility outstanding and the cash balance of the borrowers after distribution of dividends is less than $3 million. The $3 million condition on payment of dividends does not apply after June 30, 2018. As of September 30, 2017, $43.4 million was outstanding under the facility, excluding the unamortized financing fees.
 
UniCredit Bank AG Loan Facility
 
On September 11, 2015, we entered into a $52.7 million secured term loan facility with UniCredit Bank AG to partly finance the acquisition of the Premiership, Gladiatorship and Guardianship. On June 3, 2016, July 29, 2016, March 7, 2017 and September 25, 2017 we and UniCredit Bank AG entered into an amendment, a supplemental letter agreement, another supplemental letter agreement and another supplemental letter agreement, respectively, to the facility agreement. As amended to date, the facility bears interest at LIBOR plus a margin of between 2.75% and 3.20%. Effective as of June 13, 2016, the margin is split into a cash portion and a capitalized portion. The capitalized portion of the margin was repaid in full on June 26, 2017. The facility is repayable in fifteen consecutive quarterly instalments of $1.6 million each, commencing on June 26, 2017, with a final balloon payment of $29.4 million due on December 28, 2020. The September 25, 2017 supplemental letter agreement deferred an installment payment due on September 25, 2017 to October 2, 2017. The borrowers under the facility are our three applicable vessel-owning subsidiaries, and the facility is guaranteed by Seanergy Maritime Holdings Corp. The facility was made available in three tranches. On September 11, 2015, we drew the first tranche of $25.4 million to partly finance the acquisition of the Premiership. On September 29, 2015, we drew the second tranche of $13.6 million to partly finance the acquisition of the Gladiatorship. On October 21, 2015, we drew the third tranche of $13.6 million to partly finance the acquisition of the Guardianship. The facility is secured by a first preferred mortgage over each of the relevant vessels, a general assignment covering earnings, charter parties, insurances and requisition compensation for each of the vessels, an account pledge agreement for each of the vessels, technical and commercial managers' undertakings, a shares security deed of the three applicable vessel owning subsidiaries' shares and a hedging agreement assignment. The facility also imposes certain operating and financing covenants. Certain of these covenants may significantly limit or prohibit, among other things, the borrowers' ability to incur additional indebtedness, create liens, engage in mergers, or sell the vessels without the consent of the relevant lenders. Certain other covenants require ongoing compliance, including requirements that we, on a consolidated basis, maintain (i) from June 30, 2018, a Leverage Ratio (as defined in the UniCredit Bank AG Loan Facility) that does not exceed 75%, (ii) from June 30, 2018, a ratio of EBITDA to net interest expense (each as defined in the UniCredit Bank AG Loan Facility) that is not less than 2:1, and (iii) liquidity in a specified amount. In addition, from May 1, 2018, the borrowers shall ensure that the market value of the Premiership, Gladiatorship and Guardianship plus any additional security to total facility outstanding and the cost (if any) of terminating any transactions entered into under the Hedging Agreement (as defined in the UniCredit Bank AG Loan Facility) shall not be less than 120%. Moreover, from July 1, 2017 until September 30, 2017, the borrowers had to maintain in aggregate an additional $1.5 million as minimum liquidity. As of September 30, 2017, $51.2 million was outstanding under the facility, excluding the unamortized financing fees.
 

9

 
November 2015 Alpha Bank A.E. Loan Facility
 
On November 4, 2015, we entered into a $33.8 million secured floating interest rate loan facility with Alpha Bank A.E. to partly finance the acquisition of the Squireship. On July 28, 2016 we and Alpha Bank A.E. entered into a first supplemental agreement to the facility agreement, and on February 8, 2017, we and Alpha Bank A.E. agreed to an additional amendment to the facility.  As amended to date, the facility provides as follows: the facility bears interest at LIBOR plus a margin of 3.50% and is repayable in sixteen consecutive quarterly instalments of $0.8 million each, commencing on February 12, 2018, with a final balloon payment of $20.3 million due on November 10, 2021. The borrower under the facility is our applicable vessel-owning subsidiary, and the facility is guaranteed by Seanergy Maritime Holdings Corp. The facility is secured by a first preferred mortgage over the vessel, a general assignment covering earnings, insurances, charter parties and requisition compensation, an account pledge agreement and technical and commercial managers' undertakings. The facility also imposes certain operating and financing covenants. Certain of these covenants may significantly limit or prohibit, among other things, the borrower's ability to incur additional indebtedness, create liens, sell capital shares of subsidiaries, engage in mergers, or sell the vessel without the consent of the relevant lenders. Certain other covenants require ongoing compliance, including requirements that we, on a consolidated basis, maintain (i) from June 30, 2018, a percentage ratio of debt minus cash to value market adjusted total assets minus cash that does not exceed 75%, (ii) from June 30, 2018, a ratio of EBITDA to net interest expense that is not less than 2:1, and (iii) liquidity in a specified amount. In addition, from April 1, 2018, the borrower shall ensure that the market value of Squireship plus any additional security to total facility outstanding shall not be less than 125%. The facility also restricts our ability to distribute dividends to our shareholders in excess of 50% of our net income except if our cash and marketable securities are equal or greater than the amount required to meet our debt service for the following eighteen-month period. As of September 30, 2017, $33.8 million was outstanding under the facility, excluding the unamortized financing fees.
 
Natixis Loan Facility
 
On December 2, 2015, we entered into a $39.4 million secured term loan facility with Natixis to partly finance the acquisition of the Championship. On March 7, 2017, we and Natixis entered into a supplemental agreement and a settlement agreement, the Natixis settlement agreement, to the loan facility.  As amended, the facility bears interest at LIBOR plus a margin of 2.50% and is repayable in four installments: $2.0 million due April 28, 2017, $2.0 million due June 30, 2017, $3.0 million due September 29, 2017 and $32.4 million due May 2, 2018. The first two installments have been paid. Pursuant to the terms of the Natixis settlement agreement, we had an option, until September 29, 2017, to satisfy the full amount of the facility by making a prepayment of $28.0 million, which included any payments made in connection with the first three installment payments.  Upon such prepayment, the facility would be deemed satisfied in full. The borrower under the Natixis Loan Facility is our applicable vessel-owning subsidiary, and the facility is guaranteed by Seanergy Maritime Holdings Corp. The facility is secured by a first priority mortgage over the vessel, a general assignment covering earnings, insurances and requisition compensation, an account pledge agreement and technical and commercial managers' undertakings. The facility also imposes certain operating and financing covenants. Certain of these covenants may significantly limit or prohibit, among other things, the borrower's ability to incur additional indebtedness, create liens, engage in mergers, or sell the vessels without the consent of the relevant lenders. We have received waivers until May 2, 2018, the maturity date of the loan, for certain of the covenants that require ongoing compliance in future, including requirements that (i) we maintain a Leverage Ratio (as defined in the Natixis Loan Facility) that does not exceed 75%, (ii) we maintain a ratio of EBITDA to net interest expense (each as defined in the Natixis Loan Facility) that is not less than 2:1 and (iii) we maintain liquidity in a specified amount. In addition, we have received waiver from February 1, 2017 until May 2, 2018, the maturity date of the loan, for the market value of the Championship plus any additional security to total facility outstanding undertaking, which shall not be less than 120%.
 
On September 29, 2017, our lender, Natixis, entered into a deed of release and fully discharged the $35.4 million balance of our secured term loan facility obligations to the lender for a total settlement amount of $24.0 million. The first-priority mortgage over the Championship and all other securities created in favour of Natixis were irrevocably and unconditionally released pursuant to the deed of release. We recognized a gain from the Natixis refinancing of $11.4 million.
 

10

 
NSF Loan Facility

On November 28, 2016, we entered into a $32 million secured term loan facility with NSF to partly finance the acquisition of the Lordship and the Knightship. The facility bears fixed interest at 11% per annum, which is payable quarterly, and the principal is repayable in four consecutive quarterly instalments of $0.9 million each, commencing on March 13, 2019 and a final balloon payment of $28.4 million due on December 13, 2019, which is the initial maturity date assuming that we do not choose to extend the facility for one or two maximum yearly periods as described below. The facility may only be extended twice so that the final maturity date shall never extend beyond the date falling on the fifth anniversary of the final drawdown date. The option to extend the facility for up to two years from the initial maturity date is subject to an extension fee of 1.75% per extended year. The borrowers under the facility are our applicable vessel-owning subsidiaries. The facility is secured by first priority mortgages and general assignment covering earnings, insurances and requisition compensation for each of the vessels, account pledge agreements, share pledge agreements of our two vessel-owning subsidiaries and technical and commercial managers' undertakings. The facility also imposes certain operating and financing covenants. Certain of these covenants may significantly limit or prohibit, among other things, the borrowers' ability to incur additional indebtedness, create liens, engage in mergers, or sell the vessels without the consent of the relevant lenders. Certain other covenants require ongoing compliance, including requirements that (i) the borrowers maintain restricted deposits of $3 million as prepaid interest to be applied equally against the first eight quarterly interest payments of the facility, the first interest instalment commenced on March 13, 2017, (ii) the borrowers maintain an asset coverage ratio with respect to the additional vessels equal to at least 112.5% and (iii) the borrowers accumulate in each of their earnings accounts within three months from each advance relevant drawdown date, and maintain throughout the security period, a minimum amount of at least $0.25 million per additional vessel, or $0.5 million in total. The facility also places a restriction on each borrower's ability to distribute dividends to Seanergy Maritime Holdings Corp. or make any other form of distribution or effect any return of share capital if the borrower maintains a balance in its earnings account that when aggregated with a minimum liquidity amount is less than $1.0 million. As of September 30, 2017, $32 million was outstanding under the facility, excluding the unamortized financing fees.

Jelco Loan Facility dated October 4, 2016

On October 4, 2016, we entered into a $4.2 million loan facility with Jelco to finance the initial deposits for the Lordship and the Knightship.  On November 17, 2016 and November 28, 2016, we entered into amendments to this facility, which, among other things, increased the aggregate amount that may be borrowed under the facility to up to $12.8 million (to partially finance the remaining payment for the Lordship and the Knightship) and extended the maturity date to the earlier of (i) February 28, 2018 and (ii) the date falling 14 months from the final drawdown date. The maturity date may, at our option, be extended to the earlier of (i) February 28, 2019 and (ii) the date falling 26 months from the final drawdown date. The Company intends to extend the maturity date. This facility currently bears interest at LIBOR plus a margin of 7% and is repayable in one bullet payment together with accrued interest thereon to the maturity date. The margin may be increased by 1.5% if the maturity date is extended in accordance with the terms of the facility. Seanergy Maritime Holdings Corp. is the borrower under this facility. This facility is secured by second priority mortgages and general assignments covering earnings, insurances and requisition compensation on the Lordship and the Knightship, and the vessel owning subsidiaries that own the Lordship and the Knightship have provided a guarantee to Jelco for Seanergy Maritime Holdings Corp.'s obligations under this facility. As of September 30, 2017, $5.9 million was outstanding under this facility, excluding the unamortized financing fees.

Jelco Backstop Facility dated March 28, 2017

On March 28, 2017, we entered into a $47.5 million secured loan agreement with Jelco, or the Jelco Backstop Facility. Under the terms of the Jelco Backstop Facility, Jelco would make available this facility to us in the event that we were not able to secure third party financing to partially fund the Natixis settlement agreement and the balance of the purchase price of the Partnership. The Jelco Backstop Facility was terminated on September 27, 2017, and no amounts were drawn down under this facility.

11


ATB Loan Facility

On May 24, 2017, we entered into an up to $18 million term loan facility with Amsterdam Trade Bank N.V. to partially finance the acquisition of the Partnership. The facility bears interest at LIBOR plus a margin of 4.65% per annum which is payable quarterly and the principal is repayable by twenty equal consecutive quarterly installments being $200 thousand each, by additional quarterly repayments of any Excess Cash (as defined in the loan facility) up to $3.6 million in total, and a final balloon payment due on the maturity date, May 26, 2022. On August 28, 2017, an additional repayment of $0.38 million was made along with the first installment payment. The loan was made available in two drawdowns: (i) $13.3 million was drawn down on May 26, 2017 and (ii) $4.7 million was drawn down on June 22, 2017. The borrower under the ATB Loan Facility is our applicable vessel-owning subsidiary. The loan is secured by a first priority mortgage and a general assignment covering earnings, insurances and requisition compensation over the Partnership, an earnings account pledge agreement, technical and commercial managers' undertakings and a charter assignment. The facility also imposes certain operating and financing covenants. Certain of these covenants may significantly limit or prohibit, among other things, the borrowers' ability to incur additional indebtedness, create liens, engage in mergers, or sell the vessels without the consent of the relevant lenders. From June 30, 2018, certain other guarantor covenants require ongoing compliance that Seanergy Maritime Holdings Corp., on a consolidated basis, to maintain (i) a percentage ratio of net bank debt to market value adjusted total assets that does not exceed 75% and (ii) a ratio of EBITDA to net interest expense that is not less than 2:1. In addition, certain other covenants require ongoing compliance, including requirements that (i) the borrower maintains at all times a credit balance of at least $0.5 million, (ii) Seanergy Maritime Holdings Corp. maintains at all times beginning on June 30, 2017 a credit balance of at least $0.5 million per vessel, (iii) the borrower maintains an asset coverage ratio equal to at least 145% beginning on the utilization date of the first drawdown and ending on the date falling on the second anniversary and 165% at all times thereafter. The facility also places a restriction on the borrower's ability to distribute dividends to Seanergy Maritime Holdings Corp. or make any other form of distribution or effect any return of share capital unless additional repayments in an aggregate amount of $3.6 million have been made.

On September 25, 2017, in order to partially fund the refinancing of our Natixis facility, we amended and restated the ATB Loan Facility, increasing the loan amount of the facility by an additional tranche of $16.5 million, or Tranche B. The principal of Tranche B is repayable by nineteen consecutive quarterly installments, being $0.2 million each of the first four installments, $0.3 million each of the subsequent four installments, and $0.4 million each of the subsequent eleven installments, in addition to a balloon installment of any outstanding indebtedness due on the maturity date, May 26, 2022. On each quarterly repayment date, an additional repayment of at least $0.01 million, or an integral multiple of that amount, of any excess cash standing to the credit of the relevant vessel's operating account shall be applied towards reducing the balloon installment. Excess cash, as defined in the loan facility, is any amount above $1.0 million. The aggregate amount of the additional repayments, with regard to Tranche B, shall not exceed $1.25 million. The loan facility requires that the borrower shall maintain in aggregate $0.5 million as minimum liquidity. The amendment and restatement of the facility did not alter the interest rate, the maturity date, the amortization and the repayment terms of the existing tranche under the loan facility, or the financial covenants applicable to the Company as guarantor. The amended and restated loan facility is secured by first preferred mortgages and general assignments covering earnings, insurances and requisition compensation over the Partnership and Championship, earnings account pledges, shares security deeds relating to the shares of both vessels' owning subsidiaries, technical and commercial managers' undertakings and, where applicable, charter assignments. As of September 30, 2017, $33.9 million was outstanding under the facility, excluding the unamortized financing fees.

Jelco Loan Facility originally dated May 24, 2017 and amended and restated on September 27, 2017

On May 24, 2017, we entered into an up to $16.2 million loan facility with Jelco to partially finance the acquisition of the Partnership. On June 22, 2017 and on August 22, 2017, we entered into supplemental letters with Jelco to amend the terms of this loan facility, whereby the repayment of $4.8 million was deferred until September 29, 2017.

On September 27, 2017, we amended and restated the May 24, 2017 Jelco Loan Facility. The amended facility currently bears interest at three-month LIBOR plus a margin of 6% per annum which is payable quarterly and the principal is repayable in one bullet payment due on the maturity date. The maturity date, which was deferred from May 24, 2018 to May 24, 2019, may, at our option, be extended to May 24, 2020, from May 24, 2019 previously. The margin will be increased by 1% if the maturity date is extended. The facility is secured by the following amended cross collaterals: second preferred mortgages over the Championship and Partnership, second priority general assignments covering earnings, insurances and requisition compensation over each vessel, guarantees from our vessel-owning subsidiaries, and a guarantee from our wholly-owned subsidiary, Emperor Holding Ltd., which is the holding company of two of our ship-owing subsidiaries owning vessels Lordship and Knightship. As of September 30, 2017, $11.5 million was outstanding under this facility, excluding the unamortized financing fees.

12

Convertible Promissory Notes

 
On March 12, 2015, we issued a convertible promissory note for $4.0 million to Jelco. The note, as amended, is repayable in four installments with the first installment occurring six months after the delivery date of the Leadership and the other three installments semi-annually commencing four years after the delivery date of the Leadership, along with a balloon installment of $3.2 million payable on the final maturity date in the first quarter of 2020. The note bears interest at three-month LIBOR plus a margin of 5% with interest payable quarterly. At Jelco's option, the principal amount under the convertible note or any part thereof may be paid at any time in common shares at a conversion price of $0.90 per share. Jelco also received customary registration rights with respect to any shares received upon conversion of the note. As of September 30, 2017, $3.8 million was outstanding under the note.
 
On September 7, 2015, we issued a revolving convertible promissory note to Jelco for an amount up to $6.8 million, or the Applicable Limit. Following nine amendments to the note between December 2015 and September 2017, the Applicable Limit was raised to $21.2 million. The Applicable Limit will be reduced by $3.3 million four years following the first drawdown. The aggregate outstanding principal is repayable on the third quarter of 2020, however, principal is also repayable earlier to the extent that the aggregate outstanding principal exceeds the Applicable Limit (as it may be reduced from time to time). The note bears interest at three-month LIBOR plus a margin of 5% with interest payable quarterly. At Jelco's option, our obligation to repay the principal amount under the revolving convertible note or any part thereof may be paid in common shares at a conversion price of $0.90 per share. Jelco also received customary registration rights with respect to any shares received upon conversion of the note. As of September 30, 2017, $21.2 million was outstanding under the note.
 
On September 27, 2017, we issued a convertible promissory note to Jelco for an amount of $13.75 million. The note is repayable by two consecutive annual installments of $1.375 million, with the first installment occurring 24 months after the drawdown date, along with a balloon installment of $11 million payable four years after the drawdown date. The note bears interest at three-month LIBOR plus a margin of 5% with interest payable quarterly. At Jelco's option, the whole or any part of the principal amount under the note may be paid at any time in common shares at a conversion price of $0.90 per share. Jelco also received customary registration rights with respect to all shares upon conversion of the note. The note is secured by second preferred mortgages and second priority general assignments covering earnings, insurances and requisition compensation over the Championship and the Partnership and guarantees from our vessel-owning subsidiaries; all cross collateralized with the loan entered into with Jelco on May 24, 2017, as amended and restated. Of the $13.75 million under the note, $4.75 million were used to make a mandatory prepayment under the May 2017 Jelco loan facility. As of September 30, 2017, $13.75 million was outstanding under the note.
 
Our wholly-owned subsidiary Emperor Holding Ltd. has provided a guarantee, dated September 27, 2017, to Jelco for Seanergy Maritime Holding Corp.'s obligations under all these notes.
 
Tabular Disclosure of Contractual Obligations
 
The following table sets forth our contractual obligations as of September 30, 2017 (in thousands of U.S. Dollars):
 
Contractual Obligations
  
Total
    
less than 1 year
    
1-3 years
    
3-5 years
    
more than 5 years
  
Long-term debt and debt to related party
  
$
218,604
    
$
20,089
    
$
115,149
    
$
83,366
    
$
-
  
Convertible promissory notes
    
38,715
      
-
      
27,715
      
11,000
      
-
  
Interest expense - long term debt and debt to related party
    
38,029
      
13,272
      
20,055
      
4,702
      
-
  
Interest expense - convertible promissory notes
    
8,072
      
2,532
      
4,775
      
765
      
-
  
Total
  
$
303,420
    
$
35,893
    
$
167,694
    
$
99,833
    
$
-
  
                                         

13
Seanergy Maritime Holdings Corp.
 
INDEX TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 


   
Page
     
Consolidated Balance Sheets as of September 30, 2017 (unaudited) and December 31, 2016
  
F-2
     
Unaudited Interim Consolidated Statements of Loss for the nine-month periods ended September 30, 2017 and 2016
  
F-3
     
Unaudited Interim Consolidated Statements of Stockholders' Equity for the nine-month periods ended September 30, 2017 and 2016
  
F-4
     
Unaudited Interim Consolidated Statements of Cash Flows for the nine-month periods ended September 30, 2017 and 2016
  
F-5
     
Notes to Unaudited Interim Consolidated Financial Statements
  
F-6































Seanergy Maritime Holdings Corp.
Consolidated Balance Sheets
As of September 30, 2017 (unaudited) and December 31, 2016
 (In thousands of US Dollars, except for share and per share data)

   
Notes
    
2017
    
2016
  
ASSETS
                  
Current assets:
                  
     Cash and cash equivalents
    
4
      
8,438
      
12,858
  
     Restricted cash
    
4, 7
      
1,550
      
1,550
  
     Accounts receivable trade, net
            
2,552
      
2,783
  
     Inventories
    
5
      
4,201
      
4,049
  
     Other current assets
            
519
      
1,089
  
Total current assets
            
17,260
      
22,329
  
                         
Fixed assets:
                        
     Vessels, net
    
6
      
257,266
      
232,109
  
     Office equipment, net
            
2
      
19
  
Total fixed assets
            
257,268
      
232,128
  
                         
Other non-current assets:
                        
     Deferred charges
            
1,122
      
1,572
  
     Restricted cash, non-current
    
4, 7
      
910
      
1,500
  
     Other non-current assets
            
-
      
5
  
  TOTAL ASSETS
            
276,560
      
257,534
  
                         
LIABILITIES AND STOCKHOLDERS EQUITY
                        
Current liabilities:
                        
     Current portion of long-term debt, net of deferred finance costs
    
7
      
19,726
      
10,301
  
     Current portion of convertible promissory notes
    
3
      
-
      
200
  
     Trade accounts and other payables
            
6,675
      
6,350
  
     Accrued liabilities
            
3,651
      
2,529
  
     Deferred revenue
            
1,854
      
1,850
  
Total current liabilities
            
31,906
      
21,230
  
                         
Non-current liabilities:
                        
     Long-term debt, net of current portion and deferred finance costs
    
7
      
179,965
      
198,497
  
     Due to related parties, non-current
    
3
      
17,340
      
5,878
  
     Long-term portion of convertible promissory notes
    
3
      
5,988
      
1,097
  
Total liabilities
            
235,199
      
226,702
  
                         
Commitments and contingencies
    
9
      
-
      
-
  
                         
STOCKHOLDERS EQUITY
                        
     Preferred stock, $0.0001 par value; 25,000,000 shares authorized; none issued
            
-
      
-
  
  Common stock, $0.0001 par value; 500,000,000 authorized shares as at September 30, 2017 and December 31, 2016; 36,979,346 and 34,072,210 shares issued and outstanding as at September 30, 2017 and December 31, 2016, respectively
    
10
      
3
      
3
  
     Additional paid-in capital
    
3
      
382,939
      
369,291
  
     Accumulated deficit
            
(341,581
)
    
(338,462
)
Total Stockholders' equity
            
41,361
      
30,832
  
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
            
276,560
      
257,534
  

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

F-2

Seanergy Maritime Holdings Corp.
Unaudited Interim Consolidated Statements of Loss
For the nine-month periods ended September 30, 2017 and 2016
(In thousands of US Dollars, except for share and per share data)

             
   
Notes
    
2017
    
2016
  
Revenues:
                  
Vessel revenue
          
52,518
      
24,696
  
Commissions
          
(1,973
)
    
(905
)
Vessel revenue, net
          
50,545
      
23,791
  
Expenses:
                      
Voyage expenses
          
(26,084
)
    
(15,030
)
Vessel operating expenses
          
(14,049
)
    
(10,112
)
Management fees
          
(752
)
    
(648
)
General and administration expenses
          
(3,298
)
    
(2,210
)
Amortization of deferred dry-docking costs
          
(649
)
    
(360
)
Depreciation
          
(7,735
)
    
(6,317
)
Operating loss
          
(2,022
)
    
(10,886
)
Other income / (expenses), net:
                      
Interest and finance costs
    
11
      
(9,088
)
    
(5,205
)
Interest and finance costs - related party
    
3 & 11
      
(3,352
)
    
(1,612
)
Gain on debt refinancing
    
7
      
11,392
      
-
  
Interest and other income
            
9
      
-
  
Foreign currency exchange losses, net
            
(36
)
    
(27
)
Total other expenses, net
            
(1,075
)
    
(6,844
)
Net loss before income taxes
            
(3,097
)
    
(17,730
)
Income taxes
            
(22
)
    
-
  
Net loss
            
(3,119
)
    
(17,730
)
                         
Net loss per common share
                        
Basic
    
12
      
(0.09
)
    
(0.90
)
Weighted average common shares outstanding
                        
Basic
    
12
      
35,591,170
      
19,594,354
  
                         

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

F-3

Seanergy Maritime Holdings Corp.
Unaudited Interim Consolidated Statements of Stockholders' Equity
For the nine-month periods ended September 30, 2017 and 2016
 (In thousands of US Dollars, except for share data)

   
Common stock
                    
   
# of Shares
    
Par Value
    
Additional
paid-in capital
    
Accumulated
deficit
    
Total stockholders'
equity
  
                               
Balance, January 1, 2016
    
19,522,413
      
2
      
337,121
      
(313,839
)
    
23,284
  
Issuance of convertible promissory notes (Note 3)
    
-
      
-
      
9,400
      
-
      
9,400
  
Issuance of common stock (Note 10)
    
1,180,000
      
-
      
4,080
      
-
      
4,080
  
Stock based compensation (Note 13)
    
(8,003
)
    
-
      
119
      
-
      
119
  
Net loss
    
-
      
-
      
-
      
(17,730
)
    
(17,730
)
Balance, September 30, 2016
    
20,694,410
      
2
      
350,720
      
(331,569
)
    
19,153
  
                                         

   
Common stock
                    
   
# of Shares
    
Par Value
    
Additional
paid-in capital
    
Accumulated
deficit
    
Total stockholders'
equity
  
                               
Balance, January 1, 2017
    
34,072,210
      
3
      
369,291
      
(338,462
)
    
30,832
  
Issuance of common stock (Note 10)
    
2,907,136
      
-
      
2,597
      
-
      
2,597
  
Issuance of convertible promissory notes (Note 3)
    
-
      
-
      
10,389
      
-
      
10,389
  
Stock based compensation (Note 13)
    
-
      
-
      
662
      
-
      
662
  
Net loss
    
-
      
-
      
-
      
(3,119
)
    
(3,119
)
Balance, September 30, 2017
    
36,979,346
      
3
      
382,939
      
(341,581
)
    
41,361
  
                                         

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

F-4

Seanergy Maritime Holdings Corp.
Unaudited Interim Consolidated Statements of Cash Flows
For the nine-month periods ended September 30, 2017 and 2016
 (In thousands of US Dollars)

       
   
2017
    
2016
(as adjusted - Note 2)
  
Cash flows from operating activities:
            
Net loss
    
(3,119
)
    
(17,730
)
Adjustments to reconcile net loss to net cash used in operating activities:
                
Depreciation
    
7,735
      
6,317
  
Amortization of deferred dry-docking costs
    
649
      
360
  
Amortization of deferred finance charges
    
383
      
186
  
Amortization of convertible promissory note beneficial conversion feature
    
1,330
      
688
  
Stock based compensation
    
662
      
119
  
Gain on debt refinancing
    
(11,392
)
    
-
  
Changes in operating assets and liabilities:
                
Accounts receivable trade, net
    
231
      
(310
)
Inventories
    
(152
)
    
10
  
Other current assets
    
570
      
160
  
Deferred charges
    
(199
)
    
(183
)
Other non-current assets
    
5
      
(5
)
Trade accounts and other payables
    
161
      
(1,202
)
Accrued liabilities
    
657
      
(618
)
Deferred revenue
    
4
      
(87
)
Net cash used in operating activities
    
(2,475
)
    
(12,295
)
Cash flows from investing activities:
                
Acquisition of vessels and improvements
    
(32,756
)
    
-
  
Net cash used in investing activities
    
(32,756
)
    
-
  
Cash flows from financing activities:
                
Net proceeds from issuance of common stock and warrants
    
2,713
      
4,080
  
Proceeds from long term debt
    
34,500
      
-
  
Proceeds from convertible promissory notes
    
9,000
      
9,400
  
Proceeds from related party debt
    
16,200
      
-
  
Payments of financing costs
    
(561
)
    
(30
)
Repayments of long term debt
    
(31,631
)
    
(550
)
Net cash provided by financing activities
    
30,221
      
12,900
  
Net (decrease) / increase in cash and cash equivalents and restricted cash
    
(5,010
)
    
605
  
Cash and cash equivalents and restricted cash at beginning of period
    
15,908
      
3,354
  
Cash and cash equivalents and restricted cash at end of period
    
10,898
      
3,959
  
                 
SUPPLEMENTAL CASH FLOW INFORMATION
                
Cash paid during the period for:
                
Interest
    
10,330
      
6,113
  
                 
Non cash financing activities:
                
Conversion of related party debt into convertible promissory note
    
(4,750
)
    
-
  

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

F-5

Seanergy Maritime Holdings Corp.
Notes To The Unaudited Interim Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)


1.
Basis of Presentation and General Information:

Seanergy Maritime Holdings Corp. (the "Company" or "Seanergy") was formed under the laws of the Republic of the Marshall Islands on January 4, 2008, with executive offices located in Athens, Greece. The Company provides global transportation solutions in the dry bulk shipping sector through its vessel-owning subsidiaries.
 
On January 8, 2016, the Company's common stock began trading on a split-adjusted basis, following a December 22, 2015 approval from the Company's Board of Directors to reverse split the Company's common stock at a ratio of one-for-five. All share and per share amounts disclosed in the consolidated financial statements and notes give effect to this reverse stock split retroactively, for all periods presented.
 
The accompanying unaudited interim consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Principles in the United States of America ("U.S. GAAP") and applicable rules and regulations of the U.S. Securities and Exchange Commission (the "SEC") for certain financial information. Accordingly, they do not include all the information and notes required by U.S. GAAP for complete financial statements. These statements and the accompanying notes should be read in conjunction with the Company's Annual Report on Form 20-F for the fiscal year ended December 31, 2016, filed with the SEC on April 28, 2017.

In the opinion of management, these unaudited interim consolidated financial statements, reflect all adjustments, which include only normal recurring adjustments considered necessary for a fair presentation of the Company's financial position, results of operations and cash flows for the periods presented. Operating results for the nine-month period ended September 30, 2017, are not necessarily indicative of the results that might be expected for the fiscal year ending December 31, 2017.

a.
Subsidiaries in Consolidation:

Seanergy's subsidiaries included in these consolidated financial statements as of September 30, 2017, are as follows:

Company
  
Country of Incorporation
    
Vessel name
  
Date of Delivery
  
Date of Sale/Disposal
  
Seanergy Management Corp.(1) (3)
  
Marshall Islands
    
N/A
  
N/A
  
N/A
  
Seanergy Shipmanagement Corp.(1) (3)
  
Marshall Islands
    
N/A
  
N/A
  
N/A
  
Sea Glorius Shipping Co.(1)
  
Marshall Islands
    
Gloriuship
  
November 3, 2015
  
N/A
  
Sea Genius Shipping Co.(1)
  
Marshall Islands
    
Geniuship
  
October 13, 2015
  
N/A
  
Leader Shipping Co.(1)
  
Marshall Islands
    
Leadership
  
March 19, 2015
  
N/A
  
Premier Marine Co.(1)
  
Marshall Islands
    
Premiership
  
September 11, 2015
  
N/A
  
Gladiator Shipping Co.(1)
  
Marshall Islands
    
Gladiatorship
  
September 29, 2015
  
N/A
  
Guardian Shipping Co.(1)
  
Marshall Islands
    
Guardianship
  
October 21, 2015
  
N/A
  
Champion Ocean Navigation Co.(1)
  
Liberia
    
Championship
  
December 7, 2015
  
N/A
  
Squire Ocean Navigation Co.(1)
  
Liberia
    
Squireship
  
November 10, 2015
  
N/A
  
Emperor Holding Ltd.(1)
  
Marshall Islands
    
N/A
  
N/A
  
N/A
  
Knight Ocean Navigation Co.(1)
  
Liberia
    
Knightship
  
December 13, 2016
  
N/A
  
Lord Ocean Navigation Co.(1)
  
Liberia
    
Lordship
  
November 30, 2016
  
N/A
  
Partner Shipping Co.(1)
  
Marshall Islands
    
Partnership
  
May 31, 2017
  
N/A
  
Pembroke Chartering Services Limited (4)
  
Malta
    
N/A
  
N/A
  
N/A
  
Martinique International Corp.(1)
  
British Virgin Islands
    
Bremen Max
  
September 11, 2008
  
March 7, 2014
  
Harbour Business International Corp.(1)
  
British Virgin Islands
    
Hamburg Max
  
September 25, 2008
  
March 10, 2014
  
Maritime Capital Shipping Limited (1)
  
Bermuda
    
N/A
  
N/A
  
N/A
  
Maritime Capital Shipping (HK) Limited (3)
  
Hong Kong
    
N/A
  
N/A
  
N/A
  
Maritime Glory Shipping Limited (2)
  
British Virgin Islands
    
Clipper Glory
  
May 21, 2010
  
December 4, 2012
  
Maritime Grace Shipping Limited (2)
  
British Virgin Islands
    
Clipper Grace
  
May 21, 2010
  
October 15, 2012
  
Atlantic Grace Shipping Limited (5)
  
British Virgin Islands
    
N/A
  
N/A
  
N/A
  
                     


F-6


Seanergy Maritime Holdings Corp.
Notes To The Unaudited Interim Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)


(1) Subsidiaries wholly owned
(2) Vessel owning subsidiaries owned by Maritime Capital Shipping Limited (or "MCS")
(3) Management company
(4) Chartering services company
(5) Dormant company


2.
Significant Accounting Policies:

A discussion of the Company's significant accounting policies can be found in the Company's consolidated financial statements included in the Annual Report on Form 20-F for the year ended December 31, 2016, filed with the SEC on April 28, 2017. There have been no material changes to these policies in the nine-month period ended September 30, 2017, other than as disclosed below:

Revenue
 
Charterers individually accounting for more than 10% of revenues during the nine-month periods ended September 30, 2017 and 2016 were:

Customer
  
2017
  
2016
A
  
13%
  
-
B
  
13%
  
-
C
  
12%
  
-
D
  
10%
  
-
E
  
-
  
19%
F
  
-
  
12%
G
  
-
  
10%
Total
  
48%
  
41%
         

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09 Revenue from Contracts with Customers. ASU 2014-09, as amended, is effective beginning January 1, 2018. The Company expects to adopt the provisions of ASU 2014-09 on a modified retrospective approach with the cumulative effect of initially adopting the standard recognized at the date of adoption. The Company expects that the adoption of ASU 2014-09 may result in a change in the method of recognizing revenue from voyage charters, whereby the Company's method of determining proportional performance might change to load-to-discharge, as compared to the current recognition method, where a voyage is deemed to commence upon signing the charter party or completion of previous voyage, whichever is later, and is deemed to end upon the completion of the discharge of the delivered cargo. This will result in no revenue being recognized prior to the loading of the current voyage. This change will result in revenue being recognized later in the voyage which may cause additional volatility in revenue and earnings between periods. The Company does not expect that the adoption of ASU 2014-09 will result in a change in the method of recognizing revenue from time charter agreements, as time charter agreement revenue will be accounted for under the new leases accounting standard, effective beginning January 1, 2019. The Company does not expect that the adoption of ASU 2014-09 will result in a change in the method of recognizing revenue for time charter agreements, as time charter agreement revenue will be accounted for under the new leases accounting standard, effective beginning January 1, 2019. However, any non-lease components identified in the time charter agreements may affect the presentation of revenues and additional disclosures to the notes may be required, effective beginning January 1, 2018. The Company is evaluating the impact of the revenue standard and reviewing historical contracts to quantify the impact that the adoption of the standard will have on its financial statements for voyage charter agreements and is also evaluating historical contracts to identify any non-lease components in time charter arrangements. The Company is also evaluating whether there are incremental costs of obtaining contracts with customers that are required to be capitalized and amortized according to ASC 340-40 "Contracts with Customers". The Company is considering the business assumptions, processes, systems and controls to fully determine revenue recognition and disclosure under the new standard.
 

F-7

 

 
Seanergy Maritime Holdings Corp.
Notes To The Unaudited Interim Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

 
Inventories
 
On January 1, 2017, the Company adopted ASU No. 2015-11, Inventory, effective for the fiscal year ending December 31, 2017 and interim periods within this fiscal year. The adoption of this guidance has had no impact on the Company's results of operations, cash flows and net assets for any period.

Stock-based Compensation
 
On January 1, 2017, the Company adopted ASU No. 2016-09, Compensation — Stock Compensation: Improvements to Employee Share-Based Payment Accounting, effective for the fiscal year ending December 31, 2017 and interim periods within this fiscal year. The adoption of this guidance has had no impact on the Company's results of operations, cash flows and net assets for any period.

Recent Accounting Pronouncements
 
In November 2016, the FASB issued ASU No. 2016-18 Statement of Cash Flows (Topic 230) – Restricted Cash which addresses the presentation of changes in restricted cash and restricted cash equivalents in the statement of cash flows. ASU 2016-18 will reduce diversity in how entities present changes in restricted cash and restricted cash equivalents in the statement of cash flows. ASU 2016-18 is effective for fiscal years beginning after December 15, 2017 including interim periods within that reporting period. The Company early adopted ASU No. 2016-18 in 2017. The only effect the adoption of ASU No. 2016-18 had on prior-period information is the presentation of the restricted cash on the statement of cash flows. Specifically, the line item Restricted cash released/(retained) was removed from the Cash flows from financing activities section of the statement of cash flows and the beginning period and ending period cash balances now include restricted cash. Comparative interim period of the statement of cash flow has been retrospectively adjusted to reflect the adoption of ASU No. 2016-18.

In January 2017, the FASB issued ASU No. 2017-03, Accounting Changes and Error Corrections (Topic 250) and Investments-Equity Method and Joint Ventures (Topic 323). ASU 2017-03 amends the Codification for SEC staff announcements made at recent Emerging Issues Task Force (EITF) meetings. The SEC guidance that specifically relates to Consolidated Financial Statements was from the September 2016 meeting, where the SEC staff expressed their expectations about the extent of disclosures registrants should make about the effects of the new FASB guidance as well as any amendments issued prior to adoption, on revenue (ASU 2014-09), leases (ASU 2016-02) and credit losses on financial instruments (ASU 2016-13) in accordance with Staff Accounting Bulletin (SAB) Topic 11.M. Registrants are required to disclose the effect that recently issued accounting standards will have on their financial statements when adopted in a future period. In cases where a registrant cannot reasonably estimate the impact of the adoption, then additional qualitative disclosures should be considered. The ASU incorporates these SEC staff views into ASC 250 and adds references to that guidance in the transition paragraphs of each of the three new standards. The adoption of this new accounting guidance did not have a material effect on the Company's Consolidated Financial Statements.

In May 2017, the FASB issued ASU No. 2017-09, Compensation—Stock Compensation (Topic 718). ASU 2017-09 clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. ASU 2017-09 allows companies to make certain changes to awards without accounting for them as modifications. It does not change the accounting for modifications. ASU 2017-09 is effective for annual periods, and interim periods within those annual periods, beginning after 15 December 2017 for all entities. Early adoption is permitted, including adoption in any interim period for which financial statements have not yet been issued or made available for issuance.

F-8


Seanergy Maritime Holdings Corp.
Notes To The Unaudited Interim Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)


3.
Transactions with Related Parties:

a.
Convertible Promissory Notes:

March 12, 2015 Convertible Promissory Note
 
On March 12, 2015 ("commitment date"), the Company issued a convertible promissory note of $4,000 to Jelco Delta Holding Corp., or Jelco, a company affiliated with Claudia Restis, who is also the Company's principal shareholder, for general corporate purposes. The convertible note, as amended, is repayable in four installments with the first installment occurring six months after the delivery date of the M/V Leadership and the other three installments semi-annually commencing four years after the delivery date of the M/V Leadership, along with a balloon installment of $3,200 payable on the final maturity date, March 19, 2020. The note bears interest at three-month LIBOR plus a margin of 5% with quarterly interest payments. At Jelco's option, the outstanding principal amount under the convertible note or any part thereof may be paid at any time in common shares at a conversion price of $0.90 per share. Jelco also received customary registration rights with respect to all shares upon conversion of the note. The note is secured by a guarantee from the Company's wholly-owned subsidiary, Emperor Holding Ltd., which is the holding company of the M/V Lordship and the M/V Knightship.
 
The Company accounted for the issuance of the March 2015 convertible promissory note in accordance with the beneficial conversion features ("BCF") guidance of ASC 470-20. The intrinsic value of the BCF was determined as the number of shares converted from the convertible note times the positive difference between the fair value of the stock on the commitment date and the contractual conversion price. Since the intrinsic value of the BCF at the commitment date was greater than the proceeds allocated to the convertible instrument, the amount of the discount assigned to the BCF was limited to the amount of the proceeds allocated to the convertible instrument. As of December 31, 2015, the Company had paid the first installment, with the entire payment recorded as a reduction to Additional paid-in capital.
 
September 27, 2017 Convertible Promissory Note
 
On September 27, 2017, the Company issued a convertible promissory note to Jelco for an amount of $13,750. The note is repayable by two consecutive annual installments of $1,375, with the first installment occurring 24 months after the drawdown date, along with a balloon installment of $11,000 payable four years after the drawdown date. The note bears interest at three-month LIBOR plus a margin of 5% with quarterly interest payments. At Jelco's option, the whole or any part of the principal amount under the note may be paid at any time in common shares at a conversion price of $0.90 per share. Jelco also received customary registration rights with respect to all shares upon conversion of the note. The note is secured by second preferred mortgages and second priority general assignments covering earnings, insurances and requisition compensation over the M/V Championship and the M/V Partnership, guarantees from the Company's vessel-owning subsidiaries, and a guarantee from the Company's wholly-owned subsidiary, Emperor Holding Ltd.; all cross collateralized with the loan entered into with Jelco on May 24, 2017, as amended and restated. Of the $13,750 under the note, $4,750 were used to make a mandatory prepayment under the May 2017 Jelco loan facility.
 
The Company accounted for the issuance of the September 2017 convertible promissory note in accordance with the beneficial conversion features ("BCF") guidance of ASC 470-20. The intrinsic value of the BCF was determined as the number of shares converted from the convertible note times the positive difference between the fair value of the stock on the commitment date and the contractual conversion price. The intrinsic value of the BCF at the commitment date was not greater than the proceeds allocated to the convertible instrument and the amount of the discount assigned to the BCF was $10,389.

F-9
 

 

Seanergy Maritime Holdings Corp.
Notes To The Unaudited Interim Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)


The debt movement of the convertible notes is presented below:

   
Applicable limit
    
Debt discount
    
Accumulated deficit
    
Debt
  
Balance, December 31, 2015
    
4,000
      
(4,000
)
    
103
      
103
  
Amortization (Note 11)
    
-
      
-
      
222
      
222
  
Balance, September 30, 2016
    
4,000
      
(4,000
)
    
325
      
325
  
Amortization
    
-
      
-
      
100
      
100
  
Balance, December 31, 2016
    
4,000
      
(4,000
)
    
425
      
425
  
Additions
    
13,750
      
(10,389
)
    
-
      
3,361
  
Amortization (Note 11)
    
-
      
-
      
376
      
376
  
Balance, September 30, 2017
    
17,750
      
(14,389
)
    
801
      
4,162
  

The equity movement of the convertible notes is presented below:

   
Additional
paid-in capital
  
Balance, December 31, 2015
    
3,800
  
Balance, September 30, 2016
    
3,800
  
Balance, December 31, 2016
    
3,800
  
Additions
    
10,389
  
Balance, September 30, 2017
    
14,189
  


September 7, 2015 Revolving Convertible Promissory Note
 
On September 7, 2015 ("commitment date"), the Company issued a revolving convertible promissory note to Jelco for an amount up to $6,765 (the "Applicable Limit") for general corporate purposes. Following nine amendments to the revolving convertible note between December 2015 and September 2017, the Applicable Limit was raised to $21,165. The Applicable Limit will be reduced by $3,300 four years following the first drawdown. The aggregate outstanding principal is repayable in September 2020. However, the principal is also repayable earlier to the extent that the aggregate outstanding principal exceeds the Applicable Limit (as it may be reduced from time to time). The note bears interest at three-month LIBOR plus a margin of 5% with interest payable quarterly. At Jelco's option, the Company's obligation to repay the principal amount under the revolving convertible note or any part thereof may be paid in common shares at a conversion price of $0.90 per share. Jelco also received customary registration rights with respect to all shares upon conversion of the note. The note is secured by a guarantee from the Company's wholly-owned subsidiary, Emperor Holding Ltd. The Company has drawn down the entire $21,165 as of September 30, 2017.

The Company accounted for the issuance of the revolving convertible promissory note in accordance with the BCF guidance of ASC 470-20. The intrinsic value of the BCF was determined as the number of shares converted from the convertible note times the positive difference between the fair value of the stock on the commitment date and the contractual conversion price. Since the intrinsic value of the BCF at the commitment date was greater than the proceeds allocated to the convertible instrument, the amount of the discount assigned to the BCF was limited to the amount of the proceeds allocated to the convertible instrument.


F-10


Seanergy Maritime Holdings Corp.
Notes To The Unaudited Interim Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)


The debt movement of the revolving convertible note is presented below:

   
Applicable limit
    
Debt discount
    
Accumulated deficit
    
Debt
  
Balance, December 31, 2015
    
11,765
      
(11,765
)
    
31
      
31
  
Additions
    
9,400
      
(9,400
)
    
-
      
-
  
Amortization (Note 11)
    
-
      
-
      
466
      
466
  
Balance, September 30, 2016
    
21,165
      
(21,165
)
    
497
      
497
  
Amortization
    
-
      
-
      
375
      
375
  
Balance, December 31, 2016
    
21,165
      
(21,165
)
    
872
      
872
  
Amortization (Note 11)
    
-
      
-
      
954
      
954
  
Balance, September 30, 2017
    
21,165
      
(21,165
)
    
1,826
      
1,826
  

The equity movement of the revolving convertible note is presented below:

   
Additional
paid-in capital
  
Balance, December 31, 2015
    
11,765
  
Intrinsic value of BCF
    
9,400
  
Balance, September 30, 2016
    
21,165
  
Balance, December 31, 2016
    
21,165
  
Balance, September 30, 2017
    
21,165
  


b.
Loan Agreements:

On October 4, 2016, the Company entered into a $4,150 loan facility with Jelco to finance the initial deposits for the vessels M/V Lordship and M/V Knightship. On November 17, 2016 and November 28, 2016, the Company entered into amendments to this facility, which, among other things, increased the aggregate amount that could be borrowed under the facility to up to $12,800 (to partially finance the remaining payment for the M/V Lordship and the M/V Knightship) and extended the maturity date to the earlier of (i) February 28, 2018 and (ii) the date falling 14 months from the final drawdown date. As of December 31, 2016, the Company had drawn down the entire $12,800. The maturity date may be extended, at the Company's option, to the earlier of (i) February 28, 2019 and (ii) the date falling 26 months from the final drawdown date. The Company intends to extend the maturity date. The facility bears interest at LIBOR plus a margin of 9% per annum and is repayable in one bullet payment together with accrued interest thereon to the maturity date. The facility further provided that the Company was required to prepay Jelco (i) in the event of a public offering by the Company of Seanergy Maritime Holdings Corp's securities, an amount equal to 25 percent of the net offering proceeds and (ii) $1,900 upon the delivery of the M/V Knightship. Seanergy Maritime Holdings Corp. is the borrower under this facility. The margin may be decreased by 2% upon a $5,000 prepayment by the Company or increased by 1.5% if the maturity date is extended in accordance with the terms of the facility. The facility is secured by second priority mortgages and general assignments covering earnings, insurances and requisition compensation on the M/V Lordship and the M/V Knightship, and the vessel owning subsidiaries that own the M/V Lordship and the M/V Knightship have provided a guarantee to Jelco for Seanergy Maritime Holdings Corp.'s obligations under this facility. On December 14, 2016, following the delivery of M/V Knightship on December 13, 2016, the company prepaid Jelco $1,900 in accordance with the facility provisions. Additionally, on December 14, 2016, following the completion of the Company's public offering of 10,000,000 of its common shares on December 13, 2016 (Note 10), the company prepaid Jelco $5,000 in accordance with the facility provisions. The $5,000 comprised of (i) $3,430 mandatory prepayment as per the 25 percent of the then estimated net offering proceeds provision described above and (ii) $1,570 voluntary prepayment. As a result of the $5,000 prepayment, the margin was reduced by 2% to 7%. As of September 30, 2017, $5,900 was outstanding under this loan facility. The balance sheet amount is shown net of deferred financing costs.
 
F-11

 

 

Seanergy Maritime Holdings Corp.
Notes To The Unaudited Interim Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

 
On March 28, 2017, the Company entered into a $47,500 secured loan agreement with Jelco. Under the terms of this agreement, Jelco would have made available this facility to the Company in the event that the Company was not able to secure third party financing to partly fund the Natixis settlement agreement (Note 7), as well as the balance purchase price of the M/V Partnership (Notes 6 and 7). This facility was terminated on September 27, 2017, and no amounts were drawn down under this facility.
 
On May 24, 2017, the Company entered into an up to $16,200 loan facility with Jelco to partially finance the acquisition of the M/V Partnership. The Company drew down the $16,200 on May 24, 2017. On June 22, 2017 and on August 22, 2017, the Company entered into supplemental letters with Jelco to amend the terms of this loan facility, whereby the mandatory repayment of $4,750 was deferred until September 29, 2017. On September 27, 2017, the facility was amended and restated. The amended facility currently bears interest at three-month LIBOR plus a margin of 6% per annum which is payable quarterly and the principal is repayable in one bullet payment due on the maturity date. The maturity date, which was deferred from May 24, 2018 to May 24, 2019, may, at the Company's option, be extended to May 24, 2020, from May 24, 2019 previously. The margin will be increased by 1% if the maturity date is extended. The mandatory repayment of the $4,750 was financed by the convertible promissory note to Jelco on September 27, 2017. The facility is secured by the following amended cross collaterals: second preferred mortgages over the M/V Championship and M/V Partnership, second priority general assignments covering earnings, insurances and requisition compensation over each vessel, guarantees from our vessel-owning subsidiaries, and a guarantee from the Company's wholly-owned subsidiary, Emperor Holding Ltd. As of September 30, 2017, $11,450 was outstanding under this loan facility. The balance sheet amount is shown net of deferred financing costs. 
 

4.
Cash and Cash Equivalents and Restricted Cash:

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the balance sheet that sum to the total of the same such amounts shown in the statement of cash flows:

   
September 30, 2017
    
December 31, 2016
  
Cash and cash equivalents
    
8,438
      
12,858
  
Restricted cash
    
1,550
      
1,550
  
Restricted cash, non-current
    
910
      
1,500
  
Total
    
10,898
      
15,908
  
 
Restricted cash amounts include $1,875 of restricted deposits as contractually required under the loan facility with Northern Shipping Fund III LP, or NSF (Note 7), $500 of minimum liquidity requirements as per the Amsterdam Trade Bank N.V. loan agreement (Note 7), $35 in a dry-docking reserve account as per the Amsterdam Trade Bank N.V. loan agreement and $50 of restricted deposits pledged as collateral regarding credit cards balances with one of the Company's financial institutions. Minimum liquidity, not legally restricted, of $5,500 as per the Company's credit facilities covenants is included in Cash and cash equivalents.

 
5.
Inventories:

The amounts in the accompanying consolidated balance sheets are analyzed as follows:

   
September 30, 2017
    
December 31, 2016
  
Lubricants
    
581
      
553
  
Bunkers
    
3,620
      
3,496
  
Total
    
4,201
      
4,049
  


F-12

Seanergy Maritime Holdings Corp.
Notes To The Unaudited Interim Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)



6.
Vessels, Net:

The amounts in the accompanying consolidated balance sheets are analyzed as follows:
   
September 30, 2017
    
December 31, 2016
  
Cost:
            
Beginning balance
    
242,462
      
201,684
  
- Additions
    
32,876
      
40,778
  
Ending balance
    
275,338
      
242,462
  
                 
Accumulated depreciation:
                
Beginning balance
    
(10,353
)
    
(1,844
)
- Additions
    
(7,719
)
    
(8,509
)
Ending balance
    
(18,072
)
    
(10,353
)
                 
Net book value
    
257,266
      
232,109
  

On March 28, 2017, the Company entered into an agreement with an unaffiliated third party for the purchase of a secondhand Capesize vessel, at a gross purchase price of $32,650. On May 31, 2017, the Company acquired the 2012 Capesize, 179,213 DWT vessel M/V Partnership. The acquisition was financed with the Amsterdam Trade Bank N.V. loan facility (Note 7), the Jelco loan facility entered into on May 24, 2017 (Note 3) and by cash on hand. Additionally, approximately $226 worth of expenditures that increased the earning capacity and improved the efficiency of certain vessels were capitalized.
 
All vessels are mortgaged to secured loans (Notes 3 and 7).
 
7.
Long-Term Debt:

The amounts in the accompanying consolidated balance sheets are analyzed as follows:

   
September 30, 2017
    
December 31, 2016
  
Secured loan facilities
    
201,254
      
210,130
  
Less: Deferred financing costs
    
(1,563
)
    
(1,332
)
Total
    
199,691
      
208,798
  
Less - current portion
    
(19,726
)
    
(10,301
)
Long-term portion
    
179,965
      
198,497
  
 
Secured credit facilities

On March 6, 2015, the Company entered into a loan agreement with Alpha Bank A.E., for a secured loan facility in an amount of $8,750. The loan was used to partially finance the acquisition of the M/V Leadership. The loan bears interest of LIBOR plus a margin of 3.75% with quarterly interest payments. The loan is secured by a first priority mortgage over the vessel. The facility places a restriction on the Company's ability to distribute dividends to its shareholders. The amount of the dividends so declared shall not exceed 50% of Seanergy's net income except in case the cash and marketable securities are equal or greater than the amount required to meet Seanergy's consolidated installment and debt interest payments for the following eighteen-month period. The Company has paid the first ten installments as of September 30, 2017. On December 23, 2015, the Company amended the loan agreement with Alpha Bank A.E. in order to (i) defer from December 31, 2015, to June 30, 2018, the requirement that the Company maintain a corporate leverage ratio (as defined in the loan facility) that does not exceed 75%, and (ii) defer from December 31, 2015, to June 30, 2018, the requirement that the Company maintain a ratio of EBITDA to net interest expense (as defined in the loan facility) that is not less than 2:1. On July 28, 2016, the Company further amended the loan agreement with Alpha Bank A.E. in order to (i) defer from December 31, 2015, to July 1, 2017, the security requirement that the market value of M/V Leadership plus any additional security to loan outstanding (as defined in the loan facility) shall not be less than 125% and (ii) defer part of the then next four installments to the final maturity date. The outstanding loan balance as of September 30, 2017 is repayable in consecutive quarterly installments being $250 each, along with a balloon installment of $4,550 payable on the final maturity date, March 17, 2020.
 

F-13

 
Seanergy Maritime Holdings Corp.
Notes To The Unaudited Interim Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)


On September 1, 2015, the Company entered into a loan agreement with HSH Nordbank AG, for a secured loan facility in an amount of $44,430. The loan was used to pay for the acquisition of the vessels M/V Geniuship and M/V Gloriuship. The loan is repayable in twelve consecutive quarterly installments commencing on September 30, 2017, the first three installments being approximately $1,049 each, the fourth installment being approximately $4,050, the next eight installments being approximately $1,049 each, along with a balloon installment of $28,837 payable on the final maturity date, June 30, 2020. The loan bears interest of LIBOR plus margins between 3.4% and 3.6% with quarterly interest payments. Following a mandatory prepayment of $3,000 on June 30, 2018, the margin will be reduced to 3.25%. The loan facility is secured by a first priority mortgage over the two vessels. On May 16, 2016, the Company entered into a supplemental letter to the senior secured loan facility with HSH Nordbank AG. Effective as of March 1, 2016, the supplemental letter has deferred certain prepayments to June 30, 2018.

On February 23, 2017, the Company reached an agreement with HSH Nordbank AG to (i) defer from October 1, 2017, to May 1, 2018, the security coverage requirement that the market value of M/V Geniuship and M/V Gloriuship plus any additional security to total facility outstanding and any Swap Exposure (as defined in the loan facility) not be less than 120%, (ii) defer from December 31, 2017, to June 30, 2018, the requirement that the Company, on a consolidated basis, maintains a percentage ratio of total liabilities (excluding any shareholders' convertible notes) to total assets (less any activated goodwill) that does not exceed 75% and (iii) defer from the quarter ending December 31, 2017, to the quarter ending June 30, 2018, of the requirement that the Company maintains a ratio of earnings before interest, taxes, depreciation and amortization ("EBITDA"), excluding any gains and losses on the disposal of subsidiaries or vessels and impairments on goodwill and vessels, to interest payments that is not less than 2:1.
 
On September 11, 2015, the Company entered into a facility agreement with UniCredit Bank AG, for a secured loan facility in an amount of $52,705. The loan was made available to partially finance the acquisition of the vessels M/V Premiership, M/V Gladiatorship and M/V Guardianship. The loan is repayable in fifteen consecutive quarterly installments being $1,552 each, commencing on June 26, 2017, along with a balloon installment of $29,425 payable on the final maturity date, December 28, 2020. The loan bears interest of LIBOR plus a margin of 3.20% if the value to loan ratio is lower than 125%, 3.00% if the value to loan ratio is between 125% and 166.67% and 2.75% if the value to loan is higher than 166.67% with quarterly interest payments. The loan is secured by a first priority mortgage over the three vessels. On June 3, 2016, the Company entered into a supplemental letter in order to split the margin into a cash portion and a capitalized portion. The capitalized portion of the margin was repaid in full as of June 30, 2017. In addition, the application of certain covenants is deferred to at least June 30, 2017. On July 29, 2016, the Company further entered into a supplemental letter pursuant to which effective as of December 11, 2015, the requirement for Seanergy Maritime Holdings Corp., as guarantor, to maintain liquidity in a specified amount is delayed until July 1, 2017. On March 7, 2017, the Company reached an agreement with UniCredit Bank AG  to (i) defer from June 30, 2017, to May 1, 2018, the security coverage requirement that the market value of M/V Premiership, M/V Gladiatorship and M/V Guardianship plus any additional security to total facility outstanding and the cost, if any, of terminating any transactions entered into under the Hedging Agreement (as defined in the loan facility) shall not be less than 120%, (ii) defer from September 30, 2017, to June 30, 2018, the requirement that the Company maintain a leverage ratio (as defined in the loan facility) that does not exceed 75%, and (iii) defer from September 30, 2017, to June 30, 2018, the requirement that the Company maintain a ratio of EBITDA to net interest expense (as defined in the loan facility) that is not less than 2:1. On September 25, 2017, the Company entered into a supplemental letter in order to defer the installment due on September 25, 2017 to October 2, 2017.
 
On November 4, 2015, the Company entered into a loan agreement with Alpha Bank A.E., for a secured loan facility in an amount of $33,750. The loan was used to partially finance the acquisition of the M/V Squireship. On November 10, 2015, the Company drew down the $33,750. The loan is repayable in sixteen consecutive quarterly installments being approximately $844 each, commencing on February 12, 2018, along with a balloon installment of $20,250 payable on the final maturity date, November 10, 2021. The loan bears interest of LIBOR plus a margin of 3.50% with quarterly interest payments. The loan is secured by a first priority mortgage over the vessel. The facility places a restriction on the Company's ability to distribute dividends to its shareholders. The amount of the dividends so declared shall not exceed 50% of the Company's net income except in case the cash and marketable securities are equal or greater than the amount required to meet the Company's consolidated installment and debt interest payments for the following eighteen-month period. On July 28, 2016, the Company further amended the loan agreement in order to defer certain liquidity covenants to July 1, 2017 and to also waive any event of non-compliance with such covenant that occurred post December 31, 2015.  The Company has also reached an agreement with Alpha Bank A.E. to defer from January 1, 2018, to May 1, 2018, of the security requirement that the market value of M/V Squireship plus any additional security to the total facility outstanding shall not be less than 125%.
 

F-14

 
Seanergy Maritime Holdings Corp.
Notes To The Unaudited Interim Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

 
On December 2, 2015, the Company entered into a facility agreement with Natixis, for a secured loan facility in an amount of $39,412. The loan was used to partially finance the acquisition of the M/V Championship. On December 7, 2015, the Company drew down the $39,412. The loan was repayable in fifteen consecutive quarterly installments being $985 each, commencing on June 30, 2017, along with a balloon installment of $24,637 payable on the final maturity date, February 26, 2021. The loan bore interest of LIBOR plus a margin of 2.50% with quarterly interest payments. The loan was secured by a first priority mortgage over the vessel. On March 7, 2017, the Company entered into a supplemental and a settlement agreement with Natixis to the secured term loan facility dated December 2, 2015.  Under the terms of the supplemental agreement the secured term loan was repayable in four installments: $2,000 due April 28, 2017, $2,000 due June 30, 2017, $3,000 due September 29, 2017, and $32,412 due May 2, 2018.  In addition, the supplemental agreement waived the application of the minimum required security cover requirement and all the financial covenant requirements under the secured term loan facility until the termination date of the loan, which was May 2, 2018. Under the terms of the settlement agreement, the Company had an option, until September 29, 2017, to satisfy the full amount of the facility by making a prepayment of $28,000, which included any payments made in connection with the first three installment payments.  Upon such prepayment, the facility would be deemed satisfied in full. On September 29, 2017, Natixis entered into a deed of release and fully discharged the $35,412 outstanding balance of the secured term loan facility obligations to the lender for a total settlement amount of $24,000 on September 29, 2017. The first-priority mortgage over the M/V Championship and all other securities created in favour of Natixis were irrevocably and unconditionally released pursuant to the deed of release. The Company recognized a gain from the Natixis refinancing of $11,392, net of $6 refinancing charges and $14 write-off of unamortized deferred financing charges.
 
On November 28, 2016, the Company entered into a $32,000 secured term loan facility with NSF to partly finance the acquisition of the two second hand Capesize vessels M/V Lordship and M/V Knightship. The facility bears interest at 11% per annum, which is payable quarterly, and the principal is repayable in four consecutive quarterly installments of $900 each, commencing on March 31, 2019 and a final payment of $28,400 due on December 31, 2019 (initial termination date). The facility may be extended twice so that the final termination date shall never extend beyond the date falling on the fifth anniversary of the final drawdown date. The option to extend the facility for up to another two years from the initial termination date is subject to an extension fee of 1.75% per extended year of each relevant loan outstanding amount. The borrowers must maintain restricted deposits of $1,500, each, as prepaid interest to be applied equally against the first eight quarterly interest payments of the facility. As of December 13, 2016, the Company had drawn down the entire $32,000.

On May 24, 2017, the Company entered into an up to $18,000 term loan facility with Amsterdam Trade Bank N.V., to partially finance the acquisition of the M/V Partnership. The loan bears interest at LIBOR plus a margin of 4.65% per annum which is payable quarterly. The principal is repayable by twenty equal consecutive quarterly installments being $200 each and a balloon installment of $14,000 due on the maturity date, May 26, 2022. On each quarterly repayment date, an additional repayment of at least $10, or an integral multiple of that amount, of any excess cash standing in the vessel's operating account shall be applied towards reducing the balloon installment. Excess cash, as defined in the loan facility, is any amount above $1,000. The aggregate amount of the additional repayments shall not exceed $3,600. On August 28, 2017, an additional repayment of $380 was made along with the first installment payment. The loan was made available in two drawdowns: (i) $13,250 was drawn down on May 26, 2017 and (ii) $4,750 was drawn down on June 22, 2017. The loan facility requires that the borrower shall maintain in aggregate $500 as minimum liquidity. The loan is secured by a first priority mortgage over the vessel.

On September 25, 2017, in order to partially fund the refinancing of the Natixis facility, the Amsterdam Trade Bank loan Facility was amended and restated, increasing the loan amount of the facility by an additional tranche of $16,500, or Tranche B. The principal of Tranche B is repayable by nineteen consecutive quarterly installments, being $200 each of the first four installments, $300 each of the subsequent four installments, and $400 each of the subsequent eleven installments, in addition to a balloon installment of any outstanding indebtedness due on the maturity date, May 26, 2022. On each quarterly repayment date, an additional repayment of at least $10, or an integral multiple of that amount, of any excess cash standing to the credit of the relevant vessel's operating account shall be applied towards reducing the balloon installment. Excess cash, as defined in the loan facility, is any amount above $1,000. The aggregate amount of the additional repayments, with regard to Tranche B, shall not exceed $1,250. The loan facility requires that the borrower shall maintain in aggregate $500 as minimum liquidity. The amendment and restatement of the facility did not alter the interest rate, the maturity date, the amortization and the repayment terms of the existing tranche under the loan facility, or the financial covenants applicable to the Company as guarantor. The amended and restated loan facility is secured by first preferred mortgages and general assignments covering earnings, insurances and requisition compensation over the M/V Partnership and M/V Championship, earnings account pledges, shares security deeds relating to the shares of both vessels' owning subsidiaries, technical and commercial managers' undertakings and, where applicable, charter assignments.
 

F-15

 

Seanergy Maritime Holdings Corp.
Notes To The Unaudited Interim Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)


 
The borrowers under each of the above six facilities are the applicable vessel owning subsidiaries, and five out six facilities are guaranteed by Seanergy Maritime Holdings Corp.

The annual principal payments required to be made after September 30, 2017, are as follows:

Twelve month periods ending
  
Amount
  
September 30, 2018
    
20,089
  
September 30, 2019
    
19,481
  
September 30, 2020
    
78,318
  
September 30, 2021
    
36,752
  
September 30, 2022
    
46,614
  
Total
    
201,254
  

8
Financial Instruments:

(a)
Significant Risks and Uncertainties, including Business and Credit Concentration

The Company places its temporary cash investments, consisting mostly of deposits, primarily with high credit qualified financial institutions. The Company performs periodic evaluations of the relative credit standing of those financial institutions that are considered in the Company's investment strategy. The Company limits its credit risk with accounts receivable by performing ongoing credit evaluations of its customers' financial condition and generally does not require collateral for its accounts receivable and does not have any agreements to mitigate credit risk.
 
(b)
Interest Rate Risk

Fair Value of Financial Instruments
 
The fair values of the financial instruments shown in the consolidated balance sheets as of September 30, 2017 and December 31, 2016, represent management's best estimate of the amounts that would be received to sell those assets or that would be paid to transfer those liabilities in an orderly transaction between market participants at that date. Those fair value measurements maximize the use of observable inputs. However, in situations where there is little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects the Company's own judgments about the assumptions that market participants would use in pricing the asset or liability. Those judgments are developed by the Company based on the best information available in the circumstances.

The following methods and assumptions were used to estimate the fair value of each class of financial instruments:

a.
Cash and cash equivalents, restricted cash, accounts receivable trade, other current assets and trade accounts and other payables: the carrying amounts approximate fair value because of the short maturity of these instruments. The carrying value approximates the fair market value for interest bearing cash classified as restricted cash, non-current.

b.
Long-term debt: The carrying value of long-term debt with variable interest rates approximates the fair market value as the long-term debt bears interest at floating interest rate. The fair value of fixed interest long-term debt is estimated using prevailing market rates as of the period end. The Company believes the terms of its fixed interest long-term debt are similar to those that could be procured as of September 30, 2017, and the carrying value approximates the fair market value. The fair value of the fixed interest long-term debt has been obtained through Level 2 inputs of the fair value hierarchy which includes observable inputs other than quoted prices included in Level 1.

F-16


Seanergy Maritime Holdings Corp.
Notes To The Unaudited Interim Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)


9.
Commitments and Contingencies:

Various claims, lawsuits, and complaints, including those involving government regulations and product liability, arise in the ordinary course of the shipping business. In addition, losses may arise from disputes with charterers, agents, insurance and other claims with suppliers relating to the operations of the Company's vessels. Currently, management is not aware of any such claims or contingent liabilities, which should be disclosed, or for which a provision should be established in the accompanying consolidated financial statements.
 
The Company accrues for the cost of environmental liabilities when management becomes aware that a liability is probable and is able to reasonably estimate the probable exposure. Currently, management is not aware of any such claims or contingent liabilities, which should be disclosed, or for which a provision should be established in the accompanying consolidated financial statements. The Company is covered for liabilities associated with the individual vessels' actions to the maximum limits as provided by Protection and Indemnity (P&I) Clubs, members of the International Group of P&I Clubs.
 

10.
Capital Structure:

(a)  Common Stock
 
On January 8, 2016, the Company effected a one-for-five reverse stock split of the Company's issued common stock (Note 1). The reverse stock split ratio and the implementation and timing of the reverse stock split were determined by the Company's Board of Directors. The reverse stock split did not change the authorized number of shares or par value of the Company's common stock or preferred stock, but did effect a proportionate adjustment to the number of shares of common stock issuable upon the vesting of restricted stock awards, and the number of shares of common stock eligible for issuance under the Plan. All applicable outstanding equity awards discussed below have been adjusted retroactively for the one-for-five reverse stock split.
 
On August 5, 2016, the Company entered into a securities purchase agreement with an unaffiliated third party, which is an institutional investor, under which the Company sold 1,180,000 of its common shares in a registered direct offering at a price of $4.15 per share. On August 10, 2016, the Company completed the registered direct offering for net proceeds of approximately $4,080. The net proceeds of this offering were used for general corporate purposes.
 
On November 18, 2016, the Company entered into a securities purchase agreement with unaffiliated third parties, which are institutional investors, under which the Company sold 1,305,000 of its common shares in a registered direct offering at a price of $2.75 per share. On November 23, 2016, the Company completed the registered direct offering for net proceeds of approximately $3,210, which proceeds were used for general corporate purposes, including funding of vessel acquisitions.
 
On December 13, 2016, the Company completed its public offering of 10,000,000 of its common shares and 10,000,000 class A warrants to purchase an aggregate of 10,000,000 common shares of the Company, at a combined price of $1.50 per share and class A warrant. The offering was in connection with the Company's form F-1 filed with the SEC on October 28, 2016, which was further amended on November 29, 2016, December 5, 2016, December 6, 2016 and December 8, 2016. The net proceeds were approximately $13,081, which proceeds were used to prepay $6,900 of the Jelco loan facility (Note 3b) and for general corporate purposes, including funding of vessel acquisitions.
 
On December 21, 2016, the Company completed the sale of an additional 1,300,000 of its common shares and 1,500,000 class A warrants to purchase 1,500,000 common shares of the Company, at a price of $1.49 per share and $0.01 per class A warrant, respectively, pursuant to the exercise of the over-allotment option granted to the underwriters in the Company's public offering that closed on December 13, 2016. The net proceeds were approximately $1,775, which proceeds were used for general corporate purposes, including funding of vessel acquisitions.
 

F-17

 
Seanergy Maritime Holdings Corp.
Notes To The Unaudited Interim Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

 
On February 3, 2017, the Company entered into an Equity Distribution Agreement with Maxim Group LLC, or "Maxim", as sales agent, under which the Company would offer and sell, from time to time through Maxim up to $20,000 of its common shares. The Company would determine, at its sole discretion, the timing and number of shares to be sold pursuant to the Equity Distribution Agreement along with any minimum price below which sales would not be made.  Maxim would make any sales pursuant to the Equity Distribution Agreement using its commercially reasonable efforts consistent with its normal trading and sales practices. Sales of common shares, if any, would be made by means of ordinary brokers' transactions on the Nasdaq Capital Market, in negotiated transactions or transactions that are deemed to be "at the market" offerings as defined in Rule 415 under the Securities Act of 1933, as amended, including sales made to or through a market maker other than on an exchange, at prices related to the prevailing market prices or at negotiated prices. On June 27, 2017, the Company and Maxim mutually terminated the Equity Distribution Agreement. As of June 27, 2017, the Company has sold a total of 2,782,136 of its common shares for aggregate net proceeds of $2,597 in connection with this public at-the-market offering. Maxim has received aggregate compensation for such sales of $86 as of June 27, 2017.
 
On April 10, 2017, the Company issued 125,000 of its common shares to an unaffiliated third party for the provision of professional services related to the Company's internet-based investor relations efforts.
 
On May 18, 2017, the Company was notified by NASDAQ that it was no longer in compliance with NASDAQ Listing Rule 5550(a)(2) because the closing bid price of the Company's common stock for 30 consecutive business days, from April 5, 2017 to May 17, 2017, was below the minimum $1.00 per share bid price requirement for continued listing on the Nasdaq Capital Market. This notification had no effect on the listing of the Company's common stock, and the applicable grace period to regain compliance is 180 days, expiring on November 14, 2017. The Company can cure this deficiency if the closing bid price of its common stock is $1.00 per share or higher for at least ten consecutive business days during the grace period. In the event the Company does not regain compliance within the 180-day grace period and it meets all other listing standards and requirements, the Company may be eligible for an additional 180-day grace period. On September 5, 2017, the Company received a letter from The Nasdaq Stock Market confirming that it has regained compliance with the minimum bid price requirement.

(b)  Warrants
 
On December 13, 2016, in connection with the public offering of December 13, 2016, the Company granted 10,000,000 class A warrants with an exercise price of $2.00 each. In connection with the offering, the Company also issued the representative of the underwriters a warrant ("Warrant I)" to purchase 500,000 of its common shares ("Warrant Shares"). The purchase price of one Warrant Share, which will be received by the Company, is equal to $1.875. Exercise of the purchase rights represented by Warrant I may be made, in whole or in part. The class A warrants were approved for listing on the Nasdaq Capital Market and trade under the ticker symbol "SHIPW" beginning on December 8, 2016. The class A warrants are immediately exercisable and expire on December 13, 2021. The Warrant I is exercisable beginning June 6, 2017 and expires on December 7, 2019. If and only if an effective registration statement covering the issuance of the common shares under the class A warrants is not available, the class A warrants may be exercised, at the holder's option, pursuant to the "cashless exercise" clause of the class A warrant agreement. Under the "cashless exercise", the holder will receive a net number of common shares determined according to class A warrant agreement. Similarly, if and only if an effective registration statement covering the issuance of the common shares under Warrant I is not available, the Warrant I may be exercised, at the holder's option, pursuant to the "cashless exercise" clause of the representative's warrant agreement. Under the "cashless exercise", the holder will receive a net number of common shares determined according to representative's warrant agreement. The Company may call the class A warrants for cancellation upon ten trading days prior written notice commencing thirteen months after issuance, subject to certain conditions, including the volume weighted average price of the Company's common shares exceeding $7.00 for a period of ten consecutive trading days.
 
F-18

 

Seanergy Maritime Holdings Corp.
Notes To The Unaudited Interim Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

 
On December 21, 2016, in connection with the exercise of the over-allotment option granted to the underwriters in the public offering of December 13, 2016, the Company granted an additional 1,500,000 class A warrants at a price of $0.01 per class A warrant with an exercise price of $2.00 each. In connection with the offering, the Company also issued the representative of the underwriters a warrant ("Warrant II)" to purchase 65,000 of its common shares ("Warrant Shares"). The purchase price of one Warrant Share, which will be received by the Company, is equal to $1.875. Exercise of the purchase rights represented by Warrant II may be made, in whole or in part. The class A warrants are immediately exercisable and expire on December 13, 2021. If and only if an effective registration statement covering the issuance of the common shares under the class A warrants is not available, the class A warrants may be exercised, at the holder's option, pursuant to the "cashless exercise" clause of the class A warrant agreement. Under the "cashless exercise", the holder will receive a net number of common shares determined according to class A warrant agreement. Similarly, if and only if an effective registration statement covering the issuance of the common shares under Warrant II is not available, the Warrant II may be exercised, at the holder's option, pursuant to the "cashless exercise" clause of the representative's warrant agreement. Under the "cashless exercise", the holder will receive a net number of common shares determined according to representative's warrant agreement. The Warrant II is exercisable beginning June 6, 2017 and expires on December 7, 2019.
 
As of September 30, 2017, the Company had outstanding warrants, including both the class A warrants and Warrant I and Warrant II issued to the representative of the underwriters, exercisable to purchase an aggregate of 12,065,000 shares of the Company's common shares.

11.
Interest and Finance Costs:

Interest and finance costs are analyzed as follows:
 
   
September 30,
  
   
2017
    
2016
  
Interest on long-term debt
    
8,669
      
5,008
  
Amortization of debt issuance costs
    
371
      
186
  
Other
    
48
      
11
  
Total
    
9,088
      
5,205
  
 
 
Interest and finance costs-related party are analyzed as follows:
 
   
September 30,
  
   
2017
    
2016
  
Interest expense long term debt related party
    
840
      
-
  
Amortization of debt issuance costs related party
    
12
      
-
  
Convertible notes interest expense
    
1,170
      
924
  
Convertible notes amortization of debt discount
    
1,330
      
688
  
Total
    
3,352
      
1,612
  

 
12.
Loss per Share:

The calculation of net losses per common share is summarized below:
 
 
September 30,
  
 
2017
  
2016
  
         
Net loss
    
(3,119
)
    
(17,730
)
                 
Weighted average common shares outstanding – basic
    
35,591,170
      
19,594,354
  
Net loss per common share – basic
  
$
(0.09
)
  
$
(0.90
)


F-19


 
Seanergy Maritime Holdings Corp.
Notes To The Unaudited Interim Consolidated Financial Statements
(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)

 
As of September 30, 2017 and 2016, securities that could potentially dilute basic EPS in the future that were not included in the computation of diluted EPS, because to do so would have anti-dilutive effect, as mentioned above are:
 
   
2017
    
2016
  
Non-vested equity incentive plan shares (Note 13)
    
652,700
      
144,000
  
Convertible promissory note shares (Note 3)
    
43,016,668
      
27,738,890
  
Public shares under warrants (Note 10)
    
12,065,000
      
-
  
Total
    
55,734,368
      
27,882,890
  
 
13.          Equity Incentive Plan:

On December 15, 2016, the Compensation Committee granted an aggregate of 772,800 restricted shares of common shares, pursuant to the 2011 Equity Incentive Plan. Of the total 772,800 shares, 274,800 shares were granted to the Company's board of directors, 448,000 shares were granted to certain of the Company's other employees and 50,000 shares were granted to the sole director of the Company's commercial manager, a non-employee. As of September 30, 2017, 45,534 shares remained reserved for issuance under the Company's Equity Incentive Plan.

Restricted shares during the nine-month periods ended September 30, 2017 and 2016 are analyzed as follows:

   
Number of Shares
    
Weighted Average Grant Date Price
  
Outstanding at December 31, 2015
    
152,000
    
$
3.70
  
Forfeited
    
(8,000
)
    
3.70
  
Outstanding at September 30, 2016
    
144,000
    
$
3.70
  
                 
Outstanding at December 31, 2016
    
652,700
    
$
1.67
  
Outstanding at September 30, 2017
    
652,700
    
$
1.67
  

The fair value of the restricted shares has been determined with reference to the closing price of the Company's common share on the date the agreements were signed. The aggregate compensation cost is being recognized ratably in the consolidated statement of loss over the respective vesting periods. The related expense for shares granted to the Company's board of directors and certain of its employees and to the unaffiliated third party in relation to professional services (Note 10) for the nine-month periods ended September 30, 2017 and 2016, amounted to $641 and $119, respectively, and is included under general and administration expenses. The unrecognized cost for the non-vested shares granted to the Company's board of directors and certain of its employees as of September 30, 2017 and December 31, 2016 amounted to $307 and $833, respectively. The related expense for shares granted to non-employees for the nine-month periods ended September 30, 2017 and 2016, amounted to $21 and $NIL, respectively, and is included under voyage expenses. At September 30, 2017, the weighted-average period over which the total compensation cost related to non-vested awards granted to the Company's board of directors and its other employees not yet recognized is expected to be recognized is 1.81 years.

14.          Subsequent Events:

a)
On October 20, 2017, the Company filed with the SEC a registration statement on Form F-1 in connection with a contemplated $20,000 follow-on registered public offering of the Company's securities, comprised of common shares, par value $0.0001 per share.


F-20