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Seacor Marine Holdings Inc.Table of Contents UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 20-F(Mark One) ¨ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934OR x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2011OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934OR ¨ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934Date of event requiring this shell company report For the transition period from to Commission file number001-34104Navios Maritime Acquisition Corporation(Exact name of Registrant as specified in its charter)Not Applicable(Translation of Registrant’s Name into English)Republic of Marshall Islands(Jurisdiction of incorporation or organization)85Akti Miaouli StreetPiraeus, Greece 185 38(011) +30-210-4595000(Address of principal executive offices)Todd E. MasonThompson Hine LLP335 Madison AveNew York, NY 10017Todd.Mason@thompsonhine.com(212) 908-3946(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person) Table of ContentsSecurities registered or to be registered pursuant to Section 12(b) of the Act. Title of each class Name of each exchange on which registeredCommon Stock, par value $.0001 per share New York Stock Exchange LLCUnits New York Stock Exchange LLCWarrants New York Stock Exchange LLCSecurities registered or to be registered pursuant to Section 12(g) of theAct. NoneSecurities for which there is a reporting obligation pursuant toSection 15(d) of the Act. NoneIndicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:40,498,598 Shares of Common Stock 18,815 Units 6,019,179 Warrants Indicate by check mark if the registrant is a well known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No xIf this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or (15)(d) of theSecurities Exchange Act of 1934. Yes ¨ No xIndicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such reportingrequirements for the past 90 days. Yes x No ¨Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required tobe submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period thatthe registrant was required to submit and post such files). Yes x No ¨Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer andlarge accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):Large Accelerated Filer ¨ Accelerated Filer x Non-Accelerated Filer ¨Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing: U.S. GAAP x International Financial Reporting Standards as issuedby the International Accounting Standards Board ¨ Other ¨If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x Table of ContentsTABLE OF CONTENTS PART I Item 1. Identity of Directors, Senior Management and Advisers 4 Item 2. Offer Statistics and Expected Timetable 4 Item 3. Key Information 4 Item 4. Information on the Company 32 Item 4A. Unresolved Staff Comments 50 Item 5. Operating and Financial Review and Prospects 50 Item 6. Directors, Senior Management and Employees 73 Item 7. Major Stockholders and Related Party Transactions 78 Item 8. Financial Information 83 Item 9. Listing Details 84 Item 10. Additional Information 85 Item 11. Quantitative and Qualitative Disclosures about Market Risks 97 Item 12. Description of Securities Other than Equity Securities 97 PART II Item 13. Defaults, Dividend Arrearages and Delinquencies 98 Item 14. Material Modifications to the Rights of Shareholders and Use of Proceeds 98 Item 15. Controls and Procedures 98 Item 16A. Audit Committee Financial Expert 98 Item 16B. Code of Ethics 99 Item 16C. Principal Accountant Fees and Services 99 Item 16D. Exemptions from the Listing Standards for Audit Committees 99 Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers 99 Item 16F. Change in Registrant’s Certifying Accountant 99 Item 16G. Corporate Governance 99 Item 16H. Mine Safety Disclosures 100 Item 17. Financial Statements 100 Item 18. Financial Statements 100 Item 19. Exhibits 100 Signatures 103 EX-8.1 EX-12.1 EX-12.2 EX-13.1 EX-15.1 EX-15.2 2 Table of ContentsFORWARD-LOOKING STATEMENTSThis Annual Report should be read in conjunction with the financial statements and accompanying notes included herein.Statements included in this annual report on Form 20-F which are not historical facts (including our statements concerning plans andobjectives of management for future operations or economic performance, or assumptions related thereto) are forward-looking statements. In addition, we andour representatives may from time to time make other oral or written statements which are also forward-looking statements. Such statements include, inparticular, statements about our plans, strategies, business prospects, changes and trends in our business, and the markets in which we operate as described inthis annual report. In some cases, you can identify the forward-looking statements by the use of words such as “may,” “could,” “should,” “would,” “expect,”“plan,” “anticipate,” “intend,” “forecast,” “believe,” “estimate,” “predict,” “propose,” “potential,” “continue” or the negative of these terms or othercomparable terminology.Forward-looking statements appear in a number of places and include statements with respect to, among other things: • our ability to maintain or develop new and existing customer relationships, including our ability to enter into charters for our vessels; • our ability to successfully grow our business and our capacity to manage our expanding business; • our future operating and financial results, including the amount of fixed hire and profit share that we may receive; • our ability to identify and consummate desirable acquisitions, joint ventures or strategic alliances, business strategy, areas of possible expansion, andexpected capital expenditure or operating expenses; • tanker industry trends, including charter rates and vessel values and factors affecting vessel supply and demand; • our ability to take delivery of, integrate into our fleet, and employ the newbuildings we have on firm order or any newbuildings we may order in the futureand the ability of shipyards to deliver vessels on a timely basis; • the aging of our vessels and resultant increases in operation and drydocking costs; • the ability of our vessels to pass classification inspection and vetting inspections by oil majors; • significant changes in vessel performance, including increased vessel breakdowns; • the creditworthiness of our charterers and the ability of our contract counterparties to fulfill their obligations to us; • our ability to repay outstanding indebtedness, to obtain additional financing and to obtain replacement charters for our vessels, in each case, atcommercially acceptable rates or at all; • changes to governmental rules and regulations or action taken by regulatory authorities and the expected costs thereof; • potential liability from litigation and our vessel operations, including discharge of pollutants; • changes in general economic and business conditions; • general domestic and international political conditions, including wars, acts of piracy and terrorism; • changes in production of or demand for oil and petroleum products, either globally or in particular regions; and • changes in the standard of service or the ability of our technical manager to be approved as required.These and other forward-looking statements are made based upon management’s current plans, expectations, estimates, assumptions andbeliefs concerning future events impacting us and therefore involve a number of risks and uncertainties, including those set forth below, as well as those risksdiscussed in “Item 3. Key Information”.The forward-looking statements, contained in this Annual Report on Form 20-F, are based on our current expectations and beliefsconcerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we haveanticipated.The risks, uncertainties and assumptions involve known and unknown risks and are inherently subject to significant uncertainties andcontingencies, many of which are beyond our control. We caution that forward-looking statements are not guarantees and that actual results could differmaterially from those expressed or implied in the forward-looking statements.We undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date onwhich such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predictall of these factors. Further, we cannot assess the impact of each such factor on our business or the extent to which any factor, or combination of factors, maycause actual results to be materially different from those contained in any forward-looking statement. 3 Table of ContentsPART IItem 1. Identity of Directors, Senior Management and AdvisersNot Applicable.Item 2. Offer Statistics and Expected TimetableNot Applicable.Item 3. Key InformationA. Selected Financial DataNavios Maritime Acquisition Corporation (sometimes referred to herein as “Navios Acquisition”, the “Company”, “we” or “us”)was incorporated in the Republic of Marshall Islands on March 14, 2008 (refer to Item 4. Information on the company).On March 30, 2011, Navios Maritime Holdings Inc (Navios Holdings) exchanged 7,676,000 shares of Navios Acquisition’s commonstock it held for 1,000 shares of Series C Convertible Preferred Stock of Navios Acquisition pursuant to an Exchange Agreement entered into on March 30,2011, between Navios Acquisition and Navios Holdings. Following this exchange, Navios Holdings has 45% of the voting power and 53.7% of the economicinterest in Navios Acquisition.On November 4, 2011, with respect to the shares held in escrow for the acquisition of a fleet of seven very large crude carriers (VLCC)(VLCC Acquisition), a total of 1,160,963 shares of common stock were released to the sellers and the remaining 217,159 were returned to Navios Acquisitionin settlement of representations and warranties attributable to the sellers. The returned shares were cancelled on December 30, 2011. Following the release,Navios Holdings ownership of the outstanding voting stock of Navios Acquisition increased to 45.24%, and its economic interest increased to 53.96%The selected historical financial and operating data as of and for the year ended December 31, 2011, 2010, 2009 and for the period fromMarch 14, 2008 (Inception) to December 31, 2008, are derived from the historical financial and operating data from the audited consolidated financialstatements of Navios Acquisition.The information is only a summary and should be read in conjunction with the consolidated financial statements and related notesincluded elsewhere in this annual report and section “Item 5. Operating and Financial Review and Prospects.” The selected consolidated financial data is asummary of, is derived from, and is qualified by reference to, our audited consolidated financial statements and notes thereto, which have been prepared inaccordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The historical data included below and elsewhere in this annual report is notnecessarily indicative of our future performance.We cannot provide a meaningful comparison of our results of operations of the years ended December 31, 2009 and for the periodMarch 14, 2008 (date of inception) to December 31, 2008, due to the fact that our vessel operations commenced in May 2010 upon the consummation of ourinitial acquisition of vessels. During the period from our inception to the date of our initial vessel acquisition, we were a development stage enterprise. (In thousands of U.S. dollars) Year endedDecember 31,2011 Year endedDecember 31,2010 Year endedDecember 31,2009 For the periodMarch 14, 2008(date of inception)to December 31,2008 Revenue $121,925 $33,568 $— $— Time charter expenses (3,499) (355) — — Direct vessel expenses (633) — — — Management fees (35,679) (9,752) — — General and administrative expenses (4,241) (1,902) (994) (393) Share based compensation — (2,140) — — 4 Table of ContentsTransaction costs — (8,019) — — Depreciation and amortization (38,638) (10,120) — — Prepayment penalties & write- off of deferred finance fees (935) (5,441) — — Interest income 1,414 862 346 1,440 Interest expenses and finance cost, net (43,165) (10,651) — — Other income/(expense), net (406) 404 — — Net (loss)/income $(3,857) $(13,546) $(648) $1,047 Net (loss)/ income per share, basic $(0.08) (0.43) (0.03) 0.08 Net (loss)/ income per share, diluted $(0.08) (0.43) (0.02) 0.06 Balance Sheet Data (at period end) Year endedDecember 31,2011 Year endedDecember 31,2010 Year endedDecember 31,2009 For the periodMarch 14, 2008(date of inception)to December 31,2008 Current assets, including cash 78,907 81,202 142 57 Vessels, net 774,624 529,659 — — Total assets 1,195,469 1,005,087 251,635 252,258 Current portion of long-term debt 11,928 5,086 — — Total long-term debt, excluding current portion 833,483 704,332 — — Total Stockholders equity 238,849 253,728 141,990 100,289 Cash Flow Data Net cash provided by /(used in) operating activities 67,972 11,479 (623) 1,467 Net cash (used in)/provided by investing activities (229,516) (104,781) 708 (252,201) Net cash provided by financing activities 141,484 154,575 — 250,736 Fleet Data: Vessels at end of period 14 9 — — B. Capitalization and indebtedness.Not applicable. 5 Table of ContentsC. Reasons for the offer and use of proceeds.Not applicable.D. Risk factorsRisks Relating to Our BusinessWe have a limited operating history, and you will have a limited basis on which to evaluate our ability to achieve our business objectives. We may notoperate profitably in the future.We are a company with limited combined operating results to date. Accordingly, you will have a limited basis upon which to evaluateour ability to achieve our business objectives. We completed our initial public offering (“IPO”) on July 1, 2008. Pursuant to the Acquisition Agreement datedApril 8, 2010 and approved by our stockholders on May 25, 2010, we completed the Product and Chemical Tanker Acquisition which constituted the initialbusiness combination. Three of the 13 vessels were delivered in the second, third and fourth quarter of 2010, and two were delivered in the first and fourthquarter of 2011, with the remaining vessels under the Acquisition Agreement scheduled to be delivered in the future. Most of the vessels acquired with theProduct and Chemical Tanker Acquisition have no operating history, and the five vessels delivered up to date have only been chartered since their respectivedelivery. On September 10, 2010, we completed the acquisition of seven very large crude carriers (“VLCC”), referred to here in as the VLCC Acquisition,with six operating vessels and one vessel delivered in our fleet in June 2011. On October 26, 2010, we entered into an agreement to acquire two newbuildvessels that were delivered in the fourth quarter of 2011 and first quarter of 2012, respectively. Both of the vessels were immediately chartered. In July 2011,we took delivery of two MR2 product tankers, which continue to trade under charters in place at the time of acquisition. In January 2012, Navios Acquisitionconcluded the asset acquisition of three newbuild MR2 product tankers scheduled to be delivered from a South Korean shipyard in the second, third andfourth quarters of 2014, respectively.Delays in deliveries of our newbuild vessels, or our decision to cancel, or our inability to otherwise complete the acquisitions of any newbuildings we maydecide to acquire in the future, could harm our operating results and lead to the termination of any related charters.Our newbuilding vessels, as well as any newbuildings we may contract to acquire or order in the future, could be delayed, not completedor cancelled, which would delay or eliminate our expected receipt of revenues under any charters for such vessels. The shipbuilder or third party seller couldfail to deliver the newbuilding vessel or any other vessels we acquire or order, or we could cancel a purchase or a newbuilding contract because theshipbuilder has not met its obligations, including its obligation to maintain agreed refund guarantees in place for our benefit. For prolonged delays, thecustomer may terminate the time charter.Our receipt of newbuildings could be delayed, cancelled, or otherwise not completed because of: • quality or engineering problems or failure to deliver the vessel in accordance with the vessel specifications; • changes in governmental regulations or maritime self-regulatory organization standards; • work stoppages or other labor disturbances at the shipyard; • bankruptcy or other financial or liquidity problems of the shipbuilder; • a backlog of orders at the shipyard; • political or economic disturbances in the country or region where the vessel is being built; • weather interference or catastrophic event, such as a major earthquake or fire; • shortages of or delays in the receipt of necessary equipment or construction materials, such as steel; and • our inability to finance the purchase of the vessel.If delivery of any newbuild vessel acquired, or any vessel we contract to acquire in the future is materially delayed, it could materially adversely affect ourresults of operations and financial condition.If we fail to manage our planned growth properly, we may not be able to expand our fleet successfully, which may adversely affect our overall financialposition.While we have no specific plans, we do intend to continue to expand our fleet in the future. Our growth will depend on: • locating and acquiring suitable vessels; • identifying reputable shipyards with available capacity and contracting with them for the construction of new vessels; • integrating any acquired vessels successfully with our existing operations; 6 Table of Contents• enhancing our customer base; • managing our expansion; and • obtaining required financing, which could include debt, equity or combinations thereof.Additionally, the marine transportation and logistics industries are capital intensive, traditionally using substantial amounts ofindebtedness to finance vessel acquisitions, capital expenditures and working capital needs. If we finance the purchase of our vessels through the issuance ofdebt securities, it could result in: • default and foreclosure on our assets if our operating cash flow after a business combination or asset acquisition were insufficient to pay our debtobligations; • acceleration of our obligations to repay the indebtedness even if we have made all principal and interest payments when due if the debt security containedcovenants that required the maintenance of certain financial ratios or reserves and any such covenant were breached without a waiver or renegotiation ofthat covenant; • our immediate payment of all principal and accrued interest, if any, if the debt security was payable on demand; and • our inability to obtain additional financing, if necessary, if the debt security contained covenants restricting our ability to obtain additional financingwhile such security was outstanding.In addition, our business plan and strategy is predicated on buying vessels in a distressed market at what we believe is near the low endof the cycle in what has typically been a cyclical industry. However, there is no assurance that charter rates and vessels asset values will not sink lower, or thatthere will be an upswing in shipping costs or vessel asset values in the near-term or at all, in which case our business plan and strategy may not succeed in thenear-term or at all. Growing any business by acquisition presents numerous risks such as undisclosed liabilities and obligations, difficulty experienced inobtaining additional qualified personnel and managing relationships with customers and suppliers and integrating newly acquired operations into existinginfrastructures. We may not be successful in growing and may incur significant expenses and losses.We may not have adequate insurance to compensate us for damage to or loss of our vessels, which may have a material adverse effect on our financialcondition and results of operation.We procure hull and machinery insurance, protection and indemnity insurance, which includes environmental damage and pollutioninsurance coverage and war risk insurance for our fleet. We do not maintain for our vessels insurance against loss of hire, which covers business interruptionsthat result from the loss of use of a vessel. We may not be adequately insured against all risks. We may not be able to obtain adequate insurance coverage forour fleet in the future. The insurers may not pay particular claims. Our insurance policies may contain deductibles for which we will be responsible andlimitations and exclusions that may increase our costs or lower our revenue. Moreover, insurers may default on claims they are required to pay. If ourinsurance is not enough to cover claims that may arise, the deficiency may have a material adverse effect on our financial condition and results of operations.We may face unexpected maintenance costs, which could materially adversely affect our business, financial condition and results of operations.If our vessels suffer damage or require upgrade work, they may need to be repaired at a drydocking facility. Our vessels may occasionallyrequire upgrade work in order to maintain their classification society rating or as a result of changes in regulatory requirements. In addition, our vessels willbe off-hire periodically for intermediate surveys and special surveys in connection with each vessel’s certification by its classification society. The costs ofdrydock repairs are unpredictable and can be substantial and the loss of earnings while these vessels are being repaired and reconditioned, as well as theactual cost of these repairs, would decrease our earnings. Our insurance generally only covers a portion of drydocking expenses resulting from damage to avessel and expenses related to maintenance of a vessel will not be reimbursed. In addition, space at drydocking facilities is sometimes limited and not alldrydocking facilities are conveniently located. We may be unable to find space at a suitable drydocking facility on a timely basis or may be forced to move adamaged vessel to a drydocking facility that is not conveniently located to the vessel’s position. The loss of earnings while any of our vessels are forced towait for space or to relocate to drydocking facilities that are far away from the routes on which our vessels trade would further decrease our earnings. 7 Table of ContentsWe rely on our technical managers to provide essential services to our vessels and run the day-to-day operations of our vessels.Pursuant to technical management agreements our current technical manager provides services essential to the business of our vessels,including vessel maintenance, crewing, purchasing, shipyard supervision, insurance and assistance with vessel regulatory compliance. The current technicalmanager of the VLCC vessels, an affiliate of the seller of such vessels, is a technical ship management company that has provided technical management tothe acquired VLCC vessels prior to the consummation of the business combination. This technical manager will continue to provide such services for aninterim period subsequent to the closing of the VLCC Acquisition, after which the technical management of our fleet is expected to be provided directly by asubsidiary of Navios Holdings. However, in the event Navios Holdings does not obtain the required vetting approvals, it will not be able to take overtechnical management. Our operational success and ability to execute our strategy will depend significantly upon the satisfactory performance of theseservices by the current technical manager, and, subsequently, by the Navios Holdings’ subsidiary. The failure of either of these technical managers to performthese services satisfactorily and/or the failure of the Navios Holdings’ subsidiary to garner the approvals necessary to become our technical manager for theVLCC vessels could have a material adverse effect on our business, financial condition and results of operations.Our vessels may be subject to unbudgeted periods of off-hire, which could materially adversely affect our business, financial condition and results ofoperations.Under the terms of the charter agreements under which our vessels operate, or are expected to operate in the case of the newbuildings,when a vessel is “off-hire,” or not available for service or otherwise deficient in its condition or performance, the charterer generally is not required to pay thehire rate, and we will be responsible for all costs (including the cost of bunker fuel) unless the charterer is responsible for the circumstances giving rise to thelack of availability. A vessel generally will be deemed to be off-hire if there is an occurrence preventing the full working of the vessel due to, among otherthings: • operational deficiencies; • the removal of a vessel from the water for repairs, maintenance or inspection, which is referred to as drydocking; • equipment breakdowns; • delays due to accidents or deviations from course; • occurrence of hostilities in the vessel’s flag state or in the event of piracy; • crewing strikes, labor boycotts, certain vessel detentions or similar problems; or • our failure to maintain the vessel in compliance with its specifications, contractual standards and applicable country of registry andinternational regulations or to provide the required crew.Risks Relating to Our IndustryThe cyclical nature of the tanker industry may lead to volatility in charter rates and vessel values, which could materially adversely affect our futureearnings.Oil has been one of the world’s primary energy sources for a number of decades. The global economic growth of previous years had asignificant impact on the demand for oil and subsequently on the oil trade and shipping demand. However, from the second half of 2008, through today, theworld’s economies experienced a major economic slowdown and uncertainty with effects that are ongoing, the duration of which is very difficult to forecastis expected to continue to have, a significant impact on world trade, including the oil trade. If the tanker market, which has historically been cyclical, isdepressed in the future, our earnings and available cash flow may be materially adversely affected. Our ability to employ our vessels profitably will dependupon, among other things, economic conditions in the tanker market. Fluctuations in charter rates and tanker values result from changes in the supply anddemand for tanker capacity and changes in the supply and demand for liquid cargoes, including petroleum and petroleum products.Historically, the crude oil markets have been volatile as a result of the many conditions and events that can affect the price, demand,production and transport of oil, including competition from alternative energy sources. Decreased demand for oil transportation may have a material adverseeffect on our revenues, cash flows and profitability. The factors affecting the supply and demand for tankers are outside of our control, and the nature, timingand degree of changes in industry conditions are 8 Table of Contentsunpredictable. The current global financial crisis has intensified this unpredictability.The factors that influence demand for tanker capacity include: • demand for and supply of liquid cargoes, including petroleum and petroleum products; • developments in international trade; • waiting days in ports; • changes in oil production and refining capacity and regional availability of petroleum refining capacity; • environmental and other regulatory developments; • global and regional economic conditions; • the distance chemicals, petroleum and petroleum products are to be moved by sea; • changes in seaborne and other transportation patterns, including changes in distances over which cargo is transported due to geographicchanges in where oil is produced, refined and used; • competition from alternative sources of energy; • armed conflicts and terrorist activities; • political developments; and • embargoes and strikes.The factors that influence the supply of tanker capacity include: • the number of newbuilding deliveries; • the scrapping rate of older vessels; • port or canal congestion; • the number of vessels that are used for storage or as floating storage offloading service vessels; • the conversion of tankers to other uses, including conversion of vessels from transporting oil and oil products to carrying drybulk cargoand the reverse conversion; • availability of financing for new tankers; • the phasing out of single-hull tankers due to legislation and environmental concerns; • the price of steel; • the number of vessels that are out of service; • national or international regulations that may effectively cause reductions in the carrying capacity of vessels or early obsolescence oftonnage; and • environmental concerns and regulations.Furthermore, the extension of refinery capacity in India and particularly the Middle East through 2016 is expected to exceed theimmediate consumption in these areas, and an increase in exports of refined oil products is expected as a result. This coupled with announced refineryclosures in North America, the Caribbean and Europe should increase trade in refined oil products. 9 Table of ContentsHistorically, the tanker markets have been volatile as a result of the many conditions and factors that can affect the price, supply and demand for tankercapacity. The recent global economic crisis may further reduce demand for transportation of oil over long distances and supply of tankers that carry oil,which may materially affect our future revenues, profitability and cash flows.We believe that the current order book for tanker vessels represents a significant percentage of the existing fleet; however the percentageof the fleet on order as a percent of the total fleet declined from 2011 to 2012. An over-supply of tanker capacity may result in a reduction of charter hirerates. If a reduction in charter rates occurs, we may only be able to charter our vessels at unprofitable rates or we may not be able to charter these vessels at all,which could lead to a material adverse effect on our results of operations.Charter rates in the crude oil, product and chemical tanker sectors of the seaborne transportation industry in which we operate have significantly declinedfrom historically high levels in 2008 and may remain depressed or decline further in the future, which may adversely affect our earnings.Charter rates in the crude oil, product and chemical tanker sectors have significantly declined from historically high levels in 2008 andmay remain depressed or decline further. For example, the Baltic Dirty Tanker Index declined from a high of 2,347 in July 2008 to 453 in mid-April 2009,which represents a decline of approximately 81%. Since January 2010 it has traded between a low of 657 and a high of 1,216; as of February 20, 2012, itstood at 817. The Baltic Clean Tanker Index fell from 1,509 in the early summer of 2008 to 345 in April 2009, or approximately 77%. It has traded between alow of 595 and a high of 908 since January 2010 and stood at 700 as of February 20, 2012. Of note is that Chinese imports of crude oil have steadilyincreased from 3 million barrels per day in 2008 to about 5.9 million barrels per day in February 2012. If the tanker sector of the seaborne transportationindustry, which has been highly cyclical, is depressed in the future at a time when we may want to sell a vessel, our earnings and available cash flow may beadversely affected. We cannot assure you that we will be able to successfully charter our vessels in the future at rates sufficient to allow us to operate ourbusiness profitably or to meet our obligations, including payment of debt service to our lenders. Our ability to renew the charters on vessels that we mayacquire in the future, the charter rates payable under any replacement charters and vessel values will depend upon, among other things, economic conditionsin the sector in which our vessels operate at that time, changes in the supply and demand for vessel capacity and changes in the supply and demand for theseaborne transportation of energy resources and commodities.Spot market rates for tanker vessels are highly volatile and are currently at relatively low levels historically and may further decrease in the future, whichmay adversely affect our earnings in the event that our vessels are chartered in the spot market.We intend to deploy at least some of our product and chemical tankers in the spot market. Although spot chartering is common in theproduct and chemical tanker sectors, product and chemical tanker charter hire rates are highly volatile and may fluctuate significantly based upon demand forseaborne transportation of crude oil and oil products and chemicals, as well as tanker supply. The world oil demand is influenced by many factors, includinginternational economic activity; geographic changes in oil production, processing, and consumption; oil price levels; inventory policies of the major oil andoil trading companies; and strategic inventory policies of countries such as the United States and China. The successful operation of our vessels in the spotcharter market depends upon, among other things, obtaining profitable spot charters and minimizing, to the extent possible, time spent waiting for chartersand time spent traveling unladen to pick up cargo. Furthermore, as charter rates for spot charters are fixed for a single voyage that may last up to severalweeks, during periods in which spot charter rates are rising, we will generally experience delays in realizing the benefits from such increases.The spot market is highly volatile, and, in the past, there have been periods when spot rates have declined below the operating cost ofvessels. Currently, charter hire rates are at relatively low rates historically and there is no assurance that the crude oil, product and chemical tanker chartermarket will recover over the next several months or will not continue to decline further.Additionally, if the spot market rates or short-term time charter rates become significantly lower than the time charter equivalent ratesthat some of our charterers are obligated to pay us under our existing charters, the charterers may have incentive to default under that charter or attempt torenegotiate the charter. If our charterers fail to pay their obligations, we would have to attempt to re-charter our vessels at lower charter rates, which wouldaffect our ability to comply with our loan covenants and operate our vessels profitably. If we are not able to comply with our loan covenants and our lenderschoose to accelerate our indebtedness and foreclose their liens, we could be required to sell vessels in our fleet and our ability to continue to conduct ourbusiness would be impaired.Our VLCC vessels are contractually committed to time charters, with the remaining terms of these charters expiring during the periodfrom and including 2014 through 2026. We are not permitted to unilaterally terminate the charter agreements of the VLCC vessels due to upswings in thetanker industry cycle, when spot market voyages might be more profitable. We may also decide to sell a vessel in the future. In such a case, should we sell avessel that is committed to a long-term charter, we may not be able to realize the full charter free fair market value of the vessel during a period when spotmarket charters are more profitable than the 10 Table of Contentscharter agreement under which the vessel operates. We may re-charter the VLCC vessels on long-term charters or charter them in the spot market uponexpiration or termination of the vessels’ current charters. If we are not able to employ the VLCC vessels profitably under time charters or in the spot market,our results of operations and operating cash flow may suffer.Any decrease in shipments of crude oil from the Arabian Gulf or West Africa may materially adversely affect our financial performance.The demand for VLCC oil tankers derives primarily from demand for Arabian Gulf and West African crude oil, which, in turn, primarilydepends on the economies of the world’s industrial countries and competition from alternative energy sources. A wide range of economic, social and otherfactors can significantly affect the strength of the world’s industrial economies and their demand for Arabian Gulf and West African crude oil.Among the factors that could lead to a decrease in demand for exported Arabian Gulf and West African crude oil are: • increased use of existing and future crude oil pipelines in the Arabian Gulf or West African regions; • a decision by the Organization of the Petroleum Exporting Countries (“OPEC”) to increase its crude oil prices or to further decrease or limit their crude oilproduction; • armed conflict or acts of piracy in the Arabian Gulf or West Africa and political or other factors; • increased oil production in other regions, such as Russia and Latin America; and • the development and the relative costs of nuclear power, natural gas, coal and other alternative sources of energy.Any significant decrease in shipments of crude oil from the Arabian Gulf or West Africa may materially adversely affect our financial performance.Ten of the vessels we have acquired are second-hand vessels, and we may acquire more second-hand vessels in the future. The acquisition and operation ofsuch vessels may result in increased operating costs and vessel off-hire, which could materially adversely affect our earnings.Two of LR1 product tanker vessels, two of MR2 product tanker vessels and six of VLCC vessels that we have acquired are second-handvessels, and we may acquire more second-hand vessels in the future. Our inspection of second-hand vessels prior to purchase does not provide us with thesame knowledge about their condition and cost of any required or anticipated repairs that we would have had if these vessels had been built for and operatedexclusively by us. Generally, we will not receive the benefit of warranties on second-hand vessels.In general, the costs to maintain a vessel in good operating condition increase with the age of the vessel. Due to improvements in enginetechnology, older vessels are typically less fuel efficient and more costly to maintain than more recently constructed vessels. Cargo insurance rates increasewith the age of a vessel, making older vessels less desirable to charterers.Governmental regulations, safety or other equipment standards related to the age of vessels may require expenditures for alterations orthe addition of new equipment, to our vessels and may restrict the type of activities in which the vessels may engage or the geographic regions in which wemay operate. We cannot predict what alterations or modifications our vessels may be required to undergo in the future. As our vessels age, market conditionsmay not justify those expenditures or enable us to operate our vessels profitably during the remainder of their useful lives.Although we have considered the age and condition of the vessels in budgeting for operating, insurance and maintenance costs, we mayencounter higher operating and maintenance costs due to the age and condition of these vessels, or any additional vessels we acquire in the future. The age ofsome of the VLCC vessels may result in higher operating costs and increased vessel off-hire periods relative to our competitors that operate newer fleets,which could have a material adverse effect on our results of operations.Our growth depends on continued growth in demand for crude oil, refined petroleum products (clean and dirty) and bulk liquid chemicals and thecontinued demand for seaborne transportation of such cargoes.Our growth strategy focuses on expansion in the crude oil, product and chemical tanker sectors. Accordingly, our growth depends oncontinued growth in world and regional demand for crude oil, refined petroleum (clean and dirty) products and bulk liquid chemicals and the transportationof such cargoes by sea, which could be negatively affected by a number of factors, including: 11 Table of Contents • the economic and financial developments globally, including actual and projected global economic growth; • fluctuations in the actual or projected price of crude oil, refined petroleum (clean and dirty) products or bulk liquid chemicals; • refining capacity and its geographical location; • increases in the production of oil in areas linked by pipelines to consuming areas, the extension of existing, or the development of new,pipeline systems in markets we may serve, or the conversion of existing non-oil pipelines to oil pipelines in those markets; • decreases in the consumption of oil due to increases in its price relative to other energy sources, other factors making consumption of oilless attractive or energy conservation measures; • availability of new, alternative energy sources; and • negative or deteriorating global or regional economic or political conditions, particularly in oil-consuming regions, which could reduceenergy consumption or its growth.The refining and chemical industries may respond to the economic downturn and demand weakness by reducing operating rates partiallyor completely closing refineries and by reducing or cancelling certain investment expansion plans, including plans for additional refining capacity, in thecase of the refining industry. Continued reduced demand for refined petroleum (clean and dirty) products and bulk liquid chemicals and the shipping of suchcargoes or the increased availability of pipelines used to transport refined petroleum (clean and dirty) products, would have a material adverse effect on ourfuture growth and could harm our business, results of operations and financial condition.Our growth depends on our ability to obtain customers, for which we face substantial competition. In the highly competitive tanker industry, we may not beable to compete for charters with new entrants or established companies with greater resources, which may adversely affect our results of operations.We will employ our tanker vessels in the highly competitive crude oil tanker sectors of the shipping industry that is capital intensive andfragmented. Competition arises primarily from other vessel owners, including major oil companies as well as independent tanker companies, some of whomhave substantially greater resources and experience than us. Competition for the chartering of tankers can be intense and depends on price, location, size, age,condition and the acceptability of the vessel and its managers to the charterers. Such competition has been enhanced as a result of the downturn in theshipping industry, which has resulted in an excess supply of vessels and reduced charter rates.Medium- to long-term time charters and bareboat charters have the potential to provide income at pre-determined rates over moreextended periods of time. However, the process for obtaining longer term time charters and bareboat charters is highly competitive and generally involves alengthy, intensive and continuous screening and vetting process and the submission of competitive bids that often extends for several months. In addition tothe quality, age and suitability of the vessel, longer term shipping contracts tend to be awarded based upon a variety of other factors relating to the vesseloperator. Competition for the transportation of crude oil, refined petroleum products (clean and dirty) and bulk liquid chemicals can be intense and dependson price, location, size, age, condition and acceptability of the vessel and our managers to the charterers.In addition to having to meet the stringent requirements set out by charterers, it is likely that we will also face substantial competitionfrom a number of competitors who may have greater financial resources, stronger reputations or experience than we do when we try to re-charter our vessels. Itis also likely that we will face increased numbers of competitors entering into the crude oil, product and chemical tanker sectors, including in the ice classsector. Increased competition may cause greater price competition, especially for medium- to long-term charters. Due in part to the highly fragmentedmarkets, competitors with greater resources could operate larger fleets through consolidations or acquisitions that may be able to offer better prices and fleetsthan ours.As a result of these factors, we may be unable to obtain customers for medium- to long-term time charters or bareboat charters on aprofitable basis, if at all. Even if we are successful in employing our vessels under longer term time charters or bareboat charters, our vessels will not beavailable for trading in the spot market during an upturn in the crude oil, product and chemical tanker market cycles, when spot trading may be moreprofitable. If we cannot successfully employ our vessels in profitable time charters our results of operations and operating cash flow could be adverselyaffected. 12 Table of ContentsThe market values of our vessels, which have declined from historically high levels, may fluctuate significantly, which could cause us to breach covenantsin our credit facilities and result in the foreclosure of certain of our vessels. Depressed vessel values could also cause us to incur impairment charges.Due to the sharp decline in world trade and tanker charter rates, the market values of our contracted new buildings and of tankersgenerally, are currently significantly lower than prior to the downturn in the second half of 2008. Within the past year smaller product tanker yard resaleprices have remained flat or declined slightly. Vessel values may remain at current low, or lower, levels for a prolonged period of time and can fluctuatesubstantially over time due to a number of different factors, including: • prevailing level of charter rates; • general economic and market conditions affecting the shipping industry; • competition from other shipping companies; • types and sizes of vessels; • supply and demand for vessels; • other modes of transportation; • cost of newbuildings; • governmental or other regulations; and • technological advances.If the market value of our vessels decreases, we may breach some of the covenants contained in the financing agreements relating to ourindebtedness at the time. The credit facilities contain covenants including maximum total net liabilities over total net assets (effective in general afterdelivery of the vessels), minimum net worth and loan to value ratio covenants initially of 130% or lower, applicable after delivery of the vessels. If we breachany such covenants in the future and we are unable to remedy the relevant breach, our lenders could accelerate our debt and foreclose on our vessels. Inaddition, if the book value of a vessel is impaired due to unfavorable market conditions, we would incur a loss that could have a material adverse effect onour business, financial condition and results of operations.In addition, as vessels grow older, they generally decline in value. We will review our vessels for impairment whenever events or changesin circumstances indicate that the carrying amount of the assets may not be recoverable. We review certain indicators of potential impairment, such asundiscounted projected operating cash flows expected from the future operation of the vessels, which can be volatile for vessels employed on short-termcharters or in the spot market. Any impairment charges incurred as a result of declines in charter rates would negatively affect our financial condition andresults of operations. In addition, if we sell any vessel at a time when vessel prices have fallen and before we have recorded an impairment adjustment to ourfinancial statements, the sale may be at less than the vessel’s carrying amount on our financial statements, resulting in a loss and a reduction in earnings.Future increases in vessel operating expenses, including rising fuel prices, could materially adversely affect our business, financial condition and results ofoperations.Under our time charter agreements, the charterer is responsible for substantially all of the voyage expenses, including port and canalcharges and fuel costs and we are generally responsible for vessel operating expenses. Vessel operating expenses are the costs of operating a vessel, primarilyconsisting of crew wages and associated costs, insurance premiums, management fees, lubricants and spare parts and repair and maintenance costs. Inparticular, the cost of fuel is a significant factor in negotiating charter rates. As a result, an increase in the price of fuel beyond our expectations may adverselyaffect our profitability. The price and supply of fuel is unpredictable and fluctuates based on events outside our control, including geopoliticaldevelopments, supply and demand for oil, actions by members of OPEC and other oil and gas producers, war, terrorism and unrest in oil producing countriesand regions, regional production patterns and environmental concerns and regulations.We receive a daily rate for the use of our vessels, which is fixed through the term of the applicable charter agreement. Our charteragreements do not provide for any increase in the daily hire rate in the event that vessel-operating expenses increase during the term of the charter agreement.The charter agreements for the seven VLCC vessels expire during the period from and including 2014 through 2026. Because of the long-term nature of thesecharter agreements, incremental increases in our vessel operating expenses over the term of a charter agreement will effectively reduce our operating incomeand, if such increases in operating expenses are significant, adversely affect our business, financial condition and results of operations. 13 Table of ContentsThe crude oil, product and chemical tanker sectors are subject to seasonal fluctuations in demand and, therefore, may cause volatility in our operatingresults.The crude oil, product and chemical tanker sectors of the shipping industry have historically exhibited seasonal variations in demandand, as a result, in charter hire rates. This seasonality may result in quarter-to-quarter volatility in our operating results. The product and chemical tankermarkets are typically stronger in the fall and winter months in anticipation of increased consumption of oil and natural gas in the northern hemisphere. Inaddition, unpredictable weather patterns in these months tend to disrupt vessel scheduling and supplies of certain commodities. As a result, revenues aretypically weaker during the fiscal quarters ended June 30 and September 30, and, conversely, typically stronger in fiscal quarters ended December 31 andMarch 31. Our operating results, therefore, may be subject to seasonal fluctuations.The current global economic downturn may negatively impact our business.In recent years, there has been a significant adverse shift in the global economy, with operating businesses facing tightening credit,weakening demand for goods and services, deteriorating international liquidity conditions, and declining markets. Lower demand for tanker cargoes as wellas diminished trade credit available for the delivery of such cargoes may create downward pressure on charter rates. If the current global economicenvironment persists or worsens, we may be negatively affected in the following ways: • We may not be able to employ our vessels at charter rates as favorable to us as historical rates or operate such vessels profitably. • The market value of our vessels could decrease significantly, which may cause us to recognize losses if any of our vessels are sold or iftheir values are impaired. In addition, such a decline in the market value of our vessels could prevent us from borrowing under our creditfacilities or trigger a default under one of their covenants. • Charterers could have difficulty meeting their payment obligations to us.If the contraction of the global credit markets and the resulting volatility in the financial markets continues or worsens that could have amaterial adverse impact on our results of operations, financial condition and cash flows, and could cause the market price of our common stock to decline.The employment of our vessels could be adversely affected by an inability to clear the oil majors’ risk assessment process, and we could be in breach of ourcharter agreements with respect to the VLCC vessels.The shipping industry, and especially the shipment of crude oil, refined petroleum products (clean and dirty) and bulk liquid chemicals,has been, and will remain, heavily regulated. The so-called “oil majors” companies, such as Exxon Mobil, BP p.l.c., Royal Dutch Shell plc., Chevron,ConocoPhillips and Total S.A. together with a number of commodities traders, represent a significant percentage of the production, trading and shippinglogistics (terminals) of crude oil and refined products worldwide. Concerns for the environment have led the oil majors to develop and implement a strictongoing due diligence process when selecting their commercial partners. This vetting process has evolved into a sophisticated and comprehensive riskassessment of both the vessel operator and the vessel, including physical ship inspections, completion of vessel inspection questionnaires performed byaccredited inspectors and the production of comprehensive risk assessment reports. In the case of term charter relationships, additional factors are consideredwhen awarding such contracts, including: • office assessments and audits of the vessel operator; • the operator’s environmental, health and safety record; • compliance with the standards of the International Maritime Organization (the “IMO”), a United Nations agency that issues internationaltrade standards for shipping; • compliance with heightened industry standards that have been set by several oil companies; • shipping industry relationships, reputation for customer service, technical and operating expertise; 14 Table of Contents • shipping experience and quality of ship operations, including cost-effectiveness; • quality, experience and technical capability of crews; • the ability to finance vessels at competitive rates and overall financial stability; • relationships with shipyards and the ability to obtain suitable berths; • construction management experience, including the ability to procure on-time delivery of new vessels according to customerspecifications; • willingness to accept operational risks pursuant to the charter, such as allowing termination of the charter for force majeure events; and • competitiveness of the bid in terms of overall price.Under the terms of our charter agreements, our charterers require that these vessels and the technical manager are vetted and approved totransport oil products by multiple oil majors. Our failure to maintain any of our vessels to the standards required by the oil majors could put us in breach ofthe applicable charter agreement and lead to termination of such agreement, and could give rise to impairment in the value of our vessels.Should we not be able to successfully clear the oil majors’ risk assessment processes on an ongoing basis, the future employment of ourvessels, as well as our ability to obtain charters, whether medium- or long-term, could be adversely affected. Such a situation may lead to the oil majors’terminating existing charters and refusing to use our vessels in the future, which would adversely affect our results of operations and cash flows.We depend on significant customers for part of our revenue. Charterers may terminate or default on their obligations to us, which could materiallyadversely affect our results of operations and cash flow, and breaches of the charters may be difficult to enforce.We have derived a significant part of our revenue from a number of charterers. For the fiscal year ended December 31, 2011, DOSCO,Blue Light Chartering Inc. and Jacob Tank Chartering GMBH & Co. KG accounted for approximately 43.9%, 11.5% and 11.3%, respectively, of our totalrevenue. The loss of these or any of our customers, a customer’s failure to make payments or perform under any of the applicable charters, a customer’stermination of any of the applicable charters, the loss or damage beyond repair to any of our vessels, our failure to deliver the vessel within a fixed period oftime or a decline in payments under the charters could have a material adverse effect on our business, results of operations and financial condition. Inaddition, the charterers of the VLCC vessels are based in, and have their primary assets and operations in, the Asia-Pacific region, including the People’sRepublic of China. The charter agreements for the VLCC vessels are governed by English law and provide for dispute resolution in English courts orLondon-based arbitral proceedings. There can be no assurance that we would be able to enforce any judgments against these charterers in jurisdictions wherethey are based or have their primary assets and operations. Even after a charter contract is entered, charterers may terminate charters early under certaincircumstances. The events or occurrences that will cause a charter to terminate or give the charterer the option to terminate the charter generally include atotal or constructive total loss of the related vessel, the requisition for hire of the related vessel, the vessel becoming subject to seizure for more than aspecified number of days or the failure of the related vessel to meet specified performance criteria. In addition, the ability of a charterer to perform itsobligations under a charter will depend on a number of factors that are beyond our control.These factors may include general economic conditions, the condition of the crude oil, product and chemical tanker sectors of theshipping industry, the charter rates received for specific types of vessels and various operating expenses. In addition, we are exploring the possibility ofacquiring the credit risk insurance currently available to Navios Holdings. Navios Holdings has insured its charter-out contracts through a “AA” ratedgovernmental agency of a European Union member state, which provides that if the charterer goes into payment default, the insurer will reimburse it for thecharter payments under the terms of the policy for the remaining term of the charter-out contract (subject to applicable deductibles and other customarylimitations for insurance). While we may seek to benefit from such insurance, no assurance can be provided that we will qualify for or choose to obtain thisinsurance or that the costs will not outweigh the benefits. The costs and delays associated with the default by a charterer of a vessel may be considerable andmay adversely affect our business, results of operations, cash flows and financial condition. 15 Table of ContentsWe cannot predict whether our charterers will, upon the expiration of their charters, re-charter our vessels on favorable terms or at all. Ifour charterers decide not to re-charter our vessels, we may not be able to re-charter them on terms similar to our current charters or at all. In the future, we mayalso employ our vessels on the spot charter market, which is subject to greater rate fluctuation than the time charter market. If we receive lower charter ratesunder replacement charters or are unable to re-charter all of our vessels, our results of operations and financial condition could be materially adverselyaffected.If we experienced a catastrophic loss and our insurance is not adequate to cover such loss, it could lower our profitability and bedetrimental to operations.The ownership and operation of vessels in international trade is affected by a number of inherent risks, including mechanical failure,personal injury, vessel and cargo loss or damage, business interruption due to political conditions in foreign countries, hostilities, piracy, terrorism, laborstrikes and/or boycotts, adverse weather conditions and catastrophic marine disaster, including environmental accidents and collisions. All of these riskscould result in liability, loss of revenues, increased costs and loss of reputation. We maintain hull and machinery insurance, protection and indemnityinsurance, which include environmental damage and pollution and war risk insurance, consistent with industry standards, against these risks on our vesselsand other business assets. However, we cannot assure you that we will be able to insure against all risks adequately, that any particular claim will be paid outof our insurance, or that we will be able to procure adequate insurance coverage at commercially reasonable rates in the future. Our insurers also require us topay certain deductible amounts, before they will pay claims, and insurance policies may contain limitations and exclusions, which, although we believe willbe standard for the shipping industry, may nevertheless increase our costs and lower our profitability. Additionally, any increase in environmental and otherregulations may also result in increased costs for, or the lack of availability of, insurance against the risks of environmental damage, pollution and otherclaims. Our inability to obtain insurance sufficient to cover potential claims or the failure of insurers to pay any significant claims could lower ourprofitability and be detrimental to our operations.Furthermore, even if insurance coverage is adequate to cover our losses, we may not be able to timely obtain a replacement ship in theevent of a loss. We may also be subject to calls, or premiums, in amounts based not only on our own claim records but also the claim records of all othermembers of the protection and indemnity associations through which we receive indemnity insurance coverage for tort liability. In addition, our protectionand indemnity associations may not have enough resources to cover claims made against them. Our payment of these calls could result in significantexpenses to us, which could reduce our cash flows and place strains on our liquidity and capital resources.We are subject to various laws, regulations and conventions, including environmental and safety laws that could require significant expenditures both tomaintain compliance with such laws and to pay for any uninsured environmental liabilities including any resulting from a spill or other environmentalincident.The shipping business and vessel operation are materially affected by government regulation in the form of international conventions,national, state and local laws, and regulations in force in the jurisdictions in which vessels operate, as well as in the country or countries of their registration.Governmental regulations, safety or other equipment standards, as well as compliance with standards imposed by maritime self-regulatory organizations andcustomer requirements or competition, may require us to make capital and other expenditures. Because such conventions, laws and regulations are oftenrevised, we cannot predict the ultimate cost of complying with such conventions, laws and regulations, or the impact thereof on the fair market price or usefullife of our vessels. In order to satisfy any such requirements, we may be required to take any of our vessels out of service for extended periods of time, withcorresponding losses of revenues. In the future, market conditions may not justify these expenditures or enable us to operate our vessels, particularly oldervessels, profitably during the remainder of their economic lives. This could lead to significant asset write downs. In addition, violations of environmental andsafety regulations can result in substantial penalties and, in certain instances, seizure or detention of our vessels.Additional conventions, laws and regulations may be adopted that could limit our ability to do business, require capital expenditures orotherwise increase our cost of doing business, which may materially adversely affect our operations, as well as the shipping industry generally. For example,in various jurisdictions legislation has been enacted, or is under consideration, that would impose more stringent requirements on air pollution and waterdischarges from our vessels. For example, the International Maritime Organization (“IMO”) periodically proposes and adopts amendments to revise theInternational Convention for the 16 Table of ContentsPrevention of Pollution from Ships (“MARPOL”), such as the revision to Annex VI which came into force on July 1, 2010. The revised Annex VI implementsa phased reduction of the sulfur content of fuel and allows for stricter sulfur limits in designated emission control areas (“ECAs”). Thus far, ECAs have beenformally adopted for the Baltic Sea and the North Sea including the English Channel. It is expected that waters off the North American coast will beestablished as an ECA from August 1, 2012, and the United States Caribbean Sea ECA will come into force on January 1, 2013, having effect from January 1,2014. These ECAs will limit SOx, NOx and particulate matter emissions. In addition, the IMO, the U.S. and states within the U.S. have proposed orimplemented requirements relating to the management of ballast water to prevent the harmful effects of foreign invasive species.The operation of vessels is also affected by the requirements set forth in the International Safety Management (“ISM”) Code. The ISMCode requires shipowners and bareboat charterers to develop and maintain an extensive “Safety Management System” that includes the adoption of a safetyand environmental protection policy setting forth instructions and procedures for safe vessel operation and describing procedures for dealing withemergencies. Further to this, the IMO is introducing the first ever mandatory measures for an international greenhouse gas reduction regime for a globalindustry sector. The measures will come into effect on January 1, 2013 and apply to all ships of 400 gross tonnage and above. They set a ship energyefficiency management plan (“SEEMP”) which is akin to a safety management plan, which the industry will have to comply with. The failure of a ship owneror bareboat charterer to comply with the ISM Code and IMO measures may subject such party to increased liability, may decrease available insurancecoverage for the affected vessels, and may result in a denial of access to, or detention in, certain ports.We operate a fleet of crude, product and chemical tankers that are subject to national and international laws governing pollution fromsuch vessels. Several international conventions impose and limit pollution liability from vessels. An owner of a tanker vessel carrying a cargo of “persistentoil” as defined by the International Convention for Civil Liability for Oil Pollution Damage (the “CLC”) is subject under the convention to strict liability forany pollution damage caused in a contracting state by an escape or discharge from cargo or bunker tanks. This liability is subject to a financial limitcalculated by reference to the tonnage of the ship, and the right to limit liability may be lost if the spill is caused by the shipowner’s intentional or recklessconduct. Liability may also be incurred under the CLC for a bunker spill from the vessel even when she is not carrying such cargo, but is in ballast.When a tanker is carrying clean oil products that do not constitute “persistent oil” that would be covered under the CLC, liability for anypollution damage will generally fall outside the CLC and will depend on other international conventions or domestic laws in the jurisdiction where thespillage occurs. The same principle applies to any pollution from the vessel in a jurisdiction which is not a party to the CLC. The CLC applies in over 100jurisdictions around the world, but it does not apply in the United States, where the corresponding liability laws such as the Oil Pollution Act of 1990 (The“OPA”) discussed below, are particularly stringent.For vessel operations not covered by the CLC, including those operated under our fleet, at present, international liability for oilpollution is governed by the International Convention on Civil Liability for Bunker Oil Pollution Damage (the “Bunker Convention”). In 2001, the IMOadopted the Bunker Convention, which imposes strict liability on shipowners for pollution damage and response costs incurred in contracting states causedby discharges, or threatened discharges, of bunker oil from all classes of ships not covered by the CLC. The Bunker Convention also requires registeredowners of ships over a certain size to maintain insurance to cover their liability for pollution damage in an amount equal to the limits of liability under theapplicable national or international limitation regime, including liability limits calculated in accordance with the Convention on Limitation of Liability forMaritime Claims 1976, as amended (the “1976 Convention”), discussed in more detail in the following paragraph. The Bunker Convention became effectivein contracting states on November 21, 2008 and as of January 3, 2012 was in effect in 64 states. In non-contracting states, liability for such bunker oilpollution typically is determined by the national or other domestic laws in the jurisdiction where the spillage occurs.The CLC and Bunker Convention also provide vessel owners a right to limit their liability. The CLC includes its own liability limits andthe Bunker Convention incorporates the 1976 Convention referenced above. The 1976 Convention is the most widely applicable international regimelimiting maritime pollution liability. Rights to limit liability under the 1976 Convention are forfeited where a spill is caused by a shipowner’s intentional orreckless conduct. Certain jurisdictions have ratified the IMO’s Protocol of 1996 to the 1976 Convention, referred to herein as the “Protocol of 1996.” TheProtocol of 1996 provides for substantially higher liability limits in those jurisdictions than the limits set forth in the 1976 Convention. Finally, somejurisdictions, such as the United States, are not a party to either the 1976 Convention or the Protocol of 1996, and, therefore, a shipowner’s rights to limitliability for maritime pollution in such jurisdictions may be uncertain. 17 Table of ContentsEnvironmental legislation in the United States merits particular mention as it is in many respects more onerous than international laws,representing a high-water mark of regulation with which ship owners and operators must comply, and of liability likely to be incurred in the event of non-compliance or an incident causing pollution. Such regulation may become even stricter if laws are changed as a result of the April 2010 Deepwater Horizonoil spill in the Gulf of Mexico. In the United States, the OPA establishes an extensive regulatory and liability regime for the protection and cleanup of theenvironment from cargo and bunker oil spills from vessels, including tankers. The OPA covers all owners and operators whose vessels trade in the UnitedStates, its territories and possessions or whose vessels operate in United States waters, which includes the United States’ territorial sea and its 200 nauticalmile exclusive economic zone. Under the OPA, vessel owners, operators and bareboat charterers are “responsible parties” and are jointly, severally andstrictly liable (unless the spill results solely from the act or omission of a third party, an act of God or an act of war) for all containment and clean-up costs andother damages arising from discharges or substantial threats of discharges, of oil from their vessels. In response to the 2010 Deepwater Horizon oil incident inthe Gulf of Mexico, the U.S. House of Representatives passed and the U.S. Senate considered but did not pass a bill to strengthen certain requirements of theOPA; similar legislation may be introduced in the future 112th Congress.In addition to potential liability under the federal OPA, vessel owners may in some instances incur liability on an even more stringentbasis under state law in the particular state where the spillage occurred. For example, California regulations prohibit the discharge of oil, require an oilcontingency plan be filed with the state, require that the ship owner contract with an oil response organization and require a valid certificate of financialresponsibility, all prior to the vessel entering state waters.In the last decade, the EU has become increasingly active in the field of regulation of maritime safety and protection of the environment.In some areas of regulation the EU has introduced new laws without attempting to procure a corresponding amendment to international law. Notably, the EUadopted in 2005 a directive, as amended in 2009, on ship-source pollution, imposing criminal sanctions for pollution not only where pollution is caused byintent or recklessness (which would be an offence under MARPOL), but also where it is caused by “serious negligence.” The concept of “serious negligence”may be interpreted in practice to be little more than ordinary negligence. The directive could therefore result in criminal liability being incurred incircumstances where it would not be incurred under international law. Criminal liability for a pollution incident could not only result in us incurringsubstantial penalties or fines, but may also, in some jurisdictions, facilitate civil liability claims for greater compensation than would otherwise have beenpayable.We maintain insurance coverage for each owned vessel in our fleet against pollution liability risks in the amount of $1.0 billion in theaggregate for any one event. The insured risks include penalties and fines as well as civil liabilities and expenses resulting from accidental pollution.However, this insurance coverage is subject to exclusions, deductibles and other terms and conditions. If any liabilities or expenses fall within an exclusionfrom coverage, or if damages from a catastrophic incident exceed the aggregate liability of $1.0 billion for any one event, our cash flow, profitability andfinancial position would be adversely impacted.Climate change and government laws and regulations related to climate change could negatively impact our financial condition.We are and will be, directly and indirectly, subject to the effects of climate change and may, directly or indirectly, be affected bygovernment laws and regulations related to climate change. A number of countries have adopted or are considering the adoption of regulatory frameworks toreduce greenhouse gas emissions, such as carbon dioxide and methane. In the United States, the United States Environmental Protection Agency (“U.S. EPA”)has declared greenhouse gases to be dangerous pollutants and has issued greenhouse gas reporting requirements for emissions sources in certain industries(which do not include the shipping industry). The U.S. EPA is also considering petitions to regulate greenhouse gas emissions from marine vessels.The IMO has announced its intention to develop limits on greenhouse gases from international shipping and is working on technical andoperational measures to reduce emissions. In addition, while the emissions of greenhouse gases from international shipping are not subject to the KyotoProtocol to the United Nations Framework Convention on Climate Change, which requires adopting countries to implement national programs to reducegreenhouse gas emissions, a new treaty may be adopted in the future that includes restrictions on shipping emissions. The EU has also indicated that itintends to propose an expansion of the existing EU emissions trading scheme to include greenhouse gas emissions from marine vessels.We cannot predict with any degree of certainty what effect, if any, possible climate change and government laws and regulations relatedto climate change will have on our operations, whether directly or indirectly. However, we believe that 18 Table of Contentsclimate change, including the possible increase in severe weather events resulting from climate change, and government laws and regulations related toclimate change may affect, directly or indirectly, (i) the cost of the vessels we may acquire in the future, (ii) our ability to continue to operate as we have inthe past, (iii) the cost of operating our vessels, and (iv) insurance premiums, deductibles and the availability of coverage. As a result, our financial conditioncould be negatively impacted by significant climate change and related governmental regulation, and that impact could be material.We are subject to vessel security regulations and we incur costs to comply with adopted regulations. We may be subject to costs to comply with similarregulations that may be adopted in the future in response to terrorism.Since the terrorist attacks of September 11, 2001, there have been a variety of initiatives intended to enhance vessel security. OnNovember 25, 2002, the Maritime Transportation Security Act of 2002, or MTSA, came into effect. To implement certain portions of the MTSA, in July 2003,the U.S. Coast Guard issued regulations requiring the implementation of certain security requirements aboard vessels operating in waters subject to thejurisdiction of the United States. Similarly, in December 2002, amendments to the International Convention for the Safety of Life at Sea, or SOLAS, created anew chapter of the convention dealing specifically with maritime security. The new chapter went into effect in July 2004, and imposes various detailedsecurity obligations on vessels and port authorities, most of which are contained in the International Ship and Port Facilities Security (ISPS) Code. Amongthe various requirements are: • on-board installation of automatic information systems, or AIS, to enhance vessel-to-vessel and vessel-to-shore communications; • on-board installation of ship security alert systems; • the development of vessel security plans; and • compliance with flag state security certification requirements.The U.S. Coast Guard regulations, intended to be aligned with international maritime security standards, exempt non-U.S. vessels fromMTSA vessel security measures, provided such vessels have on board a valid International Ship Security Certificate (ISSC) that attests to the vessel’scompliance with SOLAS security requirements and the ISPS Code. We will implement the various security measures addressed by the MTSA, SOLAS and theISPS Code and take measures for our vessels or vessels that we charter to attain compliance with all applicable security requirements within the prescribedtime periods. Although management does not believe these additional requirements will have a material financial impact on our operations, there can be noassurance that there will not be an interruption in operations to bring vessels into compliance with the applicable requirements and any such interruptioncould cause a decrease in charter revenues. Furthermore, additional security measures could be required in the future that could have significant financialimpact on us.Our international activities increase the compliance risks associated with economic and trade sanctions imposed by the United States, the European Unionand other jurisdictions.Our international operations could expose us to trade and economic sanctions or other restrictions imposed by the United States or othergovernments or organizations, including the United Nations, the European Union and its member countries. Under economic and trading sanctions laws,governments may seek to impose modifications to business practices, and modifications to compliance programs, which may increase compliance costs, andmay subject us to fines, penalties and other sanctions.During 2011 and continuing into 2012, the scope of sanctions imposed against the government of Iran and persons engaging in certainactivities or doing certain business with and relating to Iran has been expanded by a number of jurisdictions, including the United States, the EuropeanUnion and Canada. In 2010, the U.S. enacted the Comprehensive Iran Sanctions Accountability and Divestment Act (“CISADA”), which expanded the scopeof the former Iran Sanctions Act. Among other things, CISADA expands the application of the prohibitions to non-U.S. companies, such as our company, andintroduces limits on the ability of companies and persons to do business or trade with Iran when such activities relate to the investment, supply or export ofrefined petroleum or petroleum products (our tankers have called on ports in Iran but do not engage in the activities specifically identified by thesesanctions). Although we believe that we are in compliance with all applicable sanctions and embargo laws and regulations, and intend to maintain suchcompliance, there can be no assurance that we will be in compliance in the future, particularly as the scope of certain laws may be unclear and may be subjectto changing interpretations. Moreover, our charterers may violate applicable sanctions and embargo laws and regulations as a result of actions that do notinvolve us or our vessels, and those violations could in turn negatively affect our reputation.We are monitoring developments in the United States, the European Union and other jurisdictions that maintain 19 Table of Contentssanctions programs, including developments in implementation and enforcement of such sanctions programs. Expansion of sanctions programs, embargoesand other restrictions in the future (including additional designations of countries subject to sanctions), or modifications in how existing sanctions areinterpreted or enforced, could prevent our tankers from calling on ports in sanctioned countries or could limit their cargoes. If any of the risks describedabove materialize, it could have a material adverse impact on our business and results of operations.Increased inspection procedures and tighter import and export controls could increase costs and disrupt our business.International shipping is subject to various security and customs inspections and related procedures in countries of origin anddestination. Inspection procedures can result in the seizure of contents of vessels, delays in the loading, offloading or delivery and the levying of customs,duties, fines and other penalties.It is possible that changes to inspection procedures could impose additional financial and legal obligations on us. Furthermore, changesto inspection procedures could also impose additional costs and obligations on our future customers and may, in certain cases, render the shipment of certaintypes of cargo impractical. Any such changes or developments may have a material adverse effect on our business, financial condition, and results ofoperations.A failure to pass inspection by classification societies could result in our vessels becoming unemployable unless and until they pass inspection, resulting ina loss of revenues from such vessels for that period and a corresponding decrease in operating cash flows.The hull and machinery of every commercial vessel must be classed by a classification society authorized by its country of registry. Theclassification society certifies that a vessel is safe and seaworthy in accordance with the applicable rules and regulations of the country of registry of thevessel and with SOLAS. A vessel must undergo an annual survey, an intermediate survey and a special survey. In lieu of a special survey, a vessel’smachinery may be on a continuous survey cycle, under which the machinery would be surveyed periodically over a five-year period. Every vessel is alsorequired to be drydocked every two to three years for inspection of the underwater parts of such vessel. If any of our vessels fail any annual survey,intermediate survey, or special survey, the vessel may be unable to trade between ports and, therefore, would be unemployable, potentially causing anegative impact on our revenues due to the loss of revenues from such vessel until it was able to trade again.The operation of ocean-going vessels entails the possibility of marine disasters including damage or destruction of a vessel due to accident, the loss of avessel due to piracy, terrorism or political conflict, damage or destruction of cargo and similar events that are inherent operational risks of the tankerindustry and may cause a loss of revenue from affected vessels and damage to our business reputation and condition, which may in turn lead to loss ofbusiness.The operation of ocean-going vessels entails certain inherent risks that may adversely affect our business and reputation. Our vessels andtheir cargoes are at risk of being damaged or lost due to events such as: • damage or destruction of vessel due to marine disaster such as a collision; • the loss of a vessel due to piracy and terrorism; • cargo and property losses or damage as a result of the foregoing or less drastic causes such as human error, mechanical failure and badweather; • environmental accidents as a result of the foregoing; • business interruptions and delivery delays caused by mechanical failure, human error, acts of piracy, war, terrorism, political action invarious countries, stowaways, labor strikes, potential government expropriation of our vessels or adverse weather conditions; and • other events and circumstances.In addition, increased operational risks arise as a consequence of the complex nature of the crude oil, product and chemical tankerindustry, the nature of services required to support the industry, including maintenance and repair services, and the mechanical complexity of the tankersthemselves. Compared to other types of vessels, tankers are exposed to a higher risk of damage and loss by fire, whether ignited by a terrorist attack, collisionor other cause, due to the high flammability and high volume of the oil transported in tankers. Damage and loss could also arise as a consequence of a failurein the services required to support the industry, for example, due to inadequate dredging. Inherent risks also arise due to the nature of the product transportedby our vessels. Any damage to, or accident involving, our vessels while carrying crude oil could give rise to environmental damage or lead to other adverseconsequences. Each of these inherent risks may also result in death or injury to persons, loss of revenues or property, higher insurance rates, damage to ourcustomer relationships, delay or rerouting. 20 Table of ContentsAny of these circumstances or events could substantially increase our costs. For example, the costs of replacing a vessel or cleaning upenvironmental damage could substantially lower our revenues by taking vessels out of operation permanently or for periods of time. Furthermore, theinvolvement of our vessels in a disaster or delays in delivery, damage or the loss of cargo may harm our reputation as a safe and reliable vessel operator andcause us to lose business. Our vessels could be arrested by maritime claimants, which could result in the interruption of business and decrease revenue andlower profitability.Some of these inherent risks could result in significant damage, such as marine disaster or environmental incidents, and any resultinglegal proceedings may be complex, lengthy, costly and, if decided against us, any of these proceedings or other proceedings involving similar claims orclaims for substantial damages may harm our reputation and have a material adverse effect on our business, results of operations, cash flow and financialposition. In addition, the legal systems and law enforcement mechanisms in certain countries in which we operate may expose us to risk and uncertainty.Further, we may be required to devote substantial time and cost defending these proceedings, which could divert attention from management of our business.Crew members, tort claimants, claimants for breach of certain maritime contracts, vessel mortgagees, suppliers of goods and services to a vessel, shippers ofcargo and other persons may be entitled to a maritime lien against a vessel for unsatisfied debts, claims or damages, and in many circumstances a maritimelien holder may enforce its lien by “arresting” a vessel through court processes. Additionally, in certain jurisdictions, such as South Africa, under the “sistership” theory of liability, a claimant may arrest not only the vessel with respect to which the claimant’s lien has arisen, but also any “associated” vessel ownedor controlled by the legal or beneficial owner of that vessel. If any vessel ultimately owned and operated by us is “arrested,” this could result in a material lossof revenues, or require us to pay substantial amounts to have the “arrest” lifted.Any of these factors may have a material adverse effect on our business, financial conditions and results of operations.The smuggling of drugs or other contraband onto our vessels may lead to governmental claims against us.We expect that our vessels will call in ports in South America and other areas where smugglers attempt to hide drugs and othercontraband on vessels, with or without the knowledge of crew members. To the extent our vessels are found with contraband, whether inside or attached tothe hull of our vessel and whether with or without the knowledge of any of our crew, we may face governmental or other regulatory claims which could havean adverse effect on our business, results of operations, cash flows and financial condition.Acts of piracy on ocean-going vessels have increased in frequency and magnitude, which could adversely affect our business.The shipping industry has historically been affected by acts of piracy in regions such as the South China Sea and the Gulf of Aden. In2009 acts of piracy saw a steep rise, particularly off the coast of Somalia in the Gulf of Aden. A recent and significant example of the heightened level ofpiracy came in February 2011 when the M/V Irene SL, a crude oil tanker and the Arabian Sea which was not affiliated with us, was captured by pirates in theArabian Sea while carrying crude oil estimated to be worth approximately $200 million. In December 2009, the Navios Apollon, a vessel owned by ouraffiliate, Navios Maritime Partners L.P. (“Navios Partners”), was seized by pirates 800 miles off the coast of Somalia while transporting fertilizer from Tampa,Florida to Rozi, India and was released on February 27, 2010. These piracy attacks resulted in regions (in which our vessels are deployed) being characterizedby insurers as “war risk” zones or Joint War Committee (JWC) “war and strikes” listed areas, premiums payable for such insurance coverage could increasesignificantly and such insurance coverage may be more difficult to obtain. Crew costs, including those due to employing onboard security guards, couldincrease in such circumstances. In addition, while we believe the charterer remains liable for charter payments when a vessel is seized by pirates, the charterermay dispute this and withhold charter hire until the vessel is released. A charterer may also claim that a vessel seized by pirates was not “on-hire” for a certainnumber of days and it is therefore entitled to cancel the charter party, a claim that we would dispute. We may not be adequately insured to cover losses fromthese incidents, which could have a material adverse effect on us. In addition, detention hijacking as a result of an act of piracy against our vessels, or anincrease in cost, or unavailability of insurance for our vessels, could have a material adverse impact on our business, financial condition, results of operationsand cash flows. Acts of piracy on ocean-going vessels have increased in frequency, which could adversely affect our business and operations.Terrorist attacks, increased hostilities or war could lead to further economic instability, increased costs and disruption of our business.Terrorist attacks, such as the attacks in the United States on September 11, 2001 and the United States’ continuing response to theseattacks, the attacks in London on July 7, 2005, as well as the threat of future terrorist attacks, continue to cause uncertainty in the world financial markets,including the energy markets. The continuing conflicts in Iraq and Afghanistan and other current and future conflicts, may adversely affect our business,operating results, financial condition, ability to raise capital 21 Table of Contentsand future growth. Continuing hostilities in the Middle East may lead to additional armed conflicts or to further acts of terrorism and civil disturbance in theUnited States or elsewhere, which may contribute further to economic instability.In addition, oil facilities, shipyards, vessels, pipelines and oil and gas fields could be targets of future terrorist attacks. Any such attackscould lead to, among other things, bodily injury or loss of life, vessel or other property damage, increased vessel operational costs, including insurance costs,and the inability to transport oil and other refined products to or from certain locations. Terrorist attacks, war or other events beyond our control thatadversely affect the distribution, production or transportation of oil and other refined products to be shipped by us could entitle our customers to terminateour charter contracts, which would harm our cash flow and our business.Terrorist attacks on vessels, such as the October 2002 attack on the M/V Limburg, a very large crude carrier not related to us, may in thefuture also negatively affect our operations and financial condition and directly impact our vessels or our customers. Future terrorist attacks could result inincreased volatility and turmoil in the financial markets in the United States and globally. Any of these occurrences could have a material adverse impact onour revenues and costs.Governments could requisition vessels of a target business during a period of war or emergency, resulting in a loss of earnings.A government could requisition a business’ vessels for title or hire. Requisition for title occurs when a government takes control of avessel and becomes her owner, while requisition for hire occurs when a government takes control of a vessel and effectively becomes her charterer at dictatedcharter rates. Generally, requisitions occur during periods of war or emergency, although governments may elect to requisition vessels in other circumstances.Although a target business would be entitled to compensation in the event of a requisition of any of its vessels, the amount and timing of payment would beuncertain.Disruptions in world financial markets and the resulting governmental action in Europe, the United States and in other parts of the world could have amaterial adverse impact on our ability to obtain financing required to acquire vessels or new businesses. Furthermore, such a disruption would adverselyaffect our results of operations, financial condition and cash flows.Concerns relating to the European sovereign debt crisis have recently intensified. While Greece, Portugal and Ireland have been the mostaffected countries thus far, with each agreeing to a rescue package with the European Union and the International Monetary Fund, there are fears that otherEuropean countries may be further affected by increasing public debt burdens and weakening economic growth prospects. On January 13, 2012, Standard andPoor’s Rating Services downgraded the long-term ratings for nine Eurozone nations, including France, Italy and Spain. On February 13, 2012, Moody’sInvestors Service (“Moody’s”) downgraded the sovereign debt ratings of Italy, Malta, Portugal, Slovakia, Slovenia and Spain, while initiating negativeoutlooks on the United Kingdom, France and Austria. Additionally, on March 2, 2012, Moody’s downgraded Greece’s sovereign debt rating to C from Ca.Such downgrades could negatively affect those countries’ ability to access the public debt markets at reasonable rates or at all, materially affecting thefinancial conditions of banks in those countries, including those with which we maintain cash deposits and equivalents, or on which we rely on to financeour vessel and new business acquisitions. Cash deposits and cash equivalents in excess of amounts covered by government-provided insurance are exposedto loss in the event of non-performance by financial institutions. We maintain cash deposits and equivalents in excess of government-provided insurancelimits at banks in Greek and other European banks, which may expose us to a loss of cash deposits or cash equivalents.Furthermore, the United States and other parts of the world are exhibiting volatile economic trends and were recently in a recession.Despite signs of recovery, the outlook for the world economy remains uncertain. For example, the credit markets worldwide and in the U.S. have experiencedsignificant contraction, de-leveraging and reduced liquidity, and the U.S. federal government, state governments and foreign governments have implementedand are considering a broad variety of governmental action and/or new regulation of the financial markets. Securities and futures markets and the creditmarkets are subject to comprehensive statutes, regulations and other requirements. The Securities and Exchange Commission (the “SEC”), other regulators,self-regulatory organizations and exchanges are authorized to take extraordinary actions in the event of market emergencies, and may effect changes in law orinterpretations of existing laws. Recently, a number of financial institutions have experienced serious financial difficulties and, in some cases, have enteredbankruptcy proceedings or are in regulatory enforcement actions. These issues, along with the reprising of credit risk and the difficulties currentlyexperienced by financial institutions have made, and will likely continue to make, it difficult to obtain financing. As a result of the disruptions in the creditmarkets, many lenders have increased margins on lending rates, enacted tighter lending standards, required more restrictive terms (including higher collateralratios for advances, shorter maturities and smaller loan amounts), or have refused to refinance existing debt at all. Additionally, certain banks that havehistorically been significant lenders to the shipping industry have reduced or ceased lending activities in the shipping industry. New banking regulations,including larger capital requirements and the resulting policies adopted by lenders, could reduce lending activities. We may experience difficulties obtainingfinancing commitments, including commitments to refinance our existing debt as balloon payments come due under our credit facilities, in the future iflenders are unwilling to extend financing to us or unable to meet their funding obligations due to their own liquidity, capital or solvency issues. Due to thefact that we would possibly cover all or a portion of the cost of any new vessel acquisition with debt financing, such uncertainty, combined with restrictionsimposed by our current debt, could hamper our ability to finance vessels or new business acquisitions. 22 Table of ContentsIn addition, economic uncertainty worldwide has markedly reduced demand for shipping services and has decreased charter rates, whichmay adversely affect our results of operations and financial condition. Currently, the economies of China, Japan, other Pacific Asian countries and India arethe main driving force behind the development in seaborne transportation. Reduced demand from such economies has driven decreased rates and vesselvalues.We could face risks attendant to changes in economic environments, changes in interest rates, and instability in certain securitiesmarkets, among other factors. Major market disruptions and the uncertainty in market conditions and the regulatory climate in the U.S., Europe andworldwide could adversely our business or impair our ability to borrow amounts under any future financial arrangements. The current market conditions maylast longer than we anticipate. These recent and developing economic and governmental factors could have a material adverse effect on our results ofoperations, financial condition or cash flows.Because international tanker companies often generate most or all of their revenues in U.S. dollars but incur a portion of their expenses in othercurrencies, exchange rate fluctuations could cause us to suffer exchange rate losses, thereby increasing expenses and reducing income.We engage in worldwide commerce with a variety of entities. Although our operations may expose us to certain levels of foreign currency risk, ourtransactions are predominantly U.S. dollar-denominated. Transactions in currencies other than the functional currency are translated at the exchange rate ineffect at the date of each transaction. Expenses incurred in foreign currencies against which the U.S. dollar falls in value can increase, decreasing our incomeA greater percentage of our transactions and expenses in the future may be denominated in currencies other than U.S. dollar. As part of our overall riskmanagement policy, we will attempt to hedge these risks in exchange rate fluctuations from time to time. We may not always be successful in such hedgingactivities and, as a result, our operating results could suffer as a result of un-hedged losses incurred as a result of exchange rate fluctuations. For example, as ofDecember 31, 2011, the value of the U.S. dollar as compared to the Euro increased by approximately 2.3% compared with the respective value as ofDecember 31, 2010. A greater percentage of our transactions and expenses in the future may be denominated in currencies other than the U.S. dollar.Labor interruptions and problems could disrupt our business.Certain of our vessels are manned by masters, officers and crews that are employed by third parties. If not resolved in a timely and cost-effective manner, industrial action or other labor unrest could prevent or hinder our operations from being carried out normally and could have a materialadverse effect on our business, results of operations, cash flow and financial condition.The market value of our vessels that we have constructed, acquired or may acquire in the future may fluctuate, which could limit the amount of funds thatwe can borrow, cause us to fail to meet certain financial covenants in our credit facilities and adversely affect our ability to purchase new vessels and ouroperating results.The market value of tankers has been volatile. Vessel values may fluctuate due to a number of different factors, including: generaleconomic and market conditions affecting the shipping industry; competition from other shipping companies; the types and sizes of available vessels; theavailability of other modes of transportation; increases in the supply of vessel capacity; the cost of new buildings; governmental or other regulations;prevailing charter rates; the age of the vessel; and the need to upgrade secondhand vessels as a result of charterer requirements, technological advances invessel design or equipment or otherwise. In addition, as vessels grow older, they generally decline in value. To the extent that we incur debt that is secured byany of our vessels, if the market value of such vessels declines, we may be required to prepay a portion of these secured borrowings.If the market value of our vessels decreases, we may breach some of the covenants contained in the financing agreements relating to ourindebtedness at the time. The credit facilities contain covenants including maximum total net liabilities over total net assets (effective in general afterdelivery of the vessels), minimum net worth (effective after delivery of the vessels, but in no case later than 2013) and loan to value ratio covenantsapplicable after delivery of the vessels initially of 130% or lower. If we breach any such covenants in the future and we are unable to remedy the relevantbreach, our lenders could accelerate our debt and 23 Table of Contentsforeclose on our vessels. In addition, if the book value of a vessel is impaired due to unfavorable market conditions, we would incur a loss that could have amaterial adverse effect on our business, financial condition and results of operations.If for any reason we sell any of our vessels at a time when prices are depressed, we could incur a loss and our business, financial conditionand results of operations could be adversely affected. Conversely, if vessel values are elevated at a time when we wish to acquire additional vessels, the costof acquisition may increase and this could materially adversely affect our business, financial condition and results of operations.In the highly competitive product and chemical tanker sectors of the shipping industry, we may not be able to compete for charters with new entrants orestablished companies with greater resources, which may adversely affect our results of operations.We employ our vessels in the product and chemical tanker sectors, highly competitive markets that are capital intensive and highlyfragmented. Competition arises primarily from other vessel owners, some of whom have substantially greater resources than us. Competition for thetransportation of refined petroleum products (clean and dirty) and bulk liquid chemicals can be intense and depends on price, location, size, age, conditionand the acceptability of the vessel and our managers to the charterers. Due in part to the highly fragmented markets, competitors with greater resources couldoperate larger fleets through consolidations or acquisitions that may be able to offer better prices and fleets than ours.Risks Relating to Our VLCC VesselsThe indemnity may be inadequate to cover any damages.The Securities Purchase Agreement for the VLCC vessels has a cap on indemnity obligations, subject to certain exceptions, of$58.7 million. Although we performed substantial due diligence with respect to the VLCC Acquisition, there can be no assurance that there will not beundisclosed liabilities or other matters not discovered in the course of such due diligence and the $58.7 million indemnity may be inadequate to cover theseor other damages related to breaches of such agreement. In addition, after the return to Navios Acquisition of 217,159 shares on November 4, 2011 insettlement of claims relating to representation and warranties attributable to the sellers and the return of the balance of the escrow shares to the sellers, it maybe difficult to enforce an arbitration award for any amount of damages.A large proportion of the revenue from the VLCC vessels is derived from a Chinese state-owned company, and changes in the economic and politicalenvironment in China or in Chinese relations with other countries could adversely affect our ability to continue this customer relationship.DOSCO, a wholly owned subsidiary of the Chinese state-owned COSCO, charters four of the seven VLCC vessels (including thenewbuilding delivered in June 2011). Changes in political, economic and social conditions or other relevant policies of the Chinese government, such aschanges in laws, regulations or export and import restrictions, could restrict DOSCO’s ability to continue its relationship with us. If DOSCO becomes unableto perform under its charter agreements with us, we could suffer a loss of revenue that could materially adversely affect our business, financial condition, andresults of operations. In addition, we may have limited ability in Chinese courts to enforce any awards for damages that we may suffer if DOSCO were to failto perform its obligations under our charter agreements.One of the vessels is subject to a mutual sale provision between the subsidiary that owns the vessel and the charterer of the vessel, which, if exercised, couldreduce the size of our fleet and reduce our future revenue.The Shinyo Ocean is subject to a mutual sale provision whereby we or the charterer can request the sale of the vessel provided that aprice can be obtained that is at least $3,000,000 greater than the agreed depreciated value of the vessel as set forth in the charter agreement. If this provisionis exercised, we may not be able to obtain a replacement vessel for the price at which the vessel is sold. In such a case, the size of our fleet would be reducedand we may experience a reduction in our future revenue.Risks Related to Our Relationship with Navios Holdings and Its AffiliatesNavios Holdings has limited recent experience in the crude oil, product and chemical tanker sectors.Navios Tankers Management Inc. (the “Manager”), a wholly owned subsidiary of Navios Holdings, oversees the commercial andadministrative management of our entire fleet and the technical management of a portion of our fleet. Navios Holdings is a vertically-integrated seaborneshipping and logistics company with over 55 years of operating history in the shipping industry that held approximately 45.2% of our shares of commonstock as of December 31, 2011. Other than with 24 Table of Contentsrespect to South American operations, Navios Holdings has limited recent experience in the crude oil, chemical and product tanker sectors.Such limited experience could cause Navios Holdings or the Manager to make decisions that a more experienced operator in the sectormight not make. If Navios Holdings or the Manager is not able to properly assess or ascertain a particular aspect of the crude oil, product or chemical tankersectors, it could have a material adverse affect on our operations.Navios Holdings may compete directly with us, causing certain officers to have a conflict of interest.Angeliki Frangou and Ted C. Petrone are each officers and/or directors of both Navios Holdings and Navios Acquisition. We operate inthe crude oil, product and chemical tanker sectors of the shipping industry, and although Navios Holdings does not currently operate in those sectors, there isno assurance it will not enter them. If it does, we may compete directly with Navios Holdings for business opportunities.Navios Holdings, Navios Maritime Partners L.P. (“Navios Partners”) and Navios Acquisition share certain officers and directors who may not be able todevote sufficient time to our affairs, which may affect our ability to conduct operations and generate revenues.Angeliki Frangou and Ted C. Petrone are each officers and/or directors of both Navios Holdings and Navios Acquisition, andMs. Frangou is an officer and director of Navios Partners. As a result, demands for our officers’ time and attention as required from Navios Acquisition, NaviosPartners and Navios Holdings may conflict from time to time and their limited devotion of time and attention to our business may hurt the operation of ourbusiness.The loss of key members of our senior management team could disrupt the management of our business.We believe that our success depends on the continued contributions of the members of our senior management team, includingMs. Angeliki Frangou, our Chairman and Chief Executive Officer. The loss of the services of Ms. Frangou or one of our other executive officers or seniormanagement members could impair our ability to identify and secure new charter contracts, to maintain good customer relations and to otherwise manage ourbusiness, which could have a material adverse effect on our financial performance and our ability to compete.We are dependent on a subsidiary of Navios Holdings for the commercial and administrative management of our fleet and the technical management of aportion of our fleet, which may create conflicts of interest.As we subcontract the technical and commercial management of our fleet, including crewing, maintenance and repair, to our Manager, asubsidiary of Navios Holdings, and on an interim basis to other third party managers, the loss of these services or the failure of the Manager to perform theseservices could materially and adversely affect the results of our operations. Although we may have rights against the Manager if it defaults on its obligationsto us, you will have no recourse directly against it. Further, we expect that we will need to seek approval from our respective lenders to change ourcommercial and technical managers.Navios Holdings has responsibilities and relationships to owners other than Navios Acquisition that could create conflicts of interestbetween us and Navios Holdings or our Manager. These conflicts may arise in connection with the provision of chartering services to us for our fleet versuscarriers managed by Navios Holdings’ subsidiaries or other companies affiliated with Navios Holdings.Navios Holdings, our affiliate and a greater than 5% holder of our common stock, Angeliki Frangou, our Chairman and Chief Executive Officer, andcertain of our officers and directors collectively control a substantial interest in us, and, as a result, may influence certain actions requiring stockholdervote.Navios Holdings, Angeliki Frangou, our Chairman and Chief Executive Officer, and certain of our officers and directors beneficiallyown, in the aggregate, 50.2% of our issued and outstanding shares of common stock, which permits them to influence the outcome of effectively all mattersrequiring approval by our stockholders at such time, including the election of directors and approval of significant corporate transactions. Furthermore, ifNavios Holdings and Ms. Frangou or an affiliate ceases to hold a minimum of 30% of our common stock then we will be in default under our credit facilities.Risks Related to Our Common Stock and Capital StructureWe are incorporated in the Republic of the Marshall Islands, a country that does not have a well-developed body of corporate law, which may negativelyaffect the ability of public stockholders to protect their interests.Our corporate affairs are governed by our amended and restated articles of incorporation and bylaws, and by the Marshall IslandsBusiness Corporations Act, or the BCA. The provisions of the BCA resemble provisions of the corporation 25 Table of Contentslaws of a number of states in the United States. However, there have been few judicial cases in the Republic of the Marshall Islands interpreting the BCA. Therights and fiduciary responsibilities of directors under the law of the Republic of the Marshall Islands are not as clearly established as the rights and fiduciaryresponsibilities of directors under statutes or judicial precedent in existence in certain United States jurisdictions. Stockholder rights may differ as well.While the BCA does specifically incorporate the non-statutory law, or judicial case law, of the State of Delaware and other states with substantially similarlegislative provisions, public stockholders may have more difficulty in protecting their interests in the face of actions by the management, directors orcontrolling stockholders than would stockholders of a corporation incorporated in a United States jurisdiction.We are incorporated under the laws of the Marshall Islands and our directors and officers are non-U.S. residents, and although you may bring an originalaction in the courts of the Marshall Islands or obtain a judgment against us, our directors or our management based on U.S. laws in the event you believeyour rights as a stockholder have been infringed, it may be difficult to enforce judgments against us, our directors or our management.We are incorporated under the laws of the Republic of the Marshall Islands, and all of our assets are located outside of the United States.Our business will be operated primarily from our offices in Athens, Greece. In addition, our directors and officers are non-residents of the United States, andall or a substantial portion of the assets of these non-residents are located outside the United States. As a result, it may be difficult or impossible for you tobring an action against us or against these individuals in the United States if you believe that your rights have been infringed under securities laws orotherwise. Even if you are successful in bringing an action of this kind, the laws of the Marshall Islands and of other jurisdictions may prevent or restrict youfrom enforcing a judgment against our assets or the assets of our directors and officers. Although you may bring an original action against us or our affiliatesin the courts of the Marshall Islands based on U.S. laws, and the courts of the Marshall Islands may impose civil liability, including monetary damages,against us or our affiliates for a cause of action arising under Marshall Islands law, it may impracticable for you to do so given the geographic location of theMarshall Islands.We may have to pay tax on United States source income, which would reduce our earnings.Under the U.S. Internal Revenue Code (the “Code”), 50% of the gross shipping income of a vessel-owning or chartering corporation,such as us and our subsidiaries, that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States ischaracterized as U.S.-source shipping income and such income is subject to a 4% U.S. federal income tax without allowance for deduction, unless thatcorporation qualifies for exemption from tax under Section 883 of the Code and the treasury regulations promulgated there under (“Treasury Regulations”).In general, the exemption from U.S. federal income taxation under Section 883 of the Code provides that if a non-U.S. corporation satisfies the requirementsof Section 883 of the Code and the Treasury Regulations, it will not be subject to the net basis and branch profit taxes or the 4% gross basis tax describedbelow on its U.S.-Source International Transportation Income.We expect that we and each of our vessel-owning subsidiaries will qualify for this statutory tax exemption and we will take this positionfor U.S. federal income tax return reporting purposes. However, there are factual circumstances beyond our control that could cause us to lose the benefit ofthis tax exemption and thereby become subject to U.S. federal income tax on our U.S.-source income.If we or our vessel-owning subsidiaries are not entitled to this exemption under Section 883 for any taxable year, we or our subsidiarieswould be subject for those years to a 4% U.S. federal income tax on its U.S.-source shipping income. The imposition of this taxation could have a negativeeffect on our business and would result in decreased earnings.Since we are a foreign private issuer, we are not subject to certain SEC regulations that companies incorporated in the United States would be subject to.We are a “foreign private issuer” within the meaning of the rules promulgated under the Securities Exchange Act of 1934, as amended(the “Exchange Act”). As such, we are exempt from certain provisions applicable to United States public companies including: • the rules under the Exchange Act requiring the filing with the Securities and Exchange Commission, or the SEC, of quarterlyreports on Form 10-Q or current reports on Form 8-K; • the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registeredunder the Exchange Act; • the provisions of Regulation FD aimed at preventing issuers from making selective disclosures of material information; and 26 Table of Contents • the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities andestablishing insider liability for profits realized from any “short-swing” trading transaction (i.e., a purchase and sale, or sale andpurchase, of the issuer’s equity securities within less than six months).Accordingly, investors in our common stock may not be able to obtain all of the information of the type described above, and ourstockholders may not be afforded the same protections or information generally available to investors holding shares in public companies in the UnitedStates.Anti-takeover provisions in our amended and restated articles of incorporation could make it difficult for our stockholders to replace or remove ourcurrent board of directors or could have the effect of discouraging, delaying or preventing a merger or acquisition, which could adversely affect the marketprice of our common stock.Several provisions of our amended and restated articles of incorporation and bylaws could make it difficult for our stockholders tochange the composition of our board of directors in any one year, preventing them from changing the composition of our management. In addition, the sameprovisions may discourage, delay or prevent a merger or acquisition that stockholders may consider favorable. These provisions include those that: • authorize our board of directors to issue “blank check” preferred stock without stockholder approval; • provide for a classified board of directors with staggered, three-year terms; • require a super-majority vote in order to amend the provisions regarding our classified board of directors with staggered, three-year terms;and • prohibit cumulative voting in the election of directors.These anti-takeover provisions could substantially impede the ability of stockholders to benefit from a change in control and, as a result, may adverselyaffect the market price of our common stock and your ability to realize any potential change of control premium.U.S. tax authorities could treat us as a “passive foreign investment company,” which could have adverse U.S. federal income tax consequences to U.S.holders.We will be treated as a “passive foreign investment company,” or PFIC, for U.S. federal income tax purposes if either (1) at least 75% ofour gross income for any taxable year consists of certain types of “passive income” or (2) at least 50% of the average value of our assets produce or are heldfor the production of those types of “passive income.” For purposes of these tests, “passive income” includes dividends, interest, and gains from the sale orexchange of investment property and rents and royalties other than rents and royalties that are received from unrelated parties in connection with the activeconduct or a trade or business. For purposes of these tests, income derived from the performance of services does not constitute “passive income.” U.S.stockholders of a PFIC may be subject to a disadvantageous U.S. federal income tax regime with respect to the income derived by the PFIC, the distributionsthey receive from the PFIC and the gain, if any, they derive from the sale or other disposition of their shares in the PFIC.Based upon our income, assets and activities, we expect that we will not be treated for United States federal income tax purposes as aPFIC for the 2011 and 2010 taxable years (we were treated as a PFIC for the 2008 and 2009 taxable years), and we do not expect to be treated as a PFIC for2012 and subsequent taxable years. Commencing as of 2010, we intend to treat the gross income we will derive or will be deemed to derive from our timechartering activities as services income, rather than rental income. Accordingly, we intend to take the position that our income from time chartering activitiesdoes not constitute “passive income,” and the assets that we will own and operate in connection with the production of that income do not constitute passiveassets. There is, however, no direct legal authority under the PFIC rules addressing our proposed method of operation. Accordingly, no assurance can begiven that the U.S. Internal Revenue Service, (the “IRS”), or a court of law will accept our position, and there is a risk that the IRS or a court of law coulddetermine that we are a PFIC in future years. Moreover, no assurance can be given that we would not constitute a PFIC for any future taxable year if there wereto be changes in the nature and extent of our operations. For example, if we were treated as earning rental income from our chartering activities rather thanservices income, we would be treated as a PFIC.Under the PFIC rules, unless U.S. Holders of our common stock make timely elections available under the Code (which elections could ineach case have adverse consequences for such stockholders), such stockholders would be liable to pay U.S. federal income tax at the then highest income taxrates on ordinary income plus interest upon excess distributions and upon any gain from the disposition of our common stock, as if the excess distribution orgain had been recognized ratably over the stockholder’s holding period of our common stock. If we are treated as a PFIC for any taxable year during theholding period of 27 Table of Contentsa U.S. Holder (we will be treated as a PFIC for the 2008,2009, but not for 2010 and future years), unless the U.S. Holder makes an election to be treated as a“Qualified Electing Fund” (“QEF”) for the first taxable year in which they hold the stock and in which we are a PFIC, or makes the mark-to-market election,we will continue to be treated as a PFIC for all succeeding years during which the U.S. Holder is treated as a direct or indirect U.S. Holder even if we are not aPFIC for such years. A U.S. Holder is encouraged to consult their tax adviser with respect to any available elections that may be applicable in such a situation.In addition, U.S. Holders should consult their tax advisers regarding the IRS information reporting and filing obligations that may arise as a result of theownership of shares in a PFIC. These consequences are discussed in more detail under the heading “Tax Considerations — Material U.S. Federal Income TaxConsequences — United States Federal Income Taxation of U.S. Holders — Passive Foreign Investment Company Status and Significant Tax Consequences.”We may choose to redeem our outstanding warrants included in the units sold in our IPO at a time that is disadvantageous to our warrant holders.We may redeem the warrants issued as part of our units sold in our IPO in whole and not in part, at a price of $0.01 per warrant, upon a minimum of30 days’ prior written notice of redemption, if and only if, the last sales price of our common stock equals or exceeds $13.75 per share for any 20 trading dayswithin a 30 trading day period ending three business days before we send the notice of redemption; provided, however, a current registration statement underthe Securities Act of 1933, as amended (the “Securities Act”) relating to the shares of our common stock underlying the warrants is then effective.Redemption of the warrants could force the warrant holders: (i) to exercise the warrants and pay the exercise price therefore at a time when it may bedisadvantageous for the holders to do so; (ii) to sell the warrants at the then-current market price when they might otherwise wish to hold the warrants; or(iii) to accept the nominal redemption price that, at the time the warrants are called for redemption, is likely to be substantially less than the market value ofthe warrants. We may not redeem any warrant if it is not exercisable.Registration rights held by our initial stockholders and others may have an adverse effect on the market price of our common stock.Certain stockholders, which include Navios Holdings, are entitled to demand that we register the resale of their common stock totaling 20,192,647shares. In addition, one third-party holder has an effective resale registration statement with respect to 1,677,759 shares of common stock. If all of thesestockholders exercise their registration rights with respect to all of their shares of common stock, including the effective resale registration statement, therewill be an additional 21,870,406 shares of common stock eligible for trading in the public market. The presence of these additional shares may have anadverse effect on the market price of our common stock.The New York Stock Exchange may delist our securities from quotation on its exchange, which could limit your ability to trade our securities and subjectus to additional trading restrictions.Our securities are listed on the New York Stock Exchange (“NYSE”), a national securities exchange. Although we currently satisfy theNYSE minimum listing standards, which only requires that we meet certain requirements relating to stockholders’ equity, number of round-lot holders,market capitalization, aggregate market value of publicly held shares and distribution requirements, we cannot assure you that our securities will continue tobe listed on NYSE in the future.If NYSE delists our securities from trading on its exchange, we could face significant material adverse consequences, including: • a limited availability of market quotations for our securities; • a limited amount of news and analyst coverage for us; • a decreased ability for us to issue additional securities or obtain additional financing in the future; and • limited liquidity for our stockholders due to thin trading.Risks Related to Our IndebtednessWe may not be able to access our debt financing, which may affect our ability to make payments with respect to our vessels.Our ability to borrow amounts under our current and future credit facilities will be subject to the satisfaction of customary conditionsprecedent and compliance with terms and conditions included in the loan documents, including a minimum liquidity financial covenant, and tocircumstances that may be beyond our control such as world events, economic conditions, the financial standing of the bank or its willingness to lend toshipping companies such as us. Prior to each drawdown, we will be required, among other things, to provide our lenders with satisfactory evidence thatcertain conditions precedent have been met. To the extent that we are not able to satisfy these requirements, including as a result of a decline in the 28 Table of Contentsvalue of our vessels, we may not be able to draw down the full amount under certain of our credit facilities without obtaining a waiver or consent from therespective lenders.We have substantial indebtedness and may incur substantial additional indebtedness, which could adversely affect our financial health and our ability toobtain financing in the future, react to changes in our business and make debt service payments.We have substantial indebtedness, and we may also increase the amount of our indebtedness in the future. The terms of our creditfacilities and other instruments and agreement governing our indebtedness do not prohibit us from doing so. Our substantial indebtedness could haveimportant consequences for our stockholders.Because of our substantial indebtedness: • our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, vessel or other acquisitions orgeneral corporate purposes may be impaired in the future; • if new debt is added to our existing debt levels, the related risks that we now face would increase and we may not be able to meet all of our debtobligations; • a substantial portion of our cash flow from operations must be dedicated to the payment of principal and interest on our indebtedness, therebyreducing the funds available to us for other purposes, and there can be no assurance that our operations will generate sufficient cash flow toservice this indebtedness; • we will be exposed to the risk of increased interest rates because our borrowings under the credit facilities will be at variable rates of interest; • it may be more difficult for us to satisfy our obligations to our lenders, resulting in possible defaults on and acceleration of such indebtedness; • we may be more vulnerable to general adverse economic and industry conditions; • we may be at a competitive disadvantage compared to our competitors with less debt or comparable debt at more favorable interest rates and, as aresult, we may not be better positioned to withstand economic downturns; • our ability to refinance indebtedness may be limited or the associated costs may increase; and • our flexibility to adjust to changing market conditions and ability to withstand competitive pressures could be limited, or we may be preventedfrom carrying out capital spending that is necessary or important to our growth strategy and efforts to improve operating margins or our business.Highly leveraged companies are significantly more vulnerable to unanticipated downturns and set backs, whether directly related to theirbusiness or flowing from a general economic or industry condition, and therefore are more vulnerable to a business failure or bankruptcy.The agreements and instruments governing our indebtedness do or will contain restrictions and limitations that could significantly impact our ability tooperate our business and adversely affect our stockholders.The agreements and instruments governing our indebtedness impose certain operating and financial restrictions on us. Among otherrestrictions, these restrictions may limit our ability to: • incur or guarantee additional indebtedness or issue certain preferred stock; • create liens on our assets; • make investments; • engage in mergers and acquisitions in sell all or substantially all of our properties or assets; • redeem or repurchase capital stock, pay dividends or make other restricted payments and investments; 29 Table of Contents • make capital expenditures; • change the management of our vessels or terminate the management agreements we have relating to our vessels; • enter into long-term charter arrangements without the consent of the lender; • transfer or sell any of our vessels; and • enter into certain transactions with our affiliates.Therefore, we will need to seek permission from our lenders in order to engage in some corporate and commercial actions that we believe would be inthe best interest of our business, and a denial of permission may make it difficult for us to successfully execute our business strategy or effectively competewith companies that are not similarly restricted. Our lenders’ interests may be different from our interests, and we cannot guarantee that we will be able toobtain our lenders’ permission when needed. This may prevent us from taking actions that are in our best interest. Any future credit agreement may includesimilar or more restrictive restrictions.Our credit facilities contain requirements that the value of the collateral provided pursuant to the credit facilities must equal or exceed by a certainpercentage the amount of outstanding borrowings under the credit facilities and that we maintain a minimum liquidity level. In addition, our credit facilitiescontain additional restrictive covenants, including a minimum net worth requirement and maximum total net liabilities over net assets. It is an event ofdefault under our credit facilities if such covenants are not complied with or if Navios Holdings, Ms. Angeliki Frangou, our Chairman and Chief ExecutiveOfficer, and their respective affiliates cease to hold a minimum percentage of our issued stock. In addition, the indenture governing the notes also containscertain provisions obligating us in certain instances to make offers to purchase outstanding notes with the net proceeds of certain sales or other dispositionsof assets or upon the occurrence of an event of loss with respect to a mortgaged vessel, as defined in the indenture. Our ability to comply with the covenantsand restrictions contained in our agreements and instruments governing our indebtedness may be affected by economic, financial and industry conditionsand other factors beyond our control. If we are unable to comply with these covenants and restrictions, our indebtedness could be accelerated. If we areunable to repay indebtedness, our lenders could proceed against the collateral securing that indebtedness. In any such case, we may be unable to borrowunder our credit facilities and may not be able to repay the amounts due under our agreements and instruments governing our indebtedness. This could haveserious consequences to our financial condition and results of operations and could cause us to become bankrupt or insolvent. Our ability to comply withthese covenants in future periods will also depend substantially on the value of our assets, our charter rates, our success at keeping our costs low and ourability to successfully implement our overall business strategy. Any future credit agreement or amendment or debt instrument may contain similar or morerestrictive covenants.We and our subsidiaries may be able to incur substantially more indebtedness, including secured indebtedness. This could further exacerbate the risksassociated with our substantial indebtedness.We and our subsidiaries may be able to incur substantial additional indebtedness in the future. The agreements governing our credit facilities and theindenture governing our notes do not prohibit us or our subsidiaries from doing so. If new indebtedness is added to our current indebtedness levels, therelated risks that we now face would increase and we may not be able to meet all our indebtedness obligations.Our ability to generate the significant amount of cash needed to service our other indebtedness and our ability to refinance all or a portion of ourindebtedness or obtain additional financing depends on many factors beyond our control.Our ability to make scheduled payments on or to refinance our obligations under, our indebtedness will depend on our financial and operatingperformance, which, in turn, will be subject to prevailing economic and competitive conditions and to the financial and business factors, many of which maybe beyond our control.We will use cash to pay the principal and interest on our indebtedness. These payments limit funds otherwise available for working capital, capitalexpenditures, vessel acquisitions and other purposes. As a result of these obligations, our current liabilities may exceed our current assets. We may need totake on additional indebtedness as we expand our fleet, which could increase our ratio of indebtedness to equity. The need to service our indebtedness maylimit funds available for other purposes and our inability to service indebtedness in the future could lead to acceleration of our indebtedness and foreclosureon our owned vessels.Our credit facilities mature on various dates through 2022 and our ship mortgage notes mature on November 1, 2017. In 30 Table of Contentsaddition, borrowings under certain of the credit facilities have amortization requirements prior to final maturity. We cannot assure you that we will be able torefinance any of our indebtedness or obtain additional financing, particularly because of our anticipated high levels of indebtedness and the indebtednessincurrence restrictions imposed by the agreements governing our indebtedness, as well as prevailing market conditions.We could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our indebtedness service andother obligations. Our credit facilities, the indenture governing our notes and any future indebtedness may, restrict our ability to dispose of assets and use theproceeds from any such dispositions. If we do not reinvest the proceeds of asset sales in our business (in the case of asset sales of no collateral with respect tosuch indebtedness) or in new vessels or other related assets that are mortgaged in favor of the lenders under our credit facilities (in the case of assets sales ofcollateral securing), we may be required to use the proceeds to repurchase senior indebtedness. We cannot assure you we will be able to consummate anyasset sales, or if we do, what the timing of the sales will be or whether the proceeds that we realize will be adequate to meet indebtedness service obligationswhen due.Most of our credit facilities require that we maintain loan to collateral value ratios in order to remain in compliance with the covenants set forththerein. If the value of such collateral falls below such required level, we would be required to either prepay the loans or post additional collateral to theextent necessary to bring the value of the collateral as compared to the aggregate principal amount of the loan back to the required level. We cannot assureyou that we will have the cash on hand or the financing available to prepay the loans or have any unencumbered assets available to post as additionalcollateral. In such case, we would be in default under such credit facility and the collateral securing such facility would be subject to foreclosure by theapplicable lenders.Moreover, certain of our credit facilities are secured by vessels currently under construction pursuant to shipbuilding contracts. Because we rely onthese facilities to finance the scheduled payments as they come due under the shipbuilding contracts, it is possible that any default under such a facilitywould result, in the absence of other available funds, in default by us under the associated shipbuilding contract. In such a case, our rights in the relatednewbuild would be subject to foreclosure by the applicable creditor. In addition, a payment default under a shipbuilding contract would give the shipyardthe right to terminate the contract without any further obligation to finish construction and may give it rights against us for having failed to make therequired payments.An increase or continuing volatility in interest rates would increase the cost of servicing our indebtedness and could reduce our profitability, earnings andcash flow.Amounts borrowed under our term loan facilities fluctuate with changes in LIBOR. LIBOR has been volatile, with the spread between LIBOR and theprime lending rate widening significantly at times. We may also incur indebtedness in the future with variable interest rates. As a result, an increase in marketinterest rates would increase the cost of servicing our indebtedness and could materially reduce our profitability, earnings and cash flows. The impact of suchan increase would be more significant for us than it would be for some other companies because of our substantial indebtedness. Because the interest ratesborne by our outstanding indebtedness may fluctuate with changes in LIBOR, if this volatility were to continue, it could affect the amount of interest payableon our debt, which in turn, could have an adverse effect on our profitability, earnings and cash flow.The international nature of our operations may make the outcome of any bankruptcy proceedings difficult to predict.We are incorporated under the laws of the Republic of the Marshall Islands and our subsidiaries are also incorporated under the laws of the Republic ofthe Marshall Islands, the Cayman Islands, Hong Kong, the British Virgin Islands and certain other countries other than the United States, and we conductoperations in countries around the world. Consequently, in the event of any bankruptcy, insolvency or similar proceedings involving us or one of oursubsidiaries, bankruptcy laws other than those of the United States could apply. We have limited operations in the United States. If we become a debtor underthe United States bankruptcy laws, bankruptcy courts in the United States may seek to assert jurisdiction over all of our assets, wherever located, includingproperty situated in other countries. There can be no assurance, however, that we would become a debtor in the United States or that a United Statesbankruptcy court would be entitled to, or accept, jurisdiction over such bankruptcy case or that courts in other countries that have jurisdiction over us andour operations would recognize a United States bankruptcy court’s jurisdiction if any other bankruptcy court would determine it had jurisdiction.We may be unable to raise funds necessary to finance the change of control repurchase offer required by the indenture governing our notes.If we experience specified changes of control, we would be required to make an offer to repurchase all of our outstanding notes (unless otherwiseredeemed) at a price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the repurchase date. The occurrence ofspecified events that could constitute a change of control will constitute a default 31 Table of Contentsunder our credit facilities. There are also change of control events that would constitute a default under the credit facilities that would not be a change ofcontrol under the indenture. In addition, our credit facilities prohibit the purchase of notes by us in the event of a change of control, unless and until suchtime as the indebtedness under our credit facilities is repaid in full. As a result, following a change of control event, we would not be able to repurchase notesunless we first repay all indebtedness outstanding under our credit facilities and any of our other indebtedness that contains similar provisions; or obtain awaiver from the holders of such indebtedness to permit us to repurchase the notes. We may be unable to repay all of that indebtedness or obtain a waiver ofthat type. Any requirement to offer to repurchase outstanding notes may therefore require us to refinance our other outstanding debt, which we may not beable to do on commercially reasonable terms, if at all. In addition, our failure to purchase the notes after a change of control in accordance with the terms ofthe indenture would constitute an event of default under the indenture, which in turn would result in a default under our credit facilities.Our inability to repay the indebtedness under our credit facilities will constitute an event of default under the indenture governing our notes, whichcould have materially adverse consequences to us. In the event of a change of control, we cannot assure you that we would have sufficient assets to satisfy allof our obligations under our credit facilities and the notes. Our future indebtedness may also require such indebtedness to be repurchased upon a change.We may require additional financing to acquire vessels or businesses or to exercise vessel purchase options, and such financing may not be available.In the future, we may be required to make substantial cash outlays to exercise options or to acquire vessels or business and will need additionalfinancing to cover all or a portion of the purchase prices. We may seek to cover the cost of such items with new debt collateralized by the vessels to beacquired, if applicable, but there can be no assurance that we will generate sufficient cash or that debt financing will be available. Moreover, the covenants inour credit facilities, the indenture or other debt, may make it more difficult to obtain such financing by imposing restrictions on what we can offer ascollateral.Item 4. Information on the CompanyA. History and development of Navios AcquisitionNavios Acquisition was formed as a “blank check” company on March 14, 2008 under the laws of the Republic of the Marshall Islandsand has its principal offices located at 85 Akti Miaouli Street, Piraeus, Greece 185 38, and its telephone number is (011) +30-210-4595000. Our agent forservice is Trust Company of the Marshall Islands, Inc., located at Trust Company Complex, Ajeltake Island, P.O. Box 1405, Majuro, Marshall IslandsMH96960.On March 18, 2008, we issued 8,625,000 Sponsor Units to Navios Holdings for $25,000 in cash, at a purchase price of approximately$0.003 per unit. Each Sponsor Unit consisted of one share of common stock and one warrant. On June 11, 2008, Navios Holdings transferred an aggregate of290,000 Sponsor Units to our officers and directors.On June 16, 2008, Navios Holdings returned to us an aggregate of 2,300,000 Sponsor Units, which, upon receipt, we cancelled.Accordingly, the initial stockholders owned 6,325,000 Sponsor Units. On July 1, 2008, we consummated our IPO in which we sold 25,300,000 units,consisting of one common stock and one warrant, and raised gross proceeds of $253.0 million. Simultaneously with the closing of the IPO, Navios Holdingspurchased 7,600,000 warrants from us in a private placement (the “Private Placement Warrants”). The proceeds from this private placement of warrants wereadded to the proceeds of the IPO and placed in a trust account. The net proceeds of our IPO, including amounts in the trust account, were invested in U.S.government securities (“U.S. Treasury Bills”) with a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7promulgated under the Investment Company Act of 1940.On May 25, 2010, after its special meeting of stockholders, Navios Acquisition announced the approval of: (a) the acquisition fromNavios Holdings of 13 vessels (11 product tankers and two chemical tankers) for an aggregate purchase price of $457.7 million, of which $128.7 million wasto be paid from existing cash and the $329.0 million balance with existing and new debt financing pursuant to the terms and conditions of the AcquisitionAgreement by and between Navios Acquisition and Navios Holdings and (b) certain amendments to Navios Acquisition’s amended and restated articles ofincorporation.On May 28, 2010, Navios Acquisition consummated the vessel acquisition, which constituted its initial business combination. Inconnection with the stockholder vote to approve the vessel acquisition, holders of 10,021,399 shares of common stock voted against the vessel acquisitionand elected to redeem their shares in exchange for an aggregate of approximately $99.3 million, which amount was disbursed from the trust account onMay 28, 2010. In addition, on May 28, 2010, Navios Acquisition disbursed an aggregate of $8.9 million from the trust account to the underwriters of our IPOfor deferred fees. After disbursement of approximately $76.5 million to Navios Holdings to reimburse it for the first equity instalment payment on the vesselsof $38.8 million and other associated payments, the balance of the trust account of $66.1 million was released to us for general operating expenses. 32 Table of ContentsFollowing the consummation of the transactions described in the Acquisition Agreement, Navios Holdings was released from all debtand equity commitments for the above vessels and Navios Acquisition reimbursed Navios Holdings for vessel instalments made prior to the stockholders’meeting under the purchase contracts for the vessels, plus all associated payments previously made by Navios Holdings amounting to $76.5 million.The initial business combination was treated as an asset acquisition and the consideration paid and fair values of assets and liabilitiesassumed on May 28, 2010 (See note 3 of the audited financial statements included herein).On August 27, 2010, Navios Acquisition completed the “Warrant Exercise Program” under which holders of its publicly traded andprivate warrants had the opportunity to exercise their warrants on enhanced terms (see note 19 of the audited financial statements included herein).On September 10, 2010, Navios Acquisition consummated the VLCC Acquisition of seven VLCCs for an aggregate purchase price of$587.0 million, adjusted for net working capital acquired of $20.6 million. The purchase price was financed as follows: (a) $410.5 million of bank debt,assumed at closing, consisting of six credit facilities with a consortium of banks; (b) $134.3 million of cash paid at closing; (c) $11.0 million through theissuance of 1,894,918 Navios Acquisition shares of common stock (based on the closing trading price averaged over the 15 trading days immediately prior toclosing on September 10, 2010) of which 1,378,122 shares of common stock were deposited into a one-year escrow to provide for indemnity or other claims(see note 19 of the audited financial statements included herein); and (d) $51.4 million due to a shipyard in 2011 for the newbuilding that was delivered inJune 2011. The VLCC Acquisition was accounted for as a business combination.On October 21, 2010, Navios Acquisition and Navios Acquisition Finance (US) Inc., its wholly owned finance subsidiary (“NaviosAcquisition Finance”), completed the sale of $400.0 million of 8 5/8% First Priority Ship Mortgage notes due 2017 (the “Existing Notes”).On May 26, 2011, Navios Acquisition and Navios Acquisition Finance completed the sale of $105.0 million of 8 5/8% first priority shipmortgage notes due 2017 (the “Additional Notes”) at 102.25% plus accrued interest from May 1, 2011. The net proceeds of the offering of $104.6 millionwere used to partially finance the acquisition of the VLCC delivered on June 8, 2011 and to repay the $80.0 million revolving credit facility with MarfinEgnatia Bank.Equity TransactionsOn September 17, 2010, Navios Acquisition issued 3,000 shares of preferred stock to an independent third party holder in connectionwith the payment of certain consultant and advisory fees. The preferred stock issued to the consultant was recorded at fair value as an expense in ourstatement of income totaling $5.6 million.On October 29, 2010 Navios Acquisition issued 540 shares of Series B Convertible preferred stock (fair value $1.6 million) to the sellerof two newbuild LR1 product tankers. The preferred stock contains a 2% per annum dividend payable quarterly starting on January 1, 2011, and mandatorilyconverts into shares of common stock at various dates in the future 33 Table of Contentssubject to the terms and conditions of such preferred stock. The holders of the preferred stock also have the right to convert their shares to common stocksubject to certain terms and conditions. The preferred stock does not have any voting rights.On November 19, 2010, the Company completed the public offering of 6,500,000 shares of common stock at $5.50 per share and raisedgross proceeds of $35.8 million. The net proceeds of this offering, including the underwriting discount of $1.8 million and excluding offering costs of $0.6million were approximately $34.0 million.Pursuant to an Exchange Agreement entered into March 30, 2011, Navios Holdings exchanged 7,676,000 shares of Navios Acquisition’scommon stock it held for 1,000 shares of non-voting Series C Convertible Preferred Stock of Navios Acquisition. After giving effect to this exchange, NaviosHoldings owns 45.0% of our outstanding common stock. Each holder of shares of Series C Convertible Preferred Stock is entitled at their option at any time,after March 31, 2013, to convert all or any of their outstanding shares into shares of our common stock determined by multiplying each share of Series CConvertible Preferred Stock to be converted by 7,676 subject to certain limitations. Upon the declaration of a common stock dividend, the holders of Series CConvertible Preferred Stock are entitled to receive dividends in an amount equal to the amount that would have been received on the number of shares of ourcommon stock into which the shares of Series C Convertible Preferred Stock held by each holder could be converted.On November 4, 2011, from the 1,378,122 contingently returnable shares of common stock issued on September 10, 2010 and depositedinto escrow for the VLCC Acquisition, 1,160,963 were released to the sellers and the remaining 217,159 were returned to Navios Acquisition. The returnedshares were cancelled on December 30, 2011. Following the release, Navios Holdings ownership of the outstanding voting stock of Navios Acquisitionincreased to 45.24%, and its economic interest in Navios Acquisition increased to 53.96%Vessel Deliveries and AcquisitionsOn January 20, 2012, Navios Acquisition took delivery of the Nave Estella, a 75,000 dwt LR1 product tanker, from a South Koreanshipyard. The vessel is chartered-out at net daily charter rate of $11,850 for a period of three years plus two one year options. The charter contract alsoprovides clauses for profit sharing.On November 14, 2011, Navios Acquisition took delivery of the Nave Andromeda, a 75,000 dwt LR1 South Korean — built producttanker, for a total cost of $44.6 million. Cash paid was $27.2 million and $17.4 million was transferred from vessel deposits.On July 18, 2011, Navios Acquisition took delivery of the Buddy, a 2009-built MR2 product tanker vessel of 50,470 dwt for a total costof $42.5 million that was paid with cash. Favorable lease terms recognized through this transaction amounted to $5.2 million and the balance of $37.3million was classified under vessels, net.On July 12, 2011, Navios Acquisition took delivery of the Bull, a 2009 - built MR2 product tanker vessel of 50,542 dwt, for a total costof $42.4 million that was paid with cash. Favorable lease terms recognized through this transaction amounted to $5.1 million and the balance of $37.3million was classified under vessels, net.On June 8, 2011, Navios Acquisition took delivery of a 297,066 dwt VLCC, the Shinyo Kieran, from a Chinese shipyard, for a total costof $119.2 million. Cash paid was $29.1 million and $90.1 million was transferred from vessel deposits.On January 27, 2011, Navios Acquisition took delivery of the Nave Polaris, a 25,145 dwt South Korean-built chemical tanker, for a totalcost of $31.7 million. Cash paid was $4.5 million and $27.2 million was transferred from vessel deposits.On October 27, 2010, Navios Acquisition took delivery of the Nave Cosmos, a 25,130 dwt South Korean-built chemical tanker for a totalcost of $31.8 million. Cash paid was $11.3 million and $20.5 million was transferred from vessel deposits.On July 2, 2010, Navios Acquisition took delivery of the Ariadne Jacob, an LR1 product tanker, as part of the Product and ChemicalTanker Acquisition, for total cost of $43.7 million. Cash paid was $39.3 million and $4.4 million was transferred from vessel deposits.On June 29, 2010, Navios Acquisition took delivery of the Colin Jacob, an LR1 product tanker, as part of the Product and ChemicalTanker Acquisition, for a total cost of $43.7 million. Cash paid was $39.3 million and $4.4 million was transferred from vessel deposits.B. Business OverviewIntroductionNavios Acquisition owns a large fleet of modern crude oil, refined petroleum product and chemical tankers providing 34 Table of Contentsworld-wide marine transportation services. Our strategy is to charter our vessels to international oil companies, refiners and large vessel operators under long,medium and short-term charters. We are committed to providing quality transportation services and developing and maintaining long-term relationships withour customers. We believe that the Navios brand will allow us to take advantage of increasing global environmental concerns that have created a demand inthe petroleum products/crude oil seaborne transportation industry for vessels and operators that are able to conform to the stringent environmental standardscurrently being imposed throughout the world.Navios Acquisition’s FleetOur current fleet consists of a total of 29 double-hulled tanker vessels, aggregating approximately 3.3 million deadweight tons, or dwt. The fleetincludes seven VLCC tankers (over 200,000 dwt per ship), which transport crude oil, eight Long Range 1 (“LR1”) product tankers (50,000-79,999 dwt pership), 12 Medium Range 2 (“MR2”) product tankers (30,000-49,999 dwt per ship) and two chemical tankers (25,000 dwt per ship), which transport refinedpetroleum products and bulk liquid chemicals. Of the 29 vessels in our current fleet, we have taken delivery of seven VLCC tankers, three LR1 tankers, twoMR2 product tankers and two chemical tankers, and we expect to take delivery of ten vessels in 2012, two vessels in 2013, and three vessels in 2014 basedon current construction schedule. All the vessels that we have taken delivery of, as well as four of the MR2 product tankers that we will take delivery of in thesecond, third and fourth quarters of 2012, are currently chartered-out to high-quality counterparties, including affiliates of Shell, Formosa PetrochemicalCorporation, Sinochem Group, SK Shipping and DOSCO (a wholly owned subsidiary of COSCO) with an average remaining charter period of approximately4.1 years. As of March 14, 2012, we have charters covering 89.4% of available days in 2012, 58.4% of available days in 2013 and 50.4% of available days in2014, based on the estimated scheduled delivery dates for vessels under construction. Vessels Type Built/Delivery Date DWT Net CharterRate Profit Share Expiration DateOwned Vessels Nave Cielo LR1 Product Tanker 2007 74,671 11,751 None November 2012Nave Ariadne LR1 Product Tanker 2007 74,671 11,751 None November 2012Nave Cosmos Chemical Tanker 2010 25,130 11,700 60%/40% August 2012Nave Polaris Chemical Tanker 2011 25,145 11,700 60%/40% July 2012Shinyo Splendor VLCC 1993 306,474 38,019 None May 2014Shinyo Navigator VLCC 1996 300,549 42,705 None December 2016C. Dream VLCC 2000 298,570 29,625 50% above $30,000 March 2019 40% above $40,000 Shinyo Ocean VLCC 2001 281,395 38,400 50% above $43,500 January 2017Shinyo Kannika VLCC 2001 287,175 38,025 50% above $44,000 February 2017Shinyo Saowalak VLCC 2010 298,000 48,153 35% above $54,388 June 2025 40% above 59,388 50% above 69,388 Shinyo Kieran VLCC 2011 297,066 48,153 35% above $54,388 June 2026 40% above $59,388 50% above $69,388 Buddy MR2 Product Tanker 2009 50,470 22,490 None October 2012 21,503 None October 2014Bull MR2 Product Tanker 2009 50,542 22,490 None September 2012 21,503 None September 2014Nave Andromeda LR1 Product Tanker 2011 75,000 11,850 100% up to $15,000 November 2014 50% above $15,000 90% up to 15,000 Nave Estella LR1 Product Tanker 2012 75,000 11,850 50% above $15,000 January 2015Owned Vessels to be Delivered TBN LR1 Q3 2012 75,000 TBN LR1 Q4 2012 75,000 TBN LR1 Q4 2012 75,000 TBN LR1 Q4 2012 75,000 35 (1) (2) (3,4)(3,4) (5)(6)(7) Table of ContentsTBN MR2 Q2 2012 50,000 13,331 50% /50% TBN MR2 Q3 2012 50,000 13,331 50% /50% TBN MR2 Q4 2012 50,000 13,331 50% /50% TBN MR2 Q4 2012 50,000 13,331 50% /50% TBN MR2 Q4 2012 50,000 13,825 50% /50% TBN MR2 Q1 2013 50,000 TBN MR2 Q1 2013 50,000 TBN MR2 Q2 2014 50,000 TBN MR2 Q3 2014 50,000 TBN MR2 Q4 2014 50,000 (1)Net time charter-out rate per day (net of commissions).(2)Estimated dates assuming midpoint of redelivery of charterers.(3)On October 28, 2011, the charter contracts for the Nave Cielo and the Nave Ariadne were terminated prior to their original expiration in June 2013.Navios Acquisition entered into certain settlement agreements with the charterers that provide for an amount of approximately $5.0 million tocompensate for the early termination of the charters and to cover any outstanding receivables, out of which $2.0 million will be settled in installmentsuntil June 2015.(4)Charterer’s option to extend the charter for 1+1+1 years at $12,739 (net) 1st optional year; $13,825 (net) plus 50/50% profit sharing 2nd optional year;$14,813 (net) plus 50/50% profit sharing 3rd optional year.(5)Vessel sub chartered at $34,843/day until third quarter 2012.(6)Charterer’s option to extend the charter for 1+1 years at $12,838 (net) 1st optional year plus 100% profit up to $16,000 plus 50/50% profit sharingabove $16,000; $13,825 (net) 2nd optional year plus 100% profit up to $17,000 plus 50/50% profit sharing above $17,000. Profit sharing formula iscalculated monthly and incorporates $2,000 premium above the relevant index.(7)Charterer’s option to extend the charter for 1+1 years at $11,850 (net) 1st optional year plus 90% profit up to $16,000 plus 50/50% profit sharingabove $16,000; $11,850 (net) 2nd optional year plus 90% profit up to $17,000 plus 50/50% profit sharing above $17,000. Profit sharing formula iscalculated monthly and incorporates $2,000 premium above the relevant index.(8)Charter duration three years. Charterer’s option to extend the charter for 1+ 1 years at $14,566 (net) 1st optional year plus profit sharing; $15,553 (net)2 optional year plus profit sharing. The profit sharing will be calculated monthly and profits will be split equally between each party. Profit sharingformula incorporates $1,000 premium above the relevant index.(9)Charter duration three years. Charterer’s option to extend the charter for 1 year at $14,813 (net) plus profit sharing. The charterers will receive 100% ofthe first $1,000 in profits above the base rate and the owners will receive 100% of the next $1,000. Thereafter, all profits will be split equally to eachparty.(10)Contract remains on Charterer’s option until March 30, 2012.Competitive StrengthsWe believe that the following strengths will allow us to maintain a competitive advantage within the international shipping market: • Modern, High–Quality Fleet. We own a large fleet of modern, high–quality double–hull tankers that are designed for enhanced safety and low operatingcosts. We believe that the increased enforcement of stringent environmental standards currently being imposed throughout the world has resulted in a shiftin major charterers’ preference towards greater use of modern double–hull vessels. We also have a large proportion of young product and chemical tankersin our fleet. Since our inception, we have committed to and have fully financed investments of over $1.0 billion, including investments of approximately$0.6 billion in newbuilding constructions. As of March 14, 2012 our fleet has an average age of approximately 5.9 years. Once we have taken delivery ofall of our vessels, scheduled to occur by the end of the fourth quarter of 2014, the average age of our fleet will be 5.2 years. We believe that owning andmaintaining a modern, high–quality fleet reduces off–hire time and operating costs, improves safety and environmental performance and provides us witha competitive advantage in securing employment for our vessels. • Operating Visibility Through Contracted Revenues. All of the vessels that we have taken delivery of, as well as the MR2 product tanker vessels that wewill take delivery of in the second, third and fourth quarter of 2012, are chartered out with an average remaining charter period of approximately 4.1 years,and we believe our existing charter coverage provides us with predictable, contracted revenues and operating visibility. As of March 14, 2012, we havecharters covering 89.4% of available days in 2012, 58.4% of available days in 2013 and 50.4% of available days in 2014, based on the estimatedscheduled delivery dates for vessels under construction. The charter arrangements for our seven VLCC tankers, four contracted LR1 tankers, six MR2product 36(8)(8)(9)(9)(10)nd Table of Contents tankers and two chemical tankers represent $ 146.4 million in 2012, $147.1 million in 2013 and $133.9 million in 2014 of aggregate contracted netcharter revenue, exclusive of any profit sharing. • Diversified Fleet. Our diversified fleet, which includes VLCC, product and chemical tankers, allows us to serve our customers’ international crude oil,petroleum product and liquid bulk chemical transportation needs. VLCC tankers transport crude oil and operate on primarily long–haul trades from theArabian Gulf to the Far East, North America and Europe. Product tankers transport a large number of different refined oil products, such as naphtha,gasoline, kerosene, jetfuel and gasoil, and principally operate on short– to medium–haul routes. Chemical tankers transport primarily organic andinorganic chemicals, vegetable oils and animal fats. We believe that our fleet of vessels servicing the crude oil, product and chemical tanker transportationsectors provides us with more balanced exposure to oil and commodities and more diverse opportunities to generate revenues than would a focus on anysingle shipping sector. • High–Quality Counterparties. Our strategy is to charter our vessels to international oil companies, refiners and large vessel operators under long, mediumand short–term charters. We are committed to providing safe and quality transportation services and developing and maintaining long–term relationshipswith our customers, and we believe that our modern fleet will allow us to charter–out our vessels to what management views as high–qualitycounterparties and for long periods of time. Our current charterers include Shell, one of the largest global groups of energy and petrochemical companies,operating in over 90 countries, Dalian Ocean Shipping Company (“DOSCO”), a wholly owned subsidiary of COSCO, one of China’s largest state–ownedenterprises specializing in global shipping, logistics and ship building and repairing, Sinochem, a “Fortune Global 500” company; FormosaPetrochemical Corporation, a leading Taiwanese energy company; and SK Shipping Company Limited, a leading Korean shipowner and transportationcompany and part of the Korean multinational business conglomerate, the SK Group; or their affiliates. • An Experienced Management Team and a Strong Brand. We have an experienced management team that we believe is well regarded in the shippingindustry. The members of our management team have considerable experience in the shipping and financial industries. We also believe that we will beable to leverage the management structure at Navios Holdings, which benefits from a reputation for reliability and performance and operational experiencein both the tanker and drybulk markets. Our management team is led by Angeliki Frangou, our Chairman and Chief Executive Officer, who has over20 years of experience in the shipping industry. Ms. Frangou is also the Chairman and CEO of Navios Holdings and Navios Partners and has been a ChiefExecutive Officer of various shipping and finance companies in the past. Ms. Frangou is a member of a number of recognized shipping committees. Webelieve that our well respected management team and strong brand may present us with market opportunities not afforded to other industry participants.Business StrategyWe seek to generate predictable and growing cash flow through the following: • Strategically Manage Sector Exposure. We operate a fleet of crude carriers and product and chemical tankers, which we believe provides us with diverseopportunities with a range of producers and consumers. As we grow our fleet, we expect to adjust our relative emphasis among the crude oil, product andchemical tanker sectors according to our view of the relative opportunities in these sectors. We believe that having a mixed fleet of tankers provides theflexibility to adapt to changing market conditions and will allow us to capitalize on sector–specific opportunities through varying economic cycles. • Enhance Operating Visibility With Charter–Out Strategy. We believe that we are a safe, cost–efficient operator of modern and well–maintained tankers.We also believe that these attributes, together with our strategy of proactively working towards meeting our customers’ chartering needs, will contribute toour ability to attract leading charterers as customers and to our success in obtaining attractive long–term charters. We will also seek profit sharingarrangements in our long–term time charters, to provide us with potential incremental revenue above the contracted minimum charter rates. Depending onthen applicable market conditions, we intend to deploy our vessels to leading charterers on a mix of long, medium and short–term time charters, with agreater emphasis on long–term charters and profit sharing. We believe that this chartering strategy will afford us opportunities to capture increased profitsduring strong charter markets, while benefiting from the relatively stable cash flows and high utilization rates associated with longer term time charters. Asof March 14, 2012, we have charters covering 89.4% of available days in 2012, 58.4% of available days in 2013 and 50.4% of available days in 2014,based on the estimated scheduled delivery dates for vessels under construction. We will look to secure employment for the newbuilding product tankersscheduled for delivery over the next three years, as we draw nearer to taking delivery of the vessels. 37 Table of Contents• Capitalize on Low Vessel Prices. We intend to grow our fleet using Navios Holdings’ global network of relationships and extensive experience in themarine transportation industry to make selective acquisitions of young, high–quality, modern, double–hulled vessels in the crude oil, product andchemical tanker transportation sectors. We are focused on purchasing tanker assets at favorable prices. We believe that the recent financial crisis anddevelopments in the marine transportation industry created significant opportunities to acquire vessels in the tanker market near historically low prices onan inflation adjusted basis. Developments in the banking industry continue to limit the availability of credit to shipping industry participants, creatingopportunities for well–capitalized companies with access to additional available financing. Although there has been a trend towards consolidation overthe past 15 years, the tanker market remains fragmented. In the ordinary course of our business, we engage in the evaluation of potential candidates foracquisitions and strategic transactions. • Leverage the Experience, Brand, Network and Relationships of Navios Holdings. We intend to capitalize on the global network of relationships thatNavios Holdings has developed during its long history of investing and operating in the marine transportation industry. This includes decades–longrelationships with leading charterers, financing sources and key shipping industry players. When charter markets and vessel prices are depressed andvessel financing is difficult to obtain, as is currently the case, we believe the relationships and experience of Navios Holdings and its managementenhances our ability to acquire young, technically advanced vessels at cyclically low prices and employ them under attractive charters with leadingcharterers. Navios Holdings’ long involvement and reputation for reliability in the Asia Pacific region have also allowed it to develop privilegedrelationships with many of the largest institutions in Asia. Through its established reputation and relationships, Navios Holdings has had access toopportunities not readily available to most other industry participants that lack Navios Holdings’ brand recognition, credibility and track record. • Benefit from Navios Holdings’ Leading Risk Management Practices and Corporate Managerial Support. Risk management requires the balancing of anumber of factors in a cyclical and potentially volatile environment. Fundamentally, the challenge is to appropriately allocate capital to competingopportunities of owning or chartering vessels. In part, this requires a view of the overall health of the market, as well as an understanding of capital costsand returns. Navios Holdings actively engages in assessing financial and other risks associated with fluctuating market rates, fuel prices, credit risks,interest rates and foreign exchange rates.Navios Holdings closely monitors credit exposure to charterers and other counterparties. Navios Holdings has established policies designed to ensure thatcontracts are entered into with counterparties that have appropriate credit history. Counterparties and cash transactions are limited to high–credit, quality–collateralized corporations and financial institutions. Navios Holdings has strict guidelines and policies that are designed to limit the amount of creditexposure. We believe that Navios Acquisition will benefit from these established policies. In addition, we are exploring the possibility of participating inthe credit risk insurance currently available to Navios Holdings. Navios Holdings has insured its charter–out contracts through a “AA” rated governmentalagency of a European Union member state, which provides that if the charterer goes into payment default, the insurer will reimburse it for the charterpayments under the terms of the policy for the remaining term of the charter–out contract (subject to applicable deductibles and other customarylimitations for insurance). While we may seek to benefit from such insurance, no assurance can be provided that we will qualify for or choose to obtain thisinsurance. • Implement and Sustain a Competitive Cost Structure. Pursuant to the Management Agreement, the Manager, a subsidiary of Navios Holdings, coordinatesand oversees the commercial, technical and administrative management of our fleet. The current technical managers of the VLCC vessels, affiliates of theseller of such vessels, are technical ship management companies that have provided technical management to the VLCC vessels prior to theconsummation of the VLCC Acquisition. These technical managers will continue to provide such services for an interim period, after which the technicalmanagement of our fleet is expected to be provided solely by the Manager. We believe that the Manager will be able to do so at rates competitive withthose that would be available to us through independent vessel management companies. For example, pursuant to our management agreement with NaviosHoldings, management fees of our vessels are fixed for the first two years of the agreement. We believe this external management arrangement willenhance the scalability of our business by allowing us to grow our fleet without incurring significant additional overhead costs. We believe that we will beable to leverage the economies of scale of Navios Holdings and manage operating, maintenance and corporate costs. At the same time, we believe theyoung age and high–quality of the vessels in our fleet, coupled with Navios Holdings’ safety and environmental record, will position us favorably withinthe crude oil, product and chemical tanker transportation sectors with our customers and for future business opportunities.Our CustomersWe provide or will provide seaborne shipping services under charters with customers that we believe are creditworthy. Our majorcustomers during 2011 were: DOSCO, Blue Light Chartering Inc and Jacob Tank Chartering GMBH & CO. KG. For the year ended December 31, 2011, thesethree customers accounted for 43.9%, 11.5% and 11.3% respectively, of Navios Acquisition’s revenue. 38 Table of ContentsFor the year ended December 31, 2010, Jacob Tank Chartering GMBH & CO. KG, SK Shipping Company Ltd, DOSCO, FormosaPetrochemical Corporation, Blue Light Chartering Inc and Navig8 Chemicals Shipping and Trading Co accounted for 42.5%, 18.6%, 12.9%, 12.9% and10.9%, respectively, of Navios Acquisition’s revenue.Although we believe that if any one of our charters were terminated we could re-charter the related vessel at the prevailing market raterelatively quickly, the permanent loss of a significant customer or a substantial decline in the amount of services requested by a significant customer couldharm our business, financial condition and results of operations if we were unable to re-charter our vessel on a favorable basis due to then–current marketconditions, or otherwise.ExpensesManagement fees: Pursuant to a Management Agreement dated May 28, 2010, a subsidiary of Navios Holdings, for five years from theclosing of the Product and Chemical Tanker Acquisition, provides commercial and technical management services to Navios Acquisition’s vessels for a dailyfee of $6,000 per owned MR2 product tanker and chemical tanker vessel, $7,000 per owned LR1 product tanker vessel and $10,000 per VLCC vessel for thefirst two years with the fixed daily fees adjusted for the remainder of the term based on then–current market fees. This daily fee covers all of the vessels’operating expenses, other than certain fees and costs. During the remaining three years of the term of the Management Agreement, Navios Acquisitionexpects it will reimburse Navios Holdings for all of the actual operating costs and expenses it incurs in connection with the management of its fleet. Actualoperating costs and expenses will be determined in a manner consistent with how the initial fixed fees were determined. Drydocking expenses will be fixedunder this agreement for up to $0.3 million per vessel chemical LR1 and MR2 product and will be reimbursed at cost for VLCC vessels. Total managementfees for each of the years ended December 31, 2011, 2010 and 2009 amounted to $35.7 million, $9.8 million and $0, respectively.General and administrative expenses: On May 28, 2010, Navios Acquisition entered into an administrative services agreement withNavios Holdings, expiring on May 28, 2015, pursuant to which a subsidiary of Navios Holdings provides certain administrative management services toNavios Acquisition which include: bookkeeping, audit and accounting services, legal and insurance services, administrative and clerical services, bankingand financial services, advisory services, client and investor relations and other. Navios Holdings is reimbursed for reasonable costs and expenses incurred inconnection with the provision of these services. For the years ended December 31, 2011, 2010 and 2009, administrative services rendered by NaviosHoldings amounted to $1.5 million, $0.4 million and $0.1 million, respectively.Off-hireWhen the vessel is “off-hire,” the charterer generally is not required to pay the basic hire rate, and we are responsible for all costs.Prolonged off-hire may lead to vessel substitution or termination of the time charter. A vessel generally will be deemed off-hire if there is a loss of time due to,among other things: • operational deficiencies; drydocking for repairs, maintenance or inspection; equipment breakdowns; or delays due to accidents, crewing strikes, certainvessel detentions or similar problems; or • the shipowner’s failure to maintain the vessel in compliance with its specifications and contractual standards or to provide the required crew.Under some of our charters, the charterer is permitted to terminate the time charter if the vessel is off-hire for an extended period, which isgenerally defined as a period of 90 or more consecutive off-hire days.TerminationWe are generally entitled to suspend performance under the time charters covering our vessels if the customer defaults in its paymentobligations. Under some of our time charters, either party may terminate the charter in the event of war in specified countries or in locations that wouldsignificantly disrupt the free trade of the vessel. Under some of our time charters covering our vessels require us to return to the charterer, upon the loss of thevessel, all advances paid by the charterer but not earned by us.Management of Ship Operations, Administration and SafetyNavios Holdings provides, through a wholly owned subsidiary, expertise in various functions critical to our operations. Pursuant to amanagement agreement and an administrative services agreement with Navios Holdings, we have access to 39 Table of Contentshuman resources, financial and other administrative functions, including: • bookkeeping, audit and accounting services; • administrative and clerical services; • banking and financial services; and • client and investor relations.Technical management services are also provided, including: • commercial management of the vessel; • vessel maintenance and crewing; • purchasing and insurance; and • shipyard supervision.For more information on the management agreement we have with Navios Holdings and the administrative services agreement we havewith Navios Holdings, please read “Item 7. — Unit holders and Related Party Transactions”.Oil Company Tanker Vetting ProcessTraditionally there have been relatively few charterers in the oil transportation business and that part of the industry has beenundergoing consolidation. The so called “oil majors”, such as Exxon Mobil, BP p.l.c., Royal Dutch Shell plc. Chevron, ConocoPhillips and Total S.A.,together with a few smaller companies, represent a significant percentage of the production, trading and, especially, seaborne transportation of crude oil andrefined petroleum products worldwide. Concerns about the environment have led oil majors to develop and implement a strict due diligence process, knownas vetting, when selecting vessels and considering their managers. Vetting has evolved into a sophisticated and comprehensive assessment of both the vesseland the vessel manager. While numerous factors are considered and evaluated prior to a commercial decision, the oil majors, through their association, OilCompanies International Marine Forum (OCIMF), have developed two basic tools: the Ship Inspection Report program, which is known as SIRE and theTanker Management & Self Assessment program, which is known as TMSA. Based upon commercial risk, there are three levels of assessment used by oilmajors: • terminal use, which clears a vessel to call at one of the oil major’s terminals; • voyage charter, which clears the vessel for a single voyage; and • period charter, which clears the vessel for use for an extended period of time.The depth and complexity of each of these levels of assessment varies. Each of charter agreements for our vessels requires that theapplicable vessel have a valid SIRE report (less than six months old) in the OCIMF website as recommended by OCIMF. In addition, under the terms of thecharter agreements, the charterers require that our vessels and their technical managers be vetted and approved to transport crude oil by multiple oil majors.The technical manager is responsible for obtaining and maintaining the vetting approvals required to operate our vessels. The current technical manager ofthe VLCC vessels, an affiliate of the seller of such vessels, is a technical ship management company that has provided technical management to the acquiredVLCC vessels prior to the consummation of the VLCC Acquisition, and such technical manager has been vetted and approved. This technical manager willcontinue to provide such services for an interim period after which the technical management of our fleet is expected to be provided solely by the Manager.CompetitionThe market for international seaborne crude oil transportation services is fragmented and highly competitive. Seaborne crude oiltransportation services generally are provided by two main types of operators: major oil company captive fleets (both private and state-owned) andindependent ship owner fleets. In addition, several owners and operators pool their vessels together on an ongoing basis, and such pools are available tocustomers to the same extent as independently owned and operated fleets. Many major oil companies and other oil trading companies also operate their ownvessels and use such vessels not only to transport their own crude oil but also to transport crude oil for third party charterers in direct competition withindependent owners and operators in the tanker charter market. Competition for charters is intense and is based upon price, location, size, age, condition andacceptability of the vessel and its manager. Due in part to the fragmented tanker market, competitors with greater resources could enter the tanker market andoperate larger fleets through acquisitions or consolidations and may be willing or able to accept lower prices than us, which could result in our achievinglower revenues from our vessels. 40 Table of ContentsGovernmental and Other RegulationsSources of applicable rules and standardsShipping is one of the world’s most heavily regulated industries, and, in addition, it is subject to many industry standards. Government regulationsignificantly affects the ownership and operation of vessels. These regulations consist mainly of rules and standards established by international conventions,but they also include national, state, and local laws and regulations in force in jurisdictions where vessels may operate or are registered, and which arecommonly more stringent than international rules and standards. This is the case particularly in the United States and, increasingly, in Europe.A variety of governmental and private entities subject vessels to both scheduled and unscheduled inspections. These entities include local portauthorities (the U.S. Coast Guard, harbor masters or equivalent entities), classification societies, flag state administration (country vessel of registry), andcharterers, particularly terminal operators. Certain of these entities require vessel owners to obtain permits, licenses, and certificates for the operation of theirvessels. Failure to maintain necessary permits or approvals could require a vessel owner to incur substantial costs or temporarily suspend operation of one ormore of its vessels.Heightened levels of environmental and quality concerns among insurance underwriters, regulators, and charterers continue to lead to greaterinspection and safety requirements on all vessels and may accelerate the scrapping of older vessels throughout the industry. Increasing environmentalconcerns have created a demand for vessels that conform to stricter environmental standards. Vessel owners are required to maintain operating standards forall vessels that will emphasize operational safety, quality maintenance, continuous training of officers and crews and compliance with U.S. and internationalregulations.The International Maritime Organization, or IMO, has adopted a number of international conventions concerned with ship safety and with preventing,reducing or controlling pollution from ships. These fall into two main categories, consisting firstly of those concerned generally with ship safety standards,and secondly of those specifically concerned with measures to prevent pollution.Ship safety regulationIn the former category the primary international instrument is the Safety of Life at Sea Convention of 1974, as amended, or SOLAS, together with theregulations and codes of practice that form part of its regime. Much of SOLAS is not directly concerned with preventing pollution, but some of its safetyprovisions are intended to prevent pollution as well as promote safety of life and preservation of property. These regulations have been and continue to beregularly amended as new and higher safety standards are introduced with which we are required to comply.An amendment of SOLAS introduced the International Safety Management (ISM) Code, which has been effective since July 1998. Under the ISM Codethe party with operational control of a vessel is required to develop an extensive safety management system that includes, among other things, the adoptionof a safety and environmental protection policy setting forth instructions and procedures for operating its vessels safely and describing procedures forresponding to emergencies. The ISM Code requires that vessel operators obtain a safety management certificate for each vessel they operate. This certificateevidences compliance by a vessel’s management with code requirements for a safety management system. No vessel can obtain a certificate unless itsmanager has been awarded a document of compliance, issued by the flag state for the vessel, under the ISM Code. Noncompliance with the ISM Code andother IMO regulations, such as the mandatory ship energy efficiency management plan (“SEEMP”) which is akin to a safety management plan and comes intoeffect on January 1, 2013, may subject a ship owner to increased liability, may lead to decreases in available insurance coverage for affected vessels, and mayresult in the denial of access to, or detention in, some ports. For example, the United States Coast Guard and European Union authorities have indicated thatvessels not in compliance with the ISM Code will be prohibited from trading in ports in the United States and European Union. 41 Table of ContentsSecurity RegulationsSince the terrorist attacks of September 11, 2001, there have been a variety of initiatives intended to enhance vessel security. OnNovember 25, 2002, MTSA came into effect. To implement certain portions of the MTSA, in July 2003, the U.S. Coast Guard issued regulations requiring theimplementation of certain security requirements aboard vessels operating in waters subject to the jurisdiction of the United States. Similarly, inDecember 2002, amendments to SOLAS created a new chapter of the convention dealing specifically with maritime security. The new chapter went into effecton July 1, 2004, and imposes various detailed security obligations on vessels and port authorities, most of which are contained in the ISPS Code. Among thevarious requirements are: • on-board installation of automatic information systems to enhance vessel-to-vessel and vessel-to shore communications; • on-board installation of ship security alert systems; • the development of vessel security plans; and • compliance with flag state security certification requirements.The U.S. Coast Guard regulations, intended to be aligned with international maritime security standards, exempt non-U.S. vessels fromMTSA vessel security measures, provided such vessels had on board, by July 1, 2004, a valid ISSC that attests to the vessel’s compliance with SOLASsecurity requirements and the ISPS Code.International regulations to prevent pollution from shipsIn the second main category of international regulation, the primary instrument is the International Convention for the Prevention of Pollution fromShips, or MARPOL, which imposes environmental standards on the shipping industry set out in Annexes I-VI of MARPOL. These contain regulations for theprevention of pollution by oil (Annex I), by noxious liquid substances in bulk (Annex II), by harmful substances in packaged forms within the scope of theInternational Maritime Dangerous Goods Code (Annex III), by sewage (Annex IV), by garbage (Annex V), and by air emissions (Annex VI).These regulations have been and continue to be regularly amended as new and higher standards of pollution prevention are introduced with which weare required to comply.For example, MARPOL Annex VI, together with the NOx Technical Code established thereunder, sets limits on sulphur oxide and nitrogen oxideemissions from ship exhausts and prohibits deliberate emissions of ozone depleting substances, such as chlorofluorocarbons. It also includes a global cap onthe sulphur content of fuel oil and allows for special areas to be established with more stringent controls on sulphur emissions. Originally adopted inSeptember 1997, Annex VI came into force in May 2005 and was amended in October 2008 (as was the NOx Technical Code) to provide for progressivelymore stringent limits on such emissions from 2010 onwards. The revised Annex VI provides, in particular, for a reduction of the global sulfur cap, initially to3.5% (from the previous cap of 4.5%), with effect from January 1, 2012, then progressively reducing to 0.50% effective from January 1, 2020, subject to afeasibility review to be completed no later than 2018; and the establishment of new tiers of stringent nitrogen oxide emissions standards for marine engines,depending on their date of installation. We anticipate incurring costs in complying with these more stringent standards.The revised Annex VI further allows for designation, in response to proposals from member parties, of Emission Control Areas (ECAs) that imposeaccelerated and/or more stringent requirements for control of sulfur oxide, particulate matter, and nitrogen oxide emissions. Such ECAs have been formallyadopted for the Baltic Sea and the North Sea including the English Channel, It is expected that waters off the North American coast will be established as anECA, where NOx, SOx and particulate matter emissions will be regulated, from August 1, 2012, and the United States Caribbean Sea ECA will come intoforce on January 1, 2013, having effect from January 1, 2014. For the currently-designated ECAs, much lower sulfur limits on fuel oil content are beingphased in (1% from July 2010 and 0.1% from January 1, 2015), as well as nitrogen oxide after treatment requirements that will become applicable to theBaltic and North Sea ECAs in 2016. These more stringent fuel standards, when fully in effect, are expected to require measures such as fuel 42 Table of Contentsswitching, vessel modification adding distillate fuel storage capacity, or addition of exhaust gas cleaning scrubbers, to achieve compliance, and may requireinstallation and operation of further control equipment at significant increased cost.The revised Annex I to the MARPOL Convention entered into force in January 2007. It incorporates various amendments to the MARPOL Convention andimposes construction requirements for oil tankers delivered on or after January 1, 2010. On August 1, 2007, Regulation 12A (an amendment to Annex I) cameinto force imposing performance standards for accidental oil fuel outflow and requiring oil fuel tanks to be located inside the double-hull in all ships with anaggregate oil fuel capacity of 600 cubic meters and above, and which are delivered on or after August 1, 2010, including ships for which the buildingcontract is entered into on or after August 1, 2007 or, in the absence of a contract, for which keel is laid on or after February 1, 2008. All of our newbuildtanker vessels will comply with Regulation 12A.Greenhouse gas emissionsIn February 2005, the Kyoto Protocol to the United Nations Framework Convention on Climate Change entered into force. Pursuant to the KyotoProtocol, adopting countries are required to implement national programs to reduce emissions of certain gases, generally referred to as greenhouse gases,which are suspected of contributing to global warming. Currently, the greenhouse gas emissions from international shipping do not come under the KyotoProtocol.In December 2011, UN climate change talks took place in Durban and concluded with an agreement referred to as the Durban Platform for EnhancedAction. In preparation for the Durban Conference, the International Chamber of Shipping (“ICS”) produced a briefing document, confirming the shippingindustry’s commitment to cut shipping emissions by 20% by 2020, with significant further reductions thereafter. The ICS called on the participants in theDurban Conference to give the IMO a clear mandate to deliver emissions reductions through market-based measures, for example a shipping industryenvironmental compensation fund. Notwithstanding the ICS’ request for global regulation of the shipping industry, the Durban Conference did not result inany proposals specifically addressing the shipping industry’s role in climate change. The European Union announced in April 2007 that it planned to expandthe European Union emissions trading scheme by adding vessels, and a proposal from the European Commission was expected if no global regime forreduction of seaborne emissions had been agreed by the end of 2011. That deadline has now expired and it remains to be seen what position the EU takes inthis regard in 2012. In the United States, in 2007 the California Attorney General and a coalition of environmental groups petitioned the U.S. EnvironmentalProtection Agency, or EPA, in October 2007 to regulate greenhouse gas emissions from ocean-going ships under the Clean Air Act, and in 2010 anothercoalition of environmental groups filed suit to require the EPA to do the same. Any passage of climate control legislation or other regulatory initiatives bythe IMO, European Union, or individual countries where we operate, including the U.S. that restrict emissions of greenhouse gases from vessels could requireus to make significant financial expenditures we cannot predict with certainty at this time.Other international regulations to prevent pollutionIn addition to MARPOL, other more specialized international instruments have been adopted to prevent different types of pollution or environmentalharm from ships. In February 2004, the IMO adopted an International Convention for the Control and Management of Ships’ Ballast Water and Sediments, orthe BWM Convention. The BWM Convention’s implementing regulations call for a phased introduction of mandatory ballast water exchange requirements,to be replaced in time with mandatory concentration limits. The BWM Convention will not enter into force until 12 months after it has been adopted by30 states, the combined merchant fleets of which represent not less than 35% of the gross tonnage of the world’s merchant shipping. To date, there has notbeen sufficient adoption of this standard by member-states representing enough of the gross tonnage of the world’s fleet for it to take force. However, as ofFebruary 29, 2012, the Convention has been ratified by 33 states, representing 26.5% of the global merchant shipping fleet’s gross tonnage, and its entry-into-force with attendant compliance costs may therefore be anticipated in the foreseeable future. 43 Table of ContentsEuropean regulationsEuropean regulations in the maritime sector are in general based on international law. However, since the Erika incident in 1999, the EuropeanCommunity has become increasingly active in the field of regulation of maritime safety and protection of the environment. It has been the driving forcebehind a number of amendments of MARPOL (including, for example, changes to accelerate the time-table for the phase-out of single hull tankers, and toprohibit the carriage in such tankers of heavy grades of oil), and if dissatisfied either with the extent of such amendments or with the time-table for theirintroduction it has been prepared to legislate on a unilateral basis. In some instances where it has done so, international regulations have subsequently beenamended to the same level of stringency as that introduced in Europe, but the risk is well established that EU regulations may from time to time imposeburdens and costs on shipowners and operators which are additional to those involved in complying with international rules and standards.In some areas of regulation the EU has introduced new laws without attempting to procure a corresponding amendment of international law. Notably, itadopted in 2005 a directive on ship-source pollution, imposing criminal sanctions for pollution not only where this is caused by intent or recklessness (whichwould be an offence under MARPOL), but also where it is caused by “serious negligence”. The directive could therefore result in criminal liability beingincurred in circumstances where it would not be incurred under international law. Experience has shown that in the emotive atmosphere often associated withpollution incidents, retributive attitudes towards ship interests have found expression in negligence being alleged by prosecutors and found by courts ongrounds which the international maritime community has found hard to understand. Moreover, there is skepticism that the notion of “serious negligence” islikely to prove any narrower in practice than ordinary negligence. Criminal liability for a pollution incident could not only result in us incurring substantialpenalties or fines but may also, in some jurisdictions, facilitate civil liability claims for greater compensation than would otherwise have been payable.United States environmental regulations and laws governing civil liability for pollutionEnvironmental legislation in the United States merits particular mention as it is in many respects more onerous than international laws, representing ahigh-water mark of regulation with which shipowners and operators must comply, and of liability likely to be incurred in the event of non-compliance or anincident causing pollution.U.S. federal legislation, including notably the Oil Pollution Act of 1990, or OPA, establishes an extensive regulatory and liability regime for theprotection and cleanup of the environment from oil spills, including cargo or bunker oil spills from tankers. OPA affects all owners and operators whosevessels trade in the United States, its territories and possessions or whose vessels operate in United States waters, which includes the United States’ territorialsea and its 200 nautical mile exclusive economic zone. Under OPA, vessel owners, operators and bareboat charterers are “responsible parties” and are jointly,severally and strictly liable (unless the spill results solely from the act or omission of a third party, an act of God or an act of war) for all containment andclean-up costs and other damages arising from discharges or substantial threats of discharges, of oil from their vessels. In addition to potential liability underOPA as the relevant federal legislation, vessel owners may in some instances incur liability on an even more stringent basis under state law in the particularstate where the spillage occurred.Title VII of the Coast Guard and Maritime Transportation Act of 2004, or the CGMTA, amended OPA to require the owner or operator of any non-tankvessel of 400 gross tons or more, that carries oil of any kind as a fuel for main propulsion, including bunkers, to prepare and submit a response plan for eachvessel on or before August 8, 2005. The vessel response plans must include detailed information on actions to be taken by vessel personnel to prevent ormitigate any discharge or substantial threat of such a discharge of ore from the vessel due to operational activities or casualties. 44 Table of ContentsOPA currently limits liability of the responsible party for single-hull tank vessels over 3,000 gross tons liability to the greater of $3,000 per gross ton or$22 million (this amount is reduced to $6.0 million if the vessel is less than 3,000 gross tons). For tank vessels over 3,000 gross tons, other than a single-hullvessel, liability is limited to $1,900 per gross ton or $16.0 million (or $4.0 million for a vessel less than 3,000 gross tons), whichever is greater. Theseamounts are periodically adjusted for inflation.These limits of liability do not apply if an incident was directly caused by violation of applicable United States federal safety, construction oroperating regulations or by a responsible party’s gross negligence or willful misconduct, or if the responsible party fails or refuses to report the incident or tocooperate and assist in connection with oil removal activities.In response to the Deepwater Horizon incident in the Gulf of Mexico, in 2010 the U.S. Congress has proposed, but has not formally adopted legislationthat would amend OPA to mandate stronger safety standards and increased liability and financial responsibility for offshore drilling operations, but the billdid not seek to change the OPA liability limits applicable to vessels. While Congressional activity on this topic is expected to continue to focus on offshorefacilities rather than on vessels generally, it cannot be known with certainty what form any such new legislative initiatives may take.In addition, the Comprehensive Environmental Response, Compensation, and Liability Act, or CERCLA, which applies to the discharge of hazardoussubstances (other than oil) whether on land or at sea, contains a similar liability regime and provides for cleanup, removal and natural resource damages.Liability under CERCLA is limited to the greater of $300 per gross ton or $0.5 million for vessels not carrying hazardous substances as cargo or residue,unless the incident is caused by gross negligence, willful misconduct, or a violation of certain regulations, in which case liability is unlimited.We currently maintain, for each of our owned vessels, insurance coverage against pollution liability risks in the amount of $1.0 billion per incident.The insured risks include penalties and fines as well as civil liabilities and expenses resulting from accidental pollution. However, this insurance coverage issubject to exclusions, deductibles and other terms and conditions. If any liabilities or expenses fall within an exclusion from coverage, or if damages from acatastrophic incident exceed the $1.0 billion limitation of coverage per incident, our cash flow, profitability and financial position could be adverselyimpacted.Under OPA, an owner or operator of a fleet of vessels is required only to demonstrate evidence of financial responsibility in an amount sufficient tocover the vessel in the fleet having the greatest maximum liability under OPA. Under the self-insurance provisions, the shipowner or operator must have a networth and working capital, measured in assets located in the United States against liabilities located anywhere in the world, that exceeds the applicableamount of financial responsibility. We have complied with the U.S. Coast Guard regulations by providing a certificate of responsibility from third partyentities that are acceptable to the U.S. Coast Guard evidencing sufficient self-insurance.The U.S. Coast Guard’s regulations concerning certificates of financial responsibility provide, in accordance with OPA, that claimants may bring suitdirectly against an insurer or guarantor that furnishes certificates of financial responsibility. In the event that such insurer or guarantor is sued directly, it isprohibited from asserting any contractual defense that it may have had against the responsible party and is limited to asserting those defenses available to theresponsible party and the defense that the incident was caused by the willful misconduct of the responsible party. Certain organizations, which had typicallyprovided certificates of financial responsibility under pre-OPA laws, including the major protection and indemnity organizations, have declined to furnishevidence of insurance for vessel owners and operators if they are subject to direct actions or required to waive insurance policy defenses. This requirementmay have the effect of limiting the availability of the type of coverage required by the Coast Guard and could increase our costs of obtaining this insuranceas well as the costs of our competitors that also require such coverage.OPA specifically permits individual states to impose their own liability regimes with regard to oil pollution incidents occurring within theirboundaries, and some states’ environmental laws impose unlimited liability for oil spills. In some cases, states which have enacted such legislation have notyet issued implementing regulations defining vessels owners’ responsibilities under these laws. We intend to comply with all applicable state regulations inthe ports where our vessels call. 45 Table of ContentsThe United States Clean Water Act prohibits the discharge of oil or hazardous substances in U.S. navigable waters and imposes strict liability in theform of penalties for unauthorized discharges. The Clean Water Act also imposes substantial liability for the costs of removal, remediation and damages andcomplements the remedies available under CERCLA. The EPA regulates the discharge of ballast water and other substances incidental to the normaloperation of vessels in U.S. waters using a Vessel General Permit, or VGP, system pursuant to the CWA, in order to combat the risk of harmful organisms thatcan travel in ballast water carried from foreign ports. Compliance with the conditions of the VGP is required for commercial vessels 79 feet in length or longer(other than commercial fishing vessels.) In November 2011, the EPA issued a revised draft Vessel General Permit that is expected to go into effect in 2013.This new VGP will impose a numeric standard to control the release of non-indigenous invasive species in ballast water discharges. In addition, through theCWA certification provisions that allow US states to place additional conditions on use of the VGP within state waters, a number of states have proposed orimplemented a variety of stricter ballast water requirements including, in some states, specific treatment standards. Compliance with new U.S. federal andstate requirements could require the installation of equipment on our vessels to treat ballast water before it is discharged or the implementation of other portfacility disposal arrangements or procedures at potentially substantial cost, and/or otherwise restrict our vessels from entering U.S. waters.The Federal Clean Air Act (“CAA”) requires the EPA to promulgate standards applicable to emissions of volatile organic compounds and other aircontaminants. Our vessels are subject to CAA vapor control and recovery standards (“VCS”) for cleaning fuel tanks and conducting other operations inregulated port areas, and to CAA emissions standards for so-called “Category 3 “marine diesel engines operating in U.S. waters. In April 2010, EPA adoptedregulations implementing the provision of MARPOL Annex VI regarding emissions from Category 3 marine diesel engines. Under these regulations, bothU.S. and foreign-flagged ships must comply with the applicable engine and fuel standards of MARPOL Annex VI, including the stricter North AmericaEmission Control Area (ECA) standards which take effect in August 2012, when they enter U.S. ports or operate in most internal U.S. waters including theGreat Lakes. MARPOL Annex VI requirements are discussed in greater detail above under “International regulations to prevent pollution from ships.” Wemay incur costs to install control equipment on our vessels to comply with the new standards.Also under the CAA, the U.S. Coast Guard has since 1990 regulated the safety of VCSs that are required under EPA and state rules. Our vesselsoperating in regulated port areas have installed VCSs that are compliant with EPA, state and U.S. Coast Guard requirements. In October 2010, the U.S. CoastGuard proposed a rule that would make its VCS requirements more compatible with new EPA and State regulations, reflect changes in VCS technology, andcodify existing U.S. Coast Guard guidelines. It appears unlikely that the updated U.S. Coast Guard rule when finalized will impose a material increase incosts.We intend to comply with all applicable state and U.S. federal regulations in the ports where our vessels call.International laws governing civil liability to pay compensation or damagesWe operate a fleet of product and chemical tankers that are subject to national and international laws governing pollution from such vessels. Severalinternational conventions impose and limit pollution liability from vessels. An owner of a tanker vessel carrying a cargo of “persistent oil” as defined by theInternational Convention for Civil Liability for Oil Pollution Damage (the “CLC”) is subject under the convention to strict liability for any pollution damagecaused in a contracting state by an escape or discharge from cargo or bunker tanks. This liability is subject to a financial limit calculated by reference to thetonnage of the ship, and the right to limit liability may be lost if the spill is caused by the shipowner’s intentional or reckless conduct. Liability may also beincurred under the CLC for a bunker spill from the vessel even when she is not carrying such cargo, but is in ballast.When a tanker is carrying clean oil products that do not constitute “persistent oil” that would be covered under the CLC, liability for any pollutiondamage will generally fall outside the CLC and will depend on other international conventions or domestic laws in the jurisdiction where the spillage occurs.The same principle applies to any pollution from the vessel in a jurisdiction which is not a party to the CLC. The CLC applies in over 100 jurisdictionsaround the world, but it does not apply in the United States, where the corresponding liability laws such as the Oil Pollution Act of 1990 (The “OPA”)discussed below, are particularly stringent. 46 Table of ContentsIn 2001, the IMO adopted the International Convention on Civil Liability for Bunker Oil Pollution Damage, or the Bunker Convention, which imposesstrict liability on shipowners for pollution damage in jurisdictional waters of ratifying states caused by discharges of “bunker oil.” The Bunker Conventiondefines “bunker oil” as “any hydrocarbon mineral oil, including lubricating oil, used or intended to be used for the operation or propulsion of the ship, andany residues of such oil.” The Bunker Convention also requires registered owners of ships over a certain size to maintain insurance for pollution damage inan amount equal to the limits of liability under the applicable national or international limitation regime (but not exceeding the amount calculated inaccordance with the Convention on Limitation of Liability for Maritime Claims of 1976, as amended, or the 1976 Convention). The Bunker Conventionentered into force on November 21, 2008, and as of February 29, 2012 it was in effect in 64 states. In other jurisdictions liability for spills or releases of oilfrom ships’ bunkers continues to be determined by the national or other domestic laws in the jurisdiction where the events or damages occur.Outside the United States, national laws generally provide for the owner to bear strict liability for pollution, subject to a right to limit liability underapplicable national or international regimes for limitation of liability. The most widely applicable international regime limiting maritime pollution liabilityis the 1976 Convention. Rights to limit liability under the 1976 Convention are forfeited where a spill is caused by a shipowners’ intentional or recklessconduct. Some states have ratified the 1996 LLMC Protocol to the 1976 Convention, which provides for liability limits substantially higher than those setforth in the 1976 Convention to apply in such states. Finally, some jurisdictions are not a party to either the 1976 Convention or the 1996 LLMC Protocol,and, therefore, shipowners’ rights to limit liability for maritime pollution in such jurisdictions may be uncertain.Inspection by Classification SocietiesEvery sea going vessel must be “classed” by a classification society. The classification society certifies that the vessel is “in class,”signifying that the vessel has been built and maintained in accordance with the rules of the classification society and complies with applicable rules andregulations of the vessel’s country of registry and the international conventions of which that country is a member. In addition, where surveys are required byinternational conventions and corresponding laws and ordinances of a flag state, the classification society will undertake them on application or by officialorder, acting on behalf of the authorities concerned. 47 Table of ContentsThe classification society also undertakes, on request, other surveys and checks that are required by regulations and requirements of theflag state. These surveys are subject to agreements made in each individual case or to the regulations of the country concerned. For maintenance of the class,regular and extraordinary surveys of hull, machinery (including the electrical plant) and any special equipment classed are required to be performed asfollows: • Annual Surveys: For ocean-going ships, annual surveys are conducted for the hull and the machinery (including the electrical plant) and, whereapplicable, for special equipment classed, at intervals of 12 months from the date of commencement of the class period indicated in the certificate. • Intermediate Surveys: Extended annual surveys are referred to as intermediate surveys and typically are conducted two and a half years aftercommissioning and each class renewal. Intermediate surveys may be carried out on the occasion of the second or third annual survey. • Class Renewal Surveys: Class renewal surveys, also known as special surveys, are carried out for the ship’s hull, machinery (including the electrical plant),and for any special equipment classed, at the intervals indicated by the character of classification for the hull. At the special survey, the vessel isthoroughly examined, including audio-gauging, to determine the thickness of its steel structure. Should the thickness be found to be less than classrequirements, the classification society would prescribe steel renewals. The classification society may grant a one year grace period for completion of thespecial survey. Substantial amounts of money may have to be spent for steel renewals to pass a special survey if the vessel experiences excessive wear andtear. In lieu of the special survey every four or five years, depending on whether a grace period was granted, a shipowner has the option of arranging withthe classification society for the vessel’s integrated hull or machinery to be on a continuous survey cycle, in which every part of the vessel would besurveyed within a five-year cycle.Risk of Loss and Liability InsuranceGeneralThe operation of any cargo vessel includes risks such as mechanical failure, physical damage, collision, property loss, and cargo loss ordamage and business interruption due to political circumstances in foreign countries, hostilities and labor strikes. In addition, there is always an inherentpossibility of marine disaster, including oil spills and other environmental mishaps, and the liabilities arising from owning and operating vessels ininternational trade. The OPA, which imposes virtually unlimited liability upon owners, operators and demise charterers of any vessel trading in the UnitedStates exclusive economic zone for certain oil pollution accidents in the United States, has made liability insurance more expensive for ship owners andoperators trading in the United States market. While Navios Acquisition believes that its insurance coverage is adequate, not all risks can be insured, andthere can be no guarantee that any specific claim will be paid, or that we will always be able to obtain adequate insurance coverage at reasonable rates.Hull and Machinery InsuranceNavios Acquisition has obtained marine hull and machinery and war risk insurance, which includes the risk of actual or constructivetotal loss, for all of its vessels. The vessels will each be covered up to at least fair market value, with deductibles in amounts ranging between $75,000 and$250,000, depending on the size of the tanker vessel. Navios Acquisition has also extended its war risk insurance to include war loss of hire for any loss oftime to the vessel, including for physical repairs, caused by a warlike incident, including a piracy seizure.Navios Acquisition has arranged, as necessary, increased value insurance for its vessels. With the increased value insurance, in case oftotal loss of the vessel, Navios Acquisition will be able to recover the sum insured under the increased value policy in addition to the sum insured under thehull and machinery policy. Increased value insurance also covers excess liabilities that are not recoverable in full by the hull and machinery policies byreason of under insurance. Navios Acquisition does not expect to maintain loss of hire insurance for certain of its vessels. Loss of hire insurance coversbusiness interruptions that result in the loss of use of a vessel.Protection and Indemnity InsuranceProtection and indemnity insurance is provided by mutual protection and indemnity associations, or P&I Associations, which coversNavios Acquisition’s third-party liabilities in connection with the operation of its ships. This includes third-party liability and other related expenses ofinjury or death of crew, passengers and other third parties, loss or damage to cargo, claims arising from collisions with other vessels, damage to other third-party property, pollution arising from oil or other substances, and salvage, towing and other related costs, including wreck removal. Protection and indemnityinsurance is a form of mutual indemnity insurance, extended by protection and indemnity mutual associations. 48 Table of ContentsNavios Acquisition’s protection and indemnity insurance coverage for oil pollution is limited to $1.0 billion per event. The 13 P&IAssociations that comprise the International Group insure approximately 95% of the world’s commercial tonnage and have entered into a pooling agreementto reinsure each association’s liabilities. Each vessel that Navios Acquisition acquires will be entered with P&I Associations of the International Group.Under the International Group reinsurance program, each P&I club in the International Group is responsible for the first $8.0 million of every claim. In everyclaim the amount in excess of $8.0 million and up to $60.0 million is shared by the clubs under a pooling agreement. Any claim in excess of $60.0 million isreinsured by the International Group under the General Excess of Loss Reinsurance Contract. This policy currently provides an additional $2.0 billion ofcoverage for non-oil pollution claims. Further to this, overspill protection has been placed by the International Group for claims up to $1 billion in excess of$2.06 billion, i.e. $3.06 billion in total. For passengers and crew claims the overall limit is $3.0 billion any one even any one vessel with a sub-limit of $2.0billion for passengers.As a member of a P&I Association, which is a member of the International Group, Navios Acquisition will be subject to calls payable tothe associations based on its claim records as well as the claim records of all other members of the individual associations, and members of the pool of P&IAssociations comprising the International Group. The P&I Associations’ policy year commences on February 20th. Calls are levied by means of EstimatedTotal Premiums (“ETP”) and the amount of the final installment of the ETP varies according to the actual total premium ultimately required by the club for aparticular policy year. Members have a liability to pay supplementary calls which might be levied by the board of directors of the club if the ETP isinsufficient to cover amounts paid out by the club.Exchange ControlsUnder Marshall Islands law, there are currently no restrictions on the export or import of capital, including foreign exchange controls orrestrictions that affect the remittance of dividends, interest or other payments to non-resident holders of Navios Acquisition’s securities.FacilitiesWe do not own any real estate or other physical property. Our headquarters are located at 85 Akti Miaouli Street, Piraeus, Greece 185 38.We believe that our office facilities are suitable and adequate for our business as it is presently conducted. We presently occupy office space provided byNavios Holdings. Navios Holdings has agreed that it will make such office space, as well as certain office and secretarial services, available to us, as may berequired by us from time to time.Crewing and StaffThe Manager crews its vessels primarily with Greek, Filipino, Indian, Romanian, Russian and Ukranian officers and Filipino seamen. TheManager is responsible for selecting its Greek officers. For other nationalities, officers and seamen are referred to us by local crewing agencies. NaviosAcquisition requires that all of its seamen have the qualifications and licenses required to comply with international regulations and shipping conventions.Administrative ServicesOn May 28, 2010, Navios Acquisition entered into an administrative services agreement with Navios Holdings, expiring on May 28,2015, pursuant to which Navios Holdings provides certain administrative management services to Navios Acquisition, which include bookkeeping, auditand accounting services, legal and insurance services, administrative and clerical services, banking and financial services, advisory services, client andinvestor relations and other services. Navios Holdings is reimbursed for reasonable costs and expenses incurred in connection with the provision of theseservices. See “Item 7B-Related Party Transactions — the Administrative Services Agreement.”Legal ProceedingsTo the knowledge of management, there is no litigation currently pending or contemplated against us or any of our officers or directorsin their capacity as such.C. Organizational StructureThe table below lists the Company’s wholly-owned subsidiaries as of December 31, 2011. 49 Table of ContentsNavios Maritime Acquisition Corporation and Subsidiaries: Nature Country of IncorporationCompany Name Aegean Sea Maritime Holdings Inc. Sub-Holding Company Marshall Is.Amorgos Shipping Corporation Vessel Owning Company Marshall Is.Andros Shipping Corporation Vessel Owning Company Marshall Is.Antikithira Shipping Corporation Vessel Owning Company Marshall Is.Antiparos Shipping Corporation Vessel Owning Company Marshall Is.Amindra Shipping Co. Sub-Holding Company Marshall Is.Crete Shipping Corporation Vessel Owning Company Marshall Is.Folegandros Shipping Corporation Vessel Owning Company Marshall Is.Ikaria Shipping Corporation Vessel Owning Company Marshall Is.Ios Shipping Corporation Vessel Owning Company Cayman Is.Kithira Shipping Corporation Vessel Owning Company Marshall Is.Kos Shipping Corporation Vessel Owning Company Marshall Is.Mytilene Shipping Corporation Vessel Owning Company Marshall Is.Navios Acquisition Finance (U.S.) Inc. Co-Issuer DelawareRhodes Shipping Corporation Vessel Owning Company Marshall Is.Navios Maritime Acquisition Corporation Holding Company Marshall Is.Serifos Shipping Corporation Vessel Owning Company Marshall Is.Shinyo Dream Limited Vessel Owning Company Hong KongShinyo Kannika Limited Vessel Owning Company Hong KongShinyo Kieran Limited Vessel Owning Company British Virgin Is.Shinyo Loyalty Limited Vessel Owning Company Hong KongShinyo Navigator Limited Vessel Owning Company Hong KongShinyo Ocean Limited Vessel Owning Company Hong KongShinyo Saowalak Limited Vessel Owning Company British Virgin Is.Sifnos Shipping Corporation Vessel Owning Company Marshall Is.Skiathos Shipping Corporation Vessel Owning Company Marshall Is.Skopelos Shipping Corporation Vessel Owning Company Cayman Is.Syros Shipping Corporation Vessel Owning Company Marshall Is.Thera Shipping Corporation Vessel Owning Company Marshall Is.Tinos Shipping Corporation Vessel Owning Company Marshall Is.Oinousses Shipping Corporation Vessel Owning Company Marshall Is.Psara Shipping Corporation Vessel Owning Company Marshall Is.Antipsara Shipping Corporation Vessel Owning Company Marshall Is. (1)Each company has the rights over a shipbuilding contract of a tanker vessel.D. Property, plants and equipmentOther than our vessels, we do not have any material property, plant or equipment.Item 4A. Unresolved Staff CommentsNone.Item 5. Operating and Financial Review and ProspectsOverviewNavios Acquisition was incorporated in the Republic of the Marshall Islands on March 14, 2008. We were formed to acquire through amerger, capital stock exchange, asset acquisition, stock purchase or other similar business combination one or more assets or operating businesses in themarine transportation and logistics industries. On July 1, 2008, we consummated our initial public offering representing gross proceeds of $253.0 million.On May 25, 2010, we consummated the Product and Chemical Tanker Acquisition, the acquisition of 13 vessels (11 product tankers andtwo chemical tankers), for an aggregate purchase price of $457.7 million, including amounts to be paid for future contracted vessels to be delivered. OnSeptember 10, 2010, we consummated the VLCC Acquisition, for an aggregate purchase price of $587.0 million. 50(1)(1)(1)(1)(1)(1)(1)(1)(1)(1)(1)(1)(1)(1)(1) Table of ContentsOn October 21, 2010, Navios Acquisition and Navios Acquisition Finance (US) Inc., its wholly owned finance subsidiary (“NaviosAcquisition Finance”), completed the sale of $400.0 million of 8 5/8% First Priority Ship Mortgage notes due 2017 (the “Existing Notes”).On May 26, 2011, Navios Acquisition and Navios Acquisition Finance completed the sale of $105.0 million of 8 5/8% first priority shipmortgage notes due 2017 (the “Additional Notes”) at 102.25% plus accrued interest from May 1, 2011. The net proceeds of the offering of $104.6 millionwere used to partially finance the acquisition of the VLCC delivered on June 8, 2011 and to repay the $80.0 million revolving credit facility with MarfinEgnatia Bank.Equity TransactionsOn September 17, 2010, Navios Acquisition issued 3,000 shares of preferred stock to an independent third party holder in connectionwith the payment of certain consultant and advisory fees. The preferred stock issued to the consultant was recorded at fair value as an expense in ourstatement of income totaling $5.6 million.On October 29, 2010 Navios Acquisition issued 540 shares of Series B Convertible preferred stock (fair value $1.6 million) to the sellerof the two newbuild LR1 product tankers the Company recently acquired. The preferred stock contains a 2% per annum dividend payable quarterly startingon January 1, 2011, and mandatorily converts into shares of common stock at various dates in the future subject to the terms and conditions of such preferredstock. The holders of the preferred stock also have the right to convert their shares to common stock subject to certain terms and conditions. The preferredstock does not have any voting rights.On November 19, 2010, the Company completed the public offering of 6,500,000 shares of common stock at $5.50 per share and raisedgross proceeds of $35.8 million. The net proceeds of this offering, including the underwriting discount of $1.8 million and excluding offering costs of $0.6million were approximately $34.0 million.Pursuant to an Exchange Agreement entered into March 30, 2011, Navios Holdings exchanged 7,676,000 shares of Navios Acquisition’scommon stock it held for 1,000 shares of non-voting Series C Convertible Preferred Stock of Navios Acquisition. After giving effect to this exchange, NaviosHoldings owned 45.0% of our outstanding common stock. Each holder of shares of Series C Convertible Preferred Stock is entitled at their option at any time,after March 31, 2013, to convert all or any of their outstanding shares into shares of our common stock determined by multiplying each share of Series CConvertible Preferred Stock to be converted by 7,676, subject to certain limitations. Upon the declaration of a common stock dividend, the holders of SeriesC Convertible Preferred Stock are entitled to receive dividends in an amount equal to the amount that would have been received on the number of shares ofour common stock into which the shares of Series C Convertible Preferred Stock held by each holder could be converted.On November 4, 2011, with respect to the shares held in escrow for the VLCC Acquisition, a total of 1,160,963 shares of common stockwere released to the sellers and the remaining 217,159 were returned to Navios Acquisition in settlement of representations and warranties attributable to thesellers. The returned shares were cancelled on December 30, 2011.As of December 31, 2011, Navios Acquisition had outstanding: 40,517,413 shares of common stock, 4,540 shares of preferred stock, and6,037,994 public warrants. Included in the number of shares and warrants are 18,815 units (one unit consists of one share of common stock and one warrant). 51 Table of ContentsFleet DevelopmentOn May 25, 2010, after its special meeting of stockholders, Navios Acquisition announced the approval of: (a) the acquisition from NaviosHoldings of 13 vessels (11 product tankers and two chemical tankers) for an aggregate purchase price of $457.7 million, of which $128.7 million was to bepaid from existing cash and the $329.0 million balance with existing and new debt financing pursuant to the terms and conditions of the AcquisitionAgreement by and between Navios Acquisition and Navios Holdings and (b) certain amendments to Navios Acquisition’s amended and restated articles ofincorporation.On May 28, 2010, Navios Acquisition consummated the vessel acquisition, which constituted our initial business combination. In connectionwith the stockholder vote to approve the vessel acquisition, holders of 10,021,399 shares of common stock voted against the asset acquisition and elected toredeem their shares in exchange for an aggregate of approximately $99.3 million which amount was disbursed from the trust account on May 28, 2010. Inaddition, on May 28, 2010, Navios Acquisition disbursed an aggregate of $8.9 million from the trust account to the underwriters of our initial public offeringfor deferred fees. After disbursement of approximately $76.5 million to Navios Holdings to reimburse it for the first equity instalment payment on the vesselsof $38.8 million and other associated payments, the balance of the trust account of $66.1 million was released to Navios Acquisition for general operatingexpenses. From the 13 vessels, Navios Acquisition took delivery of two LR1s in June and July 2010, and two chemical tankers in October 2010 and January2011, respectively.On September 10, 2010, Navios Acquisition consummated the VLCC Acquisition for an aggregate purchase price of $587.0 million, adjusted fornet working capital acquired of $20.6 million. The purchase price was financed as follows: (a) $410.4 million of bank debt, assumed at closing, consisting ofsix credit facilities with a consortium of banks; (b) $134.3 million of cash paid at closing; (c) $11.0 million through the issuance of 1,894,918 NaviosAcquisition shares of common stock (based on the closing trading price averaged over the 15 trading days immediately prior to closing) of which 1,378,122shares of common stock were deposited to a one-year escrow to provide for indemnity or other claims. The 1,894,918 shares were valued at the closing priceof September 9, 2010; and (d) $51.4 million due to a shipyard in 2011 for the newbuilding scheduled for delivery in June 2011. The VLCC Acquisition wasaccounted for as a business combination (refer to note 4 in the audited financial statements included herein).On November 4, 2011, a total of 1,160,963 shares of common stock were released to the sellers of the “VLCC Acquisition” and the remaining217,159 were returned to Navios Acquisition in settlement of claims relating to representations and warranties attributable to the sellers. The returned shareswere cancelled on December 30, 2011.On October 26, 2010, Navios Acquisition entered into agreements to acquire two 75,000 dwt LR1 product tankers. The acquisition price of$87.0 million is financed with: (a) the issuance of $5.4 million mandatorily convertible preferred stock, (b) a new credit facility of $52.2 million and (c) $29.4million of cash on hand. On November 14, 2011, Navios Acquisition took delivery of the Nave Andromeda, a 75,000 dwt LR1 South Korean –built producttanker, for a total cost of $44.6 million. Cash paid was $27.2 million and $17.4 million was transferred from vessel deposits. The Nave Estella was deliveredto Navios Acquisition’s fleet on January 20, 2012.On January 27, 2011, Navios Acquisition took delivery of the Nave Polaris, a 25,145 dwt South Korean-built chemical tanker, for a total cost of$31.7 million. Cash paid was $4.5 million and $27.2 million was transferred from vessel deposits.On June 8, 2011, Navios Acquisition took delivery of a 297,066 dwt VLCC, the Shinyo Kieran, from a Chinese shipyard, for a total cost of$119.2 million. Cash paid was $29.1 million and $90.1 million was transferred from vessel deposits.On July 12, 2011, Navios Acquisition took delivery of the Bull, a 2009 — built MR2 product tanker vessel of 50,542 dwt and attached timecharter, for a total cost of $42.4 million that was paid in cash. Favorable lease terms recognized through this transaction amounted to $5.1 million and thebalance of $37.3 million was classified under vessels, net.On July 18, 2011, Navios Acquisition took delivery of the Buddy, a 2009-built MR2 product tanker vessel of 50,470 dwt and attached timecharter, for a total cost of $42.5 million that was paid in cash. Favorable lease terms recognized through this transaction amounted to $5.2 million and thebalance of $37.3 million was classified under vessels, net.Prior to our initial acquisition of vessels, on May 28, 2010, we had neither engaged in any operations nor generated any revenues. We generatednon-operating income in the form of interest income on cash and cash equivalents following the completion of our IPO. 52 Table of ContentsNavios Maritime Acquisition Corporation andSubsidiaries: Nature Country ofIncorporation Statement of operations 2011 2010 2009Company Name Aegean Sea Maritime Holdings Inc. Sub-Holding Company Marshall Is. 1/1 - 12/31 5/28 - 12/31 — Amorgos Shipping Corporation Vessel Owning Company Marshall Is. 1/1 - 12/31 5/28 - 12/31 — Andros Shipping Corporation Vessel Owning Company Marshall Is. 1/1 - 12/31 5/28 - 12/31 — Antikithira Shipping Corporation Vessel Owning Company Marshall Is. 6/7 - 12/31 — — Antiparos Shipping Corporation Vessel Owning Company Marshall Is. 1/1 - 12/31 5/28 - 12/31 — Amindra Shipping Co. Sub-Holding Company Marshall Is. 4/28 - 12/31 — — Crete Shipping Corporation Vessel Owning Company Marshall Is. 1/1 - 12/31 5/28 - 12/31 — Folegandros Shipping Corporation Vessel Owning Company Marshall Is. 1/1 - 12/31 10/26 - 12/31 — Ikaria Shipping Corporation Vessel Owning Company Marshall Is. 1/1 - 12/31 5/28 - 12/31 — Ios Shipping Corporation Vessel Owning Company Cayman Is. 1/1 - 12/31 5/28 - 12/31 — Kithira Shipping Corporation Vessel Owning Company Marshall Is. 6/7 - 12/31 — — Kos Shipping Corporation Vessel Owning Company Marshall Is. 1/1 - 12/31 5/28 - 12/31 — Mytilene Shipping Corporation Vessel Owning Company Marshall Is. 1/1 - 12/31 5/28 - 12/31 — Navios Acquisition Finance (U.S.) Inc. Co-Issuer Delaware 1/1 - 12/31 10/05 - 12/31 — Navios Maritime Acquisition Corporation Holding Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Rhodes Shipping Corporation Vessel Owning Company Marshall Is. 1/1 - 12/31 5/28 - 12/31 — Serifos Shipping Corporation Vessel Owning Company Marshall Is. 1/1 - 12/31 10/26 - 12/31 — Shinyo Dream Limited Vessel Owning Company Hong Kong 1/1 - 12/31 9/10 - 12/31 — Shinyo Kannika Limited Vessel Owning Company Hong Kong 1/1 - 12/31 9/10 - 12/31 — Shinyo Kieran Limited Vessel Owning Company British Virgin Is. 1/1 - 12/31 9/10 - 12/31 — Shinyo Loyalty Limited Vessel Owning Company Hong Kong 1/1 - 12/31 9/10 - 12/31 — Shinyo Navigator Limited Vessel Owning Company Hong Kong 1/1 - 12/31 9/10 - 12/31 — Shinyo Ocean Limited Vessel Owning Company Hong Kong 1/1 - 12/31 9/10 - 12/31 — Shinyo Saowalak Limited Vessel Owning Company British Virgin Is. 1/1 - 12/31 9/10 - 12/31 — Sifnos Shipping Corporation Vessel Owning Company Marshall Is. 1/1 - 12/31 5/28 - 12/31 — Skiathos Shipping Corporation Vessel Owning Company Marshall Is. 1/1 - 12/31 5/28 - 12/31 — Skopelos Shipping Corporation Vessel Owning Company Cayman Is. 1/1 - 12/31 5/28 - 12/31 —Syros Shipping Corporation Vessel Owning Company Marshall Is. 1/1 - 12/31 5/28 - 12/31 — Thera Shipping Corporation Vessel Owning Company Marshall Is. 1/1 - 12/31 5/28 - 12/31 — Tinos Shipping Corporation Vessel Owning Company Marshall Is. 1/1 - 12/31 5/28 - 12/31 — Oinousses Shipping Corporation Vessel Owning Company Marshall Is. 10/5 - 12/31 — — Psara Shipping Corporation Vessel Owning Company Marshall Is. 10/5 - 12/31 — — Antipsara Shipping Corporation Vessel Owning Company Marshall Is. 10/5 - 12/31 — — (1)Each company has the rights over a shipbuilding contract of a tanker vessel.Our ChartersFor the year ended December 31, 2011, Navios Acquisition’s customers representing 10% or more of total revenue were, Dalian OceanShipping Co., Blue light Chartering Inc and Jacob Tank Chartering GMBH &CO. KG. which accounted for 43.9%, 11.5% and 11.3% respectively. For theyear ended December 31, 2010, Jacob Tank Chartering GMBH & CO. KG, SK Shipping Company Ltd, DOSCO, Formosa Petrochemical Corporation, BlueLight Chartering Inc and Navig8 Chemicals Shipping and Trading Co accounted for 42.5%, 18.6%, 12.9%, 12.9% and 10.9%, respectively, of NaviosAcquisition’s revenue. There were no customers in the corresponding 2009 period as the Company was in the development stage. No other customersaccounted 10% or more of total revenue for any of the years presented.Our revenues are driven by the number of vessels in the fleet, the number of days during which the vessels operate and our charter hirerates, which, in turn, are affected by a number of factors, including: • the duration of the charters; • the level of spot and long-term market rates at the time of charter; • decisions relating to vessel acquisitions and disposals; • the amount of time spent positioning vessels; • the amount of time that vessels spend undergoing repairs and upgrades in drydock; • the age, condition and specifications of the vessels; and • the aggregate level of supply and demand in the tanker shipping industry.Time charters are available for varying periods, ranging from a single trip (spot charter) to long-term which may be 53(1)(1)(1)(1)(1)(1)(1)(1)(1)(1)(1)(1)(1)(1)(1) Table of Contentsmany years. In general, a long-term time charter assures the vessel owner of a consistent stream of revenue. Operating the vessel in the spot market affords theowner greater spot market opportunity, which may result in high rates when vessels are in high demand or low rates when vessel availability exceeds demand.We intend to operate our vessels in a mix of short-term and long-term charter market. Vessel charter rates are affected by world economics, internationalevents, weather conditions, strikes, governmental policies, supply and demand and many other factors that might be beyond our control.We could lose a customer or the benefits of a charter if: • the customer fails to make charter payments because of its financial inability, disagreements with us or otherwise; • the customer exercises certain rights to terminate the charter the vessel; • the customer terminates the charter because we fail to deliver the vessel within a fixed period of time, the vessel is lost or damaged beyond repair,there are serious deficiencies in the vessel or prolonged periods of off-hire, or we default under the charter; or • a prolonged force majeure event affecting the customer, including damage to or destruction of relevant production facilities, war or politicalunrest prevents us from performing services for that customer.If we lose a charter, we may be unable to re-deploy the related vessel on terms as favorable to us due to the long-term nature of mostcharters and the cyclical nature of the industry or we may be forced to charter the vessel on the spot market at then market rates which may be less favorablethan the charter that has been terminated. The loss of any of our customers, time charters or vessels, or a decline in payments under our charters, could have amaterial adverse effect on our business, results of operations and financial condition and our ability to make cash distributions in the event we are unable toreplace such customer, time charter or vessel.Under some of our time charters, either party may terminate the charter contract in the event of war in specified countries or in locationsthat would significantly disrupt the free trade of the vessel. Some of the time charters covering our vessels require us to return to the charterer, upon the loss ofthe vessel, all advances paid by the charterer but not earned by us.Vessels OperationsUnder our charters, our vessel manager is generally responsible for commercial, technical, health and safety and other managementservices related to the vessels’ operation, and the charterer is responsible for bunkering and substantially all of the vessel voyage costs, including canal tollsand port charges.Pursuant to the Management Agreement dated May 28, 2010, a subsidiary of Navios Holdings provides, for five years from the closing ofthe Product and Chemical Tanker Acquisition, commercial and technical management services to Navios Acquisition’s vessels for a daily fee of $6,000 perowned MR2 product tanker and chemical tanker vessel, $7,000 per owned LR1 product tanker vessel, and $10,000 per owned VLCC vessel, for the first twoyears with the fixed daily fees adjusted for the remainder of the term based on then-current market fees. This daily fee covers all of the vessels’ operatingexpenses, other than certain extraordinary fees and costs. Actual operating costs and expenses will be determined in a manner consistent with how the initialfixed fees were determined. Drydocking expenses are fixed under this agreement for up to $300,000 per vessel, for MR2 and LR1 product tankers, and will bereimbursed at cost for VLCC vessels.Extraordinary costs and expenses include fees and costs resulting from: • time spent on insurance and salvage claims; • time spent vetting and pre-vetting the vessels by any charterers in excess of 10 days per vessel per year; • the deductible of any insurance claims relating to the vessels or for any claims that are within such deductible range; • the significant increase in insurance premiums which are due to factors such as “acts of God” outside the control of the Manager; • repairs, refurbishment or modifications, including those not covered by the guarantee of the shipbuilder or by the insurance coveringthe vessels, resulting from maritime accidents, collisions, other accidental damage or unforeseen events (except to the extent that suchaccidents, collisions, damage or events are due to the fraud, gross negligence or willful misconduct of the Manager, its employees orits agents, unless and to the extent otherwise covered by insurance); • expenses imposed due to any improvement, upgrade or modification to, structural changes with respect to the installation of newequipment aboard any vessel that results from a change in, an introduction of new, or a change in the interpretation of, applicablelaws, at the recommendation of the classification society for that vessel or otherwise; • costs associated with increases in crew employment expenses resulting from an introduction of new, or a change in the interpretationof, applicable laws or resulting from the early termination of the charter of any vessel; • any taxes, dues or fines imposed on the vessels or the Manager due to the operation of the vessels; • expenses incurred in connection with the sale or acquisition of a vessel such as inspections and technical assistance; 54 Table of Contents and • any similar costs, liabilities and expenses that were not reasonably contemplated by us and the Manager as being encompassed by or acomponent of the fixed daily fees at the time the fixed daily fees were determined.Payment of any extraordinary fees or expenses to the Manager could significantly increase our vessel operating expenses and impact ourresults of operations.During the remaining term of the Management Agreement, we expect that we will reimburse the Manager for all of the actual operatingcosts and expenses it incurs in connection with the management of our fleet.Administrative ServicesOn May 28, 2010, Navios Acquisition entered into an administrative services agreement with Navios Holdings, expiring on May 28,2015, pursuant to which a subsidiary of Navios Holdings provides certain administrative management services to Navios Acquisition which include: rent,bookkeeping, audit and accounting services, legal and insurance services, administrative and clerical services, banking and financial services, advisoryservices, client and investor relations and other. Navios Holdings is reimbursed for reasonable costs and expenses incurred in connection with the provisionof these services.A. Operating resultsTrends and Factors Affecting Our Future Results of OperationsWe believe the principal factors that will affect our future results of operations are the economic, regulatory, political and governmentalconditions that affect the shipping industry generally and that affect conditions in countries and markets in which our vessels engage in business. Other keyfactors that will be fundamental to our business, future financial condition and results of operations include: • the demand for seaborne transportation services; • the ability of Navios Holdings’ commercial and chartering operations to successfully employ our vessels at economically attractive rates, particularly asour fleet expands and our charters expire; • the effective and efficient technical management of our vessels; • Navios Holdings’ ability to satisfy technical, health, safety and compliance standards of major commodity traders; and • the strength of and growth in the number of our customer relationships, especially with major commodity traders.In addition to the factors discussed above, we believe certain specific factors will impact our combined and consolidated results ofoperations. These factors include: • the charter hire earned by our vessels under our charters; • our access to capital required to acquire additional vessels and/or to implement our business strategy; • our ability to sell vessels at prices we deem satisfactory; • our level of debt and the related interest expense and amortization of principal; and • the level of any dividend to our stockholders.Period over Period ComparisonsYear Ended December 31, 2011 Compared to the Year Ended December 31, 2010The following table presents consolidated revenue and expense information for the years ended December 31, 2011 and 2010. Thisinformation was derived from the audited consolidated financial statements of Navios Acquisition for the respective periods. (in thousands of U.S. dollars) Year endedDecember 31,2011 Year endedDecember 31,2010 Revenue $121,925 $33,568 Time charter expenses (3,499) (355) Direct vessel expenses (633) — Management fees (35,679) (9,752) General and administrative expenses (4,241) (1,902) Shared based compensation — (2,140) Transaction costs — (8,019) Depreciation and amortization (38,638) (10,120) Prepayment penalties & write-off deferred financing costs (935) (5,441) 55 Table of ContentsInterest income 1,414 862 Interest expenses and finance cost, net (43,165) (10,651) Other (expense)/income, net (406) 404 Net loss $(3,857) $(13,546) Set forth below are selected historical and statistical data for Navios Acquisition for each of the years ended December 31, 2011 and2010 that we believe may be useful in better understanding Navios Acquisition’s financial position and results of operations. Year endedDecember 31,2011 Year endedDecember 31,2010 FLEET DATA Available days 4,053 1,104 Operating days 4,004 1,096 Fleet utilization 98.8% 99.3% Vessels operating at period end 14 9 AVERAGE DAILY RESULTS Time Charter Equivalent per day $29,218 $30,087 (1)Available days: Available days is the total number of days a vessel is controlled by a company less the aggregate number of days that the vessel is off-hire due to scheduled repairs or repairs under guarantee, vessel upgrades or special surveys. The shipping industry uses available days to measure thenumber of days in a period during which vessels should be capable of generating revenues.(2)Operating days: Operating days is the number of available days in a period less the aggregate number of days that the vessels are off-hire due to anyreason, including lack of demand or unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in aperiod during which vessels actually generate revenues.(3)Fleet utilization: Fleet utilization is obtained by dividing the number of operating days during a period by the number of available days during theperiod. The shipping industry uses fleet utilization to measure a company’s efficiency in finding suitable employment for its vessels and minimizingthe amount of days that its vessels are off-hire for reasons other than scheduled repairs or repairs under guarantee, vessel upgrades, special surveys orvessel positioning.(4)Time Charter Equivalent: Time Charter Equivalent is defined as voyage and time charter revenues less voyage expenses during a period divided by thenumber of available days during the period. The TCE rate is a standard shipping industry performance measure used primarily to present the actualdaily earnings generated by vessels on various types of charter contracts for the number of available days of the fleet.For the year ended December 31, 2011, Navios Acquisition had 4,053 available days, after it took delivery of the vessel Nave Cielo (ex.Colin Jacob) on June, 2010, Nave Ariadne (ex. Ariadne Jacob) on July 2010, seven VLCCs on September 10, 2010, of which the Shinyo Kieran was deliveredin June 2011, the vessel Nave Cosmos on October 2010, the Nave Polaris in January 2011, the Buddy and the Bull in July 2011 and the Nave Andromeda inNovember 2011. There were 1,104 available days in the comparative period in 2010.Revenue: Revenue for the year ended December 31, 2011 increased by $88.3 million or 262.8% to $121.9 million, as compared to $33.6million for the year ended 2010. The increase was mainly attributable to the acquisitions of the Nave Cielo (ex. Colin Jacob) and the Nave Ariadne (ex.Ariadne Jacob) in July 2010, seven VLCCs in September 2010, of which the Shinyo Kieran was delivered in June 2011, the Nave Cosmos in October 2010,the Nave Polaris in January 2011, the Buddy and the Bull in July 2011 and the Nave Andromeda in November 2011 and a $3,704 early terminationcompensation fee. As a result of the vessel acquisitions described above, available days of the fleet increased to 4,053 days for the year ended December 31,2011, as compared to 1,104 days for the year ended December 31, 2010. The TCE rate decreased to $29,218 for the year ended December 31, 2011, from$30,087 for the year ended December 31, 2010.Time Charter Expenses: Time charter expenses for the year ended December 31, 2011 increased by $3.1 million to $3.5 million, ascompared to $0.4 million for the year ended December 31, 2010. The increase was attributable to brokerage commissions and other miscellaneous expenses,due to the increased number of vessels operating in Navios Acquisition’s fleet. Time charter expenses are expensed over the period of the time charter. 56(1)(2)(3)(4) Table of ContentsDirect vessel expenses: Direct vessel expenses, comprised of the amortization of dry dock and special survey costs, of two VLCC vesselsthat were completed in August 5, 2011 and October 3, 2011, respectively, amounted to $0.6 million for the year ended December 31, 2011. There were nodirect vessel expenses for the comparative period in 2010.Management Fees: Management fees for the year ended December 31, 2011 increased by $25.9 million to $35.7 million, as compared to$9.8 million for the year ended December 31, 2010. The increase was attributable to the increase in the number of vessels operating under NaviosAcquisition’s fleet. Pursuant to a Management Agreement dated May 28, 2010, a subsidiary of Navios Holdings, provides for five years from the closing ofthe Product and Chemical Tanker Acquisition, commercial and technical management services to Navios Acquisition’s vessels for a daily fee of $6,000 perowned MR2 product tanker and chemical tanker vessel, $7,000 per owned LR1 product tanker vessel and $10,000 per VLCC vessel for the first two yearswith the fixed daily fees adjusted for the remainder of the term based on then-current market fees. This daily fee covers all of the vessels’ operating expenses,other than certain fees and costs. During the remaining three years of the term of the Management Agreement, Navios Acquisition expects it will reimburseNavios Holdings for all of the actual operating costs and expenses it incurs in connection with the management of its fleet. Actual operating costs andexpenses will be determined in a manner consistent with how the initial fixed fees were determined. Drydocking expenses are fixed under this agreement forup to $0.3 million per vessel chemical LR1 and MR2 product and are reimbursed at cost for VLCC vessels.General and Administrative Expenses: Total general and administrative fees for the year ended December 31, 2011 increased by $2.3million or 121% to $4.2 million compared to $1.9 million for the year ended December 31, 2010. The increase was mainly attributable to the increase inadministrative expenses paid to the Manager due to the increased number of vessels in Navios Acquisition’s fleet.On May 28, 2010, Navios Acquisition entered into an administrative services agreement with Navios Holdings, expiring on May 28,2015, pursuant to which a subsidiary of Navios Holdings provides certain administrative management services to Navios Acquisition which include: rent,bookkeeping, audit and accounting services, legal and insurance services, administrative and clerical services, banking and financial services, advisoryservices, client and investor relations and other. Navios Holdings is reimbursed for reasonable costs and expenses incurred in connection with the provisionof these services. For the years ended December 31, 2011 and 2010, the expenses charged by Navios Holdings for administrative services were $1.5 millionand $0.4 million, respectively. The remaining balance of $2.7 million and $1.5 million of general and administrative expenses for the years endedDecember 31, 2011 and 2010, respectively, related to legal and professional fees including audit fees.Share-based compensation: On June 11, 2008, Navios Holdings transferred 290,000 Sponsor Units to our officers and directors. EachSponsor Unit consisted of one warrant and one share of common stock and they vested only upon a successful business combination. As such, on May 28,2010, we recorded an expense of $2.1 million representing the fair value of the units on that date with equal increase in our Additional Paid in Capital. Therewere no share based compensation for the year ended December 31, 2011.Transaction costs: On September 10, 2010, we completed the VLCC Acquisition and we incurred certain expenses directly related tosuch acquisition that amounted to $8.0 million. From the $8.0 million, $2.4 million was related to various audit, legal and consulting fees and $5.6 millionwas related to the fair value of 3,000 shares of preferred stock issued to an independent third party holder in connection with the payment of certainconsultant and advisory fees. There were no transaction costs for the year ended December 31, 2011.Depreciation and Amortization: Depreciation and amortization increased by $28.5 million to $38.6 million for the year endedDecember 31, 2011 as compared to $10.1 million for the year ended December 31, 2010. The increase of $28.5 million was attributable to: (a) an increase indepreciation expense of $23.9 million due to the acquisitions of the vessel Nave Cielo (ex. Colin Jacob) on June, 2010, Nave Ariadne (ex. Ariadne Jacob) onJuly 2010, seven VLCCs on September 10, 2010, of which the Shinyo Kieran was delivered in June 2011, the vessel Nave Cosmos on October 2010, the NavePolaris in January 2011, the Buddy and the Bull in July 2011 and the Nave Andromeda in November 2011; and (b) an increase in amortization expense of$4.6 million due to the favorable and unfavorable lease terms that were recognized in relation to the acquisition of the rights on the time charter-out contractsof the vessels. Depreciation of vessel is calculated using an estimated useful life of 25 years for the date the vessel was originally delivered from the shipyard.Intangible assets are amortized over the contract periods, which range from 3.17 to 15.00 years.Prepayment penalties and write-off deferred financing costs: Prepayment penalties and write-off of deferred financing costs amounted toapproximately $0.9 million for the year ended December 31, 2011 compared to $5.4 million for the year ended December 31, 2010.For the year ended December 31, 2011, an amount of $0.9 million of deferred financing costs was written-off in relation to thecancellation of certain committed credit. 57 Table of ContentsFor the year ended December 31, 2010, following the issuance of the Existing Notes and net proceeds raised of $388.9 million, loanfacilities, that previously secured the six VLCC vessels, were fully repaid, and as a result deferred finance costs related to these facilities of $2.9 million, werewritten off and prepayment fees of $2.5 million were paid.Interest Income: Interest income for year ended December 31, 2011 increased by $0.5 million to $1.4 million compared to $0.9 millionfor the year ended December 31, 2010.Interest expense and finance cost, net: Interest expense and finance cost, net for the year ended December 31, 2011 increased by$32.5 million to $43.2 million, as compared to $10.7 million for the year ended December 31, 2010. The increase was due to: (a) the increase in averageoutstanding loan balance to $327.2 million in the year ended December 31, 2011 from $185.7 million in the year ended December 31, 2010; (b) the fulleffect of the Existing Notes which were issued on October 21, 2010; and (c) the effect of the Additional Notes, which were issued on May 26, 2011. As ofDecember 31, 2011 and 2010, the outstanding loan balance under Navios Acquisition’s credit facilities was $885.4 million and $721.8 million, respectively,and the weighted average interest rate as of December 31, 2011 and 2010 was 3.16% and 3.27%, respectively.Other (expense)/ income, net: Other (expense)/ income, net decreased to a $0.4 million expense for the year ended December 31, 2011compared to $0.4 million income for the same period in 2010. The decrease of $0.8 million was mainly attributable to: (a) $0.5 million of claim reserves; and(b) $0.3 million decrease in miscellaneous income.Year Ended December 31, 2010 Compared to the Year Ended December 31, 2009The following table presents consolidated revenue and expense information for the years ended December 31, 2010 and 2009. Thisinformation was derived from the audited consolidated financial statements of Navios Acquisition for the respective periods. (in thousands of U.S. dollars) Year endedDecember 31,2010 Year endedDecember 31,2009 Revenue $33,568 $— Time charter expenses (355) — Management fees (9,752) — General and administrative expenses (1,902) (994) Shared based compensation (2,140) — Transaction costs (8,019) — Depreciation and amortization (10,120) — Prepayment penalties & write-off deferred financing costs (5,441) — Interest income 862 346 Interest expenses and finance cost, net (10,651) — Other income, net 404 — Net loss $(13,546) $(648) Set forth below are selected historical and statistical data for Navios Acquisition for each of the years ended December 31, 2010 and2009 that we believe may be useful in better understanding Navios Acquisition’s financial position and results of operations. Year endedDecember 31,2010 Year endedDecember 31,2009 FLEET DATA Available days 1,104 — Operating days 1,096 — Fleet utilization 99.3% — Vessels operating at period end 9 — AVERAGE DAILY RESULTS Time Charter Equivalent per day $30,087 $— 58(1)(2)(3)(4) Table of Contents(1)Available days: Available days is the total number of days a vessel is controlled by a company less the aggregate number of days that the vessel is off-hire due to scheduled repairs or repairs under guarantee, vessel upgrades or special surveys. The shipping industry uses available days to measure thenumber of days in a period during which vessels should be capable of generating revenues.(2)Operating days: Operating days is the number of available days in a period less the aggregate number of days that the vessels are off-hire due to anyreason, including lack of demand or unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in aperiod during which vessels actually generate revenues.(3)Fleet utilization: Fleet utilization is obtained by dividing the number of operating days during a period by the number of available days during theperiod. The shipping industry uses fleet utilization to measure a company’s efficiency in finding suitable employment for its vessels and minimizingthe amount of days that its vessels are off-hire for reasons other than scheduled repairs or repairs under guarantee, vessel upgrades, special surveys orvessel positioning.(4)Time Charter Equivalent: Time Charter Equivalent is defined as voyage and time charter revenues less voyage expenses during a period divided by thenumber of available days during the period. The TCE rate is a standard shipping industry performance measure used primarily to present the actualdaily earnings generated by vessels on various types of charter contracts for the number of available days of the fleet.For the year ended December 31, 2010, Navios Acquisition had 1,104 available days, after it took delivery of the vessel Colin Jacob onJune 30, 2010, Ariadne Jacob on July 2, 2010, six VLCCs on September 10, 2010 and the vessel Nave Cosmos on October 27, 2010. There were no availableor operating days in the comparative period in 2009, since Navios Acquisition was in a development stage.Revenue: Time charter revenues amounted to approximately $33.6 million for the year ended December 31, 2010 compared to $0 for theyear ended 2009. Following the delivery of six VLCC vessels in September 2010, the delivery of the product tankers Colin Jacob in June 2010, AriadneJacob in July 2010 and Nave Cosmos in October 2010, we had 1,104 available days for the year ended December 31, 2010, at a TCE rate of $30,087. Therewere no operations in the corresponding period in 2009.Time Charter Expenses: Time charter expenses amounted to $0.4 million for the year ended December 31, 2010 compared to $0 for theyear ended December 31, 2009.Time charter expenses comprise brokerage commissions and other miscellaneous expenses. Time charter expenses are expensed over theperiod of the time charter.Management Fees: Total management fees for the year ended December 31, 2010 amounted to $9.8 million compared to $0 for the yearended December 31, 2009. Pursuant to a Management Agreement dated May 28, 2010, a subsidiary of Navios Holdings, provides for five years from theclosing of the Product and Chemical Tanker Acquisition, commercial and technical management services to Navios Acquisition’s vessels for a daily fee of$6,000 per owned MR2 product tanker and chemical tanker vessel, $7,000 per owned LR1 product tanker vessel and $10,000 per VLCC vessel for the firsttwo years with the fixed daily fees adjusted for the remainder of the term based on then-current market fees. This daily fee covers all of the vessels’ operatingexpenses, other than certain fees and costs. During the remaining three years of the term of the Management Agreement, Navios Acquisition expects it willreimburse Navios Holdings for all of the actual operating costs and expenses it incurs in connection with the management of its fleet. Actual operating costsand expenses will be determined in a manner consistent with how the initial fixed fees were determined. Drydocking expenses will be fixed under thisagreement for up to $0.3 million per vessel chemical LR1 and MR2 product and will be reimbursed at cost for VLCC vessels.General and Administrative Expenses: Total general and administrative fees for the year ended December 31, 2010 amounted to$1.9 million compared to $1.0 million for the year ended December 31, 2009. On May 28, 2010, Navios Acquisition entered into an administrative servicesagreement with Navios Holdings, expiring on May 28, 2015, pursuant to which a subsidiary of Navios Holdings provides certain administrative managementservices to Navios Acquisition which include: rent, bookkeeping, audit and accounting services, legal and insurance services, administrative and clericalservices, banking and financial services, advisory services, client and investor relations and other. Navios Holdings is reimbursed for reasonable costs andexpenses incurred in connection with the provision of these services. For the year ended December 31, 2010, the expenses charged by Navios Holdings foradministrative services were $0.4 million. The remaining balance of $1.5 million of general and administrative expenses for the year ended December 31,2010 related to legal and professional fees including audit fees. 59 Table of ContentsShare based compensation: On June 11, 2008, Navios Holdings transferred 290,000 Sponsor Units to our officers and directors. EachSponsor Unit consisted of one warrant and one share of common stock and they vested only upon a successful business combination. As such, on May 28,2010, we recorded an expense of $2.1 million representing the fair value of the units on that date with equal increase in our Additional Paid in Capital.Transaction costs: On September 10, 2010, we completed the VLCC Acquisition and we incurred certain expenses directly related tosuch acquisition that amounted to $8.0 million. From the $8.0 million, $2.4 million is related to various audit, legal and consulting fees and $5.6 million isrelated to the fair value of 3,000 shares of preferred stock issued to an independent third party holder in connection with the payment of certain consultantand advisory fees.Depreciation and Amortization: Depreciation and amortization amounted to $10.1 million for the year ended December 31, 2010compared to $0 million for the year ended December 31, 2009. Of the total amount of $10.1 million, $9.1 million was related to depreciation of vessels, and$1.0 million was related to net amortization of intangible assets and liabilities associated with the acquisition of the VLCC vessels. Depreciation of vessels iscalculated using an estimated useful life of 25 years from the date the vessel was originally delivered from the shipyard. Intangible assets are amortized overthe contract periods, which range from four to ten years.Prepayment penalties and write-off deferred financing costs: Prepayment penalties and write-off of deferred financing costs amounted toapproximately $5.4 million for the year ended December 31, 2010 compared to $0 million for the year ended December 31, 2009. Following the issuance ofthe Existing Notes and net proceeds raised of $388.9 million, loan facilities, that previously secured the six VLCC vessels, were fully repaid, and as a resultdeferred finance costs related to these facilities of $2.9 million, were written off and prepayment fees of $2.5 million were paid.Interest Income: Interest income for year ended December 31, 2010 amounted to $0.9 million compared to $0.3 million for the yearended December 31, 2009. The increase in interest income of $0.6 million was due to the investment of the net proceeds of Navios Acquisition’s publicoffering, including amounts in the trust account.Interest Expense and Finance Cost, Net: Interest expense and finance cost, net amounted to $10.7 million for the year endedDecember 31, 2010 compared to $0 for the year ended December 31, 2009. Interest expense and finance cost for the year ended December 31, 2010, related to$6.8 million of accrued bond coupon expenses and the balance related to interest expense and finance costs in relation to our existing facilities. Theweighted average loan for the year ended December 31, 2010 was $185.7 million and the weighted average interest rate was 3.27%.Other income, net: Other income for the year ended December 31, 2010 was $0.4 million compared to $0 for the same period in 2009.B. Liquidity and Capital Resources and UsesOur initial liquidity needs were primarily met through our IPO and private placement of warrants which took place in 2008 and generatedgross proceeds of $260.6 million. Our primary short-term liquidity needs are to fund general working capital requirements, drydocking expenditures, depositsfor vessels under construction, minimum cash balance maintenance as per our credit facility agreements and debt repayment, while our long-term liquidityneeds primarily relate to expansion and investment capital expenditures and other maintenance capital expenditures and debt repayment. Expansion capitalexpenditures are primarily for the purchase or construction of vessels to the extent the expenditures increase the operating capacity of or revenue generatedby our fleet, while maintenance capital expenditures primarily consist of drydocking expenditures and expenditures to replace vessels in order to maintainthe operating capacity of or revenue generated by our fleet. Investment capital expenditures are those capital expenditures that are neither maintenancecapital expenditures nor expansion capital expenditures. We anticipate that our primary sources of funds for our short-term liquidity needs will be cash flowsfrom operations and bank borrowings which we believe that will be sufficient to meet our existing short-term liquidity needs for at least the next 12 months.Generally, our long-term sources of funds will be from cash from operations, longterm bank borrowings and other debt or equity financings. We expect thatwe will rely upon external financing sources, including bank borrowings, to fund acquisitions and expansion and investment capital expenditures. Wecannot assure you that we will be able to raise the size of our credit Facilities or obtaining additional funds on favorable terms.On November 19, 2010, the Company completed the public offering of 6,500,000 shares of common stock at $5.50 per share and raisedgross proceeds of $35.8 million. The net proceeds of this offering, including the underwriting discount of $1.8 million and excluding offering costs of $0.6million were approximately $34.0 million.Navios Acquisition finances its capital requirements with cash flows from operations, equity contributions from stockholders, bank loansand the issuance of the Existing Notes and Additional Notes. Main uses of funds have been capital expenditures for the acquisition of new vessels,expenditures incurred in connection with ensuring that the owned vessels 60 Table of Contentscomply with international and regulatory standards, repayments of bank loans and payments of dividends. Navios Acquisition on December 29, 2011 enteredinto loan agreements to finance the three newbuild product tankers scheduled to be delivered in 2014, acquired in January 2012, see “Long Term DebtObligations and Credit Arrangements”.Cash flows for the year ended December 31, 2011 compared to the year ended December 31, 2010:The following table presents cash flow information for the years ended December 31, 2011 and 2010. This information was derived fromthe audited consolidated statement of cash flows of Navios Acquisition for the respective periods. (Expressed in thousands of U.S. dollars) Year EndedDecember 31,2011 Year EndedDecember 31,2010 Net cash provided by operating activities $67,972 11,479 Net cash used in investing activities (229,516) (104,781) Net cash provided by financing activities 141,484 154,575 Change in cash and cash equivalents $(20,060) 61,273 Cash provided by operating activities for the year ended December 31, 2011 as compared to the year ended December 31, 2010:Net cash provided by operating activities increased by $56.5 million to $68.0 million for the year ended December 31, 2011 as comparedto $11.5 million for the same period in 2010. The increase is analyzed as follows:The net loss for the year ended December 31, 2011 was $3.9 million compared to $13.5 million loss for the year ended December 31,2010. In determining net cash provided by operating activities for the years ended December 31, 2011, net loss was adjusted for the effect of depreciation andamortization of $38.6 million, $3.2 million for amortization and write-off of deferred finance fees and $0.6 million for the amortization of drydocking costs.For the period ended December 31, 2010, net income was also adjusted for the effects of certain non-cash items, including depreciation and amortization of$10.1 million, $3.5 million amortization and write-off of deferred financing cost, $5.6 million for non cash transaction costs and $2.1 million for share basedcompensation.Amounts due to related parties increased by $37.5 million from $6.1 million for the year ended December 31, 2010 to $43.6 million forthe year ended December 31, 2011. The increase was due to: (i) administrative fees payable to the Manager of $0.9 million; (ii) managements fees payable tothe Manager of $18.1 million; (iii) $16.0 million costs related to vessel pre-building expenses and dry dockings; (iv) $0.1 million related to accrued interest;and (v)$2.4 million related to insurances.Capitalized dry dock costs incurred in the year ended December 31, 2011 were $7.8 million and related to the dry dock and specialsurvey costs incurred for two of the VLCC tanker vessels of the fleet.Accounts receivable increased by $2.0 million to $6.5 million for the year ended December 31, 2011, from $4.5 million for the yearended December 31, 2010 and were related to receivables from charterers.Restricted cash from operating activities decreased by $0.5 million for the year ended December 31, 2010 and related to the cash held inretention account for the payment of interest under our credit facilities.Accounts payable decreased by $2.4 million from $3.4 million for the year ended December 31, 2010 to $1.0 million for the year endedDecember 31, 2011. This decrease was attributable to the decrease in legal and professional fees of $2.3 million and the $0.6 million decrease in othercreditors which were partially offset by the $0.5 million increase in broker’s commission payable.Prepaid expenses increased by $0.1 million to $0.5 million for the year ended December 31, 2011 from $0.4 million for the year endedDecember 31, 2010, due to a decrease in prepaid vessel operating expenses On November 4, 2011, with respect to the shares held in escrow for the VLCCAcquisition, a total of 1,160,963 shares of common stock were released to the sellers and the remaining 217,159 were returned to Navios Acquisition insettlement of representations and warranties attributable to the sellers. The returned shares were cancelled on December 30, 2011. The value of the 217,159shares that were returned was $1.2 million.Accrued expenses increased by $6.3 million to $15.5 million for the year ended December 31, 2011, from $9.2 million on December 31,2010. The increase was attributable to a $1.2 million increase in accrued interest, $4.2 million increase in other accrued expenses due to increase in accrueddeferred finance fees incurred in relation to credit facilitites entered to 61 Table of Contentspartially finance the acquisition of three MR2 vessels, $0.4 million increase in voyage expenses and $0.5 million increase due to the straight line effect ofrevenue of the vessels acquired in July 2011.Other long term assets increased by $1.3 million for the year ended December 31, 2011 and $0 million of the comparative period in2010. On October 28, 2011, the charter contract of the Nave Ariadne (ex Ariadne Jacob) and Nave Cielo (ex Colin Jacob) were terminated prior to theiroriginal expiration in June 2013. Navios Acquisition entered into certain settlement agreements with charterers that provide for an amount of approximately$5.0 million to compensate for the early termination of the charters and to cover outstanding receivables, out of which $2.0 million will be settled ininstallments until June 2015.Deferred voyage revenue primarily relates to cash received from charterers prior to it being earned. These amounts are recognized asrevenue over the voyage or charter period. Deferred voyage revenue increased by $0.5 million to $3.3 million for the year ended December 31, 2011 from$2.8 million on December 31, 2010.Long Term Liabilities increased by $0.5 million. Lond term liabilities are related to the long term portion of the straight line effect ofrevenue of the vessels acquired in July 2011.Cash used in by investing activities for the year ended December 31, 2011 as compared to the year ended December 31, 2010:Net cash used in investing activities increased by $124.7 million to $229.5 million at December 31, 2011 from $104.8 million atDecember 31, 2010 mainly as a result of fleet expansion.Net cash used in investing activities resulted from: (a) $143.2 million paid for the acquisition of the Nave Polaris in January 2011, theShinyo Kieran in June 2011, the Buddy and the Bull in July 2011 and the Nave Andromed in November 2011; (b) $79.7 million paid as a deposits for theacquisition of the vessels that will be delivered to Navios Acquisition at various dates through October 2014; and (c) $10.4 million of intangible assets andliabilities associated with the acquisition of two MR2 vessels in July 2011. The $233.3 million was partially offset by a $3.8 million decrease in restrictedcash.For the year ended December 31, 2010 net cash used in investing activities increased as a result of: (a) a $76.4 million refund to NaviosHoldings, which made the first equity installment payment on the vessels acquired in Navios Acquisition’s initial vessel acquisition; (b) $89.9 million paidfor the acquisition of the Colin Jacob, the Ariadne Jacob and the Nave Cosmos that were delivered on June 29, 2010, July 2, 2010 and October 27, 2010,respectively; (c) $102.0 million paid for the VLCC Acquisition, net of cash acquired through working capital; and (d) $90.2 million paid as a deposits for theacquisition of the vessels that will be delivered to Navios Acquisition at various dates through December 2012. The increase was partially offset by therelease of $251.5 million of investments from the trust account and the release of $2.3 million from the restricted cash.Cash provided by financing activities for the year ended December 31, 2011 as compared to the year ended December 31, 2010:Net cash provided by financing activities decreased by $13.1 million to $141.5 million at December 31, 2011 from $154.6 million atDecember 31, 2010.Net cash provided by financing activities for the year ended December 31, 2011 was $141.5 million. Net cash provided by financingactivities resulted from a $252.1 million loan proceeds net of deferred finance fees and a $33.2 million proceeds from related party loan, net of deferredfinance fees. This increase was partially offset by: (a) $1.7 million decrease in restricted cash; (b) $126.3 million for loan repayments; (c) $6.0 millionrepayment of a loan from related party; and (d) $9.8 million dividends paid.Net cash provided by financing activities for the year ended December 31, 2010 was $154.6 million. Net cash provided by financingactivities resulted from: (a) $556.7 million loan proceeds net of deferred finance fees; (b) $75.0 million from net proceeds from the warrant exercise program;(c) $39.6 million proceeds from related party loan; and (d) $33.4 million net proceeds from the equity offering of 6,500,000 shares that was completed onNovember 19, 2010. This increase was offset by: (a) $99.3 million paid to holders of 10,021,399 shares of our common stock who voted against the initialvessel acquisition and elected to redeem their shares; (b) $8.9 million disbursed to the underwriters of Navios Acquisitions initial public offering for deferredfees; (c) $0.3 million decrease in restricted cash; (d) $412.3 million for loan repayments, of which, $410.5 million is associated with facilities acquired in theVLCC Acquisition; (e) $27.6 million repayment of a loan from related party; and (f) $1.8 million costs related to the issuance of Series B convertiblepreferred stock .Cash flows for the year ended December 31, 2010 compared to the year ended December 31, 2009:The following table presents cash flow information for the years ended December 31, 2010 and 2009. This 62 Table of Contentsinformation was derived from the audited consolidated statement of cash flows of Navios Acquisition for the respective periods. (Expressed in thousands of U.S. dollars) Year EndedDecember 31,2010 Year EndedDecember 31,2009 Net cash provided by/(used in) operating activities $11,479 $(623) Net cash (used in)/provided by investing activities (104,781) 708 Net cash provided by financing activities 154,575 — Change in cash and cash equivalents $(61,273) $85 Cash provided by/ (used in) operating activities for the year ended December 31, 2010 as compared to the year ended December 31, 2009:Net cash provided by operating activities increased by $12.1 million to $11.5 million for the year ended December 31, 2010 as comparedto a negative $0.6 million for the same period in 2009. The increase is analyzed as follows:The net loss for the year ended December 31, 2010 was $13.5 million compared to $0.6 million loss for the year ended December 31,2009. In determining net cash provided by operating activities for the years ended December 31, 2010, net loss was adjusted for the effect of depreciation andamortization of $10.1 million, $5.6 million for non cash transaction costs, $2.1 million for share based compensation and $3.5 million for amortization andwrite-off of deferred finance fees. There were no adjustments for the comparative period in 2009.Amounts due to related parties increased by $5.6 million from $0 for the year ended December 31, 2009 to $6.1 million for the yearended December 31, 2010 (including $0.5 million payable to Navios Holdings on the unspacking date). The increase was due to: (i) administrative feespayable to the Manager of $0.4 million; (ii) management fees payable to the Manager of $2.7 million; and (iii) $2.5 million costs related to vessel pre-building expenses.Restricted cash from operating activities increased by $0.3 million for the year ended December 31, 2010 and relates to the cash held inretention account for the payment of interest under our credit facilities.Accounts payable increased by $3.4 million from $0.1 million for the year ended December 31, 2009 to $3.5 million for the year endedDecember 31, 2010. This increase was mainly attributable to the fact that Navios Acquisition had no operations in 2009. Accounts payable mainly consistedof $2.6 million of legal and professional fees and $0.9 million of brokers and other creditors.Accounts receivable increased to $4.5 million for the year ended December 31, 2010, from $0 for the year ended December 31, 2009 andwere mainly related to receivables from charterers. There were no receivables from charterers for the same period in 2009, as Navios Acquisition had notcommenced its operations.Prepaid expenses and other current assets increased by $0.3 million to $0.4 million for the year ended December 31, 2010 (includingprepaid expenses and other current assets obtained as a result of the VLCC Acquisition amounting to $3.5 million) from $0.1 million for the year endedDecember 31, 2009.Accrued expenses increased by $8.8 million to $9.2 million for the year ended December 31, 2010 (including accrued expenses obtainedas a result of the VLCC Acquisition and accrued expenses obtained as a result of the Product and Chemical Tanker Acquisition from Navios Holdingsamounting to $12.7 million), from $0.4 million on December 31, 2009.Deferred voyage revenue primarily relates to cash received from charterers prior to it being earned. These amounts are recognized asrevenue over the voyage or charter period. Deferred voyage revenue increased by $2.8 million to $2.8 million for the year ended December 31, 2010(including deferred revenue obtained as a result of the VLCC Acquisition amounting to $2.4 million) from $0 on December 31, 2009.Cash (used in)/provided by investing activities for the year ended December 31, 2010 as compared to the year ended December 31, 2009:Net cash used in investing activities increased by $105.5 million to $104.8 million at December 31, 2010 from $0.7 million inflow atDecember 31, 2009.Net cash provided by investing activities increased as a result of the release of $251.5 million of investments from the trust account andthe release of $2.3 million from the restricted cash. This increase of $253.8 million was partially offset by: (a) $76.4 million refund to Navios Holdings, whichmade the first equity installment payment on the vessels acquired in Navios Acquisition’s initial vessel acquisition, (b) $89.9 million paid for the acquisitionof the Colin Jacob, the Ariadne Jacob and the 63 Table of ContentsNave Cosmos that were delivered on June 29, 2010, July 2, 2010 and October 27, 2010, respectively; (c) $90.2 million paid as a deposits for the acquisitionof the vessels that will be delivered to Navios Acquisition at various dates through December 2012; and (d) $102.0 million paid for the VLCC Acquisition,net of cash acquired through working capital.Net cash provided by investing activities for year ended December 31, 2009 resulted from an $0.8 million decrease in the balance of thetrust account as interest earned was released to fund Navios Acquisition’s working capital requirements.Cash provided by financing activities for the year ended December 31, 2010 as compared to the year ended December 31, 2009:Net cash provided by financing activities for the year ended December 31, 2010 was $154.6 million. There were no financing activitiesfor the same period in 2009.Net cash provided by financing activities resulted from: (a) $556.3 million from loan proceeds net of deferred finance fees;(b) $75.0 million from net proceeds from the warrant exercise program; (c) $40.0 million proceeds from related party loan; and (d) $33.4 million net proceedsfrom the equity offering of 6,500,000 shares that was completed on November 19, 2010. This increase was offset by: (a) $99.3 million paid to holders of10,021,399 shares of our common stock who voted against the initial vessel acquisition and elected to redeem their shares; (b) $8.9 million disbursed to theunderwriters of Navios Acquisitions initial public offering for deferred fees; (c) $0.3 million decrease in restricted cash; (d) $412.3 million for loanrepayments, of which, $410.5 million is associated with facilities acquired in the VLCC Acquisition; (e) $27.6 million repayment of a loan from related party;and (f) $1.8 million costs related to the issuance of Series B convertible preferred stock.Reconciliation of Adjusted EBITDA to Net Cash from Operating Activities Expressed in thousands of U.S. dollars Year EndedDecember 31,2011(unaudited) Year EndedDecember 31,2010(unaudited) Net Cash from Operating Activities $67,972 $11,479 Net increase in operating assets 12,972 1,579 Net increase in operating liabilities (42,342) (5,269) Net interest cost 41,751 9,789 Share Based Compensation — (2,140) Non cash transaction costs — (5,619) Amortization of deferred finance cost (2,253) (518) Write-off of deferred finance costs 935 (2,938) EBITDA $77,165 $6,363 Share Based Compensation — 2,140 Transaction cost — 8,019 Write-off deferred finance costs (935) 5,441 Adjusted EBITDA 78,100 $21,963 (1) Year endedDecember 31,2011 Year endedDecember 31,2010 Net cash provided by /(used in) operating activities 67,972 $11,479 Net cash used in investing activities (229,516) $(104,781) Net cash provided by financing activities 141,484 $154,575 EBITDA represents loss plus interest expenses and finance cost plus depreciation and amortization and income taxes.Adjusted EBITDA for the year ended December 31, 2011, represents EBITDA excluding the write-off of $0.9 million of the deferredfinance costs that were incurred in connection with the cancellation of committed credit. 64 Table of ContentsAdjusted EBITDA for the year ended December 31, 2010, excludes $8.0 million of transaction costs for the VLCC acquisition, $5.4million of prepayment fees and write-off of deferred financing costs and $2.1 million of share based compensation.EBITDA and Adjusted EBITDA are presented because Navios Acquisition believes that EBITDA and Adjusted EBITDA are bases uponwhich liquidity can be assessed and present useful information to investors regarding Navios Acquisition’s ability to service and/or incur indebtedness, paycapital expenditures, meet working capital requirements and pay dividends. EBITDA and Adjusted EBITDA are “non-GAAP financial measures” and shouldnot be considered a substitute for net income, cash flow from operating activities and other operations or cash flow statement data prepared in accordancewith accounting principles generally accepted in the United States or as a measure of profitability or liquidity.While EBITDA and Adjusted EBITDA are frequently used as a measure of operating results and the ability to meet debt servicerequirements, the definition of EBITDA and Adjusted EBITDA used here may not be comparable to that used by other companies due to differences inmethods of calculation.Long-Term Obligations and Credit Arrangements8 5/8% First Priority Ship Mortgage NotesOn October 21, 2010, Navios Acquisition and Navios Acquisition Finance, completed the sale of the $400.0 million of Existing Notes.Following the issuance of the Existing Notes and net proceeds raised of $388.9 million, the securities on six VLCC under their loan facilities were fullyreleased in connection with the full repayment of the facilities totalling $343.8 million, $27.6 million was used to partially repay the $40.0 million NaviosHoldings’ credit facility and the remaining proceeds were used for working capital purposes. On May 26, 2011, Navios Acquisition and Navios AcquisitionFinance completed the sale of the $105.0 million of Additional Notes. The net proceeds of the offering of $104.6 million were used to partially finance theacquisition of the VLCC delivered on June 8, 2011 and to repay the $80.0 million revolving credit facility with Marfin Egnatia Bank. The Existing Notesand the Additional Notes are secured by first priority ship mortgages on seven VLCC vessels owned by certain subsidiary guarantors.The Existing Notes and the Additional Notes are fully and unconditionally guaranteed on a joint and several basis by all of the Company’ssubsidiaries with the exception of Navios Acquisition Finance. The subsidiary guarantees are full and unconditional, as that term is defined by Regulation S-X Rule 3-10, except for the fact that the indenture provides for an individual subsidiary’s guarantee to be automatically released in certain customarycircumstances, such as when a subsidiary is sold or all assets are sold, the capital stock is sold, when the subsidiary is designated as an “unrestrictedsubsidiary” for purposes of the bond indenture upon liquidation or dissolution or upon legal or covenant defeasance or satisfaction and discharge of theExisting Notes and the Additional Notes.The Existing Notes and the Additional Notes contain covenants which, among other things, limit the incurrence of additional indebtedness,issuance of certain preferred stock, the payment of dividends, redemption or repurchase of capital stock or making restricted payments and investments,creation of certain liens, transfer or sale of assets, entering into certain transactions with affiliates, merging or consolidating or selling all or substantially allof Company’s properties and assets and creation or designation of restricted subsidiaries. We filed a registration statement for the exchange of the ExistingNotes which became effective on January 31, 2011. On February 2, 2011, we commenced the exchange offer which terminated on March 2, 2011. As a resultof such exchange offer, 100% of the outstanding Existing Notes were exchanged. A registration statement for the exchange of Additional Notes was filed onJuly 28, 2011 and was declared effective on August 22, 2011. On August 24, 2011, we commenced the exchange offer which terminated on September 23,2011. As a result of such exchange offer, 100% of the outstanding Additional Notes were exchanged.Following the consummation of the exchange offer for the Additional Notes on September 23, 2011, the Additional Notes and the ExistingNotes have the same CUSIP number.Credit FacilitiesDeutsche Schiffsbank AG, Alpha Bank A.E., and Credit Agricole Corporate and Investment Bank: As a result of its initial vesselacquisition, Navios Acquisition assumed a loan agreement dated April 7, 2010, with Deutsche Schiffsbank AG, Alpha Bank A.E. and Credit AgricoleCorporate and Investment Bank of up to $150.0 million (divided in six equal tranches of $25.0 million each) to partially finance the construction of twochemical tankers and four product tankers. Each tranche of the facility is repayable 65 Table of Contentsin 12 equal semi-annual installments of $0.75 million each with a final balloon payment of $16.75 million to be repaid on the last repayment date. Therepayment of each tranche starts six months after the delivery date of the respective vessel which that tranche finances. It bears interest at a rate of LIBOR plus250 bps. The loan also requires compliance with certain financial covenants. As of December 31, 2011, $115.8 million was outstanding under this facilityand $31.2 million remains to be drawn.BNP Paribas SA Bank and DVB Bank S.E.: As a result of the initial vessel acquisition, Navios Acquisition assumed a loan agreementdated April 8, 2010, of up to $75.0 million (divided in three equal tranches of $25.0 million each) for the purpose of part-financing the purchase price of threeproduct tankers. Each of the tranche is repayable in 12 equal semi-annual installments of $0.75 million each with a final balloon payment of $16.75 millionto be repaid on the last repayment date. The repayment date of each tranche starts six months after the delivery date of the respective vessel which thattranche finances. It bears interest at a rate of LIBOR plus 250 bps. The loan also requires compliance with certain financial covenants. As of December 31,2011, $36.2 million was outstanding under this facility and $38.8 million remains to be drawn.DVB Bank S.E. and ABN AMRO Bank N.V.: On May 28, 2010, Navios Acquisition entered into a loan agreement with DVB Bank S.E. andABN AMRO BANK N.V. of up to $52.0 million (divided into two tranches of $26.0 million each) to partially finance the acquisition costs of two producttanker vessels. The repayment of each tranche starts three months after the delivery date of the respective vessel. It bears interest at a rate of LIBOR plus 275bps. The loan also requires compliance with certain financial covenants. On December 29, 2011, Navios Acquisition prepaid $2.5 million in relation to anamendment to its credit facility. After the prepayment, outstanding amount under each tranche is repayable in five quarterly installments of $0.2 millioneach, 13 equal quarterly installments of $0.44 million each, with a final balloon payment of $15.2 million to be repaid on the last repayment date. As ofDecember 31, 2011, the facility was fully drawn, and the outstanding amount under this facility was $44.1 million.Marfin Egnatia Bank: In September 2010, Navios Acquisition (through four subsidiaries) entered into a $80.0 million revolving creditfacility with Marfin Egnatia Bank to partially finance the acquisition and construction of vessels and for investment and working capital purposes. The loansare secured by assignments of construction contracts and guarantees, as well as security interests in related assets. The loan matures on September 7, 2012(with available one-year extensions upon Navios Acquisition’s request and the bank’s consent) and bears interest at a rate of LIBOR plus 275 bps. As ofDecember 31, 2011, the outstanding amount under this facility was $24.3 million that was used to partially finance the acquisition cost of two product tankervessels and $55.7 million remains undrawn. Pursuant to an agreement dated December 28, 2011, the maturity of the facility was extended, to match thedelivery of the vessels.Eurobank Ergasias S.A.: On October 26, 2010, Navios Acquisition entered into a loan agreement with Eurobank Ergasias S.A. of up to$52.2 million (divided into two tranches of $26.1 million each) to partially finance the acquisition costs of two product tanker vessels. Each tranche of thefacility is repayable in 32 equal quarterly installments of $0.35 million, each with a final balloon payment of $15.1 million, to be repaid on the lastrepayment date. The repayment of each tranche starts three months after the delivery date of the respective vessel. The loan bears interest at a rate of LIBORplus (i) plus 250 bps for the period prior to the delivery date in respect of the vessel being financed, and (ii) thereafter 275 bps. The loan also requirescompliance with certain financial covenants. The outstanding amount under this facility as of December 31, 2011 was $46.5 million and $5.7 millionremains to be drawn.Eurobank Ergasias S.A.: On December 6, 2010, Navios Acquisition entered into a loan agreement with Eurobank Ergasias S.A. of up to$52.0 million (divided into two tranches of $26.0 million each) to partially finance the acquisition costs of two product tanker vessels. Each tranche of thefacility is repayable in 32 equal quarterly installments of $0.35 million each with a final balloon payment of $15.0, to be repaid on the last repayment date.The repayment of each tranche starts three months after the delivery date of the respective vessel. It bears interest at a rate of LIBOR plus 300 bps. The loanalso requires compliance with certain financial covenants. As of December 31, 2011, $18.2 million was outstanding under this facility ($9.1 million fromeach of the two tranches) and $33.8 million remain to be drawn.ABN AMRO BANK N.V.: On July 8, 2011, Navios Acquisition entered into a loan agreement with ABN AMRO Bank N.V of up to $55.1million (divided into two equal tranches) to partially finance the purchase price of two MR2 product tanker vessels. The total amount of $54.8 million wasdrawn under this facility. Each tranche of the facility is repayable in 12 quarterly installments of $0.75 million each and 12 quarterly installments of $0.57million each with a final balloon payment of $11.6 million to be repaid on the last repayment date. The repayment of each tranche started in October 2011and it bears interest at a rate of LIBOR plus 325 bps. The loan also requires compliance with certain financial covenants. As of December 31, 2011, $53.3million was outstanding under this loan agreement ($26.6 million from each of the two tranches), and no further amounts are available to be drawn. 66 Table of ContentsDVB Bank SE: On December 7, 2011, Navios Acquisition entered into a loan agreement with DVB Bank SE of up to $51.0 million(divided into two tranches of $25.5 million each) to partially finance the purchase price of two LR1 product tanker vessels. Each tranche of the facility isrepayable in 28 quarterly installments of $0.4 million each with a final balloon payment of $14.3 million to be repaid on the last repayment date. Therepayment starts three months after the delivery of the respective vessel and it bears interest at a rate of LIBOR plus 270 bps per annum. The loan also requirescompliance with certain financial covenants. As of December 31, 2011, $0 was drawn and outstanding under this loan agreement.NORDDEUTSCHE LANDESBANK GIROZENTRALE: On December 29, 2011, Navios Acquisition entered into a loan agreementwith NORDDEUTSCHE LANDESBANK GIROZENTRALE of up to $28.1 million to partially finance the purchase price of one MR2 product tanker vessel.The facility is repayable in 32 quarterly installments of $0.39 million each with a final balloon payment of $15.6 million to be repaid on the last repaymentdate. The repayment starts three months after the delivery of the vessel and it bears interest at a rate of LIBOR plus: (a) up to but not including the DrawdownDate of, 175bps per annum; (b) thereafter until, but not including, the tenth Repayment Date, 250 bps per annum; and (c) thereafter 300 bps per annum. Theloan also requires compliance with certain financial covenants. As of December 31, 2011, $0 was drawn and outstanding under this loan agreement.DVB Bank SE and Emporiki Bank of Greece S.A.: On December 29, 2011, Navios Acquisition entered into a loan agreement with DVBBank SE and Emporiki Bank of Greece S.A. of up to $56.3 million (divided into two tranches of $28.1 million each) to partially finance the purchase price oftwo MR2 product tanker vessels. Each tranche of the facility is repayable in 32 quarterly installments of $0.39 million each with a final balloon payment of$15.6 million to be repaid on the last repayment date. The repayment starts three months after the delivery of the respective vessel and it bears interest at arate of LIBOR plus: (a) up to but not including the Drawdown Date of, 175 bps per annum; (b) thereafter until, but not including, the tenth Repayment Date,250 bps per annum; and (c) thereafter 300 bps per annum. The loan also requires compliance with certain financial covenants. As of December 31, 2011, $0was drawn and outstanding under this loan agreement.Navios Holdings Credit Facility: In connection with the VLCC Acquisition, Navios Acquisition entered into a $40.0 million creditfacility with Navios Holdings. The $40.0 million facility has a margin of LIBOR plus 300 bps and a term of 18 months, maturing on April 1, 2012. Followingthe issuance of the Notes in October 2010, the Company prepaid $27.6 million of this facility. Pursuant to an amendment in October 2010, the facility will beavailable for multiple drawings up to a limit of $40.0 million. Pursuant to an agreement dated November 8, 2011, this facility was extended from April 2012to December 2014. As of December 31, 2011, the outstanding amount under this facility was $40.0 million and interest accrued under this facility is$0.1 million, is included under amounts due to related parties.The VLCC Acquisition Credit FacilitiesOn September 10, 2010, Navios Acquisition consummated the VLCC Acquisition. In connection with the acquisition of the VLCCvessels, it entered into, assumed and supplemented the VLCC Acquisition Credit Facilities described below. The VLCC Acquisition Credit Facilities werefully repaid and terminated with the proceeds of the Existing Notes on October 21, 2010.In connection with the full repayment of the VLCC facilities of $343.8 million Navios Acquisition paid prepayment fees and breakagecost of $2.5 million and wrote-off unamortized deferred financing costs of $2.9 million. The total amount of $5.4 million was expensed in the Statement ofOperations in the year ended December 31, 2010.On December 12, 2006, a loan of $82.9 million was obtained from HSH Nordbank AG. The loan was secured by the Shinyo Navigatortogether with security interests in related assets. The balance of the loan assumed at closing was $56.1 million and was repayable in one installment of$2.2 million, one installment of $1.9 million, 12 installments of $2.0 million, eight installments of $1.5 million and four installments of $2.0 million after theprepayment of $8.0 million on September 13, 2010. Payments were to be made quarterly until the tenth anniversary of the date three months from thedrawdown date. The facility was amended on September 9, 2010, in connection with the closing of the VLCC Acquisition, and was guaranteed by theCompany. The amended terms included: (a) a new margin of 2.75%; (b) a financial covenant package similar to Navios Acquisition’s other facilityagreements; (c) the prepayment of $8.0 million held in a cash collateral account; and (d) a minimum value clause at 115% starting on June 30, 2011 and120% starting on December 31, 2011. A 1% fee on the outstanding balance of the facility as of September 10, 2010 was paid at closing. As of December 31,2010 the outstanding amount under this facility was $0 as the facility was repaid through the issuance of the Existing Notes on October 21, 2010. On September 5, 2007, a syndicated loan of $65.0 million was obtained from DVB Group MerchantBank (Asia) Ltd, BNP Paribas, CreditSuisse and Deutsche Schiffsbank AG. The loan was secured by the C. Dream together with security interests in related assets. The balance of the loan assumedat closing was $54.7 million and was repayable in one installment of $0.90 million, four installments of $0.95 million, four installments of $1,0 million, fourinstallments of $1.08 million, four installments of $1.15 million four installments of $1.2 million, seven installments of $1.25 million and a balloon paymentof $23.55 million payable together with the last installment. Payments were to be made quarterly until the 10th anniversary of the date three months from thedrawdown date. The facility was amended on September 10, 2010, in connection with the closing of the VLCC Acquisition, and was guaranteed by theCompany. The amended terms included (a) a new margin of 2.75%, (b) a financial covenant package similar to Navios Acquisition’s other facility agreementsand (c) a minimum value clause at 115% until December 31, 2011 and thereafter at 130%. A 1% fee on the outstanding balance of the facility as ofSeptember 10, 2010 was paid at closing. As of December 31, 2010 the outstanding amount under this facility was $0 as it was repaid through the 67 Table of Contentsissuance of the Existing Notes on October 21, 2010.On January 4, 2007, a syndicated loan of $86.8 million was obtained from DVB Group MerchantBank (Asia) Ltd, Credit Suisse andDeutsche Schiffsbank AG. The loan was secured by the Shinyo Ocean together with security interests in related assets. The balance of the loan assumed onSeptember 10, 2010 was $58.9 million and was repayable in three installments of $1.6 million, eight installments of $1.7 million, four installments of$1.8 million, four installments of $2.0 million, four installments of $2.1 million, three installments of $2.2 million and a balloon payment of $10.4 millionpayable together with the last installment. Payments are to be made quarterly until the tenth anniversary of the date three months from the drawdown date.The facility was amended on September 9, 2010, in connection with the closing of the VLCC Acquisition, and was guaranteed by the Company. Theamended terms included (a) a new margin of 2.75%, (b) a financial covenant package similar to Navios Acquisition’s other facility agreements and (c) aminimum value clause at 115% until December 31, 2011 and thereafter at 130%. A 1% fee on the outstanding balance of the facility as of September 10,2010 was paid at closing. The outstanding amount under this facility as of December 31, 2010 was $0 million, since it was repaid through the issuance of theExisting Notes on October 21, 2010.On January 4, 2007, a syndicated loan of $86.8 million was obtained from DVB Group Merchant Bank (Asia) Ltd, Credit Suisse andDeutsche Schiffsbank AG. The loan was secured by the Shinyo Kannika together with security interests in related assets. The balance of the loan assumed onSeptember 10, 2010 was $58.8 million and was payable in two installments of $1.6 million, four installments of $1.6 million, four installments of$1.7 million, four installments of $1.9 million, four installments of $2.0 million, four installments of $2.1 million, three installments of $2.2 million and aballoon payment of $12.1 million together with the last installment. Forty quarterly payments are to be made commencing on February 15, 2007. The facilitywas amended on September 9, 2010, in connection with the closing of the VLCC Acquisition, and was guaranteed by the Company. The amended termsincluded (a) a new margin of 2.75%, (b) financial covenant package similar to Navios Acquisition’s other facility agreements and (c) a minimum value clauseat 115% until December 31, 2011 and thereafter at 130%. A 1% fee on the outstanding balance of the facility as of September 10, 2010 was paid at closing.As of December 31, 2010 the outstanding amount under this facility was $0, as it was repaid through the issuance of the Existing Notes on October 21, 2010.On May 16, 2007, a syndicated loan in the amount of $62.0 million was obtained from DVB Group Merchant Bank (Asia) Ltd, CreditSuisse and Deutsche Schiffsbank AG. The loan was secured by the Shinyo Splendor together with security interests in related assets. The balance of the creditfacility on September 10, 2010 was $38.8 million and was repayable in three installments of $1.9 million, four installments of $2.1 million, four installmentsof $2.2 million and three installments of $2.4 million together with a balloon payment of $8.9 million. Payments were to be made for 28 quarters from thedate three months from the drawdown date. The facility was amended on September 9, 2010, in connection with the closing of the VLCC transaction and wasguaranteed by the Company. The amended terms included (a) a new margin of 2.75% applicable for tranche A and margin of 4% applicable for tranche B,(b) a financial covenant package similar to Navios Acquisition’s other facility agreements and (c) minimum value clause at 115% until December 31, 2011on a charter attached basis and thereafter at 130% on a charter free basis. A 1% fee on the outstanding balance of the facility as of September 10, 2010 waspaid at closing. As of December 31, 2010 the outstanding amount under this facility was $0, since the facility was repaid through the issuance of the ExistingNotes on October 21, 2010.On March 26, 2010, a loan facility of $90.0 million was obtained from China Merchant Bank Co., Ltd. to finance the construction ofShinyo Saowalak. The balance of the loan facility as September 10, 2010 was $90.0 million. The loan was secured by the Shinyo Saowalak together withsecurity interests in related assets and was repayable by 12 installments of $1.8 million, 12 installments of $2.0 million and 16 installments of $2.8 million.The first repayment was to be made on September 21, 2010 with the last installment to be paid on the date falling 117 months after September 21, 2010. Thefacility was amended on September 9, 2010, in connection with the closing of the VLCC Acquisition, and was guaranteed by the Company. The amendedterms included a financial covenant package similar to Navios Acquisition’s other facility agreements. The outstanding amount under this facility as ofDecember 31, 2010 was $0, since the facility was paid in full on October 21, 2010 through the issuance of the Existing Notes.C. Research and development, patents and licenses, etc.Not applicable.D. Trend informationOur results of operations depend primarily on the charter hire rates that we are able to realize for our vessels, which depend on thedemand and supply dynamics characterizing the tanker market at any given time. For other trends affecting our business please see other discussions in “Item5-Operating and Financial Review and Prospects”. 68 Table of ContentsE. Off-Balance Sheet ArrangementsWe have no off-balance sheet arrangements that have or are reasonably likely to have, a current or future material effect on our financialcondition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.F. Contractual Obligations and ContingenciesThe following table summarizes our long-term contractual obligations as of December 31, 2011: Payments due by period (In thousands of U.S. dollars) Less than1 year 1-3 years 3-5 years More than5 years Total Long term debt obligations $11,928 $27,008 $72,803 $731,644 $843,383 Loans due to related parties $— $40,000 — — 40,000 Vessel deposits 271,638 41,152 — — 312,790 Total contractual obligations $283,566 $108,160 $72,803 $731,644 $1,196,173 1.The amount identified does not include interest costs associated with the outstanding credit facility which is based on LIBOR, plus the costs ofcomplying with any applicable regulatory requirements and a margin ranging from 1.75% to 3.25% per annum.2.The long-term debt contractual obligations includes in the amount shown for more than three and five years future principal payments of the drawnportion of credit facilities associated with the financing of the construction of the LR1 vessel, the Nave Estella, which was delivered to NaviosAcquisition’s fleet on January 20, 2012.3.The amount relates to the credit facility with Navios Holdings. The amount identified does not include interest costs associated with the outstandingcredit facility which is based on LIBOR, and a margin of 3.00% per annum.4.Future remaining contractual deposits of the ten MR2 product tanker vessels and the four LR1 product tanker vessels to be delivered in various datesthrough October 2014. 69 (1,2)(3)(4) Table of ContentsCritical Accounting PoliciesOur consolidated financial statements have been prepared in accordance with U.S. GAAP. The preparation of these financial statementsrequires us to make estimates in the application of our accounting policies based on the best assumptions, judgments and opinions of management.Following is a discussion of the accounting policies that involve a higher degree of judgment and the methods of their application that affect the reportedamount of assets and liabilities, revenues and expenses and related disclosure of contingent assets and liabilities at the date of our financial statements.Actual results may differ from these estimates under different assumptions or conditions.Critical accounting policies are those that reflect significant judgments or uncertainties, and potentially result in materially differentresults under different assumptions and conditions. For a description of all of our significant accounting policies, see Note 2 to the Notes to ConsolidatedFinancial Statements, included herein.Use of Estimates: The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to makeestimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the dates of thefinancial statements and the reported amounts of revenues and expenses during the reporting periods. On an on-going basis, management evaluates theestimates and judgments, including those related to uncompleted voyages, future drydock dates, the selection of useful lives for tangible assets, expectedfuture cash flows from long-lived assets to support impairment tests, provisions necessary for accounts receivables, provisions for legal disputes, andcontingencies. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable underthe circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparentfrom other sources. Actual results could differ from those estimates under different assumptions and/or conditions.Vessels, Net: Vessels are stated at historical cost, which consists of the contract price, delivery and acquisition expenses and capitalizedinterest costs while under construction. Vessels acquired in an asset acquisition or in a business combination are recorded at fair value. Subsequentexpenditures for major improvements and upgrading are capitalized, provided they appreciably extend the life, increase the earning capacity or improve theefficiency or safety of the vessels. Expenditures for routine maintenance and repairs are expensed as incurred.Depreciation is computed using the straight line method over the useful life of the vessels, after considering the estimated residual value.Management estimates the residual values of our tanker vessels based on a scrap value of $285 per lightweight ton, as we believe these levels are common inthe shipping industry. Management estimates the useful life of our vessels to be 25 years from the vessel’s original construction. However, when regulationsplace limitations over the ability of a vessel to trade on a worldwide basis, its useful life is re-estimated to end at the date such regulations become effective.Impairment of long-lived assets: Vessels, other fixed assets and other long lived assets held and used by Navios Acquisition are reviewedperiodically for potential impairment whenever events or changes in circumstances indicate that the carrying amount of a particular asset may not be fullyrecoverable. Navios Acquisition’s management evaluates the carrying amounts and periods over which long-lived assets are depreciated to determine ifevents or changes in circumstances have occurred that would require modification to their carrying values or useful lives. In evaluating useful lives andcarrying values of long-lived assets, certain indicators of potential impairment, are reviewed such as undiscounted projected operating cash flows, vesselsales and purchases, business plans and overall market conditions.Undiscounted projected net operating cash flows are determined for each asset group and compared to the vessel carrying value and relatedcarrying value of the intangible with respect to the time charter agreement attached to that vessel or the carrying value of deposits for new buildings. Withinthe shipping industry, vessels are customarily bought and sold with a charter attached. The value of the charter may be favorable or unfavorable whencomparing the charter rate to then current market rates. The loss recognized either on impairment (or on disposition) will reflect the excess of carrying valueover fair value (selling price) for the vessel asset group.During the fourth quarter of fiscal 2011, management concluded that events occurred and circumstances had changed, which indicated thepotential impairment of Navios Acquisition’s long-lived assets may exist. These indicators included continued deterioration in the spot market, and therelated, impact of the current tanker sector has on management’s expectation for future revenues. As a result, an impairment assessment of long-lived assetswas performed.The Company determined undiscounted projected net operating cash flows for each vessel and deposits for buildings and compared it to thevessel’s carrying value together with the carrying value of the related intangible. The significant factors and assumptions used in the undiscounted projectednet operating cash flow analysis included: determining the projected net operating cash flows by considering the charter revenues from existing time chartersfor the fixed fleet days (Company’s remaining charter agreement rates) and an estimated daily time charter equivalent for the unfixed days (based on acombination of the Company’s remaining charter agreement rates and the 10-year average historical one year time charter rates) over the remaining economiclife of each vessel, net of brokerage and address commissions, excluding days of scheduled off-hires, management fees fixed until May 2012 and thereafterassuming an annual increase of 3.0% and utilization rate of 98.6% based on the fleets historical performance. 70 Table of ContentsFor the deposits for new build vessels, the net cash flows also included the future cash out flows to make vessel ready for use, all remainingprogress payments to shipyards and other pre-delivery expenses (e.g. capitalized interest). Accordingly, no impairment charge was recorded.The assessment concluded that step two of the impairment analysis was not required and no impairment of vessels and the intangible assetsexisted as of December 31, 2011, as the undiscounted projected net operating cash flows exceeded the carrying value.In the event that impairment would occur, the fair value of the related asset would be determined and a charge would be recorded to operationscalculated by comparing the asset’s carrying value to its fair value. Fair value is estimated primarily through the use of third-party valuations performed on anindividual vessel basis.Although management believes the underlying assumptions supporting this assessment are reasonable, if charter rate trends and the length of thecurrent market downturn, vary significantly from our forecasts, management may be required to perform step two of the impairment analysis in the future thatcould expose Navios Acquisition to material impairment charges in the future.No impairment loss was recognized for any of the periods presented.Revenue Recognition: Revenue is recorded when services are rendered, under a signed charter agreement or other evidence of anarrangement, the price is fixed or determinable, and collection is reasonably assured. Revenue is generated from the voyage charter and the time charter ofvessels.Voyage revenues for the transportation of cargo are recognized ratably over the estimated relative transit time of each voyage. A voyageis deemed to commence when a vessel is available for loading and is deemed to end upon the completion of the discharge of the current cargo. Estimatedlosses on voyages are provided for in full at the time such losses on voyages are provided for in full at the time such losses become evident. Under a voyagecharter, a vessel is provided for the transportation of specific goods between specific ports in return for payment of an agreed upon freight per ton of cargo.Revenues from time chartering of vessels are accounted for as operating leases and are thus recognized on a straight-line basis as theaverage revenue over the rental periods of such charter agreements, as service is performed. A time charter involves placing a vessel at the charterers’ disposalfor a period of time during which the charterer uses the vessel in return for the payment of a specified daily hire rate. Under time charters, operating costs suchas for crews, maintenance and insurance are typically paid by the owner of the vessel.Profit-sharing revenues are calculated at an agreed percentage of the excess of the charterer’s average daily income (calculated on aquarterly or half-yearly basis) over an agreed amount and accounted for on an accrual basis based on provisional amounts and for those contracts thatprovisional accruals cannot be made due to the nature of the profit share elements, these are accounted for on the actual cash settlement.Revenues are recorded net of address commissions. Address commissions represent a discount provided directly to the charterers basedon a fixed percentage of the agreed upon charter or freight rate. Since address commissions represent a discount (sales incentive) on services rendered by theCompany and no identifiable benefit is received in exchange for the consideration provided to the charterer, these commissions are presented as a reductionof revenue.Goodwill: As required by the accounting guidance, goodwill acquired in a business combination is not to be amortized.Goodwill is tested for impairment at the reporting unit level at least annually and written down with a charge to operations if the carryingamount exceeds the estimated implied fair value.The Company will evaluate impairment of goodwill using a two-step process. First, the aggregate fair value of the reporting unit iscompared to its carrying amount, including goodwill. The Company determines the fair value of the reporting unit based on a combination of discountedcash flow analysis and an industry market multiple.If the fair value exceeds the carrying amount, no impairment exists. If the carrying amount of the reporting unit exceeds the fair value,then the Company must perform the second step in order to determine the implied fair value of the reporting unit’s goodwill and compare it with its carryingamount. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit to all the assets and liabilities of that unit, as if theunit had been acquired in a business combination and the fair value of the unit was the purchase price. If the carrying amount of the goodwill exceeds theimplied fair value, then a goodwill impairment is recognized by writing the goodwill down to its implied fair value. 71 Table of ContentsNavios Acquisition has one reporting unit. No impairment loss was recognized for any of the periods presented.Intangibles other than goodwill: Navios Acquisition’s intangible assets and liabilities consist of favorable lease terms and unfavorable leaseterms. When intangible assets or liabilities associated with the acquisition of a vessel are identified, they are recorded at fair value. Fair value is determinedby reference to market data and the discounted amount of expected future cash flows. Where charter rates are higher than market charter rates, an asset isrecorded, being the difference between the acquired charter rate and the market charter rate for an equivalent vessel. Where charter rates are less than marketcharter rates, a liability is recorded, being the difference between the assumed charter rate and the market charter rate for an equivalent vessel. Thedetermination of the fair value of acquired assets and assumed liabilities requires us to make significant assumptions and estimates of many variablesincluding market charter rates, expected future charter rates, the level of utilization of our vessels and our weighted average cost of capital. The use ofdifferent assumptions could result in a material change in the fair value of these items, which could have a material impact on Navios Acquisition’s financialposition and results of operations.The amortizable value of favorable and unfavorable leases is amortized over the remaining life of the lease term and the amortization expense isincluded in the statement of income in the depreciation and amortization line item. The amortizable value of favorable leases would be considered impairedif their fair market values could not be recovered from the future undiscounted cash flows associated with the asset. Vessel purchase options that have notbeen exercised, which are included in favorable lease terms, are not amortized and would be considered impaired if the carrying value of an option, whenadded to the option price of the vessel, exceeded the fair value of the vessel. If the purchase option is exercised the portion of this asset will be capitalized aspart of the cost of the vessel and will be depreciated over the remaining useful life of the vessel.Management, after considering various indicators performed an impairment test which included intangible assets as described in criticalAccounting policy “Impairment of long-lived assets”. As of December 31, 2011, there was no impairment of intangible assets.Deferred Drydock and Special Survey Costs: Navios Acquisition’s vessels are subject to regularly scheduled drydocking and specialsurveys which are carried out every 30 or 60 months to coincide with the renewal of the related certificates issued by the Classification Societies, unless afurther extension is obtained in rare cases and under certain conditions. The costs of drydocking and special surveys is deferred and amortized over the aboveperiods or to the next drydocking or special survey date if such has been determined. Unamortized drydocking or special survey costs of vessels sold arewritten off to income in the year the vessel is sold. Costs capitalized as part of the drydocking or special survey consist principally of the actual costs incurredat the yard, spare parts, paints, lubricants and services incurred solely during the drydocking and special survey period.Recent Accounting PronouncementsFair Value DisclosuresIn January 2010, the Financial Accounting Standards Board (“FASB”) issued amended standards requiring additional fair valuedisclosures. The amended standards require disclosures of transfers in and out of Levels 1 and 2 of the fair value hierarchy, as well as requiring gross basisdisclosures for purchases, sales, issuances and settlements within the Level 3 reconciliation. Additionally, the update clarifies the requirement to determinethe level of disaggregation for fair value measurement disclosures and to disclose valuation techniques and inputs used for both recurring and nonrecurringfair value measurements in either Level 2 or Level 3. Navios Acquisition adopted the new guidance in the first quarter of fiscal 2010, except for thedisclosures related to purchases, sales, issuance and settlements, which was effective for Navios Acquisition beginning in the first quarter of fiscal 2011. Theadoption of the new standards did not have a significant impact on Navios Acquisition’s consolidated financial statements.Supplementary Pro Forma Information for Business CombinationsIn December 2010, the FASB issued an amendment of the Accounting Standards Codification regarding Business Combinations. Thisamendment affects any public entity as defined by Topic 805 that enters into business combinations that are material on an individual or aggregate basis.The amendments specify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combinedentity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reportingperiod only. The amendments in this Update also expand the supplemental pro forma disclosures under Topic 805 to include a description of the nature andamount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue andearnings. The amendments are effective for business combinations for which the acquisition date is on or after the beginning of the first annual reportingperiod beginning on or after December 15, 2010. Navios Acquisition adopted these new requirements in fiscal 2011 and the adoption did not have asignificant impact on Navios Acquisition’s consolidated financial statements. 72 Table of ContentsPresentation of Comprehensive IncomeIn June 2011, the FASB issued an update in the presentation of comprehensive income. According to the update an entity has the optionto present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a singlecontinuous statement of comprehensive income or in two separate but consecutive statements. The statement of other comprehensive income shouldimmediately follow the statement of net income and include the components of other comprehensive income and a total for other comprehensive income,along with a total for comprehensive income. On December 23, 2011 the FASB issued an amendment to the new standard on Comprehensive income to deferthe requirement to measure and present reclassification adjustments form accumulated other comprehensive income to net income by income statement lineitem is net income and also in other comprehensive income. The amendments in this update do not change the items that must be reported in othercomprehensive income or when an item of other comprehensive income must be reclassified to net income. For public entities, the amendments are effectivefor fiscal years, and interim periods within those years, beginning after December 15, 2011. Early adoption is permitted, because compliance with theamendments is already permitted. The amendments do not require any transition disclosures. The adoption of the new amendments did not have a significantimpact on Navios Acquisition’s consolidated financial statements. There were no items of other comprehensive income arising in any of the periodspresented.Goodwill Impairment guidanceIn September 2011, the FASB issued an update to simplify how public entities, test goodwill for impairment. The amendments in theupdate permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than itscarrying amount on a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in Topic 350. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. The amendments are effective for annual and interim goodwill impairment testsperformed for fiscal years beginning after December 15, 2011. Early adoption is permitted including for annual and interim impairment tests performed as of adate before September 15, 2011, if an entity’s financial statements for the most recent annual or interim period have not yet been issued. The adoption of thenew amendments is not expected to have a significant impact on Navios Acquisition’s consolidated financial statements.Item 6. Directors, Senior Management and EmployeesA. Directors and Senior ManagementSet forth below are the names, ages and positions of Navios Acquisition’s directors, executive officers and key employees. Name Age PositionAngeliki Frangou 47 Chairman, Chief Executive Officer and DirectorTed C. Petrone 57 President and DirectorNikolaos Veraros, CFA 42 DirectorJohn Koilalous 81 DirectorLeonidas Korres 36 Chief Financial OfficerBrigitte Noury 65 DirectorAnna Kalathakis 42 Director, Senior Vice President — Legal Risk ManagementGeorge Galatis 49 DirectorVasiliki Papaefthymiou 43 SecretaryAngeliki Frangou has been Navios Maritime Acquisition Corporation’s Chairman and CEO since inception. In addition, Ms. Frangouserves as the Chairman and Chief Executive Officer of Navios Maritime Holdings, a growth-focused drybulk company since August 2005 and NaviosPartners, a limited partnership, since August 2007. Ms. Frangou is also the Chairman of the board of directors of Navios South American Logistics sinceinception in December 2007. Previously, Ms. Frangou was Chairman, Chief Executive Officer and President of International Shipping Enterprises Inc., whichacquired Navios Holdings. During the period 1990 through August 2005, Ms. Frangou was the Chief Executive Officer of Maritime Enterprises 73 Table of ContentsManagement S.A., and its predecessor company, which specialized in the management of dry cargo vessels. Ms. Frangou is the Chairman of IRF EuropeanFinance Investments Ltd., listed on the SFM of the London Stock Exchange. During the period April 2004 to July 2005, Ms. Frangou served on the board ofdirectors of Emporiki Bank of Greece (then, the second largest retail bank in Greece). From June 2006 until September 2008, Ms. Frangou also served asChairman of Proton Bank, based in Athens, Greece. Ms. Frangou is Member of the Board of The United Kingdom Mutual Steam Ship Assurance Association(Bermuda) Limited and Vice Chairman of China Classification Society Mediterranean Committee and a member of the Hellenic and Black Sea Committee ofBureau Veritas as well as a member of Greek Committee of Nippon Kaiji Kyokai. Ms. Frangou received a bachelor’s degree in Mechanical Engineering fromFairleigh Dickinson University (summa cum laude) and a master’s degree in Mechanical Engineering from Columbia University.Ted C. Petrone has been our President and a member of our Board of Directors since March 2008. He has also been a director of NaviosHoldings since May 2007, having become President of Navios Corporation in September 2006. He heads Navios Holdings’ worldwide commercialoperations. Mr. Petrone has served in the maritime industry for 35 years, 31 of which he has spent with Navios Holdings. After joining Navios Holdings as anassistant vessel operator, Mr. Petrone worked there in various operational and commercial positions. For the last 15 years, Mr. Petrone has been responsiblefor all the aspects of the daily commercial activity, encompassing the trading of tonnage, derivative hedge positions and cargoes. Mr. Petrone graduated fromNew York Maritime College at Fort Schuyler with a B.S. in Maritime Transportation. He has also served aboard U.S. Navy (Military Sealift Command)tankers.Nikolaos Veraros, CFA, has been a member of our Board of Directors since June 2008. Mr. Veraros is a senior analyst at Investments &Finance Ltd., where he has worked since August 2001, and also from June 1997 to February 1999. From March 1999 to August 2001, Mr. Veraros worked as asenior equity analyst for National Securities, S.A., a subsidiary of National Bank of Greece. He is a Chartered Financial Analyst (CFA), a Certified MarketMaker for Derivatives in the Athens Stock Exchange, and a Certified Analyst from the Hellenic Capital Market Commission. Mr. Veraros received hisBachelor of Science degree in Business Administration from the Athens University of Economics and Business (graduated as valedictorian) and his Master ofBusiness Administration degree in Finance/Accounting from the William E. Simon Graduate School of Business Administration at the University ofRochester.John Koilalous has been a member of our board of directors since June 2008. Mr. Koilalous began his career in the shipping industry inthe City of London in 1949, having worked for various firms both in London and Piraeus. He entered the adjusting profession in 1969, having worked forFrancis and Arnold for some 18 years and then with Pegasus Adjusting Services Ltd., of which he was the founder and, until his retirement at the end of 2008,the managing director. He still remains active in an advisory capacity on matters of marine insurance claims.Leonidas Korres has been our Chief Financial Officer since April 2010, and previously our Senior Vice President for BusinessDevelopment since January 2010. Mr. Korres served as the Special Secretary for Public Private Partnerships in the Ministry of Economy and Finance of theHellenic Republic from October 2005 until November 2009. Prior to that, from April 2004 to October 2005, Mr. Korres served as Special Financial Advisor tothe Minister of Economy and Finance of the Hellenic Republic and as liquidator of the Organizational Committee for the Olympic Games Athens 2004 S.A.From 2001 to 2004, Mr. Korres worked as a Senior Financial Advisor for KPMG Corporate Finance. From October 2007 until January 2010, Mr. Korres was amember of the board of directors of Navios Partners. From May 2003 to December 2006, Mr. Korres was Chairman of the Center for Employment andEntrepreneurship, a non-profit Company. From June 2008 until February 2009, Mr. Korres served as a board member and audit committee member of HellenicTelecommunications Organization S.A. (trading on the Athens and New York Stock Exchanges). From June 2004 until November 2009, Mr. Korres served onthe board of Hellenic Olympic Properties S.A., which was responsible for exploiting the Olympic venues. Mr. Korres earned his bachelor’s degree inEconomics from the Athens University of Economics and Business and his master’s degree in Finance from the University of London.Brigitte Noury has been a member of our board of directors since May 2010. Ms. Noury served from March 2002 until December 2009 asDirector of Corporate & Investment Banking Asset & Recovery Management — Europe for Societe Generale. She also served from June 1989 untilFebruary 2002 as Head of Shipping at Societe Generale. She also served as Vice President — Shipping at Banque Indosuez from 1987 to 1989. Before thatMs. Noury served as financial controller at Banque Internationale pour l’Afrique Occidentale (further acquired by BNP Paribas). Ms. Noury received a masterof economic sciences degree and a diploma in Business Administration from the University of Dijon.Anna Kalathakis has been a member of our board of directors and Senior Vice President — Legal Risk Management since May 2010.Ms. Kalathakis has been Senior Vice President — Legal Risk Management of Navios Maritime Holdings Inc. since December 2005. Before joining NaviosHoldings, Ms. Kalathakis was the General Manager of the Greek office of A Bilbrough & Co. Ltd. (Managers of the London Steam-Ship Owners’ MutualInsurance Association Limited, the “London P&I Club”) and an Associate Director of the London P&I Club where she gained experience in the handling ofliability and contractual disputes in both the dry and 74 Table of Contentstanker shipping sectors (including collisions, oil pollution incidents, groundings etc). She previously worked for a U.S. maritime law firm in New Orleans,having qualified as a lawyer in Louisiana in 1995, and also served in a similar capacity for a London maritime law firm. She qualified as a solicitor inEngland and Wales in 1999 and was admitted to the Piraeus Bar, Greece, in 2003. She received a bachelor’s degree International Relations from GeorgetownUniversity and holds a Masters of Business Administration degree from European University in Brussels and a Juris Doctor degree from Tulane Law School.George Galatis has served as a member of our board of directors since July 2010. He is currently the Executive Vice President — ProductDevelopment at Demo Pharmaceutical Industry having served as a Senior Vice President — Project Development since 1999. Mr Galatis has also served as aTechnical Manager in Pharmaceutical Industry Projects at Telos Consulting Ltd. of London from 1994 to 1999. Previously, Mr. Galatis has served as anengineer, technical manager and product manager in various shipping companies in the United States and the UK. Mr. Galatis is a mechanical engineer andholds a bachelor’s degree in Mechanical Engineering and master’s degree in Robotics from the University of Newcastle upon Tyne.Vasiliki Papaefthymiou has been appointed our Secretary since inception. Ms. Papaefthymiou has been Executive Vice President —Legal and a member of Navios Holdings’ board of directors since August 25, 2005, and prior to that was a member of the board of directors of ISE.Ms. Papaefthymiou has served as General Counsel for Maritime Enterprises Management S.A. since October 2001, where she has advised the company onshipping, corporate and finance legal matters. Ms. Papaefthymiou provided similar services as General Counsel to Franser Shipping from October 1991 toSeptember 2001. Ms. Papaefthymiou received her undergraduate degree from the Law School of the University of Athens and a master’s degree in MaritimeLaw from Southampton University in the United Kingdom. Ms. Papaefthymiou is admitted to practice law before the Bar in Piraeus, Greece.B. Executive compensationBoard ClassesOur board of directors is divided into three classes with only one class of directors being elected in each year and each class serving athree-year term. The term of office of the first class of directors, consisting of John Koilalous, George Galatis and Brigitte Noury, will expire at our 2012annual meeting of stockholders. The term of office of the second class of directors, consisting of Ted C. Petrone and Nikolaos Veraros, will expire at our 2013annual meeting of stockholders. The term of office of the third class of directors, consisting of Angeliki Frangou and Anna Kalathakis, will expire at our 2014annual meeting, as their term was renewed for three years during our 2011 annual meeting.Director IndependenceOur board of directors has determined that Messrs. Veraros, Koilalous, Galatis and Ms. Noury are “independent directors” as defined inthe New York Stock Exchange listing standards and Rule 10A-3 of the Exchange Act. We will always seek to have a board of directors comprising of amajority of independent directors.Executive CompensationOur independent directors are entitled to receive $50,000 in cash per year, from the respective start of their service on our board ofdirectors. Ms. Frangou receives a fee of $150,000 per year for acting as a director and as our Chairman of the Board. No other executive officer has receivedany cash compensation for services rendered and no compensation of any kind, including finder’s and consulting fees, were paid to our initial stockholders,officers, directors or any of their respective affiliates. Nor has Navios Holdings or, our officers, directors or any of their respective affiliates received any cashcompensation for services rendered prior to or in connection with a business combination, except that our independent directors were entitled to receive$50,000 in cash per year, accruing pro rata from the respective start of their service on our board of directors and payable only upon the successfulconsummation of a business combination. However, all of these individuals were reimbursed for any out-of-pocket expenses incurred in connection withactivities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations.For the year ended December 31, 2011, aggregate annual compensation paid to our current non-management executive directors was$0.2 million; and $0.15 million was paid to Ms. Frangou for acting as a director and as our Chairman of the Board. 75 Table of ContentsC. Board PracticesBoard committeesOur board of directors has an audit committee and a nominating committee. Our board of directors has adopted a charter for the auditcommittee as well as a code of conduct and ethics that governs the conduct of our directors and officers.Audit committeeOur audit committee consists of Messrs. Veraros, Koilalous and Ms. Noury. Each member of our audit committee is financially literateunder the current listing standards of the New York Stock Exchange, and our board of directors has determined that Mr. Veraros qualifies as an “auditcommittee financial expert,” as such term is defined by SEC rules.The audit committee reviews the professional services and independence of our independent registered public accounting firm and ouraccounts, procedures and internal controls. The audit committee also selects our independent registered public accounting firm, reviews and approves thescope of the annual audit, reviews and evaluates with the independent public accounting firm our annual audit and annual consolidated financial statements,reviews with management the status of internal accounting controls, evaluates problem areas having a potential financial impact on us that may be brought tothe committee’s attention by management, the independent registered public accounting firm or the board of directors, and evaluates all of our publicfinancial reporting documents.Any expense reimbursements payable to members of our audit committee are reviewed and approved by our board of directors, with theinterested director or directors abstaining from such review and approval.Nominating committeeA nominating committee of the board of directors has been established, which consists of Messrs. Veraros, Koilalous, Galatis, andMs. Noury, each of whom is an independent director. The nominating committee is responsible for overseeing the selection of persons to be nominated toserve on our board of directors. The nominating committee considers persons identified by its members, management, stockholders, investment bankers andothers.Code of conduct and ethicsWe have adopted a code of conduct and ethics applicable to our directors and officers in accordance with applicable federal securitieslaws and the rules of the New York Stock Exchange.Conflicts of InterestStockholders and potential investors should be aware of the following potential conflicts of interest: • None of our officers and directors is required to commit their full time to our affairs and, accordingly, they will have conflicts of interest inallocating management time among various business activities, including those related to Navios Holdings and Navios Partners. • Each of our directors has, or may come to have other fiduciary obligations. Angeliki Frangou, our Chairman and Chief Executive Officer, is theChairman and Chief Executive Officer of Navios Holdings and Navios Partners. In addition, Ms. Frangou is the Chairman of the board ofdirectors of IRF European Finance Investments, Ltd. Ted C. Petrone, our president and a member of our board of directors, is the president ofNavios Corporation, a subsidiary of Navios Holdings, and a director of Navios Holdings. Mr. Veraros is a senior analyst at Investments &Finance, Ltd., an investment banking firm specializing in the shipping industry. Mr. Koilalous is the founder and managing director of PegasusAdjusting Services, Ltd., an adjusting firm in the shipping industry. Ms. Kalathakis is Senior Vice President — Legal Risk Management ofNavios Holdings. • We have entered a Management Agreement, expiring May 28, 2015, with a subsidiary of Navios Holdings, pursuant to which such subsidiaryprovides certain commercial and technical ship management services for a fixed daily fee of $6,000 per owned MR2 product tanker and chemicaltanker vessel, $7,000 per owned LR1 product tanker vessel and $10,000 per owned VLCC tanker vessel for the first two years of the term of thatagreement. • We entered into an Administrative Services Agreement with Navios Holdings, expiring on May 28, 2015, pursuant to which a subsidiary ofNavios Holdings provides certain administrative management services to Navios Acquisition which include: bookkeeping, audit and accountingservices, legal and insurance services, administrative and clerical services, banking and financial services, advisory services, client and investorrelations and other. Navios Holdings is reimbursed for reasonable costs and expenses incurred in connection with the provision of these services. • We have not adopted a policy that expressly prohibits our directors, officers, security holders or affiliates from having a 76 Table of Contents direct or indirect pecuniary interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have aninterest. Nor do we have a policy that expressly prohibits any such persons from engaging for their own account in business activities of thetypes conducted by us. Accordingly, such parties may have an interest in certain transactions in which we are involved, and may also competewith us.We cannot assure you that any of the above mentioned conflicts will be resolved in our favor.Navios Holdings has a significant ownership interest. As a result of Navios Holdings’ significant ownership stake in us and our commonmanagement, there are certain potential conflicts of interest, including potential competition as to acquisition targets and, after an acquisition has beenconsummated, potential competition and business relationships with each other.All ongoing and future transactions between us and any of our officers and directors or their respective affiliates, including NaviosHoldings, will be on terms believed by us to be no less favorable than are available from unaffiliated third parties, and such transactions will require priorapproval, in each instance, by a unanimous vote of our disinterested “independent” directors or the members of our board who do not have an interest in thetransaction.Please see “Item 7.-Major Stockholders and Related Party Transactions”.FacilitiesWe do not own any real estate or other physical property. Our headquarters are located at 85 Akti Miaouli Street, Piraeus, Greece 185 38.D. EmployeesEmployees of Navios Holdings and its subsidiaries provide assistance to us and our operating subsidiaries pursuant to the managementagreement and the administrative services agreement; therefore Navios Acquisition does not employ additional staff.The Manager crews its vessels primarily with Greek, Filipino, Indian, Romanian, Russian and Ukranian officers and Filipino seamen.Navios Acquisition’s Manager is responsible for selecting its Greek officers. For other nationalities, officers and seamen are referred to us by local crewingagencies. Navios Acquisition requires that all of its seamen have the qualifications and licenses required to comply with international regulations andshipping conventions.Navios Holdings also provides on-shore advisory, operational and administrative support to us pursuant to service agreements. Please see“Item 7.-Major Stockholders and Related Party Transactions”.E. Share OwnershipThe following table sets forth certain information regarding beneficial ownership, based on 40,517,413 shares of common stockoutstanding as of March 14, 2012, of our common stock held by Navios Holdings, each of our officers and directors and by all of our directors and officers asa group. The information is not necessarily indicative of beneficial ownership for any other purposes.Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to allshares of common stock beneficially owned by them. Name and Address of Beneficial Owner (1) Amount ofBeneficialOwnership PercentageofCommonStock Navios Maritime Holdings Inc. 18,331,551 45.2% Angeliki Frangou 1,902,628 4.7% Ted C. Petrone * * Nikolaos Veraros * * George Galatis — * John Koilalous * * Birgitte Noury — * Anna Kalathakis — * All of our officers and directors as a group 2,025,275 5.0% *less than one (1%) percent. 77 (2) (2) (3) (3) Table of Contents(1)Unless otherwise indicated, the business address of each of the individuals is c/o Navios Maritime Holdings Inc., 85 Akti Miaouli Street, Piraeus,Greece.(2)Navios Holdings is a U.S. public company controlled by its board of directors, which consists of the following seven members: Angeliki Frangou (ourChairman and Chief Executive Officer), Vasiliki Papaefthymiou, Ted C. Petrone (our president), Spyridon Magoulas, John Stratakis, Stathis Loizos andGeorge Malanga.(3)Includes 1,502,628 shares held by Amadeus Maritime S.A. that may be deemed to be beneficially owned by Ms. Frangou.Item 7. Major Stockholders and Related Party TransactionsA. Major StockholdersThe following table sets forth the beneficial ownership of our common stock by each person we know to beneficially own more than 5%of our common stock based upon 40,517,413 shares of common stock outstanding as of March 14, 2012 and the amounts and percentages as are contained inthe public filings of such persons and based on knowledge of the Company. The number of shares of common stock beneficially owned by each person isdetermined under SEC rules and the information is not necessarily indicative of beneficial ownership for any other purpose. Under SEC rules, a personbeneficially owns any units as to which the person has or shares voting or investment power. In addition, a person beneficially owns any shares of commonstock that the person or entity has the right to acquire as of March 14, 2012 through the exercise of any right. All of the stockholders, including thestockholders listed in this table, are entitled to one vote per share of common stock held. Name of Beneficial Owner Amount ofBeneficialOwnership PercentageofCommonStock Navios Maritime Holdings Inc. 18,331,551 45.2% A. Lawrence Caroll Trust 4,250,000 10.4% Jeffrey E. Schwarz 2,257,413 5.5% (1)The business address of the reporting person is 85 Akti Miaouli Street, Piraeus, Greece 185 38. The foregoing information was derived from aSchedule 13D/A filed with the SEC on July 20, 2011.(2)The business address of the reporting person is 415 L’Ambiance Drive, 804 Longboat Key, FL 34228. The foregoing information was derived from aschedule 13G/A with the SEC on February 2, 2012.(3)The business address the reporting person is 660 Madison Ave., 18th Floor, New York, NY 10065. The foregoing information was derived from aschedule 13G filed with the SEC on August 5, 2011. The reporting person files jointly with Karen L. Finerman as principals of Metropolitan CapitalAdvisors, Inc., KJ Advisors Inc., Metropolitan Capital L.L.C. and Metropolitan Capital III, Inc which serve, directly or indirectly, as general partnerand/or investment manager for private investment funds and/or managed accounts.B. Related Party TransactionsOn May 28, 2010, Navios Acquisition consummated the vessel acquisition, which constituted its initial business combination. Inconnection with the stockholder vote to approve the business combination, holders of 10,021,399 shares of common stock voted against the businesscombination and elected to redeem their shares in exchange for an aggregate of approximately $99.3 million, which amount was disbursed from NaviosAcquisitions’ investments held in trust account on May 28, 2010. In addition, on May 28, 2010, Navios Acquisition disbursed an aggregate of $8.9 millionfrom the trust account to the underwriters of its IPO for deferred fees. After disbursement of approximately $76.5 million to Navios Holdings to reimburse itfor the first equity installment payment on the vessels of $38.8 million and other associated payments, the balance of the trust account of $66.1 million wasreleased to Navios Acquisition for general operating expenses. Following such transaction, Navios Acquisition commenced its operations as an operatingcompany and was controlled by Navios Holdings and is consolidated into its financial statements.In connection with the VLCC Acquisition, Navios Acquisition entered into a $40.0 million credit facility with Navios Holdings. The$40.0 million facility has a margin of LIBOR plus 300 bps and a term of 18 months, maturing on April 1, 2012. Following the issuance of the Notes inOctober 2010, the Company prepaid $27.6 million of this facility. Pursuant to an amendment in October 2010, the facility will be available for multipledrawings up to a limit of $40.0 million. Pursuant to an agreement dated November 8, 2011, the Navios Holdings credit facility was extended from April 2012to December 2014. As of December 31, 2011, the outstanding amount under this facility was $40.0 million and interest accrued under this facility is$0.1 million, is included under amounts due to related parties. 78 (1)(2)(3) Table of ContentsPursuant to an Exchange Agreement entered into March 30, 2011, Navios Holdings exchanged 7,676,000 shares of Navios Acquisition’scommon stock it held for 1,000 shares of Series C Convertible Preferred Stock of Navios Acquisition.The Management AgreementWe have entered into a five-year Management Agreement with the Manager, pursuant to which the Manager will provide certaincommercial and technical ship management services to us. These services will be provided in a commercially reasonable manner in accordance withcustomary ship management practice and under our direction. The Manager will provide these services to us directly but may subcontract for certain of theseservices with other entities, including other Navios Holdings subsidiaries.The commercial and technical management services will include: • the commercial and technical management of vessels: managing day-to-day vessel operations including negotiating charters and other employmentcontracts for the vessels and monitoring payments thereunder, ensuring regulatory compliance, arranging for the vetting of vessels, procuring andarranging for port entrance and clearance, appointing counsel and negotiating the settlement of all claims in connection with the operation of eachvessel, appointing adjusters and surveyors and technical consultants as necessary, and providing technical support; • vessel maintenance and crewing: including the supervision of the maintenance and general efficiency of vessels and ensuring the vessels are inseaworthy and good operating condition, arranging our hire of qualified officers and crew, arranging for all transportation, board and lodging of thecrew, negotiating the settlement and payment of all wages; and • purchasing and insurance: purchasing stores, supplies and parts for vessels, arranging insurance for vessels (including marine hull and machineryinsurance, protection and indemnity insurance and war risk and oil pollution insurance).The initial term of the Management Agreement will expire May 28, 2015. Pursuant to the terms of the Management Agreement, we willpay the Manager a fixed daily fee of $6,000 per owned MR2 product tanker and chemical tanker vessel, $7,000 per owned LR1 product tanker vessel and$10,000 per owned VLCC vessel, for the first two years of the term of that agreement, with the fixed daily fees adjusted for the remainder of the term based onthen-current market fees. This fixed daily fee will cover all of our vessel operating expenses, other than certain extraordinary fees and costs. During theremaining three years of the term of the Management Agreement, we expect that we will reimburse the Manager for all of the actual operating costs andexpenses it incurs in connection with the management of our fleet. Actual operating costs and expenses will be determined in a manner consistent with howthe initial fees were determined. Drydocking expenses will be fixed under this agreement for up to $300,000 per vessel and will be reimbursed at cost forVLCC vessels.The Management Agreement may be terminated prior to the end of its initial term by us upon 120-day’s notice if there is a change ofcontrol of the Manager or by the Manager upon 120-day’s notice if there is a change of control of Navios Acquisition. In addition, the ManagementAgreement may be terminated by us or by the Manager upon 120-day’s notice if: • the other party breaches the agreement; • a receiver is appointed for all or substantially all of the property of the other party; • an order is made to wind up the other party; • a final judgment or order that materially and adversely affects the other party’s ability to perform the Management Agreement is obtained orentered and not vacated or discharged; or • the other party makes a general assignment for the benefit of its creditors, files a petition in bankruptcy or liquidation or commences anyreorganization proceedings.Furthermore, at any time after the first anniversary of the Management Agreement, the Management Agreement may be terminated priorto the end of its initial term by us or by the Manager upon 365-day’s notice for any reason other than those described above.In addition to the fixed daily fees payable under the Management Agreement, the Management Agreement provides that the Managerwill be entitled to reasonable supplementary remuneration for extraordinary fees and costs resulting from: 79 Table of Contents • time spent on insurance and salvage claims; • time spent vetting and pre-vetting the vessels by any charterers in excess of 10 days per vessel per year; • the deductible of any insurance claims relating to the vessels or for any claims that are within such deductible range; • the significant increase in insurance premiums which are due to factors such as “acts of God” outside the control of the Manager; • repairs, refurbishment or modifications, including those not covered by the guarantee of the shipbuilders or by the insurance covering thevessels, resulting from maritime accidents, collisions, other accidental damage or unforeseen events (except to the extent that such accidents,collisions, damage or events are due to the fraud, gross negligence or willful misconduct of the Manager, its employees or its agents, unless andto the extent otherwise covered by insurance); • expenses imposed due to any improvement, upgrade or modification to, structural changes with respect to the installation of new equipmentaboard any vessel that results from a change in, an introduction of new, or a change in the interpretation of, applicable laws, at therecommendation of the classification society for that vessel or otherwise; • costs associated with increases in crew employment expenses resulting from an introduction of new, or a change in the interpretation of,applicable laws or resulting from the early termination of the charter of any vessel; • any taxes, dues or fines imposed on the vessels or the Manager due to the operation of the vessels; • expenses incurred in connection with the sale or acquisition of a vessel such as inspections and technical assistance; and • any similar costs, liabilities and expenses that were not reasonably contemplated by us and the Manager as being encompassed by or acomponent of the fixed daily fees at the time the fixed daily fees were determined.Under the Management Agreement, neither we nor the Manager will be liable for failure to perform any of our or its obligations,respectively, under the Management Agreement by reason of any cause beyond our or its reasonable control.In addition, the Manager will have no liability for any loss arising in the course of the performance of the commercial and technicalmanagement services under the Management Agreement unless and to the extent that such loss is proved to have resulted solely from the fraud, grossnegligence or willful misconduct of the Manager or its employees, in which case (except where such loss has resulted from the Manager’s intentionalpersonal act or omission and with knowledge that such loss would probably result) the Manager’s liability will be limited to $3.0 million for each incident orseries of related incidents.Further, under our Management Agreement, we have agreed to indemnify the Manager and its employees and agents against all actionsthat may be brought against them under the Management Agreement including, without limitation, all actions brought under the environmental laws of anyjurisdiction, or otherwise relating to pollution or the environment, and against and in respect of all costs and expenses they may suffer or incur due todefending or settling such action; provided, however, that such indemnity excludes any or all losses which may be caused by or due to the fraud, grossnegligence or willful misconduct of the Manager or its employees or agents, or any breach of the Management Agreement by the Manager.The Administrative Services AgreementWe have entered into an Administrative Services Agreement, expiring May 28, 2015, with the Manager, pursuant to which the Managerwill provide certain administrative management services to us.The Administrative Services Agreement may be terminated prior to the end of its term by us upon 120-day’s notice if there is a change ofcontrol of the Manager or by the Manager upon 120-day’s notice if there is a change of control of us. In addition, the Administrative Services Agreement maybe terminated by us or by the Manager upon 120-day’s notice if: • the other party breaches the agreement; • a receiver is appointed for all or substantially all of the property of the other party; • an order is made to wind up the other party; 80 Table of Contents • a final judgment or order that materially and adversely affects the other party’s ability to perform the Administrative Services Agreement isobtained or entered and not vacated or discharged; or • the other party makes a general assignment for the benefit of its creditors, files a petition in bankruptcy or liquidation or commences anyreorganization proceedings.Furthermore, at any time after the first anniversary of the Administrative Services Agreement, the Administrative Services Agreement maybe terminated by us or by the Manager upon 365-day’s notice for any reason other than those described above.The administrative services will include: • bookkeeping, audit and accounting services: assistance with the maintenance of our corporate books and records, assistance with the preparationof our tax returns and arranging for the provision of audit and accounting services; • legal and insurance services: arranging for the provision of legal, insurance and other professional services and maintaining our existence andgood standing in necessary jurisdictions; • administrative and clerical services: providing office space, arranging meetings for our security holders, arranging the provision of IT services,providing all administrative services required for subsequent debt and equity financings and attending to all other administrative mattersnecessary to ensure the professional management of our business; • banking and financial services: providing cash management including assistance with preparation of budgets, overseeing banking services andbank accounts, arranging for the deposit of funds, negotiating loan and credit terms with lenders and monitoring and maintaining compliancetherewith; • advisory services: assistance in complying with United States and other relevant securities laws; • client and investor relations: arranging for the provision of, advisory, clerical and investor relations services to assist and support us in ourcommunications with our security holders; and client and investor relations; and • integration of any acquired businesses.We will reimburse the Manager for reasonable costs and expenses incurred in connection with the provision of these services within15 days after the Manager submits to us an invoice for such costs and expenses, together with any supporting detail that may be reasonably required.Under the Administrative Services Agreement, we have agreed to indemnify the Manager and its employees against all actions whichmay be brought against them under the Administrative Services. Agreement including, without limitation, all actions brought under the environmental lawsof any jurisdiction, and against and in respect of all costs and expenses they may suffer or incur due to defending or settling such actions; provided, however,that such indemnity excludes any or all losses that may be caused by or due to the fraud, gross negligence or wilful misconduct of the Manager or itsemployees or agents.Registration RightsPursuant to a registration rights agreement between us and our initial stockholders entered into in connection with the IPO, the holders ofthe sponsor units (and the common stock and warrants comprising such units and the common stock issuable upon exercise of such warrants), the sponsorwarrants (and the common stock issuable upon exercise of such warrants), the co-investment shares and any shares of common stock purchased pursuant tothe limit orders described above are entitled to three demand registration rights, “piggy-back” registration rights and short-form resale registration rights. Wewill bear the expenses incurred in connection with any such registration statements other than underwriting discounts or commissions for shares not sold byus. In addition, we have registered the 1,677,759 shares of common stock issued in connection with the VLCC Acquisition. The resale registration statementbecame effective on January 19, 2011.The Acquisition Omnibus AgreementWe have entered an Acquisition Omnibus Agreement with Navios Holdings and Navios Partners. The following discussion describescertain provisions of the Acquisition Omnibus Agreement. 81 Table of ContentsNoncompetitionNavios Holdings and Navios Partners agree not to acquire, charter-in or own Liquid Shipment Vessels (as hereinafter defined). For purposes of theAcquisition Omnibus Agreement, “Liquid Shipment Vessels” means vessels intended primarily for the sea going shipment of liquid products, includingchemical and petroleum-based products, except for container vessels and vessels that will be employed primarily in operations in South America. Thisrestriction will not prevent Navios Holdings or any of its controlled affiliates or Navios Partners (other than us and our subsidiaries) from:(1) acquiring a Liquid Shipment Vessel(s) from us for fair market value;(2) acquiring a Liquid Shipment Vessel(s) as part of the acquisition of a controlling interest in a business or package of assets and owning those vessels;provided, however, that:(a) if less than a majority of the value of the total assets or business acquired is attributable to a Liquid Shipment Vessel(s) and related charters, as determinedin good faith by the board of directors of Navios Holdings or Navios Partners, as the case may be, Navios Holdings or Navios Partners, as the case may be,must offer to sell a Liquid Shipment Vessel(s) and related charters to us for their fair market value plus any additional tax or other similar costs to NaviosHoldings that would be required to transfer a Liquid Shipment Vessel(s) and related charters to us separately from the acquired business; and(b) if a majority or more of the value of the total assets or business acquired is attributable to a Liquid Shipment Vessel(s) and related charters, as determinedin good faith by the board of directors of Navios Holdings or Navios Partners, as the case may be, Navios Holdings or Partners, as the case may be, shall notifyus in writing, of the proposed acquisition. We shall, not later than the 15th calendar day following receipt of such notice, notify Navios Holdings or NaviosPartners, as the case may be, if we wish to acquire such a Liquid Shipment Vessel(s) and related charters forming part of the business or package of assets incooperation and simultaneously with Navios Holdings or Navios Partners, as the case may be, acquiring a Liquid Shipment Vessel(s) and related chartersforming part of that business or package of assets. If we do not notify Navios Holdings of our intent to pursue the acquisition within 15 calendar days, NaviosHoldings may proceed with the acquisition as provided in (a) above.(3) acquiring a non-controlling interest in any company, business or pool of assets;(4) acquiring or owning a Liquid Shipment Vessel(s) and related charter if we do not fulfill our obligation, under any existing or future written agreement, topurchase such vessel in accordance with the terms of any such agreement;(5) acquiring or owning a Liquid Shipment Vessel(s) subject to the offers to us described in paragraphs (3) and (4) above pending our determination whetherto accept such offers and pending the closing of any offers we accept;(6) providing ship management services relating to any vessel whatsoever, including to a Liquid Shipment Vessel(s) owned by the controlled affiliates ofNavios Holdings; or(7) acquiring or owning a Liquid Shipment Vessel(s) if we have previously advised Navios Holdings or Navios Partners, as the case may be, that we consentto such acquisition, or if we have been offered the opportunity to purchase such vessel pursuant to the Acquisition Omnibus Agreement and failed to do so.If Navios Holdings or Navios Partners, as the case may be, or any of their respective controlled affiliates (other than us or our subsidiaries) acquires orowns a Liquid Shipment Vessel(s) pursuant to any of the exceptions described above, it may not subsequently expand that portion of its business other thanpursuant to those exceptions.In addition, under the Acquisition Omnibus Agreement we have agreed, and will cause our subsidiaries to agree, not to acquire, own, operate or charterdrybulk carriers (“Drybulk Carriers”). Pursuant to an agreement between them, Navios Holdings and Navios Partners may be entitled to a priority over eachother depending on the class and charter length of any Drybulk Carrier. This restriction will not:(1) prevent us or any of our subsidiaries from acquiring a Drybulk Carrier(s) and any related charters as part of the acquisition of a controlling interest in abusiness or package of assets and owning and operating or chartering those vessels; provided, however, that:(a) if less than a majority of the value of the total assets or business acquired is attributable to a Drybulk Carrier(s) and related charter(s), as determined ingood faith by us, we must offer to sell such Drybulk Carrier(s) and related charter to Navios Holdings or Navios Partners, as the case may be, for their fairmarket value plus any additional tax or other similar costs to us that would be required to transfer the Drybulk Carrier(s) and related charter(s) to NaviosHoldings or Navios Partners, as the case may be, separately from the acquired business; and (b) if a majority or more of the value of the total assets or businessacquired is attributable to a Drybulk Carrier(s) and related charter(s), as determined in good faith by us, we shall notify Navios Holdings or Navios Partners, asthe case may be, in writing of the proposed acquisition. Navios Holdings or Navios Partners, as 82 Table of Contentsthe case may be, shall, not later than the 15th calendar day following receipt of such notice, notify us if it wishes to acquire the Drybulk Carrier(s) formingpart of the business or package of assets in cooperation and simultaneously with us acquiring the Non-Drybulk Carrier assets forming part of that business orpackage of assets. If Navios Holdings and Navios Partners do not notify us of its intent to pursue the acquisition within 15 calendar days, we may proceedwith the acquisition as provided in (a) above.(2) prevent us or any of our subsidiaries from owning, operating or chartering a Drybulk Carrier(s) subject to the offer to Navios Holdings or Navios Partnersdescribed in paragraph (1) above, pending its determination whether to accept such offer and pending the closing of any offer it accepts; or(3) prevent us or any of our subsidiaries from acquiring, operating or chartering a Drybulk Carrier(s) if Navios Holdings and Navios Partners has previouslyadvised us that it consents to such acquisition, operation or charter, or if they have previously been offered the opportunity to purchase such DrybulkCarrier(s) and have declined to do so.If we or any of our subsidiaries owns, operates and charters Drybulk Carriers pursuant to any of the exceptions described above, neither we nor suchsubsidiary may subsequently expand that portion of our business other than pursuant to those exceptions.Rights of First OfferUnder the Acquisition Omnibus Agreement, we and our subsidiaries will grant to Navios Holdings and Navios Partners, as the case maybe, a right of first offer on any proposed sale, transfer or other disposition of any of our Drybulk Carriers and related charters owned or acquired by us.Likewise, Navios Holdings and Navios Partners will agree (and will cause its subsidiaries to agree) to grant a similar right of first offer to us for any LiquidShipment Vessels it might own. These rights of first offer will not apply to a: (a) sale, transfer or other disposition of vessels between any affiliatedsubsidiaries, or pursuant to the terms of any charter or other agreement with a counterparty; or (b) merger with or into, or sale of substantially all of the assetsto, an unaffiliated third party.Prior to engaging in any negotiation regarding any vessel disposition with respect to a Liquid Shipment Vessel(s) with a non-affiliatedthird party or any Drybulk Carrier(s) and related charter, we, Navios Holdings, or Navios Partners, as the case may be, will deliver a written notice to the otherparties setting forth the material terms and conditions of the proposed transaction. During the 15-day period after the delivery of such notice, we, NaviosHoldings or Navios Partners, as the case may be, will negotiate in good faith to reach an agreement on the transaction. If we do not reach an agreement withinsuch 15-day period, we or Navios Holdings or Navios Partners, as the case may be, will be able within the next 180 calendar days to sell, transfer or dispose ofthe vessel to a third party (or to agree in writing to undertake such transaction with a third party) on terms generally no less favorable to us or NaviosHoldings, as the case may be, than those offered pursuant to the written notice.Upon a change of control of Navios Partners, the noncompetition and the right of first offer provisions of the Acquisition OmnibusAgreement will terminate immediately as to Navios Partners, but shall remain binding on us and Navios Holdings. Upon a change of control of NaviosHoldings, the noncompetition and the right of first offer provisions of the Acquisition Omnibus Agreement shall terminate; provided, however, that in noevent shall the noncompetition and the rights of first refusal terminate upon a change of control of Navios Holdings prior to the fourth anniversary of theAcquisition Omnibus Agreement. Upon change of control of us, the noncompetition and the right of first offer provisions of the Acquisition OmnibusAgreement will terminate immediately as to all parties of the Acquisition Omnibus Agreement.C. Interest of Experts and CounselNot Applicable.Item 8. Financial InformationA. Consolidated Statements and Other Financial InformationConsolidated Financial Statements: See Item 18.Legal ProceedingsAlthough we may, from time to time, be involved in litigation and claims arising out of our operations in the normal course of business,we are not at present party to any legal proceedings or aware of any proceedings against us, or contemplated to be brought against us, that would have amaterial effect on our business, financial position, results of operations or liquidity. We maintain insurance policies with insurers in amounts and withcoverage and deductibles as our board of directors believes are reasonable and prudent. We expect that these claims would be covered by insurance, subjectto customary deductibles. Those claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources. 83 Table of ContentsDividend PolicyAt the present time, Navios Acquisition intends to retain most of its available earnings generated by operations for the development and growth of thebusiness. The declaration and payment of any dividend remains subject to the discretion of the Board of Directors, and will depend on, among other things,Navios Acquisition’s cash requirements as measured by market opportunities and conditions. In addition, the terms and provisions of our current securedcredit facilities and our indenture limit our ability to pay dividends in excess of certain amounts or if certain covenants are not met. (See also “Long TermDebt Obligations and Credit Arrangements.”)On May 2, 2011, the Board of Directors of Navios Acquisition declared a quarterly cash dividend for the first quarter of 2011 of $0.05 per share ofcommon stock. A dividend in the aggregate amount of $2.4 million was paid on July 6, 2011, out of which $2.0 million was paid to the stockholders ofrecord as of June 15, 2011 and $0.4 million was paid to the holders of 1,000 shares of Series C preferred stock (which is Navios Holdings — see note 17 of thefinancial statements included herein).On August 13, 2011, the Board of Directors of Navios Acquisition declared a quarterly cash dividend for the second quarter of 2011 of $0.05 per shareof common stock. A dividend in the aggregate amount of $2.4 million was paid on October 5, 2011, out of which $2.0 million was paid to the stockholders ofrecord as of September 22, 2011 and $0.4 million was paid to the holders of 1,000 shares of Series C preferred stock (which is Navios Holdings — see note 17of the financial statements included herein).On November 7, 2011, the Board of Directors of Navios Acquisition declared a quarterly cash dividend for the third quarter of 2011 of $0.05 per shareof common stock. A dividend in the aggregate amount of $2.4 million was paid on January 5, 2012 out of which $2.0 million was paid to the stockholders ofrecord as of December 15, 2011 and $0.4 million was paid to the holders of 1,000 shares of the Series C preferred stock (which is Navios Holdings — see note17 of the financial statements included herein).As of December 31, 2011, Navios Acquisition declared and paid a dividend of $0.1 million to the holders of the 540 shares of Series B preferred stock.On February 13, 2012, the Board of Directors declared a quarterly cash dividend in respect of the fourth quarter of 2011 of $0.05 per common sharepayable on April 5, 2012 to stockholders of record as of March 22, 2012.B. Significant ChangesNot Applicable.Item 9. Listing DetailsOur listing of securities are traded on the New York Stock Exchange and comprised of units under the symbol “NNA.U”, of common stock and warrantsunder the symbols “NNA” and “NNA.WS”, respectively.The following table sets forth the high and low closing sales prices of Navios Acquisition’s units, common stock and warrants on the New York StockExchange. Price RangeUnits Price RangeCommon Stock Price RangeWarrants High Low High Low High Low Year Ended: December 31, 2011 $5.54 $2.70 $4.55 $2.51 $0.80 $0.15 December 31, 2010 $11.54 $4.96 $9.95 $3.84 $1.58 $0.45 December 31, 2009 $10.55 $8.61 $9.90 $8.57 $0.81 $0.16 December 31, 2008 $10.20 $8.40 $9.40 $8.08 $1.05 $0.14 Quarter Ended: March 31, 2012 (through March 14, 2012) $3.75 $2.70 $3.66 $2.68 $0.19 $0.19 December 31, 2011 $3.55 $2.70 $3.50 $2.51 $0.22 $0.18 September 30, 2011 $4.15 $3.40 $4.05 $3.03 $0.42 $0.15 June 30, 2011 $5.54 $4.15 $4.13 $3.52 $0.62 $0.42 84 (1),(2) Table of ContentsMarch 31, 2011 $4.96 $4.96 $4.55 $3.92 $0.80 $0.43 December 31, 2010 $8.31 $4.96 $5.80 $3.84 $1.40 $0.68 September 30, 2010 $8.81 $8.31 $6.85 $5.50 $1.43 $1.00 June 30, 2010 $11.54 $8.81 $9.95 $6.38 $1.58 $0.64 March 31, 2010 $10.32 $10.11 $9.90 $9.79 $0.68 $0.45 Month Ended: March 31, 2012 (through March 14, 2012) $3.70 $3.59 $3.66 $3.32 $0.19 $0.19 February 29, 2012 $3.75 $3.00 $3.65 $3.01 $0.19 $0.19 January 31, 2012 $3.00 $2.70 $3.08 $2.68 $0.19 $0.19 December 31, 2011 $2.90 $2.70 $3.08 $2.51 $0.21 $0.18 November 30, 2011 $3.55 $2.80 $3.40 $2.52 $0.20 $0.20 October 31, 2011 $3.55 $3.55 $3.50 $3.16 $0.22 $0.20 (1)Period beginning July 1, 2008.(2)The Company completed its initial vessel acquisition on May 28, 2010. Prior to such date, the Company was not an operating company and,accordingly, prices prior to such date may not be meaningful.Item 10. Additional InformationA. Share CapitalNot applicable.B. Memorandum and Articles of AssociationPlease refer to the filings on Form 6-K (file number 001-34104) filed with the Securities and Exchange Commission: Exhibit 99.9 ofForm 6-K filed on June 4, 2010, Exhibit 3.1 of Form 6-K filed on February 10, 2011, Exhibit 1.1 of Form 6-K filed on September 21, 2010, Exhibit 1.1 ofForm 6-K filed on November 9, 2010, and Exhibit 1.1 to Form 6-K filed on April 12, 2011, which the Company hereby incorporates by reference.C. Material ContractsThe following is a summary of each material contract, other than material contracts entered into in the ordinary course of business, towhich we or any of our subsidiaries is a party, for the two years immediately preceding the date of this Annual Report, each of which is included in the list ofexhibits in Item 19. • Indenture, dated October 21, 2010, among Navios Acquisition, Navios Acquisition Finance, the guarantors party thereto and Wells Fargo Bank, NationalAssociation (“Wells Fargo”), as trustee and collateral trustee (the “Indenture”). Please read “Item 5. Operating and Financial Review and Prospects” for asummary of certain contract terms. • First Supplemental Indenture, dated November 9, 2010, among Navios Acquisition, Navios Acquisition Finance, the guarantors party thereto and WellsFargo, which was entered into in order to add the entities identified in such First Supplemental Indenture as guarantors to the Indenture. • Second Supplemental Indenture, dated May 20, 2011, among Navios Acquisition, Navios Acquisition Finance, the guarantors party thereto and WellsFargo, which was entered into in order to add the entity identified in such Second Supplemental Indenture as a guarantor to the Indenture. • Third Supplemental Indenture, dated May 26, 2011, among Navios Acquisition, Navios Acquisition Finance, the guarantors party thereto and WellsFargo, to ratify and confirm the Indenture following the issuance of the Additional Notes. Please read “Item 5. Operating and Financial Review andProspects” for a summary of certain terms relating to the Additional Notes. 85 (2) Table of Contents• Fourth Supplemental Indenture dated July 1, 2011, among Navios Acquisition, Navios Acquisition Finance, the guarantors party thereto and Wells Fargo,which was entered into in order to add the entities identified in such Fourth Supplemental Indenture as guarantors to the Indenture. • Fifth Supplemental Indenture dated December 15, 2011, among Navios Acquisition, Navios Acquisition Finance, the guarantors party thereto and WellsFargo, which was entered into in order to add the entities identified in such Fifth Supplemental Indenture as guarantors to the Indenture. • Repurchase Plan, dated April 8, 2010, among Navios Acquisition, Navios Holdings, Amadeus Maritime S.A. (“Amadeus”) and J.P. Morgan Securities Inc.(“J.P. Morgan”) whereby Navios Holdings and Angeliki Frangou agreed to acquire through J.P. Morgan or a third party, $60.0 million of NaviosAcquisition’s common stock in open market purchases or privately negotiated purchases. This agreement terminated upon the consummation of the vesselacquisition. • Amendment to Buyback Agreement and Assumption Agreement, dated April 8, 2010, among Navios Acquisition, Navios Holdings, Amadeus, J.P. Morganand Deutsche Bank Securities Inc., which, among other things, substituted Navios Holdings for certain of the parties under the original agreement. Thisagreement terminated upon the consummation of the vessel acquisition. • Amendment to Co-Investment Share Subscription Agreement and Assumption Agreement, dated April 8, 2010, among Navios Acquisition, NaviosHoldings and Amadeus, which, among other things, substituted Navios Holdings for certain of the parties under the original agreement. This agreementterminated upon the consummation of the vessel acquisition. • Acquisition Agreement, dated April 8, 2010, between Navios Acquisition and Navios Holdings. Please read “Item 5. Operating and Financial Review andProspects” for a summary of certain contract terms. • Management Agreement, dated May 28, 2010, between Navios Acquisition and Navios Ship Management Inc. Please read “Item 7. Major Stockholdersand Related Party Transactions” for a summary of certain contract terms. • Administrative Services Agreement, dated May 28, 2010, between Navios Acquisition and Navios Ship Management Inc. Please read “Item 7. MajorStockholders and Related Party Transactions” for a summary of certain contract terms. • Acquisition Omnibus Agreement dated May 28, 2010 among Navios Acquisition, Navios Holdings and Navios Partners. Please read “Item 7. MajorShareholders and Related Party Transactions” for a summary of certain contract terms. • Registration Rights Agreement, dated May 26, 2011, among Navios Acquisition, Navios Acquisition Finance and Merrill Lynch, Pierce, Fenner & SmithIncorporated, acting as representative for the initial purchasers named therein. Please read “Item 7. Major Stockholders and Related Party Transactions” fora summary of certain contract terms. • Securities Purchase Agreement, dated July 18, 2010, between Navios Acquisition and Vanship Holdings Limited, entered into in connection with theVLCC Acquisition. • Credit Agreement, dated April 7, 2010, among certain vessel-owning subsidiaries and Deutsche Schiffsbank AG, Alpha Bank A.E. and Credit AgricoleCorporate and Investment Bank. Please read “Item 5. Operating and Financial Review and Prospects” for a summary of certain contract terms. 86 Table of Contents• Credit Agreement, dated April 8, 2010, among certain vessel-owning subsidiaries and DVB Bank S.E. and Fortis Bank. Please read “Item 5. Operating andFinancial Review and Prospects” for a summary of certain contract terms. • Revolving Credit Facility for $80.0 revolving credit facility, dated September 2010, among certain vessel-owning subsidiaries and Marfin Egnatia Bank.Please read “Item 5. Operating and Financial Review and Prospects” for a summary of certain contract terms. • Facility Agreement for $52.0 million term loan facility, dated May 28, 2010, among certain vessel-owning subsidiaries and DVB Bank S.E. and ABNAMRO BANK N.V. Please read “Item 5. Operating and Financial Review and Prospects” for a summary of certain contract terms. • First Supplemental Agreement, dated December 20, 2011, to Facility Agreement dated May 28, 2010, for $52 million term loan facility, which amendscertain terms of the Facility Agreement, including providing for additional definitions relating to new charters, amending provisions relating toprepayments upon termination of charters within a certain period of time and associated adjustments to the repayment installments and providing formandatory prepayment of a minimal amount, and an associated adjustment to a future installment payment, in the event the initial charter period is notextended by July 2012. • Facility Agreement for $52.2 million term loan facility, dated October 26, 2010, between Navios Acquisition and Eurobank Ergasias S.A. Please read“Item 5. Operating and Financial Review and Prospects” for a summary of certain contract terms. • Facility Agreement for $52.0 million term loan facility, dated December 6, 2010, between Navios Acquisition and Eurobank Ergasias S.A. Please read“Item 5. Operating and Financial Review and Prospects” for a summary of certain contract terms. • Facility Agreement for $55.1 million term loan facility, dated July 8, 2011, between Navios Acquisition and ABN AMRO Bank N.V. Please read “Item 5.Operating and Financial Review and Prospects” for a summary of certain contract terms. • Facility Agreement for $51.0 million term loan facility, dated December 7, 2011. between Navios Acquisition and DVB Bank S.E. Please read “Item 5.Operating and Financial Review and Prospects” for a summary of certain contract terms. • Facility Agreement for up to $28.125 million term loan facility, dated December 29, 2011, between Navios Acquisition and NORDDEUTSCHELANDESBANK GIROZENTRALE. Please read “Item 5. Operating and Financial Review and Prospects” for a summary of certain contract terms. • Facility Agreement for $56.250 million term loan facility, dated December 29, 2011, among Navios Acquisition, DVB Bank SE and Emporiki Bank ofGreece S.A. Please read “Item 5. Operating and Financial Review and Prospects” for a summary of certain contract terms. • Loan Agreement for $40.0 million, dated September 7, 2010, between Navios Acquisition and Navios Holdings (the “Loan Agreement”). Please read“Item 7. Major Shareholders and Related Party Transactions” for a summary of certain contract terms. • Letter Agreement Nr. 1 to the Loan Agreement, dated as of October 21, 2010, which provided that the loan would be a revolving facility. • Letter Agreement Nr. 2 to the Loan Agreement, dated November 8, 2011, pursuant to which Navios Holdings agreed to extend the maturity date fromApril 1, 2012 to December 31, 2014.D. Exchange controlsUnder the laws of the of the Marshall Islands, Cayman Islands, Hong Kong and the British Virgin Islands, the countries of incorporation of theCompany and its subsidiaries, there are currently no restrictions on the export or import of capital, including foreign exchange controls, or restrictions thataffect the remittance of dividends, interest or other payments to non-resident holders of our common stock.E. Taxation of Holders 87 Table of ContentsMATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONSMarshall Islands Tax ConsiderationsNavios Acquisition is incorporated in the Marshall Islands. Under current Marshall Islands law, Navios Acquisition is not subject to taxon income or capital gains, and no Marshall Islands withholding tax will be imposed upon payments of dividends by Navios Acquisition to its stockholders.Material U.S. Federal Income Tax ConsequencesThe following discussion addresses the U.S. federal income tax consequences relating to the purchase, ownership and disposition ofNavios Acquisition common stock by U.S. Holders (as defined below) that hold such shares. This discussion is based on current provisions of the InternalRevenue Code of 1986, as amended (the “Code”), Treasury regulations promulgated under the Code, Internal Revenue Service (“IRS”) rulings andpronouncements, and judicial decisions now in effect, all of which are subject to change at any time by legislative, judicial or administrative action. Anysuch changes may be applied retroactively. No party has sought or will seek any rulings from the IRS with respect to the U.S. federal income taxconsequences discussed below. The discussion below is not in any way binding on the IRS or the courts or in any way constitutes an assurance that the U.S.federal income tax consequences discussed herein will be accepted by the IRS or the courts.The U.S. federal income tax consequences to a holder of Navios Acquisition common stock may vary depending upon suchstockholder’s particular situation or status. This discussion is limited to holders of Navios Acquisition common stock who hold such shares as capital assets,and it does not address aspects of U.S. federal income taxation that may be relevant to holders of shares who are subject to special treatment under U.S. federalincome tax laws, including but not limited to: Non-U.S. Holders (as defined below); dealers in securities; banks and other financial institutions; insurancecompanies; tax-exempt organizations, plans or accounts; persons holding their Navios Acquisition shares as part of a “hedge,” “straddle” or other riskreduction transaction; persons holding their Navios Acquisition shares through partnerships, trusts or other entities; U.S. persons whose functional currency isnot the U.S. dollar; stockholders who will be restricted from seeking conversion rights with respect to more than 10% of the public shares; and controlledforeign corporations or passive foreign investment companies, as those terms are defined in the Code. In addition, this discussion does not consider theeffects of any applicable foreign, state, local or other tax laws, or estate or gift tax considerations, or the alternative minimum tax.For purposes of this discussion, a “U.S. Holder” is a beneficial owner of Navios Acquisition shares that is, for U.S. federal income taxpurposes: a citizen or resident of the United States; a corporation created or organized in or under the laws of the United States or any state thereof (includingthe District of Columbia); an estate the income of which is subject to United States federal income tax regardless of its source; or a trust, if a court within theUnited States can exercise primary supervision over its administration, and one or more U.S. persons have the authority to control all of the substantialdecisions of that trust (or the trust was in existence on August 20, 1996, was treated as a U.S. trust on August 19, 1996 and validly elected to continue to betreated as a U.S. trust).We urge stockholders to consult their own tax advisers as to the particular tax considerations applicable to them relating to thepurchase, ownership and disposition of Navios Acquisition shares, including the applicability of U.S. federal, state and local tax laws and non-U.S. taxlaws.For purposes of this discussion, a “Non-U.S. Holder” is, for U.S. federal income tax purposes, an individual, trust, or corporation that is abeneficial owner of Navios Acquisition shares, who is not a U.S. Holder.U.S. Federal Income Taxation of Navios AcquisitionNavios Acquisition is a foreign corporation for U.S. tax purposes and it neither has, nor intends to make an election to be treated as otherthan a corporation for U.S. tax purposes. As a foreign corporation, subject to the rules discussed below, the income, gains, losses, deductions and expenses ofthe Company will not be passed through to the holders of our common shares, and all distributions by Navios Acquisition will be treated as dividends, returnof capital, and/or capital gains.Taxation of Operating Income: In GeneralUnless exempt from U.S. federal income taxation under the rules discussed below, a foreign corporation is subject to United States federalincome taxation in respect of any income that is derived from the use of vessels, from the hiring or leasing of vessels for use on a time, voyage or bareboatcharter basis, from the participation in a pool, partnership, strategic alliance, joint operating agreement, code sharing arrangements or other joint venture itdirectly or indirectly owns or participates in that generates 88 Table of Contentssuch income, or from the performance of services directly related to those uses, which we refer to as “shipping income,” to the extent that the shipping incomeis derived from sources within the United States. For these purposes, 50% of shipping income that is attributable to transportation that begins or ends, but thatdoes not both begin and end, in the United States constitutes income from sources within the United States, which we refer to as “U.S.-source shippingincome.”Shipping income attributable to transportation that both begins and ends in the United States is considered to be 100% from sourceswithin the United States. Navios Acquisition is not permitted by law to engage in transportation that produces income which is considered to be 100% fromsources within the United States.Shipping income attributable to transportation exclusively between non-U.S. ports will be considered to be 100% derived from sourcesoutside the United States. Shipping income derived from sources outside the United States will not be subject to any United States federal income tax. In theabsence of exemption from tax under Section 883 of the Code, Navios Acquisition’s gross U.S.-source shipping income would be subject to a 4% taximposed without allowance for deductions as described below.Exemption of Operating Income From U.S. Federal Income TaxationIn general, the exemption from U.S. federal income taxation under Section 883 of the Code provides that if a non-U.S. corporationsatisfies the requirements of Section 883 of the Code and the Treasury Regulations thereunder, it will not be subject to the net basis and branch profits taxesor the 4% gross basis tax (each as described below) on its U.S.-source shipping income.Under Section 883 of the Code, we will be exempt from U.S. federal income taxation on our U.S.-source shipping income if:1. we and each of our vessel-owning subsidiaries are organized in a foreign country (“country of organization”) that grants an “equivalentexemption” to corporations organized in the United States; and2. either: • more than 50% of the value of our stock is owned, directly or indirectly, for at least half the number of days during the taxable year by(i) individuals who are “residents” of our country of organization or of another foreign country that grants an “equivalent exemption” tocorporations organized in the United States, (ii) non-U.S. corporations that meet the “Publicly Traded Test” discussed below and areorganized in a foreign country that grants an “equivalent exemption” to corporations organized in the United States or (iii) certain otherqualified persons described in the applicable regulations, which we refer to as the “50% Ownership Test,” or • our stock is “primarily and regularly traded on an established securities market” in our country of organization, in another country thatgrants an “equivalent exemption” to U.S. corporations, or in the United States, which we refer to as the “Publicly-Traded Test.”Currently, the Republic of the Marshall Islands, the jurisdiction where we are incorporated, as well as the jurisdictions where our vessel-owning subsidiaries are incorporated, namely, the Republic of the Marshall Islands, the Cayman Islands, Hong Kong and the British Virgin Islands, grant an“equivalent exemption” to U.S. corporations. Therefore, at present, we will be exempt from U.S. federal income taxation with respect to our U.S.-sourceshipping income if we satisfy either the 50% Ownership Test or the Publicly-Traded Test. Our ability to satisfy the 50% Ownership Test and Publicly-TradedTest is discussed below.The regulations provide, in pertinent part, that stock of a foreign corporation will be considered to be “primarily traded” on anestablished securities market if the number of shares of each class of stock that are traded during any taxable year on all established securities markets in thatcountry exceeds the number of shares in each such class that are traded during that year on established securities markets in any other single country. Ourcommon stock is “primarily traded” on the New York Stock Exchange.Under the regulations, our stock is considered to be “regularly traded” on an established securities market if one or more classes of ourstock representing more than 50% of our outstanding shares, by total combined voting power of all classes of stock entitled to vote and total value, is listedon the market during the taxable year, which we refer to as the listing threshold. Since our common stock, which represents more than 50% of our outstandingshares by vote and value, is listed on the New York Stock Exchange, we currently satisfy the listing requirement.It is further required that with respect to each class of stock relied upon to meet the listing threshold (i) such class of the stock is traded onthe market, other than de minimis quantities, on at least 60 days during the taxable year or 1/6 of the days in a short taxable year; and (ii) the aggregatenumber of shares of such class of stock traded on such market during the taxable year is at least 10% of the average number of shares of such class of stockoutstanding during such year or as appropriately adjusted in 89 Table of Contentsthe case of a short taxable year. We currently satisfy the trading frequency and trading volume tests. Even if this were not the case, the regulations providethat the trading frequency and trading volume tests will be deemed satisfied by a class of stock if such class of stock is traded during the taxable year on anestablished market in the United States and such class of stock is regularly quoted by dealers making a market in such stock, which condition our commonstock meets.Notwithstanding the foregoing, the regulations provide, in pertinent part, that our common stock will not be considered to be “regularlytraded” on an established securities market for any taxable year in which 50% or more of the vote and value of the outstanding shares of our common stockare owned, actually or constructively under specified stock attribution rules, on more than half the days during the taxable year by persons who each own 5%or more of the vote and value of our common stock, which we refer to as the “5% Override Rule.”For purposes of being able to determine the persons who owns 5% or more of our common stock, or “5% Stockholders,” the regulationspermit us to rely on Schedule 13G and Schedule 13D filings with the SEC to identify persons who have a 5% or more beneficial interest in our commonstock. The regulations further provide that an investment company that is registered under the Investment Company Act will not be treated as a 5%Stockholder for such purposes.If our 5% Stockholders did own more than 50% of our common stock, then we would be subject to the 5% Override Rule unless we wereable to establish that among the closely-held group of 5% Stockholders, there are sufficient 5% Stockholders that are qualified stockholders for purposes ofSection 883 to preclude non-qualified 5% Stockholders in the closely-held group from owning 50% or more of the total value of each class of our stock formore than half the number of days during the taxable year. In order to establish this, sufficient 5% Stockholders that are qualified stockholders would have tocomply with certain documentation and certification requirements designed to substantiate their identity as qualified stockholders. These requirements areonerous and there is no guarantee that we would be able to satisfy them in all cases.Currently, Navios Holdings (a Marshall Islands corporation) owns more than 50% of our common stock. Navios Holdings has representedto us that it presently meets the Publicly Traded Test and has agreed to comply with the documentation and certification requirements described above.Accordingly, we expect that we will not be subject to the 5% Override Rule by reason of Navios Holdings’ ownership of more than 50% of our commonstock. In addition, we expect that Navios Holdings’ ownership of more than 50% of our common stock will enable us to satisfy the 50% Ownership Test.However, there can be no assurance that Navios Holdings will continue to meet the Publicly Traded Test or continue to be able to comply with thedocumentation and certification requirements described above. Consequently, there can be no assurance that Navios Holdings’ ownership of more than 50%of our common stock will not result in our being subject to the 5% Override Rule or in our failure to satisfy the 50% Ownership Test in the future.In the event that Navios Holdings owned less than 50% of our common stock in the future, we do not anticipate that we would be subject to the 5%Override Rule, but there can be no assurance in this regard. In addition, in such event, it might be difficult for us to satisfy the 50% Ownership Test due to thewidely held ownership of our stock.Taxation in Absence of ExemptionTo the extent the benefits of Section 883 are unavailable, our U.S.-source shipping income, to the extent not considered to be“effectively connected” with the conduct of a U.S. trade or business, as described below, would be subject to a 4% tax imposed by Section 887 of the Codeon a gross basis, without the benefit of deductions.Since under the sourcing rules described above, no more than 50% of our shipping income would be treated as being derived from U.S.sources, the maximum effective rate of U.S. federal income tax on our shipping income would never exceed 2% of our gross income under the 4% gross basistax regime.To the extent the benefits of the Section 883 exemption are unavailable and our U.S.-source shipping income is considered to be“effectively connected” with the conduct of a U.S. trade or business, as described below, any such “effectively connected” U.S.-source shipping income, netof applicable deductions, would be subject to the U.S. federal corporate income tax currently imposed at rates of up to 35%. In addition, we may be subject tothe 30% “branch profits” taxes on any earnings and profits effectively connected with the conduct of such trade or business, as determined after allowance forcertain adjustments, and on certain interest paid or deemed paid attributable to the conduct of our U.S. trade or business.Our U.S.-source shipping income would be considered “effectively connected” with the conduct of a U.S. trade or business only if: • we have, or are considered to have, a fixed place of business in the United States involved in the earning of shipping income; and • substantially all of our U.S.-source shipping income is attributable to regularly scheduled transportation, such as the 90 Table of Contents operation of a vessel that follows a published schedule with repeated sailings at regular intervals between the same points for voyagesthat begin or end in the United States.We do not intend to have, or permit circumstances that would result in having any vessel operating to the United States on a regularlyscheduled basis. Based on the foregoing and on the expected mode of our shipping operations and other activities, we believe that none of our U.S.-sourceshipping income will be “effectively connected” with the conduct of a U.S. trade or business.United States Taxation of Gain on Sale of VesselsRegardless of whether Navios Acquisition will qualify for exemption under Section 883, Navios should not be subject to U.S. federalincome taxation with respect to gain realized on a sale of a vessel, provided that Navios Acquisition did not depreciate the vessel for U.S. federal income taxpurposes. If the Company took depreciation deductions with respect to the vessel for U.S. federal income tax purposes (which would be the case if the vesselhad produced effectively connected income), upon the sale of such vessel, a portion of any gain realized on the sale would be sourced to the U.S. inproportion to the depreciation deductions taken in the U.S. compared to the total depreciation of the vessel.United States Federal Income Taxation of U.S. HoldersU.S. persons (individuals and corporations) generally are taxed on income earned from both U.S. and foreign sources. Sections 861-865of the Code set forth the general sourcing rules for items of income earned by both U.S. and foreign persons. Generally, dividends paid by a corporation aresourced to the country where the corporation is organized. On the other hand, gains from the sale of personal property (including capital gain from the sale ofstock) are sourced to the country where the taxpayer is resident. However, if a U.S. resident maintains an office or other fixed place of business in a foreigncountry, income from the sale of personal property attributable to such office or other fixed place of business shall be foreign source income to the U.S.resident, unless less than a 10% income tax is actually paid to a foreign country with respect to such income.DistributionsSubject to the discussion of passive foreign investment companies below, any distributions made by Navios Acquisition with respect toNavios Acquisition’s common stock to a U.S. Holder will constitute dividends, which will be taxable as ordinary income, to the extent of NaviosAcquisition’s current or accumulated earnings and profits, as determined under United States federal income tax principles. Distributions in excess of NaviosAcquisition’s earnings and profits will be treated first as a nontaxable return of capital to the extent of the U.S. Holder’s tax basis in their common stock on adollar-for-dollar basis and thereafter as capital gain. Because Navios Acquisition is not a U.S. corporation, U.S. Holders that are corporations will not beentitled to claim a dividends received deduction with respect to any distributions they receive from Navios Acquisition. Dividends paid with respect toNavios Acquisition’s common stock will be treated as “passive category income” or, in the case of certain types of U.S. Holders, as “general category income”for purposes of computing allowable foreign tax credits for U.S. foreign tax credit purposes.Generally, U.S. corporations are taxed on dividends at ordinary income tax rates (a maximum of 35%) but may be entitled to a dividendsreceived deduction in certain cases. A U.S. corporation is permitted a deduction for a certain percentage of the “U.S. source portion” of any dividendsreceived from a foreign corporation if the U.S. corporation owns at least 10% (by vote and value) of such foreign corporation’s stock. A dividend will have aU.S. source portion only where the foreign corporation has undistributed earnings attributable to (1) income which is effectively connected with the conductof a U.S. trade or business, or (2) any dividend received by the foreign corporation from a domestic corporation at least 80% of the stock of which (by vote orvalue) is owned by such foreign corporation. Although Navios Acquisition intends not to engage in a trade or business within the U.S., dividends received byNavios Acquisition from Navios Acquisition Finance or from any other U.S. corporation that Navios Acquisition owns at least 80% of the stock of should betreated as U.S. source income, and thus could result in a dividends received deduction for any U.S. corporation that owns at least 10% of Navios Acquisition’sstock. Moreover, while U.S. taxpayers are permitted to offset any U.S. federal income tax with taxes paid on such income to a foreign country, it is theCompany’s understanding that the Republic of the Marshall Islands will not impose withholding tax on dividends it pays to U.S. Holders, thus, a foreign taxcredit may not be available to the corporate U.S. Holder to offset U.S. tax.Similarly, dividends received by a U.S. citizen or individual resident are taxed at ordinary income tax rates (currently, a maximum 35%)unless such dividends constitute “qualified dividend income.” “Qualified dividend income” includes any dividend paid by a foreign corporation if the stockwith respect to which such dividend was paid is readily tradable on an established securities market in the U.S. Qualified dividend income is subject to thelong-term capital gain tax rate, which is a maximum of 15% through the end of 2012. Because the common shares of Navios Acquisition are traded on theNYSE dividends paid during 2012 to U.S. Holders that are U.S. citizens or individual residents should generally be qualified dividend income subject to thelong-term capital gains tax rate. 91 Table of ContentsSpecial rules may apply to any amounts received in respect of our comment shares that are treated as “extraordinary dividends.” Ingeneral, an extraordinary dividend is a dividend with respect to a common share that is equal to or in excess of 10.0% of a shareholder’s adjusted tax basis (orfair market value upon the shareholder’s election) in such common share. In addition, extraordinary dividends include dividends received within a one yearperiod that, in the aggregate, equal or exceed 20.0% of a shareholder’s adjusted tax basis (or fair market value). If we pay an “extraordinary dividend” on ourcommon shares that is treated as “qualified dividend income,” then any loss recognized by a individual U.S. Holder from the sale or exchange of suchcommon shares will be treated as long-term capital loss to the extent of the amount of such dividend.Sale, Exchange or Other Disposition of Common StockSubject to the discussion of passive foreign investment companies below, a U.S. Holder will recognize taxable gain or loss upon a sale,exchange or other disposition (including U.S. Holders who exercise their conversion rights) of Navios Acquisition common stock in an amount equal to thedifference between the amount realized by the U.S. Holder from such sale, exchange or other disposition and the U.S. Holder’s tax basis in such stock. Suchgain or loss will be treated as long-term capital gain or loss if the U.S. Holder’s holding period is greater than one year at the time of the sale, exchange orother disposition. Such capital gain or loss will generally be treated as U.S.-source income or loss, as applicable, for U.S. foreign tax credit purposes.A corporate U.S. Holder’s capital gains, long-term and short-term, are taxed at ordinary income tax rates. If a corporate U.S. Holderrecognizes a loss upon the disposition of common shares in Navios Acquisition, the U.S. Holder is limited to using the loss to offset other capital gain. If acorporate U.S. Holder has no other capital gain in the tax year of the loss, it may carry the capital loss back three years and forward five years.As described above, long-term capital gains of individual U.S. Holders are subject to the current favorable tax rate of 15%, which is set toincrease beginning January 1, 2013, unless legislation is enacted to extend the favorable rate. An individual U.S. Holder may deduct a capital loss resultingfrom a disposition of his/her common shares in Navios Acquisition to the extent of capital gains plus up to $3,000 ($1,500 for married individuals filingseparate tax returns) and may carry forward long-term capital losses indefinitely.Passive Foreign Investment Company Status and Significant Tax ConsequencesSpecial U.S. federal income tax rules apply to a U.S. Holder that holds stock in a foreign corporation classified as a PFIC for United Statesfederal income tax purposes. These consequences are discussed in more detail below. In general, we will be treated as a PFIC with respect to a U.S. Holder if,for any taxable year in which such holder held our common stock, either: • at least 75% of our gross income for such taxable year consists of passive income (e.g., dividends, interest, capital gains and rents derivedother than in the active conduct of a rental business); or • at least 50% of the average value of the assets held by us during such taxable year produce, or are held for the production of, passiveincome.For purposes of determining whether we are a PFIC, we will be treated as earning and owning our proportionate share of the income andassets, respectively, of any subsidiary corporation in which we own at least 25% of the value of the subsidiary’s stock. Income earned, or deemed earned, byus in connection with the performance of services will not constitute passive income. By contrast, rental income will constitute “passive income” unless weare treated under specific rules as deriving such rental income in the active conduct of a trade or business.We will be treated as a “passive foreign investment company,” or PFIC, for U.S. federal income tax purposes if either (1) at least 75% ofour gross income for any taxable year consists of certain types of “passive income” or (2) at least 50% of the average value of our assets produce or are heldfor the production of those types of “passive income.” For purposes of these tests, “passive income” includes dividends, interest, and gains from the sale orexchange of investment property and rents and royalties other than rents and royalties that are received from unrelated parties in connection with the activeconduct or a trade or business. For purposes of these tests, income derived from the performance of services does not constitute “passive income.” U.S.stockholders of a PFIC may be subject to a disadvantageous U.S. federal income tax regime with respect to the income derived by the PFIC, the distributionsthey receive from the PFIC and the gain, if any, they derive from the sale or other disposition of their shares in the PFIC. 92 Table of ContentsBased upon our income, assets and activities, we expect that we will not be treated for United States federal income tax purposes as aPFIC for the 2011 and 2010 taxable years (we were treated as a PFIC for the 2008 and 2009 taxable years), and we do not expect to be treated as a PFIC for2012 and subsequent taxable years. Commencing as of 2010, we intend to treat the gross income we will derive or will be deemed to derive from our timechartering activities as services income, rather than rental income. Accordingly, we intend to take the position that our income from time chartering activitiesdoes not constitute “passive income,” and the assets that we will own and operate in connection with the production of that income do not constitute passiveassets. There is, however, no direct legal authority under the PFIC rules addressing our proposed method of operation. Accordingly, no assurance can begiven that the U.S. Internal Revenue Service (the “IRS”), or a court of law will accept our position, and there is a risk that the IRS or a court of law coulddetermine that we are a PFIC in future years. Moreover, no assurance can be given that we would not constitute a PFIC for any future taxable year if there wereto be changes in the nature and extent of our operations. For example, if we were treated as earning rental income from our chartering activities rather thanservices income, we would be treated as a PFIC.Under the PFIC rules, unless U.S. Holders of our common stock make timely elections available under the Code (which elections could ineach case have adverse consequences for such stockholders), such stockholders would be liable to pay U.S. federal income tax at the then highest income taxrates on ordinary income plus interest upon excess distributions and upon any gain from the disposition of our common stock, as if the excess distribution orgain had been recognized ratably over the stockholder’s holding period of our common stock. If we are treated as a PFIC for any taxable year during theholding period of a U.S. Holder (we expect that we will be treated as a PFIC for the 2008,2009, but not for 2010 and future years), unless the U.S. Holdermakes an election to be treated as a “Qualified Electing Fund” (“QEF”) for the first taxable year in which they hold the stock and in which we are a PFIC, ormakes the mark-to-market election, we will continue to be treated as a PFIC for all succeeding years during which the U.S. Holder is treated as a direct orindirect U.S. Holder even if we are not a PFIC for such years. A U.S. Holder is encouraged to consult their tax adviser with respect to any available electionsthat may be applicable in such a situation. In addition, U.S. Holders should consult their tax advisers regarding the IRS information reporting and filingobligations that may arise as a result of the ownership of shares in a PFICA U.S. Holder would be required to file IRS Form 8621 for each year in which the U.S. Holder (1) recognizes gain on the direct or indirectdisposition of the common stock, (2) receives certain direct or indirect distributions from us, or (3) makes any of certain reportable elections (including a“mark-to-market” election or a “QEF” election, each as defined below). U.S. Holders should also be aware that, pursuant to recently enacted legislation, eachU.S. Holder who is a shareholder of a PFIC is required to file an annual report containing such information as the IRS may require. This requirement is inaddition to other reporting requirements applicable to ownership in a PFIC. The IRS has advised that it is developing further guidance regarding the PFICreporting obligations imposed by recent legislation and that, in the meantime, U.S. Holders that were not otherwise required to file an annual report prior toMarch 18, 2010, will not be required to file an annual report as a result of such legislation for taxable years beginning before March 18, 2010. In the event aU.S. Holder fails to file a required information report, the statute of limitations on the assessment and collection of U.S. federal income taxes of such U.S.Holder for the related tax year may not close before such information is filed. U.S. Holders should consult their own tax advisors regarding the application ofthe PFIC rules to their investment in the common stock.Taxation of U.S. Holders Making a Timely QEF ElectionIf a U.S. Holder makes a timely QEF election, which U.S. Holder we refer to as an “Electing Holder,” the Electing Holder must report eachyear for U.S. federal income tax purposes the Electing Holder’s pro rata share of our ordinary earnings (as ordinary income) and our net capital gain (as longterm capital gain), if any, for our taxable year that ends with or within the taxable year of the Electing Holder, regardless of whether or not distributions werereceived from us by the Electing Holder. The Electing Holder’s adjusted tax basis in the common stock will be increased to reflect taxed but undistributedearnings and profits. Distributions of earnings and profits that had been previously taxed will result in a corresponding reduction in the Electing Holder’sadjusted tax basis in the common stock and will not be taxed again once distributed. An Electing Holder will generally recognize capital gain or loss on thesale, exchange or other disposition of our common stock. A U.S. Holder would generally make a QEF election with respect to any year that we are a PFIC bytimely filing IRS Form 8621 with the U.S. Holder’s U.S. federal income tax return. For any taxable year as to which we are aware that we are to be treated as aPFIC, upon request, we will provide a U.S. Holder with all necessary information in order to make the QEF election described above. A QEF election will notapply to any taxable year for which we are not a PFIC, but will remain in effect with respect to any subsequent taxable year for which we are a PFIC. Each U.S.Holder is encouraged to consult its own tax adviser with respect to tax consequences of a QEF election with respect to us, and how to make a timely election.It should be noted that the beneficial effect of a QEF election may be substantially diminished if such election is not 93 Table of Contentsmade in the first year of the U.S. Holder’s holding period in which we are a PFIC.Taxation of U.S. Holders Making a “Mark-to-Market” ElectionAlternatively, if we are treated as a PFIC for the 2011 taxable year or any future taxable year and, as we anticipate, our common stock istreated as “marketable stock,” a U.S. Holder would be allowed to make a “mark-to-market” election with respect to our common stock, provided the U.S.Holder completes and timely files IRS Form 8621 in accordance with the relevant instructions and related Treasury Regulations. If that election is made, theU.S. Holder generally would include as ordinary income in each taxable year the excess, if any, of the fair market value of our common stock held by the U.S.Holder at the end of the taxable year over the U.S. Holder’s adjusted tax basis in such common stock. The U.S. Holder would also be permitted an ordinaryloss in respect of the excess, if any, of the U.S. Holder’s adjusted tax basis in such common stock over its fair market value at the end of the taxable year, butonly to the extent of the net amount previously included in the U.S. Holder’s income as a result of the mark-to-market election. A U.S. Holder’s tax basis inour common stock would be adjusted to reflect any such income or loss amount. Any gain recognized by the U.S. Holder on the sale, exchange or otherdisposition of our common stock would be treated as ordinary income, and any loss recognized by the U.S. Holder on the sale, exchange or other dispositionof our common stock would be treated as ordinary loss to the extent that such loss does not exceed the net mark-to-market gains previously included by theU.S. Holder. A mark-to-market election will not apply to our common stock held by a U.S. Holder in any taxable year during which we are not a PFIC, but willremain in effect with respect to any subsequent taxable year for which we are a PFIC. Each U.S. Holder is encouraged to consult its own tax adviser withrespect to the availability and tax consequences of a mark-to-market election with respect to our common stock and how to make a timely election.It should be noted that the beneficial effect of a “mark-to-market” election may be substantially diminished if such election is not madein the first year of the U.S. Holder’s holding period in which we are a PFIC.Taxation of U.S. Holders Not Making a Timely QEF or Mark-to-Market ElectionIf we are treated as a PFIC for the 2011 taxable year or any future taxable year, a U.S. Holder who does not make either a timely QEFelection or a timely “mark-to-market” election for that year (i.e., the taxable year in which the U.S. Holder’s holding period commences), whom we refer to asa “Non-Electing Holder,” would be subject to special rules with respect to (1) any excess distribution (i.e., the portion of any distributions received by theNon-Electing Holder on our common stock in a taxable year in excess of 125 percent of the average annual distributions received by the Non-ElectingHolder in the three preceding taxable years, or, if shorter, the Non-Electing Holder’s holding period for our common stock), and (2) any gain realized on thesale, exchange or other disposition of our common stock. Under these special rules: • the excess distribution or gain would be allocated ratably over the Non-Electing Holders’ aggregate holding period for the common stock; • the amount allocated to the current taxable year and any taxable year before we became a PFIC would be taxed as ordinary income; and • the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayerfor that year, and an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable to each such othertaxable year.Moreover, (i) any dividends received by a non-corporate U.S. Holder in a year in which we are a PFIC (or in which we were a PFIC in thepreceding year) will not be treated as “qualified dividend income” and will be subject to tax at rates applicable to ordinary income and (ii) if a Non-ElectingHolder who is an individual dies while owning our common stock, such holder’s successor generally would not receive a step-up in tax basis with respect tosuch stock. Non-electing U.S. Holders are encouraged to consult their tax advisers regarding the application of the PFIC rules to their specific situations.A Non-Electing U.S. Holder that wishes to make a QEF election, but that did not make a timely QEF election for the first year in suchholder’s holding period for which we were a PFIC, may be able to make a special “purging election” pursuant to Section 1291(d) of the Code. Pursuant to thiselection, a Non-Electing U.S. Holder would be treated as selling our common stock for fair market value on the first day of the taxable year for which thesubsequent year QEF election is made. Any gain on such deemed sale would be subject to tax as discussed above. Non-Electing U.S. Holders are encouragedto consult their tax advisers regarding the availability of a “purging election” as well as other available elections.If we are treated as a PFIC for any taxable year during the holding period of a U.S. Holder, unless the U.S. Holder makes a timely QEFelection, or a timely “mark-to-market” election, for the first taxable year in which the U.S. Holder holds our common stock and in which we are a PFIC, wewill continue to be treated as a PFIC for all succeeding years during which the U.S. Holder is treated as a direct or indirect U.S. Holder even if we are not aPFIC for such years. U.S. Holders are encouraged to consult their tax advisers with respect to any available elections that may be applicable in such asituation. In this regard, while it is our position that we should not be a PFIC for the 2010 taxable year and subsequent taxable years, there is no assurancethat our position is correct. In addition, U.S. Holders should consult their tax advisers regarding the IRS information reporting and filing obligations that mayarise as a result of the ownership of shares in a PFIC. 94 Table of ContentsCertain Information Reporting RequirementsPursuant to recently enacted legislation, effective for tax years beginning after March 18, 2010, individuals who are U.S. Holders, andwho hold “specified foreign financial assets” (as defined in section 6038D of the Code), including stock of a non-U.S. corporation that is not held in anaccount maintained by a U.S. “financial institution” (as defined in section 6038D of the Code), whose aggregate value exceeds $50,000 during the tax year,may be required to attach to their tax returns for the year certain specified information. An individual who fails to timely furnish the required information maybe subject to a penalty, unless the failure is shown to be due to reasonable cause and not due to willful neglect. Additionally, in the event a U.S. Holder doesnot file such a report, the statute of limitations on the assessment and collection of U.S. federal income taxes of such U.S. Holder for the related tax year maynot close before such report is filed. Under certain circumstances, an entity may be treated as an individual for purposes of the foregoing rules. U.S. Holders(including entities) should consult their own tax advisors regarding their reporting obligations under this legislation.U.S. Backup Withholding Tax and Related Information Reporting RequirementsIn general, dividend payments and payments of proceeds from the disposition of the common stock made to you may be subject to informationreporting requirements. Such payments may also be subject to backup withholding tax (currently at a rate of 28% and scheduled to increase to 31% in 2011)if you are a non-corporate U.S. Holder and you: • fail to provide an accurate taxpayer identification number; • are notified by the IRS that you are subject to backup withholding because you have previously failed to report all interest or dividends required tobe shown on your federal income tax returns; or • fail to comply with applicable certification requirements.Backup withholding tax is not an additional tax. Rather, you generally may obtain a refund of any amounts withheld under backup withholding rulesthat exceed your income tax liability by timely filing a refund claim with the IRS.NON-UNITED STATES TAX CONSIDERATIONSUnited States Federal Income Taxation of Non-U.S. HoldersA beneficial owner of common stock (other than a partnership) that is not a U.S. Holder is referred to herein as a Non-U.S. Holder.Dividends on Common StockNon-U.S. Holders generally will not be subject to United States federal income tax or withholding tax on dividends received with respectto Navios Holdings common stock, unless that income is effectively connected with the Non-U.S. Holder’s conduct of a trade or business in the United States.If the Non-U.S. Holder is entitled to the benefits of a United States income tax treaty with respect to those dividends, that income is taxable only if it isattributable to a permanent establishment maintained by the Non-U.S. Holder in the United States. In the event that Navios Holdings were to be taxed as aUnited States corporation, dividends received by Non-U.S. Holders could be subject to United States withholding tax. See discussion above under “UnitedStates Tax Consequences Taxation of Operating Income: In General”.Sale, Exchange or other Disposition of Common StockNon-U.S. Holders generally will not be subject to United States federal income tax or withholding tax on any gain realized upon the sale,exchange or other disposition of Navios Holdings’ common stock, unless: • the gain is effectively connected with the Non-U.S. Holder’s conduct of a trade or business in the United States (and, if the Non-U.S. Holder is entitledto the benefits of an income tax treaty with respect to that gain, that gain is attributable to a permanent establishment maintained by the Non-US Holderin the United States); or • the Non-U.S. Holder is an individual who is present in the United States for 183 days or more during the taxable year of disposition or is otherwisetreated as a United States resident for income tax purposes and other conditions are met. 95 Table of ContentsIf the Non-U.S. Holder is engaged in a United States trade or business for United States federal income tax purposes, the income from thecommon stock, including dividends and the gain from the sale, exchange or other disposition of the stock, that is effectively connected with the conduct ofthat trade or business, will generally be subject to regular United States federal income tax in the same manner as discussed in the previous section relating tothe taxation of U.S. Holders. In addition, if the shareholder is a corporate Non-U.S. Holder, the shareholder’s earnings and profits that are attributable to theeffectively connected income, which are subject to certain adjustments, may be subject to an additional branch profits tax at a rate of thirty percent (30%), orat a lower rate as may be specified by an applicable income tax treaty.Backup Withholding and Information ReportingIn general, dividend payments or other taxable distributions, made within the United States to the shareholder, will be subject toinformation reporting requirements if the shareholder is a non-corporate U.S. Holder. Such payments or distributions may also be subject to backupwithholding tax if the shareholder is a non-corporate U.S. Holder and: • fails to provide an accurate taxpayer identification number; • is notified by the IRS that the shareholder failed to report all interest or dividends required to be shown on the shareholder’s federal income tax returns;or • in certain circumstances, fails to comply with applicable certification requirements.Non-US Holders may be required to establish their exemption from information reporting and backup withholding by certifying theirstatus on IRS Form W-8ECI or W-8IMY, as applicable.If the shareholder is a Non-U.S. Holder and sells the Non-U.S. Holder’s common stock to or through a United States office of a broker, thepayment of the proceeds is subject to both United States backup withholding and information reporting unless the Non-U.S. Holder certifies that the Non-U.S.Holder is a non-United States person, under penalties of perjury, or otherwise establishes an exemption. If the Non-U.S. Holder sells common stock through anon-United States office of a non-United States broker and the sales proceeds are paid to the Non-U.S. Holder outside the United States, then informationreporting and backup withholding generally will not apply to that payment. United States information reporting requirements, but not backup withholding,however, will apply to a payment of sales proceeds, even if that payment is made to the Non-U.S. Holder outside the United States, if the Non-U.S. Holdersells common stock through a non-United States office of a broker that is a United States person or has some other contacts with the United States. Suchinformation reporting requirements will not apply, however, if the broker has documentary evidence in its records that the shareholder is a non-United Statesperson and certain other conditions are met, or otherwise establishes an exemption.The conclusions expressed above are based on current United States tax law. Future legislative, administrative or judicial changes orinterpretations, which can apply retroactively, could affect the accuracy of those conclusions.The discussion does not address all of the tax consequences that may be relevant to particular taxpayers in light of their personalcircumstances or to taxpayers subject to special treatment under the Code. Such taxpayers include non-US persons, insurance companies, tax-exempt entities,dealers in securities, banks and persons who acquired their shares of capital stock pursuant to the exercise of employee options or otherwise as compensation.F. Dividends and paying agentsNot applicable.G. Statements by expertsNot applicable.H. Documents on displayWe file reports and other information with the SEC. These materials, including this annual report and the accompanying exhibits, may beinspected and copied at the public facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549, or from the SEC’s websitehttp://www.sec.gov. You may obtain information on the operation of the public reference room by calling 1 (800) SEC-0330 and you may obtain copies atprescribed rates.I. Subsidiary informationNot applicable. 96 Table of ContentsItem 11. Quantitative and Qualitative Disclosures about Market RisksForeign Exchange RiskOur functional and reporting currency is the U.S. dollar. We engage in worldwide commerce with a variety of entities. Although ouroperations may expose us to certain levels of foreign currency risk, our transactions are predominantly U.S. dollar denominated. Transactions in currenciesother than U.S. dollar are translated at the exchange rate in effect at the date of each transaction. Differences in exchange rates during the period between thedate a transaction denominated in a foreign currency is consummated and the date on which it is either settled or translated, are recognized. Expensesincurred in foreign currencies against which the U.S. Dollar falls in value can increase thereby decreasing our income or vice versa if the U.S. dollar increasesin value. For example, during the year ended December 31, 2011, the value of U.S. dollar increased by approximately 2.3% as compared to the Euro.Interest Rate RiskAs of December 31, 2011, Navios Acquisition had a total of $885.4 million in long-term indebtness. The debt is U.S. dollar-denominated. Borrowingsunder our credit facilities bear interest at rates based on a premium over U.S.$ LIBOR except for the interest rate on the Notes which is fixed. Therefore, we areexposed to the risk that our interest expense may increase if interest rates rise. For the year ended December 31, 2011 and 2010 we paid interest on ouroutstanding debt at a weighted average interest rate of 3.16% and 3.27%, respectively. There was no debt outstanding in the comparative period in 2009. A1% increase in LIBOR would have increased our interest expense for the year ended December 31, 2011 and 2010 by $3.3 million and $1.7 million,respectively.Concentration of Credit RiskFinancial instruments, which potentially subject us to significant concentrations of credit risk, consist principally of trade accounts receivable. Weclosely monitor our exposure to customers for credit risk. We have policies in place to ensure that we trade with customers with an appropriate credit history.For the year ended December 31, 2010, Jacob Tank Chartering GMBH & CO. KG, SK Shipping Company Ltd, DOSCO, Formosa Petrochemical Corporation,Blue Light Chartering Inc and Navig8 Chemicals Shipping and Trading Co accounted for 42.5%, 18.6%, 12.9%, 12.9% and 10.9%, respectively, of NaviosAcquisition’s revenue. For the year ended December 31, 2011, we had three charter counterparties, the most significant of which were DOSCO, KG, BlueLight Chartering Inc. and Jacob Tank Chartering GMBH & Co. and which counterparties accounted for approximately 43.9%, 11.5% and 11.3%,respectively, of our total revenue. There were no customers in the corresponding 2009 period as the Company was in the development stage.Cash and Cash EquivalentCash deposits and cash equivalents in excess of amounts covered by government-provided insurance are exposed to loss in the event ofnon-performance by financial institutions. The Company does maintain cash deposits and equivalents in excess of government-provided insurance limits.The Company also minimizes exposure to credit risk by dealing with a diversified group of major financial institutions.InflationInflation has had a minimal impact on vessel operating expenses and general and administrative expenses. Our management does not consider inflationto be a significant risk to direct expenses in the current and foreseeable economic environment.Item 12. Description of Securities Other than Equity SecuritiesNot applicable. 97 Table of ContentsPART IIItem 13. Defaults, Dividend Arrearages and DelinquenciesNone.Item 14. Material Modifications to the Rights of Shareholders and Use of ProceedsNone.Item 15. Controls and ProceduresA. Disclosure Controls and ProceduresThe management of the Company, with the participation of the CEO and the CFO, conducted an evaluation, pursuant to Rule 13a-15promulgated under the Exchange Act, of the effectiveness of our disclosure controls and procedures as of December 31, 2011. Based on this evaluation, themanagement concluded that the disclosure controls and procedures were effective as of December 31, 2011.Disclosure controls and procedures means controls and other procedures that are designed to ensure that information required to bedisclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periodsspecified in the SEC rules and forms and that such information required to be disclosed by us in the reports that we file or submit under the Exchange Act isaccumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similarfunctions, as appropriate to allow timely decisions regarding required disclosures.B. Management’s annual report on internal control over financial reportingThe management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting asdefined in Rule 13a-15(f) or 15d-15(f) of the Exchange Act. Navios Acquisition’s internal control system was designed to provide reasonable assurance to theCompany’s management and board of directors regarding the preparation and fair presentation of published financial statements.All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to beeffective can provide only reasonable assurance with respect to financial statement preparation and presentation.The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31,2011. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in InternalControl — Integrated Framework. Based on its assessment, management believes that, as of December 31, 2011, the Company’s internal control overfinancial reporting is effective based on those criteria.The Company’s independent registered public accounting firm has issued an attestation report on the Company’s internal control overfinancial reporting.C. Attestation report of the registered public accounting firmThe Company’s independent registered public accounting firm has issued an audit report on the Company’s internal control overfinancial reporting. This report appears on Page F-2 of the consolidated financial statements.D. Changes in internal control over financial reportingThere have been no changes in internal controls over financial reporting (identified in connection with management’s evaluation of suchinternal controls over financial reporting) that occurred during the year covered by this annual report that have materially affected, or are reasonably likely tomaterially affect, the Company’s internal controls over financial reporting.Item 16A. Audit Committee Financial ExpertOur audit committee consists of three independent directors, Messrs. Veraros and Koilalous, and Ms. Noury. Each member of our auditcommittee is financially literate under the current listing standards of the New York Stock Exchange, and our board of directors has determined thatMr. Veraros qualifies as an “audit committee financial expert,” as such term is defined by the SEC. Mr. Veraros is independent under applicable NYSE andSEC standards. 98 Table of ContentsItem 16B. Code of EthicsWe have adopted a code of conduct and ethics applicable to our directors and officers in accordance with applicable federal securitieslaws and the rules of the New York Stock Exchange. The code is available for review on our website at http://www.navios-acquisition.com.Item 16C. Principal Accountant Fees and ServicesAudit FeesOur principal accountants for fiscal year 2011 and 2010 were PricewaterhouseCoopers S.A. The audit fees for the audit of each of theyears ended December 31, 2011 and 2010 were $0.4 million and $0.4 million, respectively.Audit-Related FeesThere were no audit-related fees billed in 2011 and 2010.Tax FeesThere were no tax fees billed in 2011 and 2010.Other FeesThere were no other fees billed in 2011 and 2010.Audit CommitteeThe Audit Committee is responsible for the appointment, replacement, compensation, evaluation and oversight of the work of theindependent auditors. As part of this responsibility, the audit committee pre-approves the audit and non-audit services performed by the independent auditorsin order to assure that they do not impair the auditors’ independence from Navios Acquisition. The Audit Committee has adopted a policy which sets forththe procedures and the conditions pursuant to which services proposed to be performed by the independent auditors may be pre-approved.The Audit Committee separately pre-approved all engagements and fees paid to our principal accountants in 2011 and 2010.Item 16D. Exemptions from the Listing Standards for Audit CommitteesNot applicable.Item 16E. Purchases of Equity Securities by the Issuer and Affiliated PurchasersPursuant to an Exchange Agreement entered into March 30, 2011, Navios Holdings exchanged 7,676,000 shares of Navios Acquisition’scommon stock it held for 1,000 shares of Series C Convertible Preferred Stock of Navios Acquisition.Item 16F. Change in Registrant’s Certifying AccountantThis information required to be disclosed to this Item 16F was previously reported in a Form 6-K filed with the SEC on July 21, 2010.Item 16G. Corporate GovernancePursuant to an exception for foreign private issuers, we are not required to comply with the corporate governance practices followed byU.S. companies under the New York Stock Exchange listing standards. However, we have voluntarily adopted all of the New York Stock Exchange requiredpractices, except we do not have (i) a compensation committee consisting of independent directors or (ii) a compensation committee charter specifying thepurpose and responsibilities of the compensation committee. Instead, all compensation decisions are currently made by a majority of our independent boardmembers. 99 Table of ContentsItem 16H. Mine Safety DisclosuresNot applicable.Item 17. Financial StatementsSee Item 18.Item 18. Financial StatementsSee index to Financial Statements on page F-1.Item 19. Exhibits ExhibitNo. Description 1.1 Amended and Restated Articles of Incorporation (Previously filed as an exhibit to a Report on Form 6-K filed on June 4, 2010 and herebyincorporated by reference.) 1.2 Articles of Amendment to the Amended and Restated Articles of Incorporation (Previously filed as an exhibit to a Report on Form 6-K filed onFebruary 10, 2011, and hereby incorporated by reference.) 1.3 By-laws (Previously filed as an exhibit to the Navios Acquisition Registration Statement on Form F-1, as amended (File No 333-151707) andhereby incorporated by reference.) 2.1 Specimen Unit Certificate (Previously filed as an exhibit to the Navios Acquisition Registration Statement on Form F-1, as amended (File No333-151707) and hereby incorporated by reference.) 2.2 Specimen Common Stock Certificate (Previously filed as an exhibit to the Navios Acquisition Registration Statement on Form F-1, as amended(File No 333-151707) and hereby incorporated by reference.) 2.3 Specimen Warrant Certificate (Previously filed as an exhibit to the Navios Acquisition Registration Statement on Form F-1, as amended (FileNo 333-151707) and hereby incorporated by reference.) 2.4 Form of Amendment to Warrant Agreement between Continental Stock Transfer & Trust Company and Navios Acquisition (Previously filed asan exhibit to a Report on Form 6-K filed on July 29, 2010, and hereby incorporated by reference.) 2.5 Certificate of Designation of the Series A Convertible Preferred Stock, as filed with the Registrar of Companies of the Republic of the MarshallIslands on September 16, 2010 (Previously filed as an exhibit to a Report on Form 6-K filed on September 21, 2010, and hereby incorporated byreference.) 2.6 Indenture dated October 21, 2010 (Previously filed as an exhibit to a Report on Form 6-K filed on October 26, 2010, and hereby incorporatedby reference.) 100 Table of Contents 2.7 Certificate of Designation of the Series B Convertible Preferred Stock, as filed with the Registrar of Companies of the Republic of the MarshallIslands on October 29, 2010 (Previously filed as an exhibit to a Report on Form 6-K filed on November 9, 2010, and hereby incorporated byreference.) 2.8 First Supplemental Indenture dated November 9, 2010 (Previously filed as an exhibit to a Report on Form 6-K filed on December 22, 2010, andhereby incorporated by reference.) 2.9 Certificate of Designation of the Series C Convertible Preferred Stock, as filed with the Registrar of Companies of the Republic of the MarshallIslands on March 29, 2011 (Previously filed as an exhibit to a Report on Form 6-K filed on April 12, 2011, and hereby incorporated by reference.) 2.10 Second Supplemental Indenture dated May 20, 2011 (Previously filed as an exhibit to a Report on Form 6-K filed on May 27, 2011, and herebyincorporated by reference.) 2.11 Third Supplemental Indenture dated May 26, 2011 (Previously filed as an exhibit to a Report on Form 6-K filed on May 27, 2011, and herebyincorporated by reference.) 2.12 Fourth Supplemental Indenture dated July 1, 2011 (Previously filed as an exhibit to a Report on Form 6-K filed on July 22, 2011, and herebyincorporated by reference.) 2.13 Fifth Supplemental Indenture dated December 15, 2011 (Previously filed as an exhibit to a Report on Form 6-K filed on January 12, 2012, andhereby incorporated by reference.) 4.1 Form of Right of First Refusal Agreement among Navios Acquisition, Navios Holdings and Navios Partners (Previously filed as an exhibit to theNavios Acquisition Registration Statement on Form F-1, as amended (File No 333-151707) and hereby incorporated by reference.) 4.2 Repurchase Plan dated April 8, 2010 (Previously filed as an exhibit to a Report on Form 6-K filed on April 12, 2010, and hereby incorporated byreference.) 4.3 Amendment to Buyback Agreement dated April 8, 2010 (Previously filed as an exhibit to a Report on Form 6-K filed on April 12, 2010, andhereby incorporated by reference.) 4.4 Amended Co-Investment Shares Subscription Agreement dated April 8, 2010 (Previously filed as an exhibit to a Report on Form 6-K filed onJune 4, 2010, and hereby incorporated by reference.) 4.5 Acquisition Agreement, dated April 8, 2010 between Navios Acquisition and Navios Holdings (Previously filed as an exhibit to a Report onForm 6-K filed on June 4, 2010, and hereby incorporated by reference.) 4.6 Management Agreement dated May 28, 2010 between Navios Acquisition and Navios Ship Management Inc. (Previously filed as an exhibit to aReport on Form 6-K filed on June 4, 2010, and hereby incorporated by reference.) 4.7 Administrative Services Agreement dated May 28, 2010 between Navios Acquisition and Navios Ship Management Inc. (Previously filed as anexhibit to a Report on Form 6-K filed on June 4, 2010, and hereby incorporated by reference.) 4.8 Acquisition Omnibus Agreement dated May 28, 2010 among Navios Acquisition, Navios Holdings and Navios Partners (Previously filed as anexhibit to a Report on Form 6-K filed on June 4, 2010, and hereby incorporated by reference.) 4.9 Securities Purchase Agreement dated July 18, 2010 between Navios Acquisition and Vanship Holdings Limited (Previously filed as an exhibit to aReport on Form 6-K filed on July 26, 2010, and hereby incorporated by reference.) 101 Table of Contents 4.10 Credit Agreement, dated April 7, 2010, among certain vessel-owning subsidiaries and Deutsche Schiffsbank AG, Alpha Bank A.E. and CreditAgricole Corporate and Investment Bank (Previously filed as an exhibit to a Report on Form 6-K filed on June 4, 2010, and hereby incorporatedby reference.) 4.11 Credit Agreement, dated April 8, 2010, among certain vessel-owning subsidiaries and DVB Bank SE and Fortis Bank (Previously filed as anexhibit to a Report on Form 6-K filed on June 4, 2010, and hereby incorporated by reference.) 4.12 Form of Revolving Credit Facility with Marfin Egnatia Bank (Previously filed as an exhibit to a Report on Form 6-K filed on June 4, 2010, andhereby incorporated by reference.) 4.13 Facility Agreement for $52 million term loan facility, dated May 28, 2010 Previously filed as an exhibit to a Report on Form 6-K filed on June 4,2010, and hereby incorporated by reference.) 4.14 Facility Agreement for $52.2 million term loan facility, dated October 26, 2010 (Previously filed as an exhibit to a Report on Form 6-K filed onNovember 9, 2010, and hereby incorporated by reference.) 4.15 Facility Agreement for $52 million term loan facility, dated December 6, 2010 (Previously filed as an exhibit to a Report on Form 6-K filed onJanuary 12, 2012, and hereby incorporated by reference.) 4.16 Registration Rights Agreement dated May 26, 2011 (Previously filed as an exhibit to a Report on Form 6-K filed on May 27, 2011, and herebyincorporated by reference.) 4.17 Loan Agreement for $40.0 million with Navios Maritime Holdings Inc., dated September 7, 2010 (Previously filed as an exhibit to a Report onForm 6-K filed on May 27, 2011, and hereby incorporated by reference.) 4.18 Letter Agreement Nr. 1 to Loan Agreement, dated as of October 21, 2010 (Previously filed as an exhibit to a Report on Form 6-K filed on May 27,2011, and hereby incorporated by reference.) 4.19 Facility Agreement for $55.1 million term loan facility, dated July 8, 2011 (Previously filed as an exhibit to a Report on Form 6-K filed onJuly 21, 2011, and hereby incorporated by reference.) 4.20 Letter Agreement Nr. 2 to Loan Agreement, dated November 8, 2011 (Previously filed as an exhibit to a Report on Form 6-K filed on November15, 2011, and hereby incorporated by reference.) 4.21 Facility Agreement for $51 million term loan facility, dated December 7, 2011 (Previously filed as an exhibit to a Report on Form 6-K filed onDecember 14, 2011, and hereby incorporated by reference.) 4.22 First Supplemental Agreement dated December 20, 2011, to Facility Agreement dated May 28, 2010, for $52 million term loan facility (Previouslyfiled as an exhibit to a Report on Form 6-K filed on January 12, 2012, and hereby incorporated by reference.) 4.23 Facility Agreement for up to $28.125 million term loan facility, dated December 29, 2011 (Previously filed as an exhibit to a Report on Form 6-Kfiled on February 22, 2012, and hereby incorporated by reference.) 4.24 Facility Agreement for $56.250 million term loan facility, dated December 29, 2011 (Previously filed as an exhibit to a Report on Form 6-K filedon February 22, 2012, and hereby incorporated by reference.) 8.1 List of subsidiaries.12.1 Certification by principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *12.2 Certification by principal financial officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002. *13.1 Certification by principal executive officer and principal financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 15.1 Consent of Rothstein Kass * 102+ Table of Contents15.2 Consent of PricewaterhouseCoopers S.A. * *Filed herewith.+Furnished herewith.SignaturesNavios Maritime Acquisition Corporation hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused andauthorized the undersigned to sign this Annual Report on its behalf. Navios Maritime Acquisition Corporation /s/ Angeliki Frangou By: Angeliki Frangou Its: Chairman and Chief Executive OfficerDate: March 15, 2012 103 Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATION REPORT OF PRICEWATERHOUSECOOPERS S.A INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM F-2 REPORT OF ROTHSTEIN KASS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM F-3 CONSOLIDATED BALANCE SHEETS AT DECEMBER 31, 2011 AND 2010 F-4 CONSOLIDATED STATEMENTS OF OPERATIONS FOR EACH OF THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 F-5 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR EACH OF THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 F-6 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR EACH OF THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 F-8 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS F-9 F-1 Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Shareholders and Board of Directors ofNavios Maritime Acquisition Corporation:In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, changes in equity and cash flows for theyears ended December 31, 2011 and 2010 present fairly, in all material respects, the financial position of Navios Maritime Acquisition Corporation and itssubsidiaries (the “Company”) at December 31, 2011 and 2010, and the results of their operations and their cash flows for the periods ended December 31,2011 and December 31, 2010 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, theCompany maintained, in all material respects, effective internal control over financial reporting as of December 31, 2011, based on criteria established inInternal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’smanagement is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of theeffectiveness of internal control over financial reporting, included in “Management’s annual report on internal control over financial reporting”, appearing inItem 15(b) of the Company’s 2011 Annual Report on Form 20-F. Our responsibility is to express opinions on these financial statements and on theCompany’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the PublicCompany Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance aboutwhether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in allmaterial respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financialstatements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statementpresentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessingthe risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Ouraudits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basisfor our opinions.A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate./s/ PricewaterhouseCoopers S.A.Athens, GreeceMarch 15, 2012 F-2 Table of Contents CertifiedPublicAccountants Rothstein Kass1350 Avenue of the AmericasNew York, NY 10019tel 212.997.0500fax 212.730.6892www.rkco.com Beverly HillsDallasDenverGrand CaymanNew YorkRoselandSan FranciscoWalnut Creek Report of Independent Registered Public Accounting FirmTo the Board of Directors and Stockholders of Navios Maritime Acquisition CorporationWe have audited the accompanying statements of operations, stockholders’ equity and cash flows for the year ended December 31, 2009 of NaviosMaritime Acquisition Corporation (the “Company”). We have also audited the Company’s internal control over financial reporting as of December 31, 2009based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission(COSO). The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and forits assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on InternalControl over Financial Reporting. Our responsibility is to express an opinion on these financial statements and an opinion on the Company’s internal controlover financial reporting based on our audits.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standardsrequire that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement andwhether effective internal control over financial reporting was maintained in all material respects. Our audit of the financial statements included examining,on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significantestimates made by management, as well as evaluating the overall financial statement presentation. Our audit over internal control over financial reportingincluded obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as weconsidered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinion.A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’sinternal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of thecompany are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assuranceregarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on thefinancial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degreeof compliance with the policies or procedures may deteriorate.In our opinion, the financial statements referred to above present fairly, in all material respects, the results of the Company’s operations and its cashflows for the year ended December 31, 2009 in conformity with accounting principles generally accepted in the United States of America. Also in ouropinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on criteriaestablished in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).The accompanying financial statements have been prepared assuming that Navios Maritime Acquisition Corporation will continue as a going concern.Navios Maritime Acquisition Corporation will face a mandatory liquidation if a business combination is not consummated by July 1, 2010, which raisessubstantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from theoutcome of this uncertainty. /s/ Rothstein KassRoseland, New JerseyJanuary 29, 2010 F-3 Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONCONSOLIDATED BALANCE SHEETS(Expressed in thousands of U.S. Dollars except share data) Notes December 31,2011 December 31,2010 ASSETS Current assets Cash and cash equivalents 5 $41,300 $61,360 Restricted cash, short term portion 5 30,640 15,012 Accounts receivable, net 6 6,478 4,479 Prepaid expenses and other current assets 489 351 Total current assets 78,907 81,202 Vessels, net 7 774,624 529,659 Deposits for vessels acquisitions 7 245,567 296,690 Deferred finance costs, net 8 24,819 18,178 Goodwill 10 1,579 1,579 Intangible assets-other than goodwill 9 59,879 58,992 Restricted cash, long-term portion 5 1,574 18,787 Other long-term assets 6 1,310 — Deferred dry dock and special survey costs, net 7,210 — Total non-current assets 1,116,562 923,885 Total assets $1,195,469 $1,005,087 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable 11 $1,021 $3,454 Dividend payable 12 2,421 2,421 Accrued expenses 13 15,492 9,219 Due to related parties 17 43,616 6,080 Deferred revenue 3,251 2,765 Current portion of long-term debt 14 11,928 5,086 Total current liabilities 77,729 29,025 Long-term debt, net of current portion and premium 14 833,483 704,332 Loans due to related party 17 40,000 12,391 Other long-term liabilities 480 — Unfavorable lease terms 9 4,928 5,611 Total non-current liabilities 878,891 722,334 Total liabilities 956,620 751,359 Commitments and contingencies 18 — — Stockholders’ equity Preferred stock, $0.0001 par value; 10,000,000 shares authorized; 4,540 and 3,540 issued and outstanding as ofDecember 31, 2011 and December 31, 2010, respectively 19 — — Common stock, $0.0001 par value; 250,000,000 shares authorized; 40,517,413 and 48,410,572 issued andoutstanding as of December 31, 2011 and December 31, 2010, respectively 19 4 5 Additional paid-in capital 19 255,849 266,870 Accumulated Deficit (17, 004) (13,147) Total stockholders’ equity 238, 849 253,728 Total liabilities and stockholders’ equity $1,195,469 $1,005,087 See notes to consolidated financial statements F-4 Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONCONSOLIDATED STATEMENTS OF OPERATIONS(Expressed in thousands of U.S. dollars- except share and per share data) Year endedDecember 31, Year endedDecember 31, Year endedDecember 31, Notes 2011 2010 2009 Revenue $121,925 $33,568 $— Time charter expenses (3,499) (355) — Direct vessel expenses (633) — — Management fees 17 (35,679) (9,752) — General and administrative expenses 17 (4,241) (1,902) (994) Share based compensation 17 — (2,140) — Transaction costs 4 — (8,019) — Depreciation and amortization 7,9 (38,638) (10,120) — Prepayment penalties & write-off of deferred finance fees 8 (935) (5,441) — Interest income 1,414 862 346 Interest expenses and finance cost, net 14 (43,165) (10,651) — Other (expense)/income, net (406) 404 — Net loss $(3,857) $(13,546) $(648) Incremental fair value of securities offered to induce warrants exercise — (647) — Dividend declared on preferred shares Series B (108) — — Undistributed loss attributable to Series C participating preferred shares 587 — — Net loss attributable to common stockholders 21 $(3,378) $(14,193) $(648) Net loss per share, basic 21 $(0.08) $(0.43) $(0.03) Weighted average number of shares, basic 41,409,433 32,677,318 21,505,001 Net loss per share, diluted 21 $(0.08) $(0.43) $(0.02) Weighted average number of shares, diluted 41,409,433 32,677,318 21,505,001 See notes to consolidated financial statements F-5 Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS(Expressed in thousands of U.S. dollars) Notes Year endedDecember 31,2011 Year endedDecember 31,2010 Year endedDecember 31,2009 Operating Activities Net loss $(3,857) $(13,546) $(648) Adjustments to reconcile net loss to net cash provided by / (used in) operating activities: Depreciation and amortization 7,9 38,638 10,120 — Amortization and write-off of deferred finance cost, net 8 3,188 3,456 — Amortization of dry dock and special survey costs 633 — — Non-cash transaction costs 19 — 5,619 — Share based compensation 17 — 2,140 — Changes in operating assets and liabilities: (Increase)/decrease in prepaid expenses (1,369) 3,188 (2) Increase in accounts receivable (1,999) (4,479) — Increase in restricted cash (451) (288) — Increase in other long term assets (1,310) — — (Decrease)/increase in accounts payable (2,433) 3,398 27 Increase/(decrease) in accrued expenses 6,273 (4,022) 106 Payments for dry dock and special survey costs (7,843) — — Increase/(decrease) in due to related parties 37,536 5,569 (106) Increase in deferred revenue 486 324 — Increase in other long term liabilities 480 — — Net cash provided by/ (used in) operating activities $67,972 $11,479 $(623) Investing Activities Cash paid for assets acquired, net of cash assumed 3 — (76,428) — Cash paid for business acquisition, net of cash assumed 4 — (102,038) — Acquisition of vessels 7 (143,233) (89,910) — Deposits for vessel acquisitions 7 (79,705) (90,233) — Decrease in restricted cash 3,769 2,335 — Acquisition of intangible assets other that goodwill (10,347) — — Release from trust account — 251,493 708 Net cash (used in)/ provided by investing activities $(229,516) $(104,781) $708 Financing Activities Loan proceeds, net of deferred finance costs and net of premium 14 252,075 556,671 — Loan proceeds from related party, net of deferred finance cost 33,209 39,600 — Deferred underwriter’s fee 3 — (8,855) — Repayment on loans from related party (6,000) (27,609) — Loan repayments 14 (126,277) (412,245) — Net proceeds from warrant exercise 19 — 74,978 — Conversion of common stock into cash, upon redemption of commonstock 3 — (99,312) — Dividend paid (9,790) — — Increase in restricted cash (1,733) (250) — Net proceeds from equity offering 19 — 33,402 — Issuance costs for preferred shares 19 — (1,805) — F-6 Table of ContentsNet cash provided by financing activities $141,484 $154,575 $— Net (decrease)/increase in cash and cash equivalents (20,060) 61,273 85 Cash and cash equivalents, beginning of year 61,360 87 2 Cash and cash equivalents, end of year $41,300 $61,360 $87 Supplemental disclosures of cash flow information Cash interest paid, net of capitalized interest $40,672 $2,933 $— Non — cash investing activities Common stock issued for VLCC acquisition $— $10,745 $— Preferred stock issued for VLCC transaction costs $— $5,619 $— Preferred stock issued for vessel deposits $— $1,649 $— Capitalized financing costs $766 $320 $— Due to related party $— $480 $— Release from escrow $1,232 $— $— Non-cash financing activities Dividends payable $2,421 $2,421 $— Deferred underwriter’s fee $— $— $8,855 Initial acquisition of 13 vessels (see note 3) Restricted cash 35,596 Deposits for vessel acquisitions 174,411 Purchase options 3,158 Debt assumed (132,987) Long term liabilities (3,158) Accrued expenses (112) Total 76,908 Cash paid, net of cash received of $57 76,428 Payable to Navios Holdings 480 Total 76,908 VLCC Acquisition (see note 4) Purchase price: Cash consideration 134,270 Equity issuance 9,513 Total purchase price 143,783 Fair value of assets and liabilities acquired: Vessels 419,500 Deposits for vessel acquisition 62,575 Favorable lease terms 57,070 Current Assets including cash of $32,232 35,716 Current liabilities (16,387) Long-term debt assumed (including current portion) (410,451) Unfavorable lease terms (5,819) Fair Value of net assets acquired 142,204 Goodwill 1,579 See notes to consolidated financial statements F-7 Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONCONSOLIDATED STATEMENTS OF CHANGES IN EQUITY(Expressed in thousands of U.S. dollars, except share data) Preferred Stock Common Stock Note NumberofPreferredShares Amount Number ofCommonUnits/Shares Amount AdditionalPaid-inCapital (Accumulateddeficit)/Retainedearnings TotalStockholders’Equity Balance, December 31 2008 — — 31,625,000 $3 $141,588 $1,047 $142,638 Net loss — — — — — (648) (648) Balance, December 31, 2009 — $— 31,625,000 $3 $141,588 $399 $141,990 Common stock redeemed — — (10,021,399) (1) — — (1) Common stock not redeemed — — — — 978 — 978 Directors compensation (290,000 units) 17 — — — — 2,140 — 2,140 Shares Issued from Warrant TenderProgram, net — — 18,412,053 2 74,976 — 74,978 Shares issued in business acquisition 4 — — 1,894,918 — 10,745 — 10,745 Preferred Shares issued, net of expenses 19 3,540 — — — 5,463 — 5,463 Equity offering, net of offeringexpenses 19 — — 6,500,000 1 33,401 — 33,402 Dividend declared/paid — — — — (2,421) — (2,421) Net loss — — — — — (13,546) (13,546) Balance, December 31, 2010 3,540 $— 48,410,572 $5 $266,870 $(13,147) $253,728 Common stock exchanged for 1,000Series C Preferred Shares 19 1,000 — (7,676,000) (1) 1 — — Shares reimbursed from escrow insettlement of claim 4 — — (217,159) — (1,232) — (1,232) Dividend declared/paid — — — — (9,790) — (9,790) Net loss — — — — — (3,857) (3,857) Balance, December 31, 2011 4,540 $— 40,517,413 $4 $255,849 $(17,004) $238,849 See notes to consolidated financial statements F-8 Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars, except share data)NOTE 1: DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONSNavios Maritime Acquisition Corporation (“Navios Acquisition” or the “Company”) (NYSE: NNA) owns a large fleet of modern crude oil, refinedpetroleum product and chemical tankers providing world-wide marine transportation services. The Company’s strategy is to charter its vessels tointernational oil companies, refiners and large vessel operators under long, medium and short-term charters. The Company is committed to providing qualitytransportation services and developing and maintaining long-term relationships with its customers. The operations of Navios Acquisition are managed byNavios Tankers Management Inc. (the “Manager”), a subsidiary of Navios Maritime Holdings Inc. (“Navios Holdings”) from its head offices in Piraeus,Greece.Navios Acquisition was incorporated in the Republic of Marshall Islands on March 14, 2008. On July 1, 2008, Navios Acquisition completed its initialpublic offering, or its IPO. In the offering, Navios Acquisition sold 25,300,000 units, consisting of one common stock and one warrant for an aggregatepurchase price of $253,000. Simultaneously with the closing of the IPO, Navios Holdings purchased 7,600,000 warrants from Navios Acquisition in a privateplacement (the “Private Placement Warrants”). The proceeds from this private placement of warrants were added to the proceeds of the IPO and placed in atrust account.On May 25, 2010, after its special meeting of stockholders, Navios Acquisition announced the approval of: (a) the acquisition from Navios Holdings of13 vessels (11 product tankers and two chemical tankers) for an aggregate purchase price of $457,659, of which $128,659 was to be paid from existing cashand the $329,000 balance with existing and new debt financing pursuant to the terms and conditions of the Acquisition Agreement by and between NaviosAcquisition and Navios Holdings; and (b) certain amendments to Navios Acquisition’s amended and restated articles of incorporation.On May 28, 2010, Navios Acquisition consummated the vessel acquisition, which constituted its initial business combination (see note 3). Inconnection with the stockholder vote to approve the business combination, holders of 10,021,399 shares of common stock voted against the businesscombination and elected to redeem their shares in exchange for an aggregate of approximately $99,312, which amount was disbursed from the Company’sinvestments held in the trust account on May 28, 2010. In addition, on May 28, 2010, Navios Acquisition disbursed an aggregate of $8,855 from the trustaccount to the underwriters of its IPO for deferred fees. After disbursement of approximately $76,485 to Navios Holdings to reimburse it for the first equityinstallment payment on the vessels of $38,763 and other associated payments, the balance of the trust account of $66,118 was released to Navios Acquisitionfor general operating expenses. Following such transaction, Navios Acquisition commenced its operations as an operating company and was controlled byNavios Holdings.On September 10, 2010, Navios Acquisition consummated the acquisition (the “VLCC Acquisition”) of a fleet of seven very large crude carrier(“VLCC”) vessels for an aggregate purchase price of $587,000, adjusted for net working capital acquired of $20,561 (see note 4). The purchase price wasfinanced as follows: (a) $410,451 of bank debt, assumed at closing, consisting of six credit facilities with a consortium of banks; (b) $134,270 of cash paid atclosing; (c) $11,000 through the issuance of 1,894,918 Navios Acquisition shares of common stock (based on the closing trading price averaged over the 15trading days immediately prior to closing on September 10, 2010) of which 1,378,122 shares of common stock were deposited to a one-year escrow toprovide for indemnity or other claims (see note 19 of the condensed consolidate financial statements included herein); and (d) $51,425 due to a shipyard in2011 for the newbuilding that was delivered in June 2011. The 1,894,918 shares were valued at the opening price of the stock on the date of the acquisitionof $5.67.On March 30, 2011, Navios Holdings exchanged 7,676,000 shares of Navios Acquisition’s common stock it held for 1,000 shares of Series CConvertible Preferred Stock of Navios Acquisition pursuant to an Exchange Agreement entered into on March 30, 2011, between Navios Acquisition andNavios Holdings (see note 19). Following this exchange, Navios Holdings has 45% of the voting power and 53.7% of the economic interest in NaviosAcquisition.On November 4, 2011, a total of 1,160,963 shares of common stock were released to the sellers of the “VLCC Acquisition” and the remaining 217,159were returned to Navios Acquisition in settlement of claims relating to representations and warranties attributable to the sellers. The returned shares werecancelled on December 30, 2011.As of December 31, 2011, Navios Acquisition had outstanding: 40,517,413 shares of common stock, 4,540 shares of preferred stock, and 6,037,994public warrants. Included in the number of shares and warrants are 18,815 units (one unit consists of one share of common stock and one warrant). F-9 Table of ContentsNOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(a) Basis of presentation: The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted inthe United States of America (GAAP). Where necessary, comparative figures have been reclassified to conform to changes in presentation in the current year.(b) Principles of consolidation: The accompanying consolidated financial statements include the accounts of Navios Acquisition, a Marshall Islandscorporation, and its majority owned subsidiaries. All significant intercompany balances and transactions have been eliminated in the consolidatedstatements.The Company also consolidates entities that are determined to be variable interest entities as defined in the accounting guidance, if it determines thatit is the primary beneficiary. A variable interest entity is defined as a legal entity where either (a) equity interest holders as a group lack the characteristics of acontrolling financial interest, including decision making ability and an interest in the entity’s residual risks and rewards, or (b) the equity holders have notprovided sufficient equity investment to permit the entity to finance its activities without additional subordinated financial support, or (c) the voting rightsof some investors are not proportional to their obligations to absorb the expected losses of the entity, their rights to receive the expected residual returns ofthe entity, or both and substantially all of the entity’s activities either involve or are conducted on behalf of an investor that has disproportionately fewvoting rights.(c) Subsidiaries: Subsidiaries are those entities in which the Company has an interest of more than one half of the voting rights and/or otherwise has power togovern the financial and operating policies. The acquisition method of accounting is used to account for the acquisition of subsidiaries if deemed to be abusiness combination. The cost of an acquisition is measured as the fair value of the assets given up, shares issued or liabilities undertaken at the date ofacquisition. The excess of the cost of acquisition over the fair value of the net assets acquired and liabilities assumed is recorded as goodwill.As of December 31, 2011, Navios Acquisition’s subsidiaries included in these consolidated financial statements are: Navios Maritime Acquisition Corporationand Subsidiaries: Nature Country ofIncorporation Statement of operations 2011 2010 2009Company Name Aegean Sea Maritime Holdings Inc. Sub-Holding Company Marshall Is. 1/1 - 12/31 5/28 - 12/31 — Amorgos Shipping Corporation Vessel Owning Company Marshall Is. 1/1 - 12/31 5/28 - 12/31 — Andros Shipping Corporation Vessel Owning Company Marshall Is. 1/1 - 12/31 5/28 - 12/31 — Antikithira Shipping Corporation Vessel Owning Company Marshall Is. 6/7 - 12/31 — — Antiparos Shipping Corporation Vessel Owning Company Marshall Is. 1/1 - 12/31 5/28 - 12/31 — Amindra Shipping Co. Sub-Holding Company Marshall Is. 4/28 - 12/31 — — Crete Shipping Corporation Vessel Owning Company Marshall Is. 1/1 - 12/31 5/28 - 12/31 — Folegandros Shipping Corporation Vessel Owning Company Marshall Is. 1/1 - 12/31 10/26 - 12/31 — Ikaria Shipping Corporation Vessel Owning Company Marshall Is. 1/1 - 12/31 5/28 - 12/31 — Ios Shipping Corporation Vessel Owning Company Cayman Is. 1/1 - 12/31 5/28 - 12/31 — Kithira Shipping Corporation Vessel Owning Company Marshall Is. 6/7 - 12/31 — — Kos Shipping Corporation Vessel Owning Company Marshall Is. 1/1 - 12/31 5/28 - 12/31 — Mytilene Shipping Corporation Vessel Owning Company Marshall Is. 1/1 - 12/31 5/28 - 12/31 — Navios Maritime Acquisition Corporation Holding Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Navios Acquisition Finance (U.S.) Inc. Co-Issuer Delaware 1/1 - 12/31 10/05 - 12/31 — Rhodes Shipping Corporation Vessel Owning Company Marshall Is. 1/1 - 12/31 5/28 - 12/31 — Serifos Shipping Corporation Vessel Owning Company Marshall Is. 1/1 - 12/31 10/26 - 12/31 — Shinyo Dream Limited Vessel Owning Company Hong Kong 1/1 - 12/31 9/10 - 12/31 — Shinyo Kannika Limited Vessel Owning Company Hong Kong 1/1 - 12/31 9/10 - 12/31 — Shinyo Kieran Limited Vessel Owning Company British Virgin Is. 1/1 - 12/31 9/10 - 12/31 — Shinyo Loyalty Limited Vessel Owning Company Hong Kong 1/1 - 12/31 9/10 - 12/31 — Shinyo Navigator Limited Vessel Owning Company Hong Kong 1/1 - 12/31 9/10 - 12/31 — Shinyo Ocean Limited Vessel Owning Company Hong Kong 1/1 - 12/31 9/10 - 12/31 — Shinyo Saowalak Limited Vessel Owning Company British Virgin Is. 1/1 - 12/31 9/10 - 12/31 — Sifnos Shipping Corporation Vessel Owning Company Marshall Is. 1/1 - 12/31 5/28 - 12/31 — Skiathos Shipping Corporation Vessel Owning Company Marshall Is. 1/1 - 12/31 5/28 - 12/31 — Skopelos Shipping Corporation Vessel Owning Company Cayman Is. 1/1 - 12/31 5/28 - 12/31 — F-10(1)(1)(1)(1)(1)(1)(1)(1)(1) Table of ContentsSyros Shipping Corporation Vessel Owning Company Marshall Is. 1/1 - 12/31 5/28 - 12/31 — Thera Shipping Corporation Vessel Owning Company Marshall Is. 1/1 - 12/31 5/28 - 12/31 — Tinos Shipping Corporation Vessel Owning Company Marshall Is. 1/1 - 12/31 5/28 - 12/31 — Oinousses Shipping Corporation Vessel Owning Company Marshall Is. 10/5 - 12/31 — — Psara Shipping Corporation Vessel Owning Company Marshall Is. 10/5 - 12/31 — — Antipsara Shipping Corporation Vessel Owning Company Marshall Is. 10/5 - 12/31 — — (1)Each company has the rights over a shipbuilding contract of a tanker vessel.(d) Use of estimates: The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the dates of the financialstatements and the reported amounts of revenues and expenses during the reporting periods. On an on-going basis, management evaluates the estimates andjudgments, including those related to uncompleted voyages, future drydock dates, the selection of useful lives for tangible assets, expected future cash flowsfrom long-lived assets to support impairment tests, provisions necessary for accounts receivables, provisions for legal disputes and contingencies.Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under thecircumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent fromother sources. Actual results could differ from those estimates under different assumptions and/or conditions.(e) Cash and Cash equivalents: Cash and cash equivalents consist of cash on hand, deposits held on call with banks, and other short-term liquid investmentswith original maturities of three months or less.(f) Restricted Cash: Restricted cash consists of cash totaling $29,491 and $33,261 as of December 31, 2011 and 2010 respectively, restricted to pay futureinstallments for vessel deposits in accordance with Navios Acquisition’s new build program. Also in restricted cash is an amount of $2,723 for 2011 and $538for 2010 held in retention account in order to service debt and interest payments, as required by certain of Navios Acquisition’s credit facilities.(g) Accounts Receivable, net: The amount shown as accounts receivable, net at each balance sheet date includes receivables from charterers for hire, freightand demurrage billings, net of a provision for doubtful accounts. At each balance sheet date, all potentially uncollectible accounts are assessed individuallyfor purposes of determining the appropriate provision for doubtful accounts.(h) Vessels, net: Vessels are stated at historical cost, which consists of the contract price, delivery and acquisition expenses and capitalized interest costswhile under construction. Vessels acquired in an asset acquisition or in a business combination are recorded at fair value. Subsequent expenditures for majorimprovements and upgrading are capitalized, provided they appreciably extend the life, increase the earning capacity or improve the efficiency or safety ofthe vessels. Expenditures for routine maintenance and repairs are expensed as incurred.Depreciation is computed using the straight line method over the useful life of the vessels, after considering the estimated residual value. Managementestimates the residual values of its tanker vessels based on a scrap value of $285 per lightweight ton, as it believes this level is common in the shippingindustry. Management estimates the useful life of our vessels to be 25 years from the vessel’s original construction. However, when regulations placelimitations over the ability of a vessel to trade on a worldwide basis, its useful life is re-estimated to end at the date such regulations become effective.(i) Deposits for vessels acquisitions: This represents amounts paid by the Company in accordance with the terms of the purchase agreements for theconstruction of long-lived fixed assets. Interest costs incurred during the construction (until the asset is substantially complete and ready for its intended use)are capitalized. Capitalized interest included in deposits for vessels acquisitions amounted to $11,449 and $3,259 for the year ended December 31, 2011 and2010, respectively.(j) Impairment of long-lived assets: Vessels, other fixed assets and other long lived assets held and used by Navios Acquisition are reviewed periodically forpotential impairment whenever events or changes in circumstances indicate that the carrying amount of a particular asset may not be fully recoverable.Navios Acquisition’s management evaluates the carrying amounts and periods over which long-lived assets are depreciated to determine if events or changesin circumstances have occurred that would require modification to their carrying values or useful lives. In evaluating useful lives and carrying values of long-lived assets, certain indicators of potential impairment, are reviewed such as undiscounted projected operating cash flows, vessel sales F-11(1)(1)(1)(1)(1)(1) Table of Contentsand purchases, business plans and overall market conditions.Undiscounted projected net operating cash flows are determined for each asset group and compared to the vessel carrying value and relatedcarrying value of the intangible with respect to the time charter agreement attached to that vessel or the carrying value of deposits for new buildings. Withinthe shipping industry, vessels are customarily bought and sold with a charter attached. The value of the charter may be favorable or unfavorable whencomparing the charter rate to then current market rates. The loss recognized either on impairment (or on disposition) will reflect the excess of carrying valueover fair value (selling price) for the vessel asset group.During the fourth quarter of fiscal 2011, management concluded that events occurred and circumstances had changed, which indicated thepotential impairment of Navios Acquisition’s long-lived assets may exist. These indicators included continued deterioration in the spot market, and therelated, impact of the current tanker sector has on management’s expectation for future revenues. As a result, an impairment assessment of long-lived assetswas performed.The Company determined undiscounted projected net operating cash flows for each vessel and deposits for buildings and compared it to thevessel’s carrying value together with the carrying value of the related intangible. The significant factors and assumptions used in the undiscounted projectednet operating cash flow analysis included: determining the projected net operating cash flows by considering the charter revenues from existing time chartersfor the fixed fleet days (Company’s remaining charter agreement rates) and an estimated daily time charter equivalent for the unfixed days (based on acombination of the Company’s remaining charter agreement rates and the 10-year average historical one year time charter rates) over the remaining economiclife of each vessel, net of brokerage and address commissions, excluding days of scheduled off-hires, management fees fixed until May 2012 and thereafterassuming an annual increase of 3.0% and utilization rate of 98.6% based on the fleets historical performance.For the deposits for new build vessels, the net cash flows also included the future cash out flows to make vessel ready for use, all remainingprogress payments to shipyards and other pre-delivery expenses (e.g. capitalized interest). Accordingly, no impairment charge was recorded.The assessment concluded that step two of the impairment analysis was not required and no impairment of vessels and the intangible assetsexisted as of December 31, 2011, as the undiscounted projected net operating cash flows exceeded the carrying value.In the event that impairment would occur, the fair value of the related asset would be determined and a charge would be recorded to operationscalculated by comparing the asset’s carrying value to its fair value. Fair value is estimated primarily through the use of third-party valuations performed on anindividual vessel basis.Although management believes the underlying assumptions supporting this assessment are reasonable, if charter rate trends and the length of thecurrent market downturn, vary significantly from our forecasts, management may be required to perform step two of the impairment analysis in the future thatcould expose Navios Acquisition to material impairment charges in the future.No impairment loss was recognized for any of the periods presented.(k) Deferred Financing Costs: Deferred financing costs include fees, commissions and legal expenses associated with obtaining loan facilities. These costsare amortized over the life of the related debt using the effective interest rate method, and are included in interest expense. Amortization of deferred financingcost, interest expense and write-offs for each of the years ended December 31, 2011, 2010 and 2009 were $3,188, $3,456 and $0, respectively.(l) Goodwill: Goodwill acquired in a business combination is not to be amortized. Goodwill is tested for impairment at the reporting unit level at leastannually and written down with a charge to operations if the carrying amount exceeds the estimated implied fair value.The Company will evaluate impairment of goodwill using a two-step process. First, the aggregate fair value of the reporting unit is compared to its carryingamount, including goodwill. The Company determines the fair value of the reporting unit based on a combination of discounted cash flow analysis and anindustry market multiple.If the fair value exceeds the carrying amount, no impairment exists. If the carrying amount of the reporting unit exceeds the fair value, then the Companymust perform the second step in order to determine the implied fair value of the reporting unit’s goodwill and compare it with its carrying amount. Theimplied fair value of goodwill is determined by allocating the fair value of the reporting unit to all the assets and liabilities of that unit, as if the unit had beenacquired in a business combination and the fair value of the unit was the purchase price. If the carrying amount of the goodwill exceeds the implied fairvalue, then goodwill F-12 Table of Contentsimpairment is recognized by writing the goodwill down to its implied fair value.Navios Acquisition has one reporting unit. No impairment loss was recognized for any of the periods presented.(m) Intangibles other than goodwill: Navios Acquisition’s intangible assets and liabilities consist of favorable lease terms and unfavorable lease terms. Whenintangible assets or liabilities associated with the acquisition of a vessel are identified, they are recorded at fair value. Fair value is determined by reference tomarket data and the discounted amount of expected future cash flows. Where charter rates are higher than market charter rates, an asset is recorded, being thedifference between the acquired charter rate and the market charter rate for an equivalent vessel. Where charter rates are less than market charter rates, aliability is recorded, being the difference between the assumed charter rate and the market charter rate for an equivalent vessel. The determination of the fairvalue of acquired assets and assumed liabilities requires us to make significant assumptions and estimates of many variables including market charter rates,expected future charter rates, the level of utilization of its vessels and its weighted average cost of capital. The use of different assumptions could result in amaterial change in the fair value of these items, which could have a material impact on Navios Acquisition’s financial position and results of operations.The amortizable value of favorable and unfavorable leases is amortized over the remaining life of the lease term and the amortization expense is included inthe statement of income in the depreciation and amortization line item. The amortizable value of favorable leases would be considered impaired if their fairmarket values could not be recovered from the future undiscounted cash flows associated with the asset. Vessel purchase options that have not beenexercised, which are included in favorable lease terms, are not amortized and would be considered impaired if the carrying value of an option, when added tothe option price of the vessel, exceeded the fair value of the vessel. If the purchase option is exercised the portion of this asset will be capitalized as part ofthe cost of the vessel and will be depreciated over the remaining useful life of the vessel.Management, after considering various indicators performed impairment test which included intangible assets as described in paragraph (j) above. As ofDecember 31, 2011, there was no impairment of intangible assets.(n) Deferred Drydock and Special Survey Costs: Navios Acquisition’s vessels are subject to regularly scheduled drydocking and special surveys which arecarried out every 30 or 60 months to coincide with the renewal of the related certificates issued by the classification societies, unless a further extension isobtained in rare cases and under certain conditions. The costs of drydocking and special surveys is deferred and amortized over the above periods or to thenext drydocking or special survey date if such has been determined. Unamortized drydocking or special survey costs of vessels sold are written off to incomein the year the vessel is sold.Costs capitalized as part of the drydocking or special survey consist principally of the actual costs incurred at the yard, spare parts, paints, lubricantsand services incurred solely during the drydocking or special survey period. For each of the years ended December 31, 2011, 2010 and 2009, theamortization expense was $633, $0 and $0, respectively. Accumulated amortization as of December 31, 2011 amounted to $633.(o) Foreign currency translation: Navios Acquisition’s functional and reporting currency is the U.S. dollar. Navios Acquisition engages in worldwidecommerce with a variety of entities. Although, its operations may expose it to certain levels of foreign currency risk, its transactions are predominantly U.S.dollar denominated. Additionally, Navios Acquisition’s wholly owned vessel subsidiaries transacted a nominal amount of their operations in Euros; however,all of the subsidiaries’ primary cash flows are U.S. dollar-denominated. Transactions in currencies other than the functional currency are translated at theexchange rate in effect at the date of each transaction. Differences in exchange rates during the period between the date a transaction denominated in aforeign currency is consummated and the date on which it is either settled or translated, are recognized in the statement of operations.(p) Provisions: Navios Acquisition, in the ordinary course of its business, is subject to various claims, suits and complaints. Management, in consultationwith internal and external advisors, will provide for a contingent loss in the financial statements if the contingency had been incurred at the date of thefinancial statements and the amount of the loss was probable and can be reasonably estimated. If Navios Acquisition has determined that the reasonableestimate of the loss is a range and there is no best estimate within the range, Navios Acquisition will provide the lower amount of the range. NaviosAcquisition, through the Management Agreement with the Manager, participates in Protection and Indemnity (P&I) insurance coverage plans provided bymutual insurance societies known as P&I clubs. Services such as the ones described above are provided by the Manager under the management agreementdated May 28, 2010, and included as part of the daily fee of $6.0 for each MR2 Product tanker and chemical tanker vessel, $7.0 per owned LR1 producttanker vessel and $10.0 per owned VLCC vessel.(q) Segment Reporting: Navios Acquisition reports financial information and evaluates its operations by charter revenues and not by the length of shipemployment for its customers. Navios Acquisition does not use discrete financial information to evaluate operating results for each type of charter.Management does not identify expenses, profitability or other financial F-13 Table of Contentsinformation by charter type. As a result, management reviews operating results solely by revenue per day and operating results of the fleet and thus NaviosAcquisition has determined that it operates under one reportable segment.(r) Revenue and Expense Recognition:Revenue Recognition: Revenue is recorded when services are rendered, under a signed charter agreement or other evidence of an arrangement, the price isfixed or determinable, and collection is reasonably assured. Revenue is generated from the voyage charter and the time charter of vessels.Voyage revenues for the transportation of cargo are recognized ratably over the estimated relative transit time of each voyage. Voyage expenses arerecognized as incurred. A voyage is deemed to commence when a vessel is available for loading and is deemed to end upon the completion of the dischargeof the current cargo. Estimated losses on voyages are provided for in full at the time such losses become evident. Under a voyage charter, a vessel is providedfor the transportation of specific goods between specific ports in return for payment of an agreed upon freight per ton of cargo.Revenues from time chartering of vessels are accounted for as operating leases and are thus recognized on a straight-line basis as the average revenue over therental periods of such charter agreements, as service is performed. A time charter involves placing a vessel at the charterers’ disposal for a period of timeduring which the charterer uses the vessel in return for the payment of a specified daily hire rate. Under time charters, operating costs such as for crews,maintenance and insurance are typically paid by the owner of the vessel.Profit-sharing revenues are calculated at an agreed percentage of the excess of the charterer’s average daily income (calculated on a quarterly or half-yearlybasis) over an agreed amount and accounted for on an accrual basis based on provisional amounts and for those contracts that provisional accruals cannot bemade due to the nature of the profit share elements, these are accounted for on the actual cash settlement.Revenues are recorded net of address commissions. Address commissions represent a discount provided directly to the charterers based on a fixed percentageof the agreed upon charter or freight rate. Since address commissions represent a discount (sales incentive) on services rendered by the Company and noidentifiable benefit is received in exchange for the consideration provided to the charterer, these commissions are presented as a reduction of revenue.Time Charter and Voyage Expenses: Time charter and voyage expenses comprise all expenses related to each particular voyage, including time charter hirepaid and bunkers, port charges, canal tolls, cargo handling, agency fees and brokerage commissions. Time charter expenses are expensed over the period ofthe time charter and voyage expenses are recognized as incurred.Direct Vessel Expense: Direct vessel expenses are provided to Navios Acquisition by the Manager through the management agreement discussed in theparagraph below. Direct vessel expenses consist of all expenses relating to the operation of vessels, including crewing, repairs and maintenance, insurance,stores and lubricants and miscellaneous expenses such as communications and amortization of drydock and special survey costs.Management fees: Pursuant to a Management Agreement dated May 28, 2010, the Manager provides, for five years from the closing of the Company’s initialvessel acquisition, commercial and technical management services to Navios Acquisition’s vessels for a daily fee of $6.0 per owned MR2 product tanker andchemical tanker vessel, $7.0 per owned LR1 product tanker vessel, and $10.0 per owned VLCC vessel, for the first two years with the fixed daily fees adjustedfor the remainder of the term based on then-current market fees. This daily fee covers all of the vessels’ operating expenses, other than certain extraordinaryfees and costs. During the remaining three years of the term of the Management Agreement, Navios Acquisition expects it will reimburse Navios Holdings forall of the actual operating costs and expenses it incurs in connection with the management of its fleet. Actual operating costs and expenses will bedetermined in a manner consistent with how the initial fixed fees were determined. Drydocking expenses are fixed under this agreement for up to $300 pervessel, for MR2 and LR1 product tankers, and will be reimbursed at cost for VLCC vessels.General and administrative expenses: On May 28, 2010, Navios Acquisition entered into an administrative services agreement with Navios Holdings,expiring on May 28, 2015, pursuant to which a subsidiary of Navios Holdings provides certain administrative management services to Navios Acquisitionwhich include: rent, bookkeeping, audit and accounting services, legal and insurance services, administrative and clerical services, banking and financialservices, advisory services, client and investor relations and other. Navios Holdings is reimbursed for reasonable costs and expenses incurred in connectionwith the provision of these services.Deferred Revenue: Deferred revenue primarily relates to cash received from charterers prior to it being earned. These amounts are recognized as revenue overthe voyage or charter period.Prepaid Expense: Prepaid expenses relate primarily to cash paid in advance for expenses associated with voyages. These F-14 Table of Contentsamounts are recognized as expense over the voyage or charter period.(s) Financial Instruments: Financial instruments carried on the balance sheet include trade receivables and payables, other receivables and other liabilitiesand long-term debt. The particular recognition methods applicable to each class of financial instrument are disclosed in the applicable significant policydescription of each item, or included below as applicable.Financial risk management: Navios Acquisition’s activities expose it to a variety of financial risks including fluctuations in future freight rates, time charterhire rates, and fuel prices, credit and interest rate risk. Risk management is carried out under policies approved by executive management. Guidelines areestablished for overall risk management, as well as specific areas of operations.Credit risk: Navios Acquisition closely monitors its exposure to customers and counterparties for credit risk. Navios Acquisition has entered into theManagement Agreement with the Manager, pursuant to which the Manager agreed to provide commercial and technical management services to NaviosAcquisition. When negotiating on behalf of Navios Acquisition various employment contracts, the Manager has policies in place to ensure that it trades withcustomers and counterparties with an appropriate credit history.For the year ended December 31, 2011, Navios Acquisition’s customers representing 10% or more of total revenue were, Dalian Ocean Shipping Co., Bluelight Chartering Inc and Jacob Tank Chartering GMBH &CO. KG., which accounted for 43.9%, 11.5% and 11.3%, respectively. For the year endedDecember 31, 2010, Jacob Tank Chartering GMBH & CO. KG, SK Shipping Company Ltd, DOSCO, Formosa Petrochemical Corporation, Blue LightChartering Inc and Navig8 Chemicals Shipping and Trading Co. accounted for 42.5%, 18.6%, 12.9%, 12.9% and 10.9%, respectively, of NaviosAcquisition’s revenue. There were no customers in the corresponding 2009 period as the Company was in the development stage. No other customersaccounted 10% or more o total revenue for any of the years presented.Foreign exchange risk: Foreign currency transactions are translated into the measurement currency rates prevailing at the dates of transactions. Foreignexchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated inforeign currencies are recognized in the consolidated statement of operations.(t) (Loss)/ Earnings per Share: Basic (loss)/ earnings per share is computed by dividing net (loss)/income attributable to Navios Acquisition’s commonshareholders by the weighted average number of common shares outstanding during the periods presented. Diluted earnings per share reflect the potentialdilution that would occur if securities or other contracts to issue common stock were exercised. Dilution has been computed by the treasury stock methodwhereby all of the Company’s dilutive securities (the warrants and preferred shares) are assumed to be exercised and the proceeds used to repurchase shares ofcommon stock at the weighted average market price of the Company’s common stock during the relevant periods. Convertible shares are included in thediluted earnings/ (loss) per share, based on the weighted average number of convertible shares assumed to be outstanding during the period. The incrementalshares (the difference between the number of shares assumed issued and the number of shares assumed purchased) shall be included in the denominator of thediluted earnings per share computation.Net loss for the year ended December 31, 2011 was adjusted for the purpose of the earnings per share calculation, for the dividends on the Series BConvertible Preferred Stock and further adjusted for the undistributed net loss allocated to the Series C Convertible Preferred Stock. Net Loss for the yearended December 31, 2010 was adjusted for the purposes of earnings per share calculation, to reflect the inducement of the Warrant Exercise Programdiscussed in Note 19.(u) Dividends: Dividends are recorded in the Company’s financial statements in the period in which they are declared.(v) Recent Accounting Pronouncements:Fair Value DisclosuresIn January 2010, the Financial Accounting Standards Board (“FASB”) issued amended standards requiring additional fair value disclosures. Theamended standards require disclosures of transfers in and out of Levels 1 and 2 of the fair value hierarchy, as well as requiring gross basis disclosures forpurchases, sales, issuances and settlements within the Level 3 reconciliation. Additionally, the update clarifies the requirement to determine the level ofdisaggregation for fair value measurement disclosures and to disclose valuation techniques and inputs used for both recurring and nonrecurring fair valuemeasurements in either Level 2 or Level 3. Navios Acquisition adopted the new guidance in the first quarter of fiscal 2010, except for the disclosures relatedto purchases, sales, issuance and settlements, which is effective for Navios Acquisition beginning in the first quarter of fiscal 2011. The adoption of the newstandards did not have a significant impact on Navios Acquisition’s consolidated financial statements.Supplementary Pro Forma Information for Business CombinationsIn December 2010, the FASB issued an amendment of the Accounting Standards Codification regarding Business Combinations. This amendmentaffects any public entity as defined by Topic 805 that enters into business combinations that are material on an individual or aggregate basis. Theamendments specify that if a public entity presents comparative financial F-15 Table of Contentsstatements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the currentyear had occurred as of the beginning of the comparable prior annual reporting period only. The amendments in this Update also expand the supplementalpro forma disclosures under Topic 805 to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributableto the business combination included in the reported pro forma revenue and earnings. The amendments are effective for business combinations for which theacquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. Navios Acquisition adopted thesenew requirements in fiscal 2011 and the adoption did not have a significant impact on Navios Acquisition’s consolidated financial statements.Presentation of Comprehensive IncomeIn June 2011, the FASB issued an update in the presentation of comprehensive income. According to the update an entity has the option to present thetotal of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement ofcomprehensive income or in two separate but consecutive statements. The statement of other comprehensive income should immediately follow thestatement of net income and include the components of other comprehensive income and a total for other comprehensive income, along with a total forcomprehensive income. On December 23, 2011 the FASB issued an amendment to the new standard on Comprehensive income to defer the requirement tomeasure and present reclassification adjustments form accumulated other comprehensive income to net income by income statement line item is net incomeand also in other comprehensive income. The amendments in this update do not change the items that must be reported in other comprehensive income orwhen an item of other comprehensive income must be reclassified to net income. For public entities, the amendments are effective for fiscal years, and interimperiods within those years, beginning after December 15, 2011. Early adoption is permitted, because compliance with the amendments is already permitted.The amendments do not require any transition disclosures. The adoption of the new amendments did not have a significant impact on Navios Acquisition’sconsolidated financial statements. There were no items of other comprehensive income arising in any of the periods presented.Goodwill Impairment guidanceIn September 2011, the FASB issued an update to simplify how public entities, test goodwill for impairment. The amendments in the update permit anentity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount ona basis for determining whether it is necessary to perform the two-step goodwill impairment test described in Topic 350. The more-likely-than-not thresholdis defined as having a likelihood of more than 50 percent. The amendments are effective for annual and interim goodwill impairment tests performed for fiscalyears beginning after December 15, 2011. Early adoption is permitted including for annual and interim impairment tests performed as of a date beforeSeptember 15, 2011, if an entity’s financial statements for the most recent annual or interim period have not yet been issued. The adoption of the newamendments is not expected to have a significant impact on Navios Acquisition’s consolidated financial statements.NOTE 3: INITIAL VESSEL ACQUISITIONOn May 25, 2010, after its special meeting of stockholders, Navios Acquisition announced the approval of (a) the acquisition from Navios Holdings of13 vessels (11 product tankers and two chemical tankers) for an aggregate purchase price of $457,659, of which $128,659 was to be paid from existing cashand the $329,000 balance with existing and new debt financing pursuant to the terms and conditions of the Acquisition Agreement by and between NaviosAcquisition and Navios Holdings and (b) certain amendments to Navios Acquisition’s amended and restated articles of incorporation.On May 28, 2010, Navios Acquisition consummated the acquisition of vessels, which constituted its initial business combination. In connection withthe stockholder vote to approve the acquisition of vessels, holders of 10,021,399 shares of our common stock voted against the business combination andelected to redeem their shares in exchange for an aggregate of approximately $99,312 which amount was disbursed from our investments in trust account onMay 28, 2010. In addition, on May 28, 2010, Navios Acquisition disbursed an aggregate of $8,855 from the trust account to the underwriters of its IPO fordeferred fees. After disbursement of approximately $76,485 to Navios Holdings to reimburse it for the first equity installment payment on the vessels of$38,763 and other associated payments, the balance of the trust account of $66,118 was released to the Company for general operating expenses.Following the consummation of the transactions described in the Acquisition Agreement, Navios Holdings was released from all debt and equitycommitments for the above vessels and Navios Acquisition reimbursed Navios Holdings for vessel installments made prior to the stockholders’ meetingunder the purchase contracts for the vessels, plus all associated payments F-16 Table of Contentspreviously made by Navios Holdings amounting to $76,485.The initial acquisition was treated as an asset acquisition and the following table summarizes the consideration paid and fair values of assets andliabilities assumed on May 28, 2010. Initial Acquisition of 13 vessels Restricted Cash $35,596 Deposits for vessel acquisitions 174,411 Purchase options 3,158 Debt assumed (132,987) Long-term liabilities (3,158) Accrued expenses (112) Total $76,908 Cash paid, net of cash received of $57 $76,428 Payable to Navios Holdings 480 Total $76,908 NOTE 4: VLCC ACQUISITIONOn September 10, 2010, Navios Acquisition consummated the VLCC Acquisition for $134,270 of cash and the issuance of 1,894,918 shares ofcommon stock having a fair value of $10,745 (of which 1,378,122 shares were deposited into one-year escrow to provide for indemnity and other claims).The 1,894,918 shares were valued using the opening price of the stock on the date of the acquisition of $5.67.Transaction costs amounted to $8,019 and have been fully expensed. Transaction costs include $5,619, which is the fair value of the 3,000 preferredshares, issued to a third party on September 17, 2010, as a compensation for consulting services (see note 19).On November 4, 2011 a total of 1,160,963 shares of common stock were released to the sellers and the remaining 217,159 were returned to NaviosAcquisition in settlement of claims relating to representations and warranties attributable to the sellers. The returned shares were cancelled on December 30,2011.The VLCC Acquisition contributed revenues of $26,592 and net loss of ($8,838) to Navios Acquisition for the year ended December 31, 2010.The VLCC Acquisition was treated as a business combination and the following table summarizes the consideration paid and the fair value of assetsand liabilities assumed on September 10, 2010 and as further adjusted for the release of the escrow shares: F-17 Table of ContentsVLCC Acquisition Purchase price: Cash consideration $134,270 Equity issuance 9,513 Total purchase price 143,783 Fair value of assets and liabilities acquired: Vessels 419,500 Deposits for vessel acquisition 62,575 Favorable lease terms 57,070 Current assets including cash of $32,232 35,716 Current liabilities (16,387) Long-term debt assumed (including current portion) (410,451) Unfavorable lease terms (5,819) Fair value of net assets acquired 142,204 Goodwill $1,579 The acquired intangible assets and liabilities, listed below, as determined at the acquisition date and where applicable, are amortized under the straightline method over the periods indicated below: Weightedaverageamortization(years) Amortizationper year Favorable lease terms 12.5 $(4,566) Unfavorable lease terms 8.5 683 The following is a summary of the acquired identifiable intangible assets: GrossAmount Description Favorable lease terms $57,070 Unfavorable lease terms (5,819) Total $51,251 NOTE 5: CASH AND CASH EQUIVALENTSCash and cash equivalents consist of the following: December 31,2011 December 31,2010 Cash on hand and at banks $8,333 $16,117 Short-term deposits 32,967 45,243 Total cash and cash equivalents $41,300 $61,360 Restricted cash consists of cash totaling $29,491 and $33,261 as of December 31, 2011 and 2010 respectively, restricted to pay future installments forvessel deposits in accordance with Navios Acquisition’s new build program. Also in restricted cash is an amount of $2,723 for 2011 and $538 for 2010 heldin retention account in order to service debt and interest payments, as required by certain of Navios Acquisition’s credit facilities.Cash deposits and cash equivalents in excess of amounts covered by government-provided insurance are exposed to loss in the event of non-performance by financial institutions. The Company does maintain cash deposits and equivalents in excess of government-provided insurance limits. TheCompany also minimizes exposure to credit risk by dealing with a diversified group of major financial institutions. F-18 Table of ContentsNOTE 6: ACCOUNTS RECEIVABLE, NETAccounts receivable consist of the following: December 31,2011 December 31,2010 Accounts receivable $6,478 $4,479 Less: Provision for doubtful accounts — — Accounts receivables, net $6,478 $4,479 Financial instruments that potentially subject Navios Acquisition to concentrations of credit risk are accounts receivable. Navios Acquisition does notbelieve its exposure to credit risk is likely to have a material adverse effect on its financial position, results of operations or cash flows.On October 28, 2011, the charter contract of the Nave Ariadne (ex Ariadne Jacob) and Nave Cielo (ex Colin Jacob) were terminated prior to theiroriginal expiration in June 2013. Navios Acquisition entered into certain settlement agreements with charterers that provided for an amount of $4,909 tocompensate for the early termination of the charters and to cover any outstanding receivables. The amount $3,704 was recognized as compensation for earlytermination and was recorded in revenue. Of the total compensation for early termination, the amount of $473, classified under accounts receivable, net, willbe settled during 2012 and the amount of $1,310, classified under long term assets, will be settled in installments until June 2015.NOTE 7: VESSELS, NET Cost AccumulatedDepreciation Net BookValue Vessels Balance at December 31, 2009 $— $— $— Vessels delivered from initial acquisition 119,251 (2,024) 117,227 VLCC Acquisition (note 4) 419,500 (7,068) 412,432 Balance at December 31, 2010 $538,751 $(9,092) $529,659 Additions 277,985 (33,020) 244,965 Balance at December 31, 2011 $816,736 $(42,112) $774,624 On June 29, 2010, Navios Acquisition took delivery of the Nave Cielo, an LR1 product tanker, as part of the initial acquisition of the 13 vessels, fortotal cost of $43,733, cash paid was $39,310 and $4,423 was transferred from vessel deposits.On July 2, 2010, Navios Acquisition took delivery of the Nave Ariadne, an LR1 product tanker, as part of the initial acquisition of the 13 vessels, fortotal cost of $43,729, cash paid was $39,306 and $4,423 was transferred from vessel deposits.On September 10, 2010, Navios Acquisition took delivery of seven VLCC vessels, six of which were operating and one that was delivered inJune 2011. Total fair value attributed to the six operating vessels was $419,500 (see note 4).On October 27, 2010, Navios Acquisition took delivery of the Nave Cosmos, a 25,130 dwt South Korean-built chemical tanker for a total cost of$31,789. Cash paid was $11,294 and $20,495 was transferred from vessel deposits.On January 27, 2011, Navios Acquisition took delivery of the Nave Polaris, a 25,145 dwt South Korean-built chemical tanker, for a total cost of$31,774. Cash paid was $4,533 and $27,241 was transferred from vessel deposits.On June 8, 2011, Navios Acquisition took delivery of a 297,066 dwt VLCC, the Shinyo Kieran, from a Chinese shipyard, for a total cost of $119,212.Cash paid was $29,067 and $90,145 was transferred from vessel deposits.On July 12, 2011, Navios Acquisition took delivery of the Bull, a 2009 — built MR2 product tanker vessel of 50,542 dwt, for a total cost of $42,430that was paid with cash. Favorable lease terms recognized through this transaction amounted to $5,128 and the balance of $37,302 was classified undervessels, net.On July 18, 2011, Navios Acquisition took delivery of the Buddy, a 2009-built MR2 product tanker vessel of 50,470 dwt for F-19 Table of Contentsa total cost of $42,490 that was paid with cash. Favorable lease terms recognized through this transaction amounted to $5,219 and the balance of $37,271was classified under vessels, net.On November 14, 2011, Navios Acquisition took delivery of the Nave Andromeda, a 75,000 dwt LR1 South Korean –built product tanker, for a totalcost of $44,592. Cash paid was $27,226 and $17,366 was transferred from vessel deposits.Improvements for vessels for the year ended December 31, 2011 amounted to $7,834 and $0 for 2010.Deposits for vessel acquisition represent deposits for vessels to be delivered in the future. As of December 31, 2011, Navios Acquisition vesseldeposits amounted to $245,567 out of which $167,152 was financed through loans, $825 was financed through the issuance of preferred shares (see note 19)and the balance from existing cash. For the year ended December 31, 2011, $134,752 was transferred to vessels. As of December 31, 2010, Navios Acquisitionvessel deposits amounted to $296,690 out of which $234,211 was financed through loans, $1,649 was financed through the issuance of preferred shares (seenote 19) and the balance from existing cash. For the year ended December 31, 2010, $29,341 was transferred to vessels.NOTE 8: DEFERRED FINANCE COSTSDeferred finance costs consisted of the following: FinancingCosts Balance at December 31, 2009 $— Additions 21,954 Capitalized into vessel deposits (320) Amortization (518) Deferred charges written-off (2,938) Balance at December 31, 2010 $18,178 Additions 10,929 Capitalized into vessel deposits (766) Amortization (2,587) Deferred charges written-off (935) Balance at December 31, 2011 $24,819 In 2011, an amount of $935 of deferred financing costs was written-off in relation to the cancellation of certain committed credit. In addition, theamortization income of the bond premium was $334 for 2011 and $0 for 2010.Following the issuance in October 2010 of $400,000 of 8 5/8% first priority ship mortgage notes due November 2017 (the “Notes”) with the netproceeds raised of $388,883, loan facilities, previously secured by six VLCC vessels, were fully repaid, and as a result deferred finance costs related to thesefacilities of $2,938, were written-off.NOTE 9: INTANGIBLE ASSETS OTHER THAN GOODWILLIntangible assets as of December 31, 2011 and 2010 consist of the following: AcquisitionCost AccumulatedAmortization Transferto VesselDeposits Net BookValueDecember 31,2011 Purchase options $3,158 $— $(3,158) $— Favorable lease terms 67,417 (7,538) — 59,879 Total Intangible assets 70,575 (7,538) (3,158) 59,879 Unfavorable lease terms (5,819) 891 — (4,928) Total $64,756 $(6,647) $(3,158) $54,951 F-20 Table of Contents AcquisitionCost AccumulatedAmortization Net BookValueDecember 31,2010 Purchase options $3,158 $— $3,158 Favorable lease terms 57,070 (1,236) 55,834 Total Intangible assets 60,228 (1,236) 58,992 Unfavorable lease terms (5,819) 208 (5,611) Total $54,409 $(1,028) $53,381 Amortization (expense)/income of favorable and unfavorable lease terms for the years ended December 31, 2011, 2010 and 2009 are presented in thefollowing table: December 31,2011 December 31,2010 December 31,2009 Unfavorable lease terms charter-out $683 $208 $— Favorable lease terms charter-out (6,302) (1,236) — Total $(5,619) $(1,028) $— The aggregate amortizations of acquired intangibles will be as follows: Description WithinOneYear YearTwo YearThree YearFour YearFive Thereafter Total Favorable lease terms $(8,646) $(8,646) $(7,551) $(4,959) $(4,913) $(25,164) (59,879) Unfavorable lease terms 683 683 683 684 684 1,511 4,928 $(7,963) $(7,963) $(6,868) $(4,275) $(4,229) $(23,653) $(54,951) NOTE 10: GOODWILLGoodwill as of December 31, 2011, 2010 and 2009 consist of the following: Balance December 31, 2009 $— VLCC Acquisition (Note 4) 1,579 Balance December 31, 2010 1,579 Balance December 31, 2011 $1,579 NOTE 11: ACCOUNTS PAYABLEAccounts payable as of December 31, 2011 and 2010 consist of the following: December 31,2011 December 31,2010 Creditors $51 $747 Brokers 614 150 Professional and legal fees 356 2,557 Total accounts payable $1,021 $3,454 F-21 Table of ContentsNOTE 12: DIVIDEND PAYABLEOn November 8, 2010, the Board of Directors of Navios Acquisition declared a quarterly cash dividend for the third quarter of 2010 of $0.05 per shareof common stock. A dividend in the aggregate amount of $2,421 was paid on January 12, 2011 to stockholders of record as of December 8, 2010.On February 7, 2011, the Board of Directors declared a quarterly cash dividend in respect of the fourth quarter of 2010 of $0.05 per share of commonstock. A dividend in the aggregate amount of $2,421 was paid on April 5, 2011, to stockholders of record as of March 16, 2011.On May 2, 2011, the Board of Directors of Navios Acquisition declared a quarterly cash dividend for the first quarter of 2011 of $0.05 per share ofcommon stock. A dividend in the aggregate amount of $2,421 was paid on July 6, 2011, out of which $2,037 was paid to the stockholders of record as ofJune 15, 2011 and $384 was paid to the holders of 1,000 shares of Series C preferred stock (which is Navios Holdings — see related party transactions note17).On August 13, 2011, the Board of Directors of Navios Acquisition declared a quarterly cash dividend for the second quarter of 2011 of $0.05 per shareof common stock. A dividend in the aggregate amount of $2,421 was paid on October 5, 2011, out of which $2,037 was paid to the stockholders of record asof September 22, 2011 and $384 was paid to the holders of 1,000 shares of Series C preferred stock (which is Navios Holdings — see related partytransactions note 17).On November 7, 2011, the Board of Directors of Navios Acquisition declared a quarterly cash dividend for the third quarter of 2011 of $0.05 per shareof common stock. A dividend in the aggregate amount of $2,421 was paid on January 5, 2012 out of which $2,037 was paid to the stock holders of record asof December 15, 2011 and $384 was paid to the holders of 1,000 shares of Series C preferred stock (which is Navios Holdings — see related party transactionsnote 17).As of December 31, 2011, Navios Acquisition declared and paid a dividend of $108 to the holders of the 540 shares of Series B preferred stock.NOTE 13: ACCRUED EXPENSESAccrued expenses as of December 31, 2011 and 2010 consist of the following: December 31,2011 December 31,2010 Accrued voyage expenses $1,262 $434 Accrued loan interest 9,067 7,849 Accrued legal and professional fees 5,163 936 Total accrued expenses $15,492 $9,219 NOTE 14: BORROWINGS December 31,2011 December 31,2010 Deutsche Schiffsbank AG, Alpha Bank AE, Credit Agricole Corporate andInvestment Bank $115,827 $107,236 BNP Paribas S.A. and DVB Bank SE 36,175 36,175 DVB Bank SE and ABN AMRO Bank N.V. 44,121 50,207 Marfin Egnatia Bank 24,300 80,000 Eurobank Ergasias S.A. $52.2 million 46,500 22,800 Eurobank Ergasias S.A. $52.0 million 18,200 13,000 ABN AMRO Bank N.V 53,260 — Ship Mortage Notes 505,000 400,000 Total borrowing 843,383 709,418 Less: current portion (11,928) (5,086) Add: bond premium 2,028 — Total long-term borrowings $833,483 $704,332 F-22 Table of ContentsLong-Term Debt Obligations and Credit ArrangementsSenior NotesShip Mortgage Notes: In October 2010, Navios Acquisition issued $400,000 of 8 5/8% First Priority Ship Mortgage Notes (the “Existing Notes”) dueon November 1, 2017. The Existing Notes are senior obligations of Navios Acquisition and are secured by first priority ship mortgages on seven VLCCvessels owned by certain subsidiary guarantors and certain other associated property and contract rights. The guarantees of the Company’s subsidiaries thatown mortgage vessels are senior secured guarantees and the guarantees of the Company’s subsidiaries that do not own mortgage vessels are senior unsecuredguarantees. Navios Acquisition may redeem the Existing Notes in whole or in part, at its option, at any time (1) before November 1, 2013 at a redemptionprice equal to 100% of the principal amount plus a make whole price which is based on a formula calculated using a discount rate of treasury bonds plus 50bps and (2) on or after November 1, 2013, at a fixed price of 104.313%, which price declines ratably until it reaches par. In addition, any time beforeNovember 1, 2013, Navios Acquisition may redeem up to 35% of the aggregate principal amount of the Existing Notes with the net proceeds of an equityoffering at 108.625% of the principal amount of the Existing Notes, plus accrued and unpaid interest, if any, so long as at least 65% of the originally issuedaggregate principal amount of the Existing Notes remains outstanding after such redemption. Furthermore, upon occurrence of certain change of controlevents, the holders of the Existing Notes may require Navios Acquisition to repurchase some or all of the Existing Notes at 101% of their face amount, plusaccrued and unpaid interest to the repurchase date. Pursuant to a registration rights agreement, Navios Acquisition filed a registration statement enabling theholders of the Existing Notes to exchange the privately placed notes with publicly registered notes with identical terms, which registration statement wenteffective on January 31, 2011. On February 2, 2011, the Navios Acquisition commenced the exchange offer which terminated on March 2, 2011. As a resultof such exchange offer, 100% of the outstanding Existing Notes were exchanged. The Existing Notes contain covenants which, among other things, limit theincurrence of additional indebtedness, issuance of certain preferred stock, the payment of dividends, redemption or repurchase of capital stock or makingrestricted payments and investments, creation of certain liens, transfer or sale of assets, entering into certain transactions with affiliates, merging orconsolidating or selling all or substantially all of Navios Acquisition’s properties and assets and creation or designation of restricted subsidiaries.Following the issuance of the Existing Notes and net proceeds raised of $388,883, the securities on six VLCC vessels previously secured by the loanfacilities were fully released in connection with the full repayment of the facilities totalling approximately $343,841, and $27,609 was used to partially repaythe $40,000 Navios Holdings’ credit facility.On May 26, 2011, Navios Acquisition and Navios Acquisition Finance (US) Inc., its wholly owned finance subsidiary (“Navios Acquisition Finance”),completed the sale of $105,000 of 8 5/8% first priority ship mortgage notes due 2017 (the “Additional Notes”) at 102.25% plus accrued interest from May 1,2011. The net proceeds of the offering of $104,583 were used to partially finance the acquisition of the VLCC delivered on June 8, 2011 and to repay the$80,000 revolving credit facility with Marfin Egnatia Bank.The Additional Notes are identical to the $400,000 of Existing Notes. The Existing Notes and the Additional Notes are fully and unconditionallyguaranteed on a joint and several bases by all of Navios Acquisition’s subsidiaries with the exception of Navios Acquisition Finance (a co-issuer of the shipmortgage notes). The subsidiary guarantees are full and unconditional as that term is defined by Regulation S-X Rule 3-10, except for the fact that theindenture provides for an individual subsidiary’s guarantee to be automatically released in certain customary circumstances, such as when a subsidiary is soldor all assets are sold, the capital stock is sold, when the subsidiary is designated as an “unrestricted subsidiary” for the purposes of the bond indenture, uponliquidation or dissolution or upon legal or covenant defeasance or satisfaction and discharge of the Existing Notes and the Additional Notes. A RegistrationStatement for the exchange of Additional Notes was filed on July 28, 2011 and was declared effective on August 22, 2011. On August 24, 2011 NaviosAcquisition commenced the exchange offer which terminated on September 23, 2011. As a result of such exchange offer, 100% of the outstanding AdditionalNotes were exchanged.The Additional Notes and the Existing Notes are treated as a single class for all purposes under the indenture including, without limitation, waivers,amendments, redemptions and other offers to purchase and the Additional Notes rank evenly with the Existing Notes. Following the consummation of theexchange offer for the Additional Notes on September 23, 2011, the Additional Notes and the Existing Notes have the same CUSIP number. F-23 Table of ContentsCredit FacilitiesDeutsche Schiffsbank AG, Alpha Bank A.E., and Credit Agricole Corporate and Investment Bank: As a result of the initial business combination,Navios Acquisition assumed a loan agreement dated April 7, 2010, with Deutsche Schiffsbank AG, Alpha Bank A.E. and Credit Agricole Corporate andInvestment Bank of up to $150,000 (divided in six equal tranches of $25,000 each) to partially finance the construction of two chemical tankers and fourproduct tankers. Each tranche of the facility is repayable in 12 equal semi-annual installments of $750 each with a final balloon payment of $16,750 to berepaid on the last repayment date. The repayment of each tranche starts six months after the delivery date of the respective vessel which that tranche finances.It bears interest at a rate of LIBOR plus 250 bps. The loan also requires compliance with certain financial covenants. As of December 31, 2011, $115,827 wasoutstanding under this facility and $31,923 remains to be drawn.BNP Paribas SA Bank and DVB Bank S.E.: As a result of the initial business combination, Navios Acquisition assumed a loan agreement dated April 8,2010, of up to $75,000 (divided in three equal tranches of $25,000 each) for the purpose of part-financing the purchase price of three product tankers. Each ofthe tranche is repayable in 12 equal semi-annual installments of $750 each with a final balloon payment of $16,750 to be repaid on the last repayment date.The repayment date of each tranche starts six months after the delivery date of the respective vessel which that tranche finances. It bears interest at a rate ofLIBOR plus 250 bps. The loan also requires compliance with certain financial covenants. As of December 31, 2011, $36,175 was outstanding and $38,825remains to be drawn under this facility.DVB Bank S.E. and ABN AMRO Bank N.V.: On May 28, 2010, Navios Acquisition entered into a loan agreement with DVB Bank S.E. and ABN AMROBANK N.V. of up to $52,000 (divided into two tranches of $26,000 each) to partially finance the acquisition costs of two product tanker vessels. Eachtranche of the facility is repayable in 24 equal quarterly installments of $448 each with a final balloon payment of $15,241 to be repaid on the last repaymentdate. The repayment of each tranche starts three months after the delivery date of the respective vessel. It bears interest at a rate of LIBOR plus 275 bps. Theloan also requires compliance with certain financial covenants. On December 29, 2011, Navios Acquisition prepaid $2,500 in relation to an amendment to itscredit facility. After the prepayment, outstanding amount under each tranche is repayable in five quarterly installments of $198 each, 13 equal quarterlyinstallments of $448 each, with a final balloon payment of $15,241 to be repaid on the last repayment date. As of December 31, 2011, the facility was fullydrawn and the outstanding amount was $44,121.Marfin Egnatia Bank: In September 2010, Navios Acquisition (through four subsidiaries) entered into a $80,000 revolving credit facility with MarfinEgnatia Bank to partially finance the acquisition and construction of vessels and for investment and working capital purposes. The loans are secured byassignments of construction contracts and guarantees, as well as security interests in related assets. The loan matures on September 7, 2012 (with availableone-year extensions upon Navios Acquisition’s request and the bank’s consent) and bears interest at a rate of LIBOR plus 275 bps. As of December 31, 2011,the outstanding amount under this facility was $24,300 that was used to partially finance the acquisition cost of two product tanker vessels and $55,700remain to be drawn. Pursuant to an agreement dated December 28, 2011, the maturity of the facility was extended, to match the delivery of the vessels.EFG Eurobank Ergasias S.A.: On October 26, 2010, Navios Acquisition entered into a loan agreement with Eurobank Ergasias S.A. of up to $52,200(divided into two tranches of $26,100 each) to partially finance the acquisition costs of two LR1 product tanker vessels. Each tranche of the facility isrepayable in 32 equal quarterly installments of $345, each with a final balloon payment of $15,060, to be repaid on the last repayment date. The repaymentof each tranche starts three months after the delivery date of the respective vessel. The loan bears interest at a rate of LIBOR plus (i) plus 250 bps for theperiod prior to the delivery date in respect of the vessel being financed, and (ii) thereafter 275 bps. The loan also requires compliance with certain financialcovenants. The outstanding amount under this facility as of December 31, 2011 was $46,500 and $5,700 remains to be drawn.EFG Eurobank Ergasias S.A.: On December 6, 2010, Navios Acquisition entered into a loan agreement with Eurobank Ergasias S.A. of up to $52,000(divided into two tranches of $26,000 each) to partially finance the acquisition costs of two LR1 product tanker vessels. Each tranche of the facility isrepayable in 32 equal quarterly installments of $345 each with a final balloon payment of $14,960, to be repaid on the last repayment date. The repayment ofeach tranche starts three months after the delivery date of the respective vessel. It bears interest at a rate of LIBOR plus 300 bps. The loan also requirescompliance with certain financial covenants. As of December 31, 2011, $18,200($9,100 from each of the two tranches) was outstanding under this facilityand $33,800 remains to be drawn.ABN AMRO BANK N.V.: On July 8, 2011, Navios Acquisition entered into a loan agreement with ABN AMRO Bank N.V of up to $55,100 (divided intotwo equal tranches) to partially finance the purchase price of two MR2 product tanker vessels. The total amount of $54,750 was drawn under this facility.Each tranche of the facility is repayable in 12 quarterly installments of $745 each and 12 quarterly installments of $571 each with a final balloon payment of$11,576 to be repaid on the last repayment date. The repayment of each tranche started in October 2011 and it bears interest at a rate of LIBOR plus 325 bps.The loan also F-24 Table of Contentsrequires compliance with certain financial covenants. As of December 31, 2011, $53,260 was outstanding under this loan agreement ($26,630 from each ofthe two tranches) and no further amounts are available to be drawn.DVB Bank SE: On December 7, 2011, Navios Acquisition entered into a loan agreement with DVB Bank SE of up to $51,000 (divided into two tranches of$25,500 each) to partially finance the purchase price of two LR1 product tanker vessels. Each tranche of the facility is repayable in 28 quarterly installmentsof $400 each with a final balloon payment of $14,300 to be repaid on the last repayment date. The repayment starts three months after the delivery of therespective vessel and it bears interest at a rate of LIBOR plus 270 bps per annum. The loan also requires compliance with certain financial covenants. As ofDecember 31, 2011, $0 was drawn and outstanding under this loan agreement.NORDDEUTSCHE LANDESBANK GIROZENTRALE: On December 29, 2011, Navios Acquisition entered into a loan agreementwith NORDDEUTSCHE LANDESBANK GIROZENTRALE of up to $28,125 to partially finance the purchase price of one MR2 product tanker vessel. Thefacility is repayable in 32 quarterly installments of $391 each with a final balloon payment of $15,625 to be repaid on the last repayment date. Therepayment starts three months after the delivery of the vessel and it bears interest at a rate of LIBOR plus: (a) up to but not including the Drawdown Date of,175bps per annum; (b) thereafter until, but not including, the tenth Repayment Date, 250 bps per annum; and (c) thereafter 300 bps per annum. The loan alsorequires compliance with certain financial covenants. As of December 31, 2011, $0 was drawn and outstanding under this loan agreement.DVB Bank SE and Emporiki Bank of Greece S.A.: On December 29, 2011, Navios Acquisition entered into a loan agreement with DVB Bank SE andEmporiki Bank of Greece S.A. of up to $56,250 (divided into two tranches of $28,125 each) to partially finance the purchase price of two MR2 producttanker vessels. Each tranche of the facility is repayable in 32 quarterly installments of $391 each with a final balloon payment of $15,625 to be repaid on thelast repayment date. The repayment starts three months after the delivery of the respective vessel and it bears interest at a rate of LIBOR plus: (a) up to but notincluding the Drawdown Date of, 175 bps per annum; (b) thereafter until, but not including, the tenth Repayment Date, 250 bps per annum; and (c) thereafter300 bps per annum. The loan also requires compliance with certain financial covenants. As of December 31, 2011, $0 was drawn and outstanding under thisloan agreement.The Navios Holdings Credit Facility: In connection with the VLCC Acquisition, Navios Acquisition entered into a $40,000 credit facility withNavios Holdings and paid $400 as an arrangement fee. The $40,000 facility has a margin of LIBOR plus 300 bps and a term of 18 months. Following theissuance of the Notes in October 2010, the Company prepaid $27,609 of this facility. Pursuant to an amendment in October 2010, the facility will beavailable for multiple drawings up to a limit of $40,000. Pursuant to an agreement dated November 8, 2011, the Navios Holdings credit facility was extendedfrom April 2012 to December 2014. As of December 31, 2011 and 2010, the outstanding amount under this facility was $40,000 and $12,391 respectively. Asof December 31, 2011 and 2010, interest accrued under this facility is $81 and $62 respectively and is included under amounts due to related parties.As of December 31, 2011 the total amount available to be drawn from all our facilities was $301,323.Amounts drawn under the facilities are secured by first preferred mortgages on Navios Acquisition’s vessels and other collateral and are guaranteed byeach vessel-owning subsidiary. The credit facilities contain a number of restrictive covenants that prohibit Navios Acquisition from, among other things:undertaking new investments unless such is approved by the bank; incurring or guaranteeing indebtedness; entering into affiliate transactions; charging,pledging or encumbering the vessels; changing the flag, class, management or ownership of Navios Acquisition’s vessels; changing the commercial andtechnical management of Navios Acquisition’s vessels; selling or changing the beneficial ownership or control of Navios Acquisition’s vessels; andsubordinating the obligations under the new credit facility to any general and administrative costs relating to the vessels, including the fixed daily feepayable under the management agreement. The credit facilities also require Navios Acquisition to comply with the ISM Code and ISPS Code and to maintainvalid safety management certificates and documents of compliance at all times. The credit facilities also require compliance with a number of financialcovenants of Navios Acquisition, including tangible Net Worth, debt coverage ratios, specified tangible net worth to total debt percentages and minimumliquidity. It is an event of default under the credit facilities if such covenants are not complied with.The VLCC Acquisition Credit FacilitiesOn September 10, 2010, the Company consummated the VLCC Acquisition. In connection with the acquisition of the VLCC vessels, the Companyentered into, assumed and supplemented the VLCC Acquisition Credit Facilities described below. The VLCC Acquisition Credit Facilities were fully repaidand terminated with the proceeds of the Existing Notes on October 21, 2010.In connection with the full repayment of the VLCC facilities of $343,841 Navios Acquisition paid prepayment fees and breakage cost of $2,503 andwrote-off unamortized deferred financing costs of $2,938. The total amount of $5,441 was expensed in the Statement of Operations.On December 12, 2006, a loan of $82,875 was obtained from HSH Nordbank AG. The loan is secured by the Shinyo Navigator together with securityinterests in related assets. The balance of the loan assumed at closing was $56,125 and was repayable in one installment of $2,125, one installment of $1,810,12 installments of $2,023, eight installments of $1,491 and four installments of $1,997 after the prepayment of $8,000 on September 13, 2010. Paymentswere to be made quarterly until the 10th anniversary of the date three months from the drawdown date. The facility was amended on September 9, 2010, inconnection with the closing of the VLCC Acquisition, and was guaranteed by the Company. The amended terms included (a) a F-25 Table of Contentsnew margin of 2.75%, (b) a financial covenant package similar to Navios Acquisition’s other facility agreements, (c) the prepayment of $8,000 held in a cashcollateral account and (d) a minimum value clause at 115% starting on June 30, 2011 and 120% starting on December 31, 2011. A 1% fee on the outstandingbalance of the facility as of September 10, 2010 was paid at closing. As of December 31, 2010 the outstanding amount under this facility was $0 as thefacility was repaid through the issuance of the Existing Notes on October 21, 2010.On September 5, 2007, a syndicated loan of $65,000 was obtained from DVB Group MerchantBank (Asia) Ltd., BNP Paribas, Credit Suisse andDeutsche Schiffsbank AG. The loan was secured by the C. Dream together with security interests in related assets. The balance of the loan assumed at closingwas $54,700 and was repayable in one installment of $900, four installments of $950, four installments of $1,000, four installments of $1,075, fourinstallments of $1,150 four installments of $1,200, seven installments of $1,250 and a balloon payment of $23,550 payable together with the last installment.Payments were to be made quarterly until the 10th anniversary of the date three months from the drawdown date. The facility was amended on September 10,2010, in connection with the closing of the VLCC Acquisition, and was guaranteed by the Company. The amended terms included (a) a new margin of2.75%, (b) a financial covenant package similar to Navios Acquisition’s other facility agreements and (c) a minimum value clause at 115% untilDecember 31, 2011 and thereafter at 130%. A 1% fee on the outstanding balance of the facility as of September 10, 2010 was paid at closing. As ofDecember 31, 2010, the outstanding amount under this facility was $0 as it was repaid through the issuance of the Existing Notes on October 21, 2010.On January 4, 2007, a syndicated loan of $86,800 was obtained from DVB Group MerchantBank (Asia) Ltd., Credit Suisse and Deutsche SchiffsbankAG. The loan was secured by the Shinyo Ocean together with security interests in related assets. The balance of the loan assumed on September 10, 2010 was$58,907 and was repayable in three installments of $1,575, four installments of $1,675, four installments of $1,725 four installments of $1,850, fourinstallments of $1,950, four installments of $2,100, three installments of $2,200 and a balloon payment of $10,382 payable together with the last installment.Payments are to be made quarterly until the 10th anniversary of the date three months from the drawdown date. The facility was amended on September 9,2010, in connection with the closing of the VLCC Acquisition, and was guaranteed by the Company. The amended terms included (a) a new margin of2.75%, (b) a financial covenant package similar to Navios Acquisition’s other facility agreements and (c) a minimum value clause at 115% untilDecember 31, 2011 and thereafter at 130%. A 1% fee on the outstanding balance of the facility as of September 10, 2010 was paid at closing. Theoutstanding amount under this facility as of December 31, 2010 was $0, since it was repaid through the issuance of the Existing Notes on October 21, 2010.On January 4, 2007, a syndicated loan of $86,800 was obtained from DVB Group Merchant Bank (Asia) Ltd., Credit Suisse and Deutsche SchiffsbankAG. The loan was secured by the Shinyo Kannika together with security interests in related assets. The balance of the loan assumed on September 10, 2010was $58,784 and was payable in two installments of $1,550, four installments of $1,625, four installments of $1,725, four installments of $1,850, fourinstallments of $1,950, four installments of $2,100, three installments of $2,200 and a balloon payment of $12,084 together with the last installment. Fortyquarterly payments are to be made commencing on February 15, 2007. The facility was amended on September 9, 2010, in connection with the closing of theVLCC Acquisition, and was guaranteed by the Company. The amended terms included (a) a new margin of 2.75%, (b) financial covenant package similar toNavios Acquisition’s other facility agreements and (c) a minimum value clause at 115% until December 31, 2011 and thereafter at 130%. A 1% fee on theoutstanding balance of the facility as of September 10, 2010 was paid at closing. As of December 31, 2010, the outstanding amount under this facility was $0,as it was repaid through the issuance of the Existing Notes on October 21, 2010.On May 16, 2007, a syndicated loan in the amount of $62,000 was obtained from DVB Group Merchant Bank (Asia) Ltd., Credit Suisse and DeutscheSchiffsbank AG. The loan was secured by the Shinyo Splendor together with security interests in related assets. The balance of the credit facility onSeptember 10, 2010 was $38,775 and was repayable in three installments of $1,925, four installments of $2,075, four installments of $2,200 and threeinstallments of $2,350 together with a balloon payment of $8,850. Payments were to be made for 28 quarters from the date three months from the drawdowndate. The facility was amended on September 9, 2010, in connection with the closing of the VLCC transaction and was guaranteed by the Company. Theamended terms included (a) a new margin of 2.75% applicable for tranche A and margin of 4% applicable for tranche B, (b) a financial covenant packagesimilar to Navios Acquisition’s other facility agreements and (c) minimum value clause at 115% until December 31, 2011 on a charter attached basis andthereafter at 130% on a charter free basis. A 1% fee on the outstanding balance of the facility as of September 10, 2010 was paid at closing. As ofDecember 31, 2010, the outstanding amount under this facility was $0, since the facility was repaid through the issuance of the Existing Notes on October 21,2010.On March 26, 2010, a loan facility of $90,000 was obtained from China Merchant Bank Co., Ltd. to finance the construction of the Shinyo Saowalak.The balance of the loan facility as September 10, 2010 was $90,000. The loan was secured by the Shinyo Saowalak together with security interests in relatedassets and was repayable by 12 installments of $1,750, 12 installments of $2,000 and 16 installments of $2,813. The first repayment was to be made onSeptember 21, 2010 with the last installment to be paid on the date falling 117 months after September 21, 2010. The facility was amended on September 9,2010, F-26 Table of Contentsin connection with the closing of the VLCC Acquisition, and was guaranteed by the Company. The amended terms included a financial covenant packagesimilar to Navios Acquisition’s other facility agreements. The outstanding amount under this facility as of December 31, 2010 was $0, since the facility waspaid in full on October 21, 2010 through the issuance of the Existing Notes.As of December 31, 2011, the Company was in compliance with all of the covenants under each of its credit facilities.GuaranteesThe Company’s 8 5/8% Notes (consisting of the Existing Notes and the Additional Notes, collectively the “Notes”) are fully and unconditionallyguaranteed on a joint and several bases by all of the Company’s subsidiaries with the exception of Navios Acquisition Finance (a co-issuer of the shipmortgage notes). The guarantees of our subsidiaries that own mortgaged vessels are senior secured guarantees and the guarantees of our subsidiaries that donot own mortgaged vessels are senior unsecured guarantees. All subsidiaries, including Navios Acquisition Finance are 100% owned. The Company does nothave any independent assets or operations.The maturity table below reflects the principal payments of all credit facilities outstanding as of December 31, 2011 for the next five years andthereafter are based on the repayment schedule of the respective loan facilities (as described above) and the outstanding amount due under the senior Notes.The maturity table below includes in the amount shown for 2017 and thereafter future principal payments of the drawn portion of credit facilities associatedwith the financing of the construction of vessels scheduled to be delivered on various dates throughout 2014. Long-Term Debt Obligations: December 31,2011 Year December 31, 2012 $11,928 December 31, 2013 13,428 December 31, 2014 13,580 December 31, 2015 12,876 December 31, 2016 59,927 December 31, 2017 and thereafter 731,644 Total $843,383 NOTE 15: FAIR VALUE OF FINANCIAL INSTRUMENTSFair Value of Financial InstrumentsThe following methods and assumptions were used to estimate the fair value of each class of financial instrument:Cash and cash equivalents: The carrying amounts reported in the consolidated balance sheets for interest bearing deposits approximate their fair valuebecause of the short maturity of these investments.Restricted Cash: The carrying amounts reported in the consolidated balance sheets for interest bearing deposits approximate their fair value because ofthe short maturity of these investments.Accounts receivable: Carrying amounts are considered to approximate fair value due to the short-term nature of these accounts receivables and nosignificant changes in interest rates. All amounts that are assumed to be uncollectible are written off and/or reserved.Accounts payable: The carrying amount of accounts payable reported in the balance sheet approximates its fair value due to the short-term nature ofthese accounts payable and no significant changes in interest rates.Other long term borrowings: The carrying amount of the floating rate loans approximates its fair value.Ship Mortgage Notes: The fair value of the Notes, which has a fixed rate, was determined based on quoted market prices, as indicated in the tablebelow.Loans due to related party: The carrying amount of the floating rate loans approximates its fair value. F-27 Table of Contents December 31, 2011 December 31, 2010 BookValue Fair Value BookValue Fair Value Cash and cash equivalents $41,300 $41,300 $61,360 $61,360 Restricted cash $32,214 $32,214 $33,799 $33,799 Accounts receivable, net $6,478 $6,478 $4,479 $4,479 Accounts payable $1,021 $1,021 $3,454 $3,454 Ship mortgage notes and premium $507,028 $385,088 $400,000 $406,752 Other Long-term debt $338,383 $338,383 $309,418 $309,418 Loans due to related party $40,000 $40,000 $12,391 $12,391 NOTE 16: LEASESChartered-out:The future minimum contractual lease income (charter-out rates is presented net of commissions), is as follows: Amount 2012 $141,038 2013 127,672 2014 114,399 2015 89,684 2016 89,137 Thereafter 340,611 Total minimum lease revenue, net of commissions $902,541 Revenues from time charters are not generally received when a vessel is off-hire, including time required for scheduled maintenance of thevessel. In arriving at the minimum future charter revenues, an estimated time off-hire to perform scheduled maintenance on each vessel has been deducted,although there is no assurance that such estimate will be reflective of the actual off-hire in the future.NOTE 17: TRANSACTIONS WITH RELATED PARTIESOn March 18, 2008, Navios Acquisition issued 8,625,000 Sponsor Units, to its sponsor, Navios Holdings, for $25 in cash, at a purchase price ofapproximately $0.003 per unit.On June 11, 2008, Navios Holdings transferred an aggregate of 290,000 Sponsor Units to Navios Acquisition’s officers and directors. The SponsorUnits vested upon the consummation of Navios Acquisition’s initial business combination. As such, on May 28, 2010, Navios Acquisition recorded anexpense of $2,140 representing the fair value of the units on that date with an equal increase in the Company’s Additional Paid in Capital.On June 16, 2008, Navios Holdings returned to Navios Acquisition an aggregate of 2,300,000 Sponsor Units, which Navios Acquisition cancelled.Accordingly, Navios Acquisition’s initial stockholders owned 6,325,000 Sponsor Units as of such date. As of December 31, 2010, all of the warrantsunderlying the Sponsor Units had been exercised for cash into shares of common stock.On July 1, 2008, Navios Acquisition closed its IPO of 25,300,000 units, including 3,300,000 units issued upon the full exercise of the underwriters’over-allotment option. Each unit consists of one share of common stock and one warrant that entitles the holder to purchase one share of common stock. Theunits were sold at an offering price of $10.00 per unit, generating gross proceeds to the Company of $253,000. Simultaneously with the closing of the IPO,Navios Acquisition consummated a private placement of 7,600,000 Private Placement Warrants at a purchase price of $1.00 per warrant to Navios Holdings.The IPO and the private placement generated gross proceeds to Navios Acquisition in an aggregate amount of $260,600. As of December 31, 2010, all of the7,600,000 Private Placement Warrants had been exercised for cash into shares of common stock.On January 12, 2010, Navios Acquisition announced the appointment of Leonidas Korres as its Senior Vice President — Business Development. Pursuant toan agreement between Navios Acquisition and Navios Holdings, the compensation of Mr. Korres up to the amount of €65 ($75) was paid by Navios Holdings.The compensation was reimbursed to Navios Holdings on November 10, 2010.Pursuant to an Exchange Agreement entered into March 30, 2011, Navios Holdings exchanged 7,676,000 shares of Navios Acquisition’s commonstock it held for 1,000 shares of Series C Convertible Preferred Stock of Navios Acquisition (see note 19). As of December 31, 2011, dividends paid to NaviosHoldings amounted to $768 and dividends payable amounted to $384.The Navios Holdings Credit Facility: In connection with the VLCC Acquisition, Navios Acquisition entered into a $40,000 credit facility withNavios Holdings and paid $400 as an arrangement fee. The $40,000 facility has a margin of LIBOR plus 300 F-28 Table of Contentsbps and a term of 18 months. Following the issuance of the Notes in October 2010, the Company prepaid $27,609 of this facility. Pursuant to an amendmentin October 2010, the facility will be available for multiple drawings up to a limit of $40,000. Pursuant to an agreement dated November 8, 2011, the NaviosHoldings credit facility was extended from April 2012 to December 2014. As of December 31, 2011 and 2010, the outstanding amount under this facility was$40,000 and $12,391 respectively. As of December 31, 2011 and 2010, interest accrued under this facility is $81 and $62 respectively and is included underamounts due to related parties.Management fees: Pursuant to a Management Agreement dated May 28, 2010, the Manager provides, for five years from the closing of the Company’sinitial vessel acquisition, commercial and technical management services to Navios Acquisition’s vessels for a daily fee of $6.0 per owned MR2 producttanker and chemical tanker vessel and $7.0 per owned LR1 product tanker vessel and $10.0 per VLCC tanker vessel for the first two years with the fixed dailyfees adjusted for the remainder of the term based on then-current market fees. This daily fee covers all of the vessels’ operating expenses, other than certainfees and costs. During the remaining three years of the term of the Management Agreement, Navios Acquisition expects it will reimburse Navios Holdings forall of the actual operating costs and expenses it incurs in connection with the management of its fleet. Actual operating costs and expenses will bedetermined in a manner consistent with how the initial fixed fees were determined. Dry docking expenses will be fixed under this agreement for up to $300per vessel chemical LR1 and MR2 product and will be reimbursed at cost for VLCC vessels. Total management fees for each of the year ended December 31,2011, 2010 and 2009 amounted to $35,679, $9,752 and $0, respectively.General and administrative expenses: On May 28, 2010, Navios Acquisition entered into an administrative services agreement with Navios Holdings,expiring on May 28, 2015, pursuant to which a subsidiary of Navios Holdings provides certain administrative management services to Navios Acquisitionwhich include: bookkeeping, audit and accounting services, legal and insurance services, administrative and clerical services, banking and financial services,advisory services, client and investor relations and other. Navios Holdings is reimbursed for reasonable costs and expenses incurred in connection with theprovision of these services. For the year ended December 31, 2011, 2010 and 2009, administrative services rendered by Navios Holdings amounted to$1,527, $407 and $120 respectively.Balance due to related parties: Amounts due to related parties as of December 31, 2011 is $43,616, which represents the current account payable toNavios Holdings and its subsidiaries. The balance mainly consists of management fees, administrative fees, dry-docking and other expenses.Amounts due to related parties as of December 31, 2010 was $6,080, which represented the current account payable to Navios Holdings and its subsidiaries.Omnibus agreement: Navios Acquisition entered into an omnibus agreement (the “Acquisition Omnibus Agreement”) with Navios Holdings andNavios Maritime Partners L.P. (“Navios Partners”) in connection with the closing of Navios Acquisition’s vessel acquisition, pursuant to which, among otherthings, Navios Holdings and Navios Partners agreed not to acquire, charter-in or own liquid shipment vessels, except for container vessels and vessels that areprimarily employed in operations in South America without the consent of an independent committee of Navios Acquisition. In addition, NaviosAcquisition, under the Acquisition Omnibus Agreement, agreed to cause its subsidiaries not to acquire, own, operate or charter drybulk carriers under specificexceptions. Under the Acquisition Omnibus Agreement, Navios Acquisition and its subsidiaries grant to Navios Holdings and Navios Partners, a right of firstoffer on any proposed sale, transfer or other disposition of any of its drybulk carriers and related charters owned or acquired by Navios Acquisition. Likewise,Navios Holdings and Navios Partners agreed to grant a similar right of first offer to Navios Acquisition for any liquid shipment vessels they might own. Theserights of first offer will not apply to a (a) sale, transfer or other disposition of vessels between any affiliated subsidiaries, or pursuant to the existing terms ofany charter or other agreement with a counterparty, or (b) merger with or into, or sale of substantially all of the assets to, an unaffiliated third party.NOTE 18 — COMMITMENTS AND CONTINGENCIESAs of December 31, 2011, Navios Acquisition committed for future remaining contractual deposits for the vessels to be delivered on various datesthrough October 2014.The Company is involved in various disputes and arbitration proceedings arising in the ordinary course of business. Provisions have been recognizedin the financial statements for all such proceedings where the Company believes that a liability may be probable, and for which the amounts are reasonablyestimable, based upon facts known at the date of the financial statements were prepared. In the opinion of the management, the ultimate disposition of thesematters individually and in aggregate will not materially affect the Company’s financial position, results of operations or liquidity.The future minimum commitments by period as of December 31, 2011, of Navios Acquisition under its ship building contracts, are as follows: F-29 Table of Contents Amount December 31, 2012 $271,638 December 31, 2013 5,272 December 31, 2014 35,880 $312,790 NOTE 19: PREFERRED AND COMMON STOCKPreferred StockOn March 30, 2011, pursuant to an Exchange Agreement Navios Holdings exchanged 7,676,000 shares of Navios Acquisition’s common stock it heldfor 1,000 non-voting Series C Convertible Preferred Stock of Navios Acquisition. Each holder of shares of Series C Convertible Preferred Stock shall beentitled at their option at any time, after March 31, 2013 to convert all or any the outstanding shares of Series C Convertible Preferred Stock into a number offully paid and non-assessable shares of Common Stock determined by multiplying each share of Series C Convertible Preferred Stock to be converted by7,676, subject to certain limitations. Upon the declaration of a common stock dividend, the holders of the Series C Convertible Preferred Stock are entitled toreceive dividends on the Series C Convertible Preferred Stock in an amount equal to the amount that would have been received in the number of shares ofCommon Stock into which the Shares of Series C Convertible Preferred Stock held by each holder thereof could be converted. The shares of Series C PreferredStock were recorded at fair value of the common stock exchanged which totaled $30,474, using the common stock price on March 30, 2011 of $3.97. Theimpact of the exchange (other than the par value of the common and preferred stock) was recorded net in Additional-Paid-In-Capital. No fees were incurred inconnection with the above issuance. For the purpose of calculating loss per share this preferred sock is treated as in-substance common stock and is allocatedlosses and considered in the diluted calculation.On September 17, 2010, Navios Acquisition issued 3,000 shares of the Company’s authorized Series A Convertible Preferred Stock (fair value of$5,619) to an independent third party as a consideration for certain consulting and advisory fees related to the VLCC acquisition. The Company valued theseshares on and accounted for these shares as issued and outstanding from September 17, 2010 since all services had been provided. The $5,619 has beenrecorded in the accompanying financial statements as transaction costs. Under the terms of the consulting agreement, the preferred stock will be distributed intranches of 300 shares every six months commencing on June 30, 2011 and ending on December 15, 2015. Accordingly, the shares of Series A PreferredStock and the shares of common stock underlying them, will only be eligible for transfer upon distribution to the holder. The preferred stock has no votingrights, is only convertible into shares of common stock and does not participate in dividends until such time as the shares are converted into common stock.The holder of the preferred stock also has the right to convert their shares to common stock subject to certain terms and conditions at any time afterdistribution at a conversion price of $35.00 per share of common stock. Any shares of preferred stock remaining outstanding on December 31, 2015 shallautomatically convert into shares of common stock at a conversion price of $25.00 per share of common stock. The fair market value on September 17, 2010,was determined using a binomial valuation model. The model used takes into account the credit spread of the Company, the volatility of its stock, as well asthe price of its stock at the issuance date.On October 29, 2010, Navios Acquisition issued 540 shares of the Company’s authorized Series B Convertible Preferred Stock (fair value $1,649) tothe seller of the two newbuild LR1 product tankers the Company recently acquired and were included in the vessel cost. The preferred stock contains a2% per annum dividend payable quarterly starting on January 1, 2011 and upon declaration by the Company’s Board commences payment on March 31,2011. The Series B Convertible Preferred Stock, plus any accrued but unpaid dividends, will mandatorily convert into shares of common stock as follows:30% of the outstanding amount will convert on June 30, 2015 and the remaining outstanding amounts will convert on June 30, 2020 at a price per share ofcommon stock not less than $25.00. The holder of the preferred stock shall have the right to convert the shares of preferred stock into common stock prior tothe scheduled maturity dates at a price of $35.00 per share of common stock. The preferred stock does not have any voting rights. The fair value onOctober 29, 2010, was determined using a binomial valuation model. The model used takes into account the credit spread of the Company, the volatility ofits stock, as well as the price of its stock at the issuance date.Fees incurred in 2010 connection with the issuance of the above shares of preferred stock amounted to $1,805.The Company is authorized to issue 10,000,000 shares of $0.0001 par value preferred stock with such designations, voting and other rights andpreferences as may be determined from time to time by the Board of Directors.As of December 31, 2011 and December 31, 2010, 4,540 and 3,540 shares of preferred stock were issued and outstanding, respectively. F-30 Table of ContentsCommon StockOn November 19, 2010, the Company completed the public offering of 6,500,000 shares of common stock at $5.50 per share and raised gross proceedsof $35,750. The net proceeds of this offering, including the underwriting discount of $1,787 and excluding offering costs of $561 were $33,963.Pursuant to an Exchange Agreement entered into on March 30, 2011, Navios Holdings exchanged 7,676,000 shares of Navios Acquisition’s commonstock it held for 1,000 non-voting shares of Series C Convertible Preferred Stock of Navios Acquisition.The Company is authorized to issue 250,000,000 shares of $0.0001 par value common stock.Warrant Exercise ProgramOn September 2, 2010, Navios Acquisition completed its Warrant Exercise Program (the “Warrant Exercise Program”). Under the Warrant ExerciseProgram, holders of public warrants had the opportunity to exercise the public warrants on enhanced Terms through August 27, 2010.The Warrant Exercise Program was coupled with a consent solicitation accelerating the ability of Navios Holdings and its officers and directors toexercise certain private warrants on the same terms available to the public warrants during the Warrant Exercise Program.As a result of the above: • 19,246,056 public warrants (76.13% of the public warrants then outstanding) were exercised on a cashless basis at an exchange rate of 4.25public warrants for one share of common stock; • $78,342 of gross cash proceeds were raised from the exercise of 15,950 of the public warrants by payment of $5.65 cash exercise price, and13,850,000 private warrants owned by Navios Holdings and Angeliki Frangou, Navios Acquisition’s Chairman and Chief Executive Officer;Total expenses associated with the Warrant Exercise Program were $3,364. • a portion of the private warrants exercised were held by officers and directors of Navios Acquisition, 15,000 and 75,000 were exercised on a cashbasis and cashless basis, respectively; and • 18,412,053 new shares of common stock were issued.On September 2, 2010, Navios Acquisition completed its Warrant Exercise Program under which holder of its publicly traded and privately heldwarrants had the opportunity to exercise their warrants on enhanced terms as described above. As a result of the Warrant Exercise Program and subsequentwarrant exercises, as of December 31, 2010, the Company had outstanding 6,037,994 publicly traded warrants which were classified as equity, since theycannot be cash settled. The fair value of the warrants after the inducement offer were compared to the fair value prior to the inducement, which resulted inincremental fair value of $647 transferred to shareholders who exercised on a cashless basis. This incremental fair value has been reflected in the net loss pershare calculation for the year ended December 31, 2010.As of December 31, 2011 and 2010 there were 6,037,994 public warrants outstanding. Included in the number of shares and warrants are 18,815 units(one unit consists of one share of common stock and one warrant).NOTE 20: SEGMENT INFORMATIONNavios Acquisition reports financial information and evaluates its operations by charter revenues. Navios Acquisition does not use discrete financialinformation to evaluate operating results for each type of charter. As a result, management reviews operating results solely by revenue per day and operatingresults of the fleet and thus Navios Acquisition has determined that it operates under one reportable segment.The following table sets out operating revenue by geographic region for Navios Acquisition’s reportable segment. Revenue is allocated on the basis ofthe geographic region in which the customer is located. Tanker vessels operate worldwide. Revenues from specific geographic region which contribute over10% of total revenue are disclosed separately.Revenue by Geographic RegionVessels operate on a worldwide basis and are not restricted to specific locations. Accordingly, it is not possible to allocate the assets of these operationsto specific countries. F-31 Table of Contents Year EndedDecember 31,2011 Year EndedDecember 31,2010 Year EndedDecember 31,2009 Asia $105,952 $27,311 $— Europe 15,282 6,257 — United States 691 — — Total Revenue $121,925 $33,568 $— NOTE 21: LOSS PER COMMON SHARELoss per share is calculated by dividing net loss available to common stockholders by the average number of shares of common stock of NaviosAcquisition outstanding during the period. The average number of shares of common stock of Navios Acquisition for the year ended December 31, 2011excludes the 1,378,122 contingently returnable shares of common stock issued on September 10, 2010 for the VLCC Acquisition which were deposited intoa one year escrow to provide for indemnity and other claims (see note 4) until November 4, 2011 when 1,160,963 of these shares were released to the sellersand 217,159 were returned to Navios Acquisition in settlement of claims relating to representations and warranties attributable to the sellers of the VLCCAcquisition and were cancelled on December 30, 2011.Net loss for the year ended December 31, 2011 was adjusted for the purposes of earnings per share calculation, for the dividends on Series B PreferredShares and for the undistributed loss that is attributable to Series C preferred stock. Net Loss for the year ended December 31, 2010 is adjusted for thepurposes of earnings per share calculation, to reflect the inducement of the Warrant Exercise Program discussed in Note 19. The inducement resulted to theadjustment in the income available to common stockholders, for the earnings per share calculation, by $647, which represents the incremental value that wasgiven to the warrant holders in order to exercise their warrants. The average number of shares of common stock of Navios Acquisition for the year endedDecember 31, 2010 excludes the 1,378,122 contingently returnable shares of common stock issued on September 10, 2010 for the VLCC Acquisition whichwere deposited into a one year escrow to provide for indemnity and other claims (see Note 4).Potential common shares and shares kept in escrow have an anti-dilutive effect (i.e. those that increase income per share or decrease loss per share) andare therefore excluded from the calculation of diluted loss per share. Year endedDecember 31,2011 Year endedDecember 31,2010 Year endedDecember 31,2009 Numerator: Net Loss $(3,857) $(13,546) $(648) Incremental fair value of securities offered to induce warrantsexercise — (647) — Dividend declared on preferred shares Series B (108) — — Undistributed loss attributable to Series C participating preferredshares 587 — — Loss attributable to common stockholders $(3,378) $(14,193) $(648) Denominator: Denominator for basic net loss per share — weighted averageshares 41,409,433 32,677,318 21,505,001 Denominator for diluted net loss per share — adjusted weightedaverage shares 41,409,433 32,677,318 21,505,001 Basic net loss per share $(0.08) $(0.43) $(0.03) Diluted net loss per share $(0.08) $(0.43) $(0.02) F-32 Table of ContentsNOTE 22: INCOME TAXESMarshall Islands, Cayman Islands, British Virgin Islands, and Hong Kong, do not impose a tax on international shipping income. Under the laws ofMarshall Islands, of the companies’ incorporation and vessels’ registration, the companies are subject to registration and tonnage taxes which have beenincluded in vessel operating expenses in the accompanying consolidated statements of income.Pursuant to Section 883 of the Internal Revenue Code of the United States (the “Code”), U.S. source income from the international operation of ships isgenerally exempt from U.S. income tax if the company operating the ships meets certain incorporation and ownership requirements. Among other things, inorder to qualify for this exemption, the company operating the ships must be incorporated in a country, which grants an equivalent exemption from incometaxes to U.S. corporations. All the Company’s ship-operating subsidiaries satisfy these initial criteria. In addition, these companies must be more than 50%owned by individuals who are residents, as defined, in the countries of incorporation or another foreign country that grants an equivalent exemption to U.S.corporations. Subject to proposed regulations becoming finalized in their current form, the management of the Company believes by virtue of a special ruleapplicable to situations where the ship operating companies are beneficially owned by a publicly traded company like the Company, the second criterion canalso be satisfied based on the trading volume and ownership of the Company’s shares, but no assurance can be given that this will remain so in the future.Due to the exemption under Section 883 of the Code, Delaware would not impose a tax on the Company or its subsidiaries’ international shipping income.NOTE 23: SUBSEQUENT EVENTSOn February 13, 2012, the Board of Directors declared a quarterly cash dividend in respect of the fourth quarter of 2011 of $0.05 per common sharepayable on April 5, 2012 to stockholders of record as of March 22, 2012. The declaration and payment of any further dividends remains subject to thediscretion of the Board and will depend on, among other things, Navios Acquisition’s cash requirements as measured by market opportunities and restrictionsunder its credit agreements and other debt obligations and such other factors as the Board may deem advisable.On January 20, 2012, Navios Acquisition took delivery of the Nave Estella, a 75,000 dwt LR1 product tanker, from a South Korean shipyard. Thevessel is chartered-out at net daily charter rate of $12 per day for a period of three years plus two one year options. The charter contract also provides for profitsharing.In January 2012, Navios Acquisition concluded the acquisition of three new build MR2 product tankers scheduled to be delivered from a SouthKorean shipyard in the second, third and fourth quarter of 2014, respectively. F-33 Exhibit 8.1Subsidiaries of Navios Maritime Acquisition CorporationAegean Sea Maritime Holdings Inc., a Marshall Islands Holdings companyAmorgos Shipping Corporation, a Marshall Islands corporationAndros Shipping Corporation, a Marshall Islands corporationAntikithira Shipping Corporation, a Marshall Islands corporationAntiparos Shipping Corporation, a Marshall Islands corporationAmindra Shipping Co., a Marshall Islands corporationCrete Shipping Corporation, a Marshall Islands corporationFolegandros Shipping Corporation, a Marshall Islands corporationIkaria Shipping Corporation, a Marshall Islands corporationIos Shipping Corporation, a Cayman Islands corporationKithira Shipping Corporation, a Marshall Islands corporationKos Shipping Corporation, a Marshall Islands corporationMytilene Shipping Corporation, a Marshall Islands corporationNavios Acquisition Finance (US) Inc., a Delaware companyRhodes Shipping Corporation, a Marshall Islands corporationSerifos Shipping Corporation, a Marshall Islands corporationShinyo Dream Limited, a Hong Kong limited companyShinyo Kannika Limited, a Hong Kong limited companyShinyo Kieran Limited, a British Virgin Islands limited companyShinyo Loyalty Limited, a Hong Kong limited companyShinyo Navigator Limited, a Hong Kong limited companyShinyo Ocean Limited, a Hong Kong limited companyShinyo Saowalak Limited, a British Virgin Islands limited companySifnos Shipping Corporation, a Marshall Islands corporationSkiathos Shipping Corporation, a Marshall Islands corporationSkopelos Shipping Corporation, a Cayman Islands corporationSyros Shipping Corporation, a Marshall Islands corporationThera Shipping Corporation, a Marshall Islands corporationTinos Shipping Corporation, a Marshall Islands corporationOinousses Shipping Corporation, a Marshall Islands corporationPsara Shipping Corporation, a Marshall Islands corporationAntipsara Shipping Corporation, a Marshall Islands corporation Exhibit 12.1CERTIFICATION OF CHIEF EXECUTIVE OFFICERPURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I, Angeliki Frangou, certify that:1. I have reviewed this annual report on Form 20-F for the year ended December 31, 2011 of Navios Maritime Acquisition Corporation;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e), and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for thecompany and have:a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the company, including its consolidated subsidiary, is made known to us by others within those entities, particularlyduring the period in which this report is being prepared;b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles;c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report on such evaluation; andd) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annualreport that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting: and5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to thecompany’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the company’s ability to record, process, summarize and report financial information; andb) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal controlsover financial reporting. /s/ Angeliki Frangou Angeliki Frangou Chief Executive Officer(Principal Executive Officer)Date: March 15, 2012 Exhibit 12.2CERTIFICATION OF CHIEF FINANCIAL OFFICERPURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I, Leonidas Korres, certify that:1. I have reviewed this annual report on Form 20-F for the year ended December 31, 2011 of Navios Maritime Acquisition Corporation;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e), and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for thecompany and have:a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the company, including its consolidated subsidiary, is made known to us by others within those entities, particularlyduring the period in which this report is being prepared;b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles;c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report on such evaluation; andd) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annualreport that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting: and5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to thecompany’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the company’s ability to record, process, summarize and report financial information; andb) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal controlsover financial reporting. /s/ Leonidas Korres Leonidas Korres Chief Financial Officer(Principal Financial Officer)Date: March 15, 2012 Exhibit 13.1CertificationPursuant To Section 906 of the Sarbanes-Oxley Act Of2002(Subsections (A) And (B) Of Section 1350,Chapter 63 of Title 18, United States Code)Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each ofthe undersigned officers of Navios Maritime Acquisition Corporation, (the “Company”), does hereby certify, to such officer’s knowledge, that:(i) the Annual Report on Form 20-F for the fiscal year ended December 31, 2011 (the “Form 20-F”) of the Company fully complies with therequirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;(ii) and the information contained in the Form 20-F fairly presents, in all material respects, the financial condition and results of operations of theCompany. Dated: March 15, 2012 /s/ Angeliki Frangou Angeliki Frangou Chief Executive OfficerDated: March 15, 2012 /s/ Leonidas Korres Leonidas Korres Chief Financial Officer Exhibit 15.1 CertifiedPublicAccountants Rothstein Kass1350 Avenue of the AmericasNew York, NY 10019tel 212.997.0500fax 212.730.6892www.rkco.com Beverly HillsDallasDenverGrand CaymanNew YorkRoselandSan FranciscoWalnut CreekCONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe consent to the use in this Form 20-F of Navios Maritime Acquisition Corporation of our report, dated January 29, 2010 (which includes an explanatoryparagraph relating to the Company’s ability to continue as a going concern), relating to the statements of operations, stockholders’ equity, and cash flows forthe year ended December 31, 2009, and to the reference to our Firm under the caption “Experts”. /s/ Rothstein Kass Roseland, New JerseyMarch 15, 2012 Exhibit 15.2CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe hereby consent to the incorporation by reference in the Registration Statements on Form F-3 (Nos. 333-169320, 333-170896 and 333-151707) of NaviosMaritime Acquisition Corporation of our report dated March 15, 2012 relating to the financial statements and the effectiveness of internal control overfinancial reporting, which appears in this Form 20-F./s/ PricewaterhouseCoopers S.A.Athens, GreeceMarch 15, 2012
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