Navios Maritime Acquisition Corporation
Annual Report 2014

Plain-text annual report

Table of Contents UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 FORM 20-F (Mark One)¨REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934OR xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2014OR ¨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 number 001-34104 Navios 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)7 Avenue de Grande Bretagne, Office 11B2Monte Carlo, MC 98000 Monaco(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)Securities 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 LLCSecurities registered or to be registered pursuant toSection 12(g) of the Act. 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: 151,664,942Shares of Common StockIndicate 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 the Securities ExchangeAct 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 1934 during the preceding12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such reporting requirements for the past90 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 to be submitted andposted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit andpost 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 and large acceleratedfiler” 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 Contents TABLE OF CONTENTS PART IItem 1. Identity of Directors, Senior Management and Advisers 5 Item 2. Offer Statistics and Expected Timetable 5 Item 3. Key Information 5 Item 4. Information on the Company 41 Item 4A. Unresolved Staff Comments 64 Item 5. Operating and Financial Review and Prospects 64 Item 6. Directors, Senior Management and Employees 96 Item 7. Major Stockholders and Related Party Transactions 102 Item 8. Financial Information 112 Item 9. Listing Details 113 Item 10. Additional Information 114 Item 11. Quantitative and Qualitative Disclosures about Market Risks 129 Item 12. Description of Securities Other than Equity Securities 130 PART IIItem 13. Defaults, Dividend Arrearages and Delinquencies 131 Item 14. Material Modifications to the Rights of Shareholders and Use of Proceeds 131 Item 15. Controls and Procedures 131 Item 16A. Audit Committee Financial Expert 132 Item 16B. Code of Ethics 132 Item 16C. Principal Accountant Fees and Services 132 Item 16D. Exemptions from the Listing Standards for Audit Committees 133 Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers 133 Item 16F. Change in Registrant’s Certifying Accountant 133 Item 16G. Corporate Governance 133 Item 16H. Mine Safety Disclosures 133 Item 17. Financial Statements 133 Item 18. Financial Statements 133 Item 19. Exhibits 133 Signatures 138 EX-4.31EX-4.43EX-8.1EX-12.1EX-12.2EX-13.1EX-15.1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 (this “Annual Report”) which are not historical facts (including our statements concerningplans and objectives of management for future operations or economic performance, or assumptions related thereto) are forward-looking statements. Inaddition, we and our representatives may from time to time make other oral or written statements which are also forward-looking statements. Such statementsinclude, in particular, statements about our plans, strategies, business prospects, changes and trends in our business, and the markets in which we operate asdescribed in this 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 theseterms or other comparable 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 with major refined product importers and exporters, major crude oilcompanies and major commodity traders, including our ability to enter into long-term 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,and expected 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 inthe future and 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 the availability and costs of funding due to conditions in the bank market, capital markets and other factors; • 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 3Table of Contents • changes in the standard of service or the ability of our technical manager to be approved as required. • our ability to leverage to our advantage, Navios Maritime Holdings Inc. (“Navios Holdings”) relationships and reputation in the shippingindustry.These and other forward-looking statements are made based upon management’s current plans, expectations, estimates, assumptions and beliefsconcerning future events impacting us and therefore involve a number of risks and uncertainties, including those risks discussed in “Item 3. KeyInformation”.The forward-looking statements, contained in this Annual Report, are based on our current expectations and beliefs concerning future developmentsand their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated.The risks, uncertainties and assumptions involve known and unknown risks and are inherently subject to significant uncertainties and contingencies,many of which are beyond our control. We caution that forward-looking statements are not guarantees and that actual results could differ materially fromthose 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 on which suchstatement 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 predict all of thesefactors. Further, we cannot assess the impact of each such factor on our business or the extent to which any factor, or combination of factors, may cause actualresults to be materially different from those contained in any forward-looking statement. 4Table of ContentsPART I Item 1.Identity of Directors, Senior Management and AdvisersNot Applicable. Item 2.Offer Statistics and Expected TimetableNot Applicable. Item 3.Key Information A.Selected Financial DataNavios Maritime Acquisition Corporation (sometimes referred to herein as “Navios Acquisition,” the “Company,” “we” or “us”) was incorporated inthe Republic of Marshall Islands on March 14, 2008 (refer to Item 4. Information on the Company).Navios Acquisition’s selected historical financial information and operating results for the years ended December 31, 2014, 2013, 2012, 2011 and2010 is derived from the audited consolidated financial statements of Navios Acquisition. The selected consolidated statement of comprehensive income/(loss) for the years ended December 31, 2014, 2013 and 2012 and the consolidated balance sheet data as of December 31, 2014 and 2013 have been derivedfrom our audited consolidated financial statements included elsewhere in this Annual Report. The consolidated statement of comprehensive income/ (loss)data for the years ended December 31, 2012, 2011 and December 31, 2010, and the consolidated balance sheet data as of December 31, 2012, 2011 and asof December 31, 2010, have been derived from our audited consolidated financial statements which are not included in this document and are available atwww.sec.gov. The selected consolidated financial data should be read in conjunction with “Item 5. Operating and Financial Review and Prospects”, andother financial information included elsewhere in this Annual Report. The selected consolidated financial data is a summary of, is derived from, and isqualified by reference to, our audited consolidated financial statements and notes thereto, which have been prepared in accordance with U.S. generallyaccepted accounting principles (“U.S. GAAP”). The historical data included below and elsewhere in this Annual Report is not necessarily indicative of ourfuture performance. (In thousands of U.S. dollars) Year endedDecember 31,2014 Year endedDecember 31,2013 Year endedDecember 31,2012 Year endedDecember 31,2011 Year endedDecember 31,2010 Revenue $264,877 $202,397 $151,097 $121,925 $33,568 Time charter expenses (5,187) (6,762) (2,824) (3,499) (355) Direct vessel expenses (1,979) (3,096) (2,622) (633) — Management fees (entirely through related party transactions) (95,827) (71,392) (47,043) (35,679) (9,752) General and administrative expenses (14,588) (7,017) (3,853) (4,241) (4,042) Transaction costs — — — — (8,019) Depreciation and amortization (67,718) (63,880) (49,644) (38,638) (10,120)Loss on bond and debt extinguishment — (33,973) — (935) (5,441)Interest income 720 315 445 1,414 862 Interest expenses and finance cost (78,610) (58,386) (49,432) (43,165) (10,651)Impairment loss (11,690) — — — — Gain/ (loss) on sale of vessels 22,599 (21,098) — — — Change in fair value of other assets (1,188) — — — — Equity in net earnings of affiliated companies 2,000 — — — — Other income 280 4,787 280 155 434 Other expense (642) (487) (202) (561) (30) Net income/ (loss)$13,047 $(58,592) $(3,798) $(3,857) $(13,546)Net income/ (loss) per share, basic$0.08 $(0.57) $(0.08) $(0.08) $(0.43)Net income/ (loss) per share, diluted$0.08 $(0.57) $(0.08) $(0.08) $(0.43) 5Table of ContentsBalance Sheet Data (at period end) Year EndedDecember 31,2014 Year EndedDecember 31,2013 Year endedDecember 31,2012 Year endedDecember 31,2011 Year endedDecember 31,2010 Current assets, including cash 89,528 120,801 71,795 78,907 81,202 Vessels, net 1,375,931 1,353,131 940,738 774,624 529,659 Total assets 1,715,802 1,656,661 1,370,644 1,195,469 1,005,087 Current portion of long-term debt 33,431 34,714 19,724 11,928 5,086 Total long-term debt, excluding current portion 1,130,901 1,119,734 974,362 833,483 704,332 Series D Convertible Preferred Stock 12,000 12,000 6,000 — — Total Stockholders’ equity 487,251 450,822 225,304 238,849 253,728 Cash Flow Data Net cash provided by/(used in) operating activities 75,985 (29,571) 81,877 64,233 11,300 Net cash (used in) investing activities (145,729) (293,740) (205,956) (225,777) (103,602) Net cash provided by financing activities 41,402 363,300 125,625 141,484 154,575 Cash dividends declared per common share 0.20 0.20 0.20 0.20 0.05 Fleet Data: Vessels at end of period 37 33 19 14 9 B.Capitalization and indebtedness.Not applicable. C.Reasons for the offer and use of proceeds.Not applicable. D.Risk factorsRisks Relating to the Shipping Industry and the Operation of our VesselsThe cyclical nature of the tanker industry may lead to volatility in charter rates and vessel values, which could adversely affect our future earnings.Oil has been one of the world’s primary energy sources for a number of decades. The global economic growth of previous years had a significant impacton the demand for oil and subsequently on oil trade and shipping demand. However, the past several years were marked by a major economic slowdownwhich has had, and continues to have, a significant impact on world trade, including the oil trade. Global economic conditions remain fragile with significantuncertainty remaining with respect to recovery prospects, levels of recovery and long-term economic growth effects. In particular, the uncertaintysurrounding the future of the Eurozone, the economic prospects of the United States and the future economic growth of China, Brazil, Russia, India and otheremerging markets are all expected to affect demand for product and crude tankers going forward. Demand for oil and refined petroleum products remainsweak as a result of the weak global economic environment and a general global trend towards energy efficient technologies, which in combination with thediminished availability of trade credit and deteriorating international liquidity conditions, led to decreased demand for tanker vessels, creating downwardpressure on charter rates. This economic downturn has also affected vessel values overall. Despite global oil demand growth remaining marginally positivefor 2014, during the last half of calendar year 2014, energy prices sharply declined and average spot and period charter rates for product and crude tankersremained, and continue to be, at below historically average rates. If oil demand grows in the future, it is expected to come primarily from emerging marketswhich have been historically volatile, such as China and India, and a slowdown in these countries’ economies may severely affect global oil demand growth,and may result in 6Table of Contentsprotracted, reduced consumption of oil products and a decreased demand for our vessels and lower charter rates, which could have a material adverse effect onour business, results of operations, cash flows, financial condition and ability to make cash distributions.Historically, the crude oil markets have been volatile as a result of the many conditions and events that can affect the price, demand, production andtransport of oil, including competition from alternative energy sources. Decreased demand for oil transportation may have a material adverse effect on ourrevenues, cash flows and profitability. The factors affecting the supply and demand for tankers are outside of our control, and the nature, timing and degree ofchanges in industry conditions are unpredictable. 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 geographic changesin where oil is produced, refined and used; • competition from alternative sources of energy; • armed conflicts and terrorist activities; • natural or man-made disasters that affect the ability of our vessels to use certain waterways; • 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 cargo and thereverse 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 of tonnage;and • environmental concerns and regulations. 7Table of ContentsFurthermore, the extension of refinery capacity in China, India and particularly the Middle East through 2018 is expected to exceed the immediateconsumption in these areas, and an increase in exports of refined oil products is expected as a result. This coupled with announced refinery closures in theAustralia, Japan and Europe should increase trade in refined oil products.Historically, 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 percentage of the totaltanker fleet on order as a percent of the total fleet declined from 18% at the end of 2011 to 14% at the end of 2014. An over-supply of tanker capacity mayresult in a reduction of charter hire rates. If a reduction in charter rates occurs, we may only be able to charter our vessels at unprofitable rates or we may notbe able to charter these vessels at all, which could lead to a material adverse effect on our results of operations.Spot market rates for tanker vessels are highly volatile and may decrease in the future, which may materially adversely affect our earnings in the event thatour vessels are chartered in the spot market.We intend to deploy at least some of our product, chemical tankers and VLCCs in the spot market. Although spot chartering is common in the product,chemical, tanker and VLCCs sectors, product, chemical tanker and VLCCs’ charter hire rates are highly volatile and may fluctuate significantly based upondemand for seaborne transportation of crude oil and oil products and chemicals, as well as tanker supply. World oil demand is influenced by many factors,including international economic activity; geographic changes in oil production, processing, and consumption; oil price levels; inventory policies of themajor oil and oil trading companies; and strategic inventory policies of countries such as the United States and China. The successful operation of our vesselsin the spot charter market depends upon, among other things, obtaining profitable spot charters and minimizing, to the extent possible, time spent waiting forcharters and 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 toseveral weeks, 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 of vessels.Currently, charter hire rates are above operating costs but there is no assurance that the crude oil, product and chemical tanker charter market will rise over thenext several months or will not decline further. A decrease in spot rates may decrease the revenues and cash flow we derive from vessels employed in pools oron index linked charters. Such volatility in pool or index linked charters may be mitigated by any minimum rate due to us that we negotiate with ourcharterers.Additionally, if the spot market rates or short-term time charter rates become significantly lower than the time charter equivalent rates that some of ourcharterers are obligated to pay us under our existing charters, the charterers may have incentive to default under that charter or attempt to renegotiate thecharter. If our charterers fail to pay their obligations, we would have to attempt to re-charter our vessels at lower charter rates, which would affect our ability tocomply with our loan covenants and operate our vessels profitably. If we are not able to comply with our loan covenants and our lenders choose to accelerateour indebtedness and foreclose their liens, we could be required to sell vessels in our fleet and our ability to continue to conduct our business would beimpaired.Certain of our VLCC vessels are contractually committed to time charters or operation in pools, with the remaining terms of these charters expiring during theperiod from and including 2015 through 2019. We are not permitted to unilaterally terminate the charter agreements of the VLCC vessels due to upswings inthe tanker industry cycle, when spot market voyages might be more profitable. We may also decide to sell a vessel in the 8Table of Contentsfuture. In such a case, should we sell a vessel that is committed to a long-term charter, we may not be able to realize the full charter free fair market value ofthe vessel during a period when spot market charters are more profitable than the charter agreement under which the vessel operates. We may re-charter theVLCC vessels on long-term charters or charter them in the spot market or place them in pools upon expiration or termination of the vessels’ current charters.Furthermore, in connection with the IPO of Navios Maritime Midstream Partners L.P. (“Navios Midstream”), we have committed to charter-in certain vesselsof Navios Midstream’s fleet at their current charter-out rates for two years from redelivery if market rates then are lower than their current charter rates. If weare 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.Increasing self-sufficiency in energy by the United States could lead to a decrease in imports of oil to that country, which to date has been one of the largestimporters of oil worldwide.The United States is expected to overtake Saudi Arabia as the world’s top oil producer by 2017, according to an annual long-term report by theInternational Energy Agency (“IEA”). The steep rise in shale oil and gas production is expected to push the country toward self-sufficiency in energy. Inrecent years the share of total U.S. consumption met by total liquid fuel net imports, including both crude oil and products, has been decreasing sincepeaking at over 60% in 2005 and it is estimated that it fell at around 33% in 2013 as a result of lower consumption and the substantial increase in domesticcrude oil production. The IEA expects the net import share to decline to 21% in 2015, which would be the lowest level since 1969. A slowdown in oilimports to the United States, one of the most important oil trading nations worldwide, may result in decreased demand for our vessels and lower charter rates,which could have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to make cash distributions.A number of third party owners have ordered so-called “eco-type” vessel designs, which may offer substantial bunker savings as compared to olderdesigns. Increased demand for and supply of “eco-type” vessels could reduce demand for certain of our vessels that are not classified as such and expose usto lower vessel utilization and/or decreased charter rates.The product tanker newbuilding order book as of December 2014 is estimated at 389 vessels or 15.0% of the current product tanker fleet. The majorityof these orders are based on new vessel designs, which purport to offer material bunker savings compared to older designs, which include certain of ourvessels. Such savings could result in a substantial reduction of bunker cost for charterers compared to such vessels of ours. As the supply of such “eco-type”vessel increases and if charterers prefer such vessels over certain of our vessels that are not classified as such, this may reduce demand for our non-“eco-type”vessels, impair our ability to recharter such vessels at competitive rates and have a material adverse effect on our cash flows and operations.Charter rates in the crude oil tankers sector in which we operate and in the product and chemical tanker sectors of the seaborne transportation industryhave significantly declined from historically high levels in 2008 and may remain depressed or decline further in the future, which may adversely affect ourearnings.Charter rates in the crude oil, product and chemical tanker sectors have significantly declined from historically high levels in 2008 and may remaindepressed 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, whichrepresents a decline of approximately 81%. Since January 2013, it has traded between a low of 577 and a high of 1,344; as of February 27, 2015, it stood at841. The Baltic Clean Tanker Index fell from 1,509 in the early summer of 2008 to 345 in April 2009, or an approximate 77% decline. It has traded between alow of 483 and a high of 823 since January 2013 and stood at 695 as of February 27, 2015. Of note is that Chinese imports of crude oil have steadilyincreased from 3 million barrels per day in 2008 to about 7.1 million barrels per day in December 2014 and the U.S. has steadily increased its total petroleumproduct exports by about 313% to 3.9 million barrels per day in October 2014 from 1 million barrels per day in January 2006. If the tanker sector of theseaborne transportation industry, which has been highly cyclical, is depressed in the future at a time when we may want to sell a vessel, 9Table of Contentsour earnings and available cash flow may be adversely affected. We cannot assure you that we will be able to successfully charter our vessels in the future atrates sufficient to allow us to operate our business profitably or to meet our obligations, including payment of debt service to our lenders. Our ability to renewthe charters on vessels that we may acquire in the future, the charter rates payable under any replacement charters and vessel values will depend upon, amongother things, economic conditions in the sector in which our vessels operate at that time, changes in the supply and demand for vessel capacity and changesin the supply and demand for the seaborne transportation of energy resources and commodities.Any decrease in shipments of crude oil from the Arabian Gulf or West Africa may 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, primarily depends on theeconomies of the world’s industrial countries and competition from alternative energy sources. A wide range of economic, social and other factors cansignificantly 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 theircrude oil production; • any increase in refining of crude into petroleum products for domestic consumption or export; • 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 the United States, 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.Sixteen of the vessels in our fleet 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 our LR1 product tanker vessels, six of our MR2 product tanker vessels and eight of our VLCC vessels are second-hand vessels, and we mayacquire more second-hand vessels in the future. Our inspection of second-hand vessels prior to purchase does not provide us with the same knowledge abouttheir condition and cost of any required or anticipated repairs that we would have had if these vessels had been built for and operated exclusively by us.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 engine technology,older vessels are typically less fuel efficient and more costly to maintain than more recently constructed vessels. Cargo insurance rates increase with the ageof a vessel, making older vessels less desirable to charterers.Governmental regulations, safety or other equipment standards related to the age of vessels may require expenditures for alterations or the addition ofnew equipment to our vessels and may restrict the type of activities in which the vessels may engage or the geographic regions in which we may operate. Wecannot predict what alterations or modifications our vessels may be required to undergo in the future. As our vessels age, market conditions may not justifythose expenditures or enable us to operate our vessels profitably during the remainder of their useful lives. 10Table of ContentsAlthough we have considered the age and condition of the vessels in budgeting for operating, insurance and maintenance costs, we may encounterhigher operating and maintenance costs due to the age and condition of these vessels, or any additional vessels we acquire in the future. The age of some ofour VLCC vessels may result in higher operating costs and increased vessel off-hire periods relative to our competitors that operate newer fleets, which couldhave 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 on continued growthin world and regional demand for crude oil, refined petroleum (clean and dirty) products and bulk liquid chemicals and the transportation of such cargoes bysea, which could be negatively affected by a number of factors, including: • 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 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, pipelinesystems 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 oil lessattractive 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 reduce energyconsumption or its growth.The refining and chemical industries may respond to the economic downturn and demand weakness by reducing operating rates partially or completelyclosing refineries and by reducing or cancelling certain investment expansion plans, including plans for additional refining capacity, in the case of therefining industry. Continued reduced demand for refined petroleum products and bulk liquid chemicals and the shipping of such cargoes or the increasedavailability of pipelines used to transport refined petroleum products, and bulk liquid chemicals would have a material adverse effect on our future growthand 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, product and chemical tanker sectors of the shipping industry that is capitalintensive and fragmented. Competition arises primarily from other vessel owners, including major oil companies and traders as well as independent tankercompanies, some of whom have substantially greater resources and experience than us. Competition for the chartering of tankers can be intense and dependson price, location, size, age, condition and the acceptability of the vessel and its managers to the charterers. Such competition has been enhanced as a resultof the downturn in the shipping 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 more extended periods oftime. However, the process for obtaining longer term time 11Table of Contentscharters and bareboat charters is highly competitive and generally involves a lengthy, intensive and continuous screening and vetting process and thesubmission of competitive bids that often extends for several months. In addition to the quality, age and suitability of the vessel, longer term shippingcontracts tend to be awarded based upon a variety of other factors relating to the vessel operator. Competition for the transportation of crude oil, refinedpetroleum products and bulk liquid chemicals can be intense and depends on price, location, size, age, condition and acceptability of the vessel and ourmanagers 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 competition from a number ofcompetitors who may have greater financial resources, stronger reputations or experience than we do when we try to re-charter our vessels. It is also likely thatwe will face increased numbers of competitors entering into the crude oil, product and chemical tanker sectors, including in the ice class sector. Increasedcompetition may cause greater price competition, especially for medium- to long-term charters. Due in part to the highly fragmented markets, competitorswith greater resources could operate larger fleets through consolidations or acquisitions that may be able to offer better prices and fleets than 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 a profitable basis, if atall. Even if we are successful in employing our vessels under longer term time charters or bareboat charters, our vessels will not be available for trading in thespot market during an upturn in the crude oil, product and chemical tanker market cycles, when spot trading may be more profitable. If we cannotsuccessfully employ our vessels in profitable time charters, our results of operations and operating cash flow could be adversely affected.The market values of our vessels or vessels we may acquire have declined from historically high levels and may fluctuate significantly, which could causeus to breach covenants in our credit facilities, result in the foreclosure of certain of our vessels, limit the amount of funds that we can borrow and adverselyaffect our ability to purchase new vessels and our operating results. 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 vessels and contracted newbuildings and of tankers generally,are currently significantly lower than they would have been prior to the downturn in the second half of 2008. Within the past year smaller product tanker yardresale prices have declined slightly then remained flat. Vessel values may remain at current low, or lower, levels for a prolonged period of time and canfluctuate substantially 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 our indebtednessat the time. Our credit facilities contain covenants including maximum total net liabilities over total net assets (effective in general after delivery of thevessels), minimum net worth and value to loan ratio covenants of 133% or lower, applicable after delivery of the vessels. If we breach 12Table of Contentsany such covenants in the future and we are unable to remedy the relevant breach, our lenders could accelerate or require us to prepay a portion of our debtand foreclose 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 couldhave a material adverse effect on our 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 changes incircumstances 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.Conversely, if vessel values are elevated at a time when we wish to acquire additional vessels, the cost of acquisition may increase and this could materiallyadversely affect our business, financial condition and results of operations.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 canal charges and fuelcosts, and we are generally responsible for vessel operating expenses. Vessel operating expenses are the costs of operating a vessel, primarily consisting ofcrew wages and associated costs, insurance premiums, management fees, lubricants and spare parts and repair and maintenance costs. In particular, the cost offuel is a significant factor in negotiating charter rates. As a result, an increase in the price of fuel beyond our expectations may adversely affect ourprofitability. The price and supply of fuel is unpredictable and fluctuates based on events outside our control, including geopolitical developments, supplyand demand for oil, actions by members of OPEC and other oil and gas producers, war, terrorism and unrest in oil producing countries and regions, regionalproduction patterns and environmental concerns and regulations.We have fixed the fees for ship management services of our owned fleet, provided by a subsidiary of Navios Holdings, through May 2016 at $6,000 perMR2 product tanker and chemical tanker vessel, $7,000 per LR1 product tanker vessel and $9,500 per VLCC vessel. Drydocking expenses under thisManagement Agreement will be reimbursed at cost at occurrence for all vessels.We receive a daily rate for the use of our vessels, which is fixed through the term of the applicable charter agreement. Our charter agreements do notprovide for any increase in the daily hire rate in the event that vessel-operating expenses increase during the term of the charter agreement. The charteragreements for certain of our VLCC vessels expire during the period from and including 2015 through 2019. Because of the long-term nature of these charteragreements, incremental increases in our vessel operating expenses over the term of a charter agreement will effectively reduce our operating income and, ifsuch increases in operating expenses are significant, adversely affect our business, financial condition and results of operations.The 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 demand and, as a result,in charter hire rates. This seasonality may result in quarter-to-quarter volatility in our operating results. The product and chemical tanker markets are typicallystronger in the fall and winter months in anticipation of increased consumption of oil and natural gas in the northern hemisphere. In addition, unpredictableweather patterns in these months tend to disrupt vessel scheduling and supplies of certain commodities. As a result, revenues are typically weaker during thefiscal quarters ended June 30 and September 30, and, conversely, typically stronger in fiscal quarters ended December 31 and March 31. Our operatingresults, therefore, may be subject to seasonal fluctuations. 13Table of ContentsCurrent global economic uncertainty 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 demandfor goods and services, deteriorating international liquidity conditions, and declining markets. Lower demand for tanker cargoes as well as diminished tradecredit available for the delivery of such cargoes may create downward pressure on charter rates. If the current global economic environment persists orworsens, 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 if theirvalues are impaired. In addition, such a decline in the market value of our vessels could prevent us from borrowing under our credit facilities ortrigger 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, such volatility 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.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; • 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 of indebtedness to financevessel acquisitions, capital expenditures and working capital needs. If we finance the purchase of our vessels through the issuance of debt securities, it couldresult 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 securitycontained covenants that required the maintenance of certain financial ratios or reserves and any such covenant were breached without a waiveror renegotiation of that 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 additionalfinancing while such security was outstanding. 14Table of ContentsIn addition, our business plan and strategy is predicated on buying vessels in a market at what we believe is near the low, but recovering phase of theperiodic 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, orthat there 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 succeedin the near-term or at all. Growing any business by acquisition presents numerous risks such as undisclosed liabilities and obligations, difficulty experiencedin obtaining 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 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 occasionally requireupgrade work in order to maintain their classification society rating or as a result of changes in regulatory requirements. In addition, our vessels will be off-hire periodically for intermediate surveys and special surveys in connection with each vessel’s certification by its classification society. The costs of drydockrepairs are unpredictable and can be substantial and the loss of earnings while these vessels are being repaired and reconditioned, as well as the actual cost ofthese repairs, would decrease our earnings. Our insurance generally only covers a portion of drydocking expenses resulting from damage to a vessel andexpenses related to maintenance of a vessel will not be reimbursed. In addition, space at drydocking facilities is sometimes limited and not all drydockingfacilities 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 a damagedvessel 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 to wait forspace or to relocate to drydocking facilities that are far away from the routes on which our vessels trade would further decrease our earnings.We rely on our technical managers to provide essential services to our vessels and run the day-to-day operations of our vessels.Pursuant to our technical management agreements we are provided with services essential to the business of our vessels, including vessel maintenance,crewing, purchasing, shipyard supervision, insurance and assistance with vessel regulatory compliance, by our technical managers, including a subsidiary ofNavios Holdings and a technical manager affiliated with the seller from the acquisition of seven VLCCs in September 2010 (the “VLCC Acquisition”). Thistechnical manager will continue to provide such services for an interim period subsequent to the closing of the VLCC Acquisition, after which the technicalmanagement of certain of our VLCCs is expected to be provided directly by the subsidiary of Navios Holdings. Our operational success and ability toexecute our strategy will depend significantly upon the satisfactory performance of the aforementioned services by the current technical managers. Thefailure of our technical managers to perform these services satisfactorily could have a material adverse effect on our business, financial condition and resultsof 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 the hire rate, and wewill be responsible for all costs (including the cost of bunker fuel) unless the charterer is responsible for the circumstances giving rise to the lack ofavailability. 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 other things: • operational deficiencies; • the removal of a vessel from the water for repairs, maintenance or inspection, which is referred to as drydocking; 15Table of Contents • 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; • our failure to maintain the vessel in compliance with its specifications, contractual standards and applicable country of registry and internationalregulations or to provide the required crew; or • a natural or man-made event of force majeure.Accordingly, any vessel off-hire, due to any of the aforementioned factors or otherwise, could have a material adverse effect on our business, financialcondition and operating results.Delays in deliveries of any newbuilding vessels we may contract to acquire or order in the future, or our decision to cancel, or our inability to otherwisecomplete the acquisitions of any newbuildings we may decide to acquire in the future, could harm our operating results and lead to the termination of anyrelated charters.Any newbuildings we may contract to acquire or order in the future, could be delayed, not completed or cancelled, which would delay or eliminate ourexpected receipt of revenues under any charters for such vessels. The shipbuilder or third party seller could fail to deliver the newbuilding vessel or any othervessels we acquire or order, or we could cancel a purchase or a newbuilding contract because the shipbuilder has not met its obligations, including itsobligation to maintain agreed refund guarantees in place for our benefit. For prolonged delays, the customer may terminate the time charter.Our receipt of newbuildings could be delayed, canceled, 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 a catastrophic event, such as a major earthquake or fire; • the shipbuilder failing to deliver the vessel in accordance with our vessel specifications; • our requests for changes to the original vessel specifications; • shortages of or delays in the receipt of necessary construction materials, such as steel; or • 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 affectour results of operations and financial condition.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, andwill remain, heavily regulated. 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 number of commodities traders, represent a significant percentage of the production, trading and shipping logistics 16Table of Contents(terminals) of crude oil and refined products worldwide. Concerns for the environment have led the oil majors to develop and implement a strict ongoing duediligence process when selecting their commercial partners. This vetting process has evolved into a sophisticated and comprehensive risk assessment of boththe vessel operator and the vessel, including physical ship inspections, completion of vessel inspection questionnaires performed by accredited inspectorsand the production of comprehensive risk assessment reports. In the case of term charter relationships, additional factors are considered when awarding suchcontracts, 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 international tradestandards for shipping; • compliance with oil majors’ codes of conduct, policies and guidelines, including transparency, anti-bribery and ethical conduct requirementsand relationships with third parties; • compliance with heightened industry standards that have been set by several oil companies; • shipping industry relationships, reputation for customer service, technical and operating expertise; • 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 customer specifications; • 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 to transport oilproducts 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 of the applicablecharter agreement and lead to termination of such agreement, and could give rise to impairment in the value of our vessels. 17Table of ContentsShould we not be able to successfully clear the oil majors’ risk assessment processes on an ongoing basis, the future employment of our vessels, as wellas our ability to obtain charters, whether medium- or long-term, could be adversely affected. Such a situation may lead to the oil majors’ terminating existingcharters 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 derive a significant part of our revenue from a number of charterers. For the fiscal year ended December 31, 2014, Dalian Ocean Shipping Company(“DOSCO”) and Navig8 Chemicals Shipping and Trading Co. (“Navig8”) accounted for 22.4% and 28.8%, respectively, of our total revenue. The loss ofthese or any of our customers, a customer’s failure to make payments or perform under any of the applicable charters, a customer’s termination of any of theapplicable charters, the loss or damage beyond repair to any of our vessels, our failure to deliver the vessel within a fixed period of time or a decline inpayments under the charters could have a material adverse effect on our business, results of operations and financial condition. In addition, the charterers ofthe VLCC vessels are based in, and have their primary assets and operations in, the Asia-Pacific region, including the People’s Republic of China. The charteragreements for the VLCC vessels are governed by English law and provide for dispute resolution in English courts or London-based arbitral proceedings.There can be no assurance that we would be able to enforce any judgments against these charterers in jurisdictions where they are based or have their primaryassets and operations. Even after a charter contract is entered, charterers may terminate charters early under certain circumstances. The events or occurrencesthat will cause a charter to terminate or give the charterer the option to terminate the charter generally include a total or constructive total loss of the relatedvessel, the requisition for hire of the related vessel, the vessel becoming subject to seizure for more than a specified number of days or the failure of therelated vessel to meet specified performance criteria. In addition, the ability of a charterer to perform its obligations under a charter will depend on a numberof 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 the shipping industry,the charter rates received for specific types of vessels and various operating expenses. The costs and delays associated with the default by a charterer of avessel may be considerable and may adversely affect our business, results of operations, cash flows and financial condition.We cannot predict whether our charterers will, upon the expiration of their charters, re-charter our vessels on favorable terms or at all. If our charterersdecide 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 may also employour vessels on the spot charter market, which is subject to greater rate fluctuation than the time charter market. If we receive lower charter rates underreplacement charters or are unable to re-charter all of our vessels, our results of operations and financial condition could be materially adversely affected.The risks and costs associated with vessels increase as the vessels age.As of March 24, 2015, the vessels in our fleet had an average age of approximately 4.5 years and most tanker vessels have an expected life of approximately25 years. We may acquire older vessels in the future. Older vessels are typically more costly to maintain than more recently constructed vessels due toimprovements in engine technology. In some instances, charterers prefer newer vessels that are more fuel efficient than older vessels. Cargo insurance ratesalso increase with the age of a vessel, making older vessels less desirable to charterers as well. Governmental regulations, safety or other equipment standardsrelated to the age of the vessels may require expenditures for alterations or the addition of new equipment, to our vessels and may restrict the type ofactivities in which these vessels may engage. We cannot assure you that as our vessels age, market conditions will justify those expenditures or enable us tooperate our vessels profitably during the remainder of their useful lives. If we sell vessels, we may have to sell them at a loss, and if charterers no longercharter out vessels due to their age, it could materially adversely affect our earnings. 18Table of ContentsIf we experienced a catastrophic loss and our insurance is not adequate to cover such loss, it could lower our profitability and be detrimental tooperations.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, labor strikes and/orboycotts, adverse weather conditions and catastrophic marine disaster, including environmental accidents and collisions. All of these risks could result inliability, loss of revenues, increased costs and loss of reputation. We maintain hull and machinery insurance, protection and indemnity insurance, whichinclude environmental damage and pollution and war risk insurance, consistent with industry standards, against these risks on our vessels and other businessassets. However, we cannot assure you that we will be able to insure against all risks adequately, that any particular claim will be paid out of our insurance, orthat we will be able to procure adequate insurance coverage at commercially reasonable rates in the future. Our insurers also require us to pay certaindeductible amounts, before they will pay claims, and insurance policies may contain limitations and exclusions, which, although we believe will be standardfor the shipping industry, may nevertheless increase our costs and lower our profitability. Additionally, any increase in environmental and other regulationsmay also result in increased costs for, or the lack of availability of, insurance against the risks of environmental damage, pollution and other claims. Ourinability to obtain insurance sufficient to cover potential claims or the failure of insurers to pay any significant claims could lower our profitability and bedetrimental 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 the event 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 other members of theprotection and indemnity associations through which we receive indemnity insurance coverage for tort liability. In addition, our protection and indemnityassociations may not have enough resources to cover claims made against them. Our payment of these calls could result in significant expenses to us, whichcould 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, stateand local laws, and regulations in force in the jurisdictions in which vessels operate, as well as in the country or countries of their registration. Governmentalregulations, safety or other equipment standards, as well as compliance with standards imposed by maritime self-regulatory organizations and customerrequirements or competition, may require us to make capital and other expenditures. Because such conventions, laws and regulations are often revised, wecannot predict the ultimate cost of complying with such conventions, laws and regulations, or the impact thereof on the fair market price or useful life of ourvessels. 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 or otherwiseincrease our cost of doing business, which may materially adversely affect our operations, as well as the shipping industry generally. For example, in variousjurisdictions legislation has been enacted, or is under consideration, that would impose more stringent requirements on air pollution and water dischargesfrom our vessels. For example, the International Maritime Organization (“IMO”) periodically proposes and adopts amendments to revise the InternationalConvention for the Prevention of Pollution from Ships (“MARPOL”), such as the revision to Annex VI which came into force on July 1, 2010. The revised 19Table of ContentsAnnex VI implements a phased reduction of the sulfur content of fuel and allows for stricter sulfur limits in designated emission control areas (“ECAs”). Thusfar, ECAs have been formally adopted for the Baltic Sea area (limits SOx emissions only); the North Sea area including the English Channel (limiting SOxemissions only) and the North American ECA (which came into effect on August 1, 2012 limiting SOx, NOx and particulate matter emissions). The UnitedStates Caribbean Sea ECA entered into force on January 1, 2013 and has been effective since January 1, 2014, limiting SOx, NOx and particulate matteremissions.California has adopted more stringent low sulfur fuel requirements within California-regulated waters. In addition, the IMO, the U.S. and states withinthe U.S. have proposed or implemented 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 ISM Code requiresshipowners and bareboat charterers to develop and maintain an extensive “Safety Management System” that includes the adoption of a safety andenvironmental protection policy setting forth instructions and procedures for safe vessel operation and describing procedures for dealing with emergencies.Further to this, the IMO has introduced the first ever mandatory measures for an international greenhouse gas reduction regime for a global industry sector.The Energy Efficiency measures took effect on January 1, 2013 and apply to all ships of 400 gross tonnage and above. They include the development of aship energy efficiency management plan (“SEEMP”) which is akin to a safety management plan, with which the industry will have to comply. The failure of aship owner or bareboat charterer to comply with the ISM Code and IMO measures may subject such party to increased liability, may decrease availableinsurance coverage 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 from such vessels.Several international conventions impose and limit pollution liability from vessels. An owner of a tanker vessel carrying a cargo of “persistent oil” as definedby the International Convention for Civil Liability for Oil Pollution Damage (the “CLC”) is subject under the convention to strict liability for any pollutiondamage caused in a contracting state by an escape or discharge from cargo or bunker tanks. This liability is subject to a financial limit calculated by referenceto 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 reckless conduct. Liability mayalso 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 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.For vessel operations not covered by the CLC, including those operated under our fleet, at present, international liability for oil pollution is governedby the International Convention on Civil Liability for Bunker Oil Pollution Damage (the “Bunker Convention”). In 2001, the IMO adopted the BunkerConvention, which imposes strict liability on shipowners for pollution damage and response costs incurred in contracting states caused by discharges, orthreatened discharges, of bunker oil from all classes of ships not covered by the CLC. The Bunker Convention also requires registered owners of ships over acertain size to maintain insurance to cover their liability for pollution damage in an amount equal to the limits of liability under the applicable national orinternational limitation regime, including liability limits calculated in accordance with the Convention on Limitation of Liability for Maritime Claims 1976,as amended (the “1976 Convention”), discussed in more detail in the following paragraph. The Bunker Convention became effective in contracting states onNovember 21, 2008 and, as of March 10, 2015, had 78 contracting states comprising approximately 91.45% of the gross tonnage of the world’s merchantfleet. In non-contracting states, liability for such bunker oil pollution typically is determined by the national or other domestic laws in the jurisdiction wherethe spillage occurs. 20Table of ContentsThe CLC and Bunker Convention also provide vessel owners a right to limit their liability, depending on the applicable national or internationalregime. The CLC includes its own liability limits. The 1976 Convention is the most widely applicable international regime limiting maritime pollutionliability. Rights to limit liability under the 1976 Convention are forfeited where a spill is caused by a shipowner’s intentional or reckless conduct. Certainjurisdictions have ratified the IMO’s Protocol of 1996 to the 1976 Convention, referred to herein as the “Protocol of 1996.” The Protocol of 1996 provides forsubstantially higher liability limits in those jurisdictions than the limits set forth in the 1976 Convention. Finally, some jurisdictions, such as the UnitedStates, are not a party to either the 1976 Convention or the Protocol of 1996, and, therefore, a shipowner’s rights to limit liability for maritime pollution insuch jurisdictions may be uncertain.Environmental 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 ship owners and operators must comply, and of liability likely to be incurred in the event of non-compliance or anincident causing pollution. Such regulation may become even stricter if laws are changed as a result of the April 2010 Deepwater Horizon oil spill in the Gulfof Mexico. In the United States, the OPA establishes an extensive regulatory and liability regime for the protection and cleanup of the environment fromcargo and bunker oil spills from vessels, including tankers. The OPA covers all owners and operators whose vessels trade in the United States, its territoriesand possessions or whose vessels operate in United States waters, which includes the United States’ territorial sea and its 200 nautical mile exclusiveeconomic zone. Under the OPA, vessel owners, operators and bareboat charterers are “responsible parties” and are jointly, severally and strictly liable (unlessthe spill results solely from the act or omission of a third party, an act of God or an act of war) for all containment and clean-up costs and other damagesarising from discharges or substantial threats of discharges, of oil from their vessels. In response to the 2010 Deepwater Horizon oil incident in the Gulf ofMexico, the U.S. House of Representatives passed and the U.S. Senate considered but did not pass a bill to strengthen certain requirements of the OPA;similar legislation may be introduced in the future.In addition to potential liability under the federal OPA, vessel owners may in some instances incur liability on an even more stringent basis under statelaw in the particular state where the spillage occurred. For example, California regulations prohibit the discharge of oil, require an oil contingency plan befiled with the state, require that the ship owner contract with an oil response organization and require a valid certificate of financial responsibility, all prior tothe 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 areasof regulation the EU has introduced new laws without attempting to procure a corresponding amendment to international law. Notably, in 2005 the EUadopted a directive, as amended in 2009, on ship-source pollution, imposing criminal sanctions for pollution not only where pollution is caused by intent orrecklessness (which would be an offence under MARPOL), but also where it is caused by “serious negligence.” The concept of “serious negligence” may beinterpreted in practice to be little more than ordinary negligence. The directive could therefore result in criminal liability being incurred in circumstanceswhere it would not be incurred under international law.In response to the Deepwater Horizon incident, the European Union has issued Directive 2013/30/EU of the European Parliament and of the Council ofJune 12, 2013 on safety of offshore oil and gas operations. The objective of this Directive is to reduce as far as possible the occurrence of major accidentsrelating to offshore oil and gas operations and to limit their consequences, thus increasing the protection of the marine environment and coastal economiesagainst pollution, establishing minimum conditions for safe offshore exploration and exploitation of oil and gas and limiting possible disruptions to Unionindigenous energy production, and to improve the response mechanisms in case of an accident. The Directive has to be implemented by July 19, 2015. As faras the environment is concerned, in the UK there will be new regulations: the Offshore Petroleum Activities (Offshore Safety Directive) (EnvironmentalFunctions) Regulations 2015 (OSDEF), will amend the Merchant Shipping (Oil Pollution Preparedness, Response and Cooperation Convention) Regulations1998 (OPRC 1998) and implement other environmental Directive requirements, specifically the Environmental 21Table of ContentsManagement System. The Offshore Petroleum Licensing (Offshore Safety Directive) Regulations 2015, will implement the licensing Directive requirements.There will also be changes to the Oil Pollution Emergency Plans Regualtions 1998.Criminal liability for a pollution incident could not only result in us incurring substantial penalties or fines, but may also, in some jurisdictions,facilitate civil liability claims for greater compensation than would otherwise have been payable.We maintain insurance coverage for each owned vessel in our fleet against pollution liability risks in the amount of $1.0 billion in the aggregate forany one event. The insured risks include penalties and fines as well as civil liabilities and expenses resulting from accidental pollution. However, thisinsurance coverage is subject to exclusions, deductibles and other terms and conditions. If any liabilities or expenses fall within an exclusion from coverage,or if damages from a catastrophic incident exceed the aggregate liability of $1.0 billion for any one event, our cash flow, profitability and financial positionwould 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 by government laws andregulations related to climate change. A number of countries have adopted or are considering the adoption of regulatory frameworks to reduce greenhousegas emissions, such as carbon dioxide and methane. In the United States, the United States Environmental Protection Agency (“EPA”) has declaredgreenhouse gases to be dangerous pollutants and has issued greenhouse gas reporting requirements for emissions sources in certain industries (which do notinclude the shipping industry).In addition, while the emissions of greenhouse gases from international shipping are not subject to the Kyoto Protocol to the United NationsFramework Convention on Climate Change, which requires adopting countries to implement national programs to reduce greenhouse gas emissions, the IMOintends to develop limits on greenhouse gases from international shipping. It has responded to the global focus on climate change and greenhouse gasemissions by developing specific technical and operational efficiency measures and a work plan for market-based mechanisms in 2011. These include themandatory measures of the ship energy efficiency management plan (“SEEMP”), outlined above, and an energy efficiency design index (“EEDI”) for newships. The IMO is also considering its position on market-based measures through an expert working group. Among the numerous proposals being consideredby the working group are the following: a port state levy based on the amount of fuel consumed by the vessel on its voyage to the port in question; a globalemissions trading scheme which would allocate emissions allowances and set an emissions cap; and an international fund establishing a global reductiontarget for international shipping, to be set either by the UNFCCC or the IMO. At its 64th session in October 2012, the MEPC indicated that 2015 was thetarget year for Member States to identify market-based measures for international shipping. At its 66th session, held from March 31-April 4, 2014, the MEPCcontinued its work on developing technical and operational measures relating to energy-efficiency measures for ships, following the entry into force, onJanuary 1, 2013, of the mandatory efficiency measures. It adopted the 2014 Guidelines on the Method of Calculation of the Attained EEDI, applicable to newships. It also established a working group with an instruction to consider development of a data collection system for fuel consumption of ships. Further, itadopted amendments to MARPOL Annex VI concerning the extension of the scope of application of the EEDI to LNG carriers, ro-ro cargo ships (vehiclecarriers), ro-ro cargo ships, ro-ro passenger ships and cruise passengers ships with nonconventional propulsion. At MEPC 67 held from October 13-17, 2014.During the session, the MEPC adopted the 2014 Guidelines on survey and certification of the EEDI, updating the previous version to reference ships fittedwith dual-fuel engines using LNG and liquid fuel oil. The MEPC also adopted amendments to the 2013 Interim Guidelines for determining minimumpropulsion power to maintain the manoeuvrability of ships in adverse conditions, to make the guidelines applicable to phase 1 (starting January 1, 2015) ofthe EEDI requirements. 22Table of ContentsIn December 2011, UN climate change talks took place in Durban and concluded with an agreement referred to as the Durban Platform for EnhancedAction. The Durban Conference did not result in any proposals specifically addressing the shipping industry’s role in climate change but the progress thathas been made by the IMO in this area was widely acknowledged throughout the negotiating bodies of the UNFCCC process.The EU announced in April 2007 that it planned to expand the EU emissions trading scheme by adding vessels, and a proposal from the EuropeanCommission (“EC”) was expected if no global regime for reduction of seaborne emissions had been agreed to by the end of 2011. As of January 31, 2013 theEC had stopped short of proposing that emissions from ships be included in the EU’s emissions-trading scheme. However, on October 1, 2012 it announcedthat it would propose measures to monitor, verify and report on greenhouse-gas emissions from the shipping sector. On June 28, 2013, the EC adopted aCommunication setting out a strategy for progressively including greenhouse gas emissions from maritime transport in the EU’s policy for reducing itsoverall GHG emissions. The first step proposed by the EC is an EU Regulation that would establish an EU-wide system for the monitoring, reporting andverification of carbon dioxide emissions from large ships starting in 2018. The draft Regulation is currently working its way through the various stages of theEU legislative process (Council agreement was obtained on December 17, 2014). The Regulation will now move to legal and linguistic review before movingto the Parliament for final approval. If adopted, the Regulation will take effect on July 1, 2015, with monitoring, reporting and verification requirementsbeginning on January 1, 2018. This Regulation may be seen as indicative of an intention to maintain pressure on the international negotiating process.We cannot predict with any degree of certainty what effect, if any, possible climate change and government laws and regulations related to climatechange will have on our operations, whether directly or indirectly. However, we believe that climate change, including the possible increase in severeweather events resulting from climate change, and government laws and regulations related to climate change may affect, directly or indirectly, (i) the cost ofthe vessels we may acquire in the future, (ii) our ability to continue to operate as we have in the past, (iii) the cost of operating our vessels, and (iv) insurancepremiums, deductibles and the availability of coverage. As a result, our financial condition could be negatively impacted by significant climate change andrelated 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. On November 25, 2002,the Maritime Transportation Security Act of 2002 (“MTSA”) came into effect. To implement certain portions of the MTSA, in July 2003, the U.S. CoastGuard issued regulations requiring the implementation of certain security requirements aboard vessels operating in waters subject to the jurisdiction of theUnited States. Similarly, in December 2002, amendments to the International Convention for the Safety of Life at Sea (“SOLAS”) created a new chapter of theconvention dealing specifically with maritime security. The new chapter went into effect in July 2004, and imposes various detailed security obligations onvessels and port authorities, most of which are contained in the International Ship and Port Facilities Security (“ISPS”) Code. Among the variousrequirements 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 from MTSA vesselsecurity measures, provided such vessels have on board a valid International Ship Security Certificate (“ISSC”) that attests to the vessel’s compliance withSOLAS security 23Table of Contentsrequirements and the ISPS Code. We will implement the various security measures addressed by the MTSA, SOLAS and the ISPS Code and take measures forour vessels or vessels that we charter to attain compliance with all applicable security requirements within the prescribed time periods. Although managementdoes not believe these additional requirements will have a material financial impact on our operations, there can be no assurance that there will not be aninterruption in operations to bring vessels into compliance with the applicable requirements and any such interruption could cause a decrease in charterrevenues. Furthermore, additional security measures could be required in the future that could have significant financial impact 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 risks associated with trade and economic sanctions prohibitions or other restrictions imposed by theUnited States or other governments or organizations, including the United Nations, the European Union and its member countries. Under economic and tradesanctions laws, governments may seek to impose modifications to, prohibitions/restrictions on business practices and activities, and modifications tocompliance programs, which may increase compliance costs, and, in the event of a violation, may subject us to fines, penalties and other sanctions.IranDuring the last few years, the scope of sanctions imposed against the government of Iran and persons engaging in certain activities or doing certainbusiness with and relating to Iran has been expanded by a number of jurisdictions, including the United States, the European Union and Canada. In 2010, theU.S. enacted the Comprehensive Iran Sanctions Accountability and Divestment Act (“CISADA”), which expanded the scope of the former Iran Sanctions Act.The scope of U.S. sanctions against Iran were expanded subsequent to CISADA by, among other U.S. laws, the National Defense Authorization Act of 2012(the “2012 NDAA”), the Iran Threat Reduction and Syria Human Rights Act of 2012 (“ITRA”), Executive Order 13662, and the Iran Freedom and Counter-Proliferation Act of 2012 (“IFCA”). The foregoing laws, among other things, expand the application of prohibitions to non-U.S. companies, such as ourcompany, and introduce limits on the ability of companies and persons to do business or trade with Iran when such activities relate to specific activities suchas investment in Iran, the supply or export of refined petroleum or refined petroleum products to Iran, the supply and delivery of goods to Iran which couldenhance Iran’s petroleum or energy sector, and the transportation of crude oil from Iran to countries which do not enjoy Iran crude oil sanctions waivers (ourtankers called in Iran but did not engage in the prohibited activities specifically identified by these sanctions). While certain of these restrictions have beensuspended until June 2015 there are still limitations in place with which we need to comply. In addition to the foregoing U.S. sanctions against Iran, thesanctions applicable with respect to Iran and transactions involving Iran within U.S. jurisdiction, we must comply with any applicable prohibitions of E.U.sanctions against Iran.Russia/UkraineAs a result of the crisis in Ukraine and the annexation of Crimea by Russia earlier in 2014, both the U.S. and EU have implemented sanctions againstcertain persons and entities. In addition, various restrictions on trade have been implemented which, amongst others, include a prohibition on the import intothe EU of goods originating in Crimea or Sevastopol as well as restrictions on trade in certain dual-use and military items and restrictions in relation tovarious items of technology associated with the oil industry for use in deep water exploration and production, Arctic oil exploration and production, or shaleoil projects in Russia.The U.S. has imposed sanctions against certain designated Russian entities and individuals (“U.S. Russian Sanctions Targets”). These sanctions blockthe property and all interests in property of the U.S. Russian Sanctions Targets. This effectively prohibits U.S. persons from engaging in any economic orcommercial transactions with the U.S. Russian Sanctions Targets unless the same are authorized by the U.S. Treasury 24Table of ContentsDepartment. While the prohibitions of these sanctions are not directly applicable to us, we have compliance measures in place to guard against transactionswith U.S. Russian Sanctions Targets which may involve the United States or U.S. persons and thus implicate prohibitions.Other U.S. Economic Sanctions TargetsIn addition to Iran and certain Russian entities and individuals, as indicated above, the United States maintains economic sanctions against Syria,Sudan, Cuba, limited sanctions against North Korea, and against entities and individuals (such as entities and individuals in the foregoing targeted countries,designated terrorists, narcotics traffickers) whose names appear on the List of SDNs and Blocked Persons maintained by the U.S. Treasury Department(collectively, “Sanctions Targets”). We are subject to the prohibitions of these sanctions to the extent that any transaction or activity we engage in involvesSanctions Targets and a U.S. person or otherwise has a nexus to the United States.ComplianceAlthough 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, and the law may change. Moreover, despite, for example, relevant provisions in charter parties forbidding the use of our vesselsin trade that would violate economic sanctions, our charterers may nevertheless violate applicable sanctions and embargo laws and regulations as a result ofactions that do not involve us or our vessels, and those violations could in turn negatively affect our reputation and be imputed to us. In addition, given ourrelationship with Navios Midstream and Navios Holdings, we cannot give any assurance that an adverse finding against Navios Midstream or NaviosHoldings by a governmental or legal authority or others with respect to the matters discussed herein or any future matter related to regulatory compliance byNavios Midstream, Navios Holdings or ourselves will not have a material adverse impact on our business, reputation or the market price or trading of ourcommon stock.We are constantly monitoring developments in the United States, the European Union and other jurisdictions that maintain economic sanctions againstIran, other countries, and other sanctions targets, including developments in implementation and enforcement of such sanctions programs. Expansion ofsanctions programs, embargoes and other restrictions in the future (including additional designations of countries subject to sanctions), or modifications inhow existing sanctions are interpreted or enforced, could prevent our vessels from calling in ports in sanctioned countries or could limit their cargoes. If anyof the risks described above materialize, it could have a material adverse impact on our business and results of operations.To reduce the risk of violating economic sanctions, we have a policy of compliance with applicable economic sanctions laws and have implementedand continue to implement and diligently follow procedures to avoid economic sanctions violations.We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, and anti-corruption laws in other applicablejurisdictions.As an international shipping company, we may operate in countries known to have a reputation for corruption. The U.S. Foreign Corrupt Practices Actof 1977 (the “FCPA”) and other anti-corruption laws and regulations in applicable jurisdictions generally prohibit companies registered with the SEC andtheir intermediaries from making improper payments to government officials for the purpose of obtaining or retaining business. Under the FCPA, U.S.companies may be held liable for some actions taken by strategic or local partners or representatives. Legislation in other countries includes the U.K. BriberyAct which is broader in scope than the FCPA because it does not contain an exception for facilitating payments. We and our customers may be subject tothese and similar anti-corruption laws in other applicable jurisdictions. Failure to comply with such 25Table of Contentslegal requirements could expose us to civil and/or criminal penalties, including fines, prosecution and significant reputational damage, all of which couldmaterially and adversely affect our business and results of operations, including our relationships with our customers, and our financial results. Compliancewith the FCPA, the U.K. Bribery Act and other applicable anti-corruption laws and related regulations and policies imposes potentially significant costs andoperational burdens. Moreover, the compliance and monitoring mechanisms that we have in place including our Code of Ethics and our anti-bribery andanti-corruption policy, may not adequately prevent or detect possible violations under applicable anti-bribery and anti-corruption legislation.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 and destination. Inspectionprocedures can result in the seizure of contents of vessels, delays in the loading, offloading or delivery and the levying of customs, duties, fines and otherpenalties.It is possible that changes to inspection procedures could impose additional financial and legal obligations on us. Furthermore, changes to inspectionprocedures could also impose additional costs and obligations on our future customers and may, in certain cases, render the shipment of certain types of cargoimpractical. Any such changes or developments may have a material adverse effect on our business, financial condition, and results of operations.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. The classificationsociety certifies that a vessel is safe and seaworthy in accordance with the applicable rules and regulations of the country of registry of the vessel and withSOLAS. A vessel must undergo an annual survey, an intermediate survey and a special survey. In lieu of a special survey, a vessel’s machinery may be on acontinuous survey cycle, under which the machinery would be surveyed periodically over a five-year period. Every vessel is also required to be drydockedevery 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 specialsurvey, the vessel may be unable to trade between ports and, therefore, would be unemployable, potentially causing a negative impact on our revenues due tothe loss of revenues from such vessel until it was able to trade again.We are subject to inherent operational risks that may not be adequately covered by our insurance.The operation of ocean-going vessels in international trade is inherently risky. Although we carry insurance for our fleet against risks commonlyinsured against by vessel owners and operators, including hull and machinery insurance, war risks insurance and protection and indemnity insurance (whichinclude environmental damage and pollution insurance), all risks may not be adequately insured against, and any particular claim may not be paid. We donot currently maintain off-hire insurance, which would cover the loss of revenue during extended vessel off-hire periods, such as those that occur during anunscheduled drydocking due to damage to the vessel from accidents. Other events that may lead to off-hire periods include natural or man-made disasters thatresult in the closure of certain waterways and prevent vessels from entering or leaving certain ports. Accordingly, any extended vessel off-hire, due to anaccident or otherwise, could have a material adverse effect on our business. Any claims covered by insurance would be subject to deductibles, and since it ispossible that a large number of claims may be brought, the aggregate amount of these deductibles could be material.We may be unable to procure adequate insurance coverage at commercially reasonable rates in the future. For example, more stringent environmentalregulations have led in the past to increased costs for, and in the 26Table of Contentsfuture may result in the lack of availability of, insurance against risks of environmental damage or pollution. A catastrophic oil spill or marine disaster couldexceed our insurance coverage, which could harm our business, financial condition and operating results. Changes in the insurance markets attributable toterrorist attacks may also make certain types of insurance more difficult for us to obtain. In addition, the insurance that may be available to us may besignificantly more expensive than our existing coverage. We do not carry strike insurance.Even if our insurance coverage is adequate to cover our losses, we may not be able to timely obtain a replacement vessel in the event of a loss.Furthermore, in the future, we may not be able to obtain adequate insurance coverage at reasonable rates for our fleet. Our insurance policies also containdeductibles, limitations and exclusions which can result in significant increased overall costs to us.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 and their cargoesare 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 bad weather; • 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 in variouscountries, 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 tanker industry, the natureof services required to support the industry, including maintenance and repair services, and the mechanical complexity of the tankers themselves. Comparedto other types of vessels, tankers are exposed to a higher risk of damage and loss by fire, whether ignited by a terrorist attack, collision or other cause, due tothe high flammability and high volume of the oil transported in tankers. Damage and loss could also arise as a consequence of a failure in the servicesrequired to support the industry, for example, due to inadequate dredging. Inherent risks also arise due to the nature of the product transported by our vessels.Any damage to, or accident involving, our vessels while carrying crude oil could give rise to environmental damage or lead to other adverse consequences.Each of these inherent risks may also result in death or injury to persons, loss of revenues or property, higher insurance rates, damage to our customerrelationships, delay or rerouting.Any of these circumstances or events could substantially increase our costs. For example, the costs of replacing a vessel or cleaning up environmentaldamage could substantially lower our revenues by taking vessels out of operation permanently or for periods of time. Furthermore, the involvement of ourvessels in a disaster or delays in delivery, damage or the loss of cargo may harm our reputation as a safe and reliable vessel operator and cause us to losebusiness. Our vessels could be arrested by maritime claimants, which could result in the interruption of business and decrease revenue and lower profitability.Some of these inherent risks could result in significant damage, such as marine disaster or environmental incidents, and any resulting legal proceedingsmay be complex, lengthy, costly and, if decided against us, any of these proceedings or other proceedings involving similar claims or claims for substantialdamages may harm our 27Table of Contentsreputation and have a material adverse effect on our business, results of operations, cash flow and financial position. In addition, the legal systems and lawenforcement mechanisms in certain countries in which we operate may expose us to risk and uncertainty. Further, we may be required to devote substantialtime and cost defending these proceedings, which could divert attention from management of our business. Crew members, tort claimants, claimants forbreach of certain maritime contracts, vessel mortgagees, suppliers of goods and services to a vessel, shippers of cargo and other persons may be entitled to amaritime lien against a vessel for unsatisfied debts, claims or damages, and in many circumstances a maritime lien holder may enforce its lien by “arresting” avessel through court processes. Additionally, in certain jurisdictions, such as South Africa, under the “sister ship” theory of liability, a claimant may arrest notonly the vessel with respect to which the claimant’s lien has arisen, but also any “associated” vessel owned or controlled by the legal or beneficial owner ofthat vessel. If any vessel ultimately owned and operated by us is “arrested,” this could result in a material loss of revenues, or require us to pay substantialamounts 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 other contraband on vessels,with or without the knowledge of crew members. To the extent our vessels are found with contraband, whether inside or attached to the hull of our vessel andwhether with or without the knowledge of any of our crew, we may face governmental or other regulatory claims which could have an adverse effect on ourbusiness, 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. Although thefrequency of sea piracy worldwide decreased during 2013 to its lowest level since its increase in 2009, sea piracy incidents continue to occur, particularly inthe Gulf of Aden off the coast of Somalia and increasingly in the Gulf of Guinea. A significant example of the heightened level of piracy came in February2011 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 the Arabian Sea whilecarrying crude oil estimated to be worth approximately $200 million. In December 2009, the Navios Apollon, a vessel owned by our affiliate, NaviosMaritime 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. In January 2014, one of our vessels, the Nave Atropos, came under attack from a pirate action group ininternational waters off the coast of Yemen. The crew and the on-board security team successfully implemented the counter piracy action plan and standardoperating procedures to deter the attack with no consequences to the vessel or her crew. These piracy attacks have resulted in regions (in which our vesselsare deployed) being characterized by insurers as “war risk” zones or Joint War Committee (JWC) “war and strikes” listed areas, and premiums payable forsuch insurance coverage could increase significantly and such insurance coverage may be more difficult to obtain. Crew costs, including those due toemploying onboard security guards, could increase in such circumstances. While the use of security guards is intended to deter and prevent the hijacking ofour vessels, it could also increase our risk of liability for death or injury to persons or damage to personal property. In addition, while we believe the chartererremains liable for charter payments when a vessel is seized by pirates, the charterer may dispute this and withhold charter hire until the vessel is released. Acharterer may also claim that a vessel seized by pirates was not “on-hire” for a certain number of days and it is therefore entitled to cancel the charter party, aclaim that we would dispute. We may not be adequately insured to cover losses from these incidents, which could have a material adverse effect on us. Inaddition, detention hijacking as a result of an act of piracy against our vessels, or an increase in cost or unavailability of insurance for our vessels, could havea material adverse impact on our business, financial condition, results of operations and cash flows. Acts of piracy on ocean-going vessels could adverselyaffect our business and operations. 28Table of ContentsPolitical and government instability, terrorist attacks, increased hostilities or war could lead to further economic instability, increased costs anddisruption of our business.We conduct most of our operations outside of the United States. In particular, we derive our revenues from shipping oil and oil products frompolitically unstable regions and our business, results of operations, cash flows, financial condition and ability to make cash distributions may be adverselyaffected by the effects of political instability, terrorist or other attacks, war or international hostilities. Terrorist attacks, such as the attacks in the UnitedStates on September 11, 2001, the attacks in London on July 7, 2005, in Paris on January 7, 2015 and the bombings in Spain on March 11, 2004, along withthe recent conflicts in Iraq, Afghanistan, Syria, Yemen, Ukraine and other current and future conflicts, and the continuing response of the United States andother countries to these attacks, as well as the threat of future terrorist attacks, continue to cause uncertainty in the world financial markets, including theenergy markets. 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 could result in increased volatility and turmoil in the financial markets and may contribute further to economic instability.Current and future conflicts and terrorist attacks may adversely affect our business, operating results, financial condition, ability to raise capital and futuregrowth. Terrorist attacks on vessels, such as the October 2002 attack on the M/V Limburg, a VLCC not related to us, may in the future also negatively affectour operations and financial condition and directly impact our vessels or our customers.In addition, oil facilities, shipyards, vessels, pipelines and oil and gas fields could be targets of future terrorist attacks. Any such attacks could lead to,among other things, bodily injury or loss of life, vessel or other property damage, increased vessel operational costs, including insurance costs, and theinability to transport oil and other refined products to or from certain locations. Terrorist attacks, war or other events beyond our control that adversely affectthe distribution, production or transportation of oil and other refined products to be shipped by us could entitle our customers to terminate our chartercontracts, which would harm our cash flow and our business.Furthermore, our operations may be adversely affected by changing or adverse political and governmental conditions in the countries where ourvessels are flagged or registered and in the regions where we otherwise engage in business. Any disruption caused by these factors may interfere with theoperation of our vessels, which could harm our business, financial condition and results of operations. Our operations may also be adversely affected byexpropriation of vessels, taxes, regulation, tariffs, trade embargoes, economic sanctions or a disruption of or limit to trading activities, or other adverse eventsor circumstances in or affecting the countries and regions where we operate or where we may operate in the future.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 a vessel andbecomes her owner, while requisition for hire occurs when a government takes control of a vessel and effectively becomes her charterer at dictated charterrates. 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 materiallyadversely affect our results of operations, financial condition and cash flows.Global financial markets and economic conditions have been severely disrupted and volatile in recent years and remain subject to significantvulnerabilities, such as the deterioration of fiscal balances and the rapid accumulation of public debt, continued deleveraging in the banking sector and alimited supply of credit. The 29Table of Contentsrenewed crisis in Argentina, civil unrest in Ukraine and other parts of the world, and continuing concerns relating to the European sovereign debt crisis haveled to increased volatility in global credit and equity markets. Several European countries including Greece, have been affected by increasing public debtburdens and weakening economic growth prospects. In recent years, Standard and Poor’s Rating Services and Moody’s Investors Service (“Moody’s”)downgraded the long-term ratings of most European countries’ sovereign debt and initiated negative outlooks. Such downgrades could negatively affectthose countries’ ability to access the public debt markets at reasonable rates or at all, materially affecting the financial conditions of banks in those countries,including those with which we maintain cash deposits and equivalents, or on which we rely on to finance our vessel and new business acquisitions. Cashdeposits and cash equivalents in excess of amounts covered by government-provided insurance are exposed to loss in the event of non-performance byfinancial institutions. We maintain cash deposits and equivalents in excess of government-provided insurance limits at banks in Greece and other Europeannations, which may expose us to a loss of cash deposits or cash equivalents.The credit markets worldwide and in the U.S. have experienced significant contraction, de-leveraging and reduced liquidity, and the U.S. federalgovernment, state governments and foreign governments took highly significant measures in response to such events, including the enactment of theEmergency Economic Stabilization Act of 2008 in the United States, and may implement other significant responses in the future. Securities and futuresmarkets and the credit markets are subject to comprehensive statutes, regulations and other requirements. The SEC, other regulators, self-regulatoryorganizations and exchanges are authorized to take extraordinary actions in the event of market emergencies, and may effect changes in law or interpretationsof existing laws. Any changes to securities, tax, environmental, or other laws or regulations, could have a material adverse effect on our results of operations,financial condition or cash flows, and could cause the market price of our common stock to decline.Recently, a number of financial institutions have experienced serious financial difficulties and, in some cases, have entered bankruptcy proceedings orare in regulatory enforcement actions. These difficulties resulted, in part, from declining markets for assets held by such institutions, particularly thereduction in the value of their mortgage and asset-backed securities portfolios. These difficulties were compounded by financial turmoil affecting the world’sdebt, credit and capital markets, and the general decline in the willingness by banks and other financial institutions to extend credit, particularly to theshipping industry due to the historically low vessel earnings and values, and, in part, due to changes in overall banking regulations (for example, Basel III).As a result, the ability of banks and credit institutions to finance new projects, including the acquisition of new vessels in the future, were for a timeuncertain. Following the stress tests run by the European Central Bank (the “ECB”), revised capital ratios have been communicated to European banks. Thishas reduced the uncertainty following the difficulties of the past several years, but it has also led to changes in each bank’s lending policies and ability toprovide financing or refinancing. A recurrence of global economic weakness may adversely affect the financial institutions that provide our credit facilitiesand may impair their ability to continue to perform under their financing obligations to us, which could have an impact on our ability to fund current andfuture obligations.Furthermore, we may experience difficulties obtaining financing commitments, including commitments to refinance our existing debt as paymentscome due under our credit facilities, in the future if lenders are unwilling to extend financing to us or unable to meet their funding obligations due to theirown liquidity, capital or solvency issues. Due to the fact that we would possibly cover all or a portion of the cost of any new acquisition with debt financing,such uncertainty, combined with restrictions imposed by our current debt, could hamper our ability to finance vessels or other assets and new businessacquisitions.In addition, the economic uncertainty worldwide has made demand for shipping services volatile and has reduced charter rates, which may adverselyaffect our results of operations and financial condition. Currently, the economies of China, Japan, other Asian Pacific countries and India are the main drivingforce behind the development in seaborne transportation. Reduced demand from such economies has driven decreased rates and vessel values.In addition, as a result of the ongoing political and economic turmoil in Greece resulting from the sovereign debt crisis and the related austeritymeasures implemented by the Greek government, the operations of our 30Table of Contentsmanagers located in Greece may be subjected to new regulations and potential shift in government policies that may require us to incur new or additionalcompliance or other administrative costs and may require that we pay to the Greek government new taxes or other fees. We also face the risk that strikes, workstoppages, civil unrest and violence within Greece may disrupt the shoreside operations of our managers located in Greece.We could face risks attendant to changes in economic environments, changes in interest rates, and instability in certain securities markets, among otherfactors. Major market disruptions and the uncertainty in market conditions and the regulatory climate in the U.S., Europe and worldwide could adverselyaffect our business or impair our ability to borrow amounts under any future financial arrangements. The current market conditions may last longer than weanticipate. These recent and developing economic and governmental factors could have a material adverse effect on our results of operations, financialcondition 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 income.A greater percentage of our transactions and expenses in the future may be denominated in currencies other than the 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, 2014, the value of the U.S. dollar as compared to the Euro increased by approximately 13.3% compared with the respective value as ofDecember 31, 2013. 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-effectivemanner, industrial action or other labor unrest could prevent or hinder our operations from being carried out normally and could have a material adverseeffect on our business, results of operations, cash flow and financial condition.Risks Relating to Our VLCC VesselsThe indemnity may be inadequate to cover any damages.The Securities Purchase Agreement for the VLCC vessels acquired through the VLCC Acquisition has a cap on indemnity obligations, subject tocertain exceptions, of $58.7 million. Although we performed substantial due diligence with respect to the VLCC Acquisition, there can be no assurance thatthere will not be undisclosed liabilities or other matters not discovered in the course of such due diligence and the $58.7 million indemnity may beinadequate to cover these or other damages related to breaches of such agreement. In addition, since the return to Navios Acquisition of 217,159 shares onNovember 4, 2011 in settlement of claims relating to representation and warranties attributable to the sellers and the return of the balance of the escrow sharesto the sellers, it may be 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.During 2014, DOSCO, a wholly owned subsidiary of the Chinese state-owned China Ocean Shipping Company (“COSCO”), chartered four of ourVLCC vessels. Changes in political, economic and social conditions 31Table of Contentsor other relevant policies of the Chinese government, such as changes in laws, regulations or export and import restrictions, could restrict DOSCO’s ability tocontinue its relationship with us. If DOSCO becomes unable to perform under its charter agreements with us, we could suffer a loss of revenue that couldmaterially adversely affect our business, financial condition, and results of operations. In addition, we may have limited ability in Chinese courts to enforceany awards for damages that we may suffer if DOSCO were to fail to perform its obligations under our charter agreements.Risks Related to Our Relationship with Navios Holdings and Its AffiliatesNavios Holdings has limited 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 and administrativemanagement of our entire fleet and the technical management of a portion of our fleet. Navios Holdings is a vertically-integrated seaborne shipping andlogistics company with 60 years of operating history in the shipping industry that held approximately 43.0% of our shares of common stock as of March 27,2015. Other than with respect to South American operations, Navios Holdings’ experience in the crude oil, chemical and product tanker sectors dates from2010. Navios Holdings or the Manager may make decisions that a more experienced operator in the sector might not make. If Navios Holdings or theManager is not able to properly assess or ascertain a particular aspect of the crude oil, product or chemical tanker sectors, it could have a material adverseeffect on our operations.Navios Holdings may compete directly with us, causing certain officers to have a conflict of interest.Angeliki Frangou is an officer and director of Navios Holdings, Navios Midstream and Navios Acquisition. We operate in the crude oil, product andchemical tanker sectors of the shipping industry, and although Navios Holdings does not currently operate in those sectors, there is no assurance it will notenter them. If it does, we may compete directly with Navios Holdings for business opportunities.Navios Holdings, Navios Partners, Navios Midstream and Navios Acquisition share certain officers and directors who may not be able to devote sufficienttime to our affairs, which may affect our ability to conduct operations and generate revenues.Angeliki Frangou is an officer and director of Navios Holdings, Navios Midstream and Navios Acquisition, and Ms. Frangou is an officer and directorof Navios Partners. As a result, demands for our officers’ time and attention as required from Navios Acquisition, Navios Midstream , Navios Partners andNavios Holdings may conflict from time to time and her limited devotion of time and attention to our business may hurt the operation of our business.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, including Ms. Angeliki Frangou,our Chairman and Chief Executive Officer. The loss of the services of Ms. Frangou or one of our other executive officers or senior management memberscould impair our ability to identify and secure new charter contracts, to maintain good customer relations and to otherwise manage our business, which couldhave 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 the Manager, a subsidiary ofNavios Holdings, and on an interim basis to other third party managers, the loss of these services or the failure of the Manager to perform these services couldmaterially and 32Table of Contentsadversely affect the results of our operations. Although we may have rights against the Manager if it defaults on its obligations to us, you will have norecourse directly against it. Further, we expect that we will need to seek approval from our respective lenders to change our commercial and technicalmanagers. Navios Holdings has responsibilities and relationships to owners other than Navios Acquisition that could create conflicts of interest between usand Navios Holdings or our Manager. These conflicts may arise in connection with the provision of chartering services to us for our fleet versus carriersmanaged 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 own a substantial interest in us, and, as a result, may influence certain actions requiring stockholder vote.As of March 27, 2015, Navios Holdings, Angeliki Frangou, our Chairman and Chief Executive Officer, and certain of our officers and directorsbeneficially own, in the aggregate, 45.8% of our issued and outstanding shares of common stock, which permits them to influence the outcome of effectivelyall matters requiring approval by our stockholders at such time, including the election of directors and approval of significant corporate transactions.Furthermore, if Navios 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 ourcredit 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 Islands BusinessCorporations Act, or the BCA. The provisions of the BCA resemble provisions of the corporation laws of a number of states in the United States. However,there have been few judicial cases in the Republic of the Marshall Islands interpreting the BCA. The rights and fiduciary responsibilities of directors underthe law of the Republic of the Marshall Islands are not as clearly established as the rights and fiduciary responsibilities of directors under statutes or judicialprecedent 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 similar legislative provisions, public stockholders may havemore difficulty in protecting their interests in the face of actions by the management, directors or controlling stockholders than would stockholders of acorporation 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 businesswill be operated primarily from our offices in Monte Carlo, Monaco. In addition, our directors and officers are non-residents of the United States, and all or asubstantial 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 to bring anaction against us or against these individuals in the United States if you believe that your rights have been infringed under securities laws or otherwise. Evenif you are successful in bringing an action of this kind, the laws of the Marshall Islands and of other jurisdictions may prevent or restrict you from enforcing ajudgment against our assets or the assets of our directors and officers. Although you may bring an original action against us or our affiliates in the courts ofthe Marshall Islands based on U.S. laws, and the courts of the Marshall Islands may impose civil liability, including monetary damages, against us or ouraffiliates for a cause of action arising under Marshall Islands law, it may impracticable for you to do so given the geographic location of the Marshall Islands. 33Table of ContentsBecause the Public Company Accounting Oversight Board is not currently permitted to inspect registered public accounting firms in Greece, including ourindependent registered public accounting firm, you may not benefit from such inspections.Auditors of U.S. public companies, including our independent registered public accounting firm, are required by the laws of the United States toundergo periodic Public Company Accounting Oversight Board (“PCAOB”) inspections to assess their compliance with U.S. law and professional standardsin connection with performance of audits of financial statements filed with the SEC. The laws of certain European Union countries, including Greece, do notcurrently permit the PCAOB to conduct inspections of accounting firms established and operating in such European Union countries. Accordingly, thePCAOB is currently prevented from fully evaluating the effectiveness of our independent registered public accounting firm’s audit procedures or qualitycontrol procedures. Unlike shareholders or potential shareholders of most U.S. public companies, our shareholders would be deprived of the possible benefitsof such PCAOB inspections.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 “ExchangeAct”). 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 SEC of quarterly reports 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 registered under theExchange Act; • the provisions of Regulation FD aimed at preventing issuers from making selective disclosures of material information; and • the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and establishing insiderliability for profits realized from any “short-swing” trading transaction (i.e., a purchase and sale, or sale and purchase, of the issuer’s equitysecurities 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 our stockholders maynot be afforded the same protections or information generally available to investors holding shares in public companies in the United States.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 to change thecomposition of our Board of Directors in any one year, preventing them from changing the composition of our management. In addition, the same provisionsmay 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. 34Table of ContentsThese anti-takeover provisions could substantially impede the ability of stockholders to benefit from a change in control and, as a result, mayadversely affect the market price of our common stock and your ability to realize any potential change of control premium.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 and certain members of the management of Navios Acquisition, Navios Holdings and NaviosPartners, are entitled to demand that we register the resale of their common stock totaling 67,320,507 shares. In addition, one third-party holder has aneffective resale registration statement with respect to 1,677,759 shares of common stock. If all of these stockholders exercise their registration rights withrespect to all of their shares of common stock, including the effective resale registration statement, there will be an additional 68,998,266 shares of commonstock eligible for trading in the public market. The presence of these additional shares may have an adverse 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 the NYSE minimumlisting 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 to be listed on NYSE inthe 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 conditions precedent andcompliance with terms and conditions included in the loan documents, including a minimum liquidity financial covenant, and to circumstances that may bebeyond our control such as world events, economic conditions, the financial standing of the bank or its willingness to lend to shipping companies such as us.Prior to each drawdown, we will be required, among other things, to provide our lenders with satisfactory evidence that certain conditions precedent havebeen met. To the extent that we are not able to satisfy these requirements, including as a result of a decline in the value of our vessels, we may not be able todraw down the full amount under certain of our credit facilities without obtaining a waiver or consent from the respective lenders. 35Table of ContentsWe 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 credit facilities and otherinstruments and agreements governing our indebtedness do not prohibit us from doing so. Our substantial indebtedness could have important consequencesfor 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 debt levels after the vessel acquisition, the related risks that we now face would increase and we may not be able tomeet all of our debt obligations; • 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 setbacks, whether directly related to their business orflowing 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 other restrictions, 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 or sell all or substantially all of our properties or assets; • redeem or repurchase capital stock, pay dividends or make other restricted payments and investments; 36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 requirement. It is anevent of default under our credit facilities if such covenants are not complied with or if Navios Holdings, Ms. Angeliki Frangou, our Chairman and ChiefExecutive Officer, and their respective affiliates cease to hold a minimum percentage of our issued stock. In addition, the indenture governing the notes alsocontains certain provisions obligating us in certain instances to make offers to purchase outstanding notes with the net proceeds of certain sales or otherdispositions of 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 thecovenants and restrictions contained in our agreements and instruments governing our indebtedness may be affected by economic, financial and industryconditions and other factors beyond our control. If we are unable to comply with these covenants and restrictions, our indebtedness could be accelerated. Ifwe are unable to repay indebtedness, our lenders could proceed against the collateral securing that indebtedness. In any such case, we may be unable toborrow under our credit facilities and may not be able to repay the amounts due under our agreements and instruments governing our indebtedness. Thiscould have serious consequences to our financial condition and results of operations and could cause us to become bankrupt or insolvent. Our ability tocomply with these covenants in future periods will also depend substantially on the value of our assets, our charter rates, our success at keeping our costs lowand our ability to successfully implement our overall business strategy. Any future credit agreement or amendment or debt instrument may contain similar ormore restrictive covenants.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 financial and business factors, many of which may bebeyond 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. 37Table of ContentsOur credit facilities mature on various dates through 2023 and our ship mortgage notes mature on November 15, 2021. In addition, borrowings undercertain of the credit facilities have amortization requirements prior to final maturity. We cannot assure you that we will be able to refinance any of ourindebtedness or obtain additional financing, particularly because of our anticipated high levels of indebtedness and the indebtedness incurrence restrictionsimposed 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 and certain other countries other than the United States, and we conduct operations in countries aroundthe world. Consequently, in the event of any bankruptcy, insolvency or similar proceedings involving us or one of our 38Table of Contentssubsidiaries, 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 under our credit facilities. There are also change of control events thatwould constitute a default under the credit facilities that would not be a change of control under the indenture. In addition, our credit facilities prohibit thepurchase of notes by us in the event of a change of control, unless and until such time as the indebtedness under our credit facilities is repaid in full. As aresult, following a change of control event, we would not be able to repurchase notes unless we first repay all indebtedness outstanding under our creditfacilities and any of our other indebtedness that contains similar provisions; or obtain a waiver from the holders of such indebtedness to permit us torepurchase the notes. We may be unable to repay all of that indebtedness or obtain a waiver of that type. Any requirement to offer to repurchase outstandingnotes may therefore require us to refinance our other outstanding debt, which we may not be able to do on commercially reasonable terms, if at all. Inaddition, our failure to purchase the notes after a change of control in accordance with the terms of the indenture would constitute an event of default underthe 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 ofcontrol.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.Our senior notes are subject to restrictions on transfer within the United States or to U.S. persons and may be subject to transfer restrictions under the lawsof other jurisdictions.Our senior notes have not been and will not be registered under the Securities Act and are and will continue to be subject to restrictions ontransferability and resale. The senior notes were offered in reliance upon an exemption from registration under the Securities Act and applicable statesecurities laws. Therefore, the notes may be transferred or resold only in a transaction registered under or exempt from the Securities Act and applicable statesecurities laws. In addition, the notes will not have the benefit of any exchange offer or other registration rights. 39Table of ContentsTax RisksU.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% of our grossincome 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 held for theproduction of those types of “passive income.” For purposes of these tests, “passive income” includes dividends, interest, and gains from the sale or exchangeof investment property and rents and royalties other than rents and royalties that are received from unrelated parties in connection with the active conduct ofa trade or business. For purposes of these tests, income derived from the performance of services does not constitute “passive income.” U.S. stockholders of aPFIC may be subject to a disadvantageous U.S. federal income tax regime with respect to the income derived by the PFIC, the distributions they receive fromthe PFIC and the gain, if any, they derive from the sale or other disposition of their shares in the PFIC.Based on our current and projected methods of operations, and an opinion of counsel, we believe that we were not a PFIC for the 2014, 2013, 2012 and2011 taxable years (we were treated as a PFIC for the 2008 and 2009 taxable years), and we do not believe that we will be a PFIC for 2015 and subsequenttaxable years. For post-2010 taxable years, our U.S. counsel, Thompson Hine LLP, is of the opinion that (1) the income we receive from the time charteringactivities and assets engaged in generating such income should not be treated as passive income or assets, respectively, and (2) so long as our income fromtime charters exceeds 25.0% of our gross income for each taxable year after our 2010 taxable year and the value of our vessels contracted under time chartersexceeds 50.0% of the average value of our assets for each taxable year after our 2010 taxable year, we should not be a PFIC for any taxable year after our2010 taxable year. This opinion is based on representations and projections provided to our counsel by us regarding our assets, income and charters, and itsvalidity is conditioned on the accuracy of such representations and projections.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 oursubsidiaries, that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States is characterized as U.S.-sourceshipping income and such income is subject to a 4% U.S. federal income tax without allowance for deduction, unless that corporation qualifies for exemptionfrom 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 requirements of Section 883 of the Code and theTreasury Regulations, it will not be subject to the net basis and branch profit taxes or the 4% gross basis tax described below on its U.S.-Source InternationalTransportation Income.We expect that we and each of our vessel-owning subsidiaries will qualify for this statutory tax exemption and we will take this position for U.S.federal income tax return reporting purposes. However, there are factual circumstances beyond our control that could cause us to lose the benefit of this taxexemption 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 subsidiaries would besubject 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 negative effect on ourbusiness and would result in decreased earnings.Other Tax JurisdictionsIn accordance with the currently applicable Greek law, foreign-flagged vessels that are managed by Greek or foreign ship management companieshaving established an office in Greece are subject to duties towards the 40Table of ContentsGreek state which are calculated on the basis of the relevant vessel’s tonnage. The payment of said duties exhausts the tax liability of the foreign ship-owningcompany and the relevant manager against any tax, duty, charge or contribution payable on income from the exploitation of the foreign flagged-vessel. Item 4.Information on the Company A.History and development of Navios AcquisitionNavios Acquisition was formed on March 14, 2008 under the laws of the Republic of the Marshall Islands and has its principal offices located at 7Avenue de Grande Bretagne, Office 11B2, Monte Carlo, MC 98000 Monaco. Our agent for service is Trust Company of the Marshall Islands, Inc., located atTrust Company Complex, Ajeltake Island, P.O. Box 1405, Majuro, Marshall Islands MH96960.Navios Acquisition owns a large fleet of modern crude oil, refined petroleum product and chemical tankers providing world-wide marine transportationservices. The Company’s strategy is to charter its vessels to international oil companies, refiners and large vessel operators under long, medium and short-term charters. The Company is committed to providing quality transportation services and developing and maintaining long-term relationships with itscustomers. The operations of Navios Acquisition are managed by the Manager, a subsidiary of Navios Holdings.On July 1, 2008, Navios Acquisition completed its initial public offering, or its IPO. On May 28, 2010, Navios Acquisition consummated the vesselacquisition which constituted its initial business combination. Following such transaction, Navios Acquisition commenced its operations as an operatingcompany.As of December 31, 2014, Navios Holdings had 43.0% of the voting power and 46.1% of the economic interest in Navios Acquisition.Equity TransactionsPreferred StockOn each of August 31, 2012, October 31, 2012, February 13, 2013 and April 24, 2013, Navios Acquisition issued 300 shares (1,200 in the aggregate) ofits authorized Series D Preferred Stock (nominal value $12.0 million) to a shipyard, in partial settlement of the purchase price of the three newbuild LR1product tankers, the Nave Cassiopeia, the Nave Cetus and the Nave Rigel. The preferred stock contains a 6% per annum dividend payable quarterly, startingone year after delivery of each vessel. The Series D Preferred Stock mandatorily converts into shares of common stock 30 months after the issuance, at a priceper share of common stock equal to $10.00. The holder of the preferred stock shall have the right to convert the shares of preferred stock into common stockprior to the scheduled maturity dates at a price of $7.00 per share of common stock. The preferred stock does not have any voting rights. Navios Acquisitionis obligated to redeem the Series D Preferred Stock (or converted common shares), at the holder’s option exercisable beginning 18 months after the issuance,at par payable at up to 12 equal quarterly installments. The convertible preferred stock is classified as temporary equity (i.e. apart from permanent equity) as aresult of the redemption feature upon exercise of the put option granted to the holder of the preferred stock.In January 2015, Navios Acquisition redeemed 250 shares of the Series D Preferred Stock and paid $2.5 million to the holder upon exercise of the putoption granted. On February 28, 2015, 200 shares of the Series D preferred stock were mandatorily converted into 200,000 shares of common stock. As ofMarch 24, 2015, 750 shares of Series D Preferred Stock were outstanding.Common StockOn February 20, 2014, Navios Acquisition completed the public offering of 14,950,000 shares of its common stock at $3.85 per share, raising grossproceeds of $57.6 million. These figures include 1,950,000 shares 41Table of Contentssold pursuant to the underwriters’ option, which was exercised in full. Total net proceeds of the above transactions, net of agents’ costs of $3.0 million andoffering costs of $0.3 million, amounted to $54.2 million.On October 24, 2014, 699,994 of the 2,100,000 shares of restricted common stock that had been issued to the Company’s directors in October 2013vested and were no longer subject to forfeiture.Vessel Deliveries, Acquisitions and Sales2015Acquisition of vesselsOn February 6, 2015, Navios Acquisition took delivery of the Nave Velocity, a newbuilding 49,999 dwt MR2 product tanker, from an unaffiliated third partyfor a purchase price of $35.5 million.On January 8, 2015, Navios Acquisition took delivery of the Nave Sextans, a newbuilding 49,999 dwt MR2 product tanker, from an unaffiliated third partyfor a purchase price of $31.5 million.2014Acquisition of vesselsOn December 9, 2014, Navios Acquisition took delivery of the Nave Synergy, a 2010-built VLCC of 299,973 dwt, from an unaffiliated third party, for a totalcost of $75.9 million.On November 20, 2014, Navios Acquisition took delivery of the Nave Pyxis, a newbuilding 49,998 dwt MR2 product tanker, from an unaffiliated third party,for a total cost of $33.4 million.On September 19, 2014, Navios Acquisition took delivery of the Nave Luminosity, a newbuilding 49,999 dwt MR2 product tanker, from an unaffiliated thirdparty, for a total cost of $39.6 million.On July 21, 2014, Navios Acquisition took delivery of the Nave Electron, a 2002-built VLCC of 305,178 dwt, from an unaffiliated third party, for a total costof $41.2 million.On June 16, 2014, Navios Acquisition took delivery of the Nave Neutrino, a 2003-built VLCC 298,287 dwt, from an unaffiliated third party, for a total cost of$43.7 million.On May 7, 2014, Navios Acquisition took delivery of the Nave Jupiter, a newbuilding 49,999 dwt MR2 product tanker, from an unaffiliated third party, for atotal cost of $39.6 million. Cash paid was $13.9 million and $25.7 million was transferred from vessel deposits.On March 10, 2014, Navios Acquisition took delivery of the Nave Buena Suerte, a 2011-built 297,491 dwt VLCC, from an unaffiliated third party, for a totalcost of $57.2 million. Cash paid was $51.5 million and $5.7 million was transferred from vessel deposits.On February 12, 2014, Navios Acquisition took delivery of the Nave Quasar, a 2010-built 297,376 dwt VLCC, from an unaffiliated third party, for a total costof $54.7 million. Cash paid was $49.2 million and $5.5 million was transferred from vessel deposits.On February 4, 2014, Navios Acquisition took delivery of the Nave Galactic, a 2009-built 297,168 dwt VLCC, from an unaffiliated third party, for a total costof $51.7 million. Cash paid was $46.6 million and $5.2 million was transferred from vessel deposits. 42Table of ContentsDisposal of vesselsOn May 6, 2014, Navios Acquisition sold the Shinyo Splendor to an unaffiliated third party for an aggregate sale price of $20.0 million. As of March 31,2014, an impairment loss of $10.7 million related to the Shinyo Splendor has been recognized under the line item “Impairment Loss.” The Company had acurrent expectation that, more likely than not, the Shinyo Splendor would be sold before the end of its previously estimated useful life, and as a resultperformed an impairment test of the specific asset group. The carrying amount of the asset group was more than its undiscounted future cash flows whichresulted in an impairment loss (refer to Note 2(l) for further details related to the impairment test). The vessel’s aggregate net carrying amount as at the date ofsale was $19.2 million (including the remaining carrying balance of dry dock and special survey costs in the amount of $1.0 million). The Company receivednet cash proceeds in the amount of $18.3 million and recognized a loss of $0.9 million. This loss is presented under “Gain / (loss) on sale of vessels” in theconsolidated statements of comprehensive income/ (loss).On November 18, 2014, in connection with the IPO of Navios Midstream, Navios Acquisition sold all of the outstanding shares of capital stock of four of itsvessel-owning subsidiaries (Shinyo Ocean Limited, Shinyo Kannika Limited, Shinyo Kieran Limited and Shinyo Saowalak Limited) in exchange for: (i) allof the net proceeds from the IPO amounting to $110.4 million, (ii) $104.5 million of the $126.0 million borrowings under Navios Midstream’s new creditfacility, (iii) 9,342,692 subordinated units and 1,242,692 common units and (iv) 381,334 general partner units, representing a 2.0% general partner interest inNavios Midstream, and all of the incentive distribution rights in Navios Midstream.2013Acquisition of vesselsOn October 23, 2013, Navios Acquisition took delivery of the Nave Lucida, a 2005 Japanese-built MR2 product tanker, for a total cost of $16.8million paid in cash.On September 30, 2013, Navios Acquisition took delivery of the Bougainville, a 50,626 dwt South Korean-built MR2 product tanker, for a total cost of$35.6 million paid in cash.On September 24, 2013, Navios Acquisition took delivery of the Nave Dorado, a 2005 Japanese -built MR2 product tanker, for a total cost of $16.8million paid in cash.On September 5, 2013, Navios Acquisition took delivery of the Nave Constellation, a 45,281 dwt South Korean -built chemical tanker, for a total costof $34.3 million paid in cash.On September 3, 2013, Navios Acquisition took delivery of the Nave Alderamin, a 49,998 dwt South Korean -built MR2 product tanker, for a total costof $37.3 million. Cash paid was $9.9 million and $27.5 million was transferred from vessel deposits.On August 13, 2013, Navios Acquisition took delivery of the Nave Celeste, a 298,717 dwt South Korean -built VLCC, for a total cost of $35.9 millionpaid in cash.On July 22, 2013, Navios Acquisition took delivery of the Nave Universe, a 45,313 dwt South Korean -built chemical tanker, for a total cost of $34.2million paid in cash.On July 9, 2013, Navios Acquisition took delivery of the Nave Pulsar, a 50,922 dwt South Korean-built MR2 product tanker, for a total cost of $23.6million paid in cash.On July 9, 2013, Navios Acquisition took delivery of the Nave Capella, a 49,995 dwt South Korean-built MR2 product tanker, for a total cost of $37.2million. Cash paid was $9.6 million and $27.5 million was transferred from vessel deposits. 43Table of ContentsOn June 26, 2013, Navios Acquisition took delivery of the Nave Equinox, a 50,922 dwt South Korean-built MR2 product tanker, for a total cost of$23.5 million paid in cash.On June 10, 2013, Navios Acquisition took delivery of the Nave Titan, a 49,999 dwt South Korean-built MR2 product tanker, for a total cost of $37.1million. Cash paid was $9.6 million and $27.6 million was transferred from vessel deposits.On April 24, 2013, Navios Acquisition took delivery of the Nave Atropos, a 74,695 dwt South Korean-built LR1 product tanker, for a total cost of$48.2 million. The $48.2 million consisted of: (i) cash paid of $17.1 million (ii) the issuance of $3.0 million of Series D Preferred Stock; and (iii) $28.1million was transferred from vessel deposits.On March 22, 2013, Navios Acquisition took delivery of the Nave Orion, a 49,999 dwt South Korean -built MR2 product tanker, for a total cost of$38.1 million. Cash paid was $8.2 million and $29.9 million was transferred from vessel deposits.On February 13, 2013, Navios Acquisition took delivery of the Nave Rigel, a 74,673 dwt South Korean-built LR1 product tanker, for a total cost of$47.9 million. The $47.9 million consisted of: (i) cash paid of $16.6 million; (ii) the issuance of $3.0 million Series D Preferred; and (iii) $28.3 million wastransferred from vessel deposits.On January 24, 2013, Navios Acquisition took delivery of the Nave Bellatrix, a 49,999 dwt South Korean -built MR2 product tanker, for a total cost of$38.0 million. Cash paid was $4.6 million and $33.5 million was transferred from vessel deposits.Disposal of a vesselOn December 6, 2013, Navios Acquisition sold the Shinyo Navigator to an unaffiliated third party purchaser for an aggregate price of $18.1 million.The loss on sale of $21.1 million was calculated as the sales price less the carrying value of the vessel of $38.5 million and related selling expenses of $0.7million and bunkers written-off of $0.04 million. This loss is included under the loss on sale of vessels in the consolidated statements of comprehensiveincome/(loss). B.Business OverviewIntroductionNavios Acquisition owns a large fleet of modern crude oil, refined petroleum product and chemical tankers providing worldwide marine transportationservices. 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 with our customers. We believe thatthe Navios brand will allow us to take advantage of increasing global environmental concerns that have created a demand in the petroleum products/crudeoil seaborne transportation industry for vessels and operators that are able to conform to the stringent environmental standards currently being imposedthroughout the world.Navios Acquisition’s FleetAs of March 24, 2015, our fleet consists of a total of 39 double-hulled tanker vessels, aggregating approximately 4.1 million deadweight tons, or dwt.The fleet includes eight VLCC tankers (over 200,000 dwt per ship), which transport crude oil, eight Long Range 1 (“LR1”) product tankers (50,000-79,999dwt per ship), 19 Medium Range 2 (“MR2”) product tankers (30,000-49,999 dwt per ship) and four chemical tankers (25,000 dwt 44Table of Contentsper ship), which transport refined petroleum products and bulk liquid chemicals. All the vessels that we have taken delivery of are currently chartered-out tohigh-quality counterparties, including affiliates of Shell, Formosa Petrochemical Corporation, Sinochem Group, SK Shipping and DOSCO (a wholly ownedsubsidiary of COSCO) with an average remaining charter period of approximately 1.0 years. As of March 24, 2015, we had charters covering 80.8% ofavailable days in 2015, 26.2% of available days in 2016 and 10.3% of available days in 2017. Vessels Type Built/DeliveryDate DWT NetCharterRate(1) Profit Share ExpirationDate(2)Owned Vessels Nave Cielo LR1 Product Tanker 2007 74,671 $13,825 50%/50% May 2016Nave Ariadne LR1 Product Tanker 2007 74,671 $13,825 50%/50% May 2016Nave Cosmos Chemical Tanker 2010 25,130 Floating Rate(15) None August 2015Nave Polaris Chemical Tanker 2011 25,145 Floating Rate(15) None July 2015Nave Celeste(18) VLCC 2003 298,717 $42,705 None December 2016C. Dream(18) VLCC 2000 298,570 $29,625 50% above $30,000 March 2019 40% above $40,000 Nave Orbit(16) MR2 Product Tanker 2009 50,470 $13,825 None October 2015Nave Equator(17) MR2 Product Tanker 2009 50,542 $13,750 None July 2015Nave Andromeda LR1 Product Tanker 2011 75,000 $13,000(14) 100% up to $16,000 November 2015 50% above $16,000 Nave Estella LR1 Product Tanker 2012 75,000 $11,850(4) 90% up to $16,000 January 2016 50% above $16,000 Nave Atria MR2 Product Tanker 2012 49,992 $13,331(5) 50%/50% July 2015Nave Cassiopeia LR1 Product Tanker 2012 74,711 $13,825 50%/50% February 2016Nave Cetus LR1 Product Tanker 2012 74,581 $13,825 50%/50% April 2016Nave Aquila MR2 Product Tanker 2012 49,991 $13,331(5) 50%/50% November 2015Nave Bellatrix MR2 Product Tanker 2013 49,999 $13,331(6) 50%/50% January 2016Nave Rigel LR1 Product Tanker 2013 74,673 $12,838(3) 50%/50% August 2015Nave Orion MR2 Product Tanker 2013 49,999 $13,331(6) 50%/50% March 2016Nave Atropos LR1 Product Tanker 2013 74,695 $12,838(3) 50%/50% October 2015Nave Titan MR2 Product Tanker 2013 49,999 $13,825(7) 50%/50% June 2016Nave Equinox MR2 Product Tanker 2007 50,922 $14,813(9) None May 2015Nave Capella MR2 Product Tanker 2013 49,995 $14,813 None July 2015Nave Pulsar MR2 Product Tanker 2007 50,922 $14,813(9) None May 2015Nave Universe Chemical Tanker 2013 45,513 $14,869(8) 50%/50% July 2015Nave Constellation Chemical Tanker 2013 45,281 $14,869(8) 50%/50% September 2015Nave Alderamin MR2 Product Tanker 2013 49,998 $15,600 None February 2017Bougainville MR2 Product Tanker 2013 50,626 $15,663(10) 100% September 2015 $15,976 100% September 2016 $16,296 100% September 2017Nave Dorado MR2 Product Tanker 2005 47,999 $13,578 None November 2015Nave Lucida MR2 Product Tanker 2005 47,999 $13,578 None November 2015Nave Galactic(18) VLCC 2009 297,168 Floating Rate(12) None March 2015Nave Quasar(18) VLCC 2010 297,376 $25,350 50% above $29,250 February 2016Nave Buena Suerte(18) VLCC 2011 297,491 Floating Rate(13) None June 2015Nave Jupiter MR2 Product Tanker 2014 49,999 $14,319(11) 50%/50% May 2016Nave Neutrino(18) VLCC 2003 298,287 Floating Rate(12) None October 2015Nave Electron(18) VLCC 2002 305,178 Floating Rate(13) None July 2015Nave Synergy VLCC 2010 299,973 $34,125 None January 2016Nave Luminosity MR2 Product Tanker 2014 49,999 $14,319(11) 50%/50% September 2016Nave Pyxis MR2 Product Tanker 2014 49,998 $16,294 None February 2018Nave Sextans MR2 Product Tanker 2015 49,999 $16,294 None January 2018Nave Velocity MR2 Product Tanker 2015 49,999 $14,319(11) 50%/50% January2017 (1)Net time charter-out rate per day (net of commissions), presented in USD.(2)Estimated dates assuming midpoint of redelivery by charterers.(3)Charterer’s option to extend the charter for an additional year at $13,825 net per day plus 50% profit sharing.(4)Charterer’s option to extend the charter for one year at $11,850 net plus 90% profit up to $17,000 plus 50% profit sharing above $17,000. The profit sharing formula iscalculated monthly and incorporates $2,000 premium above the relevant index.(5)Charterer’s option to extend the charter for 1+1 years at $14,566 net for the first optional year plus profit sharing; $15,553 net for the 2nd optional year plus profit sharing. Profitsharing will be calculated monthly and profits will be split equally between each party. Profit sharing formula incorporates $1,000 premium above the relevant index.(6)Charterer’s option to extend the charter for one year at $14,813 net plus profit sharing. The charterers will receive 100% of the first $1,000 in profits above the base rate and theowners will receive 100% of the next $1,000. Thereafter, all profits will be split equally to each party.(7)Charterer’s option to extend the charter for one year at $15,306 net plus profit sharing. The charterers will receive 100% of the first $1,000 in profits above the base rate and theowners will receive 100% of the next $1,000. Thereafter, all profits will be split equally to each party.(8)Charterer’s option to extend for an additional year at a rate of $16,088 net per day, plus 50% profit sharing. 45Table of Contents(9)Profit sharing based on a formula which incorporates a premium when vessels are trading in ice. Charterer has been granted an option for an additional six months at the sameterms.(10)Rate can reach a maximum of $20,475 net per day calculated basis a specific world scale formula. Both rate and ceiling increase by 2% annually.(11)Charter duration of two years. Charterer’s option to extend for an additional year at a rate of $15,306 net per day plus 50% profit sharing.(12)Rate is based upon daily Baltic International Tanker Routes (“BITR”), Route Tanker Dirty 3 ME Gulf to Japan (“TD3”) adjusted for vessel’s service speed/cons.(13)Rate based on VLCC pool earnings.(14)Charterer’s option to extend the charter for one year at $14,000 net plus 100% profit up to $17,000 plus 50% profit sharing above $17,000. The profit sharing formula iscalculated monthly and incorporates $2,000 premium above the relevant index.(15)Rate based on Chemical Tankers Pool earnings.(16)Vessel Buddy was renamed Nave Orbit in October 2014.(17)Vessel Bull was renamed Nave Equator in October 2014.(18)Navios Acquisition has granted an option to Navios Midstream, exercisable for a period of up to two years following the closing of the Navios Midstream IPO, to purchase thevessel from Navios Acquisition at fair market value.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 lowoperating costs. We believe that the increased enforcement of stringent environmental standards currently being imposed throughout the worldhas resulted in a shift in major charterers’ preference towards greater use of modern double–hull vessels. We also have a large proportion ofyoung product and chemical tankers in our fleet. Since our inception, we have committed to and have fully financed investments of over$1.9 billion, including investments of approximately $0.9 billion in newbuilding constructions. As of March 24, 2015, our fleet had an averageage of approximately 4.4 years. We believe that owning and maintaining a modern, high–quality fleet reduces off–hire time and operating costs,improves safety and environmental performance and provides us with a competitive advantage in securing employment for our vessels. • Operating Visibility Through Contracted Revenues. All of the vessels that we have taken delivery of as of March 24, 2015, are chartered out withan average remaining charter period of approximately 1.0 years, and we believe our existing charter coverage provides us with predictable,contracted revenues and operating visibility. As of March 24, 2015, we had charters covering 80.8% of available days in 2015, 26.2% ofavailable days in 2016 and 10.3% of available days in 2017. The charter arrangements for our eight VLCC tankers, eight contracted LR1 tankers,19 MR2 product tankers and four chemical tankers represent $ 171.7 million in 2015, $71.9 million in 2016 and $28.6 million in 2017 ofaggregate contracted net charter revenue, exclusive of any profit sharing. • Diversified Fleet. Our diversified fleet, which includes VLCC, product and chemical tankers, allows us to serve our customers’ internationalcrude oil, petroleum product and liquid bulk chemical transportation needs. VLCC tankers transport crude oil and operate on primarily long–haul trades from the Arabian Gulf to the Far East, North America and Europe. Product tankers transport a large number of different refined oilproducts, such as naphtha, gasoline, kerosene, jetfuel and gasoil, and principally operate on short– to medium–haul routes. Chemical tankerstransport primarily organic and inorganic chemicals, vegetable oils and animal fats. We believe that our fleet of vessels servicing the crude oil,product and chemical tanker transportation sectors provides us with more balanced exposure to oil and commodities and more diverseopportunities to generate revenues than would a focus on any single shipping sector. • High Quality Counterparties. 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 safe and quality transportation services and developing and maintaining long–term relationships with our customers, and we believe that our modern fleet will allow us to charter–out our vessels to what management views ashigh–quality counterparties and for long periods of time. Our current charterers include: Shell, one of the largest global groups of energy andpetrochemical 46Table of Contents companies, operating in over 90 countries; DOSCO, a wholly owned subsidiary of COSCO, one of China’s largest state–owned enterprisesspecializing in global shipping, logistics and ship building and repairing; Sinochem, a Fortune Global 500 company; Navig8, a company thatcontrols a substantial fleet of product tankers; and SK Shipping Company Limited, a leading Korean shipowner and transportation company andpart of the Korean multinational business conglomerate, the SK Group and their respective affiliates. • An Experienced Management Team and a Strong Brand. We have an experienced management team that we believe is well regarded in theshipping industry. The members of our management team have considerable experience in the shipping and financial industries. We also believethat we will be able to leverage the management structure at our affiliate, Navios Holdings, which benefits from a reputation for reliability andperformance and operational experience in both the tanker and drybulk markets. Our management team is led by Angeliki Frangou, ourChairman and Chief Executive Officer, who has over 20 years of experience in the shipping industry. Ms. Frangou is also the Chairman & ChiefExecutive Officer of Navios Holdings, Navios Partners and Navios Midstream and has been a Chief Executive Officer of various shipping andfinance companies in the past. Ms. Frangou is a member of a number of recognized shipping committees. We believe that our well respectedmanagement 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 withdiverse opportunities with a range of producers and consumers. As we grow our fleet, we expect to adjust our relative emphasis among the crudeoil, product and chemical tanker sectors according to our view of the relative opportunities in these sectors. We believe that having a mixed fleetof tankers provides the flexibility to adapt to changing market conditions and will allow us to capitalize on sector–specific opportunitiesthrough varying economic cycles. • Enhance Operating Visibility With Charter–Out Strategy. We believe that we are a safe, cost–efficient operator of modern and well–maintainedtankers. We also believe that these attributes, together with our strategy of proactively working towards meeting our customers’ chartering needs,will contribute to our ability to attract leading charterers as customers and to our success in obtaining attractive long–term charters. We will alsoseek profit sharing arrangements in our long–term time charters, to provide us with potential incremental revenue above the contracted minimumcharter rates. Depending on then applicable market conditions, we intend to deploy our vessels to leading charterers on a mix of long, mediumand short–term time charters, with a greater emphasis on long–term charters and profit sharing. We believe that this chartering strategy will affordus opportunities to capture increased profits during strong charter markets, while benefiting from the relatively stable cash flows and highutilization rates associated with longer-term time charters. As of March 24, 2015, we had charters covering 80.8% of available days in 2015,26.2% of available days in 2016 and 10.3% of available days in 2017. • Capitalize on Low Vessel Prices. We intend to grow our fleet using Navios Holdings’ global network of relationships and extensive experiencein the marine transportation industry, coupled with our financial resources and financing capability, to make selective acquisitions of young,high quality, modern, double–hulled vessels in the product, crude oil, and chemical tanker sectors. We are focused on purchasing tanker assets atfavorable prices. We believe that developments in the marine transportation industry, particularly in the product tanker, crude oil transportation,and chemical tanker sectors, as well as the recent financial crisis which continues to adversely affect the availability of credit to shippingindustry participants, have created significant opportunities to acquire vessels near historically low (inflation-adjusted) prices and employ themin a manner that will provide attractive 47Table of Contents returns on capital. 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 towardsconsolidation over the past 15 years, the tanker market remains fragmented. In the ordinary course of our business, we engage in the evaluationof potential candidates for acquisitions and strategic transactions. • Leverage the Experience, Brand, Network and Relationships of Navios Holdings. We intend to capitalize on the global network of relationshipsthat Navios Holdings has developed during its long history of investing and operating in the marine transportation industry. This includesdecades–long relationships with leading charterers, financing sources and key shipping industry players. When charter markets and vessel pricesare depressed and vessel financing is difficult to obtain, as is currently the case, we believe the relationships and experience of Navios Holdingsand its management enhances our ability to acquire young, technically advanced vessels at cyclically low prices and employ them underattractive charters with leading charterers. Navios Holdings’ long involvement and reputation for reliability in the Asia Pacific region have alsoallowed it to develop privileged relationships with many of the largest institutions in Asia. Through its established reputation and relationships,Navios Holdings has had access to opportunities not readily available to most other industry participants that lack Navios Holdings’ brandrecognition, credibility and track record. • Benefit from Navios Holdings’ Leading Risk Management Practices and Corporate Managerial Support. Risk management requires thebalancing of a number of factors in a cyclical and potentially volatile environment. Fundamentally, the challenge is to appropriately allocatecapital to competing opportunities of owning or chartering vessels. In part, this requires a view of the overall health of the market, as well as anunderstanding of capital costs and returns. Navios Holdings actively engages in assessing financial and other risks associated with fluctuatingmarket rates, fuel prices, credit risks, interest rates and foreign exchange rates. • Navios Holdings closely monitors credit exposure to charterers and other counterparties and 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 limitthe amount of credit exposure. We believe that Navios Acquisition will benefit from these established policies. • Implement and Sustain a Competitive Cost Structure. Pursuant to our management agreement with the Manager, a wholly owned subsidiary ofNavios Holdings, the Manager coordinates and oversees the commercial, technical and administrative management of our fleet. The currenttechnical managers of the VLCC vessels, affiliates of the seller of the vessels acquired as part of the VLCC Acquisition are technical shipmanagement companies that have provided technical management to the VLCC vessels acquired during the VLCC Acquisition prior to theconsummation of the acquisition thereof. These technical managers will continue to provide such services for an interim period, after which thetechnical management of our fleet is expected to be provided solely by the Manager. We believe that the Manager will be able to do so at ratescompetitive with those that would be available to us through independent vessel management companies. For example, pursuant to ourmanagement agreement with Navios Holdings, management fees of our vessels are fixed through May 2016. We believe this externalmanagement arrangement will enhance the scalability of our business by allowing us to grow our fleet without incurring significant additionaloverhead costs. We believe that we will be able to leverage the economies of scale of Navios Holdings and manage operating, maintenance andcorporate costs. At the same time, we believe the young age and high–quality of the vessels in our fleet, coupled with Navios Holdings’ safetyand environmental record, will position us favorably within the crude oil, product and chemical tanker transportation sectors with our customersand for future business opportunities. 48Table of ContentsOur CustomersWe provide or will provide seaborne shipping services under charters with customers that we believe are creditworthy.Our major customers during 2014 were: DOSCO and Navig8 Chemicals Shipping and Trading Co. For the year ended December 31, 2014, these twocustomers accounted for 22.4% and 28.8%, respectively, of Navios Acquisition’s revenue.Our major customers during 2013 were: DOSCO and Navig8 Chemicals Shipping and Trading Co. For the year ended December 31, 2013, these twocustomers accounted for 32.0% and 22.4%, respectively, of Navios Acquisition’s revenue.Our major customers during 2012 were: DOSCO and STX Panocean Co. Ltd. For the year ended December 31, 2012, these two customers accounted for43.3% and 10.7%, 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 rate relativelyquickly, the permanent loss of a significant customer or a substantial decline in the amount of services requested by a significant customer could harm ourbusiness, financial condition and results of operations if we were unable to re-charter our vessel on a favorable basis due to then–current market conditions, orotherwise.CompetitionThe market for international seaborne crude oil transportation services is fragmented and highly competitive. Seaborne crude oil transportationservices generally are provided by two main types of operators: major oil company captive fleets (both private and state-owned) and independent ship ownerfleets. In addition, several owners and operators pool their vessels together on an ongoing basis, and such pools are available to customers to the same extentas independently owned and operated fleets. Many major oil companies and other oil trading companies also operate their own vessels and use such vesselsnot only to transport their own crude oil but also to transport crude oil for third party charterers in direct competition with independent owners and operatorsin the tanker charter market. Competition for charters is intense and is based upon price, location, size, age, condition and acceptability of the vessel and itsmanager. Due in part to the fragmented tanker market, competitors with greater resources could enter the tanker market and operate larger fleets throughacquisitions or consolidations and may be willing or able to accept lower prices than us, which could result in our achieving lower revenues from our vessels.Time ChartersA time charter is a contract for the use of a vessel for a fixed period of time at a specified daily rate. Under a time charter, the vessel owner providescrewing and other services related to the vessel’s operation, the cost of which is included in the daily rate and the customer is responsible for substantially allof the vessel voyage costs. Most of the vessels in our fleet are hired out under time charters, and we intend to continue to hire out our vessels under timecharters. The following discussion describes the material terms common to all of our time charters.Base Hire Rate“Base hire rate” refers to the basic payment from the customer for the use of the vessel. The hire rate is generally payable monthly, in advance on thefirst day of each month, in U.S. Dollars as specified in the charter.ExpensesManagement fees: Pursuant to a management agreement dated May 28, 2010 (the “Management Agreement”), the Manager, a subsidiary of NaviosHoldings, provides commercial and technical management 49Table of Contentsservices 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 producttanker vessel and $10,000 per VLCC tanker vessel for the first two years. On May 4, 2012, Navios Acquisition amended its existing Management Agreementwith the Manager, to fix the fees for ship management services of its owned fleet at current rates for two additional years, through May 28, 2014. This dailyfee covers all of the vessels’ operating expenses, other than certain fees and costs. During the remaining term of the Management Agreement, NaviosAcquisition expects it will reimburse Navios Holdings for all of the actual operating costs and expenses it incurs in connection with the management of itsfleet. Actual operating costs and expenses will be determined in a manner consistent with how the initial fixed fees were determined. Drydocking expenseswere fixed for the first four years under these agreements for up to $0.3 million per LR1 and MR2 product tanker vessel and will be reimbursed at cost forVLCC vessels.In May 2014, Navios Acquisition extended the duration of its existing Management Agreement with Navios Holdings until May 2020 and fixed thefees for ship management services of its owned fleet for two additional years through May 2016 at current rates for product tanker and chemical tankervessels, being $6,000 daily rate per MR2 product tanker and chemical tanker vessel and $7,000 daily rate per LR1 product tanker vessel, and reduced the rateby 5% to $9,500 daily rate per VLCC vessel. Drydocking expenses under this Management Agreement will be reimbursed at cost at occurrence for all vessels.Effective March 30, 2012, Navios Acquisition can, upon request to Navios Holdings, partially or fully defer the reimbursement of drydocking andother extraordinary fees and expenses under the Management Agreement to a later date, but not later than January 5, 2016, and if reimbursed on a later date,such amounts will bear interest at a rate of 1% per annum over LIBOR. Effective September 28, 2012, Navios Acquisition can, upon request, reimburseNavios Holdings partially or fully, for any fixed management fees outstanding for a period of not more than nine months under the Management Agreementat a later date, but not later than January 5, 2016, and if reimbursed on a later date, such amounts will bear interest at a rate of 1% per annum over LIBOR.Total management fees for the years ended December 31, 2014, 2013 and 2012 amounted to $95.8 million, $71.4 million and $47.0 million,respectively.General and administrative expenses: On May 28, 2010, Navios Acquisition entered into an administrative services agreement (the “AdministrativeServices Agreement”) with Navios Holdings, initially set to expire on May 28, 2015, pursuant to which a subsidiary of Navios Holdings provides certainadministrative 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, advisory services, client and investor relations and other services. Navios Holdings isreimbursed for reasonable costs and expenses incurred in connection with the provision of these services.In May 2014, the duration of its existing Administrative Services Agreement was extended until May 2020 pursuant to its existing terms.For the years ended December 31, 2014, 2013 and 2012, the fees for administrative services rendered by Navios Holdings amounted to $7.3 million,$3.5 million and $2.1 million, respectively.Off-hireWhen the vessel is “off-hire,” the charterer generally is not required to pay the base hire rate, and we are responsible for all costs. Prolonged off-hiremay 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 otherthings: • operational deficiencies; drydocking for repairs, maintenance or inspection; equipment breakdowns; or delays due to accidents, crewing strikes,certain vessel 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. 50Table of ContentsUnder some of our charters, the charterer is permitted to terminate the time charter if the vessel is off-hire for an extended period, which is generallydefined 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 payment obligations.Under some of our time charters, either party may terminate the charter in the event of war in specified countries or in locations that would significantlydisrupt the free trade of the vessel. Some of our time charters covering our vessels require us to return to the charterer, upon the loss of the vessel, all advancespaid 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 the ManagementAgreement and an Administrative Services Agreement with Navios Holdings, we have access to human resources, financial and other administrativefunctions, 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 and the Administrative Services Agreement we have with Navios Holdings, please read “Item 7.— Major Stockholders 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 been undergoingconsolidation. 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 afew smaller companies, represent a significant percentage of the production, trading and, especially, seaborne transportation of crude oil and refinedpetroleum products worldwide. Concerns about the environment have led oil majors to develop and implement a strict due diligence process, known asvetting, 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 charter agreement for our vessels requires that the applicable vessel have avalid SIRE report (less than six months old) in the OCIMF 51Table of Contentswebsite as recommended by OCIMF. In addition, under the terms of the charter agreements, the charterers require that our vessels and their technicalmanagers be vetted and approved to transport crude oil or refined petroleum products (as applicable). The technical manager is responsible for obtaining andmaintaining the vetting approvals required to successfully charter our vessels.Uninsured RisksNot all risks are insured and not all risks are insurable. The principal insurable risks which nonetheless remain uninsured across our fleet are “loss ofhire” and “strikes,” except in cases of loss of hire due to war or a piracy event. Specifically, Navios Acquisition does not insure these risks because the costsare regarded as disproportionate. These insurances provide, subject to a deductible, a limited indemnity for hire that would not be receivable by theshipowner for reasons set forth in the policy. Should a vessel on time charter, where the vessel is paid a fixed hire day by day, suffer a serious mechanicalbreakdown, the daily hire will no longer be payable by the charterer. Under some circumstances, an event of force majeure may also permit the charterer toterminate the time charter or suspend payment of charter hire. The purpose of the loss of hire insurance is to secure the loss of hire during such periods. In thecase of strikes insurance, if a vessel is being paid a fixed sum to perform a voyage and the ship becomes strike bound at a loading or discharging port, theinsurance covers the loss of earnings during such periods.Governmental 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 52Table of Contentsprevent pollution as well as promote safety of life and preservation of property. These regulations have been and continue to be regularly amended as newand 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 came 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.Security RegulationsSince the terrorist attacks of September 11, 2001, there have been a variety of initiatives intended to enhance vessel security. In 2002, MarineTransportation Security Act (“MTSA”) came into effect. To implement certain portions of the MTSA, in 2003, the U.S. Coast Guard issued regulationsrequiring the implementation of certain security requirements aboard vessels operating in waters subject to the jurisdiction of the United States. Similarly, in2002, amendments to SOLAS imposed various detailed security obligations on vessels and port authorities, most of which are contained in the InternationalShip and Port Facility Security Code (“ISPS Code”). Among the various 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 from MTSA vesselsecurity measures, provided such vessels had on board, by July 1, 2004, a valid International Ship Security Certificate (“ISSC”) that attests to the vessel’scompliance with SOLAS security 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 53Table of Contentswith the NOx Technical Code established thereunder, sets limits on sulfur oxide and nitrogen oxide emissions from ship exhausts and prohibits deliberateemissions of ozone depleting substances, such as chlorofluorocarbons. It also includes a global cap on the sulfur content of fuel oil and allows for specialareas to be established with more stringent controls on emissions. Originally adopted in September 1997, Annex VI came into force in May 2005 and wasamended in October 2008 (as was the NOx Technical Code) to provide for progressively more stringent limits on such emissions from 2010 onwards. Therevised Annex VI provides, in particular, for a reduction of the global sulfur cap, initially to 3.5% (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 a feasibility review to be completed no later than 2018 (regarding theavailability of compliant fuel which could defer the requirement to January 1, 2025); and the establishment of new tiers of stringent nitrogen oxide emissionsstandards 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. Thus far, ECAs have beenformally adopted for the Baltic Sea area (limits SOx emissions only); the North Sea area including the English Channel (limiting SOx emissions only) and theNorth American ECA (which came into effect from August 1, 2012 limiting SOx, NOx and particulate matter emissions). The United States Caribbean SeaECA entered into force on January 1, 2013 and has been effective since January 1, 2014, limiting SOx, NOx and particulate matter emissions. For thecurrently-designated ECAs, much lower sulfur limits on fuel oil content are being phased in (0.1% from January 1, 2015). At its 66th Session, the MEPCadopted amendments (expected to enter into force in September 2015) to MARPOL Annex VI, regulation 13, regarding NOx and the date for theimplementation of the “Tier III” standards within ECAs. These amendments provide, inter alia, that such standards, applicable on January 1, 2016, will beapplied to marine diesel engines installed on ships which operate in the North American ECA or the U.S. Caribbean Sea ECA and to installed marine dieselengines which operate in other ECAs which might be designated in the future for Tier III NOx control. At its 67th Session, the MEPC instructed thecorrespondence group, which is developing a draft framework for a methodology to determine whether sufficient fuel meeting the requirements of regulation14 (SOx and particulate matter) is likely to be available by the effective date, to submit a final report to MEPC 68. These more stringent fuel standards areexpected to require measures such as fuel switching, vessel modification adding distillate fuel storage capacity, or addition of exhaust gas cleaning scrubbers,to achieve compliance, and may require installation and operation of further control equipment at significantly increased cost.The revised Annex I to the MARPOL Convention entered into force in January 2007. It incorporates various amendments to the MARPOL Conventionand imposes construction requirements for oil tankers delivered on or after January 1, 2010. On August 1, 2007, Regulation 12A (an amendment to Annex I)came into force imposing performance standards for accidental oil fuel outflow and requiring oil fuel tanks to be located inside the double-hull in all shipswith an aggregate 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. We intend that all of ournewbuild tanker vessels, if any, 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 54Table of ContentsInternational Chamber of Shipping (“ICS”) produced a briefing document, confirming the shipping industry’s commitment to cut shipping emissions by 20%by 2020, with significant further reductions thereafter. The ICS called on the participants in the Durban Conference to give the IMO a clear mandate todeliver emissions reductions through market-based measures, for example a shipping industry environmental compensation fund. Notwithstanding the ICS’srequest for global regulation of the shipping industry, the Durban Conference did not result in any proposals specifically addressing the shipping industry’srole in climate change. The European Union announced in April 2007 that it planned to expand the European Union emissions trading scheme by addingvessels, and a proposal from the European Commission was expected if no global regime for reduction of seaborne emissions had been agreed by the end of2011. As of January 31, 2013, the Commission stopped short of proposing that emissions from ships be included in the EU’s emissions-trading scheme(“ETS”). However, on October 1, 2012, it announced that it would propose measures to monitor, verify and report on greenhouse gas emissions from theshipping sector in early 2013. On June 28, 2013, the European Commission adopted a Communication setting out a strategy for progressively includinggreenhouse gas emissions from maritime transport in the EU’s policy for reducing its overall GHG emissions. The first step proposed by the Commission is anEU Regulation that would establish an EU-wide system for the monitoring, reporting and verification of carbon dioxide emissions from large ships starting in2018. The draft Regulation is currently working its way through the various stages of the EU legislative process (most recently the European Parliamentadopted the text of the draft Regulation by way of a legislative resolution dated 16 April 2014) and will require approval from both the European Counciland European Parliament before entering into force. This Regulation may be seen as indicative of an intention to maintain pressure on the internationalnegotiating process. Any passage of climate control legislation or other regulatory initiatives by the IMO, European Union, or individual countries where weoperate, including the U.S., that restrict emissions of greenhouse gases from vessels could require us to make significant financial expenditures we cannotpredict 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 by 30 states, the combined merchant fleets of which representnot less than 35% of the gross tonnage of the world’s merchant shipping. To date, there has not been sufficient adoption of this standard by member-statesrepresenting enough of the gross tonnage of the world’s fleet for it to take force. However, as of March 10, 2015, the Convention has been ratified by 44states, representing 32.86% of the global merchant shipping fleet’s gross tonnage and its entry-into-force with attendant compliance costs may therefore beanticipated in the foreseeable future.European 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. It should be noted, for instance, that the EU has its own regime as far as ship emissions areconcerned and whilst it does in some respects reflect the IMO regime, this is not always the case. As far as sulfur dioxide emissions are concerned, forexample, the EU regulation has not just caught up with the IMO limits for sulfur in ECAs, but it continues to have certain elements that exceed IMOregulations (e.g., as of January 1, 2015, EU Member States must ensure that ships in the Baltic, the North Sea and the English Channel are using gas oils witha sulphur content of no more than 0.10%). 55Table of ContentsIn some instances where it has done so, international regulations have subsequently been amended to the same level of stringency as that introduced inEurope, but the risk is well established that EU regulations may from time to time impose burdens and costs on shipowners and operators which are additionalto 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 offense 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.Moreover, there is skepticism that the notion of “serious negligence” is likely to prove any narrower in practice than ordinary negligence. Criminal liabilityfor a pollution incident could not only result in us incurring substantial penalties or fines but may also, in some jurisdictions, facilitate civil liability claimsfor 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 implementing regulations took effect on October 30, 2013. The vessel response plans must include detailedinformation on actions to be taken by vessel personnel to prevent or mitigate any discharge or substantial threat of such a discharge of ore from the vessel dueto operational activities or casualties.OPA currently limits liability of the responsible party for single-hull tank vessels over 3,000 gross tons liability to the greater of $3,200 per gross ton or$23.5 million (this amount is reduced to $6.4 million if the vessel is less than 3,000 gross tons).For tank vessels over 3,000 gross tons, other than a single-hull vessel, liability is limited to $2,000 per gross ton or $17.0 million (or $4.27 million for avessel less than 3,000 gross tons), whichever is greater. These amounts are periodically adjusted for inflation. On August 19, 2014, the Coast Guard proposedto increase these OPA liability limits but a final rule has not yet been promulgated. These limits of liability do not apply if an incident was directly caused byviolation of applicable United States federal safety, construction or operating 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 to cooperate and assist in connection with oil removal activities. 56Table of ContentsIn 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.Similarly, in response to the Deepwater Horizon incident, the European Union has issued Directive 2013/30/EU of the European Parliament and of theCouncil of June 12, 2013 on safety of offshore oil and gas operations. The objective of this Directive is to reduce as far as possible the occurrence of majoraccidents relating to offshore oil and gas operations and to limit their consequences, thus increasing the protection of the marine environment and coastaleconomies against pollution, establishing minimum conditions for safe offshore exploration and exploitation of oil and gas and limiting possible disruptionsto Union indigenous energy production, and to improve the response mechanisms in case of an accident. The Directive has to be implemented by July 19,2015. As far as the environment is concerned, in the UK there will be new regulations: the Offshore Petroleum Activities (Offshore Safety Directive)(Environmental Functions) Regulations 2015 (OSDEF), will amend the Merchant Shipping (Oil Pollution Preparedness, Response and CooperationConvention) Regulations 1998 (OPRC 1998) and implement other environmental Directive requirements, specifically the Environmental ManagementSystem. The Offshore Petroleum Licensing (Offshore Safety Directive) Regulations 2015, will implement the licensing Directive requirements. There will alsobe changes to the Oil Pollution Emergency Plans Regulations 1998.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 57Table of Contentswaive insurance policy defenses. This requirement may have the effect of limiting the availability of the type of coverage required by the Coast Guard andcould increase our costs of obtaining this insurance as 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.The United States Clean Water Act (“CWA”) prohibits the discharge of oil or hazardous substances in U.S. navigable waters and imposes strict liabilityin the form of penalties for unauthorized discharges. The CWA 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.) On March 28, 2013 the EPA adopted the 2013 VGP which took effect on December 19, 2013. The 2013 VGP is validfor five years. This new 2013 VGP imposes a numeric standard to control the release of non-indigenous invasive species in ballast water discharges. Inaddition, through the CWA certification provisions that allow US states to place additional conditions on use of the VGP within state waters, a number ofstates have proposed or implemented a variety of stricter ballast water requirements including, in some states, specific treatment standards.Compliance with new U.S. federal and state requirements could require the installation of equipment on our vessels to treat ballast water before it isdischarged or the implementation of other port facility disposal arrangements or procedures at potentially substantial cost, and/or otherwise restrict ourvessels 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 America ECAstandards which took effect in August 2012, when they enter U.S. ports or operate in most internal U.S. waters including the Great Lakes. MARPOL Annex VIrequirements are discussed in greater detail above under “International regulations to prevent pollution from ships.” We may incur costs to install controlequipment 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. On July 16, 2013, the U.S. CoastGuard adopted regulations that made its VCS requirements more compatible with new EPA and State regulations, reflected changes in VCS technology, andcodified existing U.S. Coast Guard guidelines. 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 VLCCs and, in the future, may operate a fleet of refined petroleum product and chemical tankers, that are subject to national andinternational laws governing pollution from such vessels. Several international conventions impose and limit pollution liability from vessels. An owner of atanker vessel 58Table of Contentscarrying a cargo of “persistent oil” as defined by the International Convention for Civil Liability for Oil Pollution Damage (the “CLC”) is subject under theconvention to strict liability for any pollution damage caused in a contracting state by an escape or discharge from cargo or bunker tanks. This liability issubject to a financial limit calculated by reference to the tonnage of the ship, and the right to limit liability may be lost if the spill is caused by theshipowner’s intentional or reckless conduct. Liability may also be incurred under the CLC for a bunker spill from the vessel even when she is not carryingsuch 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 OPA discussed above, are particularlystringent.In 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 March 10, 2015 had 78 contracting states comprising approximately 91.45% of the gross tonnage of theworld’s merchant fleet. In other jurisdictions liability for spills or releases of oil from ships’ bunkers continues to be determined by the national or otherdomestic 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 thevessel has been built and maintained in accordance with the rules of the classification society and complies with applicable rules and regulations of thevessel’s country of registry and the international conventions of which that country is a member. In addition, where surveys are required by internationalconventions and corresponding laws and ordinances of a flag state, the classification society will undertake them on application or by official order, actingon behalf of the authorities concerned. The classification society also undertakes, on request, other surveys and checks that are required by regulations andrequirements of the flag state. These surveys are subject to agreements made in each individual case or to the regulations of the country concerned. Formaintenance of the class, regular and extraordinary surveys of hull, machinery (including the electrical plant) and any special equipment classed are requiredto be performed as follows: • 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 thecertificate. 59Table of Contents • 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 theelectrical plant), and for any special equipment classed, at the intervals indicated by the character of classification for the hull. At the specialsurvey, the vessel is thoroughly examined, including audio-gauging, to determine the thickness of its steel structure. Should the thickness befound to be less than class requirements, the classification society would prescribe steel renewals. The classification society may grant a one yeargrace period for completion of the special survey. Substantial amounts of money may have to be spent for steel renewals to pass a special surveyif the vessel experiences excessive wear and tear. In lieu of the special survey every four or five years, depending on whether a grace period wasgranted, a shipowner has the option of arranging with the classification society for the vessel’s integrated hull or machinery to be on acontinuous survey cycle, in which every part of the vessel would be surveyed 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 or damage andbusiness interruption due to political circumstances in foreign countries, hostilities and labor strikes. In addition, there is always an inherent possibility ofmarine disaster, including oil spills and other environmental mishaps, and the liabilities arising from owning and operating vessels in international trade. TheOPA, which imposes virtually unlimited liability upon owners, operators and demise charterers of any vessel trading in the United States exclusive economiczone for certain oil pollution accidents in the United States, has made liability insurance more expensive for ship owners and operators trading in the UnitedStates market. While we believe that our present insurance coverage is adequate, not all risks can be insured, and there can be no guarantee that any specificclaim will be paid, or that we will always be able to obtain adequate insurance coverage at reasonable rates.Hull and Machinery InsuranceWe have obtained marine hull and machinery and war risk insurance, which includes the risk of actual or constructive total loss, for all of our vessels.The vessels will each be covered up to at least fair market value, with deductibles of $250,000. We have also extended our war risk insurance to include warloss of hire for any loss of time to the vessel, including for physical repairs, caused by a warlike incident and piracy seizure for up to 270 days of detention /loss of time. There are no deductibles for the war risk insurance or the war loss of hire cover.We have arranged, as necessary, increased value insurance for our vessels. With the increased value insurance, in case of total loss of the vessel, we willbe able to recover the sum insured under the increased value policy in addition to the sum insured under the hull and machinery policy. Increased valueinsurance also covers excess liabilities that are not recoverable in full by the hull and machinery policies by reason of underinsurance. We do not expect tomaintain loss of hire insurance for our vessels. Loss of hire insurance covers business interruptions that result in the loss of use of a vessel.Protection and Indemnity InsuranceProtection and indemnity insurance is expected to be provided by mutual protection and indemnity associations, or P&I Associations, who indemnifymembers in respect of discharging their tortious, contractual or statutory third-party legal liabilities arising from the operation of an entered ship. Suchliabilities include but are not limited to third-party liability and other related expenses from injury or death of crew, passengers and other 60Table of Contentsthird parties, loss or damage to cargo, claims arising from collisions with other vessels, damage to other third-party property, pollution arising from oil orother substances, and salvage, towing and other related costs, including wreck removal. Protection and indemnity insurance is a form of mutual indemnityinsurance, extended by protection and indemnity mutual associations and always provided in accordance with the applicable associations’ rules andmembers’ agreed upon terms and conditions.Navios Acquisition’s fleet is currently entered for protection and indemnity insurance with International Group associations where, in line with allInternational Group Clubs, coverage for oil pollution is limited to $1.0 billion per event. The 13 P&I Associations that comprise the International Groupinsure approximately 95% of the world’s commercial tonnage and have entered into a pooling agreement to collectively reinsure each association’sliabilities. Each vessel that Navios Acquisition acquires will be entered with P&I Associations of the International Group. Under the International Groupreinsurance program for the current policy year, each P&I club in the International Group is responsible for the first $9.0 million of every claim. In everyclaim the amount in excess of $9.0 million and up to $80.0 million is shared by the clubs under the pooling agreement. Any claim in excess of $80.0 millionis reinsured by the International Group in the international reinsurance market under the General Excess of Loss Reinsurance Contract. This policy currentlyprovides an additional $2.0 billion of coverage for non-oil pollution claims. Further to this, an additional reinsurance layer has been placed by theInternational Group for claims up to $1 billion in excess of $2.08 billion, i.e. $3.08 billion in total. For passengers and crew claims the overall limit is $3.0billion for any one event with any one vessel with a sub-limit of $2.0 billion for passengers. With the exception of pollution, passenger or crew claims,should any other P&I claim exceed Group reinsurance limits, the provisions of all International Group Club’s overspill claim rules will operate and membersof any International Group Club will be liable for additional contributions in accordance with such rules. To date, there has never been an overspill claim, orone even nearing this level.As a member of a P&I Association, which is a member of the International Group, Navios Acquisition will be subject to calls payable to theassociations based on the individual fleet record, the associations’ overall claim records as well as the claim records of all other members of the individualassociations, and members of the pool of P&I Associations comprising the International Group. The P&I Associations’ policy year commences onFebruary 20th. Calls are levied by means of Estimated Total Premiums (“ETP”) and the amount of the final installment of the ETP varies according to theactual total premium ultimately required by the club for a particular policy year. Members have a liability to pay supplementary calls which might be leviedby the board of directors of the club if the ETP is insufficient to cover amounts paid out by the club.Should a member leave or entry cease with any of the associations, at the Club’s Managers discretion, they may be also be liable to pay release calls orprovide adequate security for the same amount. Such calls are levied in respect of potential outstanding Club/Member liabilities on open policy years andinclude but are not limited to liabilities for deferred calls and supplementary calls.Exchange ControlsUnder Marshall Islands law, there are currently no restrictions on the export or import of capital, including foreign exchange controls or restrictionsthat affect the remittance of dividends, interest or other payments to non-resident holders of Navios Acquisition’s securities.FacilitiesWe have offices at 7 Avenue de Grande Bretagne, Office 11B2, Monte Carlo, MC 98000 Monaco. We believe that our office facilities are suitable andadequate for our business as it is presently conducted. We presently occupy office space provided by Navios Holdings. Navios Holdings has agreed that itwill make such office space, as well as certain office and secretarial services, available to us, as may be required by us from time to time. 61Table of ContentsCrewing and StaffThe Manager crews its vessels primarily with Greek, Filipino, Romanian, Russian and Ukranian officers and Filipino seamen. The Manager isresponsible for selecting its Greek officers. For other nationalities, officers and seamen are referred to us by local crewing agencies. Navios Acquisitionrequires 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, initially set to expire on May 28, 2015that has been extended to May 2020, pursuant to which Navios Holdings provides certain administrative management services to Navios Acquisition, whichinclude 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 services. Navios Holdings is reimbursed for reasonable costs and expenses incurred in connectionwith the provision of these services. See “Item 7B-Related Party Transactions — the Administrative Services Agreement.”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 atpresent party to any legal proceedings or aware of any proceedings against us, or contemplated to be brought against us, that would have a material effect onour business, financial position, results of operations or liquidity. We maintain insurance policies with insurers in amounts and with coverage anddeductibles as our board of directors believes are reasonable and prudent. We expect that these claims would be covered by insurance, subject to customarydeductibles. Those claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources. C.Organizational StructureThe table below lists the Company’s wholly-owned subsidiaries as of December 31, 2014. Navios Maritime Acquisition Corporation and Subsidiaries: Nature Country ofIncorporationCompany 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 Maritime Acquisition Corporation Holding Company Marshall Is.Navios Acquisition Finance (U.S.) Inc. Co-Issuer DelawareRhodes Shipping Corporation Vessel-Owning Company Marshall Is.Serifos Shipping Corporation Vessel-Owning Company Marshall Is.Shinyo Dream Limited Vessel-Owning Company Hong KongShinyo Loyalty Limited Vessel-Owning Company(2) Hong Kong 62Table of ContentsNavios Maritime Acquisition Corporation and Subsidiaries: Nature Country ofIncorporationCompany Name Shinyo Navigator Limited Vessel-Owning Company(3) Hong KongSifnos 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(1) Vessel-Owning Company Marshall Is.Samothrace Shipping Corporation Vessel-Owning Company Marshall Is.Thasos Shipping Corporation Vessel-Owning Company Marshall Is.Limnos Shipping Corporation Vessel-Owning Company Marshall Is.Skyros Shipping Corporation(1) Vessel-Owning Company Marshall Is.Alonnisos Shipping Corporation(4) Vessel-Owning Company Marshall Is.Makronisos Shipping Corporation(4) Vessel-Owning Company Marshall Is.Iraklia Shipping Corporation Vessel-Owning Company Marshall Is.Paxos Shipping Corporation Vessel-Owning Company Marshall Is.Antipaxos Shipping Corporation Vessel-Owning Company Marshall Is.Donoussa Shipping Corporation Vessel-Owning Company Marshall Is.Schinousa Shipping Corporation Vessel-Owning Company Marshall Is.Navios Acquisition Europe Finance Inc. Sub-Holding Company Marshall Is.Sikinos Shipping Corporation Vessel-Owning Company Marshall Is.Kerkyra Shipping Corporation Vessel-Owning Company Marshall Is.Lefkada Shipping Corporation Vessel-Owning Company Marshall Is.Zakynthos Shipping Corporation Vessel-Owning Company Marshall Is.Leros Shipping Corporation Vessel-Owning Company Marshall Is.Kimolos Shipping Corporation Vessel-Owning Company Marshall Is.Samos Shipping Corporation Vessel-Owning Company Marshall Is.Navios Maritime Midstream Partners GP LLC Holding Company Marshall Is. (1)Each company had the rights over a shipbuilding contract of an MR2 product tanker vessel, such vessels having been delivered during 2015.(2)Former vessel-owner of the Shinyo Splendor which was sold to an unaffiliated third party on May 6, 2014.(3)Former vessel-owner of the Shinyo Navigator which was sold to an unaffiliated third party on December 6, 2013.(4)Each company had the rights over a shipbuilding contract of an MR2 product tanker vessel. In February 2015, these shipbuilding contracts wereterminated, with no exposure to Navios Acquisition, due to the shipyard’s inability to issue a refund guarantee.Affiliates included in the financial statements accounted for under the equity method:In the consolidated financial statements of Navios Acquisition, Navios Europe Inc. (“Navios Europe”) with ownership interest of 47.5% is included asaffiliate and is accounted for under the equity method, for such periods during which the entity was affiliate of Navios Acquisition. See Note 9 to the Notes toConsolidated Financial Statements, included elsewhere within this Annual Report.Following the completion of the IPO of Navios Midstream in November 2014, Navios Acquisition owns the 2% general partner interest in NaviosMidstream totaling 381,334 general partner units, as well as a 55.5% limited partner interest, which represents 1,242,692 common units (6.5%), and9,342,692 subordinated units (49%). In the consolidated financial statements of Navios Acquisition, Navios Midstream with ownership interest of 51.0%(held through the ownership of the subordinated units and through the General Partner) is included as 63Table of Contentsan affiliate and is accounted for under the equity method, for such periods during which the entity was an affiliate of Navios Acquisition, whereas the 6.5%ownership held through the common units is accounted for under investment in available-for-sale securities. See Note 9 to the Notes to ConsolidatedFinancial Statements, included herein. D.Property, plants and equipmentOther than our vessels, we do not have any other material property, plants or equipment. Item 4A.Unresolved Staff CommentsNone. Item 5.Operating and Financial Review and ProspectsOverviewWe are an owner and operator of tanker vessels focusing in the transportation of petroleum products (clean and dirty) and bulk liquid chemicals and weare incorporated in the Republic of the Marshall Islands.On May 25, 2010, we consummated the Product and Chemical Tanker Acquisition, the acquisition of 13 vessels (11 product tankers and two chemicaltankers), for an aggregate purchase price of $457.7 million, including amounts to be paid for future contracted vessels to be delivered. On September 10,2010, we consummated the VLCC Acquisition, for an aggregate purchase price of $587.0 million.Equity TransactionsOn February 20, 2014, Navios Acquisition completed the public offering of 14,950,000 shares of its common stock at $3.85 per share, raising grossproceeds of $57.6 million. These figures include 1,950,000 shares sold pursuant to the underwriters’ option, which was exercised in full. Total net proceeds ofthe above transactions, net of agents’ costs of $3.0 million and offering costs $0.3 million, amounted to $54.2 million.On October 24, 2014, 699,994 of the 2,100,000 shares of restricted common stock that had been issued to the Company’s directors in October 2013,vested and were no longer subject to forfeiture.Fleet Development2015Acquisition of vesselsOn February 6, 2015, Navios Acquisition took delivery of the Nave Velocity, a newbuilding 49,999 dwt MR2 product tanker, from an unaffiliated third partyfor a purchase price of $35.5 million.On January 8, 2015, Navios Acquisition took delivery of the Nave Sextans, a newbuilding 49,999 dwt MR2 product tanker, from an unaffiliated third partyfor a purchase price of $31.5 million.2014Acquisition of vesselsOn December 9, 2014, Navios Acquisition took delivery of the Nave Synergy, a 2010-built VLCC of 299,973 dwt, from an unaffiliated third party, for a totalcost of $75.9 million.On November 20, 2014, Navios Acquisition took delivery of the Nave Pyxis, a newbuilding 49,998 dwt MR2 product tanker, from an unaffiliated third party,for a total cost of $33.4 million.On September 19, 2014, Navios Acquisition took delivery of the Nave Luminosity, a newbuilding 49,999 dwt MR2 product tanker, from an unaffiliated thirdparty, for a total cost of $39.6 million. 64Table of ContentsOn July 21, 2014, Navios Acquisition took delivery of the Nave Electron, a 2002-built VLCC of 305,178 dwt, from an unaffiliated third party, for a total costof $41.2 million.On June 16, 2014, Navios Acquisition took delivery of the Nave Neutrino, a 2003-built VLCC 298,287 dwt, from an unaffiliated third party, for a total cost of$43.7 million.On May 7, 2014, Navios Acquisition took delivery of the Nave Jupiter, a newbuilding 49,999 dwt MR2 product tanker, from an unaffiliated third party, for atotal cost of $39.6 million. Cash paid was $13.9 million, and $25.7 million was transferred from vessel deposits.On March 10, 2014, Navios Acquisition took delivery of the Nave Buena Suerte, a 2011-built 297,491 dwt VLCC, from an unaffiliated third party, for a totalcost of $57.2 million. Cash paid was $51.5 million and $5.7 million was transferred from vessel deposits.On February 12, 2014, Navios Acquisition took delivery of the Nave Quasar, a 2010-built 297,376 dwt VLCC, from an unaffiliated third party, for a total costof $54.7 million. Cash paid was $49.2 million and $5.5 million was transferred from vessel deposits.On February 4, 2014, Navios Acquisition took delivery of the Nave Galactic, a 2009-built 297,168 dwt VLCC, from an unaffiliated third party, for a total costof $51.7 million. Cash paid was $46.6 million and $5.2 million was transferred from vessel deposits.Disposal of vesselsOn May 6, 2014, Navios Acquisition sold the Shinyo Splendor to an unaffiliated third party for an aggregate sale price of $20.0 million. As of March 31,2014, an impairment loss of $10.7 million related to the Shinyo Splendor has been recognized under the line item “Impairment Loss.” The Company had acurrent expectation that, more likely than not, the Shinyo Splendor would be sold before the end of its previously estimated useful life, and as a resultperformed an impairment test of the specific asset group. The carrying amount of the asset group was more than its undiscounted future cash flows whichresulted in an impairment loss (refer to Note 2(l) for further details related to the impairment test). The vessel’s aggregate net carrying amount as at the date ofsale was $19.2 million (including the remaining carrying balance of dry dock and special survey costs in the amount of $1.0 million). The Company receivednet cash proceeds in the amount of $18.3 million and recognized a loss of $0.9 million. This loss is presented under “Gain / (loss) on sale of vessels” in theconsolidated statements of comprehensive income/ (loss).On November 18, 2014, in connection with the IPO of Navios Midstream, Navios Acquisition sold all of the outstanding shares of capital stock of four of itsvessel-owning subsidiaries (Shinyo Ocean Limited, Shinyo Kannika Limited, Shinyo Kieran Limited and Shinyo Saowalak Limited) in exchange for: (i) allof the net proceeds from the IPO amounting to $110.4 million, (ii) $104.5 million of the $126.0 million borrowings under Navios Midstream’s new creditfacility, (iii) 9,342,692 subordinated units and 1,242,692 common units and (iv) 381,334 general partner units, representing a 2.0% general partner interest inNavios Midstream, and all of the incentive distribution rights in Navios Midstream.2013Acquisition of vesselsOn October 23, 2013, Navios Acquisition took delivery of the Nave Lucida, a 2005 Japanese-built MR2 product tanker, for a total cost of $16.8million paid in cash.On September 30, 2013, Navios Acquisition took delivery of the Bougainville, a 50,626 dwt South Korean- built MR2 product tanker, for a total costof $35.6 million paid in cash.On September 24, 2013, Navios Acquisition took delivery of the Nave Dorado, a 2005 Japanese- built MR2 product tanker, for a total cost of $16.8million paid in cash. 65Table of ContentsOn September 5, 2013, Navios Acquisition took delivery of the Nave Constellation, a 45,281 dwt South Korean- built chemical tanker, for a total costof $34.3 million paid in cash.On September 3, 2013, Navios Acquisition took delivery of the Nave Alderamin, a 49,998 dwt South Korean- built MR2 product tanker, for a total costof $37.3 million. Cash paid was $9.9 million and $27.5 million was transferred from vessel deposits.On August 13, 2013, Navios Acquisition took delivery of the Nave Celeste, a 298,717 dwt South Korean- built VLCC, for a total cost of $35.9 millionpaid in cash.On July 22, 2013, Navios Acquisition took delivery of the Nave Universe, a 45,313 dwt South Korean -built chemical tanker, for a total cost of $34.2million paid in cash.On July 9, 2013, Navios Acquisition took delivery of the Nave Pulsar, a 50,922 dwt South Korean- built MR2 product tanker, for a total cost of $23.6million paid in cash.On July 9, 2013, Navios Acquisition took delivery of the Nave Capella, a 49,995 dwt South Korean- built MR2 product tanker, for a total cost of $37.2million. Cash paid was $9.6 million and $27.5 million was transferred from vessel deposits.On June 26, 2013, Navios Acquisition took delivery of the Nave Equinox, a 50,922 dwt South Korean- built MR2 product tanker, for a total cost of$23.5 million paid in cash.On June 10, 2013, Navios Acquisition took delivery of the Nave Titan, a 49,999 dwt South Korean- built MR2 product tanker, for a total cost of $37.1million. Cash paid was $9.6 million and $27.6 million was transferred from vessel deposits.On April 24, 2013, Navios Acquisition took delivery of the Nave Atropos, a 74,695 dwt South Korean -built LR1 product tanker, for a total cost of$48.2 million. The $48.2 million consisted of: (i) cash paid of $17.1 million (ii) the issuance of $3.0 million of Series D Preferred Stock; and (iii) $28.1million was transferred from vessel deposits.On March 22, 2013, Navios Acquisition took delivery of the Nave Orion, a 49,999 dwt South Korean -built MR2 product tanker, for a total cost of$38.1 million. Cash paid was $8.2 million and $29.9 million was transferred from vessel deposits.On February 13, 2013, Navios Acquisition took delivery of the Nave Rigel, a 74,673 dwt South Korean -built LR1 product tanker, for a total cost of$47.9 million. The $47.9 million consisted of: (i) cash paid of $16.6 million; (ii) the issuance of $3.0 million Series D Preferred; and (iii) $28.3 million wastransferred from vessel deposits.On January 24, 2013, Navios Acquisition took delivery of the Nave Bellatrix, a 49,999 dwt South Korean -built MR2 product tanker, for a total cost of$38.0 million. Cash paid was $4.6 million and $33.5 million was transferred from vessel deposits.Disposal of a vesselOn December 6, 2013, Navios Acquisition sold the Shinyo Navigator to an unaffiliated third party purchaser for an aggregate price of $18.1 million.The loss on sale of $21.1 million was calculated as the sales price less the carrying value of the vessel of $38.5 million and related selling expenses of $0.7million and bunkers written-off of $0.04 million. This loss is included under the loss on sale of vessels in the consolidated statements of comprehensiveincome/(loss). 66Table of ContentsThe historical results discussed below, and the historical financial statements and related notes included elsewhere in this Annual Report, presentoperating results of the fleet for the periods from January 1, 2012 to December 31, 2014. Navios Maritime AcquisitionCorporation and Subsidiaries: Nature Country ofIncorporation 2014 2013 2012 Company Name Aegean Sea Maritime Holdings Inc. Sub-Holding Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Amorgos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Andros Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Antikithira Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Antiparos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Amindra Shipping Co. Sub-Holding Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Crete Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Folegandros Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Ikaria Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Ios Shipping Corporation Vessel-Owning Company Cayman Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Kithira Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Kos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Mytilene Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Navios Maritime Acquisition Corporation Holding Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Navios Acquisition Finance (U.S.) Inc. Co-Issuer Delaware 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Rhodes Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Serifos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Shinyo Dream Limited Vessel-Owning Company Hong Kong 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Shinyo Kannika Limited Vessel-Owning Company(4) Hong Kong 1/1 - 11/17 1/1 - 12/31 1/1 - 12/31 Shinyo Kieran Limited Vessel-Owning Company(4) British Virgin Is. 1/1 - 11/17 1/1 - 12/31 1/1 - 12/31 Shinyo Loyalty Limited Vessel-Owning Company(2) Hong Kong 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Shinyo Navigator Limited Vessel-Owning Company(3) Hong Kong 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Shinyo Ocean Limited Vessel-Owning Company(4) Hong Kong 1/1 - 11/17 1/1 - 12/31 1/1 - 12/31 Shinyo Saowalak Limited Vessel-Owning Company(4) British Virgin Is. 1/1 - 11/17 1/1 - 12/31 1/1 - 12/31 Sifnos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Skiathos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Skopelos Shipping Corporation Vessel-Owning Company Cayman Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Syros Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Thera Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Tinos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Oinousses Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Psara Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Antipsara Shipping Corporation(1) Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Samothrace Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 3/19 - 12/31 — Thasos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 3/19 - 12/31 — Limnos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 3/19 - 12/31 — Skyros Shipping Corporation(1) Vessel-Owning Company Marshall Is. 1/1 - 12/31 3/19 - 12/31 — Alonnisos Shipping Corporation(5) Vessel-Owning Company Marshall Is. 1/1 - 12/31 3/19 - 12/31 — Makronisos Shipping Corporation(5) Vessel-Owning Company Marshall Is. 1/1 - 12/31 3/19 - 12/31 — Iraklia Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 4/2 - 12/31 — Paxos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 4/25 - 12/31 — Antipaxos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 4/25 - 12/31 — Donoussa Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 6/28 - 12/31 — Schinousa Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 6/28 - 12/31 — Navios Acquisition Europe Finance Inc Sub-Holding Company Marshall Is. 1/1 - 12/31 6/4 - 12/31 — Sikinos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 7/3 - 12/31 — Kerkyra Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 11/8 - 12/31 — Lefkada Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 11/8 - 12/31 — Zakynthos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 11/8 - 12/31 — Leros Shipping Corporation Vessel-Owning Company Marshall Is. 4/4 - 12/31 — — Kimolos Shipping Corporation Vessel-Owning Company Marshall Is. 4/29 - 12/31 — — Samos Shipping Corporation Vessel-Owning Company Marshall Is. 9/15 - 12/31 — — Navios Maritime Midstream Partners GP LLC Holding Company Marshall Is. 10/13 - 12/31 — — (1)Each company had the rights over a shipbuilding contract of an MR2 product tanker vessel, such vessels having been delivered during 2015.(2)Former vessel-owner of the Shinyo Splendor which was sold to an unaffiliated third party on May 6, 2014.(3)Former vessel-owner of the Shinyo Navigator which was sold to an unaffiliated third party on December 6, 2013.(4)Navios Midstream acquired all of the outstanding shares of capital stock of the vessel-owning subsidiary.(5)Each company had the rights over a shipbuilding contract of an MR2 product tanker vessel. In February 2015, these shipbuilding contracts were terminated, with no exposure toNavios Acquisition, due to the shipyard’s inability to issue a refund guarantee.Our ChartersOur major customers during 2014 were: DOSCO and Navig8. For the year ended December 31, 2014, these two customers accounted for 22.4% and28.8%, respectively, of Navios Acquisition’s revenue.For the year ended December 31, 2013, Navios Acquisition’s customers representing 10% or more of total revenue were, DOSCO and Navig8, whichaccounted for 32.0% and 22.4%, respectively. 67Table of ContentsFor the year ended December 31, 2012, Navios Acquisition’s customers representing 10% or more of total revenue were, DOSCO, and STX PanoceanCo. Ltd which accounted for 43.3% and 10.7%, respectively.No other customers accounted for 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 hire rates, which, inturn, 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 any number of years. In general, along-term time charter assures the vessel owner of a consistent stream of revenue. Operating the vessel in the spot market affords the owner greater spot marketopportunity, which may result in high rates when vessels are in high demand or low rates when vessel availability exceeds demand. We intend to operate ourvessels in a mix of short-term and long-term charter markets. Vessel charter rates are affected by world economics, international events, 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 of 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 most charters and thecyclical 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 favorable than the charterthat has been terminated. The loss of any of our customers, time charters or vessels, or a decline in payments under our charters, could have a material adverseeffect on our business, results of operations and financial condition and our ability to make cash distributions in the event we are unable to replace suchcustomer, 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 locations that wouldsignificantly 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 of the 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 management services related tothe vessels’ operation, and the charterer is responsible for bunkering and substantially all of the vessel voyage costs, including canal tolls and port charges. 68Table of ContentsPursuant to the Management Agreement dated May 28, 2010, as amended on May 4, 2012, Navios Holdings provides for five years from the closing ofthe Company’s initial vessel acquisition, commercial and technical management services to Navios Acquisition’s vessels for a daily fee through May 28,2014. This daily fee covered all of the vessels’ operating expenses, other than certain fees and costs. Drydocking expenses were fixed for the first four yearsunder this agreement for up to $300 per LR1 and MR2 product tanker vessels and were reimbursed at cost for VLCC vessels.In May 2014, Navios Acquisition extended the duration of its existing Management Agreement with Navios Holdings until May 2020 and fixed thefees for ship management services of its owned fleet for two additional years through May 2016 at current rates for product tanker and chemical tankervessels, being $6,000 daily rate per MR2 product tanker and chemical tanker vessel and $7,000 daily rate per LR1 product tanker vessel and reduced the rateby 5% to $9,500 daily rate per VLCC vessel. Drydocking expenses under this Management Agreement will be reimbursed at cost at occurrence for all vessels.Effective March 30, 2012, Navios Acquisition can, upon request to Navios Holdings, partially or fully defer the reimbursement of drydocking andother extraordinary fees and expenses under the Management Agreement to a later date, but not later than January 5, 2016, and if reimbursed on a later date,such amounts will bear interest at a rate of 1% per annum over LIBOR. Effective as of September 28, 2012, Navios Acquisition can, upon request, reimburseNavios Holdings partially or fully, for any fixed management fees outstanding for a period of not more than nine months under the Management Agreementat a later date, but not later than January 5, 2016, and if reimbursed on a later date, such amounts will bear interest at a rate of 1% per annum over LIBOR.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 covering the vessels,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 and to theextent 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. 69Table of ContentsPayment of any extraordinary fees or expenses to the Manager could significantly increase our vessel operating expenses and impact our results ofoperations.During the remaining 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.Administrative ServicesOn May 28, 2010, Navios Acquisition entered into the Administrative Services Agreement with Navios Holdings, initially set to expire 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.In May 2014, Navios Acquisition extended the duration of its existing Administrative Services Agreement with Navios Holdings, until May 2020pursuant to its existing terms. 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 governmental conditions thataffect the shipping industry generally and that affect conditions in countries and markets in which our vessels engage in business. Other key factors that willbe 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 as our 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 of operations. Thesefactors 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. 70Table of ContentsPeriod over Period ComparisonsYear Ended December 31, 2014 Compared to the Year Ended December 31, 2013The following table presents consolidated revenue and expense information for the years ended December 31, 2014 and 2013. This information wasderived from the audited consolidated financial statements of Navios Acquisition for the respective periods. (in thousands of U.S. dollars) Year endedDecember 31,2014 Year endedDecember 31,2013 Revenue $264,877 $202,397 Time charter and voyage expenses (5,187) (6,762)Direct vessel expenses (1,979) (3,096)Management fees (entirely through related party transactions) (95,827) (71,392)General and administrative expenses (14,588) (7,017)Depreciation and amortization (67,718) (63,880)Loss on bond extinguishment — (33,973)Interest income 720 315 Interest expenses and finance cost (78,610) (58,386)Impairment loss (11,690) — Gain/ (loss) on sale of vessels 22,599 (21,098)Change in fair value of other assets (1,188) — Equity in net earnings of affiliated companies 2,000 — Other income 280 4,787 Other expense (642) (487)Net income/ (loss)$13,047 $(58,592)Set forth below are selected historical and statistical data for Navios Acquisition for each of the years ended December 31, 2014 and 2013 that webelieve may be useful in better understanding Navios Acquisition’s financial position and results of operations. Year EndedDecember 31,2014 Year EndedDecember 31,2013 FLEET DATA Available days(1) 13,227 9,653 Operating days(2) 13,193 9,618 Fleet utilization(3) 99.7% 99.6% Vessels operating at period end 37 33 AVERAGE DAILY RESULTS Time Charter Equivalent per day(4) $19,633 $20,267 (1)Available days: Available days for the fleet are total calendar days the vessels were in Navios Acquisition’s possession for the relevant period aftersubtracting off-hire days associated with major repairs, drydocking or special surveys. The shipping industry uses available days to measure thenumber of days in a relevant period during which vessels should be capable of generating revenues.(2)Operating days: Operating days are the number of available days in the relevant period less the aggregate number of days that the vessels are off-hiredue to any reason, including unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in arelevant period during which vessels actually generate revenues.(3)Fleet utilization: Fleet utilization is the percentage of time that Navios Acquisition’s vessels were available for generating revenue, and is determinedby dividing the number of operating days during a relevant period by the number of available days during that period. The shipping industry uses fleetutilization to measure a company’s efficiency in finding suitable employment for its vessels. 71Table of Contents(4)Time Charter Equivalent: Time Charter Equivalent (“TCE”) is defined as voyage and time charter revenues less voyage expenses during a relevantperiod divided by the number of available days during the period.For the year ended December 31, 2014, Navios Acquisition had 13,227 available days, after it took delivery of 13 MR2 product tankers, two LR1 producttankers, two chemical tankers and seven VLCCs during the period from January 1, 2013 until December 31, 2014. The effect was partially mitigated by:(i) the sale of the Shinyo Splendor on May 6, 2014 to an unaffiliated third party; (ii) the sale of the Shinyo Navigator on December 6, 2013 to an unaffiliatedthird party; and (iii) the sale of the outstanding shares of capital stock of four of its vessel-owning subsidiaries (Shinyo Ocean Limited, Shinyo KannikaLimited, Shinyo Kieran Limited and Shinyo Saowalak Limited) to Navios Midstream (see Note 1) on November 18, 2014.There were 9,653 available days in the comparative period in 2013.Revenue: Revenue for the year ended December 31, 2014 increased by $62.5 million or 30.9% to $264.9 million, as compared to $202.4 million forthe same period in 2013. The increase was attributable to the acquisition of the vessels mentioned above and was partially offset by $28.2 million due to thesale of the Shinyo Navigator in December 2013 and the sale of the five VLCCs in 2014. As a result of the vessel acquisitions described above, available daysof the fleet increased to 13,227 days for the year ended December 31, 2014, as compared to 9,653 days for year ended December 31, 2013. TCE decreased to$19,633 for the year ended December 31, 2014, from $20,267 for the year ended December 31, 2013.Time charter and voyage expenses: Time charter and voyage expenses for the year ended December 31, 2014 decreased by $1.6 million to $5.2million, as compared to $6.8 million for the year ended December 31, 2013. The decrease was attributable to: (a) $1.7 million decrease in bunkers; and(b) $0.7 million decrease in voyage expenses incurred in the year due to the fact that certain vessels were employed in voyage charters in 2013. The decreasewas partially mitigated by a: (a) $0.7 million increase in broker commission costs; and (b) $0.1 million increase in miscellaneous voyage expenses.Direct vessel expenses: Direct vessel expenses, comprised of the amortization of dry dock and special survey costs, of certain vessels of our fleetamounted to $2.0 million for the year ended December 31, 2014, as compared to $3.1 million for the year ended December 31, 2013.Management fees: Management fees for the year ended December 31, 2014 increased by $24.4 million to $95.8 million, as compared to $71.4 millionfor the year ended December 31, 2013. The increase was attributable to the increase in the number of vessels operating under Navios Acquisition’s fleet andwas partially mitigated by $7.9 million due to the sale of the Shinyo Navigator in December 2013 and the five VLCCs in 2014.Pursuant to the Management Agreement, the Manager provides all of Navios Acquisition’s vessels with commercial and technical managementservices for a daily fee that was fixed at: $6,000 per owned MR2 product tanker and chemical tanker vessel, $7,000 per owned LR1 product tanker vessel and$10,000 per VLCC tanker vessel, through May 2014. This daily fee covers all of the vessels’ operating expenses, other than certain extraordinary fees andcosts. Drydocking expenses were fixed until May 2014 for up to $0.3 million per LR1 and MR2 product tanker vessel and were reimbursed at cost for VLCCvessels.In May 2014, Navios Acquisition extended the duration of the Management Agreement until May 2020 and fixed the fees for ship managementservices of its owned fleet for two additional years through May 2016 at current rates for product tanker and chemical tanker vessels, being $6,000 per dayper MR2 product tanker and chemical tanker vessel, $7,000 per day per LR1 product tanker vessel and reduced the rate by 5% to $9,500 per day per VLCCvessel. Drydocking expenses under this Management Agreement are reimbursed at cost at occurrence for all vessels. 72Table of ContentsEffective March 30, 2012, Navios Acquisition can, upon request to Navios Holdings, partially or fully defer the reimbursement of drydocking andother extraordinary fees and expenses under the Management Agreement to a later date, but not later than January 5, 2016, and if reimbursed on a later date,such amounts will bear interest at a rate of 1% per annum over LIBOR. Commencing as of September 28, 2012, Navios Acquisition can, upon request,reimburse Navios Holdings partially or fully, for any fixed management fees outstanding for a period of not more than nine months under the ManagementAgreement at a later date, but not later than January 5, 2016, and if reimbursed on a later date, such amounts will bear interest at a rate of 1% per annum overLIBOR.General and administrative expenses: Total general and administrative expenses for the year ended December 31, 2014 increased by $7.6 million or107.9% to $14.6 million compared to $7.0 million for the year ended December 31, 2013. The increase was mainly attributable to a: (a) $4.2 million increasedue to stock based compensation recognized in connection with the issuance of 2,100,000 restricted shares and options to purchase 1,500,000 shares ofcommon stock; (b) $3.8 million increase in administrative expenses paid to the Manager due to the increased number of vessels in Navios Acquisition’s fleet;partially mitigated by (c) $0.4 million decrease in other general and administrative expenses, including professional, other fees and travelling expenses.Pursuant to the Administrative Services Agreement, the Manager 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.In May 2014, the duration of its existing Administrative Services Agreement was extended until May 2020 pursuant to its existing terms.For the years ended December 31, 2014 and 2013, the expenses charged by Navios Holdings for administrative services were $7.3 million and $3.5million, respectively. The remaining balance of $7.3 million and $3.5 million of general and administrative expenses for the years ended December 31, 2014and 2013, respectively, related to stock based compensation, as well as legal, consulting, travel and professional fees including audit fees for the years endedDecember 31, 2014 and December 31, 2013.Depreciation and amortization: Depreciation and amortization increased by $3.8 million to $67.7 million for the year ended December 31, 2014 ascompared to $63.9 million for the year ended December 31, 2013. The increase of $3.8 million was attributable to: (a) a net increase in depreciation expenseof $10.2 million due to the acquisitions of the vessels described above partially mitigated due to the sale of the Shinyo Navigator in December 2013, the saleof the Shinyo Splendor in May 2014 and the sale of the four VLCCs to Navios Midstream in November 2014. The increase in depreciation expense waspartially offset by the decrease of $6.3 million in amortization of favorable lease terms as a result of (a) the $5.6 million decrease in amortization expense,which includes $4.0 million of accelerated amortization of the intangible assets associated with the charter-out contracts of two MR2 product tanker vessels,following charterers’ default incurred in 2013; (b) a decrease in amortization of favorable lease terms of $0.4 million, due to the sale of the time charter-outcontracts attached to four VLCCs sold to Navios Midstream; and (c) a decrease of $0.3 million in amortization of favorable lease terms due to the expirationof the time charter-out contract of the Shinyo Splendor in April 2014. Depreciation of a vessel is calculated using an estimated useful life of 25 years for thedate the vessel was originally delivered from the shipyard. Intangible assets are amortized over the contract periods, which range from 6.28 to 8.52 years.Loss on bond extinguishment: On November 13, 2013, Navios Acquisition completed the sale of $610.0 million of 8.125% Senior Notes due 2021 (the“2021 Notes”). The net proceeds from the sale of the 2021 Notes were used to redeem any and all of Navios Acquisition’s outstanding 2017 Notes and payrelated transaction fees and expenses and for general corporate purposes. The effect of this transaction was the recognition of a $34.0 million loss in theconsolidated statements of operations under “Loss on bond and debt extinguishment”, which 73Table of Contentswas comprised of a $8.7 million loss relating to the write off of unamortized deferred finance costs and a $25.3 million loss relating to tender premium paidand cash payments for transaction fees and expenses in connection with the 2017 Notes extinguishment. During the year ended December 31, 2014, there wasno loss on bond or debt extinguishment.Interest income: Interest income for year ended December 31, 2014 increased by $0.4 million to $0.7 million compared to $0.3 million for the yearended December 31, 2013.Interest expense and finance cost: Interest expense and finance cost, net for the year ended December 31, 2014 increased by $20.2 million to$78.6 million, as compared to $58.4 million for the year ended December 31, 2013. The increase was due to: (a) the increase in average outstanding loanbalance to $575.1 million in the year ended December 31, 2014 from $532.3 million in the year ended December 31, 2013; and (b) the effect of the $610.0million of 8.125% Senior Notes due 2021, which were issued on November 13, 2013, partially offset by the effect of $505.0 million of 8.625% due 2017Notes extinguishment. As of December 31, 2014 and 2013, the outstanding loan balance under Navios Acquisition’s credit facilities was $1,162.5 millionand $1,154.4 million, respectively, and the weighted average interest rate for each of the years ended December 31, 2014 and 2013 was 5.73%.Impairment loss: An impairment loss of $10.7 million related to the sale of Shinyo Splendor had been recognized under the line item “ImpairmentLoss” for the year ended December 31, 2014. As of March 31, 2014, the Company had a current expectation that, more likely than not, the Shinyo Splendorwould be sold before the end of its previously estimated useful life, and as a result performed an impairment test of the specific asset group. The carryingamount of the asset group was higher than its undiscounted future cash flows which resulted in an impairment loss. In addition, as of March 31, 2014,management reassessed the recoverable amount of a receivable and recognized an impairment loss of $1.0 million. There were no impairment losses duringthe year ended December 31, 2013. (Refer to Note 2(l) for further details related to the impairment test).Gain/ (loss) on sale of vessels: On May 6, 2014, Navios Acquisition sold the Shinyo Splendor to an unaffiliated third party for an aggregate sale priceof $20.0 million. The vessel’s aggregate net carrying amount as of the date of sale was $19.2 million (including the remaining carrying balance of dry dockand special survey costs in the amount of $1.0 million). The Company received net cash proceeds in the amount of $18.3 million and recognized a loss of$0.9 million. This loss is presented under “Gain / (loss) on sale of vessels” in the consolidated statements of comprehensive income/ (loss).On November 18, 2014, Navios Acquisition sold all of the outstanding shares of capital stock of four of its vessel-owning subsidiaries (Shinyo OceanLimited, Shinyo Kannika Limited, Shinyo Kieran Limited and Shinyo Saowalak Limited) to Navios Midstream (see Note 5), resulting in a gain on disposal of$23.5 million.On December 6, 2013, Navios Acquisition sold the Shinyo Navigator to an unaffiliated third party purchaser for an aggregate price of $18.1 million.The loss on sale of $21.1 million was calculated as the sales price less the carrying value of the vessel of $38.5 million and related selling expenses of $0.7million and bunkers written-off of $0.04 million.Change in fair value of other assets: As of March 31, 2014, management revalued its derivative assets at $2.3 million using publicly available tradingdata and recognized a fair value loss of $1.2 million in the consolidated statement of comprehensive income/(loss). See Note 14: Fair Value of FinancialInstruments.Equity in net earnings of affiliated companies: Equity in net earnings of affiliated companies increased by $2.0 million to $2.0 million for the yearended December 31, 2014, as compared to $0.0 million for the same period in 2013. The increase resulted from the equity in earnings of Navios Midstreamwhich amounted to $1.2 million following the completion of its November 2014 IPO and the remaining increase resulted from the equity in earnings ofNavios Europe. For the year ended December 31, 2013, Navios Europe had minimal operations and therefore, the Company did not record any equity methodinvestee income/(loss). 74Table of ContentsOther income: Other income decreased by $4.5 million to $0.3 million for the year ended December 31, 2014 compared to $4.8 million for the yearended December 31, 2013. The decrease was mainly attributed to income arising from a loss claim following the default of their charterers of two MR2product tankers in June 2013, totaling $4.6 million, which did not reoccur in 2014.Other expense: Other expense increased to $0.6 million for the year ended December 31, 2014 compared to $0.5 million for the same period in 2013.The increase of $0.2 million was mainly attributable to miscellaneous expenses.Year Ended December 31, 2013 Compared to the Year Ended December 31, 2012The following table presents consolidated revenue and expense information for the years ended December 31, 2013 and 2012. This information wasderived from the audited consolidated financial statements of Navios Acquisition for the respective periods. (in thousands of U.S. dollars) Year endedDecember 31,2013 Year endedDecember 31,2012 Revenue $202,397 $151,097 Time charter and voyage expenses (6,762) (2,824)Direct vessel expenses (3,096) (2,622)Management fees (entirely through related party transactions) (71,392) (47,043)General and administrative expenses (7,017) (3,853)Depreciation and amortization (63,880) (49,644)Loss on bond extinguishment (33,973) — Interest income 315 445 Interest expenses and finance cost (58,386) (49,432)Loss on sale of vessel (21,098) — Other income 4,787 280 Other expense (487) (202)Net loss$(58,592) $(3,798)Set forth below are selected historical and statistical data for Navios Acquisition for each of the years ended December 31, 2013 and 2012 that webelieve may be useful in better understanding Navios Acquisition’s financial position and results of operations. Year EndedDecember 31,2013 Year EndedDecember 31,2012 FLEET DATA Available days(1) 9,653 5,786 Operating days(2) 9,618 5,751 Fleet utilization(3) 99.6% 99.4% Vessels operating at period end 33 19 AVERAGE DAILY RESULTS Time Charter Equivalent per day(4) $20,267 $25,625 (1)Available days: Available days for the fleet are total calendar days the vessels were in Navios Acquisition’s possession for the relevant period aftersubtracting off-hire days associated with major repairs, drydocking or special surveys. The shipping industry uses available days to measure thenumber of days in a relevant period during which vessels should be capable of generating revenues.(2)Operating days: Operating days are the number of available days in the relevant period less the aggregate number of days that the vessels are off-hiredue to any reason, including unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in arelevant period during which vessels actually generate revenues. 75Table of Contents(3)Fleet utilization: Fleet utilization is the percentage of time that Navios Acquisition’s vessels were available for generating revenue, and is determinedby dividing the number of operating days during a relevant period by the number of available days during that period. The shipping industry uses fleetutilization to measure a company’s efficiency in finding suitable employment for its vessels.(4)Time Charter Equivalent: TCE is defined as voyage and time charter revenues less voyage expenses during a relevant period divided by the number ofavailable days during the period.For the year ended December 31, 2013, Navios Acquisition had 9,653 available days, after it took delivery of the Nave Cetus in October 2012, theNave Aquila in November 2012, the Nave Bellatrix in January 2013, the Nave Rigel in February 2013, the Nave Orion in March 2013, the Nave Atropos inApril 2013, the Nave Titan and the Nave Equinox in June 2013, the Nave Capella, the Nave Pulsar and the Nave Universe in July 2013, the Nave Celeste inAugust 2013, the Nave Constellation, the Nave Alderamin, the Nave Dorado and the Bougainville in September 2013 and the Nave Lucida in October 2013.There were 5,786 available days in the comparative period in 2012.Revenue: Revenue for the year ended December 31, 2013 increased by $51.3 million or 34.0% to $202.4 million, as compared to $151.1 million forthe same period in 2012. The increase was mainly attributable to the acquisition of the vessels mentioned above. As a result of the vessel acquisitions,available days of the fleet increased to 9,653 days for the year ended December 31, 2013, as compared to 5,786 days for year ended December 31, 2012. TCEdecreased to $20,267 for the year ended December 31, 2013, from $25,625 for the year ended December 31, 2012 due to the fact that the vessels that weredelivered in 2013 were of a smaller type (mainly MR2s) than the average fleet of the previous year, therefore they are fixed at lower rates.Time charter and voyage expenses: Time charter and voyage expenses for the year ended December 31, 2013 increased by $3.9 million to $6.8million, as compared to $2.8 million for the year ended December 31, 2012. The increase was attributable to a: (a) $3.4 million increase in voyage expensesincurred in the year due to the fact that certain vessels were employed in voyage charter; and (b) $0.6 million increase in broker commission costs.Direct vessel expenses: Direct vessel expenses, comprised of the amortization of dry dock and special survey costs, of certain vessels of our fleetamounted to $3.1 million for the year ended December 31, 2013, as compared to $2.6 million for the year ended December 31, 2012.Management fees: Management fees for the year ended December 31, 2013 increased by $24.3 million to $71.4 million, as compared to $47.0 millionfor the year ended December 31, 2012. The increase was attributable to the increase in the number of vessels operating under Navios Acquisition’s fleet.Pursuant to the Management Agreement, the Manager provides all of Navios Acquisition’s vessels with commercial and technical management services for adaily fee that was fixed at: $6,000 per owned MR2 product tanker and chemical tanker vessel, $7,000 per owned LR1 product tanker vessel and $10,000, perowned VLCC vessel, through May 2014. This daily fee covers all of the vessels’ operating expenses, other than certain extraordinary fees and costs.Drydocking expenses were fixed until May 2014 for up to $0.3 million per LR1 and MR2 product tanker vessel and were reimbursed at cost for VLCCvessels.General and administrative expenses: Total general and administrative expenses for the year ended December 31, 2013 increased by $3.2 million or82.1% to $7.0 million compared to $3.9 million for the year ended December 31, 2012. The increase was mainly attributable to a: (a) $1.1 million increasedue to stock based compensation recognized in connection with the issuance of 2,100,000 restricted shares and options to purchase 1,500,000 shares ofcommon stock; (b) $1.4 million increase in administrative expenses paid to the Manager due to the increased number of vessels in Navios Acquisition’s fleet;and (c) $0.7 million increase in other general and administrative expenses, including professional, other fees and travelling expenses. On May 28, 2010,Navios Acquisition entered into an Administrative Services Agreement with Navios Holdings, initially set to 76Table of Contentsexpire 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. For the years ended December 31, 2013 and 2012, the expenses charged by Navios Holdings for administrative serviceswere $3.5 million and $2.1 million, respectively. The remaining balance of $3.5 million and $1.7 million of general and administrative expenses for the yearsended December 31, 2013 and 2012, respectively, related to stock based compensation for the year ended December 31, 2013, as well as legal, consulting,travel and professional fees including audit fees for the years ended December 31, 2013 and December 31, 2012.Depreciation and amortization: Depreciation and amortization increased by $14.2 million to $63.9 million for the year ended December 31, 2013 ascompared to $49.6 million for the year ended December 31, 2012. The increase of $14.2 million was attributable to: (a) an increase in depreciation expense of$11.8 million due to the acquisitions of the vessel the Nave Bellatrix in January 2013, the Nave Rigel in February 2013, the Nave Orion in March 2013, theNave Atropos in April 2013, the Nave Titan and the Nave Equinox in June 2013, the Nave Capella, the Nave Pulsar and the Nave Universe in July 2013, theNave Celeste in August 2013, the Nave Constellation, the Nave Alderamin, the Nave Dorado and the Bougainville in September 2013 and the Nave Lucidain October 2013; and (b) an increase of $4.0 million in accelerated amortization of the intangible assets associated with the charter-out contracts of two MR2product tanker vessels, following charterer’s default, partially mitigated by a decrease in amortization of favorable and unfavorable lease terms that wererecognized in relation to the acquisition of the rights on the time charter-out contracts of the vessels of $1.6 million. Depreciation of a vessel is calculatedusing an estimated useful life of 25 years for the date the vessel was originally delivered from the shipyard. Intangible assets are amortized over the contractperiods, which range from 3.17 to 15.00 years.Loss on bond and debt extinguishment: In October 2010 and May 2011, the Company issued a total of $505.0 million in senior notes at a fixed rate of8.625% due on November 1, 2017 (the “2017 Notes”). On November 13, 2013, Navios Acquisition completed the sale of $610.0 million of 8.125% SeniorNotes due 2021 (the “2021 Notes”). The net proceeds from the sale of the 2021 Notes were used to redeem any and all of Navios Acquisition’s outstanding2017 Notes and pay related transaction fees and expenses and for general corporate purposes. The effect of this transaction was the recognition of a $34.0million loss in the consolidated statements of operations under “Loss on bond and debt extinguishment”, which was comprised of a $8.7 million loss relatingto the write off of unamortized deferred finance costs and a $25.3 million loss relating to tender premium paid and cash payments for transaction fees andexpenses in connection with the 2017 Notes extinguishment.Interest income: Interest income for year ended December 31, 2013 decreased by $0.1 million to $0.3 million compared to $0.4 million for the yearended December 31, 2012.Interest expense and finance cost, net: Interest expense and finance cost, net for the year ended December 31, 2013 increased by $9.0 million to$58.4 million, as compared to $49.4 million for the year ended December 31, 2012. The increase was due to: (a) the increase in average outstanding loanbalance to $532.3 million in the year ended December 31, 2013 from $486.2 million in the year ended December 31, 2012; and (b) the effect of the $610.0million of 8.125% Senior Notes due 2021, which were issued on November 13, 2013, partially offset by the effect of $505.0 million of 8.625% due 2017Notes extinguishment. As of December 31, 2013 and 2012, the outstanding loan balance under Navios Acquisition’s credit facilities was $1,154.4 millionand $1,029.1 million, respectively, and the weighted average interest rate as of December 31, 2013 and 2012 was 2.96% and 3.25%, respectively.Loss on sale of vessel: On December 6, 2013, Navios Acquisition sold the Shinyo Navigator to an unaffiliated third party purchaser for an aggregateprice of $18.1 million. The loss on sale of $21.1 million was calculated as the sales price less the carrying value of the vessel of $38.5 million and relatedselling expenses of $0.7 million and bunkers written-off of $0.04 million. This loss is included under the loss on sale of vessels in the consolidatedstatements of comprehensive income/(loss). 77Table of ContentsOther income: Other income increased by $4.5 million to $4.8 million for the year ended December 31, 2013 compared to $0.3 million for the yearended December 31, 2012. Following the default of their charterer in June 2013, the original charters of two MR2 product tankers have been terminated.Pursuant to the rehabilitation plan of the defaulted charterer, Navios Acquisition will be paid, partly in cash and partly in shares, for a loss claim that wasaccepted by competent court in December 2013. Navios Acquisition recognized a $4.6 million income in the consolidated statements of comprehensiveincome/(loss) under “Other income” since the loss claim has been accepted by the court and the acceptance is irrevocable.Other expense: Other expense increased to a $0.5 million for the year ended December 31, 2013 compared to $0.2 million for the same period in 2012.The increase of $0.3 million was mainly attributable to miscellaneous expenses. B.Liquidity and Capital Resources and UsesOur primary short-term liquidity needs are to fund general working capital requirements, drydocking expenditures, deposits for vessels underconstruction, minimum cash balance maintenance as per our credit facility agreements and debt repayment, while our long-term liquidity needs primarilyrelate to expansion and investment capital expenditures and other maintenance capital expenditures and debt repayment. Expansion capital expenditures areprimarily for the purchase or construction of vessels to the extent the expenditures increase the operating capacity of or revenue generated by our fleet, whilemaintenance capital expenditures primarily consist of drydocking expenditures and expenditures to replace vessels in order to maintain the operatingcapacity of or revenue generated by our fleet. We anticipate that our primary sources of funds for our short-term liquidity needs will be cash flows fromoperations 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, long-term 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 secure adequate financing or obtaining additional funds on favorable terms, to meet our liquidity needs. Please alsorefer to “Item 3.D. Risk Factors — Risks Related to Our Indebtedness.”On February 20, 2014, Navios Acquisition completed the public offering of 14,950,000 shares of its common stock at $3.85 per share, raising grossproceeds of $57.6 million. These figures include 1,950,000 shares sold pursuant to the underwriters’ option, which was exercised in full.Total net proceeds of the above transactions, net of agents’ costs of $3.0 million and offering costs of $0.3 million, amounted to $54.2 million.Navios Acquisition finances its capital requirements with cash flows from operations, equity contributions from stockholders, bank loans and theissuance of the 2021 Notes. The main uses of funds have been capital expenditures for the acquisition of new vessels, expenditures incurred in connectionwith ensuring that the owned vessels comply with international and regulatory standards, repayments of bank loans and payments of dividends.On February 6, 2014, Navios Acquisition entered into a loan agreement with HSH Nordbank AG of $51.0 million (divided in two tranches of $25.5million each). The facility bears interest at a margin of LIBOR plus 310 bps. Each tranche of the facility is repayable in 28 consecutive quarterly equalrepayment installments of $0.4 million each with a final balloon payment of $14.3 million to be repaid on the last repayment date. In November 2014, theCompany prepaid in full the loan.On July 18, 2014, Navios Acquisition entered into a term loan facility of up to $132.4 million (divided into eight tranches) with Deutsche Bank AGFiliale Deutschlandgeschäft and Skandinaviska Enskilda Banken AB for the: (i) refinancing of the purchase price for one very large crude carrier and twoMR2 product tankers; (ii) post-delivery financing of two newbuilding MR2 product tankers and (iii) the refinancing of a credit facility with 78Table of ContentsDeutsche Bank AG Filiale Deutschlandgeschäft for three MR2 product tankers. The refinancing was treated as a modification for accounting purposes. Eachtranche of the facility is repayable in 20 equal quarterly installments of between approximately $0.34 million and $0.39 million, each with a final balloonrepayment of the balance to be repaid on the last repayment date. The maturity of the loan is January 8, 2020. The first three tranches of the facility bearinterest at LIBOR plus 325 bps per annum and the fourth through eighth tranches bear interest at LIBOR plus 310 bps per annum. The agreement alsorequires compliance with certain financial covenants. In November 2014, the Company prepaid an amount of $29.6 million which was the entire amountoutstanding under the two tranches.On November 11, 2014, Navios Acquisition entered into a short term credit facility with Navios Holdings pursuant to which Navios Acquisition mayborrow up to $200.0 million for general corporate purposes. The loan provides for an arrangement fee of $4.0 million and bore a fixed interest of 600 bps. OnNovember 13, 2014, the Company drew an amount of $169.7 million from the facility. The facility matured and was repaid in full by December 29, 2014.On November 18, 2014, Navios Acquisition sold all of the outstanding shares of capital stock of four of its vessel-owning subsidiaries (Shinyo OceanLimited, Shinyo Kannika Limited, Shinyo Kieran Limited and Shinyo Saowalak Limited) to Navios Midstream for (a) cash consideration of $214.9 million;and (b) 9,342,692 subordinated units, 1,242,692 common units and 381,334 general partner units representing a 2% general partner interest in NaviosMidstream and all of the incentive distribution rights in Navios Midstream (see Note 5).Cash flows for the year ended December 31, 2014 compared to the year ended December 31, 2013:The following table presents cash flow information for the years ended December 31, 2014 and 2013. This information was derived from the auditedconsolidated statement of cash flows of Navios Acquisition for the respective periods. (Expressed in thousands of U.S. dollars) Year EndedDecember 31,2014 Year EndedDecember 31,2013 Net cash provided by/ (used in) operating activities $75,985 $(29,571) Net cash used in investing activities (145,729) (293,740) Net cash provided by financing activities 41,402 363,300 Change in cash and cash equivalents$(28,342)$39,989 Cash provided by/ (used in) operating activities for the year ended December 31, 2014 as compared to the year ended December 31, 2013:Net cash provided by operating activities increased by $105.6 million to $76.0 million inflow for the year ended December 31, 2014 as compared to$29.6 million outflow for the same period in 2013. The increase is analyzed as follows:The net income for the year ended December 31, 2014 was $13.0 million compared to a $58.6 million loss for the year ended December 31, 2013. Indetermining net cash provided by operating activities for the year ended December 31, 2014, net income was adjusted for the effect of depreciation andamortization of $67.7 million, $22.6 million gain on sale of vessels, $9.1 million for amortization and write-off of deferred finance fees and bond premium,$2.0 million for the amortization of drydock and special survey costs, $5.3 million stock based compensation, $11.7 million impairment loss, $1.2 millionchange in fair value of other assets and $2.0 million of equity in net earnings of affiliated companies.Amounts due to related parties increased by $20.1 million from $8.0 million at December 31, 2013 to $28.1 million at December 31, 2014. Theincrease of $20.1 million was a result of a $7.1 million increase of payables relating to management fees, $13.2 million increase in capitalized and otherexpenses, partially mitigated by a 79Table of Contents$0.2 million decrease in payables relating to accrued administrative expenses and other items due to affiliated companies. Amounts due from related partiesincreased by $1.4 million to $1.4 million at December 31, 2014 from $0.0 million at December 31, 2013. Please refer to the relevant discussion below, under“Related Parties Transactions.”Payment for drydock and special survey costs incurred in the year ended December 31, 2014 was $5.7 million and related to the drydock and specialsurvey costs incurred for certain vessels of the fleet. Payment for drydock and special survey costs incurred in the year ended December 31, 2013 was$0.2 million.Accounts receivable increased by $9.9 million from $8.4 million for the year ended December 31, 2013, to $18.3 million for the year endedDecember 31, 2014. The increase was attributed to the increase in receivables due from charterers by $9.9 million.Restricted cash from operating activities decreased by $0.6 million for the year ended December 31, 2014 and related to the cash held in retentionaccounts for the payment of interest under our credit facilities.Accounts payable was $1.6 million for each of the years ended December 31, 2014 and December 31, 2013.Prepaid expenses and other current assets increased by $4.1 million to $8.7 million for the year ended December 31, 2014 from $4.6 million for theyear ended December 31, 2013. The total increase in prepaid expenses and other current assets amounted to $7.6 million that resulted primarily from: (a) $6.6million being advanced to certain counterparties for working capital purposes as per the charter contracts entered into with them with $3.2 million of the $6.6million increase representing amounts reclassified from caption “Other long-term assets”, as in accordance with the terms of the charter contracts these areexpected to be redelivered to the Company within the next twelve months from December 31, 2014; and (b) $1.0 million due to increase in inventory. Theincrease of $7.6 million was mitigated by the eventual sale of a derivative asset of $3.5 million during the year ended December 31, 2014. The revaluation ofsuch derivative instrument in 2014 (See Note 14: Fair Value of Financial Instruments) resulted in the recognition of a fair value loss of $1.0 million, which ispresented as a non-cash item.Other long-term assets decreased by approximately $4.8 million to $0.7 million for the year ended December 31, 2014 from $5.5 million for the yearended December 31, 2013. Excluding the impairment loss and collection of the aforementioned $1.2 million long-term receivable that has been recognizedpursuant to the rehabilitation plan of a defaulted charterer, other long-term assets decreased by $3.7 million primarily due to $3.2 million representingadvances to certain counterparties for working capital purposes reclassified to caption “Prepaid expenses and other current assets”, and a $0.5 milliondecrease in other long-term assets.Accrued expenses decreased by $1.7 million to $10.3 million for the year ended December 31, 2014, from $12.0 million on December 31, 2013. Thedecrease was attributable to a $1.7 million decrease in accrued professional fees and expenses, $0.1 million decrease in accrued interest partially mitigated bya $0.1 million increase in accrued voyage expenses.Deferred voyage revenue primarily relates to cash received from charterers prior to it being earned. These amounts are recognized as revenue over thevoyage or charter period. Deferred voyage revenue decreased by $5.7 million to $1.4 million for the year ended December 31, 2014 from $7.1 million onDecember 31, 2013.Cash used in investing activities for the year ended December 31, 2014 as compared to the year ended December 31, 2013.:Net cash used in investing activities increased by $148.0 million to $145.7 million at December 31, 2014 from $293.7 million at December 31, 2013. 80Table of ContentsNet cash used in investing activities for the year ended December 31, 2014 resulted from: (a) $362.3 million paid for acquisitions of vessels;(b) $11.9 million paid as deposits for the acquisition of the vessels that were delivered to Navios Acquisition at various dates through February 2015; and(c) $4.5 million from a loan granted to Navios Europe. The $378.7 million was partially mitigated by the receipt of $233.0 million of net proceeds from thesales of the Shinyo Splendor in May 2014 and the four VLCCs in November 2014.Net cash used in investing activities for the year ended December 31, 2013, resulted from: (a) $288.9 million paid for acquisitions of vessels;(b) $24.9 million paid as deposits for the acquisition of the vessels that will be delivered to Navios Acquisition at various dates through June 2015; and(c) $4.8 million for investment in Navios Europe; and (d) $2.7 million from the loan granted to Navios Europe. The $321.2 million was partially mitigated bya $10.1 million decrease in restricted cash and $17.4 million from net proceeds from the sale of a vessel.Cash provided by financing activities for the year ended December 31, 2014 as compared to the year ended December 31, 2013:Net cash provided by financing activities decreased by $321.9 million to $41.4 million at December 31, 2014 from $363.3 million at December 31,2013.Net cash provided by financing activities for the year ended December 31, 2014 was $41.4 million. Net cash provided by financing activities resultedfrom a $161.9 million loan proceeds net of deferred finance fees, $165.7 million loan proceeds from a related party, net of deferred finance cost, $59.6 millionproceeds from issuance of ship mortgage and senior notes, net of debt issuance costs, $54.3 million from net proceeds from equity offerings and a$17.7 million increase in restricted cash. This increase was partially offset by: (a) $216.2 million of loan repayments; (b) a $169.7 million repayment of a loanfrom a related party; and (c) dividends paid of $31.9 million.Net cash provided by financing activities for the year ended December 31, 2013 was $363.3 million. Net cash provided by financing activities resultedfrom a $155.6 million loan proceeds net of deferred finance fees, $595.4 million proceeds from issuance of ship mortgage and senior notes, net of debtissuance costs and $307.5 million from net proceeds from equity offerings. This increase was partially offset by: (a) $505.0 million repayment of the 2017Notes; (b) $22.9 million payment to a related party; (c) a $12.3 million increase in restricted cash; (d) $100.2 million of loan repayments; (e) a $35.0 millionrepayment of a loan from a related party; and (f) dividends paid of $19.7 million.Cash flows for the year ended December 31, 2013 compared to the year ended December 31, 2012:The following table presents cash flow information for the years ended December 31, 2013 and 2012. This information was derived from the auditedconsolidated statement of cash flows of Navios Acquisition for the respective periods. (Expressed in thousands of U.S. dollars) Year EndedDecember 31,2013 Year EndedDecember 31,2012 Net cash (used in)/ provided by operating activities $(29,571) $81,877 Net cash used in investing activities (293,740) (205,956) Net cash provided by financing activities 363,300 125,625 Change in cash and cash equivalents$39,989 $1,546 81Table of ContentsCash (used in)/ provided by operating activities for the year ended December 31, 2013 as compared to the year ended December 31, 2012:Net cash used in operating activities decreased by $111.4 million to $29.6 million outflow for the year ended December 31, 2013 as compared to$81.9 million inflow for the same period in 2012. The increase is analyzed as follows:The net loss for the year ended December 31, 2013 was $58.6 million compared to a $3.8 million loss for the year ended December 31, 2012. Indetermining net cash provided by operating activities for the years ended December 31, 2013, net loss was adjusted for the effect of depreciation andamortization of $63.9 million, $21.1 million loss on sale of vessel, $11.6 million for amortization and write-off of deferred finance fees and bond premiums,$3.4 million non-cash settlement received, (See Note 21: Other Income), $3.1 million for the amortization of drydock and special survey costs and $1.1million stock based compensation. For the period ended December 31, 2012, net income was also adjusted for the effects of certain non-cash items, includingdepreciation and amortization of $49.6 million, $2.8 million amortization and write-off of deferred financing cost, net and $2.6 million for the amortizationof drydock and special survey costs.Amounts due to related parties decreased by $77.5 million from $85.5 million at December 31, 2012 to $8.0 million at December 31, 2013. Excludingthe effect of payment to related party for newbuilding costs of $22.9 million (see Note 16: Transactions with Related Parties) the decrease was a result of a$45.5 million decrease of payables relating to management fees and a $9.1 million decrease in payables relating to accrued administrative expenses and otheritems due to affiliated companies. Please refer to relevant discussion below, under “Related Party Transactions.”Payment for drydock and special survey cost incurred in the year ended December 31, 2013 was $0.2 million and related to the drydock and specialsurvey costs incurred for certain vessels of the fleet. Payment for drydock and special survey cost incurred in the year ended December 31, 2012 was$2.9 million.Accounts receivable increased by $3.3 million from $5.1 million for the year ended December 31, 2012, to $8.4 million for the year endedDecember 31, 2013 due to the increase in receivables due from charterers.Restricted cash from operating activities increased by $1.5 million for the year ended December 31, 2013 and related to the cash held in retentionaccounts for the payment of interest under our credit facilities.Accounts payable increased by $0.3 million from $1.3 million for the year ended December 31, 2012 to $1.6 million for the year ended December 31,2013. This increase was attributable to the increase in broker’s payable by $0.1 million and the increase of $0.1 million in legal and professional fees.Prepaid expenses and other current assets increased by $1.9 million to $4.6 million for the year ended December 31, 2013 from $2.7 million for theyear ended December 31, 2012. The increase by $1.9 million was due to short-term receivables of $3.4 million recognized pursuant to the rehabilitationprocess for the defaulted charterer which is included as non-cash item, partially mitigated by $1.6 million representing the amounts advanced to certaincounterparties for working capital purposes as per the charters entered with them that were reclassified under the caption “Other long term assets.”Other long term assets increased by $4.6 million to $5.5 million for the year ended December 31, 2013 from $0.9 million for the year endedDecember 31, 2012. The increase is due to a (a) $1.2 million long term receivables recognized pursuant to the rehabilitation process incurred above and(b) $3.9 million increase in the advances paid to certain counterparties for working capital purposes as per the charters entered with them mitigated by adecrease of $0.4 million in other long term receivables.Accrued expenses decreased by $1.0 million to $12.0 million for the year ended December 31, 2013, from $13.0 million on December 31, 2012. Thedecrease was attributable to a $2.3 million decrease in accrued voyage expenses and a $0.1 million decrease in accrued interest partially mitigated by a $1.5million increase in accrued professional fees and expenses. 82Table of ContentsDeferred voyage revenue primarily relates to cash received from charterers prior to it being earned. These amounts are recognized as revenue over thevoyage or charter period. Deferred voyage revenue increased by $3.4 million to $7.1 million for the year ended December 31, 2013 from $3.7 million onDecember 31, 2012.Long term liabilities decreased by $0.2 million to $0.0 million for the year ended December 31, 2013 from $0.2 million on December 31, 2012. Longterm liabilities are related to the long term portion of the straight line effect of revenue of the vessels acquired in July 2011, which was written-off in 2013pursuant to the charterer default.Cash used in investing activities for the year ended December 31, 2013 as compared to the year ended December 31, 2012:Net cash used in investing activities increased by $87.8 million to $293.7 million at December 31, 2013 from $206.0 million at December 31, 2012.Net cash used in investing activities for the year ended December 31, 2013 resulted from: (a) $288.9 million paid for acquisitions of vessels;(b) $24.9 million paid as deposits for the acquisition of the vessels that will be delivered to Navios Acquisition at various dates through June 2015; (c) $4.8million for investment in Navios Europe; and (d) $2.7 million from a loan granted to Navios Europe. The $321.2 million was partially mitigated by a $10.1million decrease in restricted cash and $17.4 million from net proceeds from the sale of a vessel.Net cash used in investing activities for the year ended December 31, 2012 resulted from: (a) $83.3 million paid for the acquisition of vessels; and(b) $142.1 million paid as deposits for the acquisition of the vessels that were delivered to Navios Acquisition at various dates through October 2014. The$225.4 million was partially offset by a $19.4 million decrease in restricted cash.Cash provided by financing activities for the year ended December 31, 2013 as compared to the year ended December 31, 2012:Net cash provided by financing activities decreased by $237.7 million to $363.3 million at December 31, 2013 from $125.6 million at December 31,2012.Net cash provided by financing activities for the year ended December 31, 2013 was $363.3 million. Net cash provided by financing activities resultedfrom a $155.6 million loan proceeds net of deferred finance fees, $595.4 million proceeds from issuance of ship mortgage and senior notes, net of debtissuance costs and $307.5 million from net proceeds from equity offerings. This increase was partially offset by: (a) $505.0 million repayment of the 2017Notes; (b) $22.9 million payment to a related party; (c) a $12.3 million increase in restricted cash; (d) $100.2 million of loan repayments; (e) a $35.0 millionrepayment of a loan from a related party; and (f) dividends paid of $19.7 million.Net cash provided by financing activities for the year ended December 31, 2012 was $125.6 million. Net cash provided by financing activities resultedfrom a $162.8 million loan proceeds net of deferred finance fees and $5.0 million proceeds from a related party loan, net of deferred finance fees. Thisincrease was partially offset by: (a) an $8.7 million increase in restricted cash; (b) $13.7 million for loan repayments; (c) a $10.0 million repayment of a loanfrom a related party; and (d) dividends paid of $9.8 million. 83Table of ContentsReconciliation of Adjusted EBITDA to Net Cash from Operating Activities Expressed in thousands of U.S. dollars Year EndedDecember 31,2014(unaudited) Year EndedDecember 31,2013(unaudited) Year EndedDecember 31,2012(unaudited) Net cash flows from operating activities $75,985 $(29,571) $81,877 Net increase in operating assets 17,375 8,231 3,030 Net (increase) /decrease in operating liabilities (7,972) 60,080 (33,619) Net interest cost 77,890 58,071 48,987 Amortization of deferred finance fees (9,111) (2,908) (2,820) Non-cash settlement received — 3,446 — Equity in net earnings of affiliates 2,000 — — Adjusted EBITDA(1)$156,167 $97,349 $97,455 (1) Year endedDecember 31,2014 Year endedDecember 31,2013 Year endedDecember 31,2012 Net cash provided by/ (used in) operating activities $75,985 $(29,571) $81,877 Net cash used in investing activities $(145,729) $(293,740) $(205,956) Net cash provided by financing activities $41,402 $363,300 $125,625 EBITDA represents net income/ (loss) plus interest expense and finance costs, interest income, plus depreciation and amortization and income taxes.Adjusted EBITDA in this document represents EBITDA, before stock based compensation, gain/ (loss) on sale of vessels, impairment loss, change infair value of other assets and the write-off of unamortized deferred finance costs and bond premiums in connection with the bond extinguishment.Adjusted EBITDA is presented because Navios Acquisition believes that Adjusted EBITDA is a basis upon which liquidity can be assessed andpresents useful information to investors regarding Navios Acquisition’s ability to service and/or incur indebtedness, pay capital expenditures, meet workingcapital requirements and pay dividends. Adjusted EBITDA is a “non-GAAP financial measure” and should not be considered a substitute for net income, cashflow from operating activities and other operations or cash flow statement data prepared in accordance with accounting principles generally accepted in theUnited States or as a measure of profitability or liquidity.While Adjusted EBITDA is frequently used as a measure of operating results and the ability to meet debt service requirements, the definition ofAdjusted EBITDA used here may not be comparable to that used by other companies due to differences in methods of calculation.Adjusted EBITDA has limitations as an analytical tool, and should not be considered in isolation or as a substitute for the analysis of NaviosAcquisition results as reported under U.S. GAAP. Some of these limitations are: (i) Adjusted EBITDA does not reflect changes in, or cash requirements for,working capital needs; and (ii) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to bereplaced in the future. Adjusted EBITDA does not reflect any cash requirements for such capital expenditures. Because of these limitations, AdjustedEBITDA should not be considered as a principal indicator of Navios Acquisition’s performance. Furthermore, our calculation of Adjusted EBITDA may notbe comparable to that reported by other companies due to differences in methods of calculation.Adjusted EBITDA for the year ended December 31, 2014 increased by approximately $58.8 million to $156.2 million from $97.3 million in the yearended December 31, 2013. The increase in Adjusted EBITDA was due to a: (a) $62.5 million increase in revenue; (b) $25.3 million decrease in expensesrelating to cash portion of 84Table of Contentsloss on bond extinguishment; (c) $1.6 million decrease in time charter expenses; and (d) $2.0 million increase in equity in net earnings of affiliatedcompanies, partially mitigated by a: (i) $24.4 million increase in management fees and a $3.4 million increase in general and administrative expenses due tothe increased number of vessels in Navios Acquisition’s fleet; and (ii) $4.7 million net decrease in other income/ (expense).Adjusted EBITDA for the year ended December 31, 2013 decreased by $0.1 million to $97.3 million from $97.5 million in the year endedDecember 31, 2012. The decrease in Adjusted EBITDA was due to a: (i) $25.3 million increase in expenses relating to cash portion of loss on bondextinguishment; (ii) $24.3 million increase in management fees; (iii) $3.9 million increase in time charter expenses; (iv) $2.1 million increase in general andadministrative expenses; and (v) $0.3 million increase in other expense. The above decrease was partially mitigated by a: (a) $51.3 million increase inrevenue due to the acquisitions of the vessels described above; and (b) $4.5 million increase in other income.Long-Term Debt Obligations and Credit ArrangementsShip Mortgage Notes:8 1/8% First Priority Ship Mortgages: On November 13, 2013, the Company and its wholly owned subsidiary, Navios Acquisition Finance (US) Inc.(“Navios Acquisition Finance” and together with the Company, the “2021 Co-Issuers”) issued $610.0 million in first priority ship mortgage notes (the“Existing Notes”) due on November 15, 2021 at a fixed rate of 8.125%.On March 31, 2014, the Company completed a sale of $60.0 million of its first priority ship mortgage notes due in 2021 (the “Additional Notes,” andtogether with the Existing Notes, the “2021 Notes”). The terms of the Additional Notes are identical to the Existing Notes and were issued at 103.25% plusaccrued interest from November 13, 2013. The net cash received amounted to $59.6 million.The 2021 Notes are fully and unconditionally guaranteed on a joint and several basis by all of Navios Acquisition’s subsidiaries with the exception ofNavios Acquisition Finance (a co-issuer of the 2021 Notes).The 2021 Co-Issuers have the option to redeem the 2021 Notes in whole or in part, at any time (i) before November 15, 2016, at a redemption price equal to100% of the principal amount, plus a make-whole premium, plus accrued and unpaid interest, if any, and (ii) on or after November 15, 2016, at a fixed priceof 106.094% of the principal amount, which price declines ratably until it reaches par in 2019, plus accrued and unpaid interest, if any.At any time before November 15, 2016, the 2021 Co-Issuers may redeem up to 35% of the aggregate principal amount of the 2021 Notes with the netproceeds of an equity offering at 108.125% of the principal amount of the 2021 Notes, plus accrued and unpaid interest, if any, so long as at least 65% of theaggregate principal amount of the Existing Notes remains outstanding after such redemption.In addition, upon the occurrence of certain change of control events, the holders of the 2021 Notes will have the right to require the 2021 Co-Issuers torepurchase some or all of the 2021 Notes at 101% of their face amount, plus accrued and unpaid interest to the repurchase date.The 2021 Notes contain covenants which, among other things, limit the incurrence of additional indebtedness, issuance of certain preferred stock, thepayment of dividends, redemption or repurchase of capital stock or making restricted payments and investments, creation of certain liens, transfer or sale ofassets, entering in transactions with affiliates, merging or consolidating or selling all or substantially all of the 2021 Co-Issuers’ properties and assets andcreation or designation of restricted subsidiaries. The 2021 Co-Issuers were in compliance with the covenants as of December 31, 2014. 85Table of ContentsThe Existing Notes and the Additional 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. The Additional Notes and the ExistingNotes have the same CUSIP number.GuaranteesThe Company’s 2021 Notes are fully and unconditionally guaranteed on a joint and several basis by all of the Company’s subsidiaries with the exception ofNavios Acquisition Finance (a co-issuer of the 2021 notes). The Company’s 2021 Notes are unregistered. The guarantees of our subsidiaries that ownmortgaged vessels are senior secured guarantees and the guarantees of our subsidiaries that do not own mortgaged vessels are senior unsecured guarantees.All subsidiaries, including Navios Acquisition Finance, are 100% owned. Navios Acquisition does not have any independent assets or operations. NaviosAcquisition does not have any subsidiaries that are not guarantors of the 2021 Notes.Credit FacilitiesCommerzbank AG, Alpha Bank A.E., and Credit Agricole Corporate and Investment Bank: Navios Acquisition assumed a loan agreement dated April 7, 2010with Commerzbank AG, Alpha Bank A.E. and Credit Agricole Corporate and Investment Bank of up to $150.0 million (divided in six equal tranches of $25.0million each) to partially finance the construction of two chemical tankers and four product tankers. Each tranche of the facility is repayable in 12 equalsemi-annual installments of $0.75 million each with a final balloon payment of $16.0 million to be repaid on the last repayment date. The repayment of eachtranche started six months after the delivery date of the respective vessel which that tranche financed. It bears interest at a rate of LIBOR plus 250 bps. Theloan also requires compliance with certain financial covenants. As of December 31, 2014, the facility was fully drawn and $128.3 million was outstanding.BNP Paribas S.A. Bank and DVB Bank S.E.: Navios Acquisition assumed a loan agreement dated April 8, 2010, of up to $75.0 million (divided in three equaltranches of $25.0 million each) for the purpose of part-financing the purchase price of three product tankers. Each of the tranches is repayable in 12 equalsemi-annual installments of $0.75 million each with a final balloon payment of $16.0 million to be repaid on the last repayment date. The repayment date ofeach tranche started 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, 2014, $69.8 million was outstanding with no amount remaining to bedrawn 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 $52.0 million (divided into two tranches of $26.0 million each) to partially finance the acquisition costs of two product tanker vessels.Each tranche of the facility is repayable in 24 equal quarterly installments of $0.45 each with a final balloon payment of $15.2 million to be repaid on thelast repayment date. The repayment of each tranche started three months after the delivery date of the respective vessel. It bears interest at a rate of LIBORplus 275 bps. The loan also requires compliance with certain financial covenants. On December 29, 2011, Navios Acquisition prepaid $2.5 million in relationto an amendment to its credit facility. After the prepayment, the outstanding amount under each tranche is repayable in five quarterly installments of $0.2million each, 13 equal quarterly installments of $0.45 million each, with a final balloon payment of $15.2 million to be repaid on the last repayment date. OnDecember 31, 2012, Navios Acquisition prepaid $0.5 million in relation to an amendment to its credit facility. On November 13, 2014, the Company prepaidan amount of $18.4 million which was the entire amount outstanding under one of the two tranches. As of December 31, 2014, the facility was fully drawnand $17.9 million was outstanding. The outstanding balance is repayable in six quarterly installments of $0.45 million each, with final balloon payment of$15.2 million to be repaid on the last repayment date. 86Table of ContentsEurobank 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, ofwhich $51.6 million is drawn (divided into two tranches of $26.1 million and 25.5 million, respectively) to partially finance the acquisition costs of two LR1product tanker vessels. Each tranche of the facility is repayable in 32 quarterly installments of $0.35 million and $0.34 million, respectively, with a finalballoon payment of $15.1 million and $14.7 million, respectively, to be repaid on the last repayment date. The repayment of each tranche started threemonths after the delivery date of the respective vessel. The loan bears interest at a rate of LIBOR plus (i) 250 bps for the period prior to the delivery date inrespect of the vessel being financed, and (ii) thereafter 275 bps. The loan also requires compliance with certain financial covenants. The facility was fullydrawn and $43.8 million was outstanding as of December 31, 2014.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 out ofwhich $46.2 million has been drawn (divided into two tranches of $23.1 million each) to partially finance the acquisition costs of two LR1 product tankervessels. Each tranche of the facility is repayable in 32 equal quarterly installments of $0.31 million each with a final balloon payment of $13.3 million, to berepaid on the last repayment date. The repayment of each tranche started three months after the delivery date of the respective vessel. It bears interest at a rateof LIBOR plus 300 bps. The loan also requires compliance with certain financial covenants. The facility was fully drawn and $41.0 million was outstandingas of December 31, 2014.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 $55.1 million (divided intotwo equal tranches) to partially finance the purchase price of two MR2 product tanker vessels. The loan bears interest at a rate of LIBOR plus 325 bps. InNovember 2014, the outstanding balance of $35.7 million was fully prepaid.Norddeutsche Landesbank Girozentrale: On December 29, 2011, Navios Acquisition entered into a loan agreement with NORDDEUTSCHE LANDESBANKGIROZENTRALE of up to $28.1 million to partially finance the purchase price of one MR2 product tanker vessel. The facility is repayable in 32 quarterlyinstallments 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 monthsafter 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, 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 compliancewith certain financial covenants. As of December 31, 2014, $25.0 million was drawn and outstanding under this loan agreement with $3.2 million remainingto be drawn.DVB Bank S.E. and Credit Agricole Corporate and Investment Bank: 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, 2014, thefacility was fully drawn and $55.1 million was outstanding.The Navios Holdings Credit Facilities: Navios Acquisition entered into a $40.0 million credit facility with Navios Holdings and paid $0.4 million as anarrangement fee. The $40.0 million facility has a margin of LIBOR plus 300 bps and pursuant to an agreement dated November 8, 2011, the Navios Holdings’credit facility was extended to December 2014. Pursuant to an amendment in October 2010, the facility will be available for multiple drawings up to a limitof $40.0 million. In December 2014, the facility was renewed for one year. As of December 31, 2014, there was no amount outstanding under this facility with$40.0 million available to be drawn. 87Table of ContentsOn November 11, 2014, Navios Acquisition entered into a short term credit facility with Navios Holdings pursuant to which Navios Acquisition may borrowup to $200.0 million for general corporate purposes. The loan provides for an arrangement fee of $4.0 million and bore a fixed interest of 600 bps. OnNovember 13, 2014, the Company drew an amount of $169.7 million from the facility. The facility matured and was repaid in full by December 29, 2014.HSH Nordbank AG: On August 20, 2013, Navios Acquisition entered into a loan agreement with HSH Nordbank AG of up to $40.3 million (divided in twotranches of $20.2 million each), to partially finance the acquisition of two chemical tanker vessels. Each tranche of the facility is repayable in 28 quarterlyinstallments of $0.32 million with a final balloon payment of $11.3 million to be paid on the last repayment date. The facility bears interest at a rate ofLIBOR plus 320 bps. The loan also requires compliance with certain financial covenants. As of December 31, 2014, the facility was fully drawn and $37.2million was outstanding.HSH Nordbank AG: On February 6, 2014, Navios Acquisition entered into a loan agreement of up to $51.0 million (divided in two tranches of $25.5 millioneach). The facility bears interest at a margin of LIBOR plus 310 bps. In November 2014, the outstanding balance of $48.6 million was fully repaid.Deutsche Bank AG Filiale Deutschlandgeschäft and Skandinaviska Enskilda Banken AB: On July 18, 2014, Navios Acquisition entered into a term loanfacility of up to $132.4 million (divided into eight tranches) with Deutsche Bank AG Filiale Deutschlandgeschäft and Skandinaviska Enskilda Banken ABfor the: (i) refinancing of the purchase price for one very large crude carrier and two MR2 product tankers; (ii) post-delivery financing of two newbuildingMR2 product tankers, and (iii) the refinancing of a credit facility with Deutsche Bank AG Filiale Deutschlandgeschäft for three MR2 product tankers. Therefinancing was treated as a modification for accounting purposes. Each tranche of the facility is repayable in 20 equal quarterly installments of betweenapproximately $0.34 million and $0.39 million, each with a final balloon repayment of the balance to be repaid on the last repayment date. The maturity ofthe loan is January 8, 2020. The first three tranches of the facility bear interest at LIBOR plus 325 bps per annum and the fourth through eighth tranches bearinterest at LIBOR plus 310 bps per annum. The agreement also requires compliance with certain financial covenants. On November 13, 2014, the Companyprepaid an amount of $29.6 million which was the entire amount outstanding under the two tranches. As of December 31, 2014, the amount of $74.6 millionwas drawn and outstanding and $22.8 million remained to be drawn.As of December 31, 2014, the total amount available to be drawn from all our facilities was $66.0 million.The loan facilities include, among other things, compliance with loan to value ratios and certain financial covenants: (i) minimum liquidity higher of $40.0million or $1.0 million per vessel, including vessels under construction; (ii) net worth ranging from $50.0 million to $135.0 million; and (iii) total liabilitiesdivided by total assets, adjusted for market values to be lower than 75%, as of January 1, 2014 and thereafter. It is an event of default under the creditfacilities if such covenants are not complied with, including the loan to value ratios for which the Company may provide sufficient additional security toprevent such an event.As of December 31, 2014, the Company was in compliance with its covenants.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 or limit Navios Acquisition from, among otherthings: incurring or guaranteeing indebtedness; entering into affiliate transactions; changing the flag, class, management or ownership of NaviosAcquisition’s vessels; changing the commercial and technical management of Navios Acquisition’s vessels; selling Navios Acquisition’s vessels; andsubordinating the obligations under each credit facility to any general and administrative costs relating to the vessels, including the fixed daily fee payableunder the management agreement. The credit facilities also require Navios Acquisition to comply with the ISM Code and ISPS Code and to maintain validsafety management certificates and documents of compliance at all times. 88Table of ContentsC.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 the demand and supplydynamics characterizing the tanker market at any given time. For other trends affecting our business, please see other discussions in “Item 5. Operating andFinancial Review and Prospects”. E.Off-Balance Sheet ArrangementsCharter hire payments to third parties for chartered-in vessels are treated as operating leases for accounting purposes. As of December 31, 2014, NaviosAcquisition was contingently liable to charter-in certain vessels from Navios Midstream. Please see discussion in “Item 5F. Contractual Obligations andContingencies”. F.Contractual Obligations and ContingenciesThe following table summarizes our long-term contractual obligations as of December 31, 2014: 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(1) $33,431 $110,307 $220,259 $798,525 $1,162,522 Vessel deposits(2) 29,368 — — — 29,368 Total contractual obligations$62,799 $110,307 $220,259 $798,525 $1,191,890 Navios Holdings, Navios Acquisition and Navios Partners have made available to Navios Europe (in each case, in proportion to their ownership interests inNavios Europe) revolving loans up to $24.1 million to fund working capital requirements (collectively, the “Navios Revolving Loans”). As of December 31,2014, the amount undrawn from the revolving facility was $9.1 million, of which Navios Acquisition was committed to fund $4.3 million. 1.The amount identified does not include interest costs associated with the outstanding credit facilities, which are based on LIBOR, plus the costs ofcomplying with any applicable regulatory requirements and a margin ranging from 1.75% to 3.25% per annum or the $670.0 million Notes which havea fixed rate of 8.125%. 2.Remaining contractual installments for the Navios Acquisition tanker vessels delivered on various dates through February 2015. 3.Backstop Agreement: On November 18, 2014, Navios Acquisition entered into a backstop agreement with Navios Midstream. In accordance with theterms of the backstop agreement, Navios Acquisition has committed to charter – in the Shinyo Ocean and the Shinyo Kannika for a two-year period atthe time of their redelivery at the currently contracted rate if the market charter rate is lower than the currently contracted rate. Furthermore, NaviosAcquisition has committed to charter–in the following option vessels: a) the Nave Celeste for a two-year period at the time of her redelivery at thecurrently contracted rate if the market charter rate is lower than the currently contracted rate; and b) the Nave Galactic and the Nave Quasar for a four-year period at the net time charter-out rate per day (net of commissions) of $35,000 if the market charter rate is lower than the charter-out rate of$35,000. Conversely, if market charter rates are higher during the backstop period, such vessels will be chartered out to third-party charterers atprevailing market rates and Navios Acquisition’s backstop commitment will not be triggered. The backstop commitment does not include any profit-sharing. 89Table of ContentsCritical Accounting PoliciesOur consolidated financial statements have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us tomake estimates in the application of our accounting policies based on the best assumptions, judgments and opinions of management. Following is adiscussion of the accounting policies that involve a higher degree of judgment and the methods of their application that affect the reported amount of assetsand liabilities, revenues and expenses and related disclosure of contingent assets and liabilities at the date of our financial statements. Actual results maydiffer from these estimates under different assumptions or conditions.Critical accounting policies are those that reflect significant judgments or uncertainties, and potentially result in materially different results underdifferent assumptions and conditions. For a description of all of our significant accounting policies, see Note 2 to the Notes to Consolidated FinancialStatements, included herein.Fair Value of Vessels: As of December 31, 2014, Navios Acquisition owned and operated a fleet of 37 vessels, with an aggregate carrying value of$1,381.7 million, including the carrying value of existing time charters on its fleet of vessels. On a vessel-by-vessel basis, as of December 31, 2014, thecarrying value of 20 of Navios Acquisition’s vessels (including the carrying value of the time charter, if any, on the specified vessel) exceeds the estimatedfair value of those same vessels (including the estimated fair value of the time charter, if any, on the specified vessel) by approximately $118.8 million in theaggregate (the unrealized loss).As of December 31, 2013, Navios Acquisition owned and operated a fleet of 33 vessels, with an aggregate carrying value of $1,394.3 million,including the carrying value of existing time charters on its fleet of vessels. On a vessel-by-vessel basis, as of December 31, 2013, the carrying value of 19 ofNavios Acquisition’s vessels (including the carrying value of the time charter, if any, on the specified vessel) exceeds the estimated fair value of those samevessels (including the estimated fair value of the time charter, if any, on the specified vessel) by approximately $104.2 million in aggregate (the unrealizedloss). 90Table of ContentsA vessel-by-vessel summary as of December 31, 2014 follows (with an * indicating those individual vessels whose carrying value exceeds its estimatedfair value, including the related time charter, if any): Vessel name Date ofAcquisition PurchasePrice(1) CarryingValue as ofDecember 31,2014(1) (In millions of U.S. dollars) Nave Cielo 6/29/2010 $44.2 $35.9* Nave Ariadne 7/2/2010 $44.1 $35.8* Nave Cosmos 10/27/2010 $31.8 $26.9* C. Dream 9/10/2010 $62.2 $49.7* Nave Polaris 1/27/2011 $31.8 $27.2* Nave Orbit 7/12/2011 $37.3 $33.2* Nave Equator 7/18/2011 $37.3 $33.5* Nave Andromeda 11/14/2011 $44.3 $39.4* Nave Estella 1/20/2012 $44.6 $39.9 Nave Atria 7/31/2012 $37.6 $34.3*Nave Cassiopeia 8/31/2012 $43.8 $40.2 Nave Cetus 10/31/2012 $44.0 $40.6 Nave Aquila 11/9/2012 $37.8 $34.9* Nave Bellatrix 1/24/2013 $38.0 $35.4* Nave Orion 3/22/2013 $38.1 $35.7* Nave Rigel 2/13/2013 $47.9 $44.6* Nave Atropos 4/24/2013 $48.2 $45.3* Nave Titan 6/10/2013 $37.1 $35.1* |Nave Capella 7/9/2013 $37.2 $35.2 Nave Alderamin 9/3/2013 $37.3 $35.6 Nave Universe 7/22/2013 $34.2 $32.5 Nave Constellation 9/5/2013 $34.3 $32.7 Nave Equinox 6/26/2013 $23.5 $21.9 Nave Pulsar 7/9/2013 $23.6 $22.1 Bougainville 9/30/2013 $35.6 $34.0 Nave Dorado 9/24/2013 $16.8 $15.8 Nave Lucida 10/23/2013 $16.8 $15.9 Nave Celeste 8/12/2013 $35.9 $37.3 Nave Jupiter 05/07/2014 $39.6 $38.7* Nave Luminosity 09/19/2014 $39.6 $39.2* Nave Pyxis 11/20/2014 $33.4 $33.3 Nave Galactic 02/04/2014 $53.5 $51.8* Nave Quasar 02/12/2014 $54.7 $53.1 Nave Buena Suerte 03/10/2014 $57.2 $55.6* Nave Neutrino 06/16/2014 $43.7 $42.5 Nave Synergy 12/09/2014 $76.9 $76.7 Nave Electron 07/21/2014 $41.2 $40.2* $1,485.1 $1,381.7 (1)All amounts include related time charter, if any.Although the aforementioned excess of carrying value over fair value represents an estimate of the loss that Navios Acquisition would sustain on ahypothetical disposition of those vessels as of December 31, 2014, the recognition of the unrealized loss absent a disposition (i.e. as an impairment)would require, among other things, that a triggering event had occurred and that the undiscounted cash flows attributable to the vessel are also lessthan the carrying value of the vessel (including the carrying value of the time charter, if any, on the specified vessel). 91Table of ContentsUse 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 receivable, provisions for legal disputes, and contingencies and thevaluation estimates inherent in the deconsolidation gain. Management bases its estimates and judgments on historical experience and on various otherfactors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values ofassets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates under different assumptions and/orconditions.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 our tanker vessels based on a scrap value cost of steel times the weight of the ship noted in lightweight ton (LWT). Residualvalues are periodically reviewed and revised to recognize changes in conditions, new regulations or other reasons. Revisions of residual values affect thedepreciable amount of the vessels and affects depreciation expense in the period of the revision and future periods. Up to December 31, 2012, managementestimated the residual values of its vessels based on a scrap rate of $285 per LWT. Effective January 1, 2013, following management’s reassessment afterconsidering current market trends for scrap rates and ten-year average historical scrap rates of the residual values of the company’s vessels, the estimated scrapvalue per LWT was increased to $360 per LWT.Management estimates the useful life of our vessels to be 25 years from the vessel’s original construction. However, when regulations place limitationsover 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 Asset Group: 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, vessel salesand purchases, business plans and overall market conditions.As of March 31, 2014, the Company had a current expectation that, more likely than not, the Shinyo Splendor would be sold before the end of itspreviously estimated useful life, and, as a result, performed an impairment test of the specific asset group. The recoverability test was based on undiscountedcash flows expected to result from the entity’s use and eventual disposition of the asset. The significant factors and assumptions used in the undiscountedprojected net operating cash flow analysis included determining the net operating cash flows by considering the charter revenues from the existing timecharter until its expiration, net of brokerage and address commissions and management fees and an estimate of sale proceeds from its disposal based onmarket valuations for such vessel. The carrying amount of the asset group was more than its undiscounted future cash flows. As a result, the entity failed therecoverability test (step one) of the impairment 92Table of Contentstest and proceeded with step two of the impairment analysis. An impairment loss in the amount of $10.7 million was recognized on this asset group as thecarrying amount of the asset group was not recoverable and exceeded its fair value as of March 31, 2014. The Shinyo Splendor was sold on May 6, 2014 to anunaffiliated third party for a net cash consideration of $18.3 million (refer to Note 5 “Vessels, Net”).Undiscounted projected net operating cash flows are determined for each asset group (consisting of the individual vessel and the intangible withrespect to the time charter agreement to that vessel) and compared to the vessel carrying value and related carrying value of the intangible with respect to thetime charter agreement attached to that vessel or the carrying value of deposits for newbuildings. Within the shipping industry, vessels are customarilybought and sold with a charter attached. The value of the charter may be favorable or unfavorable when comparing the charter rate to then current marketrates. The loss recognized either on impairment (or on disposition) will reflect the excess of carrying value over fair value (selling price) for the vesselindividual asset group.During the fourth quarter of fiscal 2014, management concluded that events occurred and circumstances had changed, which indicated the potentialimpairment of Navios Acquisition’s long-lived assets may exist. These indicators included the volatility in the charter market and related impact that thecurrent tanker sector has on management’s expectation for future revenues. As a result, an impairment assessment of long-lived assets was performed.The Company determined undiscounted projected net operating cash flows for each vessel and deposits for newbuildings 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 2016 and thereafterassuming an annual increase of 3.0% and utilization rate of 98.6% based on the fleet’s historical performance.In connection with its impairment testing on its vessels as of December 31, 2014, the Company performed sensitivity analysis on the most sensitiveand/or subjective assumptions that have the potential to affect the outcome of the test, principally the projected charter rate used to forecast future cash flowfor unfixed days. In that regard, there would continue to be no impairment required to be recognized on any of the Company’s vessels when assuming adecline in the 10-year average (of the one-year charter rate for similar vessels), which is the rate that the Company uses to forecast future cash flow for unfixeddays, ranging from 26% to 67% (depending on the vessel).For the deposits for new build vessels, the net cash flows also included the future cash out flows to make vessels ready for use, all remaining progresspayments 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 assets existed asof December 31, 2014, 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. 93Table of ContentsAlthough 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.Impairment loss recognized amounted to $10.7 million for the year ended December 31, 2014. No impairment loss was recognized for the years endedDecember 31, 2013 and 2012.Revenue Recognition: Revenue is recorded when services are rendered, under a signed charter agreement or other evidence of an arrangement, the priceis fixed 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. A voyage is deemed tocommence when a vessel is available for loading and is deemed to end upon the completion of the discharge of the current cargo. Estimated losses onvoyages 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 voyage charter, avessel 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 the average revenueover the rental periods of such charter agreements, as service is performed. A time charter involves placing a vessel at the charterers’ disposal for a period oftime during 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-yearly basis) over an agreed amount and accounted for on an accrual basis based on provisional amounts and for those contracts that provisional accrualscannot be made due to the nature of the profit share elements, these are accounted for on the actual cash settlement. For vessels operating in poolingarrangements, the Company earns a portion of total revenues generated by the pool, net of expenses incurred by the pool. The amount allocated to each poolparticipant vessel, including the Company’s vessels, is determined in accordance with an agreed-upon formula, which is determined by points awarded toeach vessel in the pool based on the vessel’s age, design and other performance characteristics. Revenue under pooling arrangements is accounted for on theaccrual basis and is recognized when an agreement with the pool exists, price is fixed, service is provided and the collectability is reasonably assured.Revenues are recorded net of address commissions. Address commissions represent a discount provided directly to the charterers based on a fixedpercentage of the agreed upon charter or freight rate. Since address commissions represent a discount (sales incentive) on services rendered by the Companyand no identifiable benefit is received in exchange for the consideration provided to the charterer, these commissions are presented as a reduction of revenue.Recent Accounting PronouncementsIn February 2015, the FASB issued the ASU 2015-02, “Consolidation (Topic 810) — Amendments to the Consolidation Analysis”, which amends thecriteria for determining which entities are considered VIEs, amends the criteria for determining if a service provider possesses a variable interest in a VIE andends the deferral granted to investment companies for application of the VIE consolidation model. The ASU is effective for interim and annual periodsbeginning after December 15, 2015. Early application is permitted. We do not expect the adoption of this ASU to have a material impact on the Company’sresults of operations, financial position or cash flows, except if Navios Acquisition were to enter into new arrangements in 2015 that fall into the scope priorto adoption of this standard. 94Table of ContentsIn January 2015, the FASB issued ASU 2015-01, “Income Statement Extraordinary and Unusual Items”. This standard eliminates the concept ofextraordinary and unusual items from U.S. GAAP. The new standard is effective for annual and interim periods after December 15, 2015. Early adoption ispermitted. Navios Acquisition plans to adopt this standard effective January 1, 2016. The adoption of the new standard is not expected to have a materialimpact on Navios Acquisition’s results of operations, financial position or cash flows.In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure ofUncertainties About an Entity’s Ability to Continue as a Going Concern. This standard requires management to assess an entity’s ability to continue as agoing concern, and to provide related footnote disclosures in certain circumstances. Before this new standard, no accounting guidance existed formanagement on when and how to assess or disclose going concern uncertainties. The amendments are effective for annual periods ending after December 15,2016, and interim periods within annual periods beginning after December 15, 2016. Early application is permitted. We plan to adopt this standard effectiveJanuary 1, 2017. The adoption of the new standard is not expected to have a material impact on Navios Acquisition’s results of operations, financial positionor cash flows.In May 2014, The FASB issued ASU 2014-09, Revenue from Contracts with Customers, which changed the method used to determine the timing andrequirements for revenue recognition on the statements of income. Under the new standard, an entity must identify the performance obligations in a contract,the transaction price and allocate the price to specific performance obligations to recognize the revenue when the obligation is completed. The amendmentsin this update also require disclosure of sufficient information to allow users to understand the nature, amount, timing and uncertainty of revenue and cashflow arising from contracts. The new accounting guidance is effective for interim and annual periods beginning after December 15, 2016. Early adoption isnot permitted. We are currently reviewing the effect of ASU No. 2014-09 on our revenue recognition.In April 2014, the FASB issued ASU 2014-08, Presentation of Financial Statements and Property, Plant and Equipment changing the presentation ofdiscontinued operations on the statements of income and other requirements for reporting discontinued operations. Under the new standard, a disposal of acomponent or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (orwill have) a major effect on an entity’s operations and financial results when the component meets the criteria to be classified as held-for-sale or is disposed.The amendments in this update also require additional disclosures about discontinued operations and disposal of an individually significant component ofan entity that does not qualify for discontinued operations. The new accounting guidance is effective for interim and annual periods beginning afterDecember 15, 2014. The adoption of the new standard is not expected to have a material impact on Navios Acquisition’s results of operations, financialposition or cash flows. 95Table of ContentsItem 6.Directors, Senior Management and Employees A.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 50 Chairman, Chief Executive Officer and DirectorLeonidas Korres 39 Chief Financial OfficerVasiliki Papaefthymiou 46 SecretaryAnna Kalathakis 45 Director, Senior Vice President — Legal Risk ManagementGeorge Galatis 52 DirectorJohn Koilalous 84 DirectorBrigitte Noury 68 DirectorTed C. Petrone 59 DirectorNikolaos Veraros, CFA 44 DirectorAngeliki Frangou has been our Chairman and Chief Executive Officer since our inception. Ms. Frangou has also been Chairman and CEO of NaviosMaritime Holdings Inc. (NYSE: NM) — our sponsor — since August 2005. In addition, Ms. Frangou has been the Chairman and Chief Executive Officer ofNavios Maritime Partners L.P. (NYSE: NMM), an affiliated limited partnership, since August 2007 and the Chairman and Chief Executive Officer of NaviosMaritime Midstream Partners L.P. (NYSE: NAP), an affiliated limited partnership, since October 2014. Ms. Frangou has been the Chairman of the Board ofDirectors of Navios South American Logistics Inc. since its inception in December 2007. Previously, Ms. Frangou served as Chairman, Chief ExecutiveOfficer and President of International Shipping Enterprises Inc., which acquired Navios Holdings. From 1990 until August 2005, Ms. Frangou was the ChiefExecutive Officer of Maritime Enterprises Management S.A. and its predecessor company, which specialized in the management of dry cargo vessels.Ms. Frangou is the Chairman of IRF European Finance Investments Ltd., listed on the SFM of the London Stock Exchange. Ms. Frangou is Member of theBoard of the United Kingdom Mutual Steam Ship Assurance Association (Bermuda) Limited, Vice Chairman of China Classification Society MediterraneanCommittee, a member of the International General Committee and of the Hellenic and Black Sea Committee of Bureau Veritas, as well as a member of GreekCommittee of Nippon Kaiji Kyokai. Since February 2015, Ms. Frangou has been a Member of the Board of the Union of Greek Shipowners. Since July 2013,Ms. Frangou has been a Member of the Board of Visitors of the Columbia University School of Engineering and Applied Science. Ms. Frangou received abachelor’s degree in mechanical engineering, summa cum laude, from Fairleigh Dickinson University and a master’s degree in mechanical engineering fromColumbia University.Leonidas Korres has been our Chief Financial Officer since April 2010, and previously our Senior Vice President for Business Development fromJanuary 2010. Mr. Korres served as the Special Secretary for Public Private Partnerships in the Ministry of Economy and Finance of the Hellenic Republicfrom October 2005 until November 2009. Prior to that, from April 2004 to October 2005, Mr. Korres served as Special Financial Advisor to the Minister ofEconomy and Finance of the Hellenic Republic and as liquidator of the Organizational Committee for the Olympic Games Athens 2004 S.A. From 2001 to2004, Mr. Korres worked as a senior financial advisor for KPMG Corporate Finance. From October 2007 until January 2010, Mr. Korres was a member of theboard of directors of Navios Partners. From May 2003 to December 2006, Mr. Korres was Chairman of the Center for Employment and Entrepreneurship, anon-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 operating 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. 96Table of ContentsVasiliki Papaefthymiou has been our Secretary since our inception. Ms. Papaefthymiou has also served as Executive Vice President — Legal and amember 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. Papaefthymiouhas also served as General Counsel for Maritime Enterprises Management S.A. since October 2001, where she has advised the company on shipping,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.Anna Kalathakis has been a member of our Board of Directors and Senior Vice President — Legal Risk Management since May 2010. Ms. Kalathakishas been Chief Legal Risk Officer from since November 2012 and Senior Vice President — Legal Risk Management of Navios Holdings from December 2005until October 2012. Before joining Navios Holdings, Ms. Kalathakis was the General Manager of the Greek office of A Bilbrough & Co. Ltd. (Managers of theLondon Steam-Ship Owners’ Mutual Insurance Association Limited, the “London P&I Club”) and an Associate Director of the London P&I Club where shegained experience in the handling of liability and contractual disputes in both the dry and tanker shipping sectors (including collisions, oil pollutionincidents, 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 alsoserved in a similar capacity for a London maritime law firm. She qualified as a solicitor in England and Wales in 1999 and was admitted to the Piraeus Bar inGreece, in 2003. She received a bachelor’s degree International Relations from Georgetown University and holds a master of business administration degreefrom 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 also served as atechnical manager in Pharmaceutical Industry Projects at Telos Consulting Ltd. of London from 1994 to 1999. Previously, Mr. Galatis served as an engineer,technical manager and product manager at various shipping companies in the United States and the U.K. Mr. Galatis is a mechanical engineer and holds abachelor’s degree in mechanical engineering and master’s degree in robotics from the University of Newcastle upon Tyne. Mr. Galatis is also a member of ourNominating Committee and is an independent director.John Koilalous has been a member of our Board of Directors since June 2008. Mr. Koilalous began his career in the shipping industry in the City ofLondon in 1949, having worked for various firms both in London and Piraeus. He entered the adjusting profession in 1969, having worked for Francis andArnold, a maritime insurance adjusting firm, for 18 years and then with Pegasus Adjusting Services Ltd., of which he was the founder and, until his retirementat the end of 2008, the Managing Director. He still remains active in an advisory capacity on matters of marine insurance claims. Mr. Koilalous is also amember of our Audit Committee and is an independent director.Brigitte Noury has been a member of our Board of Directors since May 2010. Ms. Noury served from March 2002 until December 2009 as Director ofCorporate & Investment Banking Asset & Recovery Management — Europe for Societe Generale. She also served from June 1989 until February 2002 asHead of Shipping at Societe Generale. In addition, she served as Vice President — Shipping at Banque Indosuez from 1987 to 1989. Before that Ms. Nouryserved as Financial Controller at Banque Internationale pour l’Afrique Occidentale (later acquired by BNP Paribas). Ms. Noury received a master of economicsciences degree and a diploma in business administration from the University of Dijon. Ms. Noury is also a member of our Audit Committee and NominatingCommittee and is an independent director.Ted C. Petrone has been a member of our Board of Directors since our inception and was our President from our inception until December 2014. He hasalso been a director of Navios Holdings since May 2007, and 97Table of Contentsserved as President of Navios Corporation from September 2006 until December 2014. He currently serves as Navios Corporation’s Vice Chairman, a positionhe has held since December 2014. Mr. Petrone has served in the maritime industry for 36 years, 33 of which he has spent with Navios Holdings. After joiningNavios Holdings as an assistant vessel operator, Mr. Petrone worked there in various operational and commercial positions. For the last 15 years, Mr. Petronehas been responsible for all the aspects of the daily commercial activity, encompassing the trading of tonnage, derivative hedge positions and cargoes.Mr. Petrone graduated from New York Maritime College at Fort Schuyler with a bachelor in science degree in maritime transportation. He has also servedaboard U.S. Navy (Military Sealift Command) tankers.Nikolaos Veraros, CFA, has been a member of our Board of Directors since June 2008. Mr. Veraros has over 15 years of experience in shipping financeand currently serves as a financial consultant to various shipping companies. He has also worked as a senior equity analyst for National Securities, S.A., asubsidiary of National Bank of Greece. He is a Chartered Financial Analyst (CFA), a Certified Market Maker for Derivatives in the Athens Stock Exchange,and a Certified Analyst from the Hellenic Capital Market Commission. Mr. Veraros received his bachelor of science degree in business administration fromthe Athens University of Economics and Business, from which he graduated as valedictorian, and his master of business administration degree in finance andaccounting from the William E. Simon Graduate School of Business Administration at the University of Rochester. Mr. Veraros is also the Chairman of ourAudit Committee and is an independent director. B.CompensationCompensationOur 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.In October 2013, Navios Acquisition authorized and issued in the aggregate 2,100,000 restricted shares of common stock and options to purchase1,500,000 shares of common stock having an exercise price of $3.91 per share, to its directors and/or officers. These awards of restricted common stock andstock options are based on service conditions only and vest over three years.For each of the years ended December 31, 2014, 2013 and 2012 aggregate annual compensation paid to our current non-management executivedirectors 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. C.Board PracticesBoard ClassesOur Board of Directors is divided into three classes with only one class of directors being elected in each year and each class serving a three-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 2015 annual meeting ofstockholders. The term of office of the second class of directors, consisting of Ted C. Petrone and Nikolaos Veraros, will expire at our 2016 annual meeting ofstockholders. The term of office of the third class of directors, consisting of Angeliki Frangou and Anna Kalathakis, will expire at our 2017 annual meeting,as their term was renewed for three years at our 2014 annual meeting.Director IndependenceOur Board of Directors has determined that Messrs. Veraros, Koilalous, Galatis and Ms. Noury are “independent directors” as defined in the New YorkStock Exchange listing standards and Rule 10A-3 of the Exchange Act. We will always seek to have a board of directors comprising of a majority ofindependent directors. 98Table of ContentsBoard committeesOur Board of Directors has an audit committee, a nominating committee and a compensation committee. Our Board of Directors has adopted a charterfor the audit committee 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 literate under the currentlisting standards of the New York Stock Exchange, and our Board of Directors has determined that Mr. Veraros qualifies as an “audit committee financialexpert,” 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 our accounts,procedures and internal controls. The audit committee also selects our independent registered public accounting firm, reviews and approves the scope of theannual audit, reviews and evaluates with the independent public accounting firm our annual audit and annual consolidated financial statements, reviews withmanagement the status of internal accounting controls, evaluates problem areas having a potential financial impact on us that may be brought to thecommittee’s attention by management, the independent registered public accounting firm or the board of directors, and evaluates all of our public financialreporting documents.Any expense reimbursements payable to members of our audit committee are reviewed and approved by our Board of Directors, with the interesteddirector 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, and Ms. Noury, each ofwhom is an independent director. The nominating committee is responsible for overseeing the selection of persons to be nominated to serve on our Board ofDirectors. The nominating committee considers persons identified by its members, management, stockholders, investment bankers and others.Compensation committeeThe board of directors has established a compensation committee of three independent directors, Messrs. Nikolaos Veraros, who serves as Chairman,George Galatis and John Koilalous. The compensation committee is governed by a written charter, which was approved by the board of directors. Thecompensation committee is responsible for reviewing and approving the compensation of the Company’s executive officers, for establishing, reviewing andevaluating, in consultation with senior management, the long-term strategy of employee compensation and approving any material change to existingcompensation plans.Code of conduct and ethicsWe have adopted a code of conduct and ethics applicable to our directors and officers in accordance with applicable federal securities laws and therules 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, Navios Partners and NaviosMidstream. 99Table of Contents • 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, Navios Partners and Navios Midstream. In addition, Ms. Frangou is the Chairman ofthe board of directors of IRF European Finance Investments, Ltd. Ted C. Petrone, a member of our Board of Directors, is the vice chairman ofNavios Corporation, a subsidiary of Navios Holdings. Mr. Veraros is a senior analyst at Investments & Finance, Ltd., an investment banking firmspecializing in the shipping industry. Mr. Koilalous is the founder and managing director of Pegasus Adjusting Services, Ltd., an adjusting firmin the shipping industry. Ms. Kalathakis is Chief Legal Risk Officer of Navios Holdings. • We entered a Management Agreement, initially set to expire on May 28, 2015, with a subsidiary of Navios Holdings, pursuant to which suchsubsidiary provides certain commercial and technical ship management services for a fixed daily fee of $6,000 per owned MR2 product tankerand chemical tanker vessel, $7,000 per owned LR1 product tanker vessel and $10,000 per owned VLCC tanker vessel for the first four years ofthe term of that agreement. In May 2014, Navios Acquisition extended the duration of its existing Management Agreement with NaviosHoldings, until May 2020 and fixed the fees for ship management services of its owned fleet for two additional years through May 2016 atcurrent rates for product tanker and chemical tanker vessels, being $6,000 daily rate per MR2 product tanker and chemical tanker vessel and$7,000 daily rate per LR1 product tanker vessel and reduced the rate by 5% to $9,500 daily rate per VLCC vessel. • We entered into an Administrative Services Agreement with Navios Holdings, initially set to expire on May 28, 2015, pursuant to which asubsidiary of 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 and investor relations and other services. Navios Holdings is reimbursed for reasonable costs and expenses incurred in connection with theprovision of these services. In May 2014, the duration of its existing Administrative Services Agreement was extended until May 2020 pursuantto its existing terms. • We have not adopted a policy that expressly prohibits our directors, officers, security holders or affiliates from having a direct or indirectpecuniary interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest. Nor dowe have a policy that expressly prohibits any such persons from engaging for their own account in business activities of the types conducted byus. Accordingly, such parties may have an interest in certain transactions in which we are involved, and may also compete with 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 in us. 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 Navios Holdings, will be onterms believed by us to be no less favorable than are available from unaffiliated third parties, and such transactions will require prior approval, in eachinstance, by a unanimous vote of our disinterested “independent” directors or the members of our board who do not have an interest in the transaction.Please see “Item 7. Major Stockholders and Related Party Transactions.”FacilitiesWe do not own any real estate or other physical property. Our principal executive office is located at 7 Avenue de Grande Bretagne, Office 11B2,Monte Carlo, MC 98000 Monaco. 100Table of ContentsD.EmployeesEmployees of Navios Holdings and its subsidiaries provide assistance to us and our operating subsidiaries pursuant to the Management Agreement andthe Administrative Services Agreement; therefore Navios Acquisition does not employ additional staff.The Manager crews its vessels primarily with Greek, Filipino, Romanian, Russian and Ukranian officers and Filipino seamen. The Manager isresponsible for selecting its Greek officers. For other nationalities, officers and seamen are referred to us by local crewing agencies. Navios Acquisitionrequires that all of its seamen have the qualifications and licenses required to comply with international regulations and shipping 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 151,864,942 shares of common stock outstanding as ofMarch 27, 2015, of our common stock held by Navios Holdings, each of our officers and directors (who own in excess of 1% of our outstanding shares ofcommon stock) and by all of our directors and officers as a group. The information is not necessarily indicative of beneficial ownership for any otherpurposes.Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all shares of commonstock beneficially owned by them. Name and Address of Beneficial Owner(1) Amount ofBeneficialOwnership PercentageofCommonStock Navios Maritime Holdings Inc.(2) 65,301,220(2) 43.0%Angeliki Frangou(3) 3,902,628 2.5%All of our officers and directors as a group(3) 4,635,801 3.0% No other director or executive officer owns greater than 1% of our common stock.(1)Unless otherwise indicated, the business address of each of the individuals is c/o Navios Maritime Holdings Inc., 7 Avenue de Grande Bretagne, Office11B2, Monte Carlo, MC 98000 Monaco.(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, Shunji Sasada, Spyridon Magoulas, John Stratakis, Stathis Loizos and GeorgeMalanga.(3)Includes 1,502,628 shares held by Amadeus Maritime S.A. that may be deemed to be beneficially owned by Ms. Frangou. 101Table of ContentsItem 7.Major Stockholders and Related Party Transactions A.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 ourcommon stock based upon 151,864,942 shares of common stock outstanding as of March 27, 2015 and the amounts and percentages as are contained in thepublic 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 27, 2015 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.(1) 65,301,220 43.0%A. Lawrence Caroll Trust(2) 12,695,000 7.97% (1)The business address of the reporting person is offices at 7 Avenue de Grande Bretagne, Office 11B2, Monte Carlo, MC 98000 Monaco. The foregoinginformation was derived from a Schedule 13D/A filed with the SEC on March 27, 2015.(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 11, 2015. B.Related Party TransactionsEquity offeringsPursuant 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 shares of Series C Convertible Preferred Stock of Navios Acquisition. Dividends paid to the Series C Convertible Preferred Stock were$1.5 million for each of the years ended December 31, 2014 and 2013.On February 20, 2014, Navios Acquisition completed a public offering of 14,950,000 shares of its common stock at $3.85 per share, raising grossproceeds of $57.6 million. These figures include 1,950,000 shares sold pursuant to the underwriters’ option, which was exercised in full. Total net proceeds ofthe above transactions, net of agents’ costs of $3.0 million and offering costs of $0.3 million, amounted to $54.3 million.On September 16, 2013, Navios Acquisition completed the placement of a total of 25,974,026 shares of common stock, at a price of $3.85 per share,representing gross proceeds of $100.0 million and net proceeds of $96.1 million. The placement included a registered direct offering of 12,987,013 shares ofcommon stock which raised $50.0 million of gross proceeds and a private placement of 12,987,013 shares of common stock to Navios Holdings which raised$50.0 million of gross proceeds. Total net proceeds of the above transactions, net of agents’ costs of $3.5 million and offering costs of $0.4 million, amountedto $96.1 million.In May 2013, Navios Acquisition completed the placement of a total of 32,876,712 shares of its common stock, at a price of $3.65 per share,representing gross proceeds of $120.0 million. The placement included a registered direct offering of 16,438,356 shares of common stock which raised $60.0million of gross proceeds and a private placement of 16,438,356 common shares to Navios Holdings, which raised $60.0 million of gross proceeds. Bothplacements closed on May 21, 2013. Total net proceeds of the transactions in May 2013, net of agents’ costs of $4.2 million and offering costs of $0.4million, amounted to $115.4 million. 102Table of ContentsOn February 26, 2013, Navios Acquisition completed the private placement of 17,702,491 shares of common stock at a price of $2.85 per share, toNavios Holdings and certain members of management of Navios Acquisition, Navios Holdings and Navios Partners, raising gross proceeds of $50.5 million.The net proceeds of this private placement, including the agents’ fees of $2.0 million, were $48.5 million. On February 26, 2013, Navios Acquisition enteredinto a registration rights agreement with Navios Holdings and certain members of management of Navios Acquisition, Navios Holdings and Navios Partnerswho purchased shares in the private placement, providing for standard “piggy-back” and demand registration rights with respect to the shares purchased inthe private placement.Stock options and restricted sharesIn October 2013, Navios Acquisition authorized and issued in the aggregate 2,100,000 restricted shares of common stock and options to purchase1,500,000 shares of common stock having an exercise price of $3.91 per share, to its directors and/or officers. These awards of restricted common stock andstock options are based on service conditions only and vest ratably over three years.The fair value of stock option grants was determined with reference to the option pricing model, and principally adjusted Black-Scholes models. Thefair value of restricted stock was determined by reference to the quoted stock price on the date of grant. Compensation expense is recognized based on agraded expense model over the vesting period.The effect of compensation expense arising from the stock based arrangements described above amounts to $5.3 million, $1.1 million and $0.0, foreach of the years ended December 31, 2014, December 31, 2013, and December 31, 2012, respectively, it is reflected in general and administrative expenseson the Statement of Comprehensive Income/ (Loss).There were no restricted stock or stock options exercised, forfeited or expired during the years ended December 31, 2014 or 2013. On October 24, 2014,699,994 restricted shares were vested and 500,000 stock options were vested. There was no vesting of restricted shares or stock options during the year endedDecember 31, 2013. Accordingly, as of December 31, 2014 and 2013, restricted shares outstanding and non-vested amounted to 1,400,006 and 2,100,000,respectively and the number of stock options outstanding and non-vested as of December 31, 2014 and 2013 amounted to 1,000,000 and 1,500,000,respectively. There were no stock options exercised during the years ended December 31, 2014.The estimated compensation cost relating to service conditions of non-vested (a) stock options and (b) restricted stock, not yet recognized was $0.4million and $2.8 million, respectively, as of December 31, 2014 and is expected to be recognized over the weighted average period of 1.82 years.Navios MidstreamIn November 2014, Navios Maritime Midstream Partners LP (“Navios Midstream”), a Company formed as a subsidiary of the Company, completed aninitial public offering (“IPO”) of its units in the United States and is listed on the NYSE.In connection with the IPO of Navios Midstream, the Company sold all of the outstanding shares of capital stock of four of its vessel-owningsubsidiaries (Shinyo Ocean Limited, Shinyo Kannika Limited, Shinyo Kieran Limited and Shinyo Saowalak Limited) in exchange for: (i) all of the netproceeds from the IPO amounting to $110.4 million; (ii) $104.5 million of the $126.0 million borrowings under Navios Midstream’s new credit facility;(iii) 9,342,692 subordinated units and 1,242,692 common units; and (iv) 381,334 general partner units, representing a 2.0% general partner interest in NaviosMidstream, and all of the incentive distribution rights in Navios Midstream.Following the IPO, the Company concluded that it does not hold a controlling financial interest in Midstream and deconsolidated the vessels sold as ofthe IPO date. (See Note 9, “Investment in affiliates”). 103Table of ContentsThe Navios Holdings Credit FacilitiesIn September 2010, Navios Acquisition entered into a $40.0 million credit facility with Navios Holdings. The $40.0 million facility has a margin ofLIBOR plus 300 bps and a pursuant to an amendment dated November 8, 2011, the maturity of the facility was extended to December 2014. Pursuant to anamendment in October 2010, the facility will be available for multiple drawings up to a limit of $40.0 million. In December 2014 the facility was renewed forone year. As of December 31, 2014, there was no outstanding amount under this facility. For the years ended December 31, 2014, 2013 and 2012, interestexpense in relation to this facility amounted to $0.0, $0.2 million and $1.2 million, respectively, and was included under interest expense and finance cost,net in the statement of comprehensive income/ (loss).On November 11, 2014, Navios Acquisition entered into a short term credit facility with Navios Holdings pursuant to which Navios Acquisition mayborrow up to $200.0 million for general corporate purposes. The loan provides for an arrangement fee of $4.0 million and bore a fixed interest of 600 bps. Thefacility matured and was repaid in full on December 29, 2014. For the year ended December 31, 2014, interest expense in relation to this facility amounted to$0.3 million and was included under interest expense and finance cost, net in the statement of comprehensive income/ (loss).The Management AgreementWe have entered into Management Agreement with the Manager, pursuant to which the Manager provides certain commercial and technical shipmanagement services to us. These services will be provided in a commercially reasonable manner in accordance with customary ship management practiceand under our direction. The Manager will provide these services to us directly but may subcontract for certain of these services with other entities, includingother 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 otheremployment contracts for the vessels and monitoring payments thereunder, ensuring regulatory compliance, arranging for the vetting of vessels,procuring and arranging for port entrance and clearance, appointing counsel and negotiating the settlement of all claims in connection with theoperation of each vessel, 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 ofthe crew, 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 andmachinery insurance, protection and indemnity insurance and war risk and oil pollution insurance).Pursuant to a Management Agreement dated May 28, 2010, the Manager, a subsidiary of Navios Holdings, provides commercial and technicalmanagement services to Navios Acquisition’s vessels for a daily fee of $6,000 per owned MR2 product tanker and chemical tanker vessel and $7,000 perowned LR1 product tanker vessel and $10,000 per VLCC tanker vessel for the first two years. On May 4, 2012, Navios Acquisition amended the existingManagement Agreement with the Manager, to fix the fees for ship management services of its owned fleet at current rates for two additional years, throughMay 28, 2014. This daily fee covers all of the vessels’ operating expenses, other than certain fees and costs. During the remaining term of the ManagementAgreement, Navios Acquisition expects it will reimburse Navios Holdings for all of the actual operating costs and expenses it incurs in connection with themanagement of its fleet. Actual operating costs and expenses will be determined in a manner consistent with how the initial fixed fees were determined.Drydocking expenses were fixed through May 2014 for up to $0.3 million per LR1 and MR2 product tanker vessel and were reimbursed at cost for VLCCvessels. 104Table of ContentsIn May 2014, Navios Acquisition extended the duration of its existing Management Agreement with Navios Holdings, until May 2020 and fixed thefees for ship management services of its owned fleet for two additional years through May 2016 at current rates for product tanker and chemical tankervessels, being $6,000 daily rate per MR2 product tanker and chemical tanker vessel and $7,000 daily rate per LR1 product tanker vessel and reduced the rateby 5% to $9,500 daily rate per VLCC vessel. Drydocking expenses under this Management Agreement will be reimbursed at cost of occurrence for all vessels.Effective March 30, 2012, Navios Acquisition can, upon request to Navios Holdings, partially or fully defer the reimbursement of drydocking andother extraordinary fees and expenses under the Management Agreement to a later date, but not later than January 5, 2016, and if reimbursed on a later date,such amounts will bear interest at a rate of 1% per annum over LIBOR. Effective as of September 28, 2012, Navios Acquisition can, upon request, reimburseNavios Holdings partially or fully, for any fixed management fees outstanding for a period of not more than nine months under the Management Agreementat a later date, but not later than January 5, 2016, and if reimbursed on a later date, such amounts will bear interest at a rate of 1% per annum over LIBOR.Total management fees for the years ended December 31, 2014, 2013 and 2012 amounted to $95.8 million, $71.4 million and $47.0 million,respectively.The Management Agreement may be terminated prior to the end of its term by us upon 120-days’ notice if there is a change of control of the Manageror by the Manager upon 120-days’ notice if there is a change of control of Navios Acquisition. In addition, the Management Agreement may be terminatedby us or by the Manager upon 120-days’ 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 prior to the end ofits initial term by us or by the Manager upon 365-days’ 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 Manager will be entitledto reasonable supplementary remuneration for extraordinary 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 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); 105Table of Contents • 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 theManagement 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 technical managementservices under the Management Agreement unless and to the extent that such loss is proved to have resulted solely from the fraud, gross negligence or willfulmisconduct of the Manager or its employees, in which case (except where such loss has resulted from the Manager’s intentional personal act or omission andwith knowledge that such loss would probably result) the Manager’s liability will be limited to $3.0 million for each incident or series of related incidents.Further, under our Management Agreement, we have agreed to indemnify the Manager and its employees and agents against all actions that may bebrought against them under the Management Agreement including, without limitation, all actions brought under the environmental laws of any jurisdiction,or otherwise relating to pollution or the environment, and against and in respect of all costs and expenses they may suffer or incur due to defending orsettling such action; provided, however, that such indemnity excludes any or all losses which may be caused by or due to the fraud, gross negligence orwillful misconduct of the Manager or its employees or agents, or any breach of the Management Agreement by the Manager.The Administrative Services AgreementOn May 28, 2010, Navios Acquisition entered into an administrative services agreement with Navios Holdings, initially set to expire in May 2015 thatwas later extended until May 2020, pursuant to which Navios Holdings provides certain administrative management services to Navios Acquisition, whichinclude 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 services.The Administrative Services Agreement may be terminated prior to the end of its term by us upon 120-days’ notice if there is a change of control of theManager or by the Manager upon 120-days’ notice if there is a change of control of us. In addition, the Administrative Services Agreement may be terminatedby us or by the Manager upon 120-days’ 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 Administrative Services Agreement isobtained or entered and not vacated or discharged; or 106Table of Contents • 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 may beterminated by us or by the Manager upon 365-days’ notice for any reason other than those described above.The administrative services 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 within 15 days after theManager 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 which may be broughtagainst them under the Administrative Services. Agreement including, without limitation, all actions brought under the environmental laws of anyjurisdiction, and against and in respect of all costs and expenses they may suffer or incur due to defending or settling such actions; provided, however, thatsuch indemnity excludes any or all losses that may be caused by or due to the fraud, gross negligence or willful misconduct of the Manager or its employeesor agents.For the years ended December 31, 2014, 2013 and 2012, the fees for administrative services rendered by Navios Holdings amounted to $7.3 million,$3.5 million and $2.1 million, respectively.Navios EuropeNavios Holdings, Navios Acquisition and Navios Partners have made available to Navios Europe (in each case, in proportion to their ownershipinterests in Navios Europe) revolving loans up to $24.1 million to fund working capital requirements (collectively, the “Navios Revolving Loans”). See Note9 for the Investment in Navios Europe and respective ownership interests.The Navios Revolving Loans earn a 12.7% preferred distribution and are repaid from Free Cash Flow (as defined in the loan agreement) to the fullestextent possible at the end of each quarter. There are no covenant requirements or stated maturity dates. 107Table of ContentsAs of December 31, 2014 and 2013, Navios Acquisition’s portion of the outstanding amount relating to portion of the investment in Navios Europe(47.5% of the $10.0 million) is $4.8 million and $4.8 million, respectively, under the caption “Investment in affiliates” and the outstanding amount relatingto the Navios Revolving Loans, excluding interest receivable, was $7.1 million and $2.7 million, respectively, under the caption “Loan receivable fromaffiliates.” As of December 31, 2014, the amount undrawn from the revolving facility was $9.1 million, of which Navios Acquisition was committed to fund$4.3 million.Registration RightsPursuant to a registration rights agreement between us and our initial stockholders entered into in connection with the IPO, the holders of the sponsorunits (and the common stock and warrants comprising such units and the common stock issuable upon exercise of such warrants), the sponsor warrants (andthe common stock issuable upon exercise of such warrants), the co-investment shares and such other shares of common stock purchased pursuant to the limitorders described above are entitled to three demand registration rights, “piggy-back” registration rights and short-form resale registration rights. We will bearthe expenses incurred in connection with any such registration statements other than underwriting discounts or commissions for shares not sold by us. Inaddition, 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.In addition, in connection with the private placement of 17,702,491 shares that was completed on February 26, 2013, we have granted registrationrights to Navios Holdings and certain members of the management of Navios Acquisition, Navios Holdings and Navios Partners.In connection with the private placements of 16,438,356 shares and of 12,987,013 shares that were completed on May 21, 2013 and on September 16,2013, respectively, we have granted registration rights to Navios Holdings.The Acquisition Omnibus AgreementWe have entered an Acquisition Omnibus Agreement with Navios Holdings and Navios Partners. The following discussion describes certain provisionsof the Acquisition Omnibus Agreement.NoncompetitionNavios 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 thosevessels; 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, asdetermined in 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 casemay 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 toNavios Holdings that would be required to transfer a Liquid Shipment Vessel(s) and related charters to us separately from the acquired business; and 108Table of Contentsb. 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, asdetermined in 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 notify us in writing, of the proposed acquisition. We shall, not later than the 15th calendar day following receipt of such notice, notify Navios Holdingsor Navios Partners, 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 ofassets in cooperation and simultaneously with Navios Holdings or Navios Partners, as the case may be, acquiring a Liquid Shipment Vessel(s) and relatedcharters forming part of that business or package of assets. If we do not notify Navios Holdings of our intent to pursue the acquisition within 15 calendardays, Navios Holdings 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 writtenagreement, to purchase 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 determinationwhether to 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 affiliatesof Navios 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 weconsent to such acquisition, or if we have been offered the opportunity to purchase such vessel pursuant to the Acquisition Omnibus Agreement and failed todo 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 interestin a business 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), asdetermined in good faith by us, we must offer to sell such Drybulk Carrier(s) and related charter to Navios Holdings or Navios Partners, as the case maybe, for their fair market value plus any additional tax or other similar costs to us that would be required to transfer the Drybulk Carrier(s) and relatedcharter(s) to Navios Holdings 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 business acquired is attributable to a Drybulk Carrier(s) and related charter(s), asdetermined in good faith by us, we shall notify Navios Holdings or Navios Partners, as the case may be, in writing of the proposed acquisition. NaviosHoldings or Navios Partners, as the case may be, shall, not later than the 15th calendar day following receipt of such notice, notify us if it wishes toacquire the Drybulk Carrier(s) forming part of the business or package of assets in 109Table of Contentscooperation and simultaneously with us acquiring the Non-Drybulk Carrier assets forming part of that business or package of assets. If Navios Holdingsand Navios Partners do not notify us of their intent to pursue the acquisition within 15 calendar days, we may proceed with the acquisition as providedin (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 NaviosPartners described in paragraph (1) above, pending their determination whether to accept such offer and pending the closing of any offer they accept; or(3) prevent us or any of our subsidiaries from acquiring, operating or chartering a Drybulk Carrier(s) if Navios Holdings and Navios Partners havepreviously advised us that they consent to such acquisition, operation or charter, or if they have previously been offered the opportunity to purchase suchDrybulk Carrier(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.The Midstream Omnibus AgreementNavios Acquisition entered into an Omnibus Agreement (the “Midstream Omnibus Agreement”), with Navios Midstream, Navios Holdings and NaviosPartners in connection with the Navios Midstream IPO, pursuant to which Navios Acquisition, Navios Midstream, Navios Holdings, Navios Partners and theircontrolled affiliates generally have agreed not to acquire or own any VLCCs, crude oil tankers, refined petroleum product tankers, LPG tankers or chemicaltankers under time charters of five or more years without the consent of Navios Maritime Midstream GP LLC (“the Navios Midstream General Partner”). TheMidstream Omnibus Agreement contains significant exceptions that will allow Navios Acquisition, Navios Holdings, Navios Partners or any of theircontrolled affiliates to compete with Navios Midstream under specified circumstances.Under the Midstream Omnibus Agreement, Navios Midstream and its subsidiaries will grant to Navios Acquisition a right of first offer on any proposedsale, transfer or other disposition of any of its VLCCs or any crude oil tankers, refined petroleum product tankers, LPG tankers or chemical tankers and relatedcharters owned or acquired by Navios Midstream. Likewise, Navios Acquisition will agree (and will cause its subsidiaries to agree) to grant a similar right offirst offer to Navios Midstream for any of the VLCCs, crude oil tanker, refined petroleum product tanker, LPG tanker or chemical tanker under charter for fiveor more years it might own. These rights of first offer will not apply to a (a) sale, transfer or other disposition of vessels between any affiliated subsidiaries, orpursuant to the terms of any charter or other agreement with a charter party or (b) merger with or into, or sale of substantially all of the assets to, anunaffiliated third-party.Backstop AgreementOn November 18, 2014, Navios Acquisition entered into a backstop agreement with Navios Midstream. In accordance with the terms of the backstopagreement, Navios Acquisition has committed to charter–in the Shinyo Ocean and the Shinyo Kannika for a two-year period at the time of their redelivery atthe currently contracted rate if the market charter rate is lower than the currently contracted rate. Furthermore, Navios Acquisition has committed to charter–inthe following option vessels: a) the Nave Celeste for a two-year period at the time of her redelivery at the currently contracted rate if the market charter rate islower than the currently contracted rate; and b) the Nave Galactic and the Nave Quasar for a four-year period at the net time charter-out rate per day (net ofcommissions) of $35,000 if the market charter rate is lower than the charter-out rate of $35,000. Conversely, if market charter rates are higher during thebackstop period, such vessels will be chartered out to third-party charterers at prevailing market rates and Navios Acquisition’s backstop commitment willnot be triggered. The backstop commitment does not include any profit-sharing. 110Table of ContentsNavios Midstream General Partner Option Agreement with Navios HoldingsNavios Acquisition entered into an option agreement, dated November 18, 2014, with Navios Holdings under which Navios Acquisition grants NaviosHoldings the option to acquire any or all of the outstanding membership interests in the Navios Midstream General Partner and all of the incentivedistribution rights in Navios Midstream representing the right to receive an increasing percentage of the quarterly distributions when certain conditions aremet. The option shall expire on November 18, 2024. Any such exercise shall relate to not less than twenty- five percent of the option interest and thepurchase price for the acquisition of all or part of the option interest shall be an amount equal to its fair market value.Option Vessels: Navios Acquisition has granted options to Navios Midstream exercisable until November 2016, to purchase up to seven VLCCs fromNavios Acquisition at fair market value.Rights of First OfferUnder the Acquisition Omnibus Agreement, we and our subsidiaries will grant to Navios Holdings and Navios Partners, as the case may be, a right offirst offer on any proposed sale, transfer or other disposition of any of our Drybulk Carriers and related charters owned or acquired by us. Likewise, NaviosHoldings and Navios Partners will agree (and will cause its subsidiaries to agree) to grant a similar right of first offer to us for any Liquid Shipment Vessels itmight own. These rights of first offer will not apply to a: (a) sale, transfer or other disposition of vessels between any affiliated subsidiaries, or pursuant to theterms of any 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.Prior to engaging in any negotiation regarding any vessel disposition with respect to a Liquid Shipment Vessel(s) with a non-affiliated third party orany Drybulk Carrier(s) and related charter, we, Navios Holdings, or Navios Partners, as the case may be, will deliver a written notice to the other parties settingforth the material terms and conditions of the proposed transaction. During the 15-day period after the delivery of such notice, we, Navios Holdings or NaviosPartners, as the case may be, will negotiate in good faith to reach an agreement on the transaction. If we do not reach an agreement within such 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 of the vessel to a thirdparty (or to agree in writing to undertake such transaction with a third party) on terms generally no less favorable to us or Navios Holdings, as the case maybe, 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 Omnibus Agreement willterminate immediately as to Navios Partners, but shall remain binding on us and Navios Holdings. Upon a change of control of Navios Holdings, thenoncompetition and the right of first offer provisions of the Acquisition Omnibus Agreement shall terminate; provided, however, that in no event shall thenoncompetition and the rights of first refusal terminate upon a change of control of Navios Holdings prior to the fourth anniversary of the AcquisitionOmnibus Agreement. Upon change of control of us, the noncompetition and the right of first offer provisions of the Acquisition Omnibus Agreement willterminate immediately as to all parties of the Acquisition Omnibus Agreement. C.Interest of Experts and CounselNot Applicable. 111Table of ContentsItem 8.Financial Information A.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 atpresent party to any legal proceedings or aware of any proceedings against us, or contemplated to be brought against us, that would have a material effect onour business, financial position, results of operations or liquidity. We maintain insurance policies with insurers in amounts and with coverage anddeductibles as our board of directors believes are reasonable and prudent. We expect that these claims would be covered by insurance, subject to customarydeductibles. Those claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources.Dividend 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 continued declaration and payment of any dividend remains subject to the discretion of the Board of Directors, and will depend on, amongother things, Navios Acquisition’s cash requirements as measured by market opportunities and conditions. In addition, the terms and provisions of our currentsecured credit facilities and our indenture limit our ability to pay dividends in excess of certain amounts or if certain covenants are not met. (See also “LongTerm Debt Obligations and Credit Arrangements.”)On November 8, 2013, the Board of Directors declared a quarterly cash dividend for the third quarter of 2013 of $0.05 per share of common stock. Adividend in the aggregate amount of $7.2 million was paid on January 7, 2014 out of which $6.8 million was paid to the stockholders of record as ofDecember 19, 2013 including holders of restricted stock and $0.4 million was paid to Navios Holdings, the holder of the 1,000 shares of the Series Cpreferred stock (see Note 16, Transactions with Related Parties).On February 7, 2014, the Board of Directors of Navios Acquisition declared a quarterly cash dividend for the fourth quarter of 2013 of $0.05 per shareof common stock. A dividend in the aggregate amount of $8.0 million was paid on April 8, 2014 out of which $7.6 million was paid to the stockholders ofrecord as of March 19, 2014 and $0.4 million was paid to Navios Holdings, the holder of the 1,000 shares of the Series C preferred stock.On May 9, 2014, the Board of Directors declared a quarterly cash dividend in respect of the first quarter of 2014 of $0.05 per share of common stockpayable on July 3, 2014 to stockholders of record as of June 17, 2014. A dividend in the aggregate amount of $8.0 million was paid on July 3, 2014 out ofwhich $7.6 million was paid to the stockholders of record as of June 17, 2014 and $0.4 million was paid to Navios Holdings, the holder of the 1,000 shares ofthe Series C preferred stock.On August 11, 2014, the Board of Directors declared a quarterly cash dividend in respect of the second quarter of 2014 of $0.05 per share of commonstock payable on October 1, 2014 to stockholders of record as of September 17, 2014. A dividend in the aggregate amount of $8.0 million was paid onOctober 2, 2014 out of which $7.6 million was paid to the stockholders of record as of September 17, 2014 and $0.4 million was paid to Navios Holdings, theholder of the 1,000 shares of the Series C preferred stock.On October 31, 2014, the Board of Directors declared a quarterly cash dividend in respect of the third quarter of 2014 of $0.05 per share of commonstock payable on January 6, 2015 to stockholders of record as of December 17, 2014. A dividend in the aggregate amount of $8.0 million was paid onJanuary 6, 2015 out of which $7.6 million was paid to the stockholders of record as of December 17, 2014 and $0.4 million was paid to Navios Holdings, theholder of the 1,000 shares of the Series C preferred stock. 112Table of ContentsAs of December 31, 2014, Navios Acquisition paid a dividend of $0.8 million to the holders of the 540 shares of Series B and Series D Preferred Stock.On February 6, 2015, the Board of Directors declared a quarterly cash dividend in respect of the fourth quarter of 2014 of $0.05 per share of commonstock payable on April 2, 2015 to stockholders of record as of March 18, 2015.The declaration and payment of any further dividends remain subject to the discretion of the Board of Directors and will depend on, among otherthings, Navios Acquisition’s cash requirements as measured by market opportunities and restrictions under its credit agreements and other debt obligationsand such other factors as the Board of Directors may deem advisable. B.Significant ChangesNot Applicable. Item 9.Listing DetailsOur shares of common stock are traded on the New York Stock Exchange under the symbol “NNA.”The following table sets forth the high and low closing sales prices of Navios Acquisition’s common stock on the New York Stock Exchange. Price RangeCommonStock High Low Year Ended: December 31, 2014 $4.85 $2.47 December 31, 2013 $4.50 $2.45 December 31, 2012 $3.66 $2.11 December 31, 2011 $4.55 $2.51 December 31, 2010 $9.95 $3.84 Quarter Ended: December 31, 2014 $3.73 $2.47 September 30, 2014 $3.68 $2.71 June 30, 2014 $3.90 $3.49 March 31, 2014 $4.85 $3.63 December 31, 2013 $4.50 $3.66 September 30, 2013 $4.16 $3.47 June 30, 2013 $3.96 $3.10 March 31, 2013 $3.45 $2.45 Month Ended: March 31, 2015 (through March 25, 2015) $3.55 $3.20 February 28, 2015 $3.60 $3.35 January 31, 2015 $4.00 $3.33 December 31, 2014 $3.73 $2.73 November 30, 2014 $3.14 $2.56 October 31, 2014 $3.17 $2.47 September 30, 2014 $3.42 $2.71 113Table of ContentsItem 10.Additional Information A.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 of Form 6-K filed onJune 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 of Form 6-K filed onNovember 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, to which we or anyof 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 of exhibits inItem 19. • Indenture, dated October 21, 2010, among Navios Acquisition, Navios Acquisition Finance, the guarantors party thereto and Wells Fargo Bank,National Association (“Wells Fargo”), as trustee and collateral trustee (the “Indenture”). Please read “Item 5. Operating and Financial Review andProspects” for a summary of certain contract terms. • First Supplemental Indenture, dated November 9, 2010, among Navios Acquisition, Navios Acquisition Finance, the guarantors party thereto andWells Fargo, 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 andWells Fargo, 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 andWells Fargo, to ratify and confirm the Indenture following the issuance of the Additional Notes. Please read “Item 5. Operating and FinancialReview and Prospects” for a summary of certain terms relating to the Additional Notes. • Fourth Supplemental Indenture dated July 1, 2011, among Navios Acquisition, Navios Acquisition Finance, the guarantors party thereto andWells 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 theretoand Wells Fargo, which was entered into in order to add the entities identified in such Fifth Supplemental Indenture as guarantors to theIndenture. • Sixth Supplemental Indenture dated June 20, 2013, among Navios Acquisition, Navios Acquisition Finance, the guarantors party thereto andWells Fargo, which was entered into in order to add the entities identified in such Sixth Supplemental Indenture as guarantors to the Indenture. • Seventh Supplemental Indenture dated August 12, 2013, among Navios Acquisition, Navios Acquisition Finance, the guarantors party theretoand Wells Fargo, which was entered into in order to add the entities identified in such Sixth Supplemental Indenture as guarantors to theIndenture. • Eighth Supplemental Indenture dated November 13, 2013, among Navios Acquisition, Navios Acquisition Finance, the guarantors party theretoand Wells Fargo, which was entered into in order to eliminate or modify most of the restrictive covenants and certain events of default, andrelease the liens for the benefit of the holders on the assets that secure the 2017 Notes, and make certain other changes. 114Table of Contents • Indenture, dated November 13, 2013, among Navios Acquisition, Navios Acquisition Finance, the guarantors party thereto and Wells FargoBank, National Association, as trustee and collateral trustee. Please read “Item 5. Operating and Financial Review and Prospects” for a summaryof certain contract terms. • Acquisition Agreement, dated April 8, 2010, between Navios Acquisition and Navios Holdings. Please read “Item 5. Operating and FinancialReview and Prospects” 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. MajorStockholders and Related Party Transactions” for a summary of certain contract terms. • Amendment to the Management Agreement dated May 4, 2012. Please read “Item 7. Major Stockholders and Related Party Transactions” for asummary of certain contract terms. • Administrative Services Agreement, dated May 28, 2010, between Navios Acquisition and Navios Ship Management Inc. Please read “Item 7.Major Stockholders 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.Major Shareholders and Related Party Transactions” for a summary of certain contract terms. • Midstream Omnibus Agreement dated November 18, 2014 among Navios Midstream, Navios Holdings and Navios Partners in connection withthe Navios Midstream IPO. • Securities Purchase Agreement, dated July 18, 2010, between Navios Acquisition and Vanship Holdings Limited, entered into in connectionwith the VLCC Acquisition. • 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. Please read “Item 5. Operating and Financial Review and Prospects” for a summary of certain contractterms. • Credit Agreement, dated April 8, 2010, among certain vessel-owning subsidiaries and DVB Bank S.E. and Fortis Bank. Please read “Item 5.Operating and Financial 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 CyprusPopular Bank Co Ltd. 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. andABN AMRO 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 $52.0 million term loan facility, whichamends certain terms of the Facility Agreement, including providing for additional definitions relating to new charters, amending provisionsrelating to prepayments upon termination of charters within a certain period of time and associated adjustments to the repayment installmentsand providing for mandatory prepayment of a minimal amount, and an associated adjustment to a future installment payment, in the event theinitial charter period is not extended by July 2012. • Facility Agreement for $52.2 million term loan facility, dated October 26, 2010, between Navios Acquisition and Eurobank Ergasias S.A. Pleaseread “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. Pleaseread “Item 5. Operating and Financial Review and Prospects” for a summary of certain contract terms. 115Table of Contents • 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 $28.1 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 $56.3 million term loan facility, dated December 29, 2011, among Navios Acquisition, DVB Bank SE and Emporiki Bankof Greece 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”). Pleaseread “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 datefrom April 1, 2012 to December 31, 2014. • Facility Agreement for $48.5 million term loan facility, dated July 9, 2013, between Navios Acquisition (through Iraklia Shipping Corporation,Samothrace Shipping Corporation and Thasos Shipping Corporation, its wholly-owned subsidiaries) and Deutsche Bank AG FilialeDeutschlandgeschäft. Please read “Item 5. Operating and Financial Review and Prospects” for a summary of certain contract terms. • Facility Agreement for $40.3 million term loan facility, dated August 20, 2013, between Navios Acquisition (through Donoussa ShippingCorporation and Schinousa Shipping Corporation, its wholly-owned subsidiaries) and HSH Nordbank AG. Please read “Item 5. Operating andFinancial Review and Prospects” for a summary of certain contract terms. • Facility Agreement for $51.0 million term loan facility, dated February 6, 2014, between Navios Acquisition (through Tinos ShippingCorporation and Thera Shipping Corporation, its wholly-owned subsidiaries) and HSH Nordbank AG. Please read “Item 5. Operating andFinancial Review and Prospects” for a summary of certain contract terms. • Loan Agreement between Navios Europe, Navios Acquisition, Navios Holdings. and Navios Partners, as lenders, Navios Partners Europe FinanceInc., as agent, Navios Acquisition Europe Finance Inc., a wholly owned subsidiary of Navios Acquisition, as arranger and Navios HoldingsEurope Finance Inc., as security trustee, dated December 13, 2013 relating to a term facility of up to $10.0 million and a revolving facility of upto $24.1 million entered into for the purpose of partly financing the acquisition cost of ten vessels by the term facility and for providingadditional working capital to Navios Europe pursuant to the Master Agreement, dated December 13, 2013, between Navios Europe and HSHNordbank AG. • Term loan facility agreement of up to $132.4 million, dated July 18, 2014, with Deutsche Bank AG Filiale Deutschlandgeschäft andSkandinaviska Enskilda Banken AB. Please read “Item 5. Operating and Financial Review and Prospects” for a summary of certain contractterms. • Short term credit facility for up to $200.0 million, dated November 11, 2014, with Navios Holdings for general corporate purposes. Please read“Item 5. Operating and Financial Review and Prospects” for a summary of certain contract terms. 116Table of Contents • Securities Purchase Agreement, dated February 26, 2013, between Navios Acquisition and Navios Holdings for the purchase by Navios Holdingsof 17,544,300 shares of common stock of Navios Acquisition for $2.85 per share in a private placement that was completed on February 26,2013. • Form of Co-Investment Share Purchase Agreement, which was entered into by Navios Acquisition and certain members of the management ofNavios Acquisition, Navios Holdings and Navios Partners for the purchase of an aggregate of 158,191 shares of common stock of NaviosAcquisition for $2.85 per share in a private placement that was completed on February 26, 2013. • Registration Rights Agreement, dated February 26, 2013, between Navios Acquisition and Navios Holdings and the management investors partythereto. Please read “Item 7. Major Stockholders and Related Party Transactions” for a summary of certain contract terms. • Securities Purchase Agreement, dated May 21, 2013, between Navios Acquisition and Navios Holdings for the purchase by Navios Holdings of16,438,356 shares of common stock of Navios Acquisition for $3.65 per share in a private placement that was completed on May 21, 2013. • Registration Rights Agreement, dated May 21, 2013, between Navios Acquisition and Navios Holdings. Please read “Item 7. Major Stockholdersand Related Party Transactions” for a summary of certain contract terms. • Securities Purchase Agreement, dated September 16, 2013, between Navios Acquisition and Navios Holdings for the purchase by NaviosHoldings of 12,897,013 shares of common stock of Navios Acquisition for $3.85 per share in a private placement that was completed onSeptember 16, 2013. • Registration Rights Agreement, dated September 16, 2013, between Navios Acquisition and Navios Holdings. Please read “Item 7. MajorStockholders and Related Party Transactions” for a summary of certain contract terms. • First Supplemental Indenture, dated January 8, 2014, among Navios Acquisition, Navios Acquisition Finance, the guarantors party thereto andWells Fargo Bank, National Association, as trustee and collateral trustee. Please read “Item 5. Operating and Financial Review and Prospects” fora summary of certain contract terms. • Second Supplemental Indenture, dated February 20, 2014, among Navios Acquisition, Navios Acquisition Finance, the guarantors party theretoand Wells Fargo Bank, National Association, as trustee and collateral trustee. Please read “Item 5. Operating and Financial Review andProspects” for a summary of certain contract terms. • Third Supplemental Indenture, dated March 31, 2014, among Navios Acquisition, Navios Acquisition Finance, the guarantors party thereto andWells Fargo Bank, National Association, as trustee and collateral trustee. Please read “Item 5. Operating and Financial Review and Prospects” fora summary of certain contract terms. • Fourth Supplemental Indenture dated May 28, 2014, among Navios Acquisition, Navios Acquisition Finance, the guarantors party thereto andWells Fargo Bank, National Association, as trustee and collateral trustee. Please read “Item 5. Operating and Financial Review and Prospects” fora summary of certain contract terms. • Fifth Supplemental Indenture dated December 4, 2014, among Navios Acquisition, Navios Acquisition Finance, the guarantors party thereto andWells Fargo Bank, National Association, as trustee and collateral trustee. Please read “Item 5. Operating and Financial Review and Prospects” fora summary of certain contract terms. • Backstop Agreement, dated November 18, 2014, with Navios Midstream providing for a backstop commitment relating to Shinyo Ocean andShinyo Kannika and for three of the seven option vessels. Please read “Item 7. Major Shareholders and Related Party Transactions” for asummary of certain contract terms. 117Table of Contents • Navios Midstream General Partner Option Agreement, dated November 18, 2014, between Navios Acquisition and Navios Holdings. Please read“Item 7. Major Shareholders and Related Party Transactions” for a summary of certain contract terms. • Option Vessels Backstop Agreement, dated as of November 18, 2014, between Navios Midstream and Navios Acquisition. Please read “Item 7.Major Shareholders and Related Party Transactions” for a summary of certain contract terms. • Amendment to the Management Agreement dated May 14, 2014. Please read “Item 7. Major Stockholders and Related Party Transactions” for asummary of certain contract terms. • Amendment to the Administrative Services Agreement dated May 14, 2014. Please read “Item 7. Major Stockholders and Related PartyTransactions” for a summary of certain contract terms. 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 118Table of ContentsMATERIAL INCOME TAX CONSIDERATIONSMarshall Islands Tax ConsiderationsWe are incorporated in the Marshall Islands. Under current Marshall Islands law, we are not subject to tax on income or capital gains, and no MarshallIslands withholding tax will be imposed upon payments of dividends by us to our stockholders. Under the laws of Marshall Islands, of the companies’incorporation and vessels’ registration, the companies are subject to registration and tonnage taxes which have been included in the daily management fee.Other JurisdictionsThe Marshall Islands, Cayman Islands, British Virgin Islands, and Hong Kong, do not impose a tax on international shipping income. As of January 1,2014, foreign-flagged vessels that are managed by Greek or foreign ship management companies in Greece are subject to duties towards the Greek state whichare calculated on the basis of the relevant vessels’ tonnage. The payment of such duties exhausts the tax liability of the foreign ship owning company and therelevant manager against any tax duty, charge or contribution payable on income from the exploitation of the foreign flagged vessel.Material U.S. Federal Income Tax ConsequencesThe following discussion addresses the material U.S. federal income tax consequences relating to the purchase, ownership and disposition of shares ofour common stock by beneficial owners of such shares. This discussion is based on current provisions of the Internal Revenue Code of 1986, as amended (the“Code”), treasury regulations promulgated under the Code (“Treasury Regulations”), Internal Revenue Service (“IRS”) rulings and pronouncements, andjudicial decisions now in effect, all of which are subject to change at any time by legislative, judicial or administrative action. Any such changes may beapplied retroactively. No rulings from the IRS have been or will be sought with respect to the U.S. federal income tax consequences discussed below. Thediscussion below is not in any way binding on the IRS or the courts nor does it in any way constitute an assurance that the U.S. federal income taxconsequences discussed herein will be accepted by the IRS or the courts.The U.S. federal income tax consequences to a beneficial owner of shares of our common stock may vary depending upon such beneficial owner’sparticular situation or status. This discussion is limited to beneficial owners of shares of our common stock who hold such shares as capital assets, and it doesnot address aspects of U.S. federal income taxation that may be relevant to such beneficial owners that are subject to special treatment under U.S. federalincome tax laws, including but not limited to: dealers in securities; banks and other financial institutions; insurance companies; tax-exempt organizations,plans or accounts; persons holding shares of our common stock as part of a “hedge,” “straddle” or other risk reduction transaction; persons holding shares ofour common stock through partnerships, trusts or other entities; beneficial owners of shares of our common stock that own 2% or more (by vote or value) ofour outstanding capital stock; U.S. Holders (as defined below) whose functional currency is not the U.S. dollar; and controlled foreign corporations or passiveforeign investment companies, as those terms are defined in the Code. In addition, this discussion does not consider the effects 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 shares of our common stock that is, for U.S. federal income tax purposes: acitizen or resident of the United States; a corporation (or other entity that is classified as a corporation for U.S. federal income tax purposes) created ororganized in or under the laws of the United States or any state thereof (including the District of Columbia); an estate the income of which is subject to U.S.federal income tax regardless of its source; or a trust, if a court within the United States can exercise primary supervision over its administration, and one ormore “United States persons” (as defined in the Code) have the authority to control all of the substantial decisions of that trust (or the trust was in existenceon August 20, 1996, was treated as a domestic trust on August 19, 1996 and validly elected to continue to be treated as a domestic trust). 119Table of ContentsFor purposes of this discussion, a beneficial owner of shares of our common stock (other than a partnership or an entity or arrangement treated as apartnership for U.S. federal income tax purposes) that is not a U.S. Holder is a “Non-U.S. Holder.”If a partnership or other entity or arrangement classified as a partnership for U.S. federal income tax purposes holds shares of our common stock, the taxtreatment of its partners generally will depend upon the status of the partner, the activities of the partnership and certain determinations made at the partnerlevel. If you are a partner in a partnership holding shares of our common stock, you should consult your own tax advisor regarding the tax consequences toyou of the partnership’s ownership of shares of our common stock.We urge beneficial owners of shares of our common stock to consult their own tax advisers as to the particular tax considerations applicable tothem relating to the purchase, ownership and disposition of shares of our common stock, including the applicability of U.S. federal, state and local taxlaws and non-U.S. tax laws.U.S. Federal Income Taxation of Navios AcquisitionNavios Acquisition is a foreign company that is treated as a corporation for U.S. federal income tax purposes and it neither has made, nor intends tomake, an election to be treated as other than a corporation for U.S. federal income tax purposes. Consequently, among other things, U.S. Holders will notdirectly be subject to U.S. federal income tax on their shares of our income, but rather will be subject to U.S. federal income tax on distributions received fromus and dispositions of shares of our common stock as described below.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 federal incometaxation in respect of any income that is derived from the use of vessels, from the hiring or leasing of vessels for use on a time, voyage or bareboat charterbasis, from the participation in a pool, partnership, strategic alliance, joint operating agreement, code sharing arrangements or other joint venture it directlyor indirectly owns or participates in that generates such income, or from the performance of services directly related to those uses, which we refer to as“shipping income.” to the extent that the shipping income is derived from sources within the United States. For these purposes, 50% of shipping income thatis attributable to transportation that begins or ends, but that does not both begin and end, in the United States constitutes income from sources within theUnited States, which we refer to as “U.S.-source shipping income.”Shipping income attributable to transportation that both begins and ends in the United States is considered to be 100% from sources within the UnitedStates. Navios Acquisition is not permitted by law to engage in transportation that produces income which is considered to be 100% from sources within theUnited States.Shipping income attributable to transportation exclusively between non-U.S. ports will be considered to be 100% derived from sources outside theUnited States. Shipping income derived from sources outside the United States will not be subject to any United States federal income tax. In the absence ofexemption from tax under Section 883 of the Code, Navios Acquisition’s gross U.S.-source shipping income would be subject to a 4% tax imposed withoutallowance 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. corporation satisfies therequirements of Section 883 of the Code and the Treasury Regulations thereunder, it will not be subject to the net basis and branch profits taxes or the 4%gross basis tax (each as described below) on its U.S.-source shipping income. 120Table of ContentsUnder 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 “equivalent exemption”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 are organized ina foreign country that grants an “equivalent exemption” to corporations organized in the United States or (iii) certain other qualified personsdescribed 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 that grants an“equivalent exemption” to U.S. corporations, or in the United States, which we refer to as the “Publicly-Traded Test.”Currently, the jurisdiction where we are incorporated, as well as the jurisdictions where our vessel-owning subsidiaries are incorporated, namely, theRepublic 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.-source shipping income if we satisfy either the 50%Ownership Test or the Publicly-Traded Test. Our ability to satisfy the 50% Ownership Test and Publicly-Traded Test is discussed below.The Treasury Regulations provide, in pertinent part, that stock of a foreign corporation will be considered to be “primarily traded” on an establishedsecurities market if the number of shares of each class of stock that are traded during any taxable year on all established securities markets in that countryexceeds the number of shares in each such class that are traded during that year on established securities markets in any other single country. Our commonstock is “primarily traded” on the New York Stock Exchange.Under the Treasury Regulations, our stock is considered to be “regularly traded” on an established securities market if one or more classes of our stockrepresenting more than 50% of our outstanding shares, by total combined voting power of all classes of stock entitled to vote and total value, is listed on themarket during the taxable year, which we refer to as the listing threshold. Since our common stock, which represents more than 50% of our outstanding sharesby 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 on the 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 aggregate number of sharesof such class of stock traded on such market during the taxable year is at least 10% of the average number of shares of such class of stock outstanding duringsuch year or as appropriately adjusted in the case of a short taxable year. We currently satisfy the trading frequency and trading volume tests. Even if thiswere not the case, the regulations provide that the trading frequency and trading volume tests will be deemed satisfied by a class of stock if such class ofstock is traded during the taxable year on an established market in the United States and such class of stock is regularly quoted by dealers making a market insuch stock, which condition our common stock meets.Notwithstanding the foregoing, the Treasury 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 121Table of Contentsconstructively 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 voteand 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 Treasury 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 Treasury 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 were able toestablish 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 approximately 43.0% of our common stock. Navios Holdings has represented to usthat it presently meets the Publicly Traded Test and has agreed to comply with the documentation and certification requirements described above.Accordingly, we anticipate that we will not be subject to the 5% Override Rule. However, there can be no assurance that Navios Holdings will continue tomeet the Publicly Traded Test or continue to be able to comply with the documentation and certification requirements described above. Consequently, therecan be no assurance that we will not be subject to the 5% Override Rule in the future.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 Code on a gross basis, withoutthe 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, themaximum effective rate of U.S. federal income tax on our shipping income would never exceed 2% of our gross income under the 4% gross basis tax regime.To the extent the benefits of the Section 883 exemption are unavailable and our U.S.-source shipping income is considered to be “effectivelyconnected” with the conduct of a U.S. trade or business, as described below, any such “effectively connected” U.S.-source shipping income, net of applicabledeductions, 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 to the 30%“branch profits” taxes on any earnings and profits effectively connected with the conduct of such trade or business, as determined after allowance for certainadjustments, 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 operation of a vessel thatfollows a published schedule with repeated sailings at regular intervals between the same points for voyages that begin or end in the UnitedStates. 122Table of ContentsWe do not intend to have, or permit circumstances that would result in having any vessel operating to the United States on a regularly scheduled 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.-source shipping incomewill be “effectively connected” with the conduct of a U.S. trade or business.United States Taxation of Gain on Sale of VesselsRegardless of whether we will qualify for exemption under Section 883, we should not be subject to U.S. federal income taxation with respect to gainrealized on a sale of a vessel, provided that we did not depreciate the vessel for U.S. federal income tax purposes. If we took depreciation deductions withrespect to the vessel for U.S. federal income tax purposes (which would be the case if the vessel had produced effectively connected income), upon the sale ofsuch vessel, a portion of any gain realized on the sale would be sourced to the U.S. in proportion to the depreciation deductions taken in the U.S. compared tothe total depreciation of the vessel.United States Federal Income Taxation of U.S. HoldersDistributionsSubject to the discussion of the rules applicable to a passive foreign investment company (“PFIC”) below, any distributions made by us with respect toour common stock to a U.S. Holder will constitute dividends, which will be taxable as ordinary income, to the extent of our current or accumulated earningsand profits, as determined under U.S. federal income tax principles. Distributions in excess of our current and accumulated earnings and profits will be treatedfirst as a nontaxable return of capital to the extent of the U.S. Holder’s tax basis in our common stock on a dollar-for-dollar basis and thereafter as capital gain,which will be either long-term or short-term capital gain depending upon whether the U.S. Holder held the common shares for more than one year. BecauseNavios Acquisition is not a U.S. corporation, U.S. Holders that are corporations will not be entitled to claim a dividends received deduction with respect toany distributions they receive from us. Dividends paid with respect to Navios Acquisition’s common stock will be treated as foreign source income andgenerally will be “passive category income” for purposes of computing allowable foreign tax credits for U.S. foreign tax credit purposes.Dividends received by a non-corporate U.S. Holder are taxed at ordinary income tax rates (currently, a maximum 39.6%) unless such dividendsconstitute “qualified dividend income.” “Qualified dividend income” generally includes a dividend paid by a foreign corporation if (i) the stock with respectto which such dividend was paid is readily tradable on an established securities market in the U.S., (ii) the foreign corporation is not a PFIC for the taxableyear during which the dividend is paid and the immediately preceding taxable year (which we do not believe we have been for 2014, or will be forsubsequent years, as discussed below), (iii) the non-corporate U.S. Holder has owned the stock for more than 60 days during the 121-day period beginning 60days before the date on which the stock become ex-dividend (and has not entered into certain risk limiting transactions with respect to such stock), and(iv) the non-corporate U.S. Holder is not under an obligation to make related payments with respect to positions in substantially similar or related property.Qualified dividend income is subject to the long-term capital gain tax rate, which is currently a maximum of 20%. In addition, a 3.8% tax may apply tocertain investment income. See “Medicare Tax” below. Because the common stock of Navios Acquisition is traded on the NYSE, dividends paid during2015 to U.S. Holders that are U.S. citizens or individual residents should generally be qualified dividend income subject to the long-term capital gains taxrate.Special rules may apply to any amounts received in respect of our common stock that are treated as “extraordinary dividends.” In general, anextraordinary dividend is a dividend with respect to a share of common stock that is equal to or in excess of 10.0% of a U.S. Holder’s adjusted tax basis (orfair market value upon the U.S. Holder’s election) in such share. In addition, extraordinary dividends include dividends received within a one year periodthat, in the aggregate, equal or exceed 20.0% of a U.S. Holder’s adjusted tax basis (or fair market value). If we pay an “extraordinary dividend” on ourcommon stock that is treated as “qualified dividend 123Table of Contentsincome,” then any loss recognized by an individual U.S. Holder from the sale or exchange of such common stock will be treated as long-term capital loss tothe extent of the amount of such dividend.Sale, Exchange or Other Disposition of Common StockSubject to the discussion of PFICs below, a U.S. Holder generally will recognize capital gain or loss upon a sale, exchange or other disposition of ashare of our common stock in an amount equal to the difference between the amount realized by the U.S. Holder from such sale, exchange or other dispositionand the U.S. Holder’s adjusted tax basis in such stock. The U.S. Holder’s initial tax basis in a share of our common stock generally will be the U.S. Holder’spurchase price for the share and that tax basis will be reduced (but not below zero) by the amount of any distributions on our common stock that are treated asnon-taxable returns of capital (as discussed under “— Distributions” above). Such gain 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 or other disposition. Such capital gain or loss will generally be treated asU.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. Holder recognizes a lossupon the disposition of our common stock, the U.S. Holder is limited to using the loss to offset other capital gain. If a corporate U.S. Holder has no othercapital 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 non-corporate U.S. Holders are subject to the current favorable tax rate of 20%. In addition, a 3.8% taxmay apply to certain investment income. See “Medicare Tax” below. A non-corporate U.S. Holder may deduct a capital loss resulting from a disposition ofour common stock to the extent of capital gains plus up to $3,000 ($1,500 for married individuals filing separate tax returns) and may carry forward long-termcapital losses indefinitely.Passive Foreign Investment Company Status and Significant Tax ConsequencesIn general, we will be treated as a PFIC with respect to a U.S. Holder if, for any taxable year in which such holder held our common stock, either: • at least 75% of our gross income for such taxable year consists of passive income (e.g., dividends, interest, capital gains and rents derived otherthan 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, passive income.For purposes of determining whether we are a PFIC, we will be treated as earning and owning our proportionate share of the income and assets,respectively, of any subsidiary corporation in which we own at least 25% of the value of the subsidiary’s stock. Income earned, or deemed earned, by us inconnection with the performance of services will not constitute passive income. By contrast, rental income will constitute “passive income” unless we aretreated as deriving our rental income in the active conduct of a trade or business under applicable rules.Based on our current and projected methods of operations, and an opinion of counsel, we believe that we were not a PFIC for the 2014, 2013 and 2012taxable years (we were treated as a PFIC for the 2009 and 2010 taxable years), and we do not believe that we will be a PFIC for 2015 and subsequent taxableyears. For post-2010 taxable years, our U.S. counsel, Thompson Hine LLP, is of the opinion that (1) the income we receive from the time chartering activitiesand assets engaged in generating such income should not be treated as passive income or assets, respectively, and (2) so long as our income from timecharters exceeds 25.0% of our gross income for each taxable year after our 2010 taxable year and the value of our vessels contracted under time chartersexceeds 50.0% of the average value of our assets for each taxable year after our 2010 taxable year, we 124Table of Contentsshould not be a PFIC for any taxable year after our 2010 taxable year. This opinion is based on representations and projections provided to our counsel by usregarding our assets, income and charters, and its validity is conditioned on the accuracy of such representations and projections.Our counsel’s opinion is based principally on their conclusion that, for purposes of determining whether we are a PFIC, the gross income we derive (orare deemed to derive from any subsidiary in which we own at least 25% by value of the subsidiary’s stock) from time chartering activities should constituteservices income, rather than rental income. Correspondingly, such income should not constitute passive income, and the assets that we own and operate (orthat we are deemed to own and operate through any subsidiary in which we own at least 25% by value of the subsidiary’s stock) in connection with theproduction of such income, in particular, the vessels we own (or we are deemed to own) that are subject to time charters, should not constitute passive assetsfor purposes of determining whether we are or have been a PFIC. We expect that all of the vessels in our fleet will be engaged in time chartering activities andintend to treat our income from those activities as non-passive income, and the vessels engaged in those activities as non-passive assets, for PFIC purposes.Our counsel has advised us that there is a significant amount of legal authority consisting of the Code, legislative history, IRS pronouncements andrulings supporting our position that the income from our time chartering activities constitutes services income (rather than rental income). There is, however,no direct legal authority under the PFIC rules addressing whether income from time chartering activities is services income or rental income. Moreover, in acase not interpreting the PFIC rules, Tidewater Inc. v. United States, 565 F.3d 299 (5th Cir. 2009), the Fifth Circuit held that the vessel time charters at issuegenerated predominantly rental income rather than services income. However, the IRS stated in an Action on Decision (AOD 2010-001) that it disagrees with,and will not acquiesce to, the way that the rental versus services framework was applied to the facts in the Tidewater decision, and in its discussion stated thatthe time charters at issue in Tidewater would be treated as producing services income for PFIC purposes. The IRS’s AOD, however, is an administrative actionthat cannot be relied upon or otherwise cited as precedent by taxpayers.The opinion of our counsel is not binding on the IRS or any court. Thus, while we have received an opinion of our counsel in support of our position,there is a possibility that the IRS or a court could disagree with this position and the opinion of our counsel. In addition, although we intend to conduct ouraffairs in a manner to avoid being classified as a PFIC with respect to any taxable year, we cannot assure you that the nature of our operations will not changein the future.As discussed more fully below, if we were to be treated as a PFIC for any taxable year in which a U.S. Holder owned our common stock, the U.S. Holderwould be subject to different taxation rules depending on whether the U.S. Holder makes an election to treat us as a “Qualified Electing Fund,” which we referto as a “QEF election.” (As previously discussed, we were not a PFIC for the 2012, 2013 and 2014 taxable years and we do not believe that we will be treatedas a PFIC for 2015 and subsequent taxable years.) As an alternative to making a QEF election, the U.S. Holder should be able to make a “mark-to-market”election with respect to our common stock, as discussed below. In addition, if we were treated as a PFIC for any taxable year in which a U.S. Holder owned ourcommon stock, the U.S. Holder generally would be required to file IRS Form 8621 with the U.S. Holder’s U.S. federal income tax return for each year to reportthe U.S. Holder’s ownership of such common stock. It should also be noted that, if we were treated as a PFIC for any taxable year in which a U.S. Holderowned our common stock and any of our non-U.S. subsidiaries were also a PFIC, the U.S. Holder would be treated as owning a proportionate amount (byvalue) of the shares of the lower-tier PFIC for purposes of the application of these rules.Taxation of U.S. Holders Making a Timely QEF ElectionIf we were to be treated as a PFIC for any taxable year and a U.S. Holder makes a timely QEF election (any such U.S. Holder, an “Electing Holder”), theElecting Holder must report for U.S. federal income tax purposes its pro rata share of our ordinary earnings and net capital gain, if any, for our taxable yearthat ends with or within 125Table of Contentsthe Electing Holder’s taxable year, regardless of whether or not the Electing Holder received any distributions from us in that year. Such income inclusionswould not be eligible for the preferential tax rates applicable to “qualified dividend income.” The Electing Holder’s adjusted tax basis in our common stockwill be increased to reflect taxed but undistributed earnings and profits. Distributions to the Electing Holder of our earnings and profits that were previouslytaxed will result in a corresponding reduction in the Electing Holder’s adjusted tax basis in our common stock and will not be taxed again once distributed.The Electing Holder would not, however, be entitled to a deduction for its pro rata share of any losses that we incur with respect to any year. An ElectingHolder generally will recognize capital gain or loss on the sale, exchange or other disposition of our common stock.Even if a U.S. Holder makes a QEF election for one of our taxable years, if we were a PFIC for a prior taxable year during which the U.S. Holder ownedour common stock and for which the U.S. Holder did not make a timely QEF election, the U.S. Holder would also be subject to the more adverse rulesdescribed below under “Taxation of U.S. Holders Not Making a Timely QEF or Mark-to-Market Election.” However, under certain circumstances, a U.S.Holder may be permitted to make a retroactive QEF election with respect to us for any open taxable years in the U.S. Holder’s holding period for our commonstock in which we are treated as a PFIC. Additionally, to the extent that any of our subsidiaries is a PFIC, a U.S. Holder’s QEF election with respect to uswould not be effective with respect to the U.S. Holder’s deemed ownership of the stock of such subsidiary and a separate QEF election with respect to suchsubsidiary would be required.A U.S. Holder makes a QEF election with respect to any year that we are a PFIC by filing IRS Form 8621 with the U.S. Holder’s U.S. federal income taxreturn. If, contrary to our expectations, we were to determine that we are treated as a PFIC for any taxable year, we would notify all U.S. Holders and wouldprovide all necessary information to any U.S. Holder that requests such information in order to make the QEF election described above with respect to us andthe relevant subsidiaries. A QEF election would not apply to any taxable year for which we are not a PFIC, but would remain in effect with respect to anysubsequent taxable year for which we are a PFIC, unless the IRS consents to the revocation of the election.Taxation of U.S. Holders Making a “Mark-to-Market” ElectionIf we were to be treated as a PFIC for any taxable year and, as we anticipate, our common stock were treated as “marketable stock,” then, as analternative to making a QEF election, a U.S. Holder would be allowed to make a “mark-to-market” election with respect to our common stock, provided theU.S. Holder completes and 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 the U.S. Holder’s common stock atthe end of the taxable year over the holder’s adjusted tax basis in the common stock. The U.S. Holder also would be permitted an ordinary loss in respect ofthe excess, if any, of the U.S. Holder’s adjusted tax basis in the common stock over the fair market value thereof at the end of the taxable year, but only to theextent of the net amount previously included in income as a result of the mark-to-market election. A U.S. Holder’s tax basis in the U.S. Holder’s commonstock would be adjusted to reflect any such income or loss recognized. Gain recognized on the sale, exchange or other disposition of our common stockwould be treated as ordinary income, and any loss recognized on the sale, exchange or other disposition of the common stock would be treated as ordinaryloss to the extent that such loss does not exceed the net mark-to-market gains previously included in income by the U.S. Holder. A mark-to-market electionwould not apply to our common stock owned by a U.S. Holder in any taxable year during which we are not a PFIC, but would remain in effect with respect toany subsequent taxable year for which we are a PFIC, unless our common stock is no longer treated as “marketable stock” or the IRS consents to therevocation of the election.Even if a U.S. Holder makes a “mark-to-market” election for one of our taxable years, if we were a PFIC for a prior taxable year during which the U.S.Holder owned our common stock and for which the U.S. Holder did not make a timely mark-to-market election, the U.S. Holder would also be subject to themore adverse rules described below under “Taxation of U.S. Holders Not Making a Timely QEF or Mark-to-Market Election.” 126Table of ContentsAdditionally, to the extent that any of our subsidiaries is a PFIC, a “mark-to-market” election with respect to our common stock would not apply to the U.S.Holder’s deemed ownership of the stock of such subsidiary.Taxation of U.S. Holders Not Making a Timely QEF or Mark-to-Market ElectionIf we were to be treated as a PFIC for any taxable year, a U.S. Holder who does not make either a timely QEF election 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 as a “Non-Electing Holder,” would besubject to special rules resulting in increased tax liability 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 125.0% of the average annual distributions received by the Non-Electing Holder inthe three preceding taxable years, or, if shorter, the Non-Electing Holder’s holding period for the common stock), and (2) any gain realized on the sale,exchange or other disposition of our common stock. Under these special rules: • the excess distribution and any gain would be allocated ratably over the Non-Electing Holder’s aggregate holding period for the common stock; • the amount allocated to the current taxable year and any year prior to the year we were first treated as a PFIC with respect to the Non-ElectingHolder 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 oftaxpayer for that year, and an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable toeach such other taxable 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 the precedingyear) 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-Electing Holderwho 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 to suchstock. Additionally, to the extent that any of our subsidiaries is a PFIC, the foregoing consequences would apply to the U.S. Holder’s deemed receipt of anyexcess distribution on, or gain deemed realized on the disposition of, the stock of such subsidiary deemed owned by the U.S. Holder.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 QEF election,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, we willcontinue to be treated as a PFIC for all succeeding years during which the U.S. Holder owns our common stock even if we are not a PFIC 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 a situation. In thisregard, while it is our position and our U.S. counsel’s position that we should not be a PFIC for 2012, 2013 or 2014 and we believe that we will not be aPFIC for subsequent taxable years, there is no assurance that these positions are correct. In addition, U.S. Holders should consult their tax advisersregarding the IRS information reporting and filing obligations that may arise as a result of the ownership of shares in a PFIC.Medicare TaxA U.S. Holder that is an individual or estate, or a trust that does not fall into a special class of trusts that is exempt from such tax, will generally besubject to a 3.8% tax on the lesser of (i) the U.S. Holder’s “net investment income” for a taxable year and (ii) the excess of the U.S. Holder’s modified adjustedgross income for such taxable year over $200,000 ($250,000 in the case of joint filers). For these purposes, “net investment income” will generally includedividends paid with respect to our common stock and net gain attributable to the disposition of our common stock (in each case, unless such common stockis held in connection with certain trades or businesses), but will be reduced by any deductions properly allocable to such income or net gain. 127Table of ContentsUnited States Federal Income Taxation of Non-U.S. HoldersDistributionsA Non-U.S. Holder generally will not be subject to U.S. federal income tax or withholding tax on distributions received with respect to our commonstock if the Non-U.S. Holder is not engaged in a U.S. trade or business. If the Non-U.S. Holder is engaged in a U.S. trade or business, our distributions will besubject to U.S. federal income tax to the extent they constitute income effectively connected with the Non-U.S. Holder’s U.S. trade or business (and acorporate Non-U.S. Holder may also be subject to U.S. federal branch profits tax). However, distributions paid to a Non-U.S. Holder who is engaged in a tradeor business may be exempt from taxation under an income tax treaty if the income arising from the distribution is not attributable to a U.S. permanentestablishment maintained by the Non-U.S. Holder.Sale, Exchange or other Disposition of Common StockIn general, a Non-U.S. Holder will not be subject to U.S. federal income tax or withholding tax on any gain resulting from the disposition of ourcommon stock provided the Non-U.S. Holder is not engaged in a U.S. trade or business. A Non-U.S. Holder that is engaged in a U.S. trade or business will besubject to U.S. federal income tax in the event the gain from the disposition of our common stock is effectively connected with the conduct of such U.S. tradeor business (provided, in the case of a Non-U.S. Holder entitled to the benefits of an income tax treaty with the United States, such gain also is attributable toa U.S. permanent establishment). However, even if not engaged in a U.S. trade or business, individual Non-U.S. Holders may be subject to tax on gainresulting from the disposition of our common stock if they are present in the United States for 183 days or more during the taxable year of the disposition andmeet certain other requirements.Certain Information Reporting RequirementsIndividual U.S. Holders (and to the extent specified in applicable Treasury Regulations, certain individual Non-U.S. Holders and certain U.S. Holdersthat are entities) that hold “specified foreign financial assets,” including our common stock, whose aggregate value exceeds $75,000 at any time during thetaxable year or $50,000 on the last day of the taxable year (or such higher amounts as prescribed by applicable Treasury Regulations) are required to file areport on IRS Form 8938 with information relating to the assets for each such taxable year. Specified foreign financial assets would include, among otherthings, our common stock, unless such common stock is held in an account maintained by a U.S. “financial institution” (as defined). Substantial penaltiesapply to any failure to timely file IRS Form 8938, unless the failure is shown to be due to reasonable cause and not due to willful neglect. Additionally, in theevent an individual U.S. Holder (and to the extent specified in applicable Treasury Regulations, an individual Non-U.S. Holder or a U.S. entity) that isrequired to file IRS Form 8938 does not file such form, the statute of limitations on the assessment and collection of U.S. federal income taxes of such holderfor the related tax year may not close until three years after the date that the required information is filed. U.S. Holders (including U.S. entities) and Non-U.S.Holders 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 our common stock made to a non-corporate U.S. Holder may besubject to information reporting requirements. Such payments may also be subject to backup withholding tax (currently at a rate of 28%) 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 requiredto be shown on your federal income tax returns; or • fail to comply with applicable certification requirements. 128Table of ContentsNon-U.S. Holders may be required to establish their exemption from information reporting and backup withholding by certifying their status on anapplicable IRS Form W-8.Backup withholding tax is not an additional tax. Rather, you generally may obtain a credit of any amounts withheld against your liability for U.S.federal income tax (and obtain a refund of any amounts withheld in excess of such liability) by timely filing a U.S. federal income tax return with the IRS.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 be inspectedand copied at the public facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549, or from the SEC’s website http://www.sec.gov. Youmay obtain information on the operation of the public reference room by calling 1 (800) SEC-0330 and you may obtain copies at prescribed rates.I. Subsidiary informationNot applicable. Item 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 our operations mayexpose us to certain levels of foreign currency risk, our transactions are predominantly U.S. dollar denominated. Transactions in currencies other 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 the date atransaction denominated in a foreign currency is consummated and the date on which it is either settled or translated, are recognized. Expenses incurred inforeign currencies against which the U.S. Dollar falls in value can increase thereby decreasing our income or vice versa if the U.S. dollar increases in value.For example, during the year ended December 31, 2014, the value of U.S. dollar increased by approximately 13.3% as compared to the Euro.Interest Rate RiskAs of December 31, 2014 and 2013, Navios Acquisition had a total of $1,162.5 million and $1,154.4 million, respectively, in short term and long-termindebtness. The debt is U.S. dollar-denominated. Borrowings under our credit facilities bear interest at rates based on a premium over U.S. $ LIBOR except forthe interest rate on the Notes which is fixed. Therefore, we are exposed to the risk that our interest expense may increase if interest rates rise. For the yearended December 31, 2014, 2013 and 2012 we paid interest on our outstanding debt at a weighted average interest rate of 5.73%, 5.73% and 3.25%,respectively. A 1% increase in LIBOR would have increased our interest expense for the years ended December 31, 2014, 2013 and 2012 by $5.8 million,$5.4 million and $4.9 million, respectively. 129Table of ContentsConcentration 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, 2012, Navios Acquisition’s customers representing 10% or more of total revenue were DOSCO and STX Panocean Co Ltd,which accounted for 43.3% and 10.7% of total revenue, respectively. For the year ended December 31, 2013, Navios Acquisition’s customers representing10% or more of total revenue were DOSCO and Navig8, which accounted for 32% and 22.4% of total revenue, respectively. For the year ended December 31,2014, Navios Acquisition’s customers representing 10% or more of total revenue were Navig8 and DOSCO, which accounted for 28.8% and 22.4% of totalrevenue, respectively.Cash and Cash EquivalentsCash 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.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. 130Table of ContentsPART II Item 13.Defaults, Dividend Arrearages and DelinquenciesNone. Item 14.Material Modifications to the Rights of Shareholders and Use of ProceedsNone. Item 15.Controls and Procedures A.Disclosure Controls and ProceduresThe management of Navios Acquisition, with the participation of the Chief Executive Officer and Chief Financial Officer, conducted an evaluation,pursuant to Rule 13a-15 promulgated under the Securities Act of 1934, as amended (the “Exchange Act”), of the effectiveness of our disclosure controls andprocedures as of December 31, 2014. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controlsand procedures were effective as of December 31, 2014.Disclosure controls and procedures means controls and other procedures that are designed to ensure that information required to be disclosed by us inthe reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’srules and forms and that such information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated andcommunicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriateto allow timely decisions regarding required disclosures. B.Management’s annual report on internal control over financial reportingThe management of Navios Acquisition is responsible for establishing and maintaining adequate internal control over financial reporting as defined inRule 13a-15(f) or 15d-15(f) of the Exchange Act. Navios Acquisition’s internal control system was designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accountingprinciples in the United States (“GAAP”).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.Navios Acquisition’s management assessed the effectiveness of Navios Acquisition’s internal control over financial reporting as of December 31, 2014.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 (2013). Based on its assessment, management concluded that, as of December 31, 2014, Navios Acquisition’s internalcontrol over financial reporting is effective based on those criteria.Navios Acquisition’s independent registered public accounting firm has issued an attestation report on Navios Acquisition’s internal control overfinancial reporting. C.Attestation report of the registered public accounting firmNavios Acquisition’s independent registered public accounting firm has issued an audit report on Navios Acquisition’s internal control over financialreporting. This report appears on Page F-2 of the consolidated financial statements. 131Table of ContentsD.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 such internalcontrols over financial reporting) that occurred during the year covered by this Annual Report that have materially affected, or are reasonably likely tomaterially affect, Navios Acquisition’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 audit committee isfinancially literate under the current listing standards of the New York Stock Exchange, and our board of directors has determined that Mr. Veraros qualifiesas an “audit committee financial expert,” as such term is defined by the SEC. Mr. Veraros is independent under applicable NYSE and SEC standards. Item 16B.Code of EthicsWe have adopted a code of conduct and ethics applicable to our directors and officers in accordance with applicable federal securities laws and therules 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 the fiscal years 2014 and 2013 were PricewaterhouseCoopers S.A. The audit fees for the audit for the years endedDecember 31, 2014 and 2013 were $0.4 million and $0.6 million respectively.Audit-Related FeesThere were no audit-related fees billed in 2014 and 2013.Tax FeesThere were no tax fees billed in 2014 and 2013.Other FeesThere were no other fees billed in 2014 and 2013.Audit CommitteeThe Audit Committee is responsible for the appointment, replacement, compensation, evaluation and oversight of the work of the independentauditors. As part of this responsibility, the audit committee pre-approves the audit and non-audit services performed by the independent auditors in order toassure that they do not impair the auditors’ independence from Navios Acquisition. The Audit Committee has adopted a policy which sets forth theprocedures 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 2014 and 2013. 132Table of ContentsItem 16D.Exemptions from the Listing Standards for Audit CommitteesNot applicable. Item 16E.Purchases of Equity Securities by the Issuer and Affiliated PurchasersNone. Item 16F.Change in Registrant’s Certifying AccountantNot applicable. Item 16G.Corporate GovernancePursuant to an exception for foreign private issuers, we are not required to comply with the corporate governance practices followed by U.S. companiesunder the New York Stock Exchange listing standards. However, we have voluntarily adopted all of the New York Stock Exchange required practices. Item 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. Description1.1 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 filedon February 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)and hereby 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 (FileNo 333-151707) 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, asamended (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(File No 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 filedas an exhibit to a Report on Form 6-K filed on July 29, 2010, and hereby incorporated by reference.) 133Table of ContentsExhibitNo. Description2.5 Certificate of Designation of the Series A Convertible Preferred Stock, as filed with the Registrar of Companies of the Republic of theMarshall Islands on September 16, 2010 (Previously filed as an exhibit to a Report on Form 6-K filed on September 21, 2010, and herebyincorporated by reference.)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.)2.7 Certificate of Designation of the Series B Convertible Preferred Stock, as filed with the Registrar of Companies of the Republic of theMarshall Islands on October 29, 2010 (Previously filed as an exhibit to a Report on Form 6-K filed on November 9, 2010, and herebyincorporated by reference.)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,and hereby 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 theMarshall Islands on March 29, 2011 (Previously filed as an exhibit to a Report on Form 6-K filed on April 12, 2011, and hereby incorporatedby 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, andhereby incorporated 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,and hereby incorporated by reference.)2.14 Sixth Supplemental Indenture dated June 20, 2013 (Previously filed as an exhibit to a Report on Form 6-K filed on August 7, 2013, andhereby incorporated by reference.)2.15 Seventh Supplemental Indenture dated August 12, 2013 (Previously filed as an exhibit to a Report on Form 6-K filed on August 15, 2013,and hereby incorporated by reference.)2.16 Eighth Supplemental Indenture dated November 13, 2013 (Previously filed as an exhibit to a Report on Form 6-K filed on December 9, 2013,and hereby incorporated by reference.)2.17 Indenture dated November 13, 2013 (Previously filed as an exhibit to a Report on Form 6-K filed on December 9, 2013, and herebyincorporated by reference.)2.1 Certificate of Designation of the Series D Convertible Preferred Stock, as filed with the Registrar of Companies of the Republic of theMarshall Islands on August 24, 2012 (Previously filed as an exhibit to a Report on Form 6-K filed on November 16, 2012, and herebyincorporated by reference.)4.1 Form of Right of First Refusal Agreement among Navios Acquisition, Navios Holdings and Navios Partners (Previously filed as an exhibit tothe Navios 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 incorporatedby reference.)4.3 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.)4.4 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.) 134Table of ContentsExhibitNo. Description4.5 Management Agreement dated May 28, 2010 between Navios Acquisition and Navios Ship Management Inc. (Previously filed as an exhibitto a Report on Form 6-K filed on June 4, 2010, and hereby incorporated by reference.)4.6 Administrative Services Agreement dated May 28, 2010 between Navios Acquisition and Navios Ship Management Inc. (Previously filed asan exhibit to a Report on Form 6-K filed on June 4, 2010, and hereby incorporated by reference.)4.7 Acquisition Omnibus Agreement dated May 28, 2010 among Navios Acquisition, Navios Holdings and Navios Partners (Previously filed asan exhibit to a Report on Form 6-K filed on June 4, 2010, and hereby incorporated by reference.)4.8 Midstream Omnibus Agreement dated November 18, 2014 among Navios Midstream, Navios Holdings and Navios Partners (Previously filedas an exhibit to a Registration Statement on Form S-1 for Navios Maritime Midstream Partners LP filed on October 27, 2014, and herebyincorporated by reference.)4.9 Securities Purchase Agreement dated July 18, 2010 between Navios Acquisition and Vanship Holdings Limited (Previously filed as anexhibit to a Report on Form 6-K filed on July 26, 2010, and hereby incorporated by reference.)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 herebyincorporated by 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 Cyprus Popular Bank Co Ltd. (Previously filed as an exhibit to a Report on Form 6-K filed on June 4,2010, and hereby incorporated by reference.)4.13 Facility Agreement for $52.0 million term loan facility, dated May 28, 2010 Previously filed as an exhibit to a Report on Form 6-K filed onJune 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 filedon November 9, 2010, and hereby incorporated by reference.)4.15 Facility Agreement for $52.0 million term loan facility, dated December 6, 2010 (Previously filed as an exhibit to a Report on Form 6-K filedon January 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, andhereby incorporated 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 Reporton Form 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 onMay 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 onNovember 15, 2011, and hereby incorporated by reference.) 135Table of ContentsExhibitNo. Description4.21 Facility Agreement for $51 million term loan facility, dated December 7, 2011 (Previously filed as an exhibit to a Report on Form 6-K filedon December 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(Previously filed 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 $28.1 million term loan facility, dated December 29, 2011 (Previously filed as an exhibit to a Report on Form 6-K filed on February 22, 2012, and hereby incorporated by reference.)4.24 Facility Agreement for $56.3 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.)4.25 Facility Agreement for $48.5 million term loan facility, dated July 9, 2013 (Previously filed as an exhibit to a Report on Form 6-K filed onAugust 7, 2013, and hereby incorporated by reference.)4.26 Facility Agreement for $40.3 million term loan facility, dated August 20, 2013 (Previously filed as an exhibit to a Report on Form 6-K filedon August 27, 2013, and hereby incorporated by reference.)4.27 Facility Agreement for $51.0 million term loan facility, dated February 6, 2014 (Previously filed as an exhibit to a Report on Form 6-K filedon February 13, 2014, and hereby incorporated by reference.)4.28 Loan Agreement between Navios Europe Inc., Navios Maritime Acquisition Corporation, Navios Maritime Holdings Inc. and NaviosMaritime Partners L.P., as lenders, Navios Partners Europe Finance Inc., as agent, Navios Acquisition Europe Finance Inc., a wholly ownedsubsidiary of Navios Acquisition, as arranger and Navios Holdings Europe Finance Inc., as security trustee, dated December 13, 2013(Previously filed as an exhibit to a Report on Form 6-K filed on February 13, 2014, and hereby incorporated by reference.)4.29 Amendment to the Management Agreement dated May 4, 2012 (Previously filed as an exhibit to a Report on Form 6-K filed on May 15,2012, and hereby incorporated by reference.)4.30 Term Loan Facility Agreement for $132.4 million loan facility, dated July 18, 2014 (Previously filed as an exhibit to a Report on Form 6-Kfiled on August 12, 2014, and hereby incorporated by reference.)4.31 Short Term Credit Facility for up to $200.0 million, dated November 11, 2014, with Navios Maritime Holdings Inc.*4.32 Securities Purchase Agreement, dated February 26, 2013, between Navios Maritime Acquisition Corporation and Navios Maritime HoldingsInc. (Previously filed as an exhibit to a Report on Form 6-K filed on March 4, 2013, and hereby incorporated by reference.)4.33 Form of Co-Investment Share Purchase Agreement (Previously filed as an exhibit to a Report on Form 6-K filed on March 4, 2013, and herebyincorporated by reference.)4.34 Registration Rights Agreement, dated February 26, 2013, between Navios Maritime Acquisition Corporation and Navios Maritime HoldingsInc. and the management investors party thereto (Previously filed as an exhibit to a Report on Form 6-K filed on March 4, 2013, and herebyincorporated by reference.)4.35 Securities Purchase Agreement, dated May 21, 2013, between Navios Maritime Acquisition Corporation and Navios Maritime Holdings Inc.(Previously filed as an exhibit to a Report on Form 6-K filed on May 30, 2013, and hereby incorporated by reference.)4.36 Registration Rights Agreement, dated May 21, 2013, between Navios Maritime Acquisition Corporation and Navios Maritime Holdings Inc.(Previously filed as an exhibit to a Report on Form 6-K filed on May 30, 2013, and hereby incorporated by reference.) 136Table of ContentsExhibitNo. Description 4.37 Securities Purchase Agreement, dated September 16, 2013, between Navios Maritime Acquisition Corporation and Navios Maritime HoldingsInc. (Previously filed as an exhibit to a Report on Form 6-K filed on September 18, 2013, and hereby incorporated by reference.) 4.38 Registration Rights Agreement, dated September 16, 2013, between Navios Maritime Acquisition Corporation and Navios Maritime HoldingsInc. (Previously filed as an exhibit to a Report on Form 6-K filed on September 18, 2013, and hereby incorporated by reference.) 4.39 First Supplemental Indenture dated January 8, 2014 (Previously filed as an exhibit to a Report on Form 6-K filed on April 3, 2014, and herebyincorporated by reference.) 4.40 Second Supplemental Indenture dated February 20, 2014 (Previously filed as an exhibit to a Report on Form 6-K filed on April 3, 2014, andhereby incorporated by reference.) 4.41 Third Supplemental Indenture dated March 31, 2014 (Previously filed as an exhibit to a Report on Form 6-K filed on April 3, 2014, and herebyincorporated by reference.) 4.42 Fourth Supplemental Indenture dated May 28, 2014 (Previously filed as an exhibit to a Report on Form 6-K filed on August 12, 2014, andhereby incorporated by reference.) 4.43 Fifth Supplemental Indenture dated December 4, 2014.* 4.44 Backstop Agreement, dated November 18, 2014, with Navios Maritime Midstream Partners LP (Previously filed as an exhibit to a Report onForm 20-F for Navios Maritime Midstream Partners LP filed on March 17, 2015, and hereby incorporated by reference.) 4.45 Navios Midstream General Partner Option Agreement, dated November 18, 2014, with Navios Maritime Holdings Inc. (Previously filed as anexhibit to a Report on Form 20-F for Navios Maritime Midstream Partners LP filed on March 17, 2015, and hereby incorporated by reference.) 4.46 General Partner Option Agreement, dated as of November 18, 2014, with Navios Maritime Holdings Inc. (Previously filed as an exhibit to aReport on Form 20-F for Navios Maritime Midstream Partners LP filed on March 17, 2015, and hereby incorporated by reference.) 4.47 Amendment to the Management Agreement dated May 14, 2014 (Previously filed as an exhibit to a Report on Form 6-K filed on May 22,2014, and hereby incorporated by reference.) 4.48 Amendment to the Administrative Services Agreement dated May 14, 2014 (Previously filed as an exhibit to a Report on Form 6-K filed onMay 22, 2014, 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 PricewaterhouseCoopers S.A.*101 The following materials from the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2014, formatted ineXtensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets at December 31, 2014 and 2013; (ii) ConsolidatedStatements of Income for each of the years ended December 31, 2014, 2013 and 2012; (iii) Consolidated Statements of Cash Flows for each ofthe years ended December 31, 2014, 2013 and 2012; (iv) Consolidated Statements of Changes in Partners’ Capital for each of the years endedDecember 31, 2014, 2013 and 2012; and (v) the Notes to the Consolidated Financial Statements as blocks of text. *Filed herewith.+Furnished herewith. 137Table of ContentsSignaturesNavios 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 FrangouBy:Angeliki FrangouIts:Chairman and Chief Executive OfficerDate: March 30, 2015 138Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATION REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM F-2 CONSOLIDATED BALANCE SHEETS AT DECEMBER 31, 2014 AND 2013 F-3 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/ (LOSS) FOR EACH OF THE YEARS ENDED DECEMBER 31, 2014, 2013AND 2012 F-4 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR EACH OF THE YEARS ENDED DECEMBER 31, 2014, 2013 AND 2012 F-5 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR EACH OF THE YEARS ENDED DECEMBER 31, 2014, 2013 AND 2012 F-6 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS F-7 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 comprehensive income/(loss), changes in equity,and cash flows present fairly, in all material respects, the financial position of Navios Maritime Acquisition Corporation and its subsidiaries (the “Company”)at December 31, 2014 and 2013, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2014 inconformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all materialrespects, effective internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control — Integrated Framework(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for thesefinancial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control overfinancial reporting, included in “Management’s annual report on internal control over financial reporting” appearing in Item 15(b) of the Company’s 2014Annual Report on Form 20-F. Our responsibility is to express opinions on these financial statements and on the Company’s internal control over financialreporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board(United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financialstatements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accountingprinciples used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control overfinancial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, andtesting and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such otherprocedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for 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 30, 2015 F-2Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONCONSOLIDATED BALANCE SHEETS(Expressed in thousands of U.S. Dollars except share data) Notes December 31,2014 December 31,2013 ASSETS Current assets Cash and cash equivalents 3 $54,493 $82,835 Restricted cash 3 6,669 24,962 Accounts receivable, net 4 18,273 8,441 Due from related parties 1,361 — Prepaid expenses and other current assets 8,732 4,563 Total current assets 89,528 120,801 Vessels, net 5 1,375,931 1,353,131 Deposits for vessels acquisitions 5 42,276 100,112 Deferred finance costs, net 6 22,330 23,246 Goodwill 8 1,579 1,579 Intangible assets-other than goodwill 7 3,300 40,171 Other long-term assets 690 5,533 Deferred dry dock and special survey costs, net 5,312 4,678 Investment in affiliates 9, 16 151,966 4,750 Investment in available-for-sale securities 9, 20 15,099 — Loan receivable from affiliate 9, 16 7,791 2,660 Total non-current assets 1,626,274 1,535,860 Total assets$1,715,802 $1,656,661 LIABILITIES AND STOCKHOLDERS’ EQUITYCurrent liabilitiesAccounts payable 10 $1,599 $1,577 Dividend payable 11 7,967 7,220 Accrued expenses 12 10,261 11,985 Due to related parties, short term 16 18,489 2,848 Deferred revenue 1,400 7,056 Current portion of long-term debt 13 33,431 34,714 Total current liabilities 73,147 65,400 Long-term debt, net of current portion and premium 13 1,130,901 1,119,734 Due to related parties, long term 16 9,625 5,144 Unfavorable lease terms 7 2,878 3,561 Total non-current liabilities 1,143,404 1,128,439 Total liabilities$1,216,551 $1,193,839 Commitments and contingencies 17 — — Series D Convertible Preferred stock 1,200 shares issued and outstanding with $12,000 redemption amount as ofDecember 31, 2014 and December 31, 2013, respectively 18 12,000 12,000 Stockholders’ equityPreferred stock, $0.0001 par value; 10,000,000 shares authorized; 4,540 issued and outstanding as of December 31, 2014 andDecember 31, 2013, respectively 18 — — Common stock, $0.0001 par value; 250,000,000 shares authorized; 151,664,942 and 136,714,942 issued and outstanding as ofDecember 31, 2014 and December 31, 2013, respectively 18 15 13 Additional paid-in capital 18 557,125 530,203 Accumulated deficit (66,347) (79,394) Other Comprehensive Loss 20 (3,542) — Total stockholders’ equity 487,251 450,822 Total liabilities and stockholders’ equity$1,715,802 $1,656,661 See notes to consolidated financial statements. F-3Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/ (LOSS)(Expressed in thousands of U.S. dollars- except share and per share data) Notes Year endedDecember 31,2014 Year endedDecember 31,2013 Year endedDecember 31,2012 Revenue $264,877 $202,397 $151,097 Time charter and voyage expenses (5,187) (6,762) (2,824)Direct vessel expenses (1,979) (3,096) (2,622)Management fees (entirely through related party transactions) 16 (95,827) (71,392) (47,043)General and administrative expenses 16 (14,588) (7,017) (3,853)Depreciation and amortization 5,7 (67,718) (63,880) (49,644)Loss on bond extinguishment 13 — (33,973) — Interest income 720 315 445 Interest expenses and finance cost 13 (78,610) (58,386) (49,432)Impairment loss 5,14 (11,690) — — Gain/ (loss) on sale of vessels 5 22,599 (21,098) — Change in fair value of other assets (1,188) — — Equity in net earnings of affiliated companies 9 2,000 — — Other income 21 280 4,787 280 Other expense (642) (487) (202)Net income/ (loss)$13,047 $(58,592) $(3,798)Other comprehensive lossUnrealized holding loss on investments in- available-for-sale-securities (3,542) — — Other comprehensive loss 20 (3,542) — — Total comprehensive income/ (loss)$9,505 (58,592) (3,798)Net income/ (loss)$13,047 $(58,592) $(3,798)Dividend declared on preferred shares Series B (108) (108) (108)Dividend declared on Series D preferred shares (642) (91) — Dividend declared on restricted shares (385) (105) — Undistributed income/ (loss) attributable to Series C participating preferred shares (541) 3,206 622 Net income/ (loss) attributable to common stockholders, basic 22 $11,371 $(55,690)$(3,284)Plus:Undistributed income/ (loss) attributable to Series C participating preferred shares 541 — — Net income/ (loss) attributable to common stockholders, diluted 22 11,912 (55,690)$(3,284)Net income/ (loss) per share, basic 22 $0.08 $(0.57) $(0.08)Weighted average number of shares, basic 147,606,448 98,085,189 40,517,413 Net income/ (loss) per share, diluted 22 $0.08 $(0.57) $(0.08)Weighted average number of shares, diluted 156,482,448 98,085,189 40,517,413 See notes to consolidated financial statements. F-4Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS(Expressed in thousands of U.S. dollars) Notes Year endedDecember 31,2014 Year endedDecember 31,2013 Year endedDecember 31,2012 Operating Activities Net income/ (loss) $13,047 $(58,592) $(3,798) Adjustments to reconcile net loss to net cash provided by/ (used in) operating activities: Depreciation and amortization 5, 7 67,718 63,880 49,644 Amortization and write-off of deferred finance fees and bond premium 6 9,111 11,615 2,820 Amortization of dry dock and special survey costs 1,979 3,096 2,622 Stock based compensation 18 5,254 1,089 — Impairment loss 5 11,690 — — (Gain)/ loss on sale of vessels 5 (22,599) 21,098 Non-cash settlement received 14, 21 — (3,446) — Change in fair value of other assets 1,188 — — Equity in earnings of affiliates (2,000) — — Changes in operating assets and liabilities: (Increase)/ decrease in prepaid expenses and other current assets (5,287) 1,523 (2,194)(Increase)/ decrease in accounts receivable (9,308) (3,338) 1,375 Decrease/(increase) in restricted cash 642 (1,538) 320 Decrease/(increase) in other long term assets 3,665 (4,636) 413 Increase in accounts payable 254 300 256 Decrease in accrued expenses (1,640) (966) (2,541) Payments for dry dock and special survey costs (5,726) (242) (2,944) (Increase)/ decrease in due to related parties 15,014 (62,615) 35,780 (Decrease)/increase in due from related parties (1,361) — — (Decrease)/increase in deferred revenue (5,656) 3,405 400 Decrease in other long term liabilities — (204) (276) Net cash provided by/(used in) operating activities $75,985 $(29,571) $81,877 Investing Activities Acquisition of vessels 5 (362,339) (288,906) (83,253) Deposits for vessel acquisitions 5 (11,881) (24,907) (142,119) Net cash proceeds from sale of vessels and intangibles 5,9 232,956 17,407 — Investment in affiliate — (4,750) — Loan receivable to / from affiliate (4,465) (2,660) — Decrease in restricted cash — 10,076 19,416 Net cash used in investing activities $(145,729) $(293,740) $(205,956) Financing Activities Loan proceeds, net of deferred finance costs and net of premium 6,13 161,932 155,550 162,813 Loan proceeds from related party, net of deferred finance cost 165,650 — 5,000 Loan repayment to related party (169,650) (35,000) (10,000) Loan repayments 13 (216,197) (100,216) (13,744) Repayment of Senior Notes 13 — (505,000) — Proceeds from issuance of ship mortgage and senior notes, net of debt issuance costs 13 59,598 595,420 — Dividend paid (31,871) (19,711) (9,759) Increase/ (Decrease) in restricted cash 17,651 (12,337) (8,685) Payment to related party 16 — (22,948) — Net proceeds from equity offerings 18 54,289 307,542 — Net cash provided by financing activities $41,402 $363,300 $125,625 Net (decrease)/ increase in cash and cash equivalents (28,342) 39,989 1,546 Cash and cash equivalents, beginning of year 82,835 42,846 41,300 Cash and cash equivalents, end of year $54,493 $82,835 $42,846 Supplemental disclosures of cash flow information Cash interest paid, net of capitalized interest $69,255 $54,726 $47,102 Non-cash investing activities Capitalized financing costs $355 $472 $879 AFS securities received upon sale of vessels $18,640 $— $— Investment in affiliates received upon sale of vessels $145,860 $— $— Accrued interest on loan to affiliate $1,353 $— $— Non-cash financing activities Dividends payable $7,967 $7,220 $2,410 Acquisition of vessels $(3,885) $(7,198) $(4,313)Deposits for vessel acquisitions $(1,201) $(841) $(1,848)Due to related party $5,086 $8,039 $6,161 Issuance of Series D Convertible Preferred Stock issued for vessel acquisitions $— $6,000 $6,000 Issuance of restricted stock $5,254 $1,089 $— See notes to consolidated financial statements. F-5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 Number ofPreferredShares Amount Number ofCommonShares Amount OtherComprehensiveLoss AdditionalPaid-inCapital (Accumulateddeficit) TotalStockholders’Equity Balance, December 31, 2011 4,540 $ — 40,517,413 $4 $— $255,849 $(17,004) $238,849 Dividends paid/declared — — — — — (9,747) — (9,747)Net loss — — — — — — (3,798) (3,798)Balance, December 31, 2012 4,540 $— 40,517,413 $4 $— $246,102 $(20,802) $225,304 Issuance of common shares 18 — — 94,097,529 9 — 307,533 — 307,542 Issuance of restricted shares 18 — — 2,100,000 — — 1,089 — 1,089 Dividend paid/declared 11 — — (24,521) — (24,521)Net loss — — (58,592) (58,592)Balance, December 31, 2013 4,540 $— 136,714,942 $13 $— $530,203 $(79,394) $450,822 Issuance of common shares 18 — — 14,950,000 2 — 54,287 — 54,289 Stock-based compensation 18 — — — — — 5,254 — 5,254 Dividend paid/declared 11 — — — — — (32,619) — (32,619) Net income — — — — — 13,047 13,047 Other Comprehensive loss — — — — (3,542) — — (3,542) Balance, December 31, 2014 4,540 $— 151,664,942 $15 $(3,542) $557,125 $(66,347) $487,251 See notes to consolidated financial statements. F-6Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per 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, refined petroleumproduct and chemical tankers providing world-wide marine transportation services. The Company’s strategy is to charter its vessels to international oilcompanies, refiners and large vessel operators under long, medium and short-term charters. The Company is committed to providing quality transportationservices and developing and maintaining long-term relationships with its customers. The operations of Navios Acquisition are managed by Navios MaritimeHoldings Inc. (“Navios Holdings”).Navios Acquisition was incorporated in the Republic of the Marshall Islands on March 14, 2008. On July 1, 2008, Navios Acquisition completed its initialpublic offering, or its IPO. On May 28, 2010, Navios Acquisition consummated the vessel acquisition which constituted its initial business combination.Following such transaction, Navios Acquisition commenced its operations as an operating company.As of December 31, 2014, Navios Holdings had 43.0% of the voting power and 46.1% of the economic interest in Navios Acquisition.As of December 31, 2014, Navios Acquisition had outstanding: 151,664,942 shares of common stock, 4,540 shares of preferred stock, from which 1,000shares of Series C Convertible Preferred Stock are issued to Navios Holdings, and 1,200 shares of convertible preferred stock.In November 2014, Navios Maritime Midstream Partners LP (“Navios Midstream”), a company formed as a subsidiary of Navios Acquisition, completed aninitial public offering (“IPO”) of its units in the United States and is listed on the NYSE.In connection with the IPO of Navios Midstream, the Company sold all of the outstanding shares of capital stock of four of its vessel-owning subsidiaries(Shinyo Ocean Limited, Shinyo Kannika Limited, Shinyo Kieran Limited and Shinyo Saowalak Limited) in exchange for: (i) all of the estimated net proceedsfrom the IPO amounting to $110,403; (ii) $104,451 of the $126,000 of borrowings under Navios Midstream’s new credit facility; (iii) 9,342,692 subordinatedunits and 1,242,692 common units; and (iv) 381,334 general partner units, representing a 2.0% general partner interest in Navios Midstream, and all of theincentive distribution rights in Navios Midstream, to the general partner of Navios Midstream.Following the IPO, the Company concluded that it does not hold a controlling financial interest in Midstream and deconsolidated the vessels sold as of theIPO date. (Refer to Note 9, “Investment in affiliates”).NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(a) Basis of presentation: The accompanying consolidated financial statements are prepared in accordance with accounting principles generallyaccepted in the United States of America (GAAP).(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 F-7Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) legal entity where either (a) equity interest holders as a group lack the characteristics of a controlling financial interest, including decision making abilityand an interest in the entity’s residual risks and rewards, or (b) the equity holders have not provided sufficient equity investment to permit the entity tofinance its activities without additional subordinated financial support, or (c) the voting rights of some investors are not proportional to their obligations toabsorb the expected losses of the entity, their rights to receive the expected residual returns of the entity, or both and substantially all of the entity’s activitieseither involve or are conducted on behalf of an investor that has disproportionately few voting rights.(c) Equity method investmentsAffiliates are entities over which the Company generally has between 20% and 50% of the voting rights, or over which the Company has significantinfluence, but it does not exercise control. Investments in these entities are accounted for under the equity method of accounting. Under this method, theCompany records an investment in the stock of an affiliate at cost, and adjusts the carrying amount for its share of the earnings or losses of the affiliatesubsequent to the date of investment and reports the recognized earnings or losses in income. Dividends received from an affiliate reduce the carrying amountof the investment. The Company recognizes gains and losses in earnings for the issuance of shares by its affiliates, provided that the issuance of such sharesqualifies as a sale of such shares. When the Company’s share of losses in an affiliate equals or exceeds its interest in the affiliate, the Company does notrecognize further losses, unless the Company has incurred obligations or made payments on behalf of the affiliate.Navios Acquisition evaluates its equity method investments investments, for other than temporary impairment, on a quarterly basis. Consideration isgiven to (1) the length of time and the extent to which the fair value has been less than the carrying value, (2) the financial condition and near-term prospectsand (3) the intent and ability of the Company to retain its investments for a period of time sufficient to allow for any anticipated recovery in fair value.(d) Subsidiaries: Subsidiaries are those entities in which the Company has an interest of more than one half of the voting rights and/or otherwise haspower to govern the financial and operating policies. The acquisition method of accounting is used to account for the acquisition of subsidiaries if deemed tobe a business 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, 2014, the entities included in these consolidated financial statements were: Navios Maritime Acquisition Corporationand Subsidiaries: Nature Country ofIncorporation 2014 2013 2012Company Name Aegean Sea Maritime Holdings Inc. Sub-Holding Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Amorgos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Andros Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Antikithira Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Antiparos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Amindra Shipping Co. Sub-Holding Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Crete Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Folegandros Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Ikaria Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Ios Shipping Corporation Vessel-Owning Company Cayman Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Kithira Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Kos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Mytilene Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 F-8Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) Navios Maritime Acquisition Corporationand Subsidiaries: Nature Country ofIncorporation 2014 2013 2012Company Name 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 1/1 - 12/31 1/1 - 12/31Rhodes Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Serifos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Shinyo Dream Limited Vessel-Owning Company Hong Kong 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Shinyo Kannika Limited Vessel-Owning Company(4) Hong Kong 1/1 - 11/17 1/1 - 12/31 1/1 - 12/31Shinyo Kieran Limited Vessel-Owning Company(4) British Virgin Is 1/1 - 11/17 1/1 - 12/31 1/1 - 12/31Shinyo Loyalty Limited Vessel-Owning Company(2) Hong Kong 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Shinyo Navigator Limited Vessel-Owning Company(3) Hong Kong 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Shinyo Ocean Limited Vessel-Owning Company(4) Hong Kong 1/1 - 11/17 1/1 - 12/31 1/1 - 12/31Shinyo Saowalak Limited Vessel-Owning Company(4) British Virgin Is. 1/1 - 11/17 1/1 - 12/31 1/1 - 12/31Sifnos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Skiathos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Skopelos Shipping Corporation Vessel-Owning Company Cayman Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Syros Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Thera Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Tinos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Oinousses Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Psara Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Antipsara Shipping Corporation(1) Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Samothrace Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 3/19 - 12/31 — Thasos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 3/19 - 12/31 — Limnos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 3/19 - 12/31 — Skyros Shipping Corporation(1) Vessel-Owning Company Marshall Is. 1/1 - 12/31 3/19 - 12/31 — Alonnisos Shipping Corporation(5) Vessel-Owning Company Marshall Is. 1/1 - 12/31 3/19 - 12/31 — Makronisos Shipping Corporation(5) Vessel-Owning Company Marshall Is. 1/1 - 12/31 3/19 - 12/31 — Iraklia Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 4/2 - 12/31 — Paxos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 4/25 - 12/31 — Antipaxos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 4/25 - 12/31 — Donoussa Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 6/28 - 12/31 — Schinousa Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 6/28 - 12/31 — Navios Acquisition Europe Finance Inc Sub-Holding Company Marshall Is. 1/1 - 12/31 6/4 - 12/31 — Sikinos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 7/3 - 12/31 — Kerkyra Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 11/8 - 12/31 — Lefkada Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 11/8 - 12/31 — Zakynthos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 11/8 - 12/31 — Leros Shipping Corporation Vessel-Owning Company Marshall Is. 4/4 - 12/31 — — Kimolos Shipping Corporation Vessel-Owning Company Marshall Is. 4/29 - 12/31 — — Samos Shipping Corporation Vessel-Owning Company Marshall Is. 9/15 - 12/31 — — Navios Maritime Midstream Partners GP LLC Holding Company Marshall Is. 10/13 - 12/31 — — (1)Each company had the rights over a shipbuilding contract of an MR2 product tanker vessel, such vessels having been delivered during 2015.(2)Former vessel-owner of the Shinyo Splendor which was sold to an unaffiliated third party on May 6, 2014.(3)Former vessel-owner of the Shinyo Navigator which was sold to an unaffiliated third party on December 6, 2013.(4)Navios Midstream acquired all of the outstanding shares of capital stock of the vessel-owning subsidiary.(5)Each company held the rights over a shipbuilding contract of an MR2 product tanker vessel. In February 2015, these shipbuilding contracts were terminated, with no exposureto Navios Acquisition, due to the shipyard’s inability to issue a refund guarantee. Refer to Note 25 “Subsequent events”. F-9Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) (e) 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 and scrap value, expectedfuture cash flows from long-lived assets to support impairment tests, provisions necessary for accounts receivables, provisions for legal disputes andcontingencies and the valuations estimates inherent in the deconsolidation gain. Management bases its estimates and judgments on historical experience andon various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about thecarrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates under differentassumptions and/or conditions.(f) Cash and Cash equivalents: Cash and cash equivalents consist of cash on hand, deposits held on call with banks, and other short-term liquidinvestments with original maturities of three months or less.(g) Restricted Cash: As of December 31, 2014 and 2013, restricted cash comprised of an amount of $6,669 and $7,555 respectively which related toamounts held in retention account in order to service debt, interest payments and pledged cash, as required by certain of Navios Acquisition’s credit facilities.As of December 31, 2013 restricted cash also included an amount of $17,407 being cash collateral to the Senior Notes due in 2021, that was settled in 2014.(h) Accounts Receivable, net: The amount shown as accounts receivable, net at each balance sheet date includes receivables from charterers for hire,freight and demurrage billings, net of a provision for doubtful accounts. At each balance sheet date, all potentially uncollectible accounts are assessedindividually for purposes of determining the appropriate provision for doubtful accounts.(i) Other long term assets: As of December 31, 2014, the amount shown as other long term assets reflects the advances of $690 to certain unrelatedcounterparties for working capital purposes as per charters entered with them. As of December 31, 2013, the amount shown as other long term assets reflectedthe advances of $3,897 to certain unrelated counterparties for working capital purposes as per charters entered with them and the fair value of the cashamount to be received in connection with the rehabilitation process for a defaulted charterer of $1,177. (See Note 14 “Fair value of financial instruments”).(j) 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 our tanker vessels based on a scrap value cost of steel times the weight of the ship noted in lightweight ton (LWT). Residualvalues are periodically reviewed and revised to recognize changes in conditions, new regulations or other reasons. Revisions of residual values affect thedepreciable amount of the vessels and affects depreciation expense in the period of the revision and future periods. Up to December 31, 2012, managementestimated the residual values of its vessels based on a scrap rate of $285 per LWT. Effective January 1, 2013, following management’s reassessment afterconsidering current market trends for scrap rates and ten-year average historical scrap rates of the residual values of the company’s vessels, the estimated scrapvalue per LWT was increased to $360 per LWT. F-10Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) Management estimates the useful life of our vessels to be 25 years from the vessel’s original construction. However, when regulations place limitationsover 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.(k) 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 amounted to $3,290, $6,149 and $14,240 as of December 31, 2014, 2013 and 2012, respectively.(l) Impairment of long-lived asset group: 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 (consisting of the individual vessel and the intangible with respect tothe time charter agreement attached to that vessel) and compared to the vessel carrying value and related carrying value of the intangible with respect to thetime charter agreement attached to that vessel or the carrying value of deposits for newbuildings. Within the shipping industry, vessels are often bought andsold with a charter attached. The value of the charter may be favorable or unfavorable when comparing the charter rate to then current market rates. The lossrecognized either on impairment (or on disposition) will reflect the excess of carrying value over fair value (selling price) for the vessel individual assetgroup.As of March 31, 2014, the Company had a current expectation that, more likely than not, the Shinyo Splendor would be sold before the end of its previouslyestimated useful life, and, as a result, performed an impairment test of the specific asset group. The recoverability test was based on undiscounted cash flowsexpected to result from the entity’s use and eventual disposition of the asset. The significant factors and assumptions used in the undiscounted projected netoperating cash flow analysis included determining the net operating cash flows by considering the charter revenues from the existing time charter until itsexpiration, net of brokerage and address commissions and management fees and an estimate of sale proceeds from its disposal based on market valuations forsuch vessel. The carrying amount of the asset group was more than its undiscounted future cash flows. As a result, the entity failed the recoverability test (stepone) of the impairment test and proceeded with step two of the impairment analysis. An impairment loss in the amount of $10,718 was recognized on thisasset group as the carrying amount of the asset group was not recoverable and exceeded its fair value as of March 31, 2014. The Shinyo Splendor was sold onMay 6, 2014 to an unaffiliated third party for a net cash consideration of $18,315 (refer to Note 5 “Vessels, Net”).During the fourth quarter of fiscal 2014, management concluded that events occurred and circumstances had changed, which indicated the potentialimpairment of Navios Acquisition’s long-lived assets may exist. These indicators included continued volatility in the charter market and the related impactof the current tanker sector has on management’s expectation for future revenues. As a result, an impairment assessment of long-lived assets or identified assetgroups was performed.The Company determined undiscounted projected net operating cash flows for each vessel and deposits for newbuildings and compared it to the vessel’scarrying value together with the carrying value of the related F-11Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) intangible. The significant factors and assumptions used in the undiscounted projected net operating cash flow analysis included: determining the projectednet operating cash flows by considering the charter revenues from existing time charters for the fixed fleet days (Company’s remaining charter agreementrates) and an estimated daily time charter equivalent for the unfixed days (based on the 10- year average historical one year time charter rates) over theremaining economic life of each vessel, net of brokerage and address commissions, excluding days of scheduled off-hires, management fees fixed until May2016 and thereafter assuming 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 the vessels ready for use, all remaining progresspayments to shipyards and other pre-delivery expenses (e.g., capitalized interest).The assessment concluded that step two of the impairment analysis was not required and no impairment of vessels, deposits for vessel acquisitions and relatedintangible assets existed as of December 31, 2014, 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 recognized in the statement ofcomprehensive income/ (loss) calculated 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 an individual vessel basis.Although management believes the underlying assumptions supporting this assessment are reasonable, if charter rate trends and the length of the currentmarket downturn vary significantly from our forecasts, management may be required to perform step two of the impairment analysis in the future that couldexpose Navios Acquisition to material impairment charges in the future.Impairment loss recognized amounted to $10,718, $0.0 and $0.0 for the years ended December 31, 2014, 2013 and 2012, respectively.(m) Deferred Finance Costs: Deferred finance 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 financecosts for each of the years ended December 31, 2014, 2013 and 2012 were $7,275, $3,252 and $2,820, respectively.(n) 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 the statement of comprehensive income/ (loss) if the carrying amount exceeds the estimated implied fair value.The Company evaluates impairment of goodwill using a two-step process. First, the aggregate fair value of the reporting unit is compared to itscarrying amount, including goodwill. The Company determines the fair value of the reporting unit based on a combination of discounted cash flow analysisand 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 theCompany must 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.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 the unit hadbeen acquired 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 impairment is recognized by writing the goodwill down to its implied fair value. F-12Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) Navios Acquisition has one reporting unit. No impairment loss was recognized for any of the periods presented.(o) Intangibles other than goodwill: Navios Acquisition’s intangible assets and liabilities consist of favorable lease terms and unfavorable lease terms.When intangible assets or liabilities associated with the acquisition of a vessel are identified, they are recorded at fair value. Fair value is determined byreference 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 its vessels and its weighted average cost of capital. The use of differentassumptions could result in a material change in the fair value of these items, which could have a material impact on Navios Acquisition’s financial positionand 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 comprehensive income/ (loss) in the depreciation and amortization line item. The amortizable value of favorable leases would beconsidered impaired if their fair market values could not be recovered from the future undiscounted cash flows associated with the asset. If a vessel purchaseoption is exercised the portion of this asset will be capitalized as part of the cost of the vessel and will be depreciated over the remaining useful life of thevessel.Management, after considering various indicators performed impairment tests on asset groups which included intangible assets as described inparagraph (l) above. As of December 31, 2014 and 2013, there was no impairment of intangible assets.(p) Preferred shares Series D: Navios Acquisition issues shares of its authorized Series D Preferred Stock (nominal and fair value $12,000) to ashipyard, in partial settlement of the purchase price of its newbuild vessels. The preferred stock contains a 6% per annum dividend payable quarterly, startingone year after delivery of the vessel. The Series D Preferred Stock will mandatorily convert into shares of common stock 30 months after issuance at a priceper share of common stock equal to $10.00. The holder of the preferred stock shall have the right to convert the shares of preferred stock into common stockprior to the scheduled maturity dates at a price of $7.00 per share of common stock. The preferred stock does not have any voting rights. Navios Acquisitionis obligated to redeem the Series D Preferred Stock (or converted common shares) at holder’s option exercisable beginning on 18 months after issuance, at parpayable at up to 12 equal quarterly installments.The fair value of the series D Preferred Stock, was determined using a combination of Black Scholes model and discounted projected cash flows for theconversion option and put, respectively. The model used takes into account the credit spread of Navios Acquisition, the volatility of its stock, as well as theprice of its stock at the issuance date. The convertible preferred stock is classified as temporary equity (i.e., apart from permanent equity) as a result of theredemption feature upon exercise of the put option granted to the holder of the preferred stock.(q) Investment in Available-for-Sale Securities: The Company classifies its existing marketable equity securities as available-for-sale. These securitiesare carried at fair value, with unrealized gains and losses excluded from earnings and reported directly in stockholders’ equity as a component of othercomprehensive income (loss) unless an unrealized loss is considered “other-than-temporary,” in which case it is transferred to the statements of income.Management evaluates securities for other than temporary impairment (“OTTI”) on a F-13Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) quarterly basis. Consideration is given to (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition andnear-term prospects of the investee, and (iii) the intent and ability of the Company to retain its investment in the investee for a period of time sufficient toallow for any anticipated recovery in fair value.Investment in Equity Securities: Navios Acquisition evaluates its investments in Navios Midstream and Navios Europe Inc. (“Navios Europe”) for OTTI on aquarterly basis. Consideration is given to (i) the length of time and the extent to which the fair value has been less than the carrying value, (ii) the financialcondition and near-term prospects of Navios Midstream and Navios Europe, and (iii) the intent and ability of the Company to retain its investment in NaviosMidstream and Navios Europe for a period of time sufficient to allow for any anticipated recovery in fair value.(r) Deferred Dry dock 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, 2014, 2013 and 2012, theamortization expense was $1,979, $3,096 and $2,622, respectively. Accumulated amortization as of December 31, 2014 and 2013 amounted to $880 and$6,351, respectively.(s) 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 comprehensive income/ (loss).(t) Provisions: Navios Acquisition, in the ordinary course of its business, is subject to various claims, suits and complaints. Management, inconsultation with internal and external advisors, will provide for a contingent loss in the financial statements if the contingency had been incurred at the dateof the financial statements and the amount of the loss was probable and can be reasonably estimated. If Navios Acquisition has determined that thereasonable estimate 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.Navios Acquisition, through the Management Agreement with the Manager, participates in Protection and Indemnity (P&I) insurance coverage plansprovided by mutual insurance societies known as P&I clubs. Services such as the ones described above are provided by the Manager under the managementagreement dated May 28, 2010 as amended in May 2014, and are included as part of the daily fee of $6.0 for each MR2 Product tanker and chemical tankervessel, $7.0 per owned LR1 product tanker vessel and $9.5 per owned VLCC vessel. (See Note 16).(u) 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 F-14Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) discrete financial information to evaluate operating results for each type of charter. Management does not identify expenses, profitability or other financialinformation 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.(v) 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 priceis fixed 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 revenueover the rental periods of such charter agreements, as service is performed. A time charter involves placing a vessel at the charterers’ disposal for a period oftime during 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-yearly basis) over an agreed amount and accounted for on an accrual basis based on provisional amounts and for those contracts that provisional accrualscannot be made due to the nature of the profit share elements, these are accounted for on the actual cash settlement. Profit sharing for the years endedDecember 31, 2014, December 31, 2013 and December 31, 2012 amounted to $6,710, $4,360 and $2,014, respectively.Revenues are recorded net of address commissions. Address commissions represent a discount provided directly to the charterers based on a fixedpercentage of the agreed upon charter or freight rate. Since address commissions represent a discount (sales incentive) on services rendered by the Companyand no identifiable benefit is received in exchange for the consideration provided to the charterer, these commissions are presented as a reduction of revenue.Pooling arrangements: For vessels operating in pooling arrangements, the Company earns a portion of total revenues generated by the pool, net ofexpenses incurred by the pool. The amount allocated to each pool participant vessel, including the Company’s vessels, is determined in accordance with anagreed-upon formula, which is determined by points awarded to each vessel in the pool based on the vessel’s age, design and other performancecharacteristics. Revenue under pooling arrangements is accounted for on the accrual basis and is recognized when an agreement with the pool exists, price isfixed, service is provided and the collectability is reasonably assured. Revenue for vessels operating in pooling arrangements amounted to $16,974, $0.0 and$0.0, for the years ended December 31, 2014, 2013 and 2012, respectively.The allocation of such net revenue may be subject to future adjustments by the pool however, such changes are not expected to be material. F-15Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) Time Charter and Voyage Expenses: Time charter and voyage expenses comprise all expenses related to each particular voyage, including timecharter hire paid and bunkers, port charges, canal tolls, cargo handling, agency fees and brokerage commissions. Time charter expenses are expensed over theperiod of the time charter and voyage expenses are recognized as incurred.Direct Vessel Expense: Direct vessel expenses comprise of the amortization of drydock and special survey costs of certain vessels of NaviosAcquisition’s fleet.Management fees: Pursuant to a management agreement dated May 28, 2010 (the “Management Agreement”), the Manager provides, for five yearsfrom the closing of the Company’s initial vessel acquisition, commercial and technical management services to Navios Acquisition’s vessels for a daily fee of$6.0 per owned MR2 product tanker and chemical tanker vessel, $7.0 per owned LR1 product tanker vessel, and $10.0 per owned VLCC vessel for the firsttwo years. On May 4, 2012, Navios Acquisition amended its existing Management Agreement with the Manager, to fix the fees for ship management servicesof its owned fleet at current rates for two additional years, through May 28, 2014. This daily fee covers all of the vessels’ operating expenses, other thancertain extraordinary fees and costs. During the remaining term of the Management Agreement, Navios Acquisition expects it will reimburse Navios Holdingsfor all 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 chemical tanker, MR2 and LR1 product tankers, and will be reimbursed at cost for VLCC vessels.In May 2014, the duration of the existing Management Agreement was extended until May 2020 and the daily rate was reduced by 5% to $9.5 perVLCC vessel for two additional years through May 2016. Drydocking expenses under this Management Agreement will be reimbursed at cost at occurrencefor all vessels.Effective March 30, 2012, Navios Acquisition can, upon request to Navios Holdings, partially or fully defer the reimbursement of drydocking andother extraordinary fees and expenses under the Management Agreement to a later date, but not later than January 5, 2016, and if reimbursed on a later date,such amounts will bear interest at a rate of 1% per annum over LIBOR. Effective September 28, 2012, Navios Acquisition can, upon request, reimburseNavios Holdings partially or fully, for any fixed management fees outstanding for a period of not more than nine months under the Management Agreementat a later date, but not later than January 5, 2016, and if reimbursed on a later date, such amounts will bear interest at a rate of 1% per annum over LIBOR.General and administrative expenses: On May 28, 2010, Navios Acquisition entered into an administrative services agreement with Navios Holdings,initially set to expire on May 28, 2015 (the “Administrative Services Agreement”), pursuant to which a subsidiary of Navios Holdings provides certainadministrative 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, advisory services, client and investor relations and other. Navios Holdings is reimbursedfor reasonable costs and expenses incurred in connection with the provision of these services.In May 2014, the duration of its existing Administrative Services Agreement was extended until May 2020 pursuant to its existing terms.Deferred Revenue: Deferred revenue primarily relates to cash received from charterers prior to it being earned. These amounts are recognized asrevenue over the voyage or charter period. F-16Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) Prepaid Expense and Other Current Assets: Prepaid expenses relate primarily to cash paid in advance for expenses associated with voyages. Theseamounts are recognized as expense over the voyage or charter period. As of December 31, 2013, other current assets also included the fair value of the non-cash settlement of $3,446 recognized pursuant to the rehabilitation process for a defaulted charterer. (See Note 21: Other income)(w) Financial Instruments: Financial instruments carried on the balance sheet include trade receivables and payables, other receivables and otherliabilities and long-term debt. The particular recognition methods applicable to each class of financial instrument are disclosed in the applicable significantpolicy description 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, timecharter hire rates, and fuel prices, credit and interest rate risk. Risk management is carried out under policies approved by executive management. Guidelinesare established 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, 2014, Navios Acquisition’s customers representing 10% or more of total revenue were Navig8 Chemicals Shippingand Trading Co. (“Navig8”) and Dalian Ocean Shipping Co. (“DOSCO”), which accounted for 28.8% and 22.4%, respectively. For the year endedDecember 31, 2013, Navios Acquisition’s customers representing 10% or more of total revenue were DOSCO and Navig8, which accounted for 32.0% and22.4% of total revenue, respectively. For the year ended December 31, 2012, Navios Acquisition’s customers representing 10% or more of total revenue wereDOSCO and STX Panocean Co. Ltd., which accounted for 43.3% and 10.7% of total revenue, respectively. No other customers accounted for 10% or more oftotal 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.Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominatedin foreign currencies are recognized in the consolidated statement of comprehensive income/ (loss).(x) Earnings/ (Loss) per Share: Basic earnings/ (loss) per share is computed by dividing net income/ (loss) attributable to Navios Acquisition’scommon shareholders by the weighted average number of common shares outstanding during the periods presented. Diluted earnings per share reflect thepotential dilution that would occur if securities or other contracts to issue common stock were exercised. Dilution has been computed by the treasury stockmethod whereby all of the Company’s dilutive securities (the warrants and preferred shares and the stock options) are assumed to be exercised and theproceeds used to repurchase shares of common stock at the weighted average market price of the Company’s common stock during the relevant periods.Convertible shares are included in the diluted earnings/ (loss) per share, based on the weighted average number of convertible shares assumed to beoutstanding during the period. The incremental shares (the difference between the number of shares assumed issued and the number of shares assumedpurchased) shall be included in the denominator of the diluted earnings per share computation. Restricted stock and restricted stock units (vested andunvested) are included in the calculation of the diluted earnings per share, based on the weighted average number of restricted stock and restricted stock unitsassumed to be outstanding during the period. F-17Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) Net income/ (loss) for the year ended December 31, 2014, 2013 and 2012 was adjusted for the purposes of earnings per share calculation, for thedividends on Series B Preferred Shares and for the undistributed income/ (loss) that is attributable to Series C preferred stock. Net income/ (loss) for the yearsended December 31, 2014 and December 31, 2013 was also adjusted for the dividends on Series D Preferred Shares and for the dividend declared onRestricted Common Stock.(y) Dividends: Dividends are recorded in the Company’s financial statements in the period in which they are declared.(z) Stock based Compensation: In October 2013, Navios Acquisition authorized the issuance of shares of restricted common stock and stock optionsfor its directors. These awards of restricted common stock and stock options are based on service conditions only and vest over three years.The fair value of stock option grants is determined with reference to option pricing model, and principally adjusted Black-Scholes models. The fairvalue of restricted stock is determined by reference to the quoted stock price on the date of grant. Compensation expense is recognized based on a gradedexpense model over the vesting period.The effect of compensation expense arising from the restricted shares and stock options described above amounted to $5,254, as of December 31, 2014,and it is reflected in general and administrative expenses on the statement of comprehensive income/ (loss).The estimated compensation cost relating to service conditions of non-vested (a) stock options and (b) restricted stock, not yet recognized was $401and $2,825, respectively, as of December 31, 2014 and is expected to be recognized over the weighted average period of 1.82 years.NOTE 3: CASH AND CASH EQUIVALENTS AND RESTRICTED CASHCash and cash equivalents consisted of the following: December 31, 2014 December 31, 2013 Cash on hand and at banks $19,380 $78,458 Short-term deposits 35,113 4,377 Total cash and cash equivalents$54,493 $82,835 Short term deposits relate to time deposit accounts held in banks for general purposes.Cash deposits and cash equivalents in excess of amounts covered by government-provided insurance are exposed to loss in the event of non-performance byfinancial institutions. The Company does maintain cash deposits and equivalents in excess of government-provided insurance limits. The Company alsominimizes exposure to credit risk by dealing with a diversified group of major financial institutions.In restricted cash there is an amount of $6,669 for 2014 and $7,555 for 2013 held in retention account in order to service debt, interest payments and pledgedaccounts, as required by certain of Navios Acquisition’s credit facilities. F-18Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) In restricted cash as of December 31, 2013 there was also an amount of $17,407 which represented cash received from the sale of Shinyo Navigator and servedas temporary collateral to the Senior Notes 2021, up to when the Company offered a new vessel.NOTE 4: ACCOUNTS RECEIVABLE, NETAccounts receivable consist of the following: December 31,2014 December 31,2013 Accounts receivable $18,273 $8,441 Less: Provision for doubtful accounts — — Accounts receivable, net$18,273 $8,441 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.NOTE 5: VESSELS, NET Vessels Cost AccumulatedDepreciation Net BookValue Balance at December 31, 2012 $1,024,531 $(83,793) $940,738 Additions 504,355 (53,501) 450,854 Disposals (50,000) 11,539 (38,461)Balance at December 31, 2013$1,478,886 $(125,755)$1,353,131 Additions 437,498 (63,660) 373,838 Disposals (406,054) 65,734 (340,320)Impairment loss (22,724) 12,006 (10,718) Balance at December 31, 2014$1,487,606 $(111,675)$1,375,931 Acquisition of vessels2014On February 4, 2014, Navios Acquisition took delivery of the Nave Galactic, a 2009-built 297,168 dwt VLCC, from an unaffiliated third party, for a total costof $51,739. Cash paid was $46,564 and $5,175 was transferred from vessel deposits.On February 12, 2014, Navios Acquisition took delivery of the Nave Quasar, a 2010-built 297,376 dwt VLCC, from an unaffiliated third party, for a total costof $54,687. Cash paid was $49,222 and $5,465 was transferred from vessel deposits.On March 10, 2014, Navios Acquisition took delivery of the Nave Buena Suerte, a 2011-built 297,491 dwt VLCC, from an unaffiliated third party, for a totalcost of $57,164. Cash paid was $51,450 and $5,714 was transferred from vessel deposits. F-19Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) On May 7, 2014, Navios Acquisition took delivery of the Nave Jupiter, a newbuilding 49,999 dwt MR2 product tanker, from an unaffiliated third party, for atotal cost of $39,643. Cash paid was $13,907, and $25,736 was transferred from vessel deposits.On June 16, 2014, Navios Acquisition took delivery of the Nave Neutrino, a 2003-built VLCC 298,287 dwt, from an unaffiliated third party, for a total cost of$43,686.On July 21, 2014, Navios Acquisition took delivery of the Nave Electron, a 2002-built VLCC of 305,178 dwt, from an unaffiliated third party, for a total costof $41,209.On September 19, 2014, Navios Acquisition took delivery of the Nave Luminosity, a newbuilding 49,999 dwt MR2 product tanker, from an unaffiliated thirdparty, for a total cost of $39,630.On November 20, 2014, Navios Acquisition took delivery of the Nave Pyxis, a newbuilding 49,998 dwt MR2 product tanker, from an unaffiliated third party,for a total cost of $33,411.On December 9, 2014, Navios Acquisition took delivery of the Nave Synergy, a 2010-built VLCC of 299,973 dwt, from an unaffiliated third party, for a totalcost of $75,918.Improvements for vessels for the year ended December 31, 2014 amounted to $410 and $0.0 for the year ended December 31, 2013.2013On January 24, 2013, Navios Acquisition took delivery of the Nave Bellatrix, a 49,999 dwt South Korean -built MR2 product tanker, from an unaffiliatedthird party, for a total cost of $38,021. Cash paid was $4,563 and $33,458 was transferred from vessel deposits.On February 13, 2013, Navios Acquisition took delivery of the Nave Rigel, a 74,673 dwt South Korean- built LR1 product tanker, from an unaffiliated thirdparty, for a total cost of $47,863. The $47,863 consisted of: (i) cash paid of $16,591, (ii) the issuance of $3,000 Series D Preferred; and (iii) $28,272 wastransferred from vessel deposits.On March 22, 2013, Navios Acquisition took delivery of the Nave Orion, a 49,999 dwt South Korean -built MR2 product tanker, from an unaffiliated thirdparty, for a total cost of $38,054. Cash paid was $8,157 and $29,897 was transferred from vessel deposits.On April 24, 2013, Navios Acquisition took delivery of the Nave Atropos, a 74,695 dwt South Korean -built LR1 product tanker, from an unaffiliated thirdparty, for a total cost of $48,197. The $48,197 consisted of: (i) cash paid of $17,089; (ii) the issuance of $3,000 of Series D Preferred Stock; and (iii) $28,108was transferred from vessel deposits.On June 10, 2013, Navios Acquisition took delivery of the Nave Titan, a 49,999 dwt South Korean -built MR2 product tanker, from an unaffiliated thirdparty, for a total cost of $37,123. Cash paid was $9,573 and $27,550 was transferred from vessel deposits.On June 26, 2013, Navios Acquisition took delivery of the Nave Equinox, a 50,922 dwt South Korean -built MR2 product tanker, from an unaffiliated thirdparty, for a total cost of $23,449 paid in cash. F-20Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) On July 9, 2013, Navios Acquisition took delivery of the Nave Capella, a 49,995 dwt South Korean- built MR2 product tanker, from an unaffiliated thirdparty, for a total cost of $37,151. Cash paid was $9,639 and $27,512 was transferred from vessel deposits.On July 9, 2013, Navios Acquisition took delivery of the Nave Pulsar, a 50,922 dwt South Korean -built MR2 product tanker, from an unaffiliated third party,for a total cost of $23,625 paid in cash.On July 22, 2013, Navios Acquisition took delivery of the Nave Universe, a 45,313 dwt South Korean -built Chemical tanker, from an unaffiliated third party,for a total cost of $34,208 paid in cash.On August 13, 2013, Navios Acquisition took delivery of the Nave Celeste, a 298,717 dwt South Korean- built VLCC, from an unaffiliated third party, for atotal cost of $35,864 paid in cash.On September 3, 2013, Navios Acquisition took delivery of the Nave Alderamin, a 49,998 dwt South Korean -built MR2 product tanker, from an unaffiliatedthird party, for a total cost of $37,340. Cash paid was $9,886 and $27,454 was transferred from vessel deposits.On September 5, 2013, Navios Acquisition took delivery of the Nave Constellation, a 45,281 dwt South Korean -built Chemical tanker, from an unaffiliatedthird party, for a total cost of $34,294 paid in cash.On September 24, 2013, Navios Acquisition took delivery of the Nave Dorado, a 2005 Japanese built MR2 product tanker, from an unaffiliated third party,for a total cost of $16,789 paid in cash.On September 30, 2013, Navios Acquisition took delivery of the Bougainville, a 50,626 dwt South Korean -built MR2 product tanker, from an unaffiliatedthird party, for a total cost of $35,560 paid in cash.On October 23, 2013, Navios Acquisition took delivery of the Nave Lucida, a 2005 Japanese built MR2 product tanker, from an unaffiliated third party, for atotal cost of $16,817 paid in cash.Disposal of vesselsOn May 6, 2014, Navios Acquisition sold the Shinyo Splendor to an unaffiliated third party for an aggregate sale price of $20,020. As of March 31, 2014, animpairment loss of $10,718 related to the Shinyo Splendor has been recognized under the line item “Impairment Loss.” The Company had a currentexpectation that, more likely than not, the Shinyo Splendor would be sold before the end of its previously estimated useful life, and as a result performed animpairment test of the specific asset group. The carrying amount of the asset group was more than its undiscounted future cash flows which resulted in animpairment loss (refer to Note 2(l) for further details related to the impairment test). The vessel’s aggregate net carrying amount as at the date of sale was$19,219 (including the remaining carrying balance of dry dock and special survey costs in the amount of $1,021). The Company received net cash proceedsin the amount of $18,315 and recognized a loss of $904. This loss is presented under “Gain / (loss) on sale of vessels” in the consolidated statements ofcomprehensive income/ (loss).On November 18, 2014, Navios Acquisition sold all of the outstanding shares of capital stock of four of its vessel-owning subsidiaries (Shinyo OceanLimited, Shinyo Kannika Limited, Shinyo Kieran Limited and Shinyo Saowalak Limited) to Navios Midstream (see Note 1). F-21Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) The gain on sale amounted to $23,503 and was calculated as: Proceeds received:Cash proceeds received from sale of assets$214,854 Common units 18,640 General Partner units 5,720 Subordinated units 140,140 Selling expenses (211) 379,143 Carrying Value of assets sold:Vessels (322,121) Favorable leases (32,129) Other assets / liabilities, net (1,390) (355,640) Gain on sale of vessels$ 23,503 The Company recorded the common units, general partner units and subordinated units at their fair value on November 18, 2014. Refer to Note 9,“Investment in affiliates”.This gain is included in “Gain / (loss) on sale of vessels” in the consolidated statements of comprehensive income/ (loss). Navios Midstream wasdeconsolidated from the date of the IPO. Refer to Note 9, “Investment in affiliates”.On December 6, 2013, Navios Acquisition sold the Shinyo Navigator to an unaffiliated third party purchaser for an aggregate price of $18,132. The loss onsale of $21,098 was calculated as the sales price less the carrying value of the vessel of $38,461, and related selling expenses of $725 and bunkers written-offof $44. This loss is included under the loss on sale of vessels in the consolidated statements of comprehensive income/ (loss).Deposits for vessel acquisitionsDeposits for vessel acquisitions represent deposits for vessels to be delivered in the future. As of December 31, 2014, Navios Acquisition vessel depositsamounted to $42,276 of which $23,540 was financed through loans and the balance from existing cash. For the year ended December 31 2014, additions todeposits for vessels acquisitions comprising of cash payments and capitalized interest were $11,881, which was offset by $71,220 transferred to vessels, net.As of December 31, 2013, Navios Acquisition vessel deposits amounted to $100,112 of which $70,620 was financed through loans and the balance fromexisting cash. For the year ended December 31 2013, additions to deposits for vessels acquisitions comprising of cash payments and capitalized interest were$24,907, which was offset by $202,251 transferred to vessels, net.For the year ended December 31, 2014, 2013 and 2012, capitalized interest amounted to $3,290, $6,149 and $14,240, respectively. F-22Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) NOTE 6: DEFERRED FINANCE COSTSDeferred finance costs consisted of the following: FinancingCosts Balance at December 31, 2012 $20,727 Additions 16,200 Capitalized into vessel deposits (472)Amortization (3,252)Deferred charges written-off (9,957)Balance at December 31, 2013$23,246 Additions 8,691 Capitalized into vessel deposits (355) Amortization (7,275) Deferred charges written-off (1,977) Balance at December 31, 2014$22,330 In 2014, an amount of $1,977 of deferred financing costs was written-off in relation to the tranches of the loans with ABN AMRO Bank N.V, HSH NordbankAG and DVB Bank S.E. which were prepaid in November 2014. In addition, the amortization income of the bond premium was $140 for 2014, $343 for 2013and $435 for 2012. In 2013, an amount of $9,343 of deferred financing costs was written- off in relation to the $505,000 bond. and $614 in relation to theloan with DVB Bank S.E. which was fully repaid on November 12, 2013. (See Note 13: Borrowings).NOTE 7: INTANGIBLE ASSETS OTHER THAN GOODWILLIntangible assets as of December 31, 2014 and December 31, 2013, consisted of the following: Favorable lease terms Cost AccumulatedAmortization Net BookValue Balance at December 31, 2012 $67,417 $(16,184) $51,233 Additions — (7,014) (7,014)Accelerated amortization* (10,347) 6,299 (4,048)Balance at December 31, 2013$57,070 $(16,899)$40,171 Additions — (4,742) (4,742)Disposals*** (44,877) 12,748 (32,129) Write-off** (1,695) 1,695 — Balance at December 31, 2014$10,498 $(7,198)$3,300 Unfavorable lease terms Cost AccumulatedAmortization Net BookValue Balance at December 31, 2012 $(5,819) $1,574 $(4,245) Additions — 684 684 Balance at December 31, 2013$(5,819) $2,258 $(3,561) Additions — 683 683 Balance at December 31, 2014$(5,819) $2,941 $(2,878) F-23Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) Amortization (expense) /income of favorable and unfavorable lease terms for the years ended December 31, 2014, 2013 and 2012 is presented in thefollowing table: December 31,2014 December 31,2013 December 31,2012 Unfavorable lease terms $683 $684 $683 Favorable lease terms charter-out(*) (4,742) (11,062) (8,646)Total$(4,059) $(10,378)$(7,963)The aggregate amortizations of acquired intangibles will be as follows: Description WithinOneYear YearTwo YearThree YearFour YearFive Thereafter Total Favorable lease terms $(1,673) $(1,627) $— $— $— $— $(3,300)Unfavorable lease terms 683 683 683 684 145 — 2,878 Total$(990)$(944)$683 $684 $145 $— $(422) (*)Following charterer’s default in July 2013, of which the Company became aware in June 2013, relating to two product tanker vessels, an amount of$4,048 has been accounted for as accelerated amortization in the consolidated statements of comprehensive income/ (loss) under the caption of“Depreciation and Amortization”, due to the revision of the remaining useful economic life of the related favorable lease.(**)On May 6, 2014, Navios Acquisition sold the Shinyo Splendor to an unaffiliated third party purchaser for an aggregate price of $20,020. An amountof $1,695 has been written off due to the expiration of the time charter of the related favorable lease of the vessel.(***)On November 18, 2014, Navios Acquisition sold all of the outstanding shares of capital stock of the four of Navios Acquisition’s vessel-owningsubsidiaries (Shinyo Ocean Limited, Shinyo Kannika Limited, Shinyo Kieran Limited and Shinyo Saowalak Limited) to Navios Midstream (see Note1). The carrying amount of the favorable leases was $32,129.NOTE 8: GOODWILLGoodwill as of December 31, 2014 and December 31, 2013 amounted to: Balance at January 1, 2013$1,579 Balance at December 31, 2013$1,579 Balance at December 31, 2014$1,579 NOTE 9: INVESTMENT IN AFFILIATESNavios EuropeOn October 9, 2013, Navios Holdings, Navios Acquisition and Navios Maritime Partners L.P. (“Navios Partners”) established Navios Europe and haveownership interests of 47.5%, 47.5% and 5.0%, respectively. On December 18, 2013, Navios Europe acquired ten vessels for aggregate considerationconsisting of (i) cash consideration of $127,753 (which was funded with the proceeds of a $117,753 senior loan facility (the “Senior Loan”), and loansaggregating $10,000 from Navios Holdings, Navios Acquisition and Navios Partners (in each F-24Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) case, in proportion to their ownership interests in Navios Europe) (collectively, the “Navios Term Loans”) and (ii) the assumption of a junior participatingloan facility (the “Junior Loan”) with a face amount of $173,367 and fair value of $71,929 as of December 31, 2013. In addition to the Navios Term Loans,Navios Holdings, Navios Acquisition and Navios Partners will also make available to Navios Europe (in each case, in proportion to their ownership interestsin Navios Europe) revolving loans up to $24,100 to fund working capital requirements (collectively, the “Navios Revolving Loans”).On an ongoing basis, Navios Europe is required to distribute cash flows (after payment of operating expenses, amounts due pursuant to the terms of the SeniorLoan and repayments of the Navios Revolving Loans) according to a defined waterfall calculation as follows: • First, Navios Holdings, Navios Acquisition and Navios Partners will each earn a 12.7% preferred distribution on the Navios Term Loans and the NaviosRevolving Loans; and • Second, any remaining cash is then distributed on an 80%/20% basis, respectively, between (i) the Junior Loan holder and (ii) the holders of the NaviosTerm Loans.The Navios Term Loan will be repaid from the future sale of vessels owned by Navios Europe and is deemed to be the initial investment by NaviosAcquisition. Navios Acquisition evaluated its investment in Navios Europe under ASC 810 and concluded that Navios Europe is a VIE and that they are notthe party most closely associated with Navios Europe and, accordingly, is not the primary beneficiary of Navios Europe based on the following: • the power to direct the activities that most significantly impact the economic performance of Navios Europe are shared jointly between (i) NaviosHoldings, Navios Acquisition and Navios Partners and (ii) and the Junior Loan holder; and • while Navios Europe’s residual is shared on an 80%/20% basis, respectively, between (i) the Junior Loan holder and (ii) Navios Holdings, NaviosAcquisition and Navios Partners, the Junior Loan holder is exposed to a substantial portion of Navios Europe’s risks and rewards.Navios Acquisition further evaluated its investment in the common stock of Navios Europe under ASC 323 and concluded that it has the ability to exercisesignificant influence over the operating and financial policies of Navios Europe and, therefore, its investment in Navios Europe is accounted for under theequity method.As of December 31, 2014, the estimated maximum potential loss by Navios Acquisition in Navios Europe would have been $13,414, which represents theCompany’s portion of the initial investment of $4,750, equity method investee income of $185, the Company’s portion of the carrying balance of the NaviosRevolving Loans and the Navios Term Loans of $7,791 and the accrued interest receivable in the amount of $688 which is included under “Due from relatedparties”. Refer to Note 16 for the terms of the Navios Revolving Loans. For the year ended December 31, 2013, Navios Europe had minimal operations andtherefore, the Company did not record any equity method investee income/(loss).Navios MidstreamOn October 13, 2014, the Company formed in the Marshall Islands a wholly-owned subsidiary, Navios Midstream. The purpose of Navios Midstream is toown, operate and acquire crude oil tankers, refined petroleum product tankers, chemical tankers and liquefied petroleum gas tankers under long-termemployment contracts.On the same day, the Company formed in the Marshall Islands a limited liability company, Navios Maritime Midstream Partners GP LLC (the “GeneralPartner”) a wholly-owned subsidiary to act as the general partner of Navios Midstream. F-25Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) Navios Midstream completed an IPO of its units on November 18, 2014 and is listed on the NYSE under the symbol “NAP”.In connection with the IPO of Navios Midstream in November 2014, Navios Acquisition sold all of the outstanding shares of capital stock of four of NaviosAcquisition’s vessel-owning subsidiaries (Shinyo Ocean Limited, Shinyo Kannika Limited, Shinyo Kieran Limited and Shinyo Saowalak Limited) inexchange for: (i) all of the estimated net cash proceeds from the IPO amounting to $110,403, (ii) $104,451 of the $126,000 borrowings under NaviosMidstream’s new credit facility, (iii) 9,342,692 subordinated units and 1,242,692 common units and (iv) 381,334 general partner units, representing a 2.0%general partner interest in Navios Midstream, and all of the incentive distribution rights in Navios Midstream to the General Partner.Following the completion of the IPO, the Company owns a 2.0% general partner interest in Navios Midstream through the General Partner and a 55.5%limited partnership interest through the ownership of subordinated units (49%) and through common units (6.5%), based on all of the outstanding common,subordinated and general partner units.The Company evaluated its investment in Navios Midstream under ASC 810 and concluded that Navios Midstream is not a VIE. The Company furtherevaluated the power to control the board of directors of Navios Midstream under the voting interest model. As of the IPO date, Navios Acquisition as thegeneral partner, delegated all its powers to the board of directors of Navios Midstream and does not have the right to remove or replace the elected directorsfrom the board of directors. Elected directors were appointed by the general partner, but as of the IPO date are deemed to be elected directors. The electeddirectors represent the majority of the board of directors of Midstream and therefore, the Company concluded that it does not hold a controlling financialinterest in Midstream and deconsolidated the vessels sold as of the IPO date. Accordingly, the consolidated statements of comprehensive income/ (loss)present the results of the four vessel-owning subsidiaries that were sold to Navios Midstream for the period up to November 17, 2014.Navios Acquisition further evaluated its investments in Navios Midstream as follows: • Investment in common units – The 1,242,692 common units that were acquired at the closing of the IPO were fair valued at $15 per unit and areaccounted for under investment in available for sale securities. As of December 31, 2014 and 2013, the carrying amount of the investment in available-for-sale common units was $15,099 and $0.0, respectively. (See Note 20). • Investment in the subordinated units and general partner units – Under ASC 323, the Company concluded that it has the ability to exercise significantinfluence over the operating and financial policies of Navios Midstream and, therefore, its investment in the subordinated and general partner units ofNavios Midstream was fair valued at $15 per unit and is accounted for under the equity method. As of December 31, 2014 and 2013, the carryingamount of the investment in Navios Midstream (subordinated units and general partner units) accounted for under the equity method was $147,031 and$0.0, respectively. F-26Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) Gain on retained investment in Navios MidstreamThe table below shows the portion of the gain on loss of control related to the remeasurement of the Company’s retained investment (the Company’sownership interest of 57.5%) in Navios Midstream. As of November 18, 2014 Fair value of investment in Navios Midstream 164,501 Less: Percentage retained of carrying value of net assets in Navios Midstream (144,287) Gain on retained investment in Navios Midstream$20,214 Accounting for basis differenceThe investment in Navios Midstream recorded under the equity method of $145,860 included the Company’s share of the basis difference between the fairvalue and the underlying book value of Navios Midstream’s assets at the deconsolidation date. The Company’s share of the basis difference is with referenceto its holding in the subordinated units and general partner units only.As of the deconsolidation date, the Company’s share of the basis difference between the fair value and the underlying book value of Navios Midstream’sassets was $17,883, from which an amount of $(300) was allocated on the intangibles assets and $18,183 was allocated on the tangible assets. This differenceis amortized through “Equity in net earnings of affiliated companies” over the remaining life of Navios Midstream’s tangible and intangible assets.Earnings of $2,000 were recognized in “Equity in net earnings of affiliated companies” for the year ended December 31, 2014.Summarized financial information of the affiliated companies is presented below: December 31, 2014 December 31, 2013 Balance Sheet NaviosMidstream Navios Europe Navios Europe Current Assets 31,742 13,764 8,224 Non-current Assets 355,833 190,913 199,761 Current Liabilities 18,595 16,257 14,792 Non-current Liabilities 115,496 191,411 194,288 For theperiod fromNovember 18,2014 toDecember 31,2014 For the Yearended December 31,2014 For the period fromOctober 9, 2013 toDecember 31, 2013 Income Statement NaviosMidstream Navios Europe Navios Europe Revenue 7,643 35,119 1,152 Net Income / (Loss) 2,551 (1,896) (1,096) F-27Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) NOTE 10: ACCOUNTS PAYABLEAccounts payable as of December 31, 2014 and 2013 consisted of the following: December 31,2014 December 31,2013 Creditors $505 $234 Brokers 900 966 Professional and legal fees 194 377 Total accounts payable$1,599 $1,577 NOTE 11: DIVIDENDS PAYABLEOn 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 share ofcommon 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 as ofDecember 15, 2011 and $384 was paid to the holders of 1,000 shares of the Series C preferred stock which is Navios Holdings.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 share ofcommon stock. A dividend in the aggregate amount of $2,410 was paid on April 5, 2012 out of which $2,026 was paid to the stock holders of record as ofMarch 22, 2012 and $384 was paid to the holder of 1,000 shares of the Series C preferred stock which is Navios Holdings.On May 4, 2012, the Board of Directors declared a quarterly cash dividend in respect of the first quarter of 2012 of $0.05 per share of common stock. Adividend in the aggregate amount of $2,410 was paid on July 3, 2012 out of which $2,026 was paid to the stock holders of record as of June 20, 2012 and$384 was paid to the holder of 1,000 shares of the Series C preferred stock which is Navios Holdings.On August 13, 2012, the Board of Directors declared a quarterly cash dividend in respect of the second quarter of 2012 of $0.05 per share of common stock. Adividend in the aggregate amount of $2,410 was paid on October 3, 2012 out of which $2,026 was paid to the stock holders of record as of September 19,2012 and $384 was paid to the holder of 1,000 shares of the Series C preferred stock which is Navios Holdings.On November 9, 2012, the Board of Directors declared a quarterly cash dividend in respect of the third quarter of 2012 of $0.05 per share of common stock. Adividend in the aggregate amount of $2,410 was paid on January 4, 2013 out of which $2,026 was paid to the stockholders of record as of December 19, 2012and $384 was paid to Navios Holdings, the holder of the 1,000 shares of the Series C preferred stock.On February 7, 2013, the Board of Directors declared a quarterly cash dividend in respect of the fourth quarter of 2012 of $0.05 per common share payable onApril 4, 2013 to stockholders of record as of March 19, 2013. A dividend in the aggregate amount of $4,172 was paid April 4, 2013 out of which $3,788 waspaid to the stockholders of record as of March 19, 2013 and $384 was paid to Navios Holdings, the holder of the 1,000 shares of the Series C preferred stock.On April 30, 2013, the Board of Directors declared a quarterly cash dividend in respect of the first quarter of 2013 of $0.05 per share of common stock. Adividend in the aggregate amount of $5,816 was paid July 3, 2013 out of which $5,432 was paid to the stockholders of record as of June 19, 2013 and $384was paid to Navios Holdings, the holder of the 1,000 shares of the Series C preferred stock. F-28Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) On August 14, 2013, the Board of Directors declared a quarterly cash dividend in respect of the second quarter of 2013 of $0.05 per share of common stock. Adividend in the aggregate amount of $7,115 was paid on October 2, 2013 out of which $6,731 was paid to the stockholders of record as of September 18,2013 and $384 was paid to Navios Holdings, the holder of the 1,000 shares of the Series C preferred stock.On November 8, 2013, the Board of Directors declared a quarterly cash dividend for the third quarter of 2013 of $0.05 per share of common stock. A dividendin the aggregate amount of $7,220 was paid on January 7, 2014 out of which $6,836 was paid to the stockholders of record as of December 19, 2013including holders of restricted stock and $384 was paid to Navios Holdings, the holder of the 1,000 shares of the Series C preferred stock.On February 7, 2014, the Board of Directors of Navios Acquisition declared a quarterly cash dividend for the fourth quarter of 2013 of $0.05 per share ofcommon stock. A dividend in the aggregate amount of $7,967 was paid on April 8, 2014 out of which $7,583 was paid to the stockholders of record as ofMarch 19, 2014 and $384 was paid to Navios Holdings, the holder of the 1,000 shares of the Series C preferred stock.On May 9, 2014, the Board of Directors declared a quarterly cash dividend in respect of the first quarter of 2014 of $0.05 per share of common stock payableon July 3, 2014 to stockholders of record as of June 17, 2014. A dividend in the aggregate amount of $7,967 was paid on July 3, 2014 out of which $7,583was paid to the stockholders of record as of June 17, 2014 and $384 was paid to Navios Holdings, the holder of the 1,000 shares of the Series C preferredstock.On August 11, 2014, the Board of Directors declared a quarterly cash dividend in respect of the second quarter of 2014 of $0.05 per share of common stockpayable on October 1, 2014 to stockholders of record as of September 17, 2014. A dividend in the aggregate amount of $7,967 was paid on October 2, 2014out of which $7,583 was paid to the stockholders of record as of September 17, 2014 and $384 was paid to Navios Holdings, the holder of the 1,000 shares ofthe Series C preferred stock.On October 31, 2014, the Board of Directors declared a quarterly cash dividend in respect of the third quarter of 2014 of $0.05 per share of common stockpayable on January 6, 2015 to stockholders of record as of December 17, 2014. A dividend in the aggregate amount of $7,967 was paid on January 6, 2015out of which $7,583 was paid to the stockholders of record as of December 17, 2014 and $384 was paid to Navios Holdings, the holder of the 1,000 shares ofthe Series C preferred stock.The declaration and payment of any further dividends remain 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 restrictions under its credit agreements and other debt obligations and suchother factors as the Board of Directors may deem advisable.As of December 31, 2014, Navios Acquisition paid a dividend of $750 to the holders of the 540 shares of Series B and Series D Preferred Stock. F-29Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) NOTE 12: ACCRUED EXPENSESAccrued expenses as of December 31, 2014 and December 31, 2013 consisted of the following: December 31,2014 December 31,2013 Accrued voyage expenses $559 $499 Accrued loan interest 8,925 9,046 Accrued legal and professional fees 777 2,440 Total accrued expenses$10,261 $11,985 NOTE 13: BORROWINGS December 31, 2014 December 31, 2013 Commerzbank AG, Alpha Bank AE, Credit Agricole Corporate and Investment Bank $128,250 $137,250 BNP Paribas S.A. and DVB Bank S.E. 69,750 74,250 DVB Bank S.E. and ABN AMRO Bank N.V. 17,931 39,448 Eurobank Ergasias S.A. $52,200 43,753 46,482 Eurobank Ergasias S.A. $52,000 40,998 43,446 ABN AMRO Bank N.V. — 41,336 Norddeutsche Landesbank Girozentrale 24,971 24,971 DVB Bank S.E. and Credit Agricole Corporate and Investment Bank 55,078 49,943 Ship Mortgage Notes $670,000 670,000 610,000 Deutsche Bank AG Filiale Deutschlandgeschäft — 47,652 Deutsche Bank AG Filiale Deutschlandgeschäft and Skandinaviska Enskilda Banken AB 74,639 — HSH Nordbank AG $40,300 37,152 39,670 Total borrowings 1,162,522 1,154,448 Less: current portion (33,431) (34,714)Add: bond premium 1,810 — Total long-term borrowings$1,130,901 $1,119,734 Long-Term Debt Obligations and Credit ArrangementsShip Mortgage Notes:8 1/8% First Priority Ship Mortgages: On November 13, 2013, the Company and its wholly owned subsidiary, Navios Acquisition Finance (US) Inc.(“Navios Acquisition Finance” and together with the Company, the “2021 Co-Issuers”) issued $610,000 in first priority ship mortgage notes (the “ExistingNotes”) due on November 15, 2021 at a fixed rate of 8.125%.On March 31, 2014 the Company completed a sale of $60,000 of its first priority ship mortgage notes due 2021 (the “Additional Notes,” and together withthe Existing Notes, the “2021 Notes”). The terms of the Additional Notes are identical to the Existing Notes and were issued at 103.25% plus accrued interestfrom November 13, 2013. The net cash received amounted to $59,598. F-30Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) The 2021 Notes are fully and unconditionally guaranteed on a joint and several basis by all of Navios Acquisition’s subsidiaries with the exception ofNavios Acquisition Finance (a co-issuer of the 2021 Notes).The 2021 Co-Issuers have the option to redeem the 2021 Notes in whole or in part, at any time (i) before November 15, 2016, at a redemption price equal to100% of the principal amount, plus a make-whole premium, plus accrued and unpaid interest, if any, and (ii) on or after November 15, 2016, at a fixed priceof 106.094% of the principal amount, which price declines ratably until it reaches par in 2019, plus accrued and unpaid interest, if any.At any time before November 15, 2016, the 2021 Co-Issuers may redeem up to 35% of the aggregate principal amount of the 2021 Notes with the netproceeds of an equity offering at 108.125% of the principal amount of the 2021 Notes, plus accrued and unpaid interest, if any, so long as at least 65% of theaggregate principal amount of the Existing Notes remains outstanding after such redemption.In addition, upon the occurrence of certain change of control events, the holders of the notes will have the right to require the 2021 Co-Issuers to repurchasesome or all of the 2021 Notes at 101% of their face amount, plus accrued and unpaid interest to the repurchase date.The 2021 Notes contain covenants which, among other things, limit the incurrence of additional indebtedness, issuance of certain preferred stock, thepayment of dividends, redemption or repurchase of capital stock or making restricted payments and investments, creation of certain liens, transfer or sale ofassets, entering in transactions with affiliates, merging or consolidating or selling all or substantially all of the 2021 Co-Issuers’ properties and assets andcreation or designation of restricted subsidiaries. The 2021 Co-Issuers were in compliance with the covenants as of December 31, 2014.The Existing Notes and the Additional 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. The Additional Notes and the ExistingNotes have the same CUSIP number.GuaranteesThe Company’s 2021 Notes are fully and unconditionally guaranteed on a joint and several basis by all of the Company’s subsidiaries with the exception ofNavios Acquisition Finance (a co-issuer of the 2021 notes). The Company’s 2021 Notes are unregistered. The guarantees of our subsidiaries that ownmortgaged vessels are senior secured guarantees and the guarantees of our subsidiaries that do not own mortgaged vessels are senior unsecured guarantees.All subsidiaries, including Navios Acquisition Finance are 100% owned. Navios Acquisition does not have any independent assets or operations. NaviosAcquisition does not have any subsidiaries that are not guarantors of the 2021 Notes.Credit FacilitiesCommerzbank AG, Alpha Bank A.E., and Credit Agricole Corporate and Investment Bank: Navios Acquisition assumed a loan agreement dated April 7, 2010,with Commerzbank AG, Alpha Bank A.E. and Credit Agricole Corporate and Investment Bank of up to $150,000 (divided in six equal tranches of $25,000each) to partially finance the construction of two chemical tankers and four product tankers. Each tranche of the facility is repayable in 12 equal semi-annualinstallments of $750 each with a final balloon payment of $16,000 to be repaid on the last repayment date. The repayment of each tranche started six monthsafter the delivery date of the F-31Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) respective vessel which that tranche financed. It bears interest at a rate of LIBOR plus 250 bps. The loan also requires compliance with certain financialcovenants. As of December 31, 2014, the facility was fully drawn and $128,250 was outstanding.BNP Paribas S.A. Bank and DVB Bank S.E.: Navios Acquisition assumed a loan agreement dated April 8, 2010, of up to $75,000 (divided in three equaltranches of $25,000 each) to partially finance the purchase price of three product tankers. Each of the tranches is repayable in 12 equal semi-annualinstallments of $750 each with a final balloon payment of $16,000 to be repaid on the last repayment date. The repayment date of each tranche started sixmonths 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 requirescompliance with certain financial covenants. As of December 31, 2014, $69,750 was outstanding with no amount remaining 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 AMRO BankN.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. Each tranche of thefacility is repayable in 24 equal quarterly installments of $448 each with a final balloon payment of $15,241 to be repaid on the last repayment date. Therepayment of each tranche started three months after the delivery date of the respective vessel. It bears interest at a rate of LIBOR plus 275 bps. The loan alsorequires compliance with certain financial covenants. On December 29, 2011, Navios Acquisition prepaid $2,500 in relation to an amendment to its creditfacility. After the prepayment, the 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. On December 31, 2012, Navios Acquisitionprepaid $500 in relation to an amendment to its credit facility. On November 13, 2014, the Company prepaid an amount of $18,379 which was the entireamount outstanding under one of the two tranches using a portion of the proceeds received from Navios Midstream’s IPO. As of December 31, 2014, thefacility was fully drawn and $17,931 was outstanding. The outstanding balance is repayable in six quarterly installments of $448 each, with final ballonpayment of $15,241 to be repaid on the last repayment date.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, of which$51,600 is drawn (divided into two tranches of $26,100 and $25,500, respectively) to partially finance the acquisition costs of two LR1 product tankervessels. Each tranche of the facility is repayable in 32 quarterly installments of $345 and $337, respectively, with a final balloon payment of $15,060 and$14,716, respectively, to be repaid on the last repayment date. The repayment of each tranche started three months after the delivery date of the respectivevessel. The loan bears interest at a rate of LIBOR plus (i) 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 requires compliance with certain financial covenants. The facility was fully drawn and $43,753 was outstanding as ofDecember 31, 2014.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 out of which$46,200 has been drawn (divided into two tranches of $23,100 each) to partially finance the acquisition costs of two LR1 product tanker vessels. Eachtranche of the facility is repayable in 32 equal quarterly installments of $306 each with a final balloon payment of $13,308, to be repaid on the lastrepayment date. The repayment of each tranche started three months after the delivery date of the respective vessel. It bears interest at a rate of LIBOR plus300 bps. The loan also requires compliance with certain financial covenants. The facility was fully drawn and $40,998 was outstanding as of December 31,2014.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 into twoequal tranches) to partially finance the purchase price of two MR2 F-32Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) product tanker vessels. The loan bears interest at a rate of LIBOR plus 325 bps. In November 2014, the outstanding balance of $35,722 was fully repaid.Norddeutsche Landesbank Girozentrale: On December 29, 2011, Navios Acquisition entered into a loan agreement with Norddeutsche LandesbankGirozentrale of up to $28,125 to partially finance the purchase price of one MR2 product tanker vessel. The facility is repayable in 32 quarterly installmentsof $391 each with a final balloon payment of $15,625 to be repaid on the last repayment date. The repayment starts three months after the delivery of thevessel and it bears interest at a rate of LIBOR plus: (a) up to but not including the drawdown date of, 175 bps per annum; (b) thereafter until, but notincluding, the tenth repayment date, 250 bps per annum; and (c) thereafter 300 bps per annum. The loan also requires compliance with certain financialcovenants. As of December 31, 2014, $24,971 was drawn and outstanding under this loan agreement with $3,154 remaining to be drawn.DVB Bank S.E. and Credit Agricole Corporate and Investment Bank: On December 29, 2011, Navios Acquisition entered into a loan agreement with DVBBank SE and Credit Agricole Corporate and Investment Bank of up to $56,250 (divided into two tranches of $28,125 each) to partially finance the purchaseprice of two MR2 product tanker 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 the last repayment date. The repayment starts three months after the delivery of the respective vessel and it bears interest at a rate ofLIBOR 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 bpsper annum; and (c) thereafter 300 bps per annum. The loan also requires compliance with certain financial covenants. As of December 31, 2014, the facilitywas fully drawn and $55,078 was outstanding.The Navios Holdings Credit Facilities: Navios Acquisition entered into a $40,000 credit facility with Navios Holdings and paid $400 as an arrangement fee.The $40,000 facility has a margin of LIBOR plus 300 bps and pursuant to an agreement dated November 8, 2011, the Navios Holdings’ credit facility wasextended to December 2014. Pursuant to an amendment in October 2010, the facility will be available for multiple drawings up to a limit of $40,000. InDecember 2014 the facility was renewed for one year. As of December 31, 2014, there was no amount outstanding under this facility with $40,000 remainingto be drawn.On November 11, 2014, Navios Acquisition entered into a short term credit facility with Navios Holdings pursuant to which Navios Acquisition may borrowup to $200,000 for general corporate purposes. The loan provides for an arrangement fee of $4,000 and bore a fixed interest of 600 bps. On November 13,2014, the Company drew an amount of $169,650 from the facility. The facility matured and was fully repaid by December 29, 2014.HSH Nordbank AG: On August 20, 2013, Navios Acquisition entered into a loan agreement with HSH Nordbank AG of up to $40,300 (divided in twotranches of $20,150 each), to partially finance the acquisition of two chemical tanker vessels. Each tranche of the facility is repayable in 28 quarterlyinstallments of $315 with a final balloon payment of $11,334 to be paid on the last repayment date. The facility bears interest at a rate of LIBOR plus 320bps. The loan also requires compliance with certain financial covenants. As of December 31, 2014, the facility was fully drawn and $37,152 was outstanding.HSH Nordbank AG: On February 6, 2014, Navios Acquisition entered into a loan agreement of up to $51,000 (divided in two tranches of $25,500 each). Thefacility bears interest at a margin of LIBOR plus 310 bps. In November 2014, the outstanding balance of $48,600 was fully repaid. F-33Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) Deutsche Bank AG Filiale Deutschlandgeschäft and Skandinaviska Enskilda Banken AB: On July 18, 2014, Navios Acquisition, entered into a term loanfacility of up to $132,413 (divided into eight tranches) with Deutsche Bank AG Filiale Deutschlandgeschäft and Skandinaviska Enskilda Banken AB for the:(i) refinancing of the purchase price for one very large crude carrier and two MR2 product tankers; (ii) post-delivery financing of two newbuilding MR2product tankers, and (iii) the refinancing of a credit facility with Deutsche Bank AG Filiale Deutschlandgeschäft for three MR2 product tankers. Therefinancing was treated as a modification for accounting purposes. Each tranche of the facility is repayable in 20 equal quarterly installments of betweenapproximately $344 and $387, each with a final balloon repayment of the balance to be repaid on the last repayment date. The maturity of the loan isJanuary 8, 2020. The first three tranches of the facility bear interest at LIBOR plus 325 bps per annum and the fourth through eighth tranches bear interest atLIBOR plus 310 bps per annum. The agreement also requires compliance with certain financial covenants. On November 13, 2014, the Company prepaid anamount of $29,610 which was the entire amount outstanding under two of the tranches. As of December 31, 2014, the amount of $74,639 was drawn andoutstanding and $22,800 remained to be drawn.As of December 31, 2014, the total amount available to be drawn from all our facilities was $65,954.The loan facilities include, among other things, compliance with loan to value ratios and certain financial covenants: (i) minimum liquidity higher of$40,000 or $1,000 per vessel, including vessels under construction; (ii) net worth ranging from $50,000 to $135,000; and (iii) total liabilities divided bytotal assets, adjusted for market values to be lower than 75%, as of January 1, 2014 and thereafter. It is an event of default under the credit facilities if suchcovenants are not complied with, including the loan to value ratios for which the Company may provide sufficient additional security to prevent such anevent.As of December 31, 2014, the Company was in compliance with its covenants.Amounts drawn under the facilities are secured by first preferred mortgages on Navios Acquisition’s vessels and other collateral and are guaranteed by eachvessel-owning subsidiary. The credit facilities contain a number of restrictive covenants that prohibit or limit Navios Acquisition from, among other things:incurring or guaranteeing indebtedness; entering into affiliate transactions; changing the flag, class, management or ownership of Navios Acquisition’svessels; changing the commercial and technical management of Navios Acquisition’s vessels; selling Navios Acquisition’s vessels; and subordinating theobligations under each credit facility to any general and administrative costs relating to the vessels, including the fixed daily fee payable under themanagement agreement. The credit facilities also require Navios Acquisition to comply with the ISM Code and ISPS Code and to maintain valid safetymanagement certificates and documents of compliance at all times. F-34Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) The maturity table below reflects the principal payments of all notes and credit facilities outstanding as of December 31, 2014 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 2021 Notes.The maturity table below includes in the amount shown for 2015 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 2015. December 31,2014 Long-Term Debt Obligations: Year December 31, 2015 $33,431 December 31, 2016 63,776 December 31, 2017 46,531 December 31, 2018 62,200 December 31, 2019 158,059 December 31, 2020 and thereafter 798,525 Total$1,162,522 NOTE 14: 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 of theshort maturity of these investments.Due from related parties: The carrying amount of due from related parties, short-term reported in the balance sheet approximates its fair value due to theshort-term nature of these accounts receivable.Investments in available-for-sale securities: The carrying amount of the investments in available-for-sale securities reported in the balance sheet representsunrealized gains and losses on these securities, which are reflected directly in equity unless an unrealized loss is considered “other-than-temporary”, in whichcase it is transferred to the statements of comprehensive (loss)/ income.Due to related parties, short-term: The carrying amount of due to related parties, short-term reported in the balance sheet approximates its fair value due tothe short-term nature of these 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 and premiums: The fair value of the 2021 Notes, which has a fixed rate, was determined based on quoted market prices, as indicated inthe table below. F-35Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) Loans receivable from affiliates: The carrying amount of the floating rate loans approximates its fair value.Due to related parties, long-term: The carrying amount of the floating rate payable approximates its fair value. December 31, 2014 December 31, 2013 Book Value Fair Value Book Value Fair Value Cash and cash equivalents $54,493 $54,493 $82,835 $82,835 Restricted cash $6,669 $6,669 $24,962 $24,962 Due from related parties, short-term $1,361 $1,361 $— $— Investments in available-for-sale securities $15,099 $15,099 $— $— Due to related parties, short-term $18,489 $18,489 $2,848 $2,848 Ship mortgage notes and premium $671,810 $657,860 $610,000 $622,963 Other long-term debt $492,522 $492,522 $544,448 $544,448 Due to related parties, long-term $9,625 $9,625 $5,144 $5,144 Loans receivable from affiliates $7,791 $7,791 $2,660 $2,660 Fair Value MeasurementsThe estimated fair value of our financial instruments that are not measured at fair value on a recurring basis, categorized based upon the fair value hierarchy,are as follows:Level I: Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets that we have the ability to access. Valuation of these itemsdoes not entail a significant amount of judgment.Level II: Inputs other than quoted prices included in Level I that are observable for the asset or liability through corroboration with market data at themeasurement date.Level III: Inputs that are unobservable. The Company did not use any Level III inputs as of December 31, 2014. Fair Value Measurements at December 31, 2014 Using Total Level I Level II Level III Cash and cash equivalents $54,493 $54,493 $— $— Restricted cash $6,669 $6,669 $— $— Ship mortgage notes and premium $657,860 $657,860 $— $— Other long-term debt(1) $492,522 $— $492,522(1) $— Due to related parties, long-term(1) $9,625 $— $9,625(1) $— Loans receivable from affiliates $7,791 $— $7,791(1) $— Fair Value Measurements at December 31, 2013 Using Total Level I Level II Level III Cash and cash equivalents $82,835 $82,835 $— $— Restricted cash $24,962 $24,962 $— $— Ship mortgage notes and premium $622,963 $622,963 $— $— Other long-term debt(1) $544,448 $— $544,448(1) $— Due to related parties, long-term(1) $5,144 $— $5,144(1) $— Loans receivable from affiliates $2,660 $— $2,660(1) $— (1)The fair value of the Company’s other long-term debt and due to related parties, long-term is estimated based on currently available debt with similarcontract terms, interest rate and remaining maturities as well as taking into account the Company’s creditworthiness. F-36Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) The following table presents the Company’s assets that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy. Fair Value Measurements as of December 31, 2014 Using Assets Total Quoted Prices inActive Markets forIdentical Assets(Level I) Significant OtherObservableInputs(Level II) SignificantUnobservableInputs(Level III) Investments in available-for-sale securities $15,099 $15,099 $— $— Fair Value Measurements at December 31, 2013 Using Total Level I Level II Level III Derivatives (included under “Prepaid expenses and other current assets”) $3,446 $— $3,446 $— Following the termination of the charter contracts of two MR2 product tankers in June 2013, Navios Acquisition recorded as of December 31, 2013, anaggregate receivable of $4,623 pursuant to the rehabilitation plan of the defaulted charterer and managements’ estimates, consisting of: (i) a derivative of$3,446 being the valuation of the shares that it had the right to receive; and (ii) $1,177 as a long term receivable.As of March 31, 2014, management revalued the derivative at $2,258 using publicly available trading data and recognized a fair value loss of $1,188 in theconsolidated statement of comprehensive income/ (loss). The management reassessed the recoverable amount of the receivable and recognized an impairmentloss of $972 in the consolidated statement of comprehensive income/ (loss) under “Impairment loss”.In April 2014, Navios Acquisition agreed to sell the receivable for $2,463 and the cash was received within the second quarter of 2014.NOTE 15: LEASESChartered-out:The future minimum contractual lease income (charter-out rates is presented net of commissions), including revenue for vessels expected to bedelivered in 2015 for which a charter party has been concluded, is as follows: Amount 2015 $171,682 2016 71,888 2017 28,591 2018 11,644 2019 2,192 Thereafter — Total minimum lease revenue, net of commissions$285,997 Revenues from time charters are not generally received when a vessel is off-hire, including time required for scheduled maintenance of the vessel. F-37Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) NOTE 16: TRANSACTIONS WITH RELATED PARTIESThe Navios Holdings Credit Facilities: Navios Acquisition entered into a $40,000 credit facility with Navios Holdings. The $40,000 facility has a margin ofLIBOR plus 300 bps and a pursuant to an amendment dated November 8, 2011, the maturity of the facility was extended to December 2014. Pursuant to anamendment in October 2010, the facility will be available for multiple drawings up to a limit of $40,000. In December 2014 the facility was renewed for oneyear. As of December 31, 2014, there was no outstanding amount under this facility.On November 11, 2014, Navios Acquisition entered into a short term credit facility with Navios Holdings pursuant to which Navios Acquisition may borrowup to $200,000 for general corporate purposes. The loan provides for an arrangement fee of $4,000 and bore a fixed interest of 600 bps. Pursuant to the termsof the short term credit facility, the Company drew down an amount of $169,650 on November 13, 2014. The facility matured and was repaid in full byDecember 29, 2014.Management fees: Pursuant to the Management Agreement dated May 28, 2010 as amended on May 4, 2012, Navios Holdings provided for five years fromthe closing of the Company’s initial vessel acquisition, commercial and technical management services to Navios Acquisition’s vessels for a daily feethrough May 28, 2014. This daily fee covered all of the vessels’ operating expenses, other than certain fees and costs. Drydocking expenses were fixed for thefirst four years under this agreement for up to $300 per LR1 and MR2 product tanker vessel and were reimbursed at cost for VLCC vessels.In May 2014, Navios Acquisition extended the duration of its existing Management Agreement with Navios Holdings until May 2020 and fixed the fees forship management services of its owned fleet for two additional years through May 2016 at current rates for product tanker and chemical tanker vessels, being$6.0 daily rate per MR2 product tanker and chemical tanker vessel and $7.0 daily rate per LR1 product tanker vessel and reduced the rate by 5% to $9.5 dailyrate per VLCC vessel. Drydocking expenses under this Management Agreement will be reimbursed at cost at occurrence for all vessels. Total managementfees for each of the years ended December 31, 2014, 2013 and 2012 amounted to $95,827, $71,392 and $47,043, respectively.Effective March 30, 2012, Navios Acquisition can, upon request to Navios Holdings, partially or fully defer the reimbursement of drydocking and otherextraordinary fees and expenses under the Management Agreement to a later date, but not later than January 5, 2016, and if reimbursed on a later date, suchamounts will bear interest at a rate of 1% per annum over LIBOR. Commencing as of September 28, 2012, Navios Acquisition can, upon request, reimburseNavios Holdings partially or fully, for any fixed management fees outstanding for a period of not more than nine months under the Management Agreementat a later date, but not later than January 5, 2016, and if reimbursed on a later date, such amounts will bear interest at a rate of 1% per annum over LIBOR.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 Navios Holdings provides certain administrative management services to Navios Acquisition which include:bookkeeping, audit and accounting services, legal and insurance services, administrative and clerical services, banking and financial services, advisoryservices, client and investor relations and other services. Navios Holdings is reimbursed for reasonable costs and expenses incurred in connection with theprovision of these services. In May 2014, Navios Acquisition extended the duration of its existing Administrative Services Agreement with Navios Holdings,until May 2020 pursuant to its existing terms.For each of the years ended December 31, 2014, 2013 and 2012 the expense arising from administrative services rendered by Navios Holdings amounted to$7,314, $3,476 and $2,110, respectively. F-38Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) Balance due to related parties: Amounts due to related parties as of December 31, 2014 and December 31, 2013 was $28,144 and $7,992, respectively, ofwhich the current account payable to Navios Holdings and its subsidiaries was $18,489 and $2,848, respectively, and the long term payable was $9,625 and$5,144, respectively. The amounts mainly consisted of management fees administrative fees, drydocking costs and other expenses.Balance due from related parties: Amounts due from related parties as of December 31, 2014 and December 31, 2013 were $1,361 and $0.0, respectively. Asof December 31, 2014, the Company had a receivable from Navios Midstream in the amount of $674 in connection with various payables that were settled onits behalf. Further, the Company had a receivable from Navios Europe in the amount of $687 in connection with the accrued interest receivable on theworking capital loan.Omnibus AgreementsAcquisition Omnibus Agreement: Navios Acquisition entered into an omnibus agreement (the “Acquisition Omnibus Agreement”) with Navios Holdingsand Navios Partners in connection with the closing of Navios Acquisition’s initial vessel acquisition, pursuant to which, among other things, NaviosHoldings and Navios Partners agreed not to acquire, charter-in or own liquid shipment vessels, except for container vessels and vessels that are primarilyemployed in operations in South America without the consent of an independent committee of Navios Acquisition. In addition, Navios Acquisition, underthe Acquisition Omnibus Agreement, agreed to cause its subsidiaries not to acquire, own, operate or charter-in drybulk carriers under specific exceptions.Under the Acquisition Omnibus Agreement, Navios Acquisition and its subsidiaries grant to Navios Holdings and Navios Partners, a right of first offer on anyproposed sale, transfer or other disposition of any of its drybulk carriers and related charters owned or acquired by Navios Acquisition. Likewise, NaviosHoldings and Navios Partners agreed to grant a similar right of first offer to Navios Acquisition for any liquid shipment vessels they might own. These rightsof 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 of anycharter 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.Midstream Omnibus Agreement: Navios Acquisition entered into an omnibus agreement (the “Midstream Omnibus Agreement”), with Navios Midstream,Navios Holdings and Navios Partners in connection with the Navios Midstream IPO, pursuant to which Navios Acquisition, Navios Midstream, NaviosHoldings, Navios Partners and their controlled affiliates generally have agreed not to acquire or own any VLCCs, crude oil tankers, refined petroleum producttankers, LPG tankers or chemical tankers under time charters of five or more years without the consent of the General Partner of Navios Midstream. TheMidstream Omnibus Agreement contains significant exceptions that will allow Navios Acquisition, Navios Holdings, Navios Partners or any of theircontrolled affiliates to compete with Navios Midstream under specified circumstances.Under the Midstream Omnibus Agreement, Navios Midstream and its subsidiaries will grant to Navios Acquisition a right of first offer on any proposed sale,transfer or other disposition of any of its VLCCs or any crude oil tankers, refined petroleum product tankers, LPG tankers or chemical tankers and relatedcharters owned or acquired by Navios Midstream. Likewise, Navios Acquisition will agree (and will cause its subsidiaries to agree) to grant a similar right offirst offer to Navios Midstream for any of the VLCCs, crude oil tankers, refined petroleum product tanker, LPG tankers or chemical tankers under charter forfive or more years 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 charter party or (b) merger with or into, or sale of substantially all of the assetsto, an unaffiliated third-party. F-39Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) Backstop Agreement: On November 18, 2014, Navios Acquisition entered into a backstop agreement with Navios Midstream. In accordance with the termsof the backstop agreement, Navios Acquisition has committed to charter-in the Shinyo Ocean and Shinyo Kannika for a two-year period at the time of theirredelivery at the currently contracted rate if the market charter rate is lower than the currently contracted rate. Furthermore, Navios Maritime Acquisition hascommitted to charter-in the following option vessels: (a) Nave Celeste for a two-year period at the time of her redelivery at the currently contracted rate if themarket charter rate is lower than the currently contracted rate; and (b) Nave Galactic and Nave Quasar for a four-year period at the net time charter-out rate perday (net of commissions) of $35 if the market charter rate is lower than the charter-out rate of $35. Conversely, if market charter rates are higher during thebackstop period, such vessels will be chartered out to third-party charterers at prevailing market rates and Navios Acquisition’s backstop commitment willnot be triggered. The backstop commitment does not include any profit-sharing.Navios Midstream General Partner Option Agreement with Navios Holdings: Navios Acquisition entered into an option agreement, dated November 18,2014, with Navios Holdings under which Navios Acquisition grants Navios Holdings the option to acquire any or all of the outstanding membership interestsin Navios Midstream General Partner and all of the incentive distribution rights in Navios Midstream representing the right to receive an increasingpercentage of the quarterly distributions when certain conditions are met. The option shall expire on November 18, 2024. Any such exercise shall relate tonot less than twenty-five percent of the option interest and the purchase price for the acquisition for all or part of the option interest shall be an amount equalto its fair market value.Option Vessels: Navios Acquisition has granted options to Navios Midstream, exercisable for a period of two years following the closing of the MidstreamIPO, to purchase seven VLCCs from Navios Acquisition at fair market value.Revolving Loans to Navios Europe: Navios Holdings, Navios Acquisition and Navios Partners will make available to Navios Europe (in each case, inproportion to their ownership interests in Navios Europe) up to $24,100 to fund working capital requirements under the Navios Revolving Loans. See Note 9for the Investment in Affiliates and respective ownership interests. The Navios Revolving Loans earn a 12.7% preferred distribution and are repaid from FreeCash Flow (as defined in the loan agreement) to the fullest extent possible at the end of each quarter. As of December 31, 2014, Navios Acquisition’s portionof the outstanding amount relating to its initial investment in Navios Europe was $4,750, under the caption “Investment in affiliates”, and the outstandingamount relating to the Navios revolving loans, excluding interest receivable, was $7,125, under the caption “Loan receivable from affiliates.” As ofDecember 31, 2014, the amount undrawn from the revolving facility was $9,100, of which Navios Acquisition was committed to fund $4,323.NOTE 17: COMMITMENTS AND CONTINGENCIESAs of December 31, 2014, Navios Acquisition had commitments for future remaining contractual deposits for vessels to be delivered on various dates throughFebruary 2015.On November 18, 2014, Navios Acquisition entered into a backstop agreement with Navios Midstream. In accordance with the terms of the backstopagreement, Navios Acquisition has committed to charter–in the Shinyo Ocean and Shinyo Kannika for a two-year period at the time of their redelivery at thecurrently contracted rate if the market charter rate is lower than the currently contracted rate. Furthermore, Navios Maritime Acquisition has committed tocharter–in the following option vessels: a) Nave Celeste for a two-year period at the time of her redelivery at the currently contracted rate if the market charterrate is lower than the currently contracted rate and b) Nave Galactic and Nave Quasar for a four-year period at the net time charter-out rate per day (net ofcommissions) of $35 if the market charter rate is lower than the charter-out rate of $35. Conversely, if market F-40Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) charter rates are higher during the backstop period, such vessels will be chartered out to third-party charterers at prevailing market rates and NaviosAcquisition’s backstop commitment will not be triggered. The backstop commitment does not include any profit-sharing.The Company is involved in various disputes and arbitration proceedings arising in the ordinary course of business. Provisions have been recognized in thefinancial 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, 2014 of Navios Acquisition under its contractual obligations related to newbuilding vessels,are as follows: Amount December 31, 2015 $29,368 Total$29,368 NOTE 18: PREFERRED AND COMMON STOCKPreferred StockAs of December 31, 2014, the Company was authorized to issue 10,000,000 shares of $0.0001 par value preferred stock with such designations, voting andother rights and preferences as may be determined from time to time by the Board of Directors.As of each of December 31, 2014 and December 31, 2013, there were 4,540 shares of preferred stock issued and outstanding.Redeemable Convertible Preferred StockOn each of August 31, 2012, October 31, 2012, February 13, 2013 and April 24, 2013, Navios Acquisition issued 300 shares of its authorized Series DPreferred Stock (nominal and fair value $3,000) to a shipyard, in partial settlement of the purchase price of each of the newbuilding LR1 product tankers,Nave Cassiopeia, Nave Cetus, Nave Atropos and Nave Rigel. The preferred stock includes a 6% per annum dividend payable quarterly, starting one year afterdelivery of each vessel. The Series D Preferred Stock will mandatorily convert into shares of common stock 30 months after issuance at a price per share ofcommon stock equal to $10.00. The holder of the preferred stock shall have the right to convert such shares of preferred stock into common stock prior to thescheduled maturity dates at a price of $7.00 per share of common stock. The Series D Preferred Stock does not have any voting rights. Navios Acquisition isobligated to redeem the Series D Preferred Stock (or converted common shares) at holder’s option exercisable beginning on 18 months after issuance, at parpayable at up to 12 equal quarterly installments.The fair value was determined using a combination of the Black Scholes model and discounted projected cash flows for the conversion option and put,respectively. The model used takes into account the credit spread of F-41Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) Navios Acquisition, the volatility of its stock, as well as the price of its stock at the issuance date. The convertible preferred stock is classified as temporaryequity (i.e., apart from permanent equity) as a result of the redemption feature upon exercise of the put option granted to the holder of the preferred stock.As of each of December 31, 2014 and December 31, 2013, 1,200 shares of Series D Preferred Stock were outstanding. Preferred Stock Number ofpreferred shares Amount Balance at December 31, 2012 600 $6,000 Issuance of preferred stock subject to redemption 600 6,000 Balance at December 31, 2013 1,200 $12,000 Balance at December 31, 2014 1,200 $12,000 Stock based compensationIn October 2013, Navios Acquisition authorized and issued to its directors in the aggregate of 2,100,000 restricted shares of common stock and options topurchase 1,500,000 shares of common stock having an exercise price of $3.91 per share and an expiration term of 10 years. These awards of restrictedcommon stock and stock options are based on service conditions only and vest ratably over a period of three years (33.33% each year). The holders ofrestricted stock are entitled to dividends paid on the same schedule as paid to the common stockholders of the company. The fair value of restricted stock wasdetermined by reference to the quoted stock price on the date of grant of $3.99 per share (or total fair value of $8,379).The fair value of stock option grants was determined with reference to the option pricing model, and principally adjusted Black-Scholes models, usinghistorical volatility, historical dividend yield, zero forfeiture rate, risk free rate equal to 10-year U.S. treasury bond and the simplified method for determiningthe expected option term since the Company did not have sufficient historical exercise data upon which to have a reasonable basis to estimate the expectedoption term. The fair value of stock options was calculated at $0.79 per option (or $1,188). Compensation expense is recognized based on a graded expensemodel over the vesting period of three years from the date of the grant.The effect of compensation expense arising from the stock based arrangements described above amounted to $5,254, $1,089 and $0.0for the years endedDecember 31, 2014, 2013 and 2012, respectively and was reflected in general and administrative expenses on the statement of comprehensive income/ (loss).The recognized compensation expense for the year was presented as an adjustment to reconcile net income to net cash provided by operating activities on thestatements of cash flows.There were no restricted stock or stock options exercised, forfeited or expired during the year ended December 31, 2014. On October 24, 2014, 699,994 sharesof restricted stock were vested. Accordingly, restricted shares outstanding and non-vested amounted to 1,400,006 shares as of December 31, 2014 and thenumber of stock options outstanding and non-vested as of December 31, 2014 amounted to 1,000,000. There were no stock options exercised as ofDecember 31, 2014.The estimated compensation cost relating to service conditions of non-vested (a) stock options and (b) restricted stock not yet recognized was $401 and$2,825, respectively, as of December 31, 2014 and is expected to be recognized over the weighted average period of 1.82 years. The weighted averagecontractual life of stock options outstanding as of December 31, 2014 was 8.8 years. F-42Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) Common StockOn February 20, 2014, Navios Acquisition completed the public offering of 14,950,000 shares of its common stock at $3.85 per share, raising gross proceedsof $57,556. These figures include 1,950,000 shares sold pursuant to the underwriters’ option, which was exercised in full. Total net proceeds of the abovetransactions, net of agents’ costs of $3,022 and offering costs of $247, amounted to $54,289.On September 16, 2013, Navios Acquisition completed the placement of a total of 25,974,026 shares of common stock, at a price of $3.85 per share,representing gross proceeds of $100,000 and net proceeds of $96,120. The placement included a registered direct offering of 12,987,013 shares of commonstock which raised $50,000 of gross proceeds and a private placement of 12,987,013 shares of common stock to Navios Holdings which raised $50,000 ofgross proceeds.Total net proceeds of the above transactions, net of agents’ costs of $3,501 and offering costs of $379, amounted to $96,120.In May 2013, Navios Acquisition completed the placement of a total of 32,876,712 shares of its common stock, at a price of $3.65 per share, representinggross proceeds of $120,000. The placement included a registered direct offering of 16,438,356 shares of common stock which raised $60,000 of grossproceeds and a placement of 16,438,356 common shares to Navios Holdings which raised $60,000 of gross proceeds. Both placements closed on May 21,2013.Total net proceeds of the transactions in May 2013, net of agents’ costs of $4,199 and offering costs of $369, amounted to $115,432.In February 2013, Navios Acquisition completed multiple offerings, including registered direct offerings, of a total of 35,246,791 shares of its common stock,at a price of $2.85 per share, representing gross proceeds of $100,453. The offerings were conducted as follows: • The first registered direct offering of 7,719,300 shares of common stock was completed on February 21, 2013, raising $22,000 of gross proceeds. • The second registered direct offering of 9,825,000 shares of common stock was completed on February 26, 2013, raising $28,001 of gross proceeds. • In addition, Navios Holdings and certain members of management of Navios Acquisition, Navios Holdings and Navios Partners purchased an aggregateof 17,702,491 shares of common stock in a private placement that was completed on February 26, 2013, raising $50,452 of gross proceeds.Total net proceeds of the transactions in February 2013, net of agents’ costs of $4,018 and offering costs of $465, amounted to $95,970.As of December 31, 2014, the Company was authorized to issue 250,000,000 shares of $0.0001 par value common stock.NOTE 19: 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. F-43Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) The following table sets out operating revenue by geographic region for Navios Acquisition’s reportable segment. Revenue is allocated on the basis of thegeographic region in which the customer is located. Tanker vessels operate worldwide. Revenues from specific geographic regions 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 operations tospecific countries. Year EndedDecember 31,2014 Year EndedDecember 31,2013 Year EndedDecember 31,2012 Asia $167,670 $158,441 $131,263 Europe 40,875 23,949 16,881 United States 56,332 20,007 2,953 Total Revenue$264,877 $202,397 $151,097 NOTE 20: INVESTMENT IN AVAILABLE FOR SALE SECURITIESAs part of the consideration received from the sale of all of the outstanding shares of capital stock of four of Navios Acquisition’s vessel-owning subsidiaries(Shinyo Ocean Limited, Shinyo Kannika Limited, Shinyo Kieran Limited and Shinyo Saowalak Limited) to Navios Midstream in November 2014, theCompany received 1,242,692 common units of Navios Midstream. As of December 31, 2014 and 2013, the carrying amount of the investment in available-for-sale common units was $15,099 and $0.0, respectively. As of December 31, 2014, the unrealized holding loss on the investment amounted to $3,542 andis included in “Other comprehensive loss”.NOTE 21: OTHER INCOMEAs of each of December 31, 2014, 2013 and 2012 other income amounted to $280, $4,787 and $280, respectively.Following the default of their charterer in June 2013, the original charters of two MR2 product tankers, were terminated. Pursuant to the rehabilitation plan ofthe defaulted charterer, Navios Acquisition would be paid, partly in cash and partly in shares, for a loss claim that was agreed by the competent court inDecember 2013. The Company had a right to receive shares (issued in 2014) and therefore, recorded a derivative of $3,446 which was valued using thepublicly available trading data on the settlement date. The derivative would be marked-to-market until the shares are received. The long-term notesreceivable for cash of $1,177 was discounted using a discount rate that was determined based on the terms of the rehabilitation plan and managements’estimates. The total amount of $4,623 was recognized in the consolidated statements of comprehensive income/ (loss) under “Other Income” since the lossclaim was accepted by the court and the acceptance was irrevocable. (See Note 14 for the subsequent sale of the receivable and derivative).NOTE 22: EARNINGS/ (LOSS) PER COMMON SHAREEarnings/ (Loss) per share is calculated by dividing net income/ (loss) attributable to common stockholders by the weighted average number of shares ofcommon stock of Navios Acquisition outstanding during the period. F-44Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) Net income/ (loss) for the years ended December 31, 2014, 2013 and 2012 was adjusted for the purposes of earnings per share calculation, for the dividendson Series B Preferred Shares and for the undistributed loss that is attributable to Series C preferred stock. Net income/ (loss) for the years ended December 31,2014 and 2013 was also adjusted for the dividends on Series D Preferred Shares and for the dividend declared on Restricted shares. Year endedDecember 31,2014 Year endedDecember 31,2013 Year endedDecember 31,2012 Numerator: Net income/ (loss) $13,047 $(58,592) $(3,798) Dividend declared on preferred shares Series B (108) (108) (108) Dividend declared on Series D preferred shares (642) (91) — Dividend declared on restricted shares (385) (105) — Undistributed (income)/ loss attributable to Series C participating preferred shares (541) 3,206 622 Income / (loss) attributable to common stockholders$11,371 $(55,690) $(3,284) Undistributed income/ (loss) attributable to Series C participating preferred shares 541 — — Net income/ ( loss) attributable to common stockholders, diluted 11,912 (55,690) (3,284)Denominator:Denominator for basic net income/ (loss) per share — weighted average shares 147,606,448 98,085,189 40,517,413 Series A preferred stock 1,200,000 — — Series C preferred stock 7,676,000 — — Denominator for diluted net income/ (loss) per share — adjusted weighted averageshares 156,482,448 98,085,189 40,517,413 Basic net income/ (loss) per share$0.08 $(0.57) $(0.08)Diluted net income/ (loss) per share$0.08 $(0.57) $(0.08)Potential common shares of 4,830,286 for the year ended December 31, 2014 (which include Series B and Series D Preferred Stock, restricted stock and stockoptions), 14,406,286 for the year ended December 31, 2013 (which include Series A, Series B, Series C and Series D Preferred Stock, restricted stock and stockoptions) and 9,949,143 for the year ended December 31, 2012 (which include Series A, Series B, Series C and Series D Preferred Stock) have an anti-dilutiveeffect (i.e., those that increase income per share or decrease loss per share) and are therefore excluded from the calculation of diluted income/ (loss) per share.NOTE 23: INCOME TAXESMarshall Islands, Cayman Islands, British Virgin Islands, and Hong Kong, do not impose a tax on international shipping income. Under the laws of MarshallIslands, of the companies’ incorporation and vessels’ registration, the companies are subject to registration and tonnage taxes which have been included inthe daily management fee.In accordance with the currently applicable Greek law, foreign flagged vessels that are managed by Greek or foreign ship management companies havingestablished an office in Greece are subject to duties towards the Greek state which are calculated on the basis of the relevant vessels’ tonnage. The payment ofsaid duties F-45Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) exhausts the tax liability of the foreign ship owning company and the relevant manager against any tax, duty, charge or contribution payable on income fromthe exploitation of the foreign flagged vessel. The amount included in Navios Acquisition’s statement of comprehensive income/ (loss) for each of the yearsended December 31, 2014 and 2013, related to the Greek Tonnage tax was $336 and $136, respectively.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 Navios Acquisition’s ship-operating subsidiaries satisfy these initial criteria. In addition, these companies must meet anownership test. Subject to proposed regulations becoming finalized in their current form, the management of Navios Acquisition believes by virtue of aspecial rule applicable to situations where the ship operating companies are beneficially owned by a publicly traded company like Navios Acquisition, thesecond criterion can also be satisfied based on the trading volume and ownership of the Company’s shares, but no assurance can be given that this willremain so in the future.NOTE 24: RECENT ACCOUNTING PRONOUNCEMENTSIn February 2015, the FASB issued the ASU 2015-02, “Consolidation (Topic 810) — Amendments to the Consolidation Analysis”, which amends thecriteria for determining which entities are considered VIEs, amends the criteria for determining if a service provider possesses a variable interest in a VIE andends the deferral granted to investment companies for application of the VIE consolidation model. The ASU is effective for interim and annual periodsbeginning after December 15, 2015. Early application is permitted. We do not expect the adoption of this ASU to have a material impact on the Company’sresults of operations, financial position or cash flows, except if Navios Acquisition were to enter into new arrangements in 2015 that fall into the scope priorto adoption of this standard.In January 2015, the FASB issued ASU 2015-01, Income Statement Extraordinary and Unusual Items. This standard eliminates the concept ofextraordinary and unusual items from U.S. GAAP. The new standard is effective for annual and interim periods after December 15, 2015. Early adoption ispermitted. Navios Acquisition plans to adopt this standard effective January 1, 2016. The adoption of the new standard is not expected to have a materialimpact on Navios Acquisition’s results of operations, financial position or cash flows.In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure ofUncertainties About an Entity’s Ability to Continue as a Going Concern. This standard requires management to assess an entity’s ability to continue as agoing concern, and to provide related footnote disclosures in certain circumstances. Before this new standard, no accounting guidance existed formanagement on when and how to assess or disclose going concern uncertainties. The amendments are effective for annual periods ending after December 15,2016, and interim periods within annual periods beginning after December 15, 2016. Early application is permitted. We plan to adopt this standard effectiveJanuary 1, 2017. The adoption of the new standard is not expected to have a material impact on Navios Acquisition’s results of operations, financial positionor cash flows.In May 2014, The FASB issued ASU 2014-09, Revenue from Contracts with Customers, which changed the method used to determine the timing andrequirements for revenue recognition on the statements of income. Under the new standard, an entity must identify the performance obligations in a contract,the transaction price and allocate the price to specific performance obligations to recognize the revenue when the obligation is F-46Table of ContentsNAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) completed. The amendments in this update also require disclosure of sufficient information to allow users to understand the nature, amount, timing anduncertainty of revenue and cash flow arising from contracts. The new accounting guidance is effective for interim and annual periods beginning afterDecember 15, 2016. Early adoption is not permitted. We are currently reviewing the effect of ASU No. 2014-09 on our revenue recognition.In April 2014, the FASB issued ASU 2014-08, Presentation of Financial Statements and Property, Plant and Equipment changing the presentation ofdiscontinued operations on the statements of income and other requirements for reporting discontinued operations. Under the new standard, a disposal of acomponent or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (orwill have) a major effect on an entity’s operations and financial results when the component meets the criteria to be classified as held-for-sale or is disposed.The amendments in this update also require additional disclosures about discontinued operations and disposal of an individually significant component ofan entity that does not qualify for discontinued operations. The new accounting guidance is effective for interim and annual periods beginning afterDecember 15, 2014. The adoption of the new standard is not expected to have a material impact on Navios Acquisition’s results of operations, financialposition or cash flows.NOTE 25: SUBSEQUENT EVENTSIn January 2015, Navios Acquisition redeemed 250 shares of the Series D Preferred Stock and paid $2,500 to the holder upon exercise of the put optiongranted. On February 28, 2015, 200 shares of the Series D preferred stock were mandatorily converted into 200,000 shares of common stock.On January 8, 2015, Navios Acquisition took delivery of the Nave Sextans, a newbuilding 49,999 dwt MR2 product tanker, from an unaffiliated third partyfor a purchase price of $31,500.In February 2015, Navios Acquisition terminated the newbuilding contracts for two MR2 product tankers, with no exposure to the Company, due to theshipyard’s inability to issue a refund guarantee.On February 6, 2015, Navios Acquisition took delivery of the Nave Velocity, a newbuilding 49,999 dwt MR2 product tanker, from an unaffiliated third partyfor a purchase price of $35,500.On February 6, 2015, the Board of Directors declared a quarterly cash dividend in respect of the fourth quarter of 2014 of $0.05 per share of common stockpayable on April 2, 2015 to stockholders of record as of March 18, 2015. The declaration and payment of any further dividends remain subject to thediscretion of the Board of Directors and will depend on, among other things, Navios Acquisition’s cash requirements as measured by market opportunitiesand restrictions under its credit agreements and other debt obligations and such other factors as the Board of Directors may deem advisable. F-47EXHIBIT 4.31Loan AgreementTo: Navios Maritime Acquisition Corporation (the Borrower)November 11, 2014Dear Sirs,Up to United States Dollars $200,000,000 loan by Navios Maritime Holdings Inc. to the BorrowerWe, Navios Maritime Holdings Inc. (Navios), are pleased to make available to the Borrower the Loan (defined below) on the terms set out in this letter (thisletter is hereafter referred to as the Agreement).For the purposes of this Agreement:Business Day means a day (other than Saturday or Sunday) on which banks are open for business in Athens and New York.Drawdown Notice means, in relation to each advance, a notice substantially in the form of Schedule 1.Event of Default means any of the events listed in Clause 11.Existing Indebtedness means indebtedness of the Borrower and its subsidiaries in existence on the date of this Agreement.Finance Documents mean this Agreement or any other document executed pursuant hereto.Interest Payment Date means the last day of an Interest Period.Interest Period means a period of one (1) or three (3) months for the calculation of interest in accordance with the provisions of Clause 6.Offering shall mean the initial public offering of Navios Maritime Midstream Partners L.P. formed by the Borrower and any agreements that may be executedin connection therein.Permitted Indebtedness means any existing or future Security related to Existing Indebtedness.Security means any mortgage, pledge, lien, charge, assignment, hypothecation or security interest or any other agreement or arrangement having a similareffect.Units shall mean common or subordinated units of Navios Maritime Midstream Partners L.P. issued in connection with Offering. 1.AMOUNTThe maximum amount of the Loan is up to United States Dollars $200,000,000 (the Loan).2.CONDITIONS PRECEDENT DOCUMENTSThe obligation of Navios to make the Loan available shall be subject to Navios receiving, in form and substance satisfactory to Navios, the followingdocuments: (a)an original of this Agreement duly signed by the Borrower; (b)evidence of the authority of any person signing this Agreement on behalf of the Borrower; and (c)any other document, opinion, assurance or authorisation that Navios reasonably considers necessary or desirable in connection with the performanceof, and the transactions contemplated by, any Finance Document or the validity and enforceability of any Finance Document. 3.FURTHER CONDITIONS PRECEDENT TO THE LOANThe obligation of Navios to make the Loan available is subject to the further conditions precedent that as at the date the Borrower requests the Loan to bemade and at the date the Loan is made by Navios: (a)no Event of Default (defined below), or event which with giving of notice, lapse of time or other condition may constitute an Event of Default, hasoccurred or is continuing or would result from the borrowing of the Loan; and (b)the representations and warranties made by the Borrower in Clause 9 below are correct in all respects. 4.UTILISATION 4.1The Borrower must provide Navios with a Drawdown Notice at least one Business Day before stating the date on which Navios is to make the Loanavailable to the Borrower (the Term Date) and to be credited to an account to be nominated by the Borrower: 4.2The Loan may be borrowed in up to three advances. 4.3The Borrower agrees to pay to Navios an arrangement fee of United States Dollars $4,000,000 on the date of the first advance of the Loan. 4.4The Loan is for general corporate purposes. 5.REPAYMENT-PREPAYMENT 5.1The Borrower must repay the Loan thereon in full by December 29, 2014 (time being of the essence). 5.2The Borrower may prepay the Loan (and any interest accrued thereon) in full at any time. The Borrower must give Navios one (1) Business Day’swritten notice of its intention to repay in accordance with this clause. 5.3The Borrower shall be obliged to mandatorily prepay the Loan upon consummation of the Offering through the proceeds of such Offering. 26.INTEREST 6.1The rate of interest in respect of the Loan will be 6.00% per annum (the “Interest Rate”). 6.2The Borrower must pay interest in respect of each Interest Period relating thereto on each Interest Payment Date. 6.3The Borrower must also pay accrued interest on the Loan at the time of repayment or prepayment in accordance with Clause 5. 7.DEFAULT INTERESTIf the Borrower fails to pay any amount due under this Agreement it must pay default interest on demand on any overdue amount from the due date up to thedate of actual payment (both before and after judgment) at the rate of 2% per annum above the Interest Rate on such overdue amounts. 8.PAYMENTS 8.1All payments by the parties are to be made in immediately available funds on the due date to a designated account in a country with the currency ofUnited States Dollars. However, amounts payable in respect of any Tax (defined below), fees, costs and expenses are payable in the currency in whichthey are incurred. 8.2The Borrower’s payments must be made without set-off or counterclaim and without any deduction, including, without limitation, any tax, levy,impost, stamp duty, duty or other charge or withholding of a similar nature (collectively referred to as Tax), except to the extent required by law. If theBorrower is compelled to make any deductions, the Borrower will pay an additional amount to ensure receipt by Navios of the full amount whichNavios would have received but for such deduction. 8.3The Borrower shall indemnify Navios upon demand against any loss or liability which Navios determines will be or has been suffered (directly orindirectly) by it for or on account of any Tax or registration fees (including, without limitation, any Tax or registration fees payable in respect of thePledge Agreement) or in respect of the entry into, performance or enforcement of any Finance Document. 9.REPRESENTATIONS AND WARRANTIESThe Borrower represents and warrants that: (a)the Finance Documents are legally binding, valid and enforceable upon it; (b)the entry into and performance by it of, and the transactions contemplated by, the Finance Documents do not conflict with: (i)any law or regulation applicable to it; or (ii)any document which is binding upon it or any of its assets; 3(c)no Event of Default has occurred or will result from the entry into, or the performance of any transaction contemplated by, the Finance Documents;and (d)no litigation, arbitration or administration proceedings are current or, to its knowledge, pending or threatened, which have or, if adverselydetermined, are reasonably likely to have a materially adverse effect on the Borrower, its ability to repay the Loan or the enforceability of the FinanceDocuments. 10.UNDERTAKINGS 10.1InformationThe Borrower must notify Navios, upon it becoming aware, of details of any litigation, arbitration or administrative proceedings which are current, threatenedor pending and which have or might have a materially adverse effect on the Borrower. 10.2Negative PledgeExcept to the extent contemplated under and connected to the Finance Documents, the Offering, any Permitted Indebtedness and any Existing Indebtedness,the Borrower shall not without the prior written consent of Navios: (a)sell, transfer or otherwise dispose of any of its interest in any of its assets; (b)create or permit to subsist any Security in respect of its assets or rights; or (c)enter into any other arrangement having a similar economic effect as (a) or (b) above. 10.3Compliance with lawsThe Borrower must comply in all respects with all laws to which it is subject and shall obtain, maintain and comply with the terms of any authorisationrequired under any law or regulation to perform its obligations under, or for the validity or enforceability of, the Finance Documents. 10.4PledgeThe Borrower, upon receipt of written notice by Navios, will offer any Units acquired during the Offering as security under this Agreement. 11.EVENTS OF DEFAULTIf at any time: (i)the Borrower fails to pay on the due date any amount payable by it under any Finance Document; (ii)the Borrower fails to comply promptly with the terms of any Finance Document; (iii)the Borrower makes any representation or warranty (or such representation or warranty is repeated by the Borrower) under the FinanceDocuments which are incorrect or misleading in any respect; 4 (iv)it becomes illegal for the Borrower or Navios to make or maintain any of its obligations under the Finance Documents; (v)any of the Finance Documents are not effective in accordance with their terms or are alleged by the Borrower to be ineffective with their terms forany reason; or (vi)the Borrower is declared insolvent or similar proceedings are taken in respect of the Borrower or its assets,(each event listed under (i) to and including (vi) above being an Event of Default) Navios may, by notice to the Borrower, cancel all or any part of the Loanand declare all or any part of the Loan and interest thereon and all other amounts payable to Navios in respect thereof, immediately due and payable andenforce any rights it may have under the Finance Documents. 12.INDEMNITIESThe Borrower indemnifies Navios against any loss or liability Navios incurs as a consequence of: (a)the occurrence of an Event of Default; (b)any failure by the Borrower to pay any amount due under the Finance Documents on its due date; (c)preparation and enforcement of, or preservation of any rights under, any Finance Document; and (d)any judgment or claim being payable in a different currency from that agreed in this Agreement. 13.TRANSFERSNavios may assign all or any of its rights under any of the Finance Documents without the Borrower’s consent. The Borrower shall not assign any of its rightsunder any of the Finance Documents. 14.WAIVERS 14.1Any term of the Finance Documents may be amended or waived with the agreement of Navios and the Borrower. 14.2No failure or delay by Navios in exercising any right, power or privilege under any Finance Document shall operate as a waiver thereof or prejudiceany other or further exercise by Navios of any of its rights or remedies under any Finance Document. The rights and remedies contained in the FinanceDocuments are cumulative and not exclusive of any right or remedies provided by law. 15.LAW AND JURISDICTIONThis Agreement and any non-contractual obligations connected with it shall be governed by English law and the English courts have exclusive jurisdictionto settle any dispute in connection with any Finance Document. 516.COUNTERPARTSThis Agreement may be executed in any number of counterparts. This has the same effect as if the signatures on the counterparts were on a single copy of thisAgreement. 17.NOTICES 17.1In writing (a)Any communication in connection with a Finance Document must be in writing and, unless otherwise stated, may be given: (i)in person, by post or fax: or (ii)to the extent agreed between Navios and the Borrower, by e-mail or other electronic communication. (b)For the purpose of the Finance Documents, an electronic communication will be treated as being in writing. (c)Unless it is agreed to the contrary, any consent or agreement required under a Finance Document must be given in writing. 17.2Contact details (a)The contact details of the Navios for this purpose are: Address:c/o Navios Shipmanagement Inc.85 Akti Miaouli185 38 PiraeusGreeceFax number:+302104531984E-mail:vpapaefthymiou@navios.comAttention:Vasiliki Papaefthymiou (b)The contact details of the Borrower for this purpose are: Address:c/o Navios Tankers Management Inc.85 Akti Miaouli185 38 PiraeusGreeceFax number:+302104531984E-mail:1korres@navios.comAttention:Leonidas Korres (c)Navios or the Borrower may change their contact details by giving five Business Days’ notice to the other parties. 18.SERVICE OF PROCESSThe Borrower irrevocably appoints HFW Nominees Ltd of Friary Court, 65 Crutched Friars, London EC3N 2AE, England, as its agent for service of process inany proceedings before the English courts in connection with this Agreement. The Borrower agrees that failure by a 6process agent to notify it of any process will not invalidate the relevant proceedings. This Clause does not affect any other method of service allowed by law.If you agree to the above, please sign and return the enclosed copy of this letter.Yours faithfully, By: /s/ George AkhniotisName: George Akhniotis, Chief Financial Officerfor and on behalf ofNavios Maritime Holdings Inc.We agree to the above. By: /s/ Leonidas KorresName: Leonidas Korres, Chief Financial Officerfor and on behalf ofNavios Maritime Acquisition Corporation 7Schedule 1Form of Drawdown Notice To:Navios Maritime Holdings Inc.85 Akti MiaouliPiraeus 185 38[ ], 2014Dear Sirs Re:Facility agreement dated 11 November 2014 in respect of a loan of up to $200,000,000 (the “Loan Agreement”) made between Navios MaritimeAcquisition Corporation as Borrower and Navios Maritime Holdings Inc. as Lender.We refer to the Loan Agreement. Words and expressions whose meanings are defined therein shall have the same meanings when used herein.We hereby give you notice that we wish to draw an advance in the sum of $[ ] on [ ], 2014 and we select a first Interest Period in respect ofsuch drawing of [ ]. The funds should be remitted on [ ], 2014 as follows:[ ]We confirm that: (a)no Event of Default has occurred; (b)the representations and warranties contained in clause 9 of the Loan Agreement are true and correct at the date hereof as if made with respect to thefacts and circumstances existing at such date; (c)the borrowing to be effected by the drawdown of such Advance will be within our corporate powers and has been validly authorised by appropriatecorporate action. By Authorised Signatory 8EXHIBIT 4.43FIFTH SUPPLEMENTAL INDENTURE (this “Fifth Supplemental Indenture”), dated as of December 4, 2014, among Navios Maritime AcquisitionCorporation, a Marshall Islands corporation, (the “Company”), Navios Acquisition Finance (US) Inc., a Delaware corporation (together with the Company,the “Co-Issuers”), and Samos Shipping Corporation (the “Guaranteeing Subsidiary”), a Marshall Islands corporation and an indirect subsidiary of theCompany, the other Guarantors (as defined in the Indenture referred to herein) and Wells Fargo Bank, National Association, as trustee (or its permittedsuccessor) under the Indenture referred to below (the “Trustee”) and as collateral trustee (or its permitted successor) under the Indenture referred to below (the“Collateral Trustee”).WITNESSETHWHEREAS, the Co-Issuers and the Guarantors have heretofore executed and delivered to the Trustee an indenture (the “Indenture”), dated as ofNovember 13, 2013 providing for the issuance of 8.125% First Priority Ship Mortgage Notes due 2021 (the “Notes”);WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee asupplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Co-Issuers’ obligations under the Notesand the Indenture on the terms and conditions set forth herein (the “Note Guarantee”); andWHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Fourth Supplemental Indenture.NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged,the Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.2. AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary hereby agrees to provide an unconditional Guarantee, on and subject to the terms,conditions and limitations set forth in the Notation of Guarantee and in the Indenture, including, but not limited, to Article Ten thereof.3. NEW YORK LAW TO GOVERN. THIS FIFTH SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCEWITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO CONFLICTS OF LAW PRINCIPLES TO THE EXTENT THAT THEAPPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.4. COUNTERPARTS. The parties may sign any number of copies of this Fifth Supplemental Indenture. Each signed copy shall be an original, but all ofthem together represent the same agreement.5. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof.6. THE TRUSTEE. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this FifthSupplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary and the Co-Issuers.IN WITNESS WHEREOF, the parties hereto have caused this Fifth Supplemental Indenture to be duly executed and attested, all as of the date firstabove written. SAMOS SHIPPING CORPORATIONBy:/s/ Anna KalathakisName: Anna KalathakisTitle:Treasurer/DirectorNAVIOS MARITIME ACQUISITION CORPORATIONBy:/s/ Vasiliki PapaefthymiouName:Vasiliki PapaefthymiouTitle:SecretaryNAVIOS ACQUISITION FINANCE (US) INC.By:/s/ Vasiliki PapaefthymiouName:Vasiliki PapaefthymiouTitle:President/SecretaryNAVIOS ACQUISITION EUROPE FINANCE INC.By:/s/ Alexandros LaiosName: Alexandros LaiosTitle: Director/SecretaryLEFKADA SHIPPING CORPORATIONKERKYRA SHIPPING CORPORATIONZAKYNTHOS SHIPPING CORPORATIONDONOUSSA SHIPPING CORPORATIONSCHINOUSA SHIPPING CORPORATIONSIKINOS SHIPPING CORPORATIONLIMNOS SHIPPING CORPORATIONSKYROS SHIPPING CORPORATIONALONNISOS SHIPPING CORPORATIONMAKRONISOS SHIPPING CORPORATIONIRAKLIA SHIPPING CORPORATIONTHASOS SHIPPING CORPORATION SAMOTHRACESHIPPING CORPORATION PAXOS SHIPPINGCORPORATIONANTIPAXOS SHIPPING CORPORATION OINOUSSESSHIPPING CORPORATION ANTIPSARA SHIPPINGCORPORATIONPSARA SHIPPING CORPORATIONKITHIRA SHIPPING CORPORATION ANTIKITHIRASHIPPING CORPORATION AMINDRA NAVIGATION CO.SERIFOS SHIPPING CORPORATION FOLEGANDROSSHIPPING CORPORATION LEROS SHIPPINGCORPORATIONKIMOLOS SHIPPING CORPORATIONBy: /s/ Anna KalathakisName: Anna KalathakisTitle:Treasurer/DirectorSHINYO DREAM LIMITEDSHINYO KANNIKA LIMITEDSHINYO LOYALTY LIMITEDSHINYO NAVIGATOR LIMITEDSHINYO OCEAN LIMITEDSHINYO SAOWALAK LIMITEDSHINYO KIERAN LIMITEDBy: /s/ Alexandros LaiosName: Alexandros LaiosTitle: DirectorAEGEAN SEA MARITIME HOLDINGS INC. THERASHIPPING CORPORATIONTINOS SHIPPING CORPORATIONAMORGOS SHIPPING CORPORATIONANDROS SHIPPING CORPORATION ANTIPAROS SHIPPINGCORPORATIONCRETE SHIPPING CORPORATIONIKARIA SHIPPING CORPORATIONIOS SHIPPING CORPORATIONKOS SHIPPING CORPORATIONMYTILENE SHIPPING CORPORATIONRHODES SHIPPING CORPORATIONSIFNOS SHIPPING CORPORATIONSKIATHOS SHIPPING CORPORATION SKOPELOSSHIPPING CORPORATIONSYROS SHIPPING CORPORATIONBy: /s/ George AchniotisName: George AchniotisTitle: President/DirectorWELLS FARGO BANK, NATIONAL ASSOCIATION, as TrusteeBy: Name:Title:WELLS FARGO BANK, NATIONALASSOCIATION,as Collateral TrusteeBy: Name:Title:Exhibit 8.1Subsidiaries of Navios Maritime Acquisition CorporationAegean Sea Maritime Holdings Inc., a Marshall Islands Holdings companyAlonnisos Shipping Corporation, a Marshall Islands corporationAmindra Shipping Co., a Marshall Islands corporationAmorgos Shipping Corporation, a Marshall Islands corporationAndros Shipping Corporation, a Marshall Islands corporationAntikithira Shipping Corporation, a Marshall Islands corporationAntiparos Shipping Corporation, a Marshall Islands corporationAntipaxos Shipping Corporation, a Marshall Islands corporationAntipsara Shipping Corporation, a Marshall Islands corporationCrete Shipping Corporation, a Marshall Islands corporationDonoussa Shipping Corporation, a Marshall Islands corporationFolegandros Shipping Corporation, a Marshall Islands corporationIkaria Shipping Corporation, a Marshall Islands corporationIos Shipping Corporation, a Cayman Islands corporationIraklia Shipping Corporation, a Marshall Islands corporationKerkyra Shipping Corporation, a Marshall Islands corporationKithira Shipping Corporation, a Marshall Islands corporationKimolos Shipping Corporation, a Marshall Islands corporationKos Shipping Corporation, a Marshall Islands corporationLefkada Shipping Corporation, a Marshall Islands corporationLeros Shipping Corporation, a Marshall Islands corporationLimnos Shipping Corporation, a Marshall Islands corporationMakronisos Shipping Corporation, a Marshall Islands corporationMytilene Shipping Corporation, a Marshall Islands corporationNavios Acquisition Europe Finance Inc., a Marshall Islands corporationNavios Acquisition Finance (US) Inc., a Delaware companyOinousses Shipping Corporation, a Marshall Islands corporationPaxos Shipping Corporation, a Marshall Islands corporationPsara Shipping Corporation, a Marshall Islands corporationRhodes Shipping Corporation, a Marshall Islands corporationSamothrace Shipping Corporation, a Marshall Islands corporationSamos Shipping Corporation, a Marshall Islands corporationSchinousa Shipping Corporation, a Marshall Islands corporationSerifos Shipping Corporation, a Marshall Islands corporationShinyo 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 corporationSikinos Shipping Corporation, a Marshall Islands corporationSkiathos Shipping Corporation, a Marshall Islands corporationSkopelos Shipping Corporation, a Cayman Islands corporationSkyros Shipping Corporation, a Marshall Islands corporationSyros Shipping Corporation, a Marshall Islands corporationThasos Shipping Corporation, a Marshall Islands corporationThera Shipping Corporation, a Marshall Islands corporationTinos Shipping Corporation, a Marshall Islands corporationZakynthos Shipping Corporation, a Marshall Islands corporationNavios Maritime Midstream Partners GP LLC, 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, 2014 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 the financialcondition, 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 in ExchangeAct 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 the companyand have:a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure thatmaterial information relating to the company, including its consolidated subsidiary, is made known to us by others within those entities, particularly duringthe period in which this report is being prepared;b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, toprovide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles;c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of thedisclosure 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 annual reportthat 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 reasonably likely toadversely 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 controls overfinancial reporting. /s/ Angeliki FrangouAngeliki FrangouChief Executive Officer(Principal Executive Officer)Date: March 30, 2015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, 2014 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 the financialcondition, 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 in ExchangeAct 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 the companyand have:a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure thatmaterial information relating to the company, including its consolidated subsidiary, is made known to us by others within those entities, particularly duringthe period in which this report is being prepared;b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, toprovide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles;c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of thedisclosure 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 annual reportthat 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 reasonably likely toadversely 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 controls overfinancial reporting. /s/ Leonidas KorresLeonidas KorresChief Financial Officer(Principal Financial Officer)Date: March 30, 2015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 of theundersigned 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, 2014 (the “Form 20-F”) of the Company fully complies with the requirements ofSection 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 the Company. Dated: March 30, 2015/s/ Angeliki FrangouAngeliki FrangouChief Executive OfficerDated: March 30, 2015/s/ Leonidas KorresLeonidas KorresChief Financial OfficerExhibit 15.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe hereby consent to the incorporation by reference in the Registration Statements on Form F-3 (Nos. 333-191266 and 333-170896) of Navios MaritimeAcquisition Corporation of our report dated March 30, 2015 relating to the financial statements and the effectiveness of internal control over financialreporting, which appears in this Form 20-F. /s/ PricewaterhouseCoopers S.A.Athens, GreeceMarch 30, 2015

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