Navios Maritime
Annual Report 2017

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 EXCHANGEACT OF 1934OR ☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2017OR ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934OR ☐SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934Date of event requiring shell company report For the transition period from to Commission file number001-33311 Navios Maritime Holdings Inc.(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)Stuart GelfondFried, Frank, Harris, Shriver & Jacobson LLPOne New York PlazaNew York, New York 10004Tel: (212) 859-8000Fax: (212) 859-4000(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 registeredCommon Stock, par value $.0001 per share The New York Stock Exchange8.75% Series G Cumulative Redeemable Perpetual Preferred Stock, parvalue $0.0001 per share (“Series G”) The New York Stock Exchange*American Depositary Shares, each representing 1/100th of a Share of SeriesG The New York Stock Exchange8.625% Series H Cumulative Redeemable PerpetualPreferred Stock, par value $0.0001 per share (“Series H”) The New York Stock Exchange *American Depositary Shares, each representing 1/100th of a Share of SeriesH The New York Stock Exchange *Not for trading, but in connection with the registration of American Depositary Shares, pursuant to the requirements of the Securities and ExchangeCommissionSecurities registered or to be registered pursuant to Section 12(g) of the Act. NoneSecurities for which there is a reporting obligation pursuant to Section 15(d) of the Act. None Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annualreport:120,386,472 shares of common stock, 14,191 shares of Series G and 28,612 shares of Series H as of December 31, 2017Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15 (d) ofthe Securities Exchange Act of 1934. Yes ☐ No ☒Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data Filerequired to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorterperiod that the registrant was required to submit and post such files). Yes ☒ No ☐Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes ☒ No ☐Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company.See the definition of “accelerated filer” and “large accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☐ Emerging growth company ☐If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant haselected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a)of the Exchange Act. ☐ †The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its AccountingStandards Codification after April 5, 2012.Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing: U.S. GAAP ☒ International Financial Reporting Standards as issuedby the International Accounting Standards Board ☐ Other ☐If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected tofollow. Item 17 ☐ Item 18 ☐If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the ExchangeAct). Yes ☐ No ☒ Table of ContentsTABLE OF CONTENTS FORWARD-LOOKING STATEMENTS 1 Item 1. Identity of Directors, Senior Management and Advisers 1 Item 2. Offer Statistics and Expected Timetable 1 Item 3. Key Information 1 Item 4. Information on the Company 45 Item 4A. Unresolved Staff Comments 69 Item 5. Operating and Financial Review and Prospects 69 Item 6. Directors, Senior Management and Employees 105 Item 7. Major Shareholders and Related Party Transactions 111 Item 8. Financial Information 116 Item 9. The Offer and Listing 117 Item 10. Additional Information 118 Item 11. Quantitative and Qualitative Disclosures about Market Risk 126 Item 12. Description of Securities Other than Equity Securities 127 PART II Item 13. Defaults, Dividend Arrearages and Delinquencies 127 Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds 127 Item 15. Controls and Procedures 127 Item 16A. Audit Committee Financial Expert 128 Item 16B. Code of Ethics 128 Item 16C. Principal Accountant Fees and Services 128 Item 16D. Exemptions from the Listing Standards for Audit Committees 129 Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers 129 Item 16F. Changes in Registrant’s Certifying Accountant 129 Item 16G. Corporate Governance 129 Item 16H. Mine Safety Disclosures 129 PART III Item 17. Financial Statements 129 Item 18. Financial Statements 129 Item 19. Exhibits 130 EX-8.1 EX-12.1 EX-12.2 EX-13.1 EX-15.1 EX-15.2 EX-15.3 Table of ContentsPlease note in this Annual Report, “we”, “us”, “our”, the “Company” and “Navios Holdings” all refer to Navios Maritime Holdings Inc. and itsconsolidated subsidiaries, except as otherwise indicated or where the context otherwise requires.FORWARD-LOOKING STATEMENTSThis Annual Report should be read in conjunction with the consolidated financial statements and accompanying notes included in this report.Navios Maritime Holdings Inc. desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995and is including this cautionary statement in connection with this safe harbor legislation. This document and any other written or oral statements made by usor on our behalf may include forward-looking statements, which reflect our current views with respect to future events and financial performance. The words“may,” “could,” “should,” “would,” “expect,” “plan,” “anticipate,” “intend,” “forecast,” “believe,” “estimate,” “predict,” “propose,” “potential,” “continue”and similar expressions identify forward-looking statements.The forward-looking statements in this document and in other written or oral statements we make from time to time are based upon currentassumptions, many of which are based, in turn, upon further assumptions, including without limitation, management’s examination of historical operatingtrends, data contained in our records, and other data available from third parties. Although we believe that these assumptions were reasonable when made,because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyondour control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections.In addition to these important factors and matters discussed elsewhere herein, important factors that, in our view, could cause actual results todiffer materially from those discussed in the forward-looking statements include, but are not limited to, the strength of world economies, fluctuations incurrencies and interest rates, general market conditions, including fluctuations in charter hire rates and vessel values, changes in demand in the dry cargoshipping industry, changes in the Company’s operating expenses, including bunker prices, drydocking and insurance costs, expectations of dividends anddistributions from affiliates, the Company’s ability to maintain compliance with the continued listing standards of the New York Stock Exchange (the“NYSE”), changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation,general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, the value of our publiclytraded subsidiaries, and other important factors described from time to time in the reports we file with the Securities and Exchange Commission, or the SEC.See also “Risk Factors” below.We undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on whichsuch statement is made or to reflect the occurrence of unanticipated events, except as required by law. New factors emerge from time to time, and it is notpossible for us to predict all of these factors. Further, we cannot assess the impact of each such factor on our business or the extent to which any factor, orcombination of factors, may cause actual results to be materially different from those contained in any forward-looking statement.PART IItem 1. Identity of Directors, Senior Management and AdvisersNot Applicable.Item 2. Offer Statistics and Expected TimetableNot Applicable.Item 3. Key InformationA. Selected Financial DataNavios Holdings’ selected historical financial information and operating results for the years ended December 31, 2017, 2016, 2015, 2014 and2013 are derived from the consolidated financial statements of Navios Holdings. The selected consolidated statement of comprehensive (loss)/income datafor the years ended December 31, 2017, 2016 and 2015 and the selected consolidated balance sheet data as of December 31, 2017 and 2016 have beenderived from our audited consolidated financial statements included elsewhere in this Annual Report. The selected consolidated financial data should beread in conjunction with “Item 5. Operating and Financial Review and Prospects”, the consolidated financial statements, related notes and other financialinformation included elsewhere in this Annual Report. The historical data included below and elsewhere in this Annual Report is not necessarily indicativeof our future performance. 1Table of Contents Year EndedDecember 31,2017 Year EndedDecember 31,2016 Year EndedDecember 31,2015 Year EndedDecember 31,2014 Year EndedDecember 31,2013 (Expressed in thousands of U.S. dollars — except share and per share data) Statement of Comprehensive (Loss)/income Data Revenue $463,049 $419,782 $480,820 $569,016 $512,279 Administrative fee revenue from affiliates 23,667 21,799 16,177 14,300 7,868 Time charter, voyage and logistics business expenses (213,929) (175,072) (247,882) (263,304) (244,412) Direct vessel expenses (116,713) (127,396) (128,168) (130,064) (114,074) General and administrative expenses incurred on behalfof affiliates (23,667) (21,799) (16,177) (14,300) (7,868) General and administrative expenses (27,521) (25,295) (34,183) (45,590) (44,634) Depreciation and amortization (104,112) (113,825) (120,310) (104,690) (98,124) Provision for losses on accounts receivable (269) (1,304) (59) (792) (630) Interest income 6,831 4,947 2,370 5,515 2,299 Interest expense and finance cost (121,611) (113,639) (113,151) (113,660) (110,805) Impairment losses (50,565) — — — — Loss on derivatives — — — — (260) Gain on sale of assets 1,064 — — — 18 (Loss)/gain on bond and debt extinguishment (981) 29,187 — (27,281) (37,136) Other income 6,140 18,175 4,840 15,639 17,031 Other expense (13,761) (11,665) (34,982) (24,520) (10,447) Loss before equity in net earnings of affiliatedcompanies $(172,378) $(96,105) $(190,705) $(119,731) $(128,895) Equity/(loss) in net earnings of affiliated companies 4,399 (202,779) 61,484 57,751 19,344 Loss before taxes $(167,979) $(298,884) $(129,221) $(61,980) $(109,551) Income tax benefit/(expense) 3,192 (1,265) 3,154 (84) 4,260 Net loss $(164,787) $(300,149) $(126,067) $(62,064) $(105,291) Less: Net (income)/loss attributable to thenoncontrolling interest (1,123) (3,674) (8,045) 5,861 (3,772) Net loss attributable to Navios Holdings commonstockholders $(165,910) $(303,823) $(134,112) $(56,203) $(109,063) Loss attributable to Navios Holdings commonstockholders, basic and diluted $(175,298) $(273,105) $(150,314) $(66,976) $(110,990) Basic and diluted net loss per share attributable toNavios Holdings common stockholders $(1.50) $(2.54) $(1.42) $(0.65) $(1.09) Weighted average number of shares, basic and diluted 116,673,459 107,366,783 105,896,235 103,476,614 101,854,415 2Table of ContentsBalance Sheet Data (at period end) Current assets, including cash and restricted cash $256,076 $273,140 $302,959 $417,131 $339,986 Total assets 2,629,981 2,752,895 2,958,813 3,127,697 2,886,453 Total long-term debt, net including current portion 1,682,488 1,651,095 1,581,308 1,612,890 1,478,089 Navios Holdings’ stockholders’ equity $516,098 $678,287 $988,960 $1,152,963 $1,065,695 Year EndedDecember 31,2017 Year EndedDecember 31,2016 Year EndedDecember 31,2015 Year EndedDecember 31,2014 Year EndedDecember 31,2013 (Expressed in thousands of U.S. dollars — except per share data) Other Financial Data Net cash provided by operating activities $50,784 $36,920 $43,478 $56,323 $59,749 Net cash used in investing activities (42,365) (150,565) (36,499) (244,888) (258,571) Net cash (used in)/ provided by financing activities (16,779) 86,225 (91,123) 248,290 128,785 Book value per common share 4.29 5.79 8.95 10.89 10.22 Cash dividends per common share — — 0.17 0.24 0.24 Cash dividends per preferred share — 74.4 216.7 99.9 200.0 Cash paid for common stock dividend declared — — 19,325 25,228 24,710 Cash paid for preferred stock dividend declared — 3,681 16,025 7,502 1,696 Adjusted EBITDA(1) $68,813 $(62,827) $112,756 $176,698 $107,909 (1)EBITDA represents net (loss)/income attributable to Navios Holdings’ common stockholders before interest and finance costs, before depreciation andamortization and before income taxes. Adjusted EBITDA represents EBITDA before stock based compensation. We use Adjusted EBITDA as liquiditymeasure and reconcile Adjusted EBITDA to net cash provided by operating activities, the most comparable U.S. GAAP liquidity measure. AdjustedEBITDA is calculated as follows: net cash provided by operating activities adding back, when applicable and as the case may be, the effect of (i) netincrease/(decrease) in operating assets, (ii) net (increase)/decrease in operating liabilities, (iii) net interest cost, (iv) deferred finance charges andgains/(losses) on bond and debt extinguishment, (v) (provision)/recovery for losses on accounts receivable, (vi) equity in affiliates, net of dividendsreceived, (vii) payments for drydock and special survey costs, (viii) noncontrolling interest, (ix) gain/ (loss) on sale of assets/ subsidiaries,(x) unrealized (loss)/gain on derivatives, and (xi) loss on sale and reclassification to earnings of available-for-sale securities and impairment charges.Navios Holdings believes that Adjusted EBITDA is a basis upon which liquidity can be assessed and represents useful information to investorsregarding Navios Holdings’ ability to service and/or incur indebtedness, pay capital expenditures, meet working capital requirements and paydividends. Navios Holdings also believes that Adjusted EBITDA is used (i) by prospective and current lessors as well as potential lenders to evaluatepotential transactions; (ii) to evaluate and price potential acquisition candidates; and (iii) by securities analysts, investors and other interested partiesin the evaluation of companies in our industry.Adjusted EBITDA has limitations as an analytical tool, and therefore, should not be considered in isolation or as a substitute for the analysis of NaviosHoldings’ 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; (ii) Adjusted EBITDA does not reflect the amounts necessary to service interest or principal payments on our debt and other financingarrangements; and (iii) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced inthe future. Adjusted EBITDA does not reflect any cash requirements for such capital expenditures. Because of these limitations, among others, AdjustedEBITDA should not be considered as a principal indicator of Navios Holdings’ performance. Furthermore, our calculation of Adjusted EBITDA may not becomparable to that reported by other companies due to differences in methods of calculation. 3Table of ContentsThe following table reconciles net cash provided by operating activities, as reflected in the consolidated statements of cash flows, to AdjustedEBITDA:Adjusted EBITDA Reconciliation from Cash from Operations Year EndedDecember 31,2017 Year EndedDecember 31,2016 Year EndedDecember 31,2015 Year EndedDecember 31,2014 Year EndedDecember 31,2013 (Expressed in thousands of U.S. dollars — except per share data) Net cash provided by operating activities $50,784 $36,920 $43,478 $56,323 $59,749 Net (decrease)/ increase in operating assets (25,052) 20,599 (43,042) 18,025 (57,792) Net (increase)/decrease in operating liabilities (20,814) (38,928) (39,288) (23,613) 27,087 Payments for drydock and special survey costs 10,824 11,096 24,840 10,970 12,119 Net interest cost 108,389 103,039 106,257 104,084 103,122 Provision for losses on accounts receivable (269) (1,304) (59) (792) (630) Impairment losses (50,565) — — — — Gain on sale of assets 1,064 — — — 18 Unrealized loss on FFA derivatives, warrants, interest rate swaps — — — — (69) Gain/ (Loss) on bond and debt extinguishment 185 29,187 — (4,786) (12,142) (Losses)/earnings in affiliates and joint ventures, net of dividendsreceived (4,610) (219,417) 30,398 22,179 (19,781) Reclassification to earnings of available-for-sale securities — (345) (1,783) (11,553) — Noncontrolling interest (1,123) (3,674) (8,045) 5,861 (3,772) Adjusted EBITDA $68,813 $(62,827) $112,756 $176,698 $107,909 B. Capitalization and IndebtednessNot applicable.C. Reasons for the Offer and Use of ProceedsNot applicable.D. Risk FactorsSome of the following risks relate principally to the industry in which we operate and our business in general. Other risks relate principally to thesecurities market and ownership of our common stock. You should carefully consider each of the following risks together with the other informationincorporated into this Annual Report when evaluating the Company’s business and its prospects. The risks and uncertainties described below are not the onlyones the Company faces. Additional risks and uncertainties not presently known to the Company or that the Company currently considers immaterial mayalso impair the Company’s business operations. If any of the following risks relating to our business and operations actually occur, our business, financialcondition and results of operations could be materially and adversely affected and in that case, the trading price of our common stock could decline, and youcould lose all or part of your investment. 4Table of ContentsRisks Associated with the Shipping Industry and Our OperationsThe cyclical nature of the shipping industry may lead to decreases in charter rates and lower vessel values, which could adversely affect our and ouraffiliates’ results of operations and financial condition. In particular, charter rates in the dry cargo market are currently near historical lows and certainof our vessels may operate below operating cost.The shipping business, including the dry cargo market, is cyclical in varying degrees, experiencing severe fluctuations in charter rates,profitability and, consequently, vessel values. For example, during the period from January 1, 2016 to December 31, 2017, the Baltic Exchange’s Panamaxtime charter average daily rates experienced a low of $2,260 and a high of $13,740. Additionally, during the period from January 1, 2016 to December 31,2017, the Baltic Exchange’s Capesize time charter average (BCI-5TCA) daily rates experienced a low of $1,985 and a high of $30,475 and the Baltic DryIndex experienced a low of 290 points and a high of 1,743 points. There can be no assurance that the dry bulk charter market will not fluctuate or hit newlows. We anticipate that the future demand for our dry bulk carriers and dry bulk charter rates will be dependent upon demand for imported commodities,economic growth in the emerging markets, including the Asia Pacific region, of which China is particularly important, India, Brazil and Russia and the rest ofthe world, seasonal and regional changes in demand and changes to the capacity of the world fleet. Adverse economic, political, social or other developmentscan decrease demand and prospects for growth in the shipping industry and thereby could reduce revenue significantly. A decline in demand for commoditiestransported in dry bulk carriers or an increase in supply of dry bulk vessels could cause a further decline in charter rates, which could materially adverselyaffect our results of operations and financial condition. If we sell a vessel at a time when the market value of our vessels has fallen, the sale may be at less thanthe vessel’s carrying amount, resulting in a loss.Demand for container shipments declined significantly from 2008 to 2009 in the aftermath of the global financial crisis but has increased eachyear from 2009 to 2017. In 2016, total container trade grew by 4.2%, influenced by strong trade growth worldwide. In 2017, total container trade is estimatedto have gained 5.5%, led by recovering volumes going to the US as well as increases in intra-regional trade. Containership supply growth was less thandemand growth during the year as there was elevated scrapping in the first part of the year, which allowed average daily rates to recover modestly. Theoversupply in the market continued to prevent any significant rise in time charter rates for both short- and long-term periods. Additional orders for large andvery large containerships continue to be placed during 2017 and so far in 2018, both increasing the expected future supply of larger vessels and having aspillover effect on the market segment for smaller vessels. Ordering of container ships slowed significantly in 2016 and 2017 while scrapping increased to arecord volume in 2016 and was the third highest on record in 2017. The recent global economic slowdown and disruptions in the credit markets significantlyreduced demand for products shipped in containers and, in turn, containership capacity, which has had an adverse effect on our and our affiliates’ results ofoperations and financial condition.The continuation of such containership oversupply or any declines in container freight rates could negatively affect the liner companies towhich our affiliates seek to charter their containerships.Historically, the tanker markets have been volatile as a result of the many conditions and factors that can affect the price, supply and demand fortanker capacity. Demand for crude oil and product tankers is historically well correlated with the growth or contraction of the world economy. The pastseveral years were marked by a major economic slowdown, which has had, and continues to have, a significant impact on world trade, including the oil trade.Global economic conditions remain fragile with significant uncertainty with respect to recovery prospects, levels of recovery and long-term economic growtheffects. Energy prices sharply declined from mid-2014 to the end of March 2016 primarily as a result of increased oil production worldwide. In response tothis increased production, demand for tankers to move oil and refined petroleum products increased significantly and average spot and period charter rates forproduct and crude tankers rose, but have since then declined as more tankers have been delivered. Keys to this demand growth have been steady increases inChinese and Indian crude oil imports since 2001 and a steady increase in US oil production, which has led to a steady decline in US crude oil imports since2005. Oil products shipments have increased due to refinery closures in Europe, Japan and Australia with oil products being shipped to those regions fromIndia, the Middle East and the US. With the increase in US crude oil production, the US became a net exporter of oil products since 2011 adding to theseaborne movement of oil products, recently however, large inventories of products have reduced arbitrage possibilities and spot rates for product tankershave moderated. The Organization of Petroleum Exporting Countries (“OPEC”) is currently producing and shipping oil at very high levels, even after itannounced the continued production cuts. Should OPEC significantly reduce oil production or should there be significant declines in non-OPEC oilproduction or should China or other emerging market countries suffer significant economic slowdowns, that may result in a protracted period of reduced oilshipments and a decreased demand for our affiliated tanker vessels and lower charter rates, which could have a material adverse effect on our results ofoperations and financial condition.The percentage of the total tanker fleet on order as a percent of the total fleet declined from 18% at the end of 2015 to 12% at the beginning ofMarch 2018. An over-supply of tanker capacity may result in a reduction of charter hire rates. If a reduction in charter rates occurs, our affiliates may only beable to charter their tanker vessels at unprofitable rates or may not be able to charter these vessels at all, which could lead to a material adverse effect on ourresults of operations. 5Table of ContentsThe demand for dry cargo vessels, containerships and tanker capacity has generally been influenced by, among other factors: • global and regional economic conditions; • developments in international trade; • changes in seaborne and other transportation patterns, such as port congestion and canal closures or expansions; • supply and demand for energy resources, commodities, semi-finished and finished consumer and industrial products, and liquid cargoes,including petroleum and petroleum products; • changes in the exploration or production of energy resources, commodities, semi-finished and finished consumer and industrial products; • supply and demand for products shipped in containers; • changes in global production of raw materials or products transported by containerships; • the distance dry bulk cargo or containers are to be moved by sea; • the globalization of manufacturing; • carrier alliances, vessel sharing or container slot sharing that seek to allocate container ship capacity on routes; • weather and crop yields; • armed conflicts and terrorist activities, including piracy; • natural or man-made disasters that affect the ability of our vessels to use certain waterways; • political, environmental and other regulatory developments, including but not limited to governmental macroeconomic policy changes,import- export restrictions, central bank policies and pollution conventions or protocols; • embargoes and strikes; • technical advances in ship design and construction; • waiting days in ports; • changes in oil production and refining capacity and regional availability of petroleum refining capacity; • the distance chemicals, petroleum and petroleum products are to be moved by sea; • changes in seaborne and other transportation patterns, including changes in distances over which cargo is transported due to geographicchanges in where oil is produced, refined and used; and • competition from alternative sources of energy.The supply of vessel capacity has generally been influenced by, among other factors: • the number of vessels that are in or out of service; • the scrapping rate of older vessels; • port and canal traffic and congestion; • the number of newbuilding deliveries; • vessel casualties; • the availability of shipyard capacity; • the economics of slow steaming; • 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 dry bulk cargoand the reverse conversion; 6Table of Contents • availability of financing for new vessels; • the phasing out of single-hull tankers due to legislation and environmental concerns; • the price of steel; • national or international regulations that may effectively cause reductions in the carrying capacity of vessels or early obsolescence oftonnage; and • environmental concerns and regulations.Our growth depends on continued growth in demand for dry bulk commodities and the shipping of dry bulk cargoes.Our growth strategy focuses on expansion in the dry bulk shipping sector. Accordingly, our growth depends on continued growth in worldwideand regional demand for dry bulk commodities and the shipping of dry bulk cargoes, which could be negatively affected by a number of factors, such asdeclines in prices for dry bulk commodities, or general political and economic conditions.Reduced demand for dry bulk commodities and the shipping of dry bulk cargoes would have a material adverse effect on our future growth andcould harm our business, results of operations and financial condition. In particular, Asian Pacific economies, of which China is especially important, andIndia have been the main driving force behind the current increase in seaborne dry bulk trade and the demand for dry bulk carriers. A negative change ineconomic conditions in any Asian Pacific country, but particularly in China, Korea, Japan or India, may have a material adverse effect on our business,financial condition and results of operations, as well as our future prospects, by reducing demand and resultant charter rates.Weak economic conditions throughout the world, particularly the Asia Pacific region, renewed terrorist activity, the growing refugee crises andprotectionist policies which could affect advanced economies, could have a material adverse effect on our business, financial condition and results ofoperations.The global economy remains relatively weak, especially when compared to the period prior to the 2008-2009 financial crisis. The current globalrecovery is proceeding at varying speeds across regions and is still subject to downside economic risks stemming from factors like fiscal fragility in advancedeconomies, high sovereign and private debt levels, highly accommodative macroeconomic policies, the significant fall in the price of crude oil and othercommodities and persistent difficulties in access to credit and equity financing as well as political risks such as the continuing war in Syria, renewed terroristattacks around the world and the emergence of populist and protectionist political movements in advanced economies.Concerns regarding new terrorist threats from groups in Europe and the growing refugee crisis may advance protectionist policies and maynegatively impact globalization and global economic growth, which could disrupt financial markets, and may lead to weaker consumer demand in the EU,the U.S., and other parts of the world which could have a material adverse effect on our business.In recent years, China has been one of the world’s fastest growing economies in terms of gross domestic product, which has had a significantimpact on shipping demand. However, if China’s growth in gross domestic product declines and other countries in the Asia Pacific region experience sloweror negative economic growth in the future, this may negatively affect the fragile recovery of the economies of the U.S. and the EU, and thus, may negativelyimpact shipping demand. For example, the possibility of the introduction of impediments to trade within the EU member countries in response to increasingterrorist activities, and the possibility of market reforms to float the Chinese renminbi, either of which development could weaken the Euro against theChinese renminbi, could adversely affect consumer demand in the EU. Moreover, the revaluation of the renminbi may negatively impact the U.S.’ demand forimported goods, many of which are shipped from China. Any moves by either the U.S. or the EU to levy additional tariffs on imported goods carried incontainers as part of protectionist measures or otherwise could decrease shipping demand. Such weak economic conditions or protectionist measures couldhave a material adverse effect on our business, results of operations and financial condition, as well as our cash flows. 7Table of ContentsDisruptions in global financial markets from terrorist attacks, regional armed conflicts, general political unrest and the resulting governmental actioncould have a material adverse impact our ability to obtain financing required to acquire vessels or new businesses. Furthermore, such a disruption wouldadversely affect our results of operations, financial condition and cash flows and could cause the market price of our shares to decline.Terrorist attacks in certain parts of the world, such as the attacks on the U.S. on September 11, 2001 or more recently in Paris and London, andthe continuing response of the U.S. and other countries to these attacks, as well as the threat of future terrorist attacks, continue to cause uncertainty andvolatility in the world financial markets and may affect our business, results of operations and financial condition. In addition, global financial markets andeconomic conditions have been severely disrupted and volatile in recent years and remain subject to significant vulnerabilities, such as the deterioration offiscal balances and the rapid accumulation of public debt, continued deleveraging in the banking sector and a limited supply of credit. Credit markets as wellas the debt and equity capital markets were exceedingly distressed during 2008 and 2009 and have been volatile since that time. The continuing refugeecrisis in the EU, the continuing war in Syria and advances of ISIS and other terrorist organizations in the Middle East, conflicts in Iraq, general politicalunrest in Ukraine, and political tension or conflicts in the Asia Pacific Region such as in the South China Sea and North Korea have led to increasedvolatility in global credit and equity markets. The resulting uncertainty and volatility in the global financial markets may accordingly affect our business,results of operations and financial condition. These uncertainties, as well as future hostilities or other political instability in regions where our vessels trade,could also affect trade volumes and patterns and adversely affect our operations, and otherwise have a material adverse effect on our business, results ofoperations and financial condition, as well as our cash flows.Further, 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 managers located in Greece may be subjected to new regulations and potential shift ingovernment policies that may require us to incur new or additional compliance or other administrative costs and may require the payment of new taxes orother fees. We also face the risk that strikes, work stoppages, civil unrest and violence within Greece may disrupt the shoreside operations of our managerslocated in Greece.Specifically, these issues, along with the re-pricing of credit risk and the difficulties currently experienced by financial institutions, have made,and will likely continue to make, it difficult to obtain financing. As a result of the disruptions in the credit markets and higher capital requirements, manylenders have increased margins on lending rates, enacted tighter lending standards, required more restrictive terms (including higher collateral ratios foradvances, shorter maturities and smaller loan amounts), or have refused to refinance existing debt at all. Furthermore, certain banks that have historicallybeen significant lenders to the shipping industry have reduced or ceased lending activities in the shipping industry. Additional tightening of capitalrequirements and the resulting policies adopted by lenders, could further reduce lending activities. We may experience difficulties obtaining financingcommitments or be unable to fully draw on the capacity under our committed term loans in the future, if our lenders are unwilling to extend financing to us orunable to meet their funding obligations due to their own liquidity, capital or solvency issues. We cannot be certain that financing will be available onacceptable terms or at all. If financing is not available when needed, or is available only on unfavorable terms, we may be unable to meet our futureobligations as they come due. Our failure to obtain such funds could have a material adverse effect on our business, results of operations and financialcondition, as well as our cash flows. In the absence of available financing, we also may be unable to take advantage of business opportunities or respond tocompetitive pressures.The New York Stock Exchange may delist our common stock from trading on its exchange, which could limit your ability to trade our common stock andsubject us to additional trading restrictions.A company is not in compliance with the continued listing standards set forth in Section 802.01C of the NYSE Listed Company Manual if theaverage closing price of that company’s common stock is less than $1.00 over a consecutive 30 trading-day period.Since March 26, 2018, the closing price of our common stock was less than $1.00.Under the NYSE Listed Company Manual, a listed company is generally afforded a six-month period following receipt of the NYSE deficiencynotice to regain compliance, after which the NYSE will commence suspension of trading and delisting procedures. Regaining compliance requires, on the lasttrading day of any calendar month, a company’s common stock price per share and 30 trading-day average closing share price to be at least $1.00. During thissix month period, a company’s common stock will continue to be traded on the NYSE, subject to compliance with other continued listing requirements andfurther subject to the discretion of the NYSE to commence delisting procedures against a company’s common stock for other reasons, such as selling for anabnormally low price.While we are currently in compliance with the NYSE listing standards, we cannot assure you that our common stock will continue to be listed onNYSE in the future. 8Table of ContentsIf our common stock ultimately were to be delisted for any reason, we could face significant material adverse consequences, including: • a limited availability of market quotations for our common stock; • 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; • limited liquidity for our shareholders due to thin trading; and • loss of our tax exemption under Section 883 of the Internal Revenue Code of 1986, as amended (the “Code”), loss of preferential capital gain tax ratesfor certain dividends received by certain non-corporate U.S. holders, and loss of “mark-to-market” election by U.S. holders in the event we are treated asa passive foreign investment company (“PFIC”).A decrease in the level of China’s imports of raw materials or a decrease in trade globally could have a material adverse impact on our charterers’business and, in turn, could cause a material adverse impact on our results of operations, financial condition and cash flows.China imports significant quantities of raw materials. For example, in 2017, China imported 1.058 billion tons of iron out of a total of1.474 billion tons shipped globally accounting for about 72% of the global seaborne iron ore trade. While it only accounted for 18% of seaborne coalmovements of coal in 2017 according to current estimates (217 million tons imported compared to 1.197 billion tons of seaborne coal traded globally), thatis a decline from over 22% in 2013 (264 million tons imported compared to 1.182 billion tons of seaborne coal traded globally). Our dry bulk vessels aredeployed by our charterers on routes involving dry bulk trade in and out of emerging markets, and our charterers’ dry bulk shipping and business revenuemay be derived from the shipment of goods within and to the Asia Pacific region from various overseas export markets. Any reduction in or hindrance toChina-based importers could have a material adverse effect on the growth rate of China’s imports and on our charterers’ business. For instance, thegovernment of China has implemented economic policies aimed at reducing pollution, increasing consumption of domestically produced Chinese coal orpromoting the export of such coal. This may have the effect of reducing the demand for imported raw materials and may, in turn, result in a decrease indemand for dry bulk shipping. Additionally, though in China there is an increasing level of autonomy and a gradual shift in emphasis to a “market economy”and enterprise reform, many of the reforms, particularly some limited price reforms that result in the prices for certain commodities being principallydetermined by market forces, are unprecedented or experimental and may be subject to revision, change or abolition. The level of imports to and exports fromChina could be adversely affected by changes to these economic reforms by the Chinese government, as well as by changes in political, economic and socialconditions or other relevant policies of the Chinese government.For example, China imposes a new tax for non-resident international transportation enterprises engaged in the provision of services of passengersor cargo, among other items, in and out of China using their own, chartered or leased vessels, including any stevedore, warehousing and other servicesconnected with the transportation. The regulation broadens the range of international transportation companies who may find themselves liable for Chineseenterprise income tax on profits generated from international transportation services passing through Chinese ports. This tax or similar regulations, such asthe recently promoted environmental taxes on coal, by China may result in an increase in the cost of raw materials imported to China and the risks associatedwith importing raw materials to China, as well as a decrease in the quantity of raw materials to be shipped from our charterers to China. This could have anadverse impact on our charterers’ business, operating results and financial condition and could thereby affect their ability to make timely charter hirepayments to us and to renew and increase the number of their time charters with us.Our operations expose us to the risk that increased trade protectionism from China or other nations will adversely affect our business. If theglobal recovery is undermined by downside risks and the recent economic downturn returns, governments may turn to trade barriers to protect their domesticindustries against foreign imports, thereby depressing the demand for shipping. Specifically, increasing trade protectionism in the markets that our charterersserve may cause (i) a decrease in cargoes available to our charterers in favor of local charterers and local owned ships and (ii) an increase in the risksassociated with importing goods to China. Any increased trade barriers or restrictions on trade, especially trade with China, would have an adverse impact onour charterers’ business, operating results and financial condition and could thereby affect their ability to make timely charter hire payments to us and torenew and increase the number of their time charters with us. This could have a material adverse effect on our business, results of operations, financialcondition and our ability to pay cash distributions to our stockholders. 9Table of ContentsWhen our contracts expire, we may not be able to successfully replace them, or we may not choose to enter into long-term contracts at levels that are at orbelow operating costs.The process for concluding contracts and longer term time charters generally involves a lengthy and intensive screening and vetting process andthe submission of competitive bids. In addition to the quality and suitability of the vessel, medium and longer term shipping contracts tend to be awardedbased upon a variety of other factors relating to the vessel operator, including: • environmental, health and safety record; • compliance with regulatory industry standards; • 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 customerspecifications; • willingness to accept operational risks pursuant to the charter, such as allowing termination of the charter for force majeure events; and • competitiveness of the bid in terms of overall price.As a result of these factors, when our contracts including our long-term charters expire, we cannot assure you that we will be able to replace thempromptly or at all or at rates sufficient to allow us to operate our business profitably, to meet our obligations, including payment of debt service to ourlenders, or to pay dividends. Our ability to renew the charter contracts on our vessels on the expiration or termination of our current charters, or, on vesselsthat we may acquire in the future, the charter rates payable under any replacement charter contracts, will depend upon, among other things, economicconditions in the sectors in which our vessels operate at that time, changes in the supply and demand for vessel capacity and changes in the supply anddemand for the transportation of commodities. During periods of market distress when long-term charters may be renewed at rates at or below operating costs,we may not choose to charter our vessels for longer terms particularly if doing so would create an ongoing negative cash flow during the period of the charter.We may instead choose or be forced to idle our vessels or lay them up or scrap them depending on market conditions and outlook at the time those vesselsbecome available for charter.However, if we are successful in employing our vessels under longer-term time charters, our vessels will not be available for trading in the spotmarket during an upturn in the market cycle, when spot trading may be more profitable. If we cannot successfully employ our vessels in profitable chartercontracts, our results of operations and operating cash flow could be materially adversely affected.We may employ vessels on the spot market and thus expose ourselves to risk of losses based on short-term decreases in shipping rates.We periodically employ some of our vessels on a spot basis. The spot charter market is highly competitive and freight rates within this market arehighly volatile, while longer-term charter contracts provide income at pre-determined rates over more extended periods of time. We cannot assure you that wewill be successful in keeping our vessels fully employed in these short-term markets, or that future spot rates will be sufficient to enable such vessels to beoperated profitably. A significant decrease in spot market rates or our inability to fully employ our vessels by taking advantage of the spot market wouldresult in a reduction of the incremental revenue received from spot chartering and adversely affect our results of operations, including our profitability andcash flows, with the result that our ability to pay debt service and dividends could be impaired.Additionally, if spot market rates or short-term time charter rates become significantly lower than the time charter equivalent rates that some ofour charterers 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. 10Table of ContentsWe depend upon significant customers for part of our revenues. The loss of one or more of these customers or a decline in the financial capability of ourcustomers could materially adversely affect our financial performance.We derive a significant part of our revenue from a small number of charterers. During the years ended December 31, 2017, 2016 and 2015, wederived approximately 31.1%, 41.1%, and 33.8%, respectively, of our gross revenues from four customers. For the year ended December 31, 2017, nocustomers accounted for more than 10% of the Company’s revenue. For the year ended December 31, 2016, two customers accounted for 14.7% and 13.1%,respectively, of the Company’s revenue. For the year ended December 31, 2015, one customer accounted for 15.1% of the Company’s revenue.We could lose a customer or the benefits of a time charter if, among other things: • the customer fails to make charter payments because of its financial inability, disagreements with us or otherwise, which risk is increasingdue to the current economic environment; • the customer terminates the charter because we fail to deliver the vessel within a fixed period of time, the vessel is lost or damagedbeyond repair, there are serious deficiencies in the vessel or prolonged periods of off-hire, default under the charter; or • the customer terminates the charter because the vessel has been subject to seizure for more than a specified number of days.Furthermore, a number of our charters are at above-market rates, such that any loss of such charter may require us to recharter the vessel at lowerrates. Additionally, our charterers from time to time have sought to renegotiate their charter rates with us. We no longer maintain insurance against the risk ofdefault by our customers.If one or more of our customers is unable to perform under one or more charters with us and we are not able to find a replacement charter, or if acharterer exercises certain rights to terminate the charter, or if a charterer is unable to make its charter payments in whole or in part, we could suffer a loss ofrevenues that could materially adversely affect our business, financial condition and results of operations.We are subject to certain credit risks with respect to our counterparties on contracts, and the failure of such counterparties to meet their obligations couldcause us to suffer losses on such contracts and thereby decrease revenues.We charter-out our vessels to other parties who pay us a daily rate of hire. We also enter into contracts of affreightment (“COAs”) pursuant towhich we agree to carry cargoes, typically for industrial customers, who export or import dry bulk cargoes. Additionally, we may enter into Forward FreightAgreements (“FFAs”), parts of which are traded over-the-counter. We also enter into spot market voyage contracts, where we are paid a rate per ton to carry aspecified cargo on a specified route. The FFAs and these contracts and arrangements subject us to counterparty credit risks at various levels. If thecounterparties fail to meet their obligations, we could suffer losses on such contracts, which could materially adversely affect our financial condition andresults of operations. In addition, if a charterer defaults on a time charter, we may only be able to enter into new contracts at lower rates. It is also possible thatwe would be unable to secure a charter at all. If we re-charter the vessel at lower rates or not at all, our financial condition and results of operations could bematerially adversely affected.Trading and complementary hedging activities in freight, tonnage and FFAs subject us to trading risks, and we may suffer trading losses, which couldadversely affect our financial condition and results of operations.Due to dry bulk shipping market volatility, success in this shipping industry requires constant adjustment of the balance between chartering-outvessels for long periods of time and trading them on a spot basis. A long-term contract to charter a vessel might lock us into a profitable or unprofitablesituation depending on the direction of freight rates over the term of the contract. We may seek to manage and mitigate that risk through trading andcomplementary hedging activities in freight, tonnage and FFAs. We may trade FFAs with an objective of both economically hedging the risk on the fleet,specific vessels or freight commitments and taking advantage of short-term fluctuations in market prices. There can be no assurance that we will be able at alltimes to successfully protect ourselves from volatility in the shipping market. We may not successfully mitigate our risks, leaving us exposed to unprofitablecontracts, and may suffer trading losses resulting from these hedging activities.We are subject to certain operating risks, including vessel breakdowns or accidents, that could result in a loss of revenue from the chartered-in vessels andwhich in turn could have an adverse effect on our results of operations or financial condition.Our exposure to operating risks of vessel breakdown and accidents mainly arises in the context of our owned vessels. The rest of our core fleet ischartered-in under time charters and, as a result, most operating risks relating to these time chartered vessels remain with their owners. If we pay hire on achartered-in vessel at a lower rate than the rate of hire it receives from a sub-charterer to whom we have chartered out the vessel, a breakdown or loss of thevessel due to an operating risk suffered by the owner will, in all 11Table of Contentslikelihood, result in our loss of the positive spread between the two rates of hire. Although we maintain insurance policies (subject to deductibles andexclusions) to cover us against the loss of such spread through the sinking or other loss of a chartered-in vessel, we cannot assure you that we will be coveredunder all circumstances or that such policies will be available in the future on commercially reasonable terms. Breakdowns or accidents involving our vesselsand losses relating to chartered vessels, which are not covered by insurance, would result in a loss of revenue from the affected vessels adversely affecting ourfinancial condition and results of operations.Risks inherent in the operation of ocean-going vessels could affect our business and reputation, which could adversely affect our expenses, net income,cash flow and the price of our common stock.The operation of ocean-going vessels entails certain inherent risks that may materially adversely affect our business and reputation, including: • the damage or destruction of vessels 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 drastic causes such as human error, mechanical failure and badweather; • environmental accidents as a result of the foregoing; and • business interruptions and delivery delays caused by mechanical failure, human error, war, terrorism, disease and quarantine, politicalaction in various countries, labor strikes or adverse weather conditions.Such occurrences could result in death or injury to persons, loss of property or environmental damage, delays in the delivery of cargo, loss ofrevenues from or termination of charter contracts, governmental fines, penalties or restrictions on conducting business, litigation with our employees,customers or third parties, higher insurance rates, and damage to our reputation and customer relationships generally. Although we maintain hull andmachinery and war risks insurance, as well as protection and indemnity insurance, which may cover certain risks of loss resulting from such occurrences, ourinsurance coverage may be subject to caps or not cover such losses and any of these circumstances or events could increase our costs or lower our revenues.The involvement of our vessels in an environmental disaster may harm our reputation as a safe and reliable vessel owner and operator. Any of these resultscould have a material adverse effect on business, results of operations and financial condition, as well as our cash flows.We are subject to various laws, regulations and conventions, including environmental and safety laws that could require significant expenditures both tomaintain compliance with such laws and to pay for any uninsured environmental liabilities including any resulting from a spill or other environmentalincident.The shipping business and vessel operation are materially affected by government regulation in the form of international conventions, national,state and local laws, and regulations in force in the jurisdictions in which vessels operate, as well as in the country or countries of their registration.Governmental regulations, safety or other equipment standards, as well as compliance with standards imposed by maritime self-regulatory organizations andcustomer requirements or competition, may require us to make capital and other expenditures. Because such conventions, laws and regulations are oftenrevised, we cannot predict the ultimate cost of complying with such conventions, laws and regulations, or the impact thereof on the fair market price or usefullife of our vessels. In order to satisfy any such requirements, we may be required to take any of our vessels out of service for extended periods of time, withcorresponding losses of revenues. In the future, market conditions may not justify these expenditures or enable us to operate our vessels, particularly oldervessels, profitably during the remainder of their economic lives. This could lead to significant asset write downs. In addition, violations of environmental andsafety regulations can result in substantial penalties and, in certain instances, seizure or detention of our vessels.Additional conventions, laws and regulations may be adopted that could limit our ability to do business, require capital expenditures orotherwise increase our cost of doing business, which may materially adversely affect our operations, as well as the shipping industry generally. In variousjurisdictions legislation has been enacted, or is under consideration, that would impose more stringent requirements on air pollution and effluent 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 revisedAnnex 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 (limiting 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). In October2016, the IMO approved the designation of the North Sea and Baltic Sea as ECAs for NOx under Annex VI, which is scheduled for adoption in 2017 andwould take effect in January 2021. The U.S. Caribbean Sea ECA entered into force on January 1, 2013 and has been effective since January 1, 2014, limitingSOx, NOx and particulate matter emissions. In January 2015, the limit for fuel oil sulfur levels fell to 0.10% m/m in ECAs established to limit SOx andparticulate matter emissions. 12Table of ContentsAfter considering the issue for many years, the IMO announced on October 27, 2016 that it was proceeding with a requirement for 0.5% m/m sulfur content inmarine fuel (down from current levels of 3.5%) outside the ECAs starting on January 1, 2020. Under Annex VI, the 2020 date was subject to review as to theavailability of the required fuel oil. Annex VI required the fuel availability review to be completed by 2018 but was ultimately completed in 2016. Therefore,by 2020, ships will be required to remove sulfur from emissions through the use of emission control equipment, or purchase marine fuel with 0.5% sulfurcontent, which may see increased demand and higher prices due to supply constraints. Installing pollution control equipment or using lower sulfur fuel couldresult in significantly increased costs to our company. Similarly, MARPOL Annex VI requires Tier III standards for NOx emissions to be applied to shipsconstructed and engines installed in ships operating in NOx ECAs from January 1, 2016.Certain jurisdictions have adopted more stringent requirements. For instance, California has adopted more stringent low sulfur fuel requirementswithin California regulated waters. Compliance with new emissions standards could require modifications to vessels or the use of more expensive fuel. Whileit is unclear how new emissions standards will affect the employment of our vessels, over time it is possible that ships not retrofitted to comply with newstandards may become less competitive.In addition, the IMO, the U.S. and states within the U.S. have proposed or implemented requirements relating to the management of ballast waterto prevent the harmful effects of foreign invasive species. These ballast water proposals and requirements are discussed below in the risk factor relating toballast water.The operation of vessels is also affected by the requirements set forth in the International Safety Management (“ISM”) Code. The ISM Coderequires shipowners and bareboat charterers to develop and maintain an extensive Safety Management System (the “SMS”) that includes the adoption of asafety and environmental protection policy setting forth instructions and procedures for safe vessel operation and describing procedures for dealing withemergencies. Further to this, the IMO has introduced the first ever mandatory measures for an international greenhouse gas reduction regime for a globalindustry sector. These energy efficiency measures took effect on January 1, 2013 and apply to all ships of 400 gross tonnage and above. They include thedevelopment of a ship energy efficiency management plan (“SEEMP”) which is akin to a safety management plan, with which the industry will have tocomply. The failure of a ship owner or bareboat charterer to comply with the ISM Code and IMO measures may subject such party to withdrawal of the permitto operate or manage the vessels, increased liability, decreased available insurance coverage for the affected vessels, and may result in a denial of access to, ordetention in, certain ports.We operate a fleet of vessels that are subject to national and international laws governing pollution from such vessels. Several internationalconventions impose and limit pollution liability from vessels. An owner of a tanker vessel carrying a cargo of “persistent oil” as defined by the InternationalConvention for Civil Liability for Oil Pollution Damage (the “CLC”) is subject under the convention to strict liability for any pollution damage caused in acontracting state by an escape or discharge from cargo or bunker tanks. This liability is subject to a financial limit calculated by reference to the tonnage ofthe ship, and the right to limit liability may be lost if the spill is caused by the shipowner’s intentional or reckless conduct. Liability may also be incurredunder the CLC for a bunker spill from the vessel even when she is not carrying such cargo, but is in ballast.When a tanker is carrying clean oil products that do not constitute “persistent oil” that would be covered under the CLC, liability for anypollution damage will generally fall outside the CLC and will depend on other international conventions or domestic laws in the jurisdiction where thespillage occurs. The same principle applies to any pollution from the vessel in a jurisdiction, which is not a party to the CLC. The CLC applies in over 100jurisdictions around the world, but it does not apply in the U.S., where the corresponding liability laws such as the Oil Pollution Act of 1990 (the “OPA 90”)discussed below, are particularly stringent.For vessel operations not covered by the CLC, including those operated under our fleet, international liability for oil pollution is governed bythe 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 February 7, 2017, had 83 contracting states. In non-contracting states, liability for such bunker oil pollution typically isdetermined by the national or other domestic laws in the jurisdiction where the spillage occurs.The CLC and Bunker Convention also provide vessel owners a right to limit their liability, depending on the applicable national orinternational regime. The CLC includes its own liability limits. The 1976 Convention is the most widely applicable international regime limiting maritimepollution liability. Rights to limit liability under the 1976 Convention are forfeited where a spill is caused by a shipowner’s intentional or reckless conduct.Certain jurisdictions have ratified the IMO’s Protocol of 1996 to the 1976 Convention, referred to herein as the “Protocol of 1996.” The Protocol of 1996provides for substantially higher liability limits in those jurisdictions than the limits set forth in the 1976 Convention. Finally, some jurisdictions, such as theU.S., 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 in suchjurisdictions may be uncertain. 13Table of ContentsEnvironmental legislation in the U.S. 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. Though it has been eight years since the Deepwater Horizon oil spill in the Gulf of Mexico (the “Deepwater Horizon incident”),such regulation may become even stricter because of the incident’s impact. In the U.S., the OPA90 establishes an extensive regulatory and liability regime forthe protection and cleanup of the environment from cargo and bunker oil spills from vessels, including tankers. The OPA 90 covers all owners and operatorswhose vessels trade in the U.S., its territories and possessions or whose vessels operate in U.S. waters, which includes the U.S.’s territorial sea and its 200nautical mile exclusive economic zone. Under the OPA 90, 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. The U.S. Congress has in the pastconsidered bills to strengthen certain requirements of the OPA 90; similar legislation may be introduced in the future. Further, under the federalComprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) and similar state laws, investigation and cleanup requirements forthreatened or actual releases of hazardous substances may be imposed upon owners and operators of vessels, on a joint and several basis, regardless of fault orthe legality of the original activity that resulted in the release of hazardous substances.In addition to potential liability under the federal OPA 90, vessel owners may in some instances incur liability on an even more stringent basisunder state law in the particular state where the spillage occurred. For example, California regulations prohibit the discharge of oil, require an oil contingencyplan be filed with the state, require that the ship owner contract with an oil response organization and require a valid certificate of financial responsibility, allprior to the vessel entering state waters.In recent years, the EU has become increasingly active in the field of regulation of maritime safety and protection of the environment. In someareas of regulation, the EU has introduced new laws without attempting to procure a corresponding amendment to international law. Notably, the EU adoptedin 2005 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.The EU has also issued Directive 2013/30/EU of the European Parliament and of the Council of June 12, 2013 on safety of offshore oil and gasoperations. The objective of this Directive is to reduce as much as possible the occurrence of major accidents relating to offshore oil and gas operations andto limit their consequences, thus increasing the protection of the marine environment and coastal economies against pollution, establishing minimumconditions for safe offshore exploration and exploitation of oil and gas and limiting possible disruptions to EU indigenous energy production, and toimprove the response mechanisms in case of an accident. The Directive was implemented on July 19, 2015. As far as the environment is concerned, the U.K.has various new or amended regulations such as: the Offshore Petroleum Activities (Offshore Safety Directive) (Environmental Functions) Regulations 2015(OSDEF), the 2015 amendments to the Merchant Shipping (Oil Pollution Preparedness, Response and Cooperation Convention) Regulations 1998 (OPRC1998) and other environmental Directive requirements, specifically the Environmental Management System. The Offshore Petroleum Licensing (OffshoreSafety Directive) Regulations 2015 will implement the licensing Directive requirements.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 aggregatefor any 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.We may be required to make significant investments in ballast water management, which may have a material adverse effect on our future performance,results of operations, and financial position.As discussed above, the International Convention for the Control and Management of Vessels’ Ballast Water and Sediments (the “BWMConvention”) which was adopted in February 2004 aims to prevent the spread of harmful aquatic organisms from one region to another, by establishingstandards and procedures for the management and control of ships’ ballast water and sediments. The BWM Convention’s implementing regulations call for aphased introduction of mandatory ballast water exchange requirements, to be replaced in time with mandatory concentration limits, as well as otherobligations, including recordkeeping requirements and implementation of a Ballast Water and Sediments Management Plan. The BWM Conventionstipulates that it will enter into force twelve months after it has been adopted by at least 30 states, the combined merchant fleets of which represent at least35% of the gross tonnage of the world’s merchant shipping. With Finland’s accession to the Agreement on September 8, 2016, the 35% threshold wasreached, and the BWM convention entered into force on September 8, 2017. Thereafter, on October 19, 2016, Panama also acceded to the BWM convention,adding its 18.02% of world gross tonnage. As of September 8, 2017, the BWM Convention had 69 contracting states for 14Table of Contents75.11% of world gross tonnage. Although new ships constructed after September 8, 2017 must comply on delivery with the BWM Convention,implementation of the BWM Convention has been delayed for existing vessels (constructed prior to September 8, 2017) for a further two years. For suchexisting vessels, installation of ballast water management systems must take place at the first renewal survey following September 8, 2017 (the date the BWMConvention entered into force). The BWM Convention requires ships to manage ballast water in a manner that removes, renders harmless or avoids theupdate or discharge of aquatic organisms and pathogens within ballast water and sediment. Recently updated Ballast Water and Sediment Management Planguidance includes more robust testing and performance specifications. The entry of the BWM Convention and revised guidance, as well as similar ballastwater treatment requirements in certain jurisdictions (such as the U.S. and states within the U.S.), will likely result in compliance costs relating to theinstallation of equipment on our vessels to treat ballast water before it is discharged and other additional ballast water management and reportingrequirements. Investments in ballast water treatment may have a material adverse effect on our future performance, results of operations, cash flows andfinancial position.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 governmentlaws and regulations related to climate change. A number of countries have adopted or are considering the adoption of, regulatory frameworks to reducegreenhouse gas emissions. In the U.S., the United States Environmental Protection Agency (“EPA”) has declared greenhouse gases to be dangerous pollutantsand has issued greenhouse gas reporting requirements for emissions sources in certain industries (which does not include the shipping industry). EPA doesrequire owners of vessels subject to MARPOL Annex VI to maintain records for nitrogen oxides standards and in-use fuel specifications. In addition, whilethe emissions of greenhouse gases from international shipping are not subject to the Kyoto Protocol to the United Nations Framework Convention onClimate Change(the “UNFCCC”), which requires adopting countries to implement national programs to reduce greenhouse gas emissions, the IMO intends todevelop limits on greenhouse gases from international shipping. It has responded to the global focus on climate change and greenhouse gas emissions bydeveloping specific technical and operational efficiency measures and a work plan for market-based mechanisms in 2011. These include the mandatorymeasures of the ship energy efficiency management (“SEEMP”), outlined above, and an energy efficiency design index (“EEDI”) for new ships. The IMO isalso considering its position on market-based measures through an expert working group. Among the numerous proposals being considered by the workinggroup 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 global emissionstrading scheme which would allocate emissions allowances and set an emissions cap; and an international fund establishing a global reduction target forinternational shipping, to be set either by the UNFCCC or the IMO.At its 64th session (2012), the IMO’s Marine Environment Protection Committee (the “MEPC”) indicated that 2015 was the target year formember states to identify market-based measures for international shipping. At its 66th session in 2014, the MEPC continued its work on developingtechnical and operational measures relating to energy-efficiency measures for ships, following the entry into force of the mandatory efficiency measures onJanuary 1, 2013. It adopted the 2014 Guidelines on the Method of Calculation of the Attained EEDI, applicable to new ships. It further adopted amendmentsto MARPOL Annex VI concerning the extension of the scope of application of the EEDI to Liquified Natural Gas (“LNG”) carriers, ro-ro cargo ships (vehiclecarriers), ro-ro passenger ships and cruise passengers ships with nonconventional propulsion. At its 67th session (2014), the MEPC adopted the 2014Guidelines on survey and certification of the EEDI, updating the previous version to reference ships fitted with dual-fuel engines using LNG and liquid fueloil. The MEPC also adopted amendments to the 2013 Interim Guidelines for determining minimum propulsion power to maintain the maneuverability ofships in adverse conditions, to make the guidelines applicable to phase 1 (starting January 1, 2015) of the EEDI requirements. At its 68th session (2015), theMEPC amended the 2014 Guidelines on EEDI survey and certification as well as the method of calculating of EEDI for new ships, the latter of which wasagain amended at the 70th session (2016). At its 70th session, the MEPC also adopted mandatory requirements for ships of 5,000 gross tonnage or greater tocollect fuel consumption data for each type of fuel used, and report the data to the flag State after the end of each calendar year.Although regulation of greenhouse gas emissions in the shipping industry was discussed during the 2015 UN Climate Change Conference inParis (the “Paris Conference”), the agreement reached among the 195 nations did not expressly reference the shipping industry. Following the ParisConference, the IMO announced it would continue its efforts on this issue at the MEPC, and at its 70th session, the MEPC approved a Roadmap fordeveloping a comprehensive GHG emissions reduction strategy for ships, which includes the goal of adopting an initial strategy and emission reductioncommitments in 2018. The Roadmap also provides for additional studies and further intersessional work, to be continued at the 71st session in 2017, with agoal of adopting a revised strategy in 2023 to include short-, mid- and long-term reduction measures and schedules for implementation. In April 2018, thecommittee charged with creating the reduction strategy must finalize the initial draft of the strategy and submit a report to MEPC.The EU announced in April 2007 that it planned to expand the EU emissions trading scheme (“ETS”) by adding vessels, as ETS-regulatedbusinesses required to report on carbon emissions and subject to a credit trading system for carbon allowances. A proposal from the European Commissionwas expected if no global regime for reduction of seaborne emissions had been agreed to by the end of 2011. On October 1, 2012, the European Commissionannounced that it would propose measures to monitor, verify and report on greenhouse-gas emissions from the shipping sector. On June 28, 2013, theEuropean Commission adopted a communication setting out a strategy for progressively including greenhouse gas emissions from maritime transport in theEU’s policy for reducing its overall greenhouse emissions. The first step proposed by the European Commission was an EU Regulation to an EU-wide systemfor the 15Table of Contentsmonitoring, reporting and verification of carbon dioxide emissions from large ships starting in 2018. The EU Regulation (2015/757) was adopted onApril 29, 2015 and took effect on July 1, 2015, with monitoring, reporting and verification requirements beginning on January 1, 2018. This Regulationappears to be indicative of an intent to maintain pressure on the international negotiating process. The European Commission also adopted an ImplementingRegulation, which entered into force in November 2016, setting templates for monitoring plans, emissions reports and compliance documents pursuant toRegulation 2015/757.In February 2017, EU member states met to consider independently regulating the shipping industry under the ETS. On February 15, 2017,European Parliament voted in favor of a bill to include maritime shipping in the ETS by 2023 if the IMO has not promulgated a comparable system by 2021.In November 2017, the Council of Ministers, the EU’s main decision making body, agreed that the EU should act on shipping emissions by 2023 if the IMOfails to deliver effective global measures. Last year, IMO’s urgent call to action to bring about shipping greenhouse gas emissions reductions before 2023 wasmet with industry push-back in many countries. Depending on how fast IMO and the EU move on this issue, the ETS may result in additional compliancecosts for our vessels.We cannot predict with any degree of certainty what effect, if any possible climate change and government laws and regulations related toclimate change 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 will incur costs to comply with recently adopted regulations and we may be subject to costs to complywith similar regulations that may be adopted in the future in response to terrorism.Since the terrorist attacks of September 11, 2001, there has 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.Coast Guard issued regulations requiring the implementation of certain security requirements aboard vessels operating in waters subject to the jurisdiction ofthe U.S.. 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 newly created International Ship and Port Facilities Code, or ISPS Code. Among the variousrequirements are: • on-board installation of automatic information systems, (“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.Furthermore, additional security measures could be required in the future, which could have a significant financial impact on us. The U.S. CoastGuard regulations, intended to be aligned with international maritime security standards, exempt non-U.S. vessels from MTSA vessel security measures,provided such vessels have on board a valid International Ship Security Certificate, or ISSC, that attests to the vessel’s compliance with SOLAS securityrequirements and the ISPS Code. We will implement the various security measures addressed by the MTSA, SOLAS and the ISPS Code and take measures forthe vessels to attain compliance with all applicable security requirements within the prescribed time periods. Although management does not believe theseadditional requirements will have a material financial impact on our operations, there can be no assurance that there will not be an interruption in operationsto bring vessels into compliance with the applicable requirements and any such interruption could cause a decrease in charter revenues. Furthermore,additional security measures could be required in the future, which could have a significant financial impact on us.The cost of vessel security measures has also been affected by acts of piracy against ships. Attacks of this kind have commonly resulted invessels and their crews being detained for several months, and being released only on payment of large ransoms. Substantial loss of revenue and other costsmay be incurred as a result of such detention. Although we insure against these losses to the extent practicable, the risk remains of uninsured losses, whichcould significantly affect our business. Costs are incurred in taking additional security measures in accordance with Best Management Practices to DeterPiracy, notably those contained in the BMP3 industry standard. A number of flag states have signed the 2009 New York Declaration, which expressescommitment to Best Management Practices in relation to piracy and calls for compliance with them as an essential part of compliance with the ISPS Code. 16Table of ContentsActs of piracy on ocean-going vessels could adversely affect our business.Acts of piracy have historically affected ocean-going vessels trading in certain regions of the world, such as the South China Sea and the Gulf ofAden off the coast of Somalia. Piracy continues to occur in the Gulf of Aden off the coast of Somalia and increasingly in the Gulf of Guinea. Although boththe frequency and success of attacks have diminished recently, we still consider potential acts of piracy to be a material risk to the international containershipping industry, and protection against this risk requires vigilance. Our vessels regularly travel through regions where pirates are active. Crew costs,including those due to employing onboard security guards, could increase in such circumstances. While the use of security guards is intended to deter andprevent the hijacking of our vessels, it could also increase our risk of liability for death or injury to persons or damage to personal property. In addition, whilewe believe the charterer remains liable for charter payments when a vessel is seized by pirates, the charterer may dispute this and withhold charter hire untilthe vessel is released. A charterer may also claim that a vessel seized by pirates was not “on-hire” for a certain number of days and it is therefore entitled tocancel the charter party, a claim that we would dispute. We may not be adequately insured to cover losses from these incidents, which could have a materialadverse effect on our results of operations, financial condition and ability to make distributions. Crew costs could also increase in such circumstances. Wemay not be adequately insured to cover losses from acts of terrorism, piracy, regional conflicts and other armed actions.Political and government instability, terrorist attacks, increased hostilities or war could lead to further economic instability, increased costs anddisruption of our business.We are an international company and conduct our operations primarily outside the U.S.. Changing economic, political and governmentalconditions in the countries where we are engaged in business or where our vessels are registered will affect us. Terrorist attacks, such as the attacks in the U.S.on September 11, 2001 and the U.S.’ continuing response to these attacks, and in Paris on January 7, 2015 and on November 13, 2015, the bombings in Spainon March 11, 2004 and in Brussels on March 22, 2016, and the attacks in London on July 7, 2005, the recent conflicts in Iraq, Afghanistan, Syria, Ukraineand other current and future conflicts, and the continuing response of the U.S. to these attacks, as well as the threat of future terrorist attacks, continue tocause uncertainty in the world financial markets, including the energy markets. Continuing hostilities in the Middle East may lead to additional armedconflicts or to further acts of terrorism and civil disturbance in the U.S. or elsewhere, which could result in increased volatility and turmoil in the financialmarkets and may contribute further to economic instability. Current and future conflicts and terrorist attacks may adversely affect our business, operatingresults, financial condition, ability to raise capital and future growth. Terrorist attacks on vessels, such as the October 2002 attack on the M/V Limburg, aVLCC not related to us, may in the future also negatively affect our operations and financial condition and directly impact our vessels or our customers.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 our vessels during a period of war or emergency, resulting in a loss of earningsA government of the jurisdiction where one or more of our vessels are registered could requisition for title or seize our vessels. Requisition fortitle occurs when a government takes control of a vessel and becomes its owner. In addition, a government could requisition our vessels for hire. Requisitionfor hire occurs when a government takes control of a ship and effectively becomes the charterer at dictated charter rates. Generally, requisitions occur during aperiod of war or emergency, although governments may elect to requisition vessels in other circumstances. Although we would expect to be entitled tocompensation in the event of a requisition of one or more of our vessels, the amount and timing of payment, if any, would be uncertain. Governmentrequisition of one or more of our vessels may cause us to breach covenants in certain of our credit facilities, and could have a material adverse effect on ourbusiness and results of operations and financial condition.A failure to pass inspection by classification societies could result in one or more vessels being unemployable unless and until they pass inspection,resulting in a loss of revenues from such vessels for that period and a corresponding decrease in operating cash flows.The hull and machinery of every commercial vessel must be classed by a classification society authorized by its country of registry. Theclassification society certifies that a vessel is safe and seaworthy in accordance with the applicable rules and regulations of the country of registry of thevessel and with SOLAS. Our owned fleet is currently enrolled with Nippon Kaiji Kiokai, Bureau Veritas, Lloyd’s Register, DNV GL and American Bureau ofShipping.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 ona continuous survey cycle, under which the machinery would be surveyed periodically over a five-year period. Our vessels are on special survey cycles forhull inspection and continuous survey cycles for machinery inspection. Every vessel is also required to be drydocked every two to three years for inspectionof the underwater parts of such vessel. 17Table of ContentsIf any vessel fails any annual survey, intermediate survey or special survey, the vessel may be unable to trade between ports and, therefore, would beunemployable, potentially causing a negative impact on our revenues due to the loss of revenues from such vessel until she is able to trade again.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 inspection and related procedures in countries of origin and destination andtrans-shipment points. Inspection procedures may result in the seizure of contents of our vessels, delays in the loading, offloading, trans-shipment or deliveryand the levying of customs duties, fines or other penalties against us.It is possible that changes to inspection procedures could impose additional financial and legal obligations on us. Changes to inspectionprocedures could also impose additional costs and obligations on our customers and may, in certain cases, render the shipment of certain types of cargouneconomical or impractical. Any such changes or developments may have a material adverse effect on our business, results of operations and financialcondition.Our insurance may be insufficient to cover losses that may occur to our property or result from our operations.The operation of any vessel includes risks such as mechanical failure, collision, fire, contact with floating objects, property loss, cargo loss ordamage and business interruption due to political circumstances in foreign countries, hostilities and labor strikes. In addition, there is always an inherentpossibility of a marine disaster, including oil spills and other environmental mishaps. There are also liabilities arising from owning and operating vessels ininternational trade. We procure insurance for our fleet in relation to risks commonly insured against by vessel owners and operators. Our current insuranceincludes (i) hull and machinery and war risk insurance covering damage to our vessels’ hulls and machinery from, among other things, collisions and contactwith fixed and floating objects, (ii) war risks insurance covering losses associated with the outbreak or escalation of hostilities and (iii) protection andindemnity insurance (which includes environmental damage) covering, among other things, third-party and crew liabilities such as expenses resulting fromthe injury or death of crew members, passengers and other third parties, the loss or damage to cargo, third-party claims arising from collisions with othervessels, damage to other third-party property and pollution arising from oil or other substances, and salvage, towing and other related costs, including wreckremoval.We can give no assurance that we are adequately insured against all risks or that our insurers will pay a particular claim. Even if our insurancecoverage is adequate to cover our losses, we may not be able to obtain a timely replacement vessel in the event of a loss of a vessel. Furthermore, in the future,we may not be able to obtain adequate insurance coverage at reasonable rates for our fleet. For example, more stringent environmental regulations have led toincreased costs for, and in the future may result in the lack of availability of, insurance against risks of environmental damage or pollution. We may also besubject to calls, or premiums, in amounts based not only on our own claim records but also on the claim records of all other members of the protection andindemnity associations through which we receive indemnity insurance coverage. There is no cap on our liability exposure for such calls or premiums payableto our protection and indemnity association. Our insurance policies also contain deductibles, limitations and exclusions, which, although we believe arestandard in the shipping industry, may nevertheless increase our costs. A catastrophic oil spill or marine disaster could exceed our insurance coverage, whichcould have a material adverse effect on our business, results of operations and financial condition. Any uninsured or underinsured loss could harm ourbusiness and financial condition. In addition, the insurance may be voidable by the insurers as a result of certain actions, such as vessels failing to maintainrequired certification.Our charterers may engage in legally permitted trading in locations, which may still be subject to sanctions or boycott, such as Iran, Syria andSudan. Our insurers may be contractually or by operation of law prohibited from honoring our insurance contract for such trading, which could result inreduced insurance coverage for losses incurred by the related vessels. Furthermore, our insurers and we may be prohibited from posting or otherwise be unableto post security in respect of any incident in such locations, resulting in the loss of use of the relevant vessel and negative publicity for our Company whichcould negatively impact our business, results of operations and financial condition.Maritime claimants could arrest our vessels, which could interrupt our cash flow.Crew members, suppliers of goods and services to a vessel, shippers or receivers of cargo and other parties may be entitled to a maritime lienagainst a vessel for unsatisfied debts, claims or damages, including, in some jurisdictions, for debts incurred by previous owners. In many jurisdictions, amaritime lien-holder may enforce its lien by arresting a vessel. The arrest or attachment of one or more of our vessels, if such arrest or attachment is not timelydischarged, could interrupt our cash flows and could require us to pay large sums of money to have the arrest or attachment lifted. Any of these occurrencescould have a material adverse effect on our business, results of operations and financial condition as well as our cash flows. We are not currently aware of theexistence of any such maritime lien on our vessels. 18Table of ContentsIn addition, in some jurisdictions, such as South Africa, under the “sister ship” theory of liability, a claimant may arrest both the vessel which issubject to the claimant’s maritime lien and any “associated” vessel, which is any vessel owned or controlled by the same owner. Claimants could try to assert“sister ship” liability against one vessel in our fleet for claims relating to another ship in the fleet.The risks and costs associated with vessels increase as the vessels age.The costs to operate and maintain a vessel in operation increase with the age of the vessel. The average age of the vessels in our fleet is 7.7 years,basis fully delivered fleet, and most dry bulk vessels have an expected life of approximately 25 years. In some instances, charterers prefer newer vessels thatare more fuel efficient than older vessels. Cargo insurance rates also increase with the age of a vessel, making older vessels less desirable to charterers as well.Governmental regulations, safety or other equipment standards related to the age of the vessels may require expenditures for alterations or the addition of newequipment to our vessels and may restrict the type of activities in which these vessels may engage. We cannot assure you that, as our vessels age, marketconditions will justify those expenditures or enable us to operate our vessels profitably during the remainder of their useful lives. If we sell vessels, we mayhave to sell them at a loss, and if charterers no longer charter-out vessels due to their age, our earnings could be materially adversely affected.Technological innovation could reduce our charter hire income and the value of our vessels.The charter hire rates and the value and operational life of a vessel are determined by a number of factors including the vessel’s efficiency,operational flexibility and physical life. Efficiency includes speed, fuel economy and the ability to load and discharge cargo quickly. Flexibility includes theability to enter harbors, utilize related docking facilities and pass through canals and straits. The length of a vessel’s physical life is related to its originaldesign and construction, its maintenance and the impact of the stress of operations. If new vessels are built that are more efficient or more flexible or havelonger physical lives than our vessels, competition from these more technologically advanced vessels could adversely affect the amount of charter hirepayments we receive for our vessels and the resale value of our vessels could significantly decrease. As a result, our results of operations and financialcondition could be adversely affected.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.We have grown our fleet and business significantly. We intend to continue to expand our fleet in the future. Our growth will depend on: • ongoing and anticipated economic conditions and charter rates; • 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 tofinance vessel acquisitions, capital expenditures and working capital needs. If we finance the purchase of our vessels through the issuance of debt securities,it could result in: • default and foreclosure on our assets if our operating cash flow after a business combination or asset acquisition were insufficient to payour debt obligations; • acceleration of our obligations to repay the indebtedness even if we have made all principal and interest payments when due if the debtsecurity contained covenants that required the maintenance of certain financial ratios or reserves and any such covenant was breachedwithout a waiver or renegotiation of that covenant; • our immediate payment of all principal and accrued interest, if any, if the debt security was payable on demand; and 19Table of Contents • our inability to obtain additional financing, if necessary, if the debt security contained covenants restricting our ability to obtainadditional financing while such security was outstanding.In addition, our business plan and strategy is predicated on buying vessels at what we believe is near the low end of the cycle in what hastypically been a cyclical industry. However, there is no assurance that shipping rates and vessels asset values will not sink lower, or that there will be anupswing in shipping costs or vessel asset values in the near-term or at all, in which case our business plan and strategy may not succeed in the near-term or atall. Growing any business by acquisition presents numerous risks such as undisclosed liabilities and obligations, difficulty experienced in obtainingadditional 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.If we purchase any newbuilding vessels, delays, cancellations or non-completion of deliveries of newbuilding vessels could harm our operating results.If we purchase any newbuilding vessels, the shipbuilder could fail to deliver the newbuilding vessel as agreed or their counterparty could cancelthe purchase contract if the shipbuilder fails to meet its obligations. In addition, under charters we may enter into that are related to a newbuilding, if ourdelivery of the newbuilding to our customer is delayed, we may be required to pay liquidated damages during such delay. For prolonged delays, the customermay terminate the charter and, in addition to the resulting loss of revenues, we may be responsible for additional, substantial liquidated damages. We do notderive any revenue from a vessel until after its delivery and are required to pay substantial sums as progress payments during construction of a newbuilding.While we expect to have refund guarantees from financial institutions with respect to such progress payments in the event the vessel is not delivered by theshipyard or is otherwise not accepted by us, there is the potential that we may not be able to collect all portions of such refund guarantees, in which case wewould lose the amounts we have advanced to the shipyards for such progress payments.The completion and delivery of newbuildings could be delayed, cancelled or otherwise not completed because of: • quality or engineering problems; • changes in governmental regulations or maritime self-regulatory organization standards; • work stoppages or other labor disturbances at the shipyard; • bankruptcy or other financial crisis of the shipbuilder; • a backlog of orders at the shipyard; • political or economic disturbances; • weather interference or catastrophic event, such as a major earthquake or fire; • requests for changes to the original vessel specifications; • shortages of or delays in the receipt of necessary construction materials, such as steel; • inability to finance the construction or conversion of the vessels; or • inability to obtain requisite permits or approvals.If delivery of a vessel is materially delayed, it could materially adversely affect our results of operations and financial condition and our abilityto make cash distributions.Although we have long-standing relationships with certain Japanese shipowners that provide us access to competitive contracts, we cannot assure you thatwe will always be able to maintain such relationships or that such contracts will continue to be available in the future.We have long-standing relationships with certain Japanese shipowners that give us access to time charters at favorable rates and that, in somecases, include options to purchase the vessels at favorable prices relative to the current market. We cannot assure you that we will have such relationshipsindefinitely. In addition, there is no assurance that Japanese shipowners will generally make contracts available on the same or substantially similar terms inthe future. 20Table of ContentsThe 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 onvessels, with or without the knowledge of crew members. Under some jurisdictions, vessels used for the conveyance of illegal drugs could subject the vesselsto forfeiture to the government of such jurisdiction. To the extent our vessels are found with contraband, whether inside or attached to the hull of our vesseland whether with or without the knowledge of any of our crew, we may face governmental or other regulatory claims which could have an adverse effect onour business, results of operations, cash flows, financial condition and ability to pay dividends.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 a newbuilding, when a vesselis “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, andwe will 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; • equipment breakdowns; • delays due to accidents or deviations from course; • occurrence of hostilities in the vessel’s flag state or in the event of piracy; • crewing strikes, labor boycotts, certain vessel detentions or similar problems; or • our failure to maintain the vessel in compliance with its specifications, contractual standards and applicable country of registry andinternational regulations or to provide the required crew.Under some of our charters, the charterer is permitted to terminate the time charter if the vessel is off-hire for an extended period, which isgenerally defined as a period of 90 or more consecutive off-hire days. Under some circumstances, an event of force majeure may also permit the charterer toterminate the time charter or suspend payment of charter hire.As we do not maintain off-hire insurance except in cases of loss of hire up to a limited number of days due to war or piracy events any extendedoff-hire period could have a material adverse effect on our results of operations, cash flows and financial condition.Our international activities increase the compliance risks associated with economic and trade sanctions imposed by the U.S., the EU and otherjurisdictions.Our international operations and activities could expose us to risks associated with trade and economic sanctions prohibitions or otherrestrictions imposed by the U.S. or other governments or organizations, including the United Nations, the EU and its member countries. Under economic andtrade sanctions 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 and other penalties.IranDuring the last few years until January 2016, the scope of sanctions imposed against Iran, the government of Iran and persons engaging in certainactivities or doing certain business with and relating to Iran was expanded by a number of jurisdictions, including the U.S., the EU 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, expanded the application of prohibitions to non-U.S. companies, such as ourcompany, and introduced limits on the ability of non-U.S. companies and other non-U.S. persons to do business or trade with Iran when such activities relateto specific trade and investment activities involving Iran. 21Table of ContentsU.S. economic sanctions on Iran fall into two general categories: “Primary” sanctions, which prohibit U.S. persons or U.S. companies and theirforeign branches, U.S. citizens, U.S. permanent residents, and persons within the territory of the U.S. from engaging in all direct and indirect trade and othertransactions with Iran without U.S. government authorization, and “secondary” sanctions, which are mainly nuclear-related sanctions. While most of the EUand U.S. nuclear-related sanctions with respect to Iran (including, inter alia, CISADA, ITRA, and IFCA) were lifted on January 16, 2016 through theimplementation of the Joint Comprehensive Plan of Action (the “JCPOA”) entered into between the permanent members of the United Nations SecurityCouncil (China, France, Russia, the U.K. and the U.S.) and Germany, there are still certain limitations in place with which we need to comply. The primarysanctions with which U.S. persons or transactions with a U.S. nexus must comply are still in force and have not been lifted or relaxed, except in a very limitedfashion. Additionally, the sanctions lifted under the JCPOA could be reimposed (“snapped back”) at any time if Iran violates the JCPOA or the U.S. withdrawsfrom the JCPOA.After the lifting of most of the nuclear-related sanctions on January 16, 2016, EU sanctions remain in place in relation to the export of arms andmilitary goods, missiles-related goods and items that might be used for internal repression. The main nuclear-related EU sanctions, which remain in place,include restrictions on: i.Graphite and certain raw or semi-finished metals such as corrosion-resistant high-grade steel, iron, aluminium and alloys, titanium and alloys andnickel and alloys (as listed in Annex VIIB to EU Regulation 267/2012 as updated by EU Regulation 2015/1861 (the “EU Regulation”); ii.Goods listed in the Nuclear Suppliers Group list (listed in Annex I to the EU Regulation); iii.Goods that could contribute to nuclear-related or other activities inconsistent with the JCPOA (as listed in Annex II to the EU Regulation); and iv.Software designed for use in nuclear/military industries (as listed in Annex VIIA to the EU Regulation).Dealing with the above is no longer prohibited, but prior authorization must be obtained first and is granted on a case-by-case basis. Theremaining restrictions apply to the sale, supply, transfer or export, directly or indirectly to any Iranian person/for use in Iran, as well as the provision oftechnical assistance, financing or financial assistance in relation to the restricted activity. Certain individuals and entities remain sanctioned and theprohibition to make available, directly or indirectly, economic resources or assets to or for the benefit of sanctioned parties remains. “Economic resources” iswidely defined and it remains prohibited to provide vessels for a fixture from which a sanctioned party (or parties related to a sanctioned party) directly orindirectly benefits. It is therefore still necessary to carry out due diligence on the parties and cargoes involved in fixtures involving Iran.Russia/UkraineAs a result of the crisis in Ukraine and the annexation of Crimea by Russia in 2014, both the U.S. and the EU have implemented sanctionsagainst certain persons and entities.The EU has imposed travel bans and asset freezes on certain persons and entities pursuant to which it is prohibited to make available, directly orindirectly, economic resources or assets to or for the benefit of the sanctioned parties. Certain Russian ports including Kerch Commercial Seaport; SevastopolCommercial Seaport and Port Feodosia are subject to the above restrictions. Other entities are subject to sectoral sanctions, which limit the provision ofequity and debt financing to the listed entities. In addition, various restrictions on trade have been implemented which, amongst others, include a prohibitionon the import into the EU of goods originating in Crimea or Sevastopol as well as restrictions on trade in certain dual-use and military items and restrictionsin relation to various items of technology associated with the oil industry for use in deep water exploration and production, Arctic oil exploration andproduction or shale oil projects in Russia. As such, it is important to carry out due diligence on the parties and cargoes involved in fixtures relating to Russia.The U.S. has imposed sanctions against certain designated Russian entities and individuals (“U.S. Russian Sanctions Targets”). These sanctionsblock the property and all interests in property of the U.S. Russian Sanctions Targets. This effectively prohibits U.S. persons from engaging in any economicor commercial transactions with the U.S. Russian Sanctions Targets unless the same are authorized by the U.S. Treasury Department. Similar to EU sanctions,U.S. sanctions also entail restrictions on certain exports from the U.S. to Russia and the imposition of Sectoral Sanctions, which restrict the provision ofequity and debt financing to designated Russian entities. While the prohibitions of these sanctions are not directly applicable to us, we have compliancemeasures in place to guard against transactions with U.S. Russian Sanctions Targets, which may involve the U.S. or U.S. persons and thus implicateprohibitions. The U.S. also maintains prohibitions on trade with Crimea.The U.S.’s “Countering America’s Adversaries Through Sanctions Act” (Public Law 115-44) (CAATSA), authorizes imposition of new sanctionson Iran, Russia, and North Korea. The CAATSA sanctions with respect to Russia have not actually been imposed or implemented. CAATSA sanctions on Iranand North Korea enhance existing sanctions. 22Table of ContentsVenezuela-Related SanctionsThe U.S. sanctions with respect to Venezuela prohibit dealings with designated Venezuelan government officials, and curtail the provision offinancing to PDVSA and other government entities. EU sanctions against Venezuela are primarily governed by EU Council Regulation 2017/2063 of13 November 2017 concerning restrictive measures in view of the situation in Venezuela. This includes financial sanctions and restrictions on listed persons,an arms embargo, and related prohibitions and restrictions including restrictions related to internal repression.Other U.S. Economic Sanctions TargetsIn addition to Iran and certain Russian entities and individuals, as indicated above, the U.S. maintains economic sanctions against Syria, Cuba,North Korea, and sanctions 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, the “SanctionsTargets”). We are subject to the prohibitions of these sanctions to the extent that any transaction or activity we engage in involves Sanctions Targets and aU.S. person or otherwise has a nexus to the U.S..Other E.U. Economic Sanctions TargetsThe EU also maintains sanctions against Syria, North Korea and certain other countries and against individuals listed by the EU. Theserestrictions apply to our operations and as such, to the extent that these countries may be involved in any business it is important to carry out checks toensure compliance with all relevant restrictions and to carry out due diligence checks on counterparties and cargoes.ComplianceConsidering the aforementioned prohibitions of U.S. as well as EU sanctions and the nature of our business, there is a sanctions risk for us due tothe worldwide trade of our vessels, which we seek to minimize by following our corporate written Economic Sanctions Compliance Policy and Proceduresand our compliance with all applicable sanctions and embargo laws and regulations. Although we intend to maintain such compliance, there can be noassurance that we will be in compliance in the future, particularly as the scope of certain laws may be unclear and may be subject to changing interpretations,and the law may change. Moreover, despite, for example, relevant provisions in charter parties forbidding the use of our vessels in trade that would violateeconomic sanctions, our charterers may nevertheless violate applicable sanctions and embargo laws and regulations and those violations could in turnnegatively affect our reputation and be imputed to us. In addition, given our relationship with Navios Acquisition, Navios Partners, Navios MaritimeContainers Inc. (“Navios Containers”) and Navios Midstream Partners L.P. (“Navios Midstream”), we cannot give any assurance that an adverse findingagainst Navios Acquisition, Navios Partners, Navios Containers or Navios Midstream by a governmental or legal authority or others with respect to thematters discussed herein or any future matter related to regulatory compliance by Navios Acquisition, Navios Partners, Navios Containers, Navios Midstreamor ourselves will not have a material adverse impact on our business, reputation or the market price or trading of our common stock-units.We are constantly monitoring developments in the U.S., the E.U. and other jurisdictions that maintain economic sanctions against Iran, othercountries, and other sanctions targets, including developments in implementation and enforcement of such sanctions programs. Expansion of sanctionsprograms, embargoes and other restrictions in the future (including additional designations of countries and persons 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 haveimplemented and continue to implement and diligently follow compliance procedures to avoid economic sanctions violations.We rely on critical information systems for the operation of our businesses, and the failure of any critical information system, including a cyber-securitybreach, may adversely impact our businesses.We rely on information systems and networks in our operations and administration of our business. Information systems are vulnerable tosoftware viruses, power failures and security breaches by computer hackers and cyber terrorists. We rely on industry-accepted security measures andtechnology to securely maintain confidential and proprietary information maintained on our information systems. However, we cannot guarantee that ourinformation systems cannot be damaged or compromised. The unavailability of the information systems or the failure of these systems to perform asanticipated for any reason could disrupt our business and could result in decreased performance and increased operating costs, causing our business andresults of operations to suffer. Any significant interruption or failure of our information systems or any significant breach of security could adversely affectour business, results of operations and financial condition, as well as our cash flows. 23Table of ContentsChanging laws and evolving reporting requirements could have an adverse effect on our business.Changing laws, regulations and standards relating to reporting requirements, including the European Union General Data Protection Regulation(“GDPR”), may create additional compliance requirements for us. To maintain high standards of corporate governance and public disclosure, we haveinvested in, and intend to continue to invest in, reasonably necessary resources to comply with evolving standards.GDPR broadens the scope of personal privacy laws to protect the rights of European Union citizens and requires organizations to report on databreaches within 72 hours and be bound by more stringent rules for obtaining the consent of individuals on how their data can be used. GDPR will becomeenforceable on May 25, 2018 and non-compliance may expose entities to significant fines or other regulatory claims, which could have an adverse effect onour business, financial conditions, results of operations and cash flows.We could be materially adversely affected by violations of the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, and anti-corruption laws in otherapplicable jurisdictions.As an international shipping company, we may operate in countries known to have a reputation for corruption. The U.S. Foreign CorruptPractices Act of 1977 (the “FCPA”) and other anti-corruption laws and regulations in applicable jurisdictions generally prohibit companies registered withthe SEC and their 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.Bribery Act 2010 (the “U.K. Bribery Act”) which is broader in scope than the FCPA because it does not contain an exception for facilitation payments. Weand our customers may be subject to these and similar anti-corruption laws in other applicable jurisdictions. Failure to comply with legal requirements couldexpose us to civil and/or criminal penalties, including fines, prosecution and significant reputational damage, all of which could materially and adverselyaffect our business and results of operations, including our relationships with our customers, and our financial results. Compliance with the FCPA, the U.K.Bribery Act and other applicable anti-corruption laws and related regulations and policies imposes potentially significant costs and operational burdens onus. Moreover, the compliance and monitoring mechanisms that we have in place including our Code of Ethics and our anti-bribery and anti-corruptionpolicy, may not adequately prevent or detect all possible violations under applicable anti-bribery and anti-corruption legislation. However, we believe thatthe procedures we have in place to prevent bribery are adequate and that they should provide a defense in most circumstances to a violation or a mitigation ofapplicable penalties, at least under the U.K.’s Bribery Act.We may be unable to attract and retain qualified, skilled employees or crew necessary to operate our business or may have to pay substantially increasedcosts for our employees and crew.Our success will depend in part on our ability to attract, hire, train and retain highly skilled and qualified personnel. In crewing our vessels, werequire technically skilled employees with specialized training who can perform physically demanding work. Competition to attract, hire, train and retainqualified crew members is intense. In addition, recently, the limited supply of, and increased demand for, well-qualified crew members, due to the increase inthe size of global shipping fleet, has created upward pressure on crewing costs, which we generally bear under our period, time and spot charters. If we are notable to increase our hire rates to compensate for any crew cost increases, our business, financial condition and results of operations may be adversely affected.Any inability we experience in the future to attract, hire, train and retain a sufficient number of qualified employees could impair our ability to manage,maintain and grow our business.Our Chairman and Chief Executive Officer holds approximately 30.6% of our common stock and will be able to exert considerable influence over ouractions; her failure to own a significant amount of our common stock or to be our Chief Executive Officer would constitute a default under our securedcredit facilities.Ms. Angeliki Frangou owns approximately 30.6% of the outstanding shares of our common stock directly or through her affiliates, and haspreviously filed an amended Schedule 13D indicating that she intends, subject to market conditions, to purchase up to $20.0 million of our common stock(as of March 31, 2018, she had purchased approximately $10.0 million of the total $20.0 million in value of our common stock). As the Chairman, ChiefExecutive Officer and a significant stockholder, she has the power to exert considerable influence over our actions and the outcome of matters on which ourstockholders are entitled to vote including the election of directors and other significant corporate actions. The interests of Ms. Frangou may be differentfrom your interests. Furthermore, if Ms. Frangou ceases to hold a minimum of 20% of our common stock, does not remain actively involved in the business,or ceases to be our Chief Executive Officer, then we will be in default under our secured credit facilities. 24Table of ContentsThe 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. AngelikiFrangou, our Chairman, Chief Executive Officer and principal stockholder. The loss of the services of Ms. Frangou or one of our other executive officers orsenior management members could impair our ability to identify and secure new charter contracts, to maintain good customer relations and to otherwisemanage our business, which could have a material adverse effect on our financial performance and our ability to compete.Certain of our directors, officers, and principal stockholders are affiliated with entities engaged in business activities similar to those conducted by us,which may compete directly with us, causing such persons to have conflicts of interest.Some of our directors, officers and principal stockholders have affiliations with entities that have similar business activities to those conductedby us. Certain of our directors are also directors of other shipping companies and they may enter similar businesses in the future. These other affiliations andbusiness activities may give rise to certain conflicts of interest in the course of such individuals’ affiliation with us. Although we do not prevent our directors,officers and principal stockholders from having such affiliations, we use our best efforts to cause such individuals to comply with all applicable laws andregulations in addressing such conflicts of interest. Our officers and employee directors devote their full time and attention to our ongoing operations, andour non-employee directors devote such time as is necessary and required to satisfy their duties as directors of a public company.Because we generate substantially all of our revenues in U.S. dollars but incur a portion of our expenses in other currencies, exchange rate fluctuationscould 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,our transactions are predominantly U.S. dollar-denominated at the present. Additionally, our South American subsidiaries transact a nominal amount of theiroperations in Uruguayan pesos, Paraguayan Guaranies, Argentinean pesos and Brazilian Reales, whereas our wholly-owned vessel subsidiaries and the vesselmanagement subsidiaries transact a nominal amount of their operations in Euros; however, all of the subsidiaries’ primary cash flows are U.S. dollar-denominated. In 2017, approximately 42.4% of our expenses were incurred in currencies other than U.S. dollars. Transactions in currencies other than thefunctional currency are translated at the exchange rate in effect at the date of each transaction. Expenses incurred in foreign currencies against which the U.S.dollar falls in value can increase, thereby decreasing our income. A change in exchange rates between the U.S. dollar and each of the foreign currencies listedabove of 1.00% would change our net loss for the year ended December 31, 2017 by $1.5 million.For example, as of December 31, 2017, the value of the U.S. dollar as compared to the Euro decreased by approximately 12.1% compared withthe respective value as of December 31, 2016. A greater percentage of our transactions and expenses in the future may be denominated in currencies otherthan U.S. dollar. As part of our overall risk management policy, we attempt to hedge these risks in exchange rate fluctuations from time to time. We may notalways be successful in such hedging activities and, as a result, our operating results could suffer as a result of non-hedged losses incurred as a result ofexchange rate fluctuations.We are incorporated in the Republic of the Marshall Islands, which does not have a well-developed body of corporate law.Our corporate affairs are governed by our amended and restated articles of incorporation and by-laws and by the Marshall Islands BusinessCorporations Act (“BCA”). The provisions of the BCA are intended to resemble provisions of the corporation laws of a number of states in the U.S.. 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 U.S. jurisdictions. Stockholder rights may differ as well. The BCA does specifically incorporate the non-statutory law, orjudicial case law, of the State of Delaware and other states with substantially similar legislative provisions. Accordingly, you may have more difficultyprotecting your interests in the face of actions by management, directors or controlling stockholders than you would in the case of a corporation incorporatedin the State of Delaware or other U.S. jurisdictions.We, and certain of our officers and directors, may be difficult to serve with process as we are incorporated in the Republic of the Marshall Islands and suchpersons may reside outside of the U.S..We are a corporation organized under the laws of the Republic of the Marshall Islands, and all of our assets are located outside of the U.S.. In addition, themajority of our directors and officers are residents of non-U.S. jurisdictions. Substantial portions of the assets of these persons are located in Greece or othernon-U.S. jurisdictions. Thus, it may not be possible for investors to affect service of process upon us, or our non-U.S. directors or officers, or to enforce anyjudgment obtained against these persons in U.S. courts. In addition, it may not be possible to enforce U.S. securities laws or judgments obtained in U.S. courtsagainst these persons in a non-U.S. jurisdiction. 25Table of ContentsBeing a foreign private issuer exempts us from certain SEC and NYSE requirements.We are a foreign private issuer within the meaning of rules promulgated under the Securities Exchange Act of 1934, as amended (the “ExchangeAct”). As such, we are exempt from certain provisions applicable to U.S. 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 underthe Exchange Act; • the provisions of Regulation FD aimed at preventing issuers from making selective disclosures of material information; • the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and establishinginsider liability for profits realized from any “short-swing” trading transaction (i.e., a purchase and sale, or sale and purchase, of theissuer’s equity securities within less than six months); and • the obligation to obtain shareholder approval in connection with the approval of, and material revisions to, equity compensation plans.Because of these exemptions, investors are not afforded the same protections or information generally available to investors holding shares inpublic companies organized in the U.S.Risks Relating to Our Common StockOur stock price may be volatile, and investors in our common stock could lose all or part of their investment.The following factors could cause the price of our common stock in the public market to fluctuate significantly: • variations in our quarterly operating results; • changes in market valuations of companies in our industry; • fluctuations in stock market prices and volumes; • issuance of common stock or other securities in the future; • the addition or departure of key personnel; • announcements by us or our competitors of new business or trade routes, acquisitions or joint ventures; and • the other factors discussed elsewhere in this Annual Report.Volatility in the market price of our common stock may prevent investors from being able to sell their common stock at or above the price; aninvestor pays for our common stock in an offering. In the past, class action litigation has often been brought against companies following periods ofvolatility in the market price of those companies’ common stock. We may become involved in this type of litigation in the future. Litigation is oftenexpensive and diverts management’s attention and company resources and could have a material effect on our business, financial condition and operatingresults. 26Table of ContentsRisks Relating to Our Series G and Series H and the Depositary SharesOur Series G and Series H are subordinated to our debt obligations, and a holder’s interests could be diluted by the issuance of additional shares,including additional Series G, Series H and by other transactions.Our Series G, with a liquidation preference of $2,500.00 per share and our Series H, with a liquidation preference of $2,500.00 per share (theSeries G and the Series H together referred to as the “Series G and H”), both represented by American Depositary Shares (the “Depositary Shares”), aresubordinated to all of our existing and future indebtedness. As of December 31, 2017, our total debt was $1,717.8 million. We may incur substantialadditional debt from time to time in the future, and the terms of the Series G and H do not limit the amount of indebtedness we may incur. In February 2016,we announced the suspension of payment of quarterly dividends on our common stock and on the Series G and Series H. The payment of principal andinterest on our debt reduces cash available for distribution to us and on our shares, including the Series G and H and the Depositary Shares, should suchdividends be reinstated.The issuance of additional preferred stock on a parity with or senior to our Series G and H would dilute the interests of the holders of our Series Gand H, and any issuance of any preferred stock senior to or on parity with our Series G and H or additional indebtedness could affect our ability to paydividends on, redeem or pay the liquidation preference on our Series G and H. No provisions relating to our Series G and H protect the holders of our Series Gand H in the event of a highly leveraged or other transaction, including a merger or the sale, lease or conveyance of all or substantially all our assets orbusiness, which might adversely affect the holders of our Series G and H.Our Series G and H will rank pari passu with any other class or series of our capital stock established after the original issue date of the Series Gand H that is not expressly subordinated or senior to the Series G and H (“Parity Securities”) as to the payment of dividends and amounts payable uponliquidation or reorganization. If less than all dividends payable with respect to the Series G and H and any Parity Securities are paid, any partial paymentshall be made pro rata with respect to shares of Series G and H and any Parity Securities entitled to a dividend payment at such time in proportion to theaggregate amounts remaining due in respect of such shares at such time.We may not have sufficient cash from our operations to enable us to pay dividends on or to redeem our Series G and H, and accordingly the DepositaryShares, as the case may be, following the payment of expenses and the establishment of any reserves.In February 2016, we announced the suspension of payment of quarterly dividends on the Series G and Series H. On July 15, 2017, the Companyreached six quarterly dividend payments in arrears relating to its Series G and Series H and as a result the respective dividend rates increased by 0.25%. Wewill reinstate and pay quarterly dividends on the Series G and H, and accordingly the Depositary Shares, only from funds legally available for such purposewhen, as and if declared by our board of directors. We may not have sufficient cash available to reinstate such dividend or to pay dividends each quarter ifand when reinstated. In addition, we may have insufficient cash available to redeem the Series G and H, and accordingly the Depositary Shares. The amountof cash we can use to pay dividends or redeem our Series G and H and the Depositary Shares depends upon the amount of cash we generate from ouroperations, which may fluctuate significantly, and other factors, including the following: • changes in our operating cash flow, capital expenditure requirements, working capital requirements and other cash needs; • the amount of any cash reserves established by our board of directors; • restrictions under our credit facilities and other instruments and agreements governing our existing and future debt, including restrictionsunder our existing credit facilities and indentures governing our debt securities on our ability to pay dividends if an event of default hasoccurred and is continuing, or if the payment of the dividend would result in an event of default, and on our ability to redeem equitysecurities; • restrictions under Marshall Islands law as described below; and • our overall financial and operating performance, which, in turn, is subject to prevailing economic and competitive conditions and to therisks associated with the shipping industry, our dry bulk operations and the other factors described herein, many of which are beyond ourcontrol.The amount of cash we generate from our operations may differ materially from our net income or loss for the period, which will be affected bynoncash items, and our board of directors in its discretion may elect not to declare any dividends. We may incur other expenses or liabilities that couldreduce or eliminate the cash available for distribution as dividends. As a result of these and the other factors mentioned above, we may pay dividends duringperiods when we record losses and may not pay dividends during periods when we record net income. 27Table of ContentsOur ability to pay dividends on and to redeem our Series G and H, and therefore holders’ ability to receive payments on the Depositary Shares, is limited bythe requirements of Marshall Islands law.If we reinstate the payment of dividends, Marshall Islands law provides that we may pay dividends on and redeem the Series G and H only to theextent that assets are legally available for such purposes. Legally available assets generally are limited to our surplus, which essentially represents ourretained earnings and the excess of consideration received by us for the sale of shares above the par value of the shares. In addition, under Marshall Islandslaw we may not pay dividends on or redeem Series G and H if we are insolvent or would be rendered insolvent by the payment of such a dividend or themaking of such redemption.The Series G and H represent perpetual equity interests.The Series G and H represent perpetual equity interests in us and, unlike our indebtedness, will not give rise to a claim for payment of a principalamount at a particular date. As a result, holders of the Series G and H (and accordingly the Depositary Shares) may be required to bear the financial risks of aninvestment in the Series G and H (and accordingly the Depositary Shares) for an indefinite period of time. In addition, the Series G and H will rank junior toall our indebtedness and other liabilities, and any other senior securities we may issue in the future with respect to assets available to satisfy claims against us.Holders of Depositary Shares have extremely limited voting rights, will have even more limited rights than holders of the Series G and H and mayencounter difficulties in exercising some of such rights.Voting rights of holders of Depositary Shares will be extremely limited. Our common stock is the only class of stock carrying full voting rights.Holders of the Series G and H, and accordingly holders of the Depositary Shares, generally have no voting rights. In February 2016, we announced thesuspension of payment of quarterly dividends on the Series G and Series H. As such, (i) we have used commercially reasonable efforts to obtain anamendment to our articles of incorporation to effectuate any and all such changes thereto as may be necessary to permit either the Series G PreferredShareholders or the Series H Preferred Shareholders, as the case may be, to exercise the voting rights described in the following clause (ii)(x), and (ii) if andwhen dividends payable on either the Series G or the Series H, as the case may be, are in arrears for six or more quarterly periods, whether or not consecutive(and whether or not such dividends shall have been declared and whether or not there are profits, surplus, or other funds legally available for the payment ofdividends), then (x) if our articles of incorporation have been amended as described in the preceding clause (i), the holders of Series G or the holders of SeriesG, as the case may be, will have the right (voting together as a class with all other classes or series of parity securities upon which like voting rights have beenconferred and are exercisable), to elect one additional director to serve on our board of directors, and the size of our board of directors will be increased asneeded to accommodate such change (unless the size of our board of directors already has been increased by reason of the election of a director by holders ofsecurities on parity with either the Series G or Series H, as the case may be, upon which like voting rights have been conferred and with which the Series Gand H voted as a class for the election of such director), and (y) if our articles of incorporation have not been amended as described in the preceding clause (i),then, until such amendment is fully approved and effective, the dividend rate on the Series G or the Series H, as the case may be, shall increase by 25 basispoints. At our respective Annual Meeting of stockholders held on December 15, 2016 and December 15, 2017, the Company proposed an amendment to ourarticles of incorporation to effectuate any and all such changes as were necessary to permit the Series G and/or Series H holders the ability to exercise thecertain voting rights described above. These proposals failed to receive the affirmative vote of holders of two-thirds of the Company’s issued and outstandingcommon stock entitled to vote at the respective Annual Meeting, which was required to approve the proposal. Therefore, since the proposals failed and thedividends for the Series G and Series H are in arrears for six or more quarterly periods the dividend rate on the Series G and Series H have increased by 25basis points respectively. There can be no assurance that any such further proposal to our stockholders to amend our articles of incorporation will beapproved by our common stockholders.Furthermore, holders of the Depositary Shares may encounter difficulties in exercising any voting rights acquired by the Series G or the Series Hfor as long as they hold the Depositary Shares rather than the Series G or the Series H. For example, holders of the Depositary Shares will not be entitled tovote at meetings of holders of Series G or of the Series H, and they will only be able to exercise their limited voting rights by giving timely instructions toThe Bank of New York Mellon (the “Depositary”) in advance of any meeting of holders of Series G or the Series H, as the case may be. The Depositary will bethe holder of the Series G or the Series H underlying the Depositary Shares and holders may exercise voting rights with respect to the Series G or the Series Hrepresented by the Depositary Shares only in accordance with the deposit agreement (the “Deposit Agreement”) relating to the Depositary Shares. To thelimited extent permitted by the Deposit Agreement, the holders of the Depositary Shares should be able to direct the Depositary to vote the underlying SeriesG or the Series H, as the case may be, in accordance with their individual instructions. Nevertheless, holders of Depositary Shares may not receive votingmaterials in time to instruct the Depositary to vote the Series G or the Series H, as the case may be, underlying their Depositary Shares. In addition, theDepositary and its agents are not responsible for failing to carry out voting instructions of the holders of Depositary Shares or for the manner of carrying outsuch instructions. Accordingly, holders of Depositary Shares may not be able to exercise voting rights, and they will have little, if any, recourse if theunderlying Series G or the Series H, as the case may be, is not voted as requested. 28Table of ContentsThe Depositary Shares lack a well developed trading market. Various factors may adversely affect the price of the Depositary Shares.Even though the Depositary Shares are listed on the NYSE, there may be little or no secondary market for the Depositary Shares, in which casethe trading price of the Depositary Shares could be adversely affected and a holder’s ability to transfer its securities will be limited. The Depositary Sharesmay trade at prices lower than the offering price and the secondary market may not provide sufficient liquidity. In addition, since the Series G and Series H donot have a stated maturity date, investors seeking liquidity in the Depositary Shares will be limited to selling their Depositary Shares in the secondary marketabsent redemption by us. We do not expect that there will be any other trading market for the Series G and Series H except as represented by the DepositaryShares.Other factors, some of which are beyond our control, will also influence the market prices of the Depositary Shares. Factors that might influencethe market prices of the Depositary Shares include: • whether we are able to reinstate dividends on the Series G and Series H; • the market for similar securities; • our issuance of debt or preferred equity securities; • our creditworthiness; • our financial condition, results of operations and prospects; and • economic, financial, geopolitical, regulatory or judicial events that affect us or the financial markets generally.Accordingly, the Depositary Shares that an investor purchases may trade at a discount to their purchase price.The Series G and H represented by the Depositary Shares have not been rated, and ratings of any other of our securities may affect the trading price of theDepositary Shares.We have not sought to obtain a rating for the Series G and H, and both stocks may never be rated. It is possible, however, that one or more ratingagencies might independently determine to assign a rating to either the Series G or the Series H or that we may elect to obtain a rating of either our Series G orthe Series H in the future. In addition, we have issued securities that are rated and may elect to issue other securities for which we may seek to obtain a rating.Any ratings that are assigned to the Series G or the Series H in the future, that have been issued on our outstanding securities or that may be issued on ourother securities, if they are lower than market expectations or are subsequently lowered or withdrawn, could imply a lower relative value for the Series G orthe Series H and could adversely affect the market for or the market value of the Depositary Shares of the Series G and H Preferred Shares respectively. Ratingsonly reflect the views of the issuing rating agency or agencies and such ratings could at any time be revised downward or withdrawn entirely at the discretionof the issuing rating agency. A rating is not a recommendation to purchase, sell or hold any particular security, including the Series G and H and theDepositary Shares. Ratings do not reflect market prices or suitability of a security for a particular investor and any future rating of the Series G and H and theDepositary Shares may not reflect all risks related to us and our business, or the structure or market value of the Series G and H and the Depositary Shares.The amount of the liquidation preference of our Series G and H is fixed and holders will have no right to receive any greater payment regardless of thecircumstances.The payment due upon liquidation for both our Series G and H is fixed at the liquidation preference of $2,500.00 per share (equivalent to $25.00per Depositary Share) plus accumulated and unpaid dividends to the date of liquidation (whether or not declared). If in the case of our liquidation, there areremaining assets to be distributed after payment of this amount, holders will have no right to receive or to participate in these amounts. Furthermore, if themarket price for the Series G or the Series H, as the case may be, is greater than the liquidation preference, holders will have no right to receive the marketprice from us upon our liquidation.The Series G and H are only redeemable at our option and investors should not expect us to redeem either the Series G or the Series H on the dates theyrespectively become redeemable or on any particular date afterwards.We may redeem, at our option, all or from time to time part of the Series G or the Series H on or after January 28, 2019 and July 8, 2019respectively. If we redeem the Series G, holders of the Series G will be entitled to receive a redemption price equal to $2,500.00 per share (equivalent to$25.00 per Depositary Share) plus accumulated and unpaid dividends to the date of redemption (whether or not declared). If we redeem the Series H, holdersof the Series H will be entitled to receive a redemption price equal to $2,500.00 per share (equivalent to $25.00 per Depositary Share) plus accumulated andunpaid dividends to the date of redemption (whether or not declared). Any decision we may make at any time to propose redemption of either the Series G orthe Series H will depend upon, among other things, our evaluation of our capital position, the composition of our shareholders’ equity and general marketconditions at that time. In addition, investors might not be able to reinvest the money they receive upon redemption of the Series G or the Series H, as thecase may be, in a similar security or at similar rates. We may elect to exercise our partial redemption right on multiple occasions. 29Table of ContentsHolders of Depositary Shares may be subject to additional risks related to holding Depositary Shares rather than shares.Because holders of Depositary Shares do not hold their shares directly, they are subject to the following additional risks, among others: • a holder of Depositary Shares will not be treated as one of our direct shareholders and may not be able to exercise shareholder rights; • distributions on the Series G and H represented by the Depositary Shares will be paid to the Depositary, and before the Depositary makesa distribution to holder on behalf of the Depositary Shares, withholding taxes or other governmental charges, if any, that must be paidwill be deducted; • we and the Depositary may amend or terminate the Deposit Agreement without the consent of holders of the Depositary Shares in amanner that could prejudice holders of Depositary Shares or that could affect their ability to transfer Depositary Shares, among others;and • the Depositary may take other actions inconsistent with the best interests of holders of Depositary Shares.Risks Relating to Our DebtWe have substantial debt and may incur substantial additional debt, including secured debt, which could adversely affect our financial health and ourability to obtain financing in the future, react to changes in our business and make payments under the notes.As of December 31, 2017, we had $1,717.8 million in aggregate principal amount of debt outstanding, of which $697.2 million was unsecured.Our substantial debt could have important consequences to holders of our common stock. Because of our substantial debt: • our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, vessel or otheracquisitions or general corporate purposes and our ability to satisfy our obligations with respect to our debt may be impaired in thefuture; • a substantial portion of our cash flow from operations must be dedicated to the payment of principal and interest on our indebtedness,thereby reducing the funds available to us for other purposes; • we will be exposed to the risk of increased interest rates because our borrowings under our senior secured credit facilities will be atvariable 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 suchindebtedness; • 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 ratesand, as a result, 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 beprevented from carrying out capital expenditures that are necessary or important to our growth strategy and efforts to improve operatingmargins or our business.We and our subsidiaries may be able to incur substantial additional indebtedness in the future as the terms of the indenture governing our11.25% Senior Secured Notes due 2022 (the “2022 Senior Secured Notes”) and the indenture governing our 7.375% First Priority Ship Mortgage Notes due2022 (the “2022 Notes”) do not fully prohibit us or our subsidiaries from doing so. The terms of the indenture governing the 7.25% Senior Notes due 2022(the “2022 Logistics Senior Notes”) of Navios South American Logistics (“Navios Logistics”), the agreements governing the terms of Term Loan B Facility(the “Term Loan B Facility”) and the 30Table of Contentsagreements governing the terms of the other indebtedness of Navios Logistics also permit Navios Logistics to incur substantial additional indebtedness inaccordance with the terms of such agreements. If new debt is added to our current debt levels, the related risks that we now face would increase and we maynot be able to meet all of our debt obligations.The agreements and instruments governing our debt contain restrictions and limitations that could significantly impact our ability to operate our business.Our secured credit facilities and our indentures impose certain operating and financial restrictions on us. These restrictions limit our ability to: • incur or guarantee additional indebtedness; • create liens on our assets; • make new investments; • engage in mergers and acquisitions; • pay dividends or redeem capital stock; • make capital expenditures; • engage in certain FFA trading activities; • change the flag, class or commercial and technical management of our vessels; • enter into long-term charter arrangements without the consent of the lender; and • sell any of our vessels.The agreements governing the terms of Navios Logistics’ indebtedness impose similar restrictions upon Navios Logistics.Therefore, we and Navios Logistics will need to seek permission from our respective lenders in order to engage in some corporate andcommercial actions that believe would be in the best interest of our respective business, and a denial of permission may make it difficult for us or NaviosLogistics to successfully execute our business strategy or effectively compete with companies that are not similarly restricted. The interests of our and NaviosLogistics’ lenders may be different from our respective interests or those of our holders of common stock, and we cannot guarantee that we or NaviosLogistics will be able to obtain the permission of lenders when needed. This may prevent us or Navios Logistics from taking actions that are in best interestsof us, Navios Logistics or our stockholders. Any future debt agreements may include similar or more restrictive restrictions.Our ability to generate the significant amount of cash needed to pay interest and principal and otherwise service our debt and our ability to refinance allor a portion of our indebtedness or obtain additional financing depend on multiple factors, many of which may be beyond our control.The ability of us and Navios Logistics to make scheduled payments on or to refinance our respective debt obligations will depend on ourrespective financial and operating performance, which, in turn, will be subject to prevailing economic and competitive conditions and to the financial andbusiness factors, many of which may be beyond the control of us and Navios Logistics.The principal and interest on such debt will be paid in cash. The payments under our and Navios Logistics’ debt will limit funds otherwiseavailable for our respective working capital, capital expenditures, vessel acquisitions and other purposes. As a result of these obligations, the currentliabilities us or Navios Logistics may exceed our respective current assets. We or Navios Logistics may need to take on additional debt as we expand ourrespective fleets or other operations, which could increase our respective ratio of debt to equity. The need to service our respective debt may limit fundsavailable for other purposes, and our or Navios Logistics’ inability to service debt in the future could lead to acceleration of such debt, the foreclosure onassets such as owned vessels or otherwise negatively affect us.We may be unable to raise funds necessary to finance the change of control repurchase offer required by the indentures governing our outstanding notesand our secured credit facilities.The indenture governing the 2022 Senior Secured Notes, the indenture governing the 2022 Notes, the indentures governing the 2022 LogisticsSenior Notes and our and Navios Logistics’ secured credit facilities contain certain change of control provisions. If we or Navios Logistics experiencespecified changes of control under our respective notes, we or Navios Logistics, as the case may be, will be required to make an offer to repurchase all of ourrespective outstanding notes (unless otherwise redeemed) at a price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, tothe repurchase date. The occurrence of specified events that would constitute a change of control may constitute a default under our and Navios Logistics’secured credit 31Table of Contentsfacilities. In the event of a change of control under these debt agreements, we cannot assure you that we would have sufficient assets to satisfy all of ourobligations under these debt agreements, including but not limited to, repaying all indebtedness outstanding under the applicable secured credit facilities orrepurchasing the applicable notes.If the volatility in the London InterBank Offered Rate, or LIBOR, continues, it could affect our profitability, earnings and cash flow.LIBOR has been volatile, with the spread between LIBOR and the prime lending rate widening significantly at times. These conditions are theresult of the recent disruptions in the international credit markets. Because the interest rates borne by our outstanding indebtedness fluctuate with changes inLIBOR, if this volatility were to continue, it would affect the amount of interest payable on our debt, which in turn, could have an adverse effect on ourprofitability, earnings and cash flow. See also “Item 11 Qualitative and Quantitative Disclosures about Market Risk.”Furthermore, interest in most loan agreements in our industry has been based on published LIBOR rates. Recently, however, lenders haveinsisted on provisions that entitle the lenders, in their discretion, to replace published LIBOR as the base for the interest calculation with their cost-of-fundsrate. Such provisions could significantly increase our lending costs, which would have an adverse effect on our profitability, earnings and cash flow.The market values of our vessels, which have declined from historically high levels, may fluctuate significantly, which could cause us to breach covenantsin our credit facilities and result in the foreclosure of our mortgaged vessels.Factors that influence vessel values include: • number of newbuilding deliveries; • number of vessels scrapped or otherwise removed from the total fleet; • changes in environmental and other regulations that may limit the useful life of vessels; • changes in global dry cargo commodity supply; • types and sizes of vessels; • development viability and increase in use of other modes of transportation; • cost of vessel acquisitions; • cost of newbuilding vessels; • governmental or other regulations; • prevailing level of charter rates; • general economic and market conditions affecting the shipping industry; and • the cost of retrofitting or modifying existing ships to respond to technological advances in vessel design or equipment, changes inapplicable environmental or other regulations or standards, or otherwise.If the market values of our owned vessels decrease, we may breach covenants contained in our secured credit facilities. If we breach suchcovenants and are unable to remedy any relevant breach, our lenders could accelerate our debt and foreclose on the collateral, including our vessels. Any lossof vessels would significantly decrease our ability to generate positive cash flow from operations and, therefore, service our debt. In addition, if the bookvalue of a vessel is impaired due to unfavorable market conditions, or a vessel is sold at a price below its book value, we would incur a loss. Navios Logisticsmay be subject to similar ramifications under its credit facilities if the market values of its owned vessels decrease.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. 32Table of ContentsWe may require additional financing to acquire vessels or business 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 intend to cover the cost of such items with new debt collateralized by the vessels to be acquired,if applicable, but there can be no assurance that we will generate sufficient cash or that debt financing will be available. Moreover, the covenants in oursenior secured credit facility, the indentures or other debt, may make it more difficult to obtain such financing by imposing restrictions on what we can offeras collateral.We have substantial equity investments in seven companies, six of which are not consolidated in our financial results, and our investment in suchcompanies is subject to the risks related to their respective businesses.As of December 31, 2017, we had a 63.8% ownership interest in Navios Logistics, and, as a result, Navios Logistics is a consolidated subsidiary.As such, the income and losses relating to Navios Logistics and the indebtedness and other liabilities of Navios Logistics are shown in our consolidatedfinancial statements.We also have substantial equity investments in two public companies that are accounted for under the equity method — Navios Acquisition andNavios Partners. As of December 31, 2017, we held 42.9% of the voting stock and 46.2% of the economic interest of Navios Acquisition and 20.8% of theequity interest in Navios Partners (including a 2.0% general partner interest). As of such date, the carrying value of our investments in these two affiliatedcompanies amounted to $166.4 million.In addition to the value of our investment, we receive dividend payments relating to our investments. As a result of our investment, in fiscal year2017, we received $14.6 million in dividends from Navios Acquisition. Furthermore, we receive management and general and administrative fees fromNavios Acquisition and Navios Partners, which amounted to $104.0 million and $70.5 million, respectively, in fiscal year 2017.On October 9, 2013, Navios Holdings, Navios Acquisition and Navios Partners established Navios Europe Inc. (“Navios Europe I”) and hadeconomic interests of 47.5%, 47.5% and 5.0%, respectively and 50%, 50% and 0%, voting interests, respectively. As of December 31, 2017, Navios Holdingsportion of the Navios Term Loans I (as defined herein) relating to Navios Europe I was $4.8 million.On February 18, 2015, Navios Holdings, Navios Acquisition and Navios Partners established Navios Europe (II) Inc. (“Navios Europe II”) andhad economic interests of 47.5%, 47.5% and 5.0%, respectively and voting interests of 50%, 50% and 0%, respectively. As of December 31, 2017, NaviosHoldings portion of the Navios Term Loans II (as defined herein) relating to Navios Europe II was $6.7 million.On June 8, 2017, Navios Containers completed a private placement in which Navios Holdings invested $5.0 million. Navios Containersregistered its shares on the Norwegian Over-The-Counter Market (N-OTC) on June 12, 2017 under the ticker “NMCI”. As of December 31, 2017, NaviosHoldings owned 3.4% of Navios Containers’ common stock and warrants, for 1.7% of the equity of Navios Containers and the carrying amount of theinvestment in Navios Containers was $5.2 million.During the year ended December 31, 2017, the Company received shares of Pan Ocean Co. Ltd (“STX”) as partial compensation for the claimsfiled under the Korean court for all unpaid amounts in respect of the employment of the Company’s vessels and their carrying value amounted to $0.2 millionas of December 31, 2017. During the year ended December 31, 2013, the Company received shares of Korea Line Corporation (“KLC”) and during the yearended December 31, 2015 the Company received shares of STX. During the third quarter of 2016, the Company sold all its KLC and STX securities it held atthe time.Our ownership interest in Navios Logistics, Navios Acquisition, Navios Partners, Navios Containers, Navios Europe I, Navios Europe II, STX andthe reflection of such companies (or the investment relating thereto) on our balance sheets and any income generated from or related to such companies aresubject to a variety of risks, including risks relating to the respective business of Navios Logistics, Navios Acquisition, Navios Partners, Navios Containers,Navios Europe I and Navios Europe II as disclosed in their respective public filings with the SEC or management reports. The occurrence of any such risksmay negatively affect our financial condition.We evaluate our investments in Navios Acquisition, Navios Partners, Navios Containers, Navios Europe I, Navios Europe II and STX for “other-than-temporary impairment” (“OTTI”) on a quarterly basis. Consideration is given to (i) the length of time and the extent to which the fair value has been lessthan the carrying value, (ii) their financial condition and near term prospects, and (iii) the intent and ability of the Company to retain our investment in thesecompanies, for a period of time sufficient to allow for any anticipated recovery in fair value.As of December 31, 2017, management considers the decline in the market value of its investment in Navios Acquisition to be temporary.However, there is the potential for future impairment changes relative to this security if its respective fair value does not recover and an OTTI analysisindicates such write down is necessary, which may have a material adverse impact on our results of operations in the period recognized. During the yearended December 31, 2017, we did not recognize any impairment loss in earnings. 33Table of ContentsDuring the year ended December 31, 2016, the Company considered the decline in fair value of its investment in Navios Partners and NaviosAcquisition as “other-than-temporary” and therefore, recognized a loss of $228.0 million in the accompanying consolidated statement of comprehensive(loss)/income.During each of the years ended December 31, 2016 and 2015, the Company considered the decline in fair value of the KLC shares as “other-than-temporary” and therefore, recognized a loss out of accumulated other comprehensive income /(loss) of $0.3 million and $1.8 million, respectively. Therespective loss was included within the caption “Other expense” in the accompanying consolidated statement of comprehensive (loss)/income.Risks Relating to Navios LogisticsNavios Logistics’ grain port business has seasonal components linked to the grain harvests in the region. At times throughout the year, the capacity of itsgrain port, including the loading and unloading operations, as well as the space in silos is exceeded, which could materially adversely affect its operationsand revenues.A significant portion of Navios Logistics’ grain port business is derived from handling and storage of soybeans and other agricultural productsproduced in the Hidrovia, mainly during the season between April and September. This seasonal effect could, in turn, increase the inflow and outflow ofbarges and vessels in its dry port and cause the space in its silos to be exceeded, which in turn would affect its timely operations or its ability to satisfy theincreased demand. Inability to provide services in a timely manner may have a negative impact on its clients’ satisfaction and result in loss of existingcontracts or inability to obtain new contracts.Navios Logistics depends on a few significant customers for a large part of its revenues and the loss of one or more of these customers could materially andadversely affect its revenues.In each of Navios Logistics’ businesses, a significant part of its revenues is derived from a small number of customers. Navios Logistics expectthat a small number of customers will continue to generate a substantial portion of our revenues for the foreseeable future. For the year ended December 31,2017, its three largest customers, Vale International S.A. (“Vale”), YPF S.A. (“YPF”) and Axion Energy Argentina S.A. (“Axion Energy”), accounted for20.3%, 13.7% and 12.7% of its revenues, respectively, and its five largest customers accounted for approximately 61.9% of its revenues. For the year endedDecember 31, 2016, Navios Logistics’ two largest customers, Vale, Axion Energy and Cammesa S.A. (“Cammesa”), accounted for 28.0%, 13.8% and 11.5%,of its revenues, respectively, and its five largest customers accounted for approximately 67.4% of its revenues. For the year ended December 31, 2015, NaviosLogistics’ two largest customers, Vale and Cammesa, accounted for 27.8% and 12.9% of its revenues, respectively, and its five largest customers accountedfor approximately 61.7% of its revenues. In addition, some of Navios Logistics’ customers, including many of its most significant customers, operate theirown vessels and/or barges as well as port terminals. These customers may decide to cease or reduce the use of its services for various reasons, includingemployment of their own vessels or port terminals as applicable. The loss of any of its significant customers, including our large take-or-pay customers or thechange of the contractual terms of one of our most significant take-or-pay contracts or any significant dispute with one of these customers could materiallyadversely affect its financial condition and its results of operations.If one or more of Navios Logistics’ customers does not perform under one or more contracts with it and Navios Logistics is not able to find areplacement contract, or if a customer exercises certain rights to terminate the contract, Navios Logistics could suffer a loss of revenues that could materiallyadversely affect its business, financial condition and results of operations.Navios Logistics could lose a customer or the benefits of a contract if, among other things: • the customer fails to make payments because of its financial inability, the curtailment or cessation of its operations, disagreements withNavios Logistics or otherwise; • the customer terminates the contract because Navios Logistics fails to meet their contracted storage needs and/or the contractedoperational performance; • the customer terminates the contract because Navios Logistics fails to deliver the vessel within a fixed period of time, the vessel is lost ordamaged beyond repair, there are serious deficiencies in the vessel or prolonged off-hire, default under the contract; or • the customer terminates the contract because the vessel has been subject to seizure for more than a specified number of days.Navios Logistics could also become involved in legal disputes with customers, including but not limited to Navios 34Table of ContentsLogistics’ long-term take-or pay customers, relating to its contracts, be it through litigation, arbitration or otherwise, which could lead to delays in, orsuspension or termination of its take-or-pay contracts or others and result in time-consuming, disruptive and expensive litigation or arbitration. If suchcontracts are suspended for an extended period of time, or if a number of Navios Logistics’ material contracts are terminated or renegotiated, its financialcondition and results of operations could be materially adversely affected. Even if Navios Logistics prevail in legal disputes relating to its customercontracts, which could entitle it to compensation, Navios Logistics cannot assure you that it would receive such compensation on a timely basis or in anamount that would fully compensate Navios Logistics for its losses. For example, on March 30, 2016, Navios Logistics received written notice from Valestating that Vale will not be performing the service contract entered into between Corporacion Navios S.A. and Vale on September 27, 2013, relating to theiron ore port facility in Nueva Palmira, Uruguay. The Company initiated arbitration proceedings in London on June 10, 2016 pursuant to the disputeresolution provisions of the service contract. On December 20, 2016, a London arbitration tribunal ruled that the Vale port contract remains in full force andeffect. If Vale were to further repudiate or renounce the contract, Navios Logistics may elect to terminate the contract and then would be entitled to damagescalculated by reference to guaranteed volumes and agreed tariffs for the remaining period of the contract.Navios Logistics’ business can be affected by adverse weather conditions, effects of climate change and other factors beyond its control, that can affectproduction of the goods it transports and stores as well as the navigability of the river system on which it operates.A significant portion of Navios Logistics’ business is derived from the transportation, handling and storage of iron ore, soybeans and otheragricultural products produced in the Hidrovia region. Any drought or other adverse weather conditions, such as floods, could result in a decline inproduction of these products, which would likely result in a reduction in demand for its services. This would, in turn, negatively impact its results ofoperations and financial condition. Furthermore, Navios Logistics’ fleet operates in the Parana and Paraguay Rivers, and any changes adversely affectingnavigability of either of these rivers, such as changes in the depth of the water or the width of the navigable channel, could, in the short-term, reduce or limitits ability to effectively transport cargo on the rivers. The possible effects of climate change, such as floods, droughts or increased storm activity, couldsimilarly affect the demand for its services or its operations.For instance, a prolonged drought, the possible effects of climate change, or other turn of events that is perceived by the market to have animpact on the region, the navigability of the Parana or Paraguay Rivers or Navios Logistics’ business in general may, in the short-term, result in a reduction inthe market value of its ports, barges and pushboats that operate in the region. These barges and pushboats are designed to operate in wide and relatively calmrivers, of which there are only a few in the world. If it becomes difficult or impossible to operate profitably Navios Logistics’ barges and pushboats in theHidrovia and Navios Logistics is forced to sell them to a third party located outside of the region, there is a limited market in which it would be able to sellthese vessels, and accordingly it may be forced to sell them at a substantial loss.Navios Logistics may be unable to obtain financing for its growth or to fund its future capital expenditures, which could materially adversely affect itsresults of operations and financial condition.Navios Logistics’ capital expenditures during 2015, 2016 and 2017 were $27.0 million, $91.2 million and $46.5 million, respectively, used toacquire and/or pay installments for among others one bunker vessel, one newbuilding estuary tanker vessel, six pushboats, 72 newbuilding barges and toexpand Navios Logistics’ port terminal operations through the construction of an iron ore port terminal facility. In order to follow its current strategy forgrowth, Navios Logistics will need to fund future asset or business acquisitions, increase working capital levels and increase capital expenditures.In the future, Navios Logistics will also need to make capital expenditures required to maintain its current ports, fleet and infrastructure. Cashgenerated from its earnings may not be sufficient to fund all of these measures. Accordingly, Navios Logistics may need to raise capital through borrowingsor the sale of debt or equity securities. Navios Logistics’ ability to obtain bank financing or to access the capital markets for future offerings may be limitedby its financial condition at the time of any such financing or offering, as well as by adverse market conditions resulting from, among other things, generaleconomic conditions and contingencies and uncertainties that are beyond its control. If Navios Logistics fails to obtain the funds necessary for capitalexpenditures required to maintain its ports, fleet and infrastructure, it may be forced to take vessels out of service or curtail operations, which could materiallyharm its revenues and profitability. If Navios Logistics fails to obtain the funds that might be necessary to acquire new vessels, expand its existinginfrastructure, or increase its working capital or capital expenditures, Navios Logistics might not be able to grow its business and its earnings could suffer.Furthermore, despite covenants under the indenture governing the 2022 Logistics Senior Notes and Term Loan B Facility and the agreements governing itsother indebtedness, Navios Logistics will be permitted to incur additional indebtedness, which would limit cash available for working capital, and to serviceits indebtedness. 35Table of ContentsSpare parts or other key equipment needed for the operation of Navios Logistics’ ports and fleet may not be available off the shelf and, as a result, it mayface substantial delays, which could result in loss of revenues while waiting for those spare parts to be produced and delivered to Navios Logistics.Navios Logistics’ ports and its fleet may need spare parts to be provided in order to replace old or damaged parts in the normal course of itsoperations. Given the increased activity in the maritime industry and the industry that supplies it, the manufacturers of key equipment for Navios Logistics’vessels and its ports (such as engine makers, propulsion systems makers, control system makers and others) may not have the spare parts needed availableimmediately (or off the shelf) and may have to produce them when required. If this was the case, Navios Logistics vessels and ports may be unable to operatewhile waiting for such spare parts to be produced, delivered, installed and tested, resulting in a substantial loss of revenues for Navios Logistics.Navios Logistics owns and operates an up-river port terminal in San Antonio, Paraguay that it believes is well-positioned to become a hub for industrialdevelopment based upon the depth of the river in the area and the convergence between land and river transportation. If the port does not become a hubfor industrial development, its future prospects could be materially and adversely affected.Navios Logistics owns and operates an up-river port terminal with tank storage for refined petroleum products, oil and gas in San Antonio,Paraguay. Navios Logistics believes that the port’s location south of the city of Asuncion, the depth of the river in the area and the convergence between landand river transportation make this port well-positioned to become a hub for industrial development. However, if the location is not deemed to beadvantageous, or the use of the river or its convergence with the land is not fully utilized for transportation, then the port would not become a hub forindustrial development, and its future prospects could be materially and adversely affected.The risks and costs associated with ports as well as vessels increase as the operational port equipment and vessels age.The costs to operate and maintain a port or a vessel increase with the age of the port equipment or the vessel. Governmental regulations, safety orother equipment standards related to the age of the operational port equipment or vessels may require expenditures for alterations or the addition of newequipment to Navios Logistics’ port equipment or vessels and may restrict the type of activities in which these ports or vessels may engage. The failure tomake capital expenditures to alter or add new equipment to Navios Logistics’ barges, pushboats or vessels may restrict the type of activities in which thesebarges, pushboats and vessels may engage and may decrease their operational efficiency and increase Navios Logistics’ costs. Given the increased activity inthe maritime industry and the industry that supplies it, the manufacturers of key equipment for its vessels and ports (such as engine makers, propulsionsystems makers, control systems makers and others) may not have the spare parts needed available immediately (or off-the-shelf) and may have to producethem when required. If this was the case, Navios Logistics’ vessels and ports may be unable to operate while waiting for such spare parts to be produced,delivered, installed and tested, resulting in substantial loss of revenues for Navios Logistics. As charterers prefer newer vessels that are more fuel efficient thanolder vessels, the age of some of Navios Logistics’ vessels, barges and pushboats may make them less attractive to charterers. Cargo insurance rates alsoincrease with the age of a vessel, making older vessels less desirable to charterers as well.Navios Logistics cannot assure you that, as its operational port equipment and vessels barges and pushboats age, market conditions will justifythose expenditures or enable Navios Logistics to operate them profitably during the remainder of their useful lives. If Navios Logistics sells such assets, itmay have to sell them at a loss, or opt to scrap its assets, and if clients no longer use its ports or charter-out its vessels due to their age, its results of operationscould be materially adversely affected.As Navios Logistics expands its business, it may have difficulty managing its growth, including the need to improve its operations and financial systems,staff and crew or to receive required approvals to implement its expansion projects. If Navios Logistics cannot improve these systems, recruit suitableemployees or obtain required approvals, it may not be able to effectively control its operations.Navios Logistics intends to grow its port terminal, barge and cabotage businesses, either through land acquisition and expansion of its portfacilities, through purchases of additional vessels, through chartered-in vessels or acquisitions of other logistics and related or complementary businesses.The expansion and acquisition of new land or addition of vessels to its fleet will impose significant additional responsibilities on its management and staff,and may require Navios Logistics to increase the number of its personnel. Navios Logistics will also have to increase its customer base to provide continuedactivity for the new businesses.In addition, approval of governmental, regulatory and other authorities may be needed to implement any acquisitions or expansions. Forexample, Navios Logistics has available land within the Nueva Palmira Free Zone in Uruguay as well as near the Free Zone where it plans to expand its portfacility and construct a port terminal for liquid cargo. In order to complete these projects, however, Navios Logistics needs to receive required authorizationfrom several authorities. If these authorities deny its request for authorization, or if existing authorizations are revoked, Navios Logistics will not be able toproceed with these projects. 36Table of ContentsGrowing any business by acquisition presents numerous risks. Acquisitions expose Navios Logistics to the risk of successor liability relating toactions involving an acquired company, its management or contingent liabilities incurred before the acquisition. The due diligence Navios Logisticsconducts in connection with an acquisition, and any contractual guarantees or indemnities that it receives from the sellers of acquired companies or assetsmay not be sufficient to protect it from, or compensate it for, actual liabilities. Any material liability associated with an acquisition could adversely affectNavios Logistics’ reputation and results of operations and reduce the benefits of the acquisition. Other risks presented include difficulty in obtainingadditional qualified personnel, managing relationships with customers and suppliers and integrating newly acquired assets or operations into existinginfrastructures.Management is unable to predict whether or when any prospective acquisition will occur, or the likelihood of a certain transaction beingcompleted on favorable terms and conditions. Navios Logistics’ ability to expand its business through acquisitions depends on many factors, including itsability to identify acquisitions or access capital markets at an acceptable cost and negotiate favorable transaction terms. Navios Logistics cannot give anyassurance that it will be successful in executing its growth plans or that it will not incur significant expenses and losses in connection therewith or that itsacquisitions will perform as expected, which could materially adversely affect its results of operations and financial condition. Furthermore, because thevolume of cargo Navios Logistics ships is at or near the capacity of its existing barges during the typical peak harvest season, its ability to increase volumesshipped is limited by its ability to acquire or charter-in additional barges.With respect to Navios Logistics’ existing infrastructure, its initial operating and financial systems may not be adequate as Navios Logisticsimplements its plan to expand, and its attempts to improve these systems may be ineffective. If Navios Logistics is unable to operate its financial andoperations systems effectively or to recruit suitable employees as it expands its operations, it may be unable to effectively control and manage thesubstantially larger operation. Although it is impossible to predict what errors might occur as the result of inadequate controls, it is generally harder tomanage a larger operation than a smaller one and, accordingly, more likely that errors will occur as operations grow. Additional management infrastructureand systems will be required in connection with such growth to attempt to avoid such errors.Rising crew costs, fuel prices and other cost increases may adversely affect Navios Logistics’ profits.At December 31, 2017, Navios Logistics employed 395 land-based employees and 597 seafarers as crew on its vessels. Crew costs are asignificant expense for Navios Logistics. Recently, the limited supply of and increased demand for well-qualified crew, due to the increase in the size of theglobal shipping fleet, has created upward pressure on crewing costs, which Navios Logistics generally bears under its time and spot contracts. Additionally,labor union activity in the Hidrovia may create pressure for Navios Logistics to pay higher crew salaries and wages. In addition, fuel is one of the largestoperating expenses in Navios Logistics’ barge and cabotage businesses, when the revenue is contracted mainly by ton per cargo shipped. The prices for andavailability of fuel may be subject to rapid change or curtailment, respectively, due to, among other things, new laws or regulations, interruptions inproduction by suppliers, imposition of restrictions on energy supply by government, worldwide price levels and market conditions. Currently, most of NaviosLogistics’ long-term contracts provide for the adjustment of freight rates based on changes in the fuel prices and crew costs. Navios Logistics may be unableto include similar provisions in these contracts when they are renewed or in future contracts with new customers. To the extent Navios Logistics’ contracts donot pass-through changes in fuel prices to its clients, Navios Logistics will be forced to bear the cost of fuel price increases. Navios Logistics may hedge inthe futures market all or part of its exposure to fuel price variations. Navios Logistics cannot assure you that it will be successful in hedging its exposure. Inthe event of a default by Navios Logistics’ contractual counterparties or other circumstance affecting their performance under a contract, Navios Logisticsmay be subject to exposure under, and may incur losses in connection with, its hedging instruments, if any. In certain jurisdictions, the price of fuel isaffected by high local taxes and may become more expensive than prevailing international prices. Navios Logistics may not be able to pass onto itscustomers the additional cost of such taxes and may suffer losses as a consequence of such inability. Such increases in crew and fuel costs may materiallyadversely affect Navios Logistics’ results of operations.Navios Logistics’ industry is highly competitive, and it may not be able to compete successfully for services with new companies with greater resources.Navios Logistics provides services through its ports and employs its fleet in highly competitive markets. The river and sea coastal logisticsmarket is international in scope and Navios Logistics competes with many different companies, including other port or vessel owners and major oilcompanies.With respect to loading, storage and ancillary services, the market is divided between transits and exports, depending on the cargo origin. In thecase of transits there are other companies operating in the river system that are able to offer services similar to Navios Logistics. With respect to exports, itscompetitors are Montevideo Port in Montevideo and Ontur and TGU in Nueva Palmira. The main competitor of its liquid port terminal in Paraguay isPetropar, a Paraguayan state-owned entity. Other competitors include Copetrol, TLP, Petrobras and Trafigura Pte Ltd. 37Table of ContentsNavios Logistics faces competition in its barge and cabotage businesses with transportation of oil and refined petroleum products from otherindependent ship owners and from vessel operators. The charter markets in which its vessels compete are highly competitive. Key competitors include thesuccessor of Ultrapetrol Bahamas Ltd., Hidrovias do Brasil, Interbarge, P&O, Imperial Shipping and Fluviomar. In addition, some of its customers, includingADM, International S.A. (“Cargill”), Louis Dreyfus Holding B.V. (“Louis Dreyfus”) and Vale, have some of their own dedicated barge capacity, which theycan use to transport cargo in lieu of hiring a third party. Navios Logistics also competes indirectly with other forms of land-based transportation such as truckand rail. These companies and other smaller entities are regular competitors of Navios Logistics in its primary trading areas. Competition is primarily basedon prevailing market contract rates, vessel location and vessel manager know-how, reputation and credibility.Navios Logistics’ competitors may be able to offer their customers lower prices, higher quality service and greater name recognition than NaviosLogistics does. Accordingly, Navios Logistics may be unable to retain its current customers or to attract new customers.If Navios Logistics fails to fulfill the oil majors’ vetting processes, it could materially adversely affect the employment of its tanker vessels in the spot andperiod markets, and consequently its results of operations.While numerous factors are considered and evaluated prior to a commercial decision, the oil majors, through their association, OCIMF, havedeveloped and are implementing two basic tools: (a) the Ship Inspection Report Program (“SIRE”) and (b) the Tanker Management and Self Assessment(“TMSA”) program. The former is a ship inspection based upon a thorough Vessel Inspection Questionnaire and performed by OCIMF-accredited inspectors,resulting in a report being logged on SIRE. The report is an important element of the ship evaluation undertaken by any oil major when a commercial needexists.Based upon commercial needs, there are three levels of assessment used by the oil majors: (a) terminal use, which will clear a vessel to call at oneof the oil major’s terminals, (b) voyage charter, which will clear the vessel for a single voyage and (c) term charter, which will clear the vessel for use for anextended period of time. While for terminal use and voyage charter relationships, a ship inspection and the operator’s TMSA will be sufficient for theevaluation to be undertaken, a term charter relationship also requires a thorough office audit. An operator’s request for such an audit is by no means aguarantee one will be performed; it will take a long record of proven excellent safety and environmental protection on the operator’s part as well as highcommercial interest on the part of the oil major to have an office audit performed. If Navios Logistics fails to clear the vetting processes of the oil majors, itcould have a material adverse effect on the employment of our vessels, and, consequently, on its results of operations.Navios Logistics may employ its fleet on the spot market and thus expose itself to risk of losses based on short-term decreases in shipping rates.Navios Logistics periodically employs some of its fleet on a spot basis. As of December 31, 2017, 58% of its cabotage fleet and 34% of its bargefleet on a dwt tons basis was employed under time charter or COA contracts. The remaining percentage of its barge fleet and cabotage fleet were employed inthe spot market. The spot charter market can be competitive and freight rates within this market may be volatile with the timing and amount of fluctuations inspot rates being difficult to determine. Longer-term contracts provide income at pre-determined rates over more extended periods of time. The cycles in itstarget markets have not yet been clearly determined but Navios Logistics expects them to exhibit significant volatility as the South American marketsmature. Navios Logistics cannot assure you that it will be successful in keeping its fleet fully employed in these short-term markets, or that future spot rateswill be sufficient to enable such fleet to be operated profitably, as spot rates may decline below the operating cost of vessels. A significant decrease in spotmarket rates or its inability to fully employ its fleet by taking advantage of the spot market would result in a reduction of the incremental revenue receivedfrom spot chartering and could materially adversely affect its results of operations, and operating cash flow.Navios Logistics does not carry any strike insurance of its vessels. As a result, if Navios Logistics were to become subject to a labor strike, it may incuruninsured losses, which could have a material adverse effect on its results of operations.Navios Logistics does not currently maintain any strike insurance for its vessels. As a result, if the crew of its vessels were to initiate a laborstrike, Navios Logistics could incur uninsured liabilities and losses as a result. There can be no guarantee that Navios Logistics will be able to obtainadditional insurance coverage in the future, and even if Navios Logistics is able to obtain additional coverage, it may not carry sufficient insurance coverageto satisfy potential claims. Should uninsured losses occur, it could have a material adverse effect on its results of operations. 38Table of ContentsCertain of Navios Logistics’ directors, officers, and principal stockholders are affiliated with entities engaged in business activities similar to thoseconducted by Navios Logistics which may compete directly with it, causing such persons to have conflicts of interest.Some of Navios Logistics’ directors, officers and principal stockholders have affiliations with entities that have similar business activities tothose conducted by Navios Logistics. In addition, certain of Navios Logistics’ directors are also directors of shipping companies and they may enter similarbusinesses in the future. These other affiliations and business activities may give rise to certain conflicts of interest in the course of such individuals’affiliation with Navios Logistics. Although Navios Logistics does not prevent its directors, officers and principal stockholders from having such affiliations,Navios Logistics uses its best efforts to cause such individuals to comply with all applicable laws and regulations in addressing such conflicts of interest.Navios Logistics’ officers and employee directors devote their full time and attention to its ongoing operations, and its non-employee directors devote suchtime as is necessary and required to satisfy their duties as directors of a company.Navios Logistics’ success depends upon its management team and other employees, and if it is unable to attract and retain key management personnel andother employees, its results of operations may be negatively impacted.Navios Logistics’ success depends to a significant extent upon the abilities and efforts of its management team and its ability to retain them. Inparticular, many members of its senior management team, including its Chairman, its Chief Executive Officer, its Chief Financial Officer, its Chief OperatingOfficers and its Chief Commercial Officer, have extensive experience in the logistics and shipping industries. If Navios Logistics was to lose their services forany reason, it is not clear whether any available replacements would be able to manage its operations as effectively. The loss of any of the members of itsmanagement team could impair Navios Logistics’ ability to identify and secure vessel contracts, to maintain good customer relations and to otherwisemanage its business, which could have a material adverse effect on its financial performance and its ability to compete. Navios Logistics does not maintainkey man insurance on any of its officers. Further, the efficient and safe operation of its fleet and ports requires skilled and experienced crew members andemployees. Difficulty in hiring and retaining such crew members and employees could adversely affect its results of operations.Risks Relating to ArgentinaArgentine government actions concerning the economy, including decisions with respect to inflation, interest rates, price controls, foreignexchange controls, wages and taxes, restrictions on production, imports and exports, have had and could continue to have a material adverse effect on NaviosLogistics. Navios Logistics cannot provide any assurance that future economic, social and political developments in Argentina, over which it has no control,will not impair its business, financial condition or results of operations, the guarantees or the market price of the 2022 Logistics Senior Notes.The future economic and political environment of Argentina is uncertain.The administration that took office in Argentina on December 10, 2015 has announced and implemented several significant economic andpolicy reforms, including reforms to the foreign exchange market in order to provide greater flexibility and easier access to the foreign exchange market.Likewise, export duties on several agricultural products and export duties on most industrial and mining exports were eliminated.We can offer no assurances as to the policies that may be implemented by the new Argentine administration, or that political developments orsocial unrest in Argentina will not adversely affect our financial condition and results of operations.The continuing inflation may have material adverse effects on the Argentine economy.In the past, Argentina has experienced periods of high inflation. Inflation has increased since 2005 and remained relatively high for more than adecade. The reliability of INDEC’s statistics has been widely questioned. In February 2013, the IMF censured Argentina for its inaccurate financial statistics.In response, in 2014, INDEC adopted the IPCNu, an improved methodology for calculating the CPI, and estimated the 2014 CPI to be 23.9%.However, the current administration as one of its first measures declared a state of administrative emergency, suspending momentarily thepublication of all indexes until the INDEC is capable of accurately calculating such indexes. During this suspension period, the inflation rate was informedthrough data provided by the City of Buenos Aires and the province of San Luis.On July 15, 2016, INDEC published its inflation index again, indicating that the CPI showed, for June, July, August, September, October,November and December of 2016, variations of 3.1%, 2%, 0.2%, 1.1%, 2.4%, 1.6% and 1.2% compared to previous month, respectively. Furthermore,according to the most recent publicly available information, the inflation rate was 24.8% for the year 2017. 39Table of ContentsOn the other hand, INDEC published the index of poverty and indigence, which estimated that poverty reaches 28.6% of Argentines andindigence, 6.2% during the first semester of 2017.As a result of the readjustment of INDEC indexes, the IMF Executive Board announced, on November 9, 2016, the lifting of the censorshipimposed on Argentina in 2013 due to lack of consistency in its statistical data.Over the last few years, the Argentine government has implemented certain programs aimed at controlling inflation and monitoring the prices ofmany goods and services, including price agreements between the Argentine government and private sector companies.The increase in wages and public spending, the adjustment of some utility tariffs and the expiration of the price agreements signed by theArgentine government could have a direct influence on inflation. In the past, inflation undermined the Argentine economy substantially, as well as theability of the Argentine government to create conditions leading to growth. In turn, because part of the Argentine debt is adjusted by the ReferenceStabilization Coefficient (“CER”), strongly related to inflation, its increase would have a negative effect on the level of public indebtedness.A high inflation economy could undermine Argentina’s cost competitiveness abroad if not offset by a devaluation of the Argentine peso, whichcould also negatively affect economic activity and employment levels. While most of the client contracts of Navios Logistics’ Argentine subsidiaries aredenominated in U.S. dollars, freight under those contracts is collected in Argentine pesos at the prevailing exchange rate. These contracts also include crewcost adjustment terms. Uncertainty about future inflation may contribute to slowdown or contraction in economic growth. Argentine inflation rate volatilitymakes it impossible to estimate with reasonable certainty the extent to which activity levels and results of operations of Navios Logistics’ Argentinesubsidiaries could be affected by inflation and exchange rate volatility in the future.The Argentine Central Bank has imposed restrictions on the transfer of funds outside of Argentina and other exchange controls in the past and may do soin the future, which could prevent Navios Logistics’ Argentine subsidiaries from transferring funds for the payment of the 2022 Logistics Senior Notes orthe related guarantees.In 2001 and during the first half of 2002, Argentina experienced a massive withdrawal of deposits from the Argentine financial system in a shortperiod of time, which precipitated a liquidity crisis within the Argentine financial system, which prompted the Argentine government to impose exchangecontrols and restrictions on the ability of depositors to withdraw their deposits. Despite the reduction on some of these restrictions in the following years,significant government controls and restrictions remained in place.In December 2015, the Argentine government implemented several reforms to the foreign exchange market regulations and provided easieraccess to the foreign exchange market for individuals and companies. Consequently, as from December 17, 2015, the new financial indebtedness transactionsabroad of the non-financial private sector, financial sector and local governments will not be subject to the obligation to bring to and liquidate funds in theMULC (the single and free floating foreign exchange market). Fund liquidation at MULC (the single and free floating foreign exchange market) will be acondition precedent for the further access to that market so as to cater for capital and interest services. If the funding enters local accounts in foreign currencyin the country, the liquidation of the funds deposited will need to be evidenced.Additionally, pursuant to recent regulations, financial indebtedness taken through the MULC and financial debt rollovers with non-residents inthe financial sector and non-financial private sector will not need to meet a minimum period of stay, and may be canceled at any time.Some remaining controls and restrictions, and any additional restrictions of this kind that may be imposed in the future, could impair NaviosLogistics ability to transfer funds generated by its Argentine operations in U.S. dollars outside Argentina to it for the payment of its indebtedness. In addition,any other restrictions or requirements, that may be imposed in the future, expose Navios Logistics to the risk of losses arising from fluctuations in theexchange rate of the Argentine peso.The Argentine government has made certain changes to its tax rules that affected Navios Logistics’ operations in Argentina in the past, and could furtherincrease the fiscal burden on its operations in Argentina in the future.Since 1992, the Argentine government has not permitted the application of an inflation adjustment on the value of fixed assets for tax purposes.Since the substantial devaluation of the Argentine peso in 2002, the amounts that the Argentine tax authorities permit Navios Logistics to deduct asdepreciation for its past investments in plant, property and equipment have been substantially reduced, resulting in a higher effective income tax charge.However, in December 2016, a reform to the Income Tax Law was passed by the National Congress. Some of the main modifications were:(i) personal deductions were raised; (ii) a new scale of aliquots was established, including a greater number of tranches and beginning taxing with a 5%aliquot; (iii) new deductions were established for per diem and room rent; (iv) extra amounts 40Table of Contentspaid to employees in the form of overtime for services on national holidays, non-business days and weekends is exempt from income tax; and (v) theupdating of the Average Taxable Compensation for Government Employees (RIPTE) was established as of fiscal year 2018, with respect to personaldeduction amounts and tax tranches. In order to finance the reduction of tax resources that these reforms will entail, an indirect tax on on-line betting and anextraordinary tax on US dollar futures transactions were created; in addition, the figure of the surrogate decision-maker in Value Tax Added in relation tooperations involving external subjects was established.If the Argentine government decides to alter the tax burden on Navios Logistics’ operations in Argentina, its results of operations and financialcondition could be materially and adversely affected.The Argentine economy could be adversely affected by economic developments in other global markets.Argentina’s economy is vulnerable to external shocks that could be caused by adverse developments affecting its principal trading partners. Asignificant decline in the economic growth of any of Argentina’s major trading partners (including Brazil, the EU, China and the U.S.) could have a materialadverse impact on Argentina’s balance of trade and could adversely affect Argentina’s economic growth. In particular, Brazil’s economy, which isArgentina’s largest export market and its principal source of imports, is currently experiencing heightened negative pressure due to the uncertaintiesstemming from ongoing political crises, including the corruption investigations and allegations and criminal convictions involving certain politicians. TheBrazilian economy declined by 3.6% during 2016. In addition, the Brazilian currency lost approximately 17.7% of its value relative to the U.S. dollar in2016. Brazilian demand for Argentine exports has generally declined over the past five years and further deterioration of economic conditions in Brazil mayincreasingly reduce demand for Argentine exports and create advantages for Brazilian imports. Further adverse developments in the Brazilian political andeconomic crisis may have further negative effects on the Argentine economy and our operations.Argentina may also be affected by other countries that have influence over world economic cycles. If interest rates rise significantly in developedeconomies, including the U.S., emerging market economies, including Argentina, could find it increasingly challenging and expensive to borrow capital andrefinance existing debt, which could negatively affect their economic growth.Future policies of the Argentine government may affect the economy as well as Navios Logistics’ operations.During past years, the Argentine government took several actions to re-nationalize concessions and public services companies that wereprivatized in the 1990’s, such as Aguas Argentinas S.A. and Aerolíneas Argentinas S.A. On May 3, 2012, expropriation law 26,741 was passed by theArgentine Congress, providing for the expropriation of 51% of the share capital of YPF S.A., represented by an identical stake of Class D shares owned,directly or indirectly, by Repsol YPF and its controlled or controlling entities, which have been declared of public interest. The Argentine government madean offer to compensate Repsol YPF for around $5.0 billion, which was accepted by the Board of Directors and shareholders of Repsol YPF and confirmed bythe Argentine Congress. Although the current administration has not implemented or advocated any nationalization or expropriation measures, similarmeasures, such as mandatory renegotiation or modification of existing contracts, new taxation policies, changes in laws, regulations and policies affectingforeign trade, investment, among others, that may be adopted by the Argentine government in the future could adversely affect Navios Logistics’ business,financial condition and results of operations.Risks Relating to Uruguayan Free Zone RegulationCertain of Navios Logistics’ subsidiaries in Uruguay are operating as direct free trade zone users under an agreement with the Free Zone Divisionof the Uruguayan General Directorate of Commerce allowing them to operate in isolated public and private areas within national borders and to enjoy taxexemptions and other benefits, such as a generic exemption on present and future national taxes including the Corporate Income Tax, Value-Added Tax andWealth Tax. Other benefits that Navios Logistics’ subsidiaries enjoy are simplified corporate law provisions, the ability to negotiate preferential publicutility rates with government agencies and government guarantees of maintenance of such benefits and tax exemptions. Free trade zone users do not need topay import and export tariffs to introduce goods from abroad to the free trade zone, to transfer or send such goods to other free trade zones in Uruguay or sendthem abroad. However, Navios Logistics’ subsidiaries may lose all the tax benefits granted to them if they breach or fail to comply with the free trade zonecontracts or framework, including exceeding the limit on non-Uruguayan employees or engaging in industrial, commercial or service activities outside of afree trade zone in Uruguay. In this case, Navios Logistics’ subsidiaries may continue with their operations from the free zone, but under a different tax regime. 41Table of ContentsOther Risks Relating to the Countries in which Navios Logistics’ OperatesNavios Logistics is an international company that is exposed to the risks of doing business in many different, and often less developed and emergingmarket countries.Navios Logistics is an international company and conducts all of its operations outside of the U.S., and expects to continue doing so for theforeseeable future. These operations are performed in countries that are historically less developed and stable than the U.S., such as Argentina, Brazil, Bolivia,Paraguay and Uruguay.Some of the other risks Navios Logistics is generally exposed to through its operations in emerging markets include among others: • political and economic instability, changing economic policies and conditions, and war and civil disturbances; • recessions in economies of countries in which Navios Logistics has business operations; • frequent government interventions into the country’s economy, including changes to monetary, fiscal and credit policy; • the imposition of additional withholding, income or other taxes, or tariffs or other restrictions on foreign trade or investment, includingcurrency exchange controls and currency repatriation limitations; • the modification of Navios Logistics’ status or the rules and regulations relating to the international tax-free trade zone in which itoperates its dry port; • the imposition of executive and judicial decisions upon Navios Logistics’ vessels by the different governmental authorities associatedwith some of these countries; • the imposition of or unexpected adverse changes in foreign laws or regulatory requirements; • longer payment cycles in foreign countries and difficulties in collecting accounts receivable; • difficulties and costs of staffing and managing its foreign operations; • compliance with anti-bribery laws; and • acts of terrorism.These risks may result in unforeseen harm to Navios Logistics’ business and financial condition. Also, some of its customers are headquartered inSouth America, and a general decline in the economies of South America, or the instability of certain South American countries and economies, couldmaterially adversely affect Navios Logistics.Navios Logistics’ business in emerging markets requires it to respond to rapid changes in market conditions in these countries. Navios Logistics’overall success in international markets depends, in part, upon its ability to succeed in different legal, regulatory, economic, social and political conditions.Navios Logistics may not continue to succeed in developing and implementing policies and strategies that will be effective in each location where it doesbusiness. Furthermore, the occurrence of any of the foregoing factors may have a material adverse effect on its business and results of operations.The governments of Argentina, Bolivia, Brazil, Paraguay and Uruguay have entered into a treaty that commits each of them to participate in a regionalinitiative to integrate the region’s economies. There is no guarantee that such an initiative will be successful or that each of the governments involved inthe initiative will follow through on its intentions to participate and if such regional initiative is unsuccessful, it could have a material adverse impact onNavios Logistics’ results of operations.The governments of Argentina, Bolivia, Brazil, Paraguay and Uruguay have entered into a treaty that commits each of them to participate in aregional initiative to integrate the region’s economies, a central component of which is water transportation in the Hidrovia. Although Navios Logisticsbelieves that this regional initiative of expanding navigation on the Hidrovia river system will result in significant economic benefits, there is no guaranteethat such an initiative will ultimately be successful, that each country will follow through on its intention to participate, or that the benefits of this initiativewill match Navios Logistics’ expectations of continuing growth in the Hidrovia or reducing transportation costs. If the regional initiative is unsuccessful,Navios Logistics’ results of operations could be materially and adversely affected. 42Table of ContentsChanges in rules and regulations with respect to cabotage or their interpretation in the markets in which Navios Logistics’ operate could have a materialadverse effect on its results of operations.In the markets in which Navios Logistics currently operates, in cabotage or regional trades, it is subject to restrictive rules and regulations on aregion by region basis. Its operations currently benefit from these rules and regulations or their interpretation. For instance, preferential treatment is extendedin Argentine cabotage for Argentine flagged vessels or foreign flagged vessels operated by local established operators with sufficient Argentine tonnageunder one to three years’ licenses, including its Argentine cabotage vessels. Changes in cabotage rules and regulations or in their interpretation may have anadverse effect on Navios Logistics’ current or future cabotage operations, either by becoming more restrictive (which could result in limitations to theutilization of some of its vessels in those trades) or less restrictive (which could result in increased competition in these markets).Because Navios Logistics generates the majority of its revenues in U.S. dollars but incurs a significant portion of its expenses in other currencies, exchangerate fluctuations could cause it to suffer exchange rate losses, thereby increasing expenses and reducing income.Navios Logistics engages in regional commerce with a variety of entities. Although its operations expose Navios Logistics to certain levels offoreign currency risk, its revenues are predominantly U.S. dollar-denominated at the present. Additionally, Navios Logistics’ South American subsidiariestransact certain operations in Uruguayan pesos, Paraguayan guaranies, Argentinean pesos and Brazilian reals; however, all of the subsidiaries’ primary cashflows are U.S. dollar-denominated. Currencies in Argentina and Brazil have fluctuated significantly against the U.S. dollar in the past. As of December 31,2017, 2016 and 2015 approximately 60.3%, 61.1% and 61.9%, respectively, of its expenses were incurred in currencies other than U.S. dollars. Transactionsin currencies other than the functional currency are translated at the exchange rate in effect at the date of each transaction. Expenses incurred in foreigncurrencies against which the U.S. dollar falls in value can increase, thereby decreasing Navios Logistics’ income. A greater percentage of Navios Logistics’transactions and expenses in the future may be denominated in currencies other than U.S. dollars. As part of its overall risk management policy, NaviosLogistics may attempt to hedge these risks in exchange rate fluctuations from time to time but cannot guarantee it will be successful in these hedgingactivities. Future fluctuations in the value of local currencies relative to the U.S. dollar in the countries in which it operates may occur, and if suchfluctuations were to occur in one or a combination of the countries in which it operates, its results of operations or financial condition could be materiallyadversely affected.Tax RisksWe may earn U.S. source income that is subject to tax, thereby adversely affecting our results of operations and cash flows.Under the Code, 50.0% of the gross shipping income of a vessel owning or chartering corporation that is attributable to transportation that eitherbegins or ends, but that does not both begin and end, in the U.S. is characterized as U.S.-source shipping income. U.S.-source shipping income generally issubject to a 4.0% U.S. federal income tax without allowance for deduction or, if such U.S.-source shipping income is effectively connected with the conductof a trade or business in the U.S., U.S. federal corporate income tax (the highest statutory rate presently is 21.0%) as well as a branch profits tax (presentlyimposed at a 30.0% rate on effectively connected earnings), unless that corporation qualifies for exemption from tax under Section 883 of the Code. Webelieve that we and each of our subsidiaries qualifies and will continue to qualify for the foreseeable future for this statutory tax exemption underSection 883 with respect to our U.S.-source shipping income, provided that our common stock continues to be listed on the NYSE and represents more than50.0% of the total combined voting power of all classes of our stock entitled to vote and of the total value of our stock, and less than 50.0% of our commonstock is owned, actually or constructively under specified stock attribution rules, on more than half the number of days in the relevant year by persons whoeach own 5.0% or more of the vote and value of our common stock. Our ability to qualify for the exemption at any given time will depend uponcircumstances related to the ownership of our common stock at such time and thus are beyond our control. Furthermore, our board of directors coulddetermine that it is in our best interests to take an action that would result in this tax exemption not applying to us in the future. Accordingly, we can give noassurance that we would qualify for the exemption under Section 883 with respect to any such income we earn. If we were not entitled to the Section 883exemption for any taxable year, we generally would be subject to a 4.0% U.S. federal gross income tax with respect to our U.S.-source shipping income or, ifsuch U.S. source shipping income were effectively connected with the conduct of a trade or business in the U.S., U.S. federal corporate income tax as well as abranch profits tax for those years. As a result, depending on the trading patterns of our vessels, we could become liable for tax, and our net income and cashflow could be adversely affected. Please see the discussion under “Taxation—Material U.S. Federal Income Tax Considerations—U.S. Federal IncomeTaxation of the Company—Taxation of Our Shipping Income.” 43Table of ContentsNavios Holdings may be taxed as a U.S. corporation.The purchase by International Shipping Enterprises Inc. (“ISE”), our predecessor, of all of the outstanding shares of common stock of NaviosHoldings, and the subsequent downstream merger of ISE with and into Navios Holdings took place on August 25, 2005. Navios Holdings is incorporatedunder the laws of the Republic of the Marshall Islands. ISE received an opinion from its counsel for the merger transaction that, while there is no directauthority that governs the tax treatment of the transaction, it was more likely than not that Navios Holdings would be taxed by the U.S. as a foreigncorporation. Accordingly, we take the position that Navios Holdings will be taxed as a foreign corporation by the U.S.. If Navios Holdings were to be taxed asa U.S. corporation, its taxes would be significantly higher than they are currently.A change in tax laws, treaties or regulations, or their interpretation, of any country in which we operate our business could result in a high tax rate on ourworldwide earnings, which could result in a significant negative impact on our earnings and cash flows from operations.We are an international company that conducts business throughout the world. Tax laws and regulations are highly complex and subject tointerpretation. Consequently, we are subject to changing tax laws, treaties and regulations in and between countries in which we operate. Our income taxexpense is based upon our interpretation of tax laws in effect in various countries at the time that the expense was incurred. A change in these tax laws,treaties or regulations, or in the interpretation thereof, or in the valuation of our deferred tax assets, could result in a materially higher tax expense or a highereffective tax rate on our worldwide earnings, and such change could be significant to our financial results. If any tax authority successfully challenges ouroperational structure, intercompany pricing policies or the taxable presence of our key subsidiaries in certain countries, or if the terms of certain income taxtreaties are interpreted in a manner that is adverse to our structure, or if we lose a material tax dispute in any country, our effective tax rate on our worldwideearnings from our operations could increase substantially and our earnings and cash flows from these operations could be materially adversely affected. Forexample, in 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 Greek state, which are calculated on the basis of the relevant vessel’s tonnage. Thepayment of said duties exhausts the tax liability of the foreign ship owning company and the relevant manager against any tax, duty, charge or contributionpayable on income from the exploitation of the foreign flagged vessel.We and our subsidiaries may be subject to taxation in the jurisdictions in which we and our subsidiaries conduct business. Such taxation wouldresult in decreased earnings available to our stockholders.Investors are encouraged to consult their own tax advisors concerning the overall tax consequences of the ownership of our common stockarising in an investor’s particular situation under U.S. federal, state, local and foreign law.U.S. tax authorities could treat us as a “passive foreign investment company,” which could have adverse U.S. federal income tax consequences to U.S.holders.A foreign corporation will be treated as a PFIC, for U.S. federal income tax purposes if either (1) at least 75% of its gross income for any taxableyear consists of certain types of “passive income” or (2) at least 50% of the quarterly average value of the corporation’s assets produce or are held for theproduction of those types of “passive income.” For purposes of these tests, “passive income” includes dividends, interest, capital gains and rents (other thanrents derived other than in the active conduct of a rental business). For purposes of these tests, income derived from the performance of services does notconstitute “passive income.” U.S. stockholders of a PFIC are subject to a disadvantageous U.S. federal income tax regime with respect to the income derivedby the PFIC, the distributions they receive from the PFIC and the gain, if any, they derive from the sale or other disposition of their shares in the PFIC andadditional tax filing obligations.Based upon our actual and projected income, assets and activities, we believe that we should not be a PFIC for our taxable year endedDecember 31, 2017 or for subsequent taxable years. Based upon our operations as described herein, our income from time charters should not be treated aspassive income for purposes of determining whether we are a PFIC. Accordingly, our income from our time chartering activities should not constitute“passive income,” and the assets that we own and operate in connection with the production of that income should not constitute passive assets.There is substantial legal authority supporting this position consisting of case law and U.S. Internal Revenue Service, or IRS, pronouncementsconcerning the characterization of income derived from time charters and voyage charters as services income for other tax purposes. However, it should benoted that there is also authority, which characterizes time charter income as rental income rather than services income for other tax purposes. Accordingly,no assurance can be given that the IRS or a court of law will accept this position and there is a risk that the IRS or a court of law could determine that we are aPFIC. In addition, no assurance can be given as to our current and future PFIC status, because such status requires an annual factual determination based uponthe composition of our income and assets for the entire taxable year. The PFIC determination also depends on the application of complex U.S. federal incometax rules concerning the classification of our income and assets for this purpose, and there are legal uncertainties involved in determining 44Table of Contentswhether the income derived from our chartering activities and from our logistics activities constitutes rental income or income derived from the performanceof services. We have not sought, and we do not expect to seek, an IRS ruling on this issue. As a result, the IRS or a court could disagree with our position. Inaddition, although we intend to conduct our affairs in a manner to avoid, to the extent possible, being classified as a PFIC with respect to any taxable year, wecannot assure you that the nature of our operations, or the nature or composition of our income or assets, will not change in the future, or that we can avoidPFIC status in the future.If the IRS were to find that we are or have been a PFIC for any taxable year, our U.S. stockholders would face adverse U.S. federal income taxconsequences and certain information reporting requirements. Under the PFIC rules, unless those stockholders make an election available under the Code(which election could itself have adverse consequences for such stockholders, and which election may not be available if our common stock were to cease tobe listed on the NYSE), such stockholders would be liable to pay U.S. federal income tax at the then prevailing ordinary income tax rates, plus interest, uponexcess distributions and upon any gain from the disposition of their shares of common stock, as if the excess distribution or gain had been recognized ratablyover the stockholder’s holding period of the common stock. In addition, for each year during which we are treated as a PFIC and you actually orconstructively own our common stock you generally will be required to file IRS Form 8621 with your U.S. federal income tax return to report certaininformation concerning your ownership of our common stock. Please see the discussion under “Taxation—Material U.S. Federal Income Tax Considerations— Taxation of U.S. Holders of our Common Stock — Passive Foreign Investment Company Status.”Item 4. Information on the CompanyA. History and Development of the CompanyThe legal and commercial name of the Company is Navios Maritime Holdings Inc. The Company’s office and principal place of business islocated at 7 Avenue de Grande Bretagne, Office 11B2, Monte Carlo, MC 98000 Monaco, and its telephone number is (011) + (377) 9798-2140. TheCompany is a corporation incorporated under the BCA and the laws of the Republic of the Marshall Islands. Trust Company of the Marshall Islands, Inc.serves as the Company’s agent for service of process, and the Company’s registered address, as well as address of its agent for service of process, is TrustCompany Complex, Ajeltake Island P.O. Box 1405, Majuro, Marshall Islands MH96960.On August 25, 2005, pursuant to a Stock Purchase Agreement dated February 28, 2005, as amended, by and among ISE, Navios Holdings, and allthe shareholders of Navios Holdings, ISE acquired Navios Holdings through the purchase of all of the outstanding shares of common stock of NaviosHoldings. As a result of this acquisition, Navios Holdings became a wholly-owned subsidiary of ISE. In addition, on August 25, 2005, simultaneously withthe acquisition of Navios Holdings, ISE effected a reincorporation from the State of Delaware to the Republic of the Marshall Islands through a downstreammerger with and into its newly acquired wholly-owned subsidiary, whose name was and continued to be Navios Maritime Holdings Inc.The Company operates a fleet of owned Capesize, Panamax, Ultra Handymax and Handysize vessels and a fleet of time chartered Capesize,Panamax, Ultra Handymax and Handysize vessels that are employed to provide worldwide transportation of bulk commodities. Navios Holdings is a global,vertically integrated seaborne shipping and logistics company focused on the transport and transshipment of dry bulk commodities including iron ore, coaland grain. For over 60 years, Navios Holdings has had in-house technical ship management expertise that has worked with producers of raw materials,agricultural traders and exporters, industrial end-users, ship owners and charterers.Navios LogisticsNavios Logistics is one of the largest logistics companies in the Hidrovia region of South America, focusing on the Hidrovia river system, themain navigable river system in the region, and on cabotage trades along the eastern coast of South America. Navios Logistics is focused on providing itscustomers integrated transportation, storage and related services through its port facilities, its large, versatile fleet of dry and liquid cargo barges and itsproduct tankers. Navios Logistics serves the needs of a number of growing South American industries, including mineral and grain commodity providers aswell as users of refined petroleum products.On January 1, 2008, pursuant to a share purchase agreement, Navios Holdings contributed cash, and the authorized capital stock of its wholly-owned subsidiary Corporacion Navios Sociedad Anonima (“CNSA”) in exchange for the issuance and delivery of 63.8% of Navios Logistics’ outstandingstock. Navios Logistics acquired all ownership interests in the Horamar Group (“Horamar”) in exchange for cash, and the issuance of 36.2% of NaviosLogistics’ outstanding stock. As of December 31, 2017, Navios Holdings owned 63.8% of Navios Logistics. 45Table of ContentsAffiliates (not consolidated under Navios Holdings)Navios PartnersNavios Partners (NYSE:NMM) is an international owner and operator of dry cargo vessels and is engaged in the seaborne transportation servicesof a wide range of dry cargo commodities including iron ore, coal, grain, fertilizer and also containers, chartering its vessels under medium to long-termcharters.On August 7, 2007, Navios Holdings formed Navios Partners under the laws of Marshall Islands. Navios GP L.L.C., or the general partner, awholly-owned subsidiary of Navios Holdings, was also formed on that date to act as the general partner of Navios Partners and received a 2.0% generalpartner interest in Navios Partners.On or prior to the closing of Navios Partners’ initial public offering, or IPO, in November 2007, Navios Holdings entered into certain agreementswith Navios Partners: (a) a management agreement with Navios Partners pursuant to which Navios Shipmanagement Inc. (the “Manager”) , a wholly-ownedsubsidiary of Navios Holdings, provides Navios Partners with commercial and technical management services; (b) an administrative services agreement withthe Manager pursuant to which the Manager provides Navios Partners administrative services; and (c) an omnibus agreement with Navios Partners,governing, among other things, when Navios Partners and Navios Holdings may compete against each other as well as rights of first offer on certain dry bulkcarriers.Since the formation of Navios Partners, Navios Holdings sold in total ten vessels to Navios Partners (the Navios Hope, the Navios Apollon, theNavios Hyperion, the Navios Aurora II, the Navios Fulvia, the Navios Melodia, the Navios Pollux, the Navios Luz, the Navios Orbiter and the Navios BuenaVentura) and also sold the rights of Navios Sagittarius to Navios Partners. All vessels were sold in exchange of cash and 5,601,920 common units of NaviosPartners in total.As of December 31, 2017, Navios Holdings’ interest in Navios Partners was 20.8% (including 2.0% general partner interest).Navios AcquisitionNavios Acquisition (NYSE:NNA) is an owner and operator of tanker vessels focusing on the transportation of petroleum products (clean anddirty) and bulk liquid chemicals.On July 1, 2008, Navios Acquisition completed its IPO. On May 28, 2010, Navios Acquisition consummated the vessel acquisition, whichconstituted its initial business combination. Following such transaction, Navios Acquisition commenced its operations as an operating company. On thatdate, Navios Holdings acquired control over Navios Acquisition, and consequently concluded a business combination had occurred and consolidated theresults of Navios Acquisition from that date until March 30, 2011.On May 28, 2010, Navios Holdings entered into (a) a management agreement with Navios Acquisition pursuant to which Navios TankersManagement Inc. (the “Tankers Manager”) provides Navios Acquisition commercial and technical management services; (b) an administrative servicesagreement with the Tankers Manager pursuant to which the Tankers Manager provides Navios Acquisition administrative services and is in turn reimbursedfor reasonable costs and expenses; and (c) an omnibus agreement with Navios Acquisition and Navios Partners (the “Acquisition Omnibus Agreement”) inconnection with the closing of Navios Acquisition’s vessel acquisition, governing, among other things, competition and rights of first offer on certain typesof vessels and businesses.On March 30, 2011, Navios Holdings exchanged 7,676,000 shares of Navios Acquisition common stock it held for 1,000 shares of non-votingSeries C Convertible Preferred Stock of Navios Acquisition and had 45.0% of the voting power and 53.7% of the economic interest in Navios Acquisition,since the preferred stock is considered, in substance, common stock for accounting purposes. From March 30, 2011, Navios Acquisition has been consideredas an affiliate entity of Navios Holdings and not as a controlled subsidiary of the Company.In February, May and September 2013, Navios Acquisition completed multiple offerings, including registered direct offerings and privateplacements to Navios Holdings and certain members of the management of Navios Acquisition, Navios Partners and Navios Holdings. A total of 94,097,529shares were issued. As part of these offerings, Navios Holdings purchased in private placements an aggregate of 46,969,669 shares of Navios Acquisitioncommon stock for $160.0 million. In February 2014, Navios Acquisition completed a public offering of 14,950,000 shares of its common stock.As of December 31, 2017, Navios Holdings’ ownership of the outstanding voting stock of Navios Acquisition was 42.9% and its economicinterest in Navios Acquisition was 46.2%. 46Table of ContentsNavios Europe INavios Europe I is engaged in the marine transportation industry through the ownership of five tanker and five container vessels.On October 9, 2013, Navios Holdings, Navios Acquisition and Navios Partners established Navios Europe I under the laws of Marshall Islandsand have economic interests of 47.5%, 47.5% and 5.0%, respectively and effective from November 2014, voting interests of 50%, 50% and 0%, respectively.On December 18, 2013, Navios Europe I acquired ten vessels for aggregate consideration consisting of (i) cash (which was funded with the proceeds of seniorloan facilities (the “Senior Loans I”) and loans aggregating to $10.0 million from Navios Holdings, Navios Acquisition and Navios Partners (in each case, inproportion to their economic interests in Navios Europe I) (collectively, the “Navios Term Loans I”) and (ii) the assumption of a junior participating loanfacility (the “Junior Loan I”). In addition to the Navios Term Loans I, Navios Holdings, Navios Acquisition and Navios Partners also made available toNavios Europe I revolving loans of up to $24.1 million to fund working capital requirements (collectively, the “Navios Revolving Loans I”)..Refer also to “Item 5. Operating and Financial Review and Prospects” in “Recent Developments”.Navios MidstreamNavios Midstream (NYSE: NAP) is a publicly traded master limited partnership which owns and operates crude oil tankers under long-termemployment contracts.On October 13, 2014, Navios Acquisition formed Navios Midstream under the laws of the Marshall Islands. Navios Maritime Midstream PartnersGP LLC, or the Midstream General Partner, a wholly-owned subsidiary of Navios Acquisition, was also formed on that date to act as the general partner ofNavios Midstream and received a 2.0% general partner interest in Navios Midstream.As of December 31, 2017, and following the completion of the Navios Midstream’s IPO in November 2014 and the issuance of 1,592,920 ofSubordinated Series A Units to Navios Acquisition in June 2015, Navios Acquisition had 59.0% interest and Navios Holdings had indirect economic interestof 27.2% (through its ownership in Navios Acquisition) and no direct equity interest.On or prior to the closing of Navios Midstream’s IPO, Navios Holdings entered into certain agreements with Navios Midstream: (a) amanagement agreement with Navios Midstream pursuant to which the Tankers Manager, a wholly-owned subsidiary of Navios Holdings, provides NaviosMidstream with commercial and technical management services; (b) an administrative services agreement with the Tankers Manager pursuant to which theTankers Manager provides Navios Midstream administrative services; and (c) an omnibus agreement with Navios Midstream, Navios Acquisition and NaviosPartners, governing, among other things, when Navios Holdings, Navios Acquisition and Navios Partners may compete with Navios Midstream.At the same time, Navios Holdings entered into an option agreement with Navios Acquisition, which expires on November 18, 2024, underwhich Navios Acquisition, which owns and controls Midstream General Partner, granted Navios Holdings the option to acquire a minimum of 25.0% of theoutstanding membership interests in Midstream General Partner, and the incentive distribution rights in Navios Midstream at fair value. As of December 31,2017, Navios Holdings had not exercised any part of that option.Navios Europe IINavios Europe II is engaged in the marine transportation industry through the ownership of seven dry bulkers and seven container vessels.On February 18, 2015, Navios Holdings, Navios Acquisition and Navios Partners established Navios Europe II under the laws of Marshall Islandsand have economic interests of 47.5%, 47.5% and 5.0%, respectively, and voting interests of 50.0%, 50.0% and 0%, respectively. From June 8, 2015 throughDecember 31, 2015, Navios Europe II acquired 14 vessels for aggregate consideration consisting of: (i) cash (which was funded with the proceeds of a seniorloan facility (the “Senior Loans II”) and loans aggregating to $14.0 million from Navios Holdings, Navios Acquisition and Navios Partners (in each case, inproportion to their economic interests in Navios Europe II) (collectively, the “Navios Term Loans II”) and (ii) the assumption of a junior participating loanfacility (the “Junior Loan II”). In addition to the Navios Term Loans II, Navios Holdings, Navios Acquisition and Navios Partners will also make available toNavios Europe II revolving loans up to $43.5 million to fund working capital requirements (collectively, the “Navios Revolving Loans II”). In March 2017,the amount of the Navios Revolving Loans II increased by $14.0 million.Navios ContainersNavios Containers is a growth vehicle dedicated to the container sector of the maritime industry. On June 8, 2017, Navios 47Table of ContentsContainers completed a private placement and Navios Holdings invested $5.0 million. Navios Containers registered its shares on the NorwegianOver-The-Counter Market (N-OTC) on June 12, 2017 under the ticker “NMCI”. On August 29, 2017 and on November 9, 2017, Navios Containers closedadditional private placements.As of December 31, 2017, Navios Holdings owned 3.4% of Navios Containers’ common stock and warrants, representing 1.7% of the equity ofNavios Containers.B. Business overviewIntroductionNavios Holdings is a global, vertically integrated seaborne shipping and logistics company focused on the transport and transshipment of drybulk commodities including iron ore, coal and grain. For over 60 years, Navios Holdings has had an in-house ship management expertise that has workedwith producers of raw materials, agricultural traders and exporters, industrial end-users, ship owners, and charterers. Navios Holdings’ current core fleet(excluding the Navios Logistics fleet), the average age of which is approximately 7.7 years, basis fully delivered fleet, consists of a total of 71 vessels,aggregating approximately 7.2 million dwt. Navios Holdings owns 14 Capesize vessels (169,000-182,000 dwt), eleven modern Ultra Handymax vessels(50,000-59,000 dwt), twelve Panamax vessels (74,000-85,000 dwt) and one Handysize vessel. It also time charters-in and operates a fleet of six UltraHandymax, one Handysize, 19 Panamax, and seven Capesize vessels under long-term time charters. Navios Holdings has options to acquire 23 timechartered-in vessels (on one of which Navios Holdings holds an initial 50% purchase option).Navios Holdings also offers commercial and technical management services to the fleets of Navios Partners, Navios Acquisition, NaviosMidstream, Navios Europe I, Navios Europe II and Navios Containers. As of December 31, 2017, Navios Partners’ fleet was comprised of 29 drybulk vesselsand seven Container vessels. In each of October 2013, August 2014, February 2015, February 2016 and November 2017, the Company amended its existingmanagement agreement with Navios Partners to fix the fees for ship management services of its owned fleet at: (i) $4,225 daily rate per Ultra-Handymaxvessel; (ii) $4,325 daily rate per Panamax vessel; (iii) $5,250 daily rate per Capesize vessel; (iv) $6,700 daily rate per container vessel of TEU 6,800; (v)$7,400 daily rate per container vessel of more than TEU 8,000; and (vi) $8,750 daily rate per very large container vessel of more than TEU 13,000 throughDecember 31, 2019. Drydocking expenses under this agreement will be reimbursed by Navios Partners at cost at occurrence. As of December 31, 2017, NaviosAcquisition’s fleet was comprised of 28 tankers and eight VLCC vessels. In May 2016, Navios Holdings amended its agreement with Navios Acquisition tofix the fees for ship management services of Navios Acquisition owned fleet at a daily fee of (i) $6,350 per MR2 product tanker and chemical tanker vessel;(ii) $7,150 per LR1 product tanker vessel; and (iii) $9,500 per VLCC through May 2018. Drydocking expenses under this agreement will be reimbursed atcost at occurrence for all vessels. As of December 31, 2017, Navios Midstream’s fleet was comprised of six VLCC vessels and Navios Holdings receives adaily management fee of $9,500 per VLCC vessel. Drydocking expenses under this agreement will be reimbursed by Navios Midstream at cost at occurrence.Navios Europe I’s fleet was comprised of five tankers and five container vessels and management fees and drydocking expenses under the managementagreement will be reimbursed at cost at occurrence. Navios Europe II’s fleet was comprised of seven dry bulker and seven container vessels and managementfees and drydocking expenses under the management agreement will be reimbursed at cost at occurrence. As of December 31, 2017, Navios Containers’ fleetwas comprised of 21 container vessels. The fee for the ship management services provided by Navios Holdings is a daily fee of $6,100 per day for 4,250 TEU,3,450 TEU and 5,500 TEU container vessels. Drydocking expenses under this agreement are reimbursed by Navios Containers at cost.Navios Holdings’ strategy and business model focuses on: • Operation of a high quality, modern fleet. Navios Holdings owns and charters-in a modern, high quality fleet, having an average age ofapproximately 7.7 years, basis fully delivered fleet that provides numerous operational advantages including more efficient cargooperations, lower insurance and vessel maintenance costs, higher levels of fleet productivity, and an efficient operating cost structure. • Pursuing an appropriate balance between vessel ownership and a long-term chartered-in fleet. Navios Holdings controls, through acombination of vessel ownership and long-term time chartered vessels, approximately 7.2 million dwt in tonnage, which, we believe,makes Navios Holdings one of the largest independent dry bulk operators in the world. Navios Holdings’ ability, through its long-standing relationships with various shipyards and trading houses, to charter-in vessels allows it to control additional shipping capacitywithout the capital expenditures required by new vessel acquisition. In addition, having purchase options on 23 time chartered vesselspermits Navios Holdings to determine when is the most commercially opportune time to own or charter-in vessels. Navios Holdingsintends to monitor developments in the sales and purchase market to maintain the appropriate balance between owned and long-termtime chartered vessels. 48Table of Contents • Capitalize on Navios Holdings’ established reputation. Navios Holdings believes its reputation and commercial relationships enable itto obtain favorable long-term time charters, enter into the freight market and increase its short-term tonnage capacity to complement thecapacity of its core fleet, as well as to obtain access to cargo freight opportunities through COA arrangements not readily available toother industry participants. This reputation has also enabled Navios Holdings to obtain vessel acquisition terms as reflected in thepurchase options contained in some of its long-term charters. • Utilize industry expertise to take advantage of market volatility. The dry bulk shipping market is cyclical and volatile. Navios Holdingsuses its experience in the industry, sensitivity to trends, and knowledge and expertise as to risk management to hedge against, and insome cases, to generate profit from, such volatility. • Maintain customer focus and reputation for service and safety. Navios Holdings is recognized by its customers for the high quality of itsservice and safety record. Navios Holdings’ high standards for performance, reliability, and safety provide Navios Holdings with anadvantageous competitive profile. • Enhance vessel utilization and profitability through a mix of spot charters, time charters, and COAs. Specifically, this strategy isimplemented as follows: • The operation of voyage charters or spot fixtures for the carriage of a single cargo from load port to discharge port; • The operation of time charters, whereby the vessel is hired out for a predetermined period but without any specification as tovoyages to be performed, with the ship owner being responsible for operating costs and the charterer for voyage costs; • The use of COAs, under which Navios Holdings contracts to carry a given quantity of cargo between certain load and dischargeports within a stipulated time frame, but does not specify in advance which vessels will be used to perform the voyages; and • The shipping industry uses fleet utilization to measure a company’s efficiency in finding suitable employment for its vessels andminimizing the days its vessels are off-hire. At 99.7% as of December 31, 2017, Navios Holdings believes that it has one of thehighest fleet utilization rates in the industry.Competitive AdvantagesControlling approximately 7.2 million dwt (excluding Navios Logistics) in dry bulk tonnage, Navios Holdings is one of the largest independentdry bulk operators in the world. Management believes that Navios Holdings occupies a competitive position within the industry in that its reputation in theglobal dry bulk markets permits it to enter into at any time, and take on spot, medium or long-term freight commitments, depending on its view of futuremarket trends. In addition, many of the long-term charter deals may be brought to the attention of Navios Holdings prior to even being quoted in the openmarket. Even in the open market, Navios Holdings’ solid reputation allows it to take in large amounts of tonnage on a short, medium, or long-term basis onvery short notice. This ability is possessed by relatively few ship owners and operators, and is a direct consequence of Navios Holdings’ market reputation forreliability in the performance of its obligations in each of its roles as a ship owner, COA operator, and charterer. Navios Holdings, therefore, has much greaterflexibility than a traditional ship owner or charterer to quickly go “long” or “short” relative to the dry bulk markets.Navios Holdings’ long involvement and reputation for reliability in the Asian Pacific region have also allowed it to develop privilegedrelationships with many of the largest trading houses in Japan, such as Marubeni Corporation and Mitsui & Co. Through these institutional relationships,Navios Holdings has obtained long-term charter-in deals, with options to extend time charters and options to purchase the majority of the vessels. Through itsestablished reputation and relationships, Navios Holdings has had access to opportunities not readily available to most other industry participants who lackNavios Holdings’ brand recognition, credibility, and track record.In addition to its long-standing reputation and flexible business model, management believes that Navios Holdings is well-positioned in the drybulk market on the basis of the following factors: • A high-quality, modern fleet of vessels that provides a variety of operational advantages, such as lower insurance premiums, higher levelsof productivity, and efficient operating cost structures, as well as a competitive advantage over owners of older fleets, especially in thetime charter market, where age, fuel economy and quality of a vessel are of significant importance in competing for business; 49Table of Contents • A core fleet which has been chartered-in (some through 2030, assuming minimum available charter extension periods are exercised) onterms generally that allow Navios Holdings to charter-out the vessels at an attractive spread during strong markets and to weather downcycles in the market while maintaining low costs; • Strong commercial relationships with both freight customers and Japanese trading houses and ship owners, providing Navios Holdingswith access to future attractive long-term time charters on newbuildings with valuable purchase options; • Strong in-house technical management team who oversee every step of technical management, from the construction of the vessels tosubsequent shipping operations throughout the life of a vessel, including the superintendence of maintenance, repairs and drydocking,providing efficiency and transparency in Navios Holdings’ owned fleet operations; • Visibility into worldwide commodity flows through its physical shipping operations and port terminal operations in South America; and • An experienced management team with a strong track record of operational experience and a strong brand having a well establishedreputation for reliability and performance.Management intends to maintain and build on these qualitative advantages, while at the same time continuing to benefit from Navios Holdings’reputation.Shipping OperationsNavios Holdings’ Fleet. Navios Holdings controls a core fleet of 38 owned vessels and 33 chartered-in vessels (all of which have purchaseoptions). The average age of the fleet is 7.7 years, basis fully delivered fleet.Owned Fleet. Navios Holdings owns and operates a fleet comprised of eleven modern Ultra Handymax vessels, 14 Capesize vessels, twelvePanamax vessels and one Handysize vessel.Owned Vessels Vessel Name Vessel Type Year Built Deadweight(in metric tons) Navios Serenity Handysize 2011 34,690 Navios Achilles Ultra Handymax 2001 52,063 Navios Vector Ultra Handymax 2002 50,296 Navios Meridian Ultra Handymax 2002 50,316 Navios Mercator Ultra Handymax 2002 53,553 Navios Arc Ultra Handymax 2003 53,514 Navios Hios Ultra Handymax 2003 55,180 Navios Kypros Ultra Handymax 2003 55,222 Navios Astra Ultra Handymax 2006 53,468 Navios Ulysses Ultra Handymax 2007 55,728 Navios Celestial Ultra Handymax 2009 58,063 Navios Vega Ultra Handymax 2009 58,792 Navios Magellan Panamax 2000 74,333 Navios Star Panamax 2002 76,662 Navios Northern Star Panamax 2005 75,395 Navios Amitie Panamax 2005 75,395 Navios Taurus Panamax 2005 76,596 Navios Asteriks Panamax 2005 76,801 N Amalthia Panamax 2006 75,318 Navios Galileo Panamax 2006 76,596 N Bonanza Panamax 2006 76,596 Navios Avior Panamax 2012 81,355 Navios Centaurus Panamax 2012 81,472 Navios Sphera Panamax 2016 84,872 Navios Equator Prosper Capesize 2000 171,191 50Table of ContentsNavios Stellar Capesize 2009 169,001 Navios Bonavis Capesize 2009 180,022 Navios Happiness Capesize 2009 180,022 Navios Phoenix Capesize 2009 180,242 Navios Lumen Capesize 2009 180,661 Navios Antares Capesize 2010 169,059 Navios Etoile Capesize 2010 179,234 Navios Bonheur Capesize 2010 179,259 Navios Altamira Capesize 2011 179,165 Navios Azimuth Capesize 2011 179,169 Navios Ray Capesize 2012 179,515 Navios Gem Capesize 2014 181,336 Navios Mars Capesize 2016 181,259 Long-Term Fleet. In addition to the 38 owned vessels, Navios Holdings controls a fleet of seven Capesize, 19 Panamax, six Ultra Handymax,and one Handysize vessels under long-term time charters (including seven Panamax vessels to be delivered through the end of 2019), having an average ageof approximately 4.4 years, basis fully delivered fleet.Long-term Chartered-in Fleet in Operation Vessel Name Vessel Type YearBuilt Deadweight(in metric tons) PurchaseOption(1)Navios Lyra Handysize 2012 34,718 Yes(2)Navios Primavera Ultra Handymax 2007 53,464 YesMercury Ocean Ultra Handymax 2008 53,452 NoKouju Lily Ultra Handymax 2011 58,872 NoNavios Oriana Ultra Handymax 2012 61,442 YesNavios Mercury Ultra Handymax 2013 61,393 YesNavios Venus Ultra Handymax 2015 61,339 YesOsmarine Panamax 2006 76,000 NoNavios Aldebaran Panamax 2008 76,500 YesKM Imabari Panamax 2009 76,619 NoNavios Marco Polo Panamax 2011 80,647 YesNavios Southern Star Panamax 2013 82,224 YesSea Victory Panamax 2014 77,095 YesNavios Amber Panamax 2015 80,994 YesNavios Sky Panamax 2015 82,056 YesNavios Coral Panamax 2016 84,904 YesNavios Citrine Panamax 2017 81,626 YesNavios Dolphin Panamax 2017 81,630 YesElsa S Panamax 2015 80,954 NoPacific Explorer Capesize 2007 177,000 NoKing Ore Capesize 2010 176,800 YesNavios Koyo Capesize 2011 181,415 YesNavios Obeliks Capesize 2012 181,415 YesDream Canary Capesize 2015 180,528 YesDream Coral Capesize 2015 181,249 YesNavios Felix Capesize 2016 181,221 YesLong-term Chartered-in Fleet to be delivered Vessel Name Vessel Type DeliveryDate Deadweight(in metric tons) PurchaseOption(1)TBN Panamax April 2018 82,000 NoTBN Panamax May 2018 82,000 NoTBN Panamax Q4 2018 81,500 No(3)TBN Panamax Q1 2019 81,500 No(3) 51Table of ContentsLong-term Bareboat Chartered-in Fleet to be delivered Vessel Name Vessel Type DeliveryDate Deadweight(in metric tons) PurchaseOption(1)TBN Panamax Q4 2019 82,000 YesTBN Panamax Q1 2020 82,000 YesTBN Panamax Q4 2019 82,000 Yes (1) Generally, Navios Holdings may exercise its purchase option after three to five years of service.(2) Navios Holdings holds the initial 50% purchase option on the vessel.(3) Navios Holdings has the right of first refusal and profit share on sale of vessel.Many of Navios Holdings’ current long-term chartered-in vessels are chartered from ship owners with whom Navios Holdings has long-standingrelationships. Navios Holdings pays these ship owners daily rates of hire for such vessels, and then charters out these vessels to other parties, who pay NaviosHoldings a daily rate of hire. Navios Holdings also enters into COAs pursuant to which Navios Holdings has agreed to carry cargoes, typically for industrialcustomers, who export or import dry bulk cargoes. Further, Navios Holdings enters into spot market voyage contracts, where Navios Holdings is paid a rateper ton to carry a specified cargo from point A to point B.Short-Term Fleet: Navios Holdings’ “short-term fleet” is comprised of Capesize, Panamax and Ultra Handymax vessels chartered-in for duration of lessthan 12 months. The number of short-term vessels varies from time to time. These vessels are not included in the “core fleet” of the Company.Exercise of Vessel Purchase OptionsNavios Holdings has executed several purchase options comprising of six Ultra Handymax, six Panamax and one Capesize vessels, which weredelivered on various dates from November 30, 2005 until February 21, 2011. Navios Holdings currently has options to acquire 23 chartered-in vesselscurrently in operation (on one of the 23 purchase options Navios Holdings holds a 50% initial purchase option).Commercial Ship Management: Commercial management of Navios Holdings’, Navios Partners, Navios Acquisition’s, Navios Midstream’s,Navios Europe I’s, Navios Europe II’s and Navios Containers’ fleet involves identifying and negotiating charter party employment for the vessels. In additionto its internal commercial ship management capabilities, Navios Holdings uses the services of a related party, Acropolis Chartering & Shipping Inc.(“Acropolis”), based in Piraeus, as well as numerous third-party charter brokers, to solicit, research, and propose charters for its vessels. Charter brokersresearch and negotiate with different charterers, and propose charters to Navios Holdings for cargoes suitable for carriage by Navios Holdings’, NaviosPartners, Navios Acquisition’s, Navios Midstream’s, Navios Europe I’s, Navios Europe II’s and Navios Containers’ vessels. Navios Holdings then evaluatesthe employment opportunities available for each type of vessel and arranges cargo and country exclusions, bunkers, loading and discharging conditions, anddemurrage.Technical Ship Management: Navios Holdings provides, through its subsidiaries, Navios Shipmanagement Inc., Navios ContainersManagement Inc. and Navios Tankers Management Inc., technical ship management and maintenance services to its owned vessels and has also providedsuch services to Navios Partners’, Navios Acquisition’s, Navios Midstream’s, Navios Europe I’s, Navios Europe II’s and Navios Containers’ vessels under theterms of the management agreements between the parties. Based in Piraeus, Greece, Monaco and Singapore, this operation is run by experienced professionalswho oversee every step of technical management, from the construction of the vessels to subsequent shipping operations throughout the life of a vessel,including the superintendence of maintenance, repairs and drydocking.Operation of the Fleet: The operations departments supervise the post-fixture business of the vessels in Navios Holdings’, Navios Partners,Navios Acquisition’s, Navios Midstream’s, Navios Europe I’s, Navios Europe II’s and Navios Containers’ fleet (i.e., once the vessel is chartered and beingemployed) by monitoring their daily positions to ensure that the terms and conditions of the charters are being fulfilled. 52Table of ContentsFinancial Risk Management: Navios Holdings actively engages in assessing financial risks associated with fluctuating future freight rates, dailytime charter hire rates, fuel prices, credit risks, interest rates and foreign exchange rates. Financial risk management is carried out under policies approved andguidelines established by the Company’s executive management. • Freight Rate Risk. Navios Holdings may use FFAs to manage and mitigate its risk to its freight market exposures in shipping capacityand freight commitments and respond to fluctuations in the dry bulk shipping market by augmenting its overall long or short position.See “Risk Factors — Risks Associated with the Shipping Industry and Our Dry bulk Operations — Trading and complementary hedgingactivities in freight, tonnage and FFAs subject us to trading risks, and we may suffer trading losses which could adversely affect ourfinancial condition and results of operations” for additional detail on the financial implications, and risks of our use of FFAs. Currently,Navios Holdings holds no FFA contracts. • Credit Risk. Navios Holdings closely monitors its credit exposure to charterers and FFAs counterparties. Navios Holdings has establishedpolicies to ensure that contracts are entered into with counterparties that have appropriate credit history. Counterparties and cashtransactions are limited to high quality credit collateralized corporations and financial institutions. Most importantly, Navios Holdingshas guidelines and policies that are designed to limit the amount of credit exposure. • Interest Rate Risk. Navios Holdings may use from time to time interest rate swap agreements to reduce exposure to fluctuations in interestrates. These instruments allow Navios Holdings to raise long-term borrowings at floating rates and swap them into fixed rates. Althoughthese instruments are intended to minimize the anticipated financing costs and maximize gains for Navios Holdings that may be set offagainst interest expense, they may also result in losses, which would increase financing costs. Currently, Navios Holdings holds nointerest rate swap contracts. See also item 11 “Quantitative and Qualitative Disclosures about Market Risks — Interest Rate Risk.” • Foreign Exchange Risk. Although Navios Holdings’ revenues are U.S. dollar-based, 24.7% of its expenses, related to its Navios Logisticssegment, are in Uruguayan pesos, Argentinean pesos, Paraguayan Guaranies and Brazilian Reales and 14.2% of its expenses related tooperation of its Greek, Belgian and Monaco offices, are in Euros. Navios Holdings monitors its Euro, Argentinean Peso, Uruguayan Peso,Paraguayan Guarani and Brazilian Real exposure against long-term currency forecasts and enters into foreign currency contracts whenconsidered appropriate.CustomersDry bulk Vessel OperationsThe international dry bulk shipping industry is highly fragmented and, as a result, there are numerous charterers. Navios Holdings’ assessment ofa charterer’s financial condition and reliability is an important factor in negotiating employment of its vessels. Navios Holdings generally charters its vesselsto major trading houses (including commodities traders), major producers and government-owned entities. Navios Holdings’ customers under charter parties,COAs, and other counterparties, include national, regional and international companies, such as Cargill International S.A., GIIC, Louis Dreyfus Commodities,Oldendorff Carriers, Swiss Marine, Rio Tinto and Mansel Ltd. For the year ended December 31, 2017, no customers accounted for more than 10% of theCompany’s revenue. For the year ended December 31, 2016, two customers accounted for 14.7% and 13.1%, respectively, of the Company’s revenue. For theyear ended December 31, 2015, one customer accounted for 15.1% of the Company’s revenue.Logistics Business OperationsCustomers of Navios Logistics include affiliates of ADM, Axion Energy, Bunge, Cargill, Glencore, Louis Dreyfus, Petrobras, Petropar (thenational oil company of Paraguay), Shell, Vale, Vitol and YPF. Navios Logistics has a long history of operating in the Hidrovia region and has been able togenerate and maintain longstanding relationships with its customers. In its grain port facilities in Uruguay, Navios Logistics has been serving three of its keycustomers, ADM, Cargill and Louis Dreyfus, for more than 19 years on average. In its liquid port facility, liquid barge transportation and cabotage business,Navios Logistics has had long-term relationships with its global petroleum customers for more than 16 years on average (such as Axion Energy, PetrobrasGroup, YPF and Shell or their successors). In its dry barge business, Navios Logistics started its relationship with Vale in 2008 for iron ore transportation andhas signed new contracts since then. Navios Logistics is committed to providing quality logistics services for its customers and further developing andmaintaining its long-term relationships.Concentrations of credit risk with respect to accounts receivables are limited due to Navios Logistics’ large number of customers, who areestablished international operators and have an appropriate credit history. Due to these factors, management believes that no additional credit risk, beyondamounts provided for collection losses, is inherent in its trade receivables. For the year ended December 31, 2017, Navios Logistics’ three largest customers,Vale, YPF and Axion Energy accounted for 20.3%, 13.7% and 53Table of Contents12.7% of its revenues, respectively, and its five largest customers accounted for approximately 61.9% of its revenues. For the year ended December 31, 2016,its three largest customers, Vale, Axion Energy and Cammessa accounted for 28.0%, 13.8% and 11.5% of its revenues, respectively, and its five largestcustomers accounted for approximately 67.4% of its revenues. For the year ended December 31, 2015, its two largest customers, Vale and Cammessaaccounted for 27.8% and 12.9% of its revenues, respectively, and its five largest customers accounted for approximately 61.7% of its revenues. Other than itslargest customers mentioned above, no other customer accounted for more than 10% of Navios Logistics’ revenues during the years ended December 31,2017, 2016 and 2015.CompetitionThe dry bulk shipping markets are extensive, diversified, competitive and highly fragmented, divided among 1,938 independent dry bulk carrierowners. The world’s active dry bulk fleet consists of approximately 11,200 vessels, aggregating approximately 824 million dwt as of April 1, 2018. As ageneral principle, the smaller the cargo carrying capacity of a dry bulk carrier, the more fragmented is its market, both with regard to charterers and vesselowner/operators. Even among the larger dry bulk owners and operators, whose vessels are mainly in the larger sizes, only nine companies are known to havefleets of 100 vessels or more after the merger of the two largest Chinese shipping companies, China Ocean Shipping and China Shipping Group into ChinaCOSCO Shipping. The other eight are the largest Japanese shipping companies, Mitsui O.S.K. Lines, Kawasaki Kisen and Nippon Yusen Kaisha plus theFredriksen Group, Wisdom Marine, China Merchants, Pacific Basin and Oldendorff Carriers. There are about 41 owners known to have fleets of between 30and 100 vessels. However, vessel ownership is not the only determinant of fleet control. Many owners of bulk carriers charter their vessels out for extendedperiods, not just to end users (owners of cargo), but also to other owner/operators and to tonnage pools. Such operators may, at any given time, control a fleetmany times the size of their owned tonnage. Navios Holdings is one such operator; others include Cargill, Pacific Basin Shipping, Bocimar, Zodiac Maritime,Louis Dreyfus/Cetragpa, Cobelfret, Torvald Klaveness and Swiss Marine.It is likely that we will face substantial competition for long-term charter business from a number of experienced companies. Many of thesecompetitors will have significantly greater financial resources than we do. It is also likely that we will face increased numbers of competitors entering into ourtransportation sectors, including in the dry bulk sector. Many of these competitors have strong reputations and extensive resources and experience. Increasedcompetition may cause greater price competition, especially for long-term charters.Navios LogisticsNavios Logistics is one of the largest logistics providers in the Hidrovia region of South America. Navios Logistics believes its ownership ofriver ports, including its port terminals in Uruguay that provides access to the ocean, allows it to offer a logistics solution superior to its competitors that alsooperate barges and pushboats. Navios Logistics also competes based on reliability, efficiency and price.With respect to loading, storage and ancillary services, the market is divided between transits and exports, depending on the cargo origin. In thecase of transits there are other companies operating in the river system that are able to offer services similar to Navios Logistics. However, most of thesecompanies are proprietary service providers that are focused on servicing their own cargo. Unlike these companies, Navios Logistics is an independentservice provider in the market for transits. With respect to exports, its competitors are Montevideo Port in Montevideo and Ontur in Nueva Palmira, and TGUin Nueva Palmira. The main competitor of its liquid port terminal in Paraguay is Petropar, a Paraguayan state-owned entity. Other competitors includeCopetrol, TLP, Trafigura Pte Ltd and Petrobras.Navios Logistics faces competition in its barge and cabotage businesses with transportation of oil and refined petroleum products from otherindependent ship owners and from vessel operators who primarily charter vessels to meet their cargo carrying needs. The charter markets in which NaviosLogistics’ vessels compete are highly competitive. Key competitors include the successor of Ultrapetrol Bahamas Ltd., Hidrovias do Brasil, Interbarge, P&O,Imperial Shipping and Fluviomar. In addition, some of Navios Logistics’ customers, including ADM, Cargill, Louis Dreyfus and Vale, have some of their owndedicated barge capacity, which they can use to transport cargo in lieu of hiring a third party. Navios Logistics also competes indirectly with other forms ofland-based transportation such as truck and rail. Competition is primarily based on prevailing market contract rates, vessel location and vessel managerknow-how, reputation and credibility. These companies and other smaller entities are regular competitors of Navios Logistics in its primary tanker tradingareas.Navios Logistics believes that its ability to combine its ports in Uruguay and Paraguay with its versatile fleet of barges, pushboats and tankers tooffer integrated, end-to-end logistics solutions for both its dry and liquid customers seeking to transport mineral and grain commodities and liquid cargoesthrough the Hidrovia region has allowed Navios Logistics to differentiate its business and offer superior services compared to its competitors. 54Table of ContentsIntellectual PropertyWe consider NAVIOS to be our proprietary trademark, service mark and trade name. We hold several U.S. and E.U. trademark registrations for ourproprietary logos and the domain name registration for our website.Governmental and Other RegulationsSources of Applicable Rules and Standards: Shipping is one of the world’s most heavily regulated industries, and, in addition, it is subject tomany industry standards. Government regulation significantly affects the ownership and operation of vessels. These regulations consist mainly of rules andstandards established by international conventions, but they also include national, state, and local laws and regulations in force in jurisdictions where vesselsmay operate or are registered, and which are commonly more stringent than international rules and standards. This is the case particularly in the U.S. 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.International Environmental Regulations: The International Maritime Organization (“IMO”) has adopted a number of internationalconventions concerned with ship safety and with preventing, reducing or controlling pollution from ships. These fall into two main categories, consistingfirstly of those concerned generally with ship safety standards, and secondly of those specifically concerned with measures to prevent pollution.Ship Safety Regulation: In the former category the primary international instrument is the Safety of Life at Sea Convention of 1974(“SOLAS”),as amended, together with the regulations and codes of practice that form part of its regime. Much of SOLAS is not directly concerned with preventingpollution, but some of its safety provisions are intended to prevent pollution as well as promote safety of life and preservation of property. These regulationshave been and continue to be regularly amended as new and higher safety standards are introduced with which we are required to comply.An amendment of SOLAS introduced the International Safety Management (ISM) Code, which has been effective since July 1998. Under theISM Code, the party with operational control of a vessel is required to develop an extensive safety management system that includes, among other things, theadoption of a safety and environmental protection policy setting forth instructions and procedures for operating its vessels safely and describing proceduresfor responding to emergencies. The ISM Code requires that vessel operators obtain a safety management certificate for each vessel they operate. Thiscertificate evidences compliance by a vessel’s management with code requirements for a safety management system. No vessel can obtain a certificate unlessits manager 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 invalidate or lead to decreases in available insurance coverage for affectedvessels, and may result in the denial of access to, or detention in, some ports. For example, the U.S. Coast Guard and EU authorities have indicated thatvessels not in compliance with the ISM Code will be prohibited from trading in ports in the U.S. and EU respectively.Another amendment of SOLAS, made after the terrorist attacks in the U.S. on September 11, 2001, introduced special measures to enhancemaritime security, including the International Ship and Port Facilities Security Code (“ISPS Code”).Our owned fleet maintains ISM and ISPS certifications for safety and security of operations. Each vessel’s certificate must be periodicallyrenewed and compliance must be periodically verified. In addition, the Manager voluntarily implements and maintains certifications pursuant to theInternational Organization for Standardization (“ISO”), for its office and ships covering both quality of services and environmental protection (ISO 9001 andISO 14001, respectively). 55Table of ContentsInternational Regulations to Prevent Pollution from Ships: In the second main category of international regulation, the primary instrument isthe International Convention for the Prevention of Pollution from Ships (“MARPOL”), which imposes environmental standards on the shipping industry setout in Annexes I-VI of MARPOL. These contain regulations for the prevention of pollution by oil (Annex I), by noxious liquid substances in bulk (Annex II),by harmful substances in packaged forms within the scope of the International Maritime Dangerous Goods Code (Annex III), by sewage (Annex IV), bygarbage (Annex V), and by air emissions (Annex VI).These regulations have been and continue to be regularly amended as new and more stringent standards of pollution prevention are introducedwith which we are required to comply.For example, MARPOL Annex VI, together with the NOx Technical Code established thereunder, sets limits on sulphur oxide and nitrogenoxide emissions from ship exhausts and prohibits deliberate emissions of ozone depleting substances, such as chlorofluorocarbons. It also includes a globalcap on the sulphur content of fuel oil and allows for special areas to be established with more stringent controls on emissions. Originally adopted inSeptember 1997, Annex VI came into force in May 2005 and was amended in October 2008 (as was the NOx Technical Code) to provide for progressivelymore stringent limits on such emissions from 2010 onwards. The new standards seek to reduce air pollution from vessels by, among other things, establishinga series of progressive requirements to further limit the sulfur content of fuel oil that will be phased in through 2020 and by establishing new tiers of nitrogenoxide emission standards for new marine diesel engines, depending on their date of installation. Additionally, more stringent emission standards apply in thecoastal areas designated emission control areas (“ECAs). Thus far, ECAs have been formally adopted for the Baltic Sea area (limits SOx emissions only); theNorth Sea area including the English Channel (limiting SOx emissions only) and the North American ECA (which came into effect on August 1, 2012limiting SOx, NOx and particulate matter emissions). In October 2016, the IMO approved the designation of the North Sea and the Baltic Sea as ECAs forNOx under Annex VI, which would take effect in January 2021. The U.S. Caribbean Sea ECA entered into force on January 1, 2013 and has been effectivesince January 1, 2014, limiting SOx, NOx and particulate matter emissions. In January 2015, the limit for fuel oil sulfur levels fell to 0.10% m/m in ECAsestablished to limit SOx and particulate matter emissions.After considering the issue for many years, the IMO announced on October 27, 2016 that it was proceeding with a requirement for 0.5% m/msulfur content in marine fuel (down from current levels of 3.5%) outside the ECAs starting on January 1, 2020. Under Annex VI, the 2020 date was subject toreview as to the availability of the required fuel oil. Annex VI required the fuel availability review to be completed by 2018 but was ultimately completed in2016. Therefore, by 2020, ships will be required to remove sulfur from emissions through the use of emission control equipment, or purchase marine fuel with0.5% sulfur content, which may see increased demand and higher prices due to supply constraints. Installing pollution control equipment or using lowersulfur fuel could result in significantly increased costs to our company. Similarly, Annex VI requires Tier III standards for NOx emissions to be applied toships constructed and engines installed in ships operating in NOx ECAs from January 1, 2016. The IMO’s Marine Environment Protection Committee (the“MEPC”) adopted amendments (effective September 2015) to Annex VI, regulation 13, regarding NOx and the date for the implementation of the “Tier III”standards within ECAs. These amendments provide, inter alia, that such standards, applicable on January 1, 2016, apply to marine diesel engines installed onships which operate in the North American ECA or the U.S. Caribbean Sea ECA and to installed marine diesel engines which operate in other ECAs whichmight be designated in the future for Tier III NOx control. At the 69th session (2016), Annex VI was also amended to require recordkeeping requirements todemonstrate compliance with the NOX Tier III ECA.Certain jurisdictions have adopted more stringent requirements. For instance, California has also adopted more stringent low sulfur fuelrequirements within California-regulated waters. We anticipate incurring costs to comply with these more stringent standards by implementing measures suchas fuel switching, vessel modification adding distillate fuel storage capacity, or addition of exhaust gas cleaning scrubbers, and may require installation andoperation of further control equipment at significantly increased cost. While it is unclear how the new emissions standard will affect the employment of ourvessels, over time it is possible that ships not retrofitted to comply with new standards will become less competitive.The IMO has introduced the first ever mandatory measures for an international greenhouse gas reduction regime for a global industry sector.These energy efficiency measures apply to all ships of 400 gross tonnage and above. They include the development of a ship energy efficiency managementplan (“SEEMP”) which is akin to a safety management plan. At its 66th session (2014), the MEPC continued its work on developing technical andoperational measures relating to energy-efficiency measures for ships, following the entry into force of the mandatory efficiency measures on January 1, 2013.It adopted the 2014 Guidelines on the Method of Calculation of the Attained EEDI, applicable to new ships. It further adopted amendments to MARPOLAnnex VI concerning the extension of the scope of application of the EEDI to Liquified Natural Gas (“LNG”) carriers, ro-ro cargo ships (vehicle carriers),ro-ro cargo ships, ro-ro passenger ships and cruise passengers ships with nonconventional propulsion. At its 67th session (2014), the MEPC adopted the 2014Guidelines on survey and certification of the EEDI, updating the previous version to reference ships fitted with dual-fuel engines using LNG and liquid fueloil. The MEPC also adopted amendments to the 2013 Interim Guidelines for determining minimum propulsion power to maintain the maneuverability ofships in adverse conditions, to make the guidelines applicable to phase 1 (starting January 1, 2015) of the EEDI requirements. At its 68th session (2015), theMEPC amended the 2014 Guidelines on EEDI survey and certification as well as the method of calculating of EEDI for new ships. At its 70th session (2016),the MEPC again amended the method of calculating EEDI, and adopted mandatory requirements for ships of 5,000 gross tonnage or greater to collect fuelconsumption data for each type of fuel used, and report the data to the flag State after the end of each calendar year. 56Table of ContentsThe revised Annex I to the MARPOL Convention entered into force in January 2007. It incorporates various amendments to the MARPOLConvention and imposes construction requirements for oil tankers delivered on or after January 1, 2010. On August 1, 2007, Regulation 12A (an amendmentto 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 inall ships with 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 thebuilding contract 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 thatall of our newbuild tanker vessels, if any, will comply with Regulation 12A.Greenhouse Gas (“GHG”) Emissions: In February 2005, the Kyoto Protocol to the United Nations Framework Convention on Climate Change(the “Kyoto Protcol”) entered into force. Pursuant to the Kyoto Protocol, adopting countries are required to implement national programs to reduce emissionsof certain gases, generally referred to as greenhouse gases, which are suspected of contributing to global warming. Currently, the greenhouse gas emissionsfrom international shipping do not come under the Kyoto Protocol.In December 2011, United Nations climate change talks took place in Durban and concluded with an agreement referred to as the DurbanPlatform for Enhanced Action. In preparation for the Durban Conference, the International 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 onthe participants in the Durban Conference to give the IMO a clear mandate to deliver emissions reductions through market-based measures, for example ashipping industry environmental compensation fund. Notwithstanding the ICS’ request for global regulation of the shipping industry, the Durban Conferencedid not result in any proposals specifically addressing the shipping industry’s role in climate change.Although regulation of greenhouse gas emissions in the shipping industry was discussed during the 2015 United Nations Climate ChangeConference in Paris (the “Paris Conference”), the agreement reached among the 195 nations, which entered into force on November 4, 2016, did not expresslyreference the shipping industry. Following the Paris Conference, the IMO announced it would continue its efforts on this issue at the MEPC, and at its 70thsession, the MEPC approved a Roadmap for developing a comprehensive GHG emissions reduction strategy for ships, which includes the goal of adopting aninitial strategy and emission reduction commitments in 2018 with a goal of adopting a revised strategy in 2023 to include short-, mid- and long-termreduction measures and schedules for implementation. In April 2018, the committee charged with creating the reduction strategy must finalize the initial draftof the strategy and submit a report to MEPC. The EU, Canada, the U.S. and other individual countries, states and provinces also have or are evaluatingvarious measures to reduce greenhouse gas emissions from international shipping, which may include some combination of market-based instruments, acarbon tax or other mandatory reduction measures. The EU recently adopted Regulation (EU) 2015/757 concerning the monitoring, reporting andverification of carbon dioxide emissions from vessels (the “MRV Regulation”) which entered into force on July 1, 2015 (as amended by Regulation (EU)2016/2071). The MRV Regulation applies to all vessels over 5,000 gross tonnage (except for a few types, including, but not limited to, warships and fish-catching or fish-processing vessels), irrespective of flag, in respect of carbon dioxide emissions released during voyages within the EU as well as voyagescoming into and going out of the EU. The first reporting period will commence on January 1, 2018. The monitoring, reporting and verification systemadopted by the MRV Regulation may be the precursor to a market-based mechanism to be adopted in the future. This EU Regulation may be seen asindicative of an intention to maintain pressure on the international negotiating process. An Implementing Regulation, which entered into force in November2016, was also adopted setting templates for monitoring plans, emissions reports and compliance documents pursuant to Regulation 2015/757.Further, in February 2017, EU member states met to consider independently regulating the shipping industry under the ETS. On February 15,2017, European Parliament voted in favor of a bill to include maritime shipping in the ETS by 2023 if the IMO has not promulgated a comparable system by2021. In November 2017, the Council of Ministers, the EU’s main decision making body, agreed that the EU should act on shipping emissions by 2023 if theIMO fails to deliver effective global measures. Last year, IMO’s urgent call to action to bring about shipping greenhouse gas emissions reductions before2023 was met with industry push-back in many countries. Depending on how fast IMO and the EU move on this issue, the ETS may result in additionalcompliance costs for our vessels.Any passage of climate control legislation or other regulatory initiatives by the IMO, EU, Canada, the U.S. or other individual jurisdictionswhere we operate, that restrict emissions of greenhouse gases from vessels, could require us to make significant capital expenditures and may materiallyincrease our operating costs. 57Table of ContentsOther International Regulations to Prevent Pollution: In addition to MARPOL, other more specialized international instruments have beenadopted to prevent different types of pollution or environmental harm from ships. In February 2004, the IMO adopted an International Convention for theControl and Management of Ships’ Ballast Water and Sediments (“BWM”) Convention. The BWM Convention’s implementing regulations call for a phasedintroduction of mandatory ballast water exchange requirements, to be replaced in time with mandatory concentration limits, as well as other obligationsincluding recordkeeping requirements and implementation of a Ballast Water and Sediments Management PlanThe BWM Convention stipulates that it will enter into force twelve months after it has been adopted by at least 30 states, the combined merchantfleets of which represent at least 35% of the gross tonnage of the world’s merchant shipping. With Finland’s accession to the Agreement on September 8,2016, the 35% threshold was reached, and the BWM convention will enter into force on September 8, 2017. Thereafter, on October 19, 2016, Panama alsoacceded to the BWM convention, adding its 18.02% of world gross tonnage. As of February 7, 2017, the BWM Convention had 54 contracting states for53.30% of world gross tonnage. Although new ships constructed after September 8, 2017 must comply on delivery with the BWM Convention,implementation of the BWM Convention has been delayed for existing vessels (constructed prior to September 8, 2017) for a further two years. For suchexisting vessels, installation of ballast water management systems must take place at the first renewal survey following September 8, 2017 (the date the BWMConvention entered into force). The BWM Convention requires ships to manage ballast water in a manner that removes, renders harmless or avoids theuptake or discharge of aquatic organisms and pathogens within ballast water and sediment. Recently updated Ballast Water and Sediment Management Planguidance includes more robust testing and performance specifications. The entry of the BWM Convention and revised guidance, as well as similar ballastwater treatment requirements in certain jurisdictions (such as the U.S. and states within the U.S.) will likely result in compliance costs relating to theinstallation of equipment on our vessels to treat ballast water before it is discharged and other additional ballast water management and reportingrequirements. Investments in ballast water treatment may have a material adverse effect on our future performance, results of operations, cash flows andfinancial position.European RegulationsEuropean regulations in the maritime sector are in general based on international law. However, since the Erika incident in 1999, the EU hasbecome increasingly active in the field of regulation of maritime safety and protection of the environment. It has been the driving force behind a number ofamendments of MARPOL (including, for example, changes to accelerate the time-table for the phase-out of single hull tankers, and to prohibit the carriage insuch tankers of heavy grades of oil), and if dissatisfied either with the extent of such amendments or with the time-table for their introduction it has beenprepared to legislate on a unilateral basis. It should be noted, for instance, that the EU has its own regime as far as ship emissions are concerned and while itdoes in some respects align with the IMO regime, this is not always the case. As far as sulfur dioxide emissions are concerned, for example, the EU regulationhas not just caught up with the IMO limits for sulfur in ECAs, but it continues to have certain elements that exceed IMO regulations (e.g. as of January 1,2015, EU Member States must ensure that ships in the Baltic, the North Seam and the English Channel are using gas oils with a sulfur content of no more than0.10%). The EU has adopted legislation that (1) requires member states to refuse access to their ports to certain sub-standard vessels, according to vessel type,flag and number of previous detentions, (2) obliges member states to inspect at least 25% of vessels using their ports annually and provides for increasedsurveillance of vessels posing a high risk to maritime safety or the marine environment, (3) provides the EU with greater authority and control overclassification societies, including the ability to seek to suspend or revoke the authority of negligent societies, and (4) requires member states to imposecriminal sanctions for certain pollution events, such as the unauthorized discharge of tank washings. It has also considered legislation that could affect theoperation of vessels and the liability of owners for oil pollution. In some instances where it has done so, international regulations have subsequently beenamended to the same level of stringency as that introduced in Europe, but the risk is well established that EU regulations may from time to time imposeburdens and costs on ship owners and operators which are additional to those involved in complying with international rules and standards. In December2016, the EU signed into law the National Emissions Ceiling (“NEC”) Directive, which entered into force on December 31, 2016. The NEC must beimplemented by individual members states through particular laws in each state by June 30, 2018. The NEC aims to set stricter emissions limits on SO2,ammonia, non-methane volatile organic compounds, NOx and fine particulate (PM2.5) by setting new upper limits for emissions of these pollutants, startingin 2020. While the NEC is not specifically directed toward the shipping industry, the EU specifically mentions the shipping industry in its announcement ofthe NEC as a contributor to emissions of PM2.5, SO2 and NOx. Implementation of new laws by member states to reduce emissions may ultimately result inincreased costs to us to comply with the more stringent standards.Notably, in 2015 the EU adopted a directive, as amended in 2009, on ship-source pollution, imposing criminal sanctions for pollution not onlywhere this is caused by intent or recklessness (which would be an offense under MARPOL), but also where it is caused by “serious negligence”. The conceptof “serious negligence” may be interpreted in practice to be little more than ordinary negligence. The directive could therefore result in criminal liabilitybeing incurred in circumstances where it would not be incurred under international law. Criminal liability for a pollution incident could not only result in usincurring substantial penalties or fines but may also, in some jurisdictions, facilitate civil liability claims for greater compensation than would otherwise havebeen payable. 58Table of ContentsThe EU has also recently adopted a regulation that seeks to facilitate the ratification of the IMO Recycling Convention and sets forth rulesrelating to vessel recycling and management of hazardous materials on vessels. The new regulation contains requirements for the recycling of vessels atapproved recycling facilities that must meet certain requirements, so as to minimize the adverse effects of recycling on human health and the environment.The new regulation also contains rules for the control and proper management of hazardous materials on vessels and prohibits or restricts the installation oruse of certain hazardous materials on vessels. The new regulation applies to vessels flying the flag of a member state and certain of its provisions apply tovessels flying the flag of a third country calling at a port or anchorage of a member state. For example, when calling at a port or anchorage of a member state,a vessel flying the flag of a third country will be required, among other things, to have on board an inventory of hazardous materials that complies with therequirements of the new regulation and the vessel must be able to submit to the relevant authorities of that member state a copy of a statement of complianceissued by the relevant authorities of the country of the vessel’s flag verifying the inventory. The new regulation is to apply no later than December 31, 2018,although certain of its provisions are to apply at different stages, with certain of them applicable from December 31, 2020. Pursuant to this regulation, the EUhas recently published the first version of a European List of approved ship recycling facilities meeting the requirements of the regulation, as well as fourfurther implementing decisions dealing with certification and other administrative requirements set out in the regulation.In response to the 2010 Deepwater Horizon incident, the EU 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 much 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 limiting possible disruptions to EUindigenous energy production, and to improve the response mechanisms in case of an accident. Member states must implement the Directive by July 19,2015. The U.K. has various new or amended regulations such as: the Offshore Petroleum Activities (Offshore Safety Directive) (Environmental Functions)Regulations 2015 (OSDEF), the 2015 amendments to the Merchant Shipping (Oil Pollution Preparedness, Response and Cooperation Convention)Regulations 1998 (OPRC 1998) and other environmental Directive requirements, specifically the Environmental Management System. The OffshorePetroleum Licensing (Offshore Safety Directive) Regulations 2015 will implement the licensing Directive requirements.U.S. Environmental Regulations and Laws Governing Civil Liability for Pollution: Environmental legislation in the U.S. merits particularmention as it is in many respects more onerous than international laws, representing a high-water mark of regulation with which ship-owners and operatorsmust comply, and of liability likely to be incurred in the event of non-compliance or an incident causing pollution.U.S. federal legislation, including notably the Oil Pollution Act of 1990 (“OPA 90”), establishes an extensive regulatory and liability regime forthe protection and cleanup of the environment from oil spills, including cargo or bunker oil spills from tankers. OPA 90 affects all owners and operatorswhose vessels trade in the U.S., its territories and possessions or whose vessels operate in U.S. waters, which includes the U.S.’ territorial sea and its 200nautical mile exclusive economic zone. Under OPA 90, vessel owners, operators and bareboat charterers are “responsible parties” and are jointly, severallyand strictly liable (unless the spill results solely from the act or omission of a third party, an act of God or an act of war) for all containment and clean-up costsand other damages arising from discharges or substantial threats of discharges, of oil from their vessels. OPA 90 defines these other damages broadly toinclude: • natural resource damages and the costs of assessment thereof; • real and personal property damage; • net loss of taxes, royalties, rents, fees and other lost revenues; • lost profits or impairment of earning capacity due to property or natural resource damages; and • net cost of public services necessitated by a spill response, such as protection from fire, safety or health hazards, and loss of subsistenceuse of natural resources.OPA 90 preserves the right to recover damages under other existing laws, including maritime tort law. 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 90 to require the owner or operator of anynon tank vessel 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 planfor each vessel 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. 59Table of ContentsOPA 90 liability limits are periodically adjusted for inflation, and the U.S. Coast Guard issued a final rule on November 19, 2015 to reflectincreases in the Consumer Price Index. With this adjustment, OPA 90 currently limits liability of the responsible party for single-hull tank vessels over 3,000gross tons to the greater of $3,500 per gross ton or $25.846 million (this amount is reduced to $7.05 million if the vessel is less than 3,000 gross tons). Fortank vessels over 3,000 gross tons, other than a single-hull vessel, liability is limited to $2,200 per gross ton or $18.8 million (or $4.7 million for a vessel lessthan 3,000 gross tons), whichever is greater. For non-tank vessels, liability is limited to $1,100 per gross ton or $939,800 per incident, whichever is greater.Under OPA 90, these limits of liability do not apply if an incident was directly caused by violation of applicable U.S. federal safety, construction or operatingregulations 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 cooperateand assist in connection with oil removal activities.In response to the Deepwater Horizon incident in the Gulf of Mexico, in 2010 the U.S. Congress proposed, but did not formally adopt legislationto amend OPA 90 to mandate stronger safety standards and increased liability and financial responsibility for offshore drilling operations. WhileCongressional activity on this topic is expected to continue to focus on offshore facilities rather than on vessels generally, it cannot be known with certaintywhat form any such new legislative initiatives may take.In addition, the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), which applies to the discharge ofhazardous substances (other than oil) whether on land or at sea, contains a similar liability regime and provides for cleanup, removal and natural resourcedamages. CERCLA, as well as certain U.S. state laws that may also apply to petroleum or petroleum products, imposes joint and several liability, withoutregard to fault, on the owner or operator of a vessel, vehicle or facility from which there has been a release, along with other specified parties. Liability underCERCLA 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 incidentis caused by gross negligence, willful misconduct, or a violation of certain regulations, in which case liability is unlimited.We currently maintain, for each of our owned vessels, insurance coverage against pollution liability risks in the amount of $1.0 billion perincident. The insured risks include penalties and fines as well as civil liabilities and expenses resulting from accidental pollution. However, this insurancecoverage is subject to exclusions, deductibles and other terms and conditions. If any liabilities or expenses fall within an exclusion from coverage, or ifdamages from a catastrophic incident exceed the $1.0 billion limitation of coverage per incident, our cash flow, profitability and financial position could beadversely impacted.All owners and operators of vessels over 300 gross tons are required to establish and maintain with the U.S. Coast Guard evidence of financialresponsibility sufficient to meet their potential liabilities under OPA 90 and CERCLA. Under OPA 90, an owner or operator of a fleet of vessels is requiredonly to demonstrate evidence of financial responsibility in an amount sufficient to cover the vessel in the fleet having the greatest maximum liability underOPA. Under the self-insurance provisions, the ship owner or operator must have a net worth and working capital, measured in assets located in the U.S. againstliabilities located anywhere in the world, that exceeds the applicable amount of financial responsibility. We have complied with the U.S. Coast Guardregulations by providing a certificate of responsibility from third party entities 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 90, that claimants maybring suit directly against an insurer or guarantor that furnishes certificates of financial responsibility. In the event that such insurer or guarantor is sueddirectly, it is prohibited from asserting any contractual defense that it may have had against the responsible party and is limited to asserting those defensesavailable to the responsible party and the defense that the incident was caused by the willful misconduct of the responsible party. Certain organizations,which had typically provided certificates of financial responsibility under pre-OPA 90 laws, including the major protection and indemnity organizationshave declined to furnish evidence of insurance for vessel owners and operators if they are subject to direct actions or required to waive insurance policydefenses. This requirement may have the effect of limiting the availability of the type of coverage required by the Coast Guard and could increase our costs ofobtaining this insurance as well as the costs of our competitors that also require such coverage.OPA 90 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. For example, California regulations prohibit the discharge of oil,require an oil contingency plan be filed with the state, require that the ship owner contract with an oil response organization and require a valid certificate offinancial responsibility, all prior to the vessel entering state waters. In some cases, states, which have enacted such legislation, have not yet issuedimplementing regulations defining vessels owners’ responsibilities under these laws. We intend to comply with all applicable state regulations in the portswhere our vessels call. 60Table of ContentsThe U.S. Clean Water Act (“CWA”) prohibits the discharge of oil or hazardous substances in U.S. navigable waters and imposes strict liability inthe 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 U.S. Environmental Protection Agency (“EPA”) regulates the discharge of ballast water and othersubstances incidental to the normal operation of vessels in U.S. waters using a Vessel General Permit (“VGP”), system pursuant to the CWA, in order tocombat the risk of harmful organisms that can travel in ballast water carried from foreign ports and to minimize the risk of water pollution through numerousspecified effluent streams incidental to the normal operation of vessels. Compliance with the conditions of the VGP is required for commercial vessels 79 feetin 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 valid for five years.This new 2013 VGP imposes a numeric standard to control the release of non-indigenous invasive species in ballast water discharges. OnOctober 5, 2015, the U.S. Court of Appeals for the Second Circuit found the EPA was arbitrary and capricious in issuing the ballast water provisions of theVGP, finding that the EPA failed to adequately explain why stricter technology-based effluent standards should not be applied. The court instructed the EPAto reconsider these issues but held the 2013 VCP remains in effect until the EPA addresses the issues. If the EPA establishes more stringent numeric standardsfor ballast water discharges, we may incur costs to modify our vessels to comply with new standards. In addition, through the CWA certification provisions,that allow U.S. states to place additional conditions on the use of the VGP within state waters, a number of states have proposed or implemented a variety ofstricter ballast water requirements including, in some states, specific treatment standards. Because the VGP expires at the end of this year, there may be newU.S. federal and state requirements that could require the installation of equipment on our vessels to treat ballast water before it is discharged or theimplementation of other port facility disposal arrangements or procedures at potentially substantial cost, and/or otherwise restrict our vessels from enteringU.S. waters.Compliance with new U.S. federal and state requirements could require the installation of equipment on our vessels to treat ballast water before itis discharged 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. Coast Guard regulations require commercial ships operating in U.S. waters to manage ballast water by meeting certainrequirements, which include using a U.S. type-approved Ballast Water Management System (“BWMS”), temporarily using a foreign-type BWMS that hasbeen accepted by the Coast Guard, using ballast water obtained from a U.S. Public Water System, discharging ballast water into a shore-side facility or notdischarging ballast water within 12 nautical miles. As of January 1, 2014, vessels are technically subject to the phasing-in of these standards. As a result, theU.S. Coast Guard in the past provided waivers to vessels which could not install the then unapproved ballast water treatment technology, but has begun todeny requests for waivers in light of its recent approval of a handful of technologies. The EPA, on the other hand, has taken a different approach to enforcingballast discharge standards under the VGP. On December 27, 2013, the EPA issued an enforcement response policy in connection with the new VGP in whichthe EPA indicated that it would take into account the reasons why vessels do not have the requisite technology installed, but will not grant any waivers.A number of bills relating to ballast water management have been introduced in the U.S. Congress, but it is difficult to predict which, if any, willbe enacted. Several states, including Michigan and California, have adopted legislation or regulations relating to the permitting and management of ballastwater discharges. California has extended its ballast water management program to the regulation of “hull fouling” organisms attached to vessels and adoptedregulations limiting the number of organisms in ballast water discharges. Other states could adopt similar requirements that could increase the costs ofoperation in state waters.The Federal Clean Air Act (“CAA”) requires the EPA to promulgate standards applicable to emissions of volatile organic compounds and otherair contaminants. 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 Annex VI, including the stricter North America ECA standards,which took effect in August 2012, when they enter U.S. ports or operate in most internal U.S. waters including the Great Lakes. Annex VI requirements arediscussed in greater detail above under “International regulations to prevent pollution from ships.” We may incur costs to install control equipment on ourvessels to comply with the new standards.Also under the CAA, since 1990, the U.S. Coast Guard has 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. 61Table of ContentsInternational laws governing civil liability for oil pollution damageWe operate a fleet of vessels that are subject to national and international laws governing pollution from such vessels. Several internationalconventions impose and limit pollution liability from vessels. An owner of a tanker vessel carrying a cargo of “persistent oil” as defined by the InternationalConvention for Civil Liability for Oil Pollution Damage (the “CLC”) is subject under the convention to strict liability for any pollution damage caused in acontracting state by an escape or discharge from cargo or bunker tanks. This liability is subject to a financial limit calculated by reference to the tonnage ofthe ship, and the right to limit liability may be lost if the spill is caused by the shipowner’s intentional or reckless conduct. Liability may also be incurredunder the CLC for a bunker spill from the vessel even when she is not carrying such cargo, but is in ballast.When a tanker is carrying clean oil products that do not constitute “persistent oil” that would be covered under the CLC, liability for anypollution damage will generally fall outside the CLC and will depend on other international conventions or domestic laws in the jurisdiction where thespillage occurs. The same principle applies to any pollution from the vessel in a jurisdiction, which is not a party to the CLC. The CLC applies in over 100jurisdictions around the world, but it does not apply in the U.S., where the corresponding liability laws such as the OPA 90 discussed above, are particularlystringent.For vessel operations not covered by the CLC, in 2001, the IMO adopted the International Convention on Civil Liability for Bunker OilPollution Damage (the “Bunker Convention”), which imposes strict liability on shipowners for pollution damage in jurisdictional waters of ratifying statescaused by discharges of “bunker oil.” The Bunker Convention defines “bunker oil” as “any hydrocarbon mineral oil, including lubricating oil, used orintended to be used for the operation or propulsion of the ship, and any residues of such oil.” The Bunker Convention also requires registered owners of shipsover a certain size to maintain insurance for pollution damage in an amount equal to the limits of liability under the applicable national or internationallimitation regime. The Bunker Convention entered into force on November 21, 2008, and as of February 7, 2017, had 83 contracting states. In otherjurisdictions, liability for spills or releases of oil from ships’ bunkers continues to be determined by the national or other domestic laws in the jurisdictionwhere the events or damages occur.Outside the U.S., 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 Convention on Limitation of Liability for Maritime Claims of 1976 (the “1976 Convention”). Rights to limit liability under the 1976 Convention areforfeited where a spill is caused by a shipowners’ intentional or reckless conduct. Some states have ratified the 1996 LLMC Protocol to the 1976 Convention,which provides for liability limits substantially higher than those set forth in the 1976 Convention to apply in such states. Finally, some jurisdictions are nota party to either the 1976 Convention or the 1996 LLMC Protocol, and, therefore, shipowners’ rights to limit liability for maritime pollution in suchjurisdictions may be uncertain.Other Regional RequirementsThe environmental protection regimes in certain other countries, such as Canada, resemble those of the U.S. To the extent we operate in the territorialwaters of such countries or enter their ports, our vessels would typically be subject to the requirements and liabilities imposed in such countries. Otherregions of the world also have the ability to adopt requirements or regulations that may impose additional obligations on our vessels and may entailsignificant expenditures on our part and may increase the costs of our operations. These requirements, however, would apply to the industry operating inthose regions as a whole and would also affect our competitors. However, it is difficult to predict what legislation, if any, may be promulgated by the U.S., theEU or any other country or authority. 62Table of ContentsSecurity RegulationsA number of initiatives have been introduced in recent years intended to enhance vessel security. On November 25, 2002, MTSA was signed intolaw. To implement certain portions of the MTSA, the U.S. Coast Guard issued regulations in July 2003 requiring the implementation of certain securityrequirements aboard vessels operating in waters subject to the jurisdiction of the United States. Similarly, in December 2002, amendments to SOLAS createda new chapter of the convention dealing specifically with maritime security. This new chapter came into effect in July 2004 and imposes various detailedsecurity obligations on vessels and port authorities, most of which are contained in the newly created 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 align 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” that attests to the vessel’s compliance with SOLASsecurity requirements and the ISPS Code. We have implemented the various security measures required by the IMO, SOLAS and the ISPS Code and haveapproved ISPS certificates and plans certified by the applicable flag state on board all our vessels.Classification, Inspection and Maintenance: Every sea going vessel must be “classed” by a classification society. The classification societycertifies that the vessel is “in class,” signifying that the vessel has been built and maintained in accordance with the rules of the classification society andcomplies with applicable rules and regulations of the vessel’s country of registry and the international conventions of which that country is a member. Inaddition, where surveys are required by international conventions and corresponding laws and ordinances of a flag state, the classification society willundertake them on application or by official order, acting on behalf of the authorities concerned.The classification society also undertakes, on request, other surveys and checks that are required by regulations and requirements of the flagstate. These surveys are subject to agreements made in each individual case or to the regulations of the country concerned. For maintenance of the class,regular and extraordinary surveys of hull, machinery (including the electrical plant) and any special equipment classed are required to be performed asfollows: • Annual Surveys: For seagoing ships, annual surveys are conducted for the hull and the machinery (including the electrical plant) and, where applicable,for special equipment classed, at intervals of 12 months from the date of commencement of the class period indicated in the certificate. • Intermediate Surveys: Extended annual surveys are referred to as intermediate surveys and typically are conducted two and a half years aftercommissioning and each class renewal. Intermediate surveys may be carried out on the occasion of the second or third annual survey. • Class Renewal Surveys: Class renewal surveys, also known as special surveys, are carried out for the ship’s hull, machinery (including the electricalplant), and for any special equipment classed, at the intervals indicated by the character of classification for the hull. At the special survey, the vessel isthoroughly examined, including audio-gauging, to determine the thickness of its steel structure. Should the thickness be found to be less than classrequirements, the classification society would prescribe steel renewals. The classification society may grant a one-year grace period for completion ofthe special survey. Substantial amounts of money may have to be spent for steel renewals to pass a special survey if the vessel experiences excessivewear and tear. In lieu of the special survey every four or five years, depending on whether a grace period was granted, a ship owner has the option ofarranging with the classification society for the vessel’s integrated hull or machinery to be on a continuous survey cycle, in which every part of thevessel would be surveyed within a five-year cycle. 63Table of ContentsRisk of Loss and Liability InsuranceGeneral: The operation of any cargo vessel includes risks such as mechanical failure, physical damage, collision, fire, contact with floatingobjects, property loss, cargo loss or damage, business interruption due to political circumstances in foreign countries, hostilities, and labor strikes. Inaddition, there is always an inherent possibility of marine disaster, including oil spills and other environmental mishaps, and the liabilities arising fromowning and operating vessels in international trade. OPA 90, which imposes virtually unlimited liability upon owners, operators and demise charterers of anyvessel trading in the U.S. exclusive economic zone for certain oil pollution accidents in the United States, has made liability insurance more expensive forship owners and operators trading in the U.S. market. While we believe that our present insurance coverage is adequate, not all risks can be insured, and therecan be no guarantee that any specific claim will be paid, or that we will always be able to obtain adequate insurance coverage at reasonable rates. Our currentinsurance includes the following:Hull and Machinery and War Risk Insurance: We have marine hull and machinery and war risk insurance, which include coverage of the riskof actual or constructive total loss, for all of our owned vessels. Each of the owned vessels is covered up to at least fair market value, with a deductible of$0.1 million per Panamax, Handymax and Container vessel and $0.2 million per Capesize vessel for the hull and machinery insurance. We have alsoextended our war risk insurance to include war loss of hire for any loss of time to the vessel, including for physical repairs, caused by a warlike incident andpiracy 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 will be able to recover the sum insured under the increased value policy in addition to the sum insured under the hull and machinery policy. Increasedvalue insurance also covers excess liabilities that are not recoverable in full by the hull and machinery policies by reason of underinsurance. We do notexpect to maintain 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 Insurance: Protection and indemnity insurance is expected to be provided by mutual protection and indemnityassociations (“P&I Associations”), who indemnify members in respect of discharging their tortious, contractual or statutory third-party legal liabilities arisingfrom the operation of an entered ship. Such liabilities include but are not limited to third-party liability and other related expenses from injury or death ofcrew, passengers and other third parties, loss or damage to cargo, claims arising from collisions with other vessels, damage to other third-party property,pollution arising from oil or other substances, and salvage, towing and other related costs, including wreck removal. Protection and indemnity insurance is aform of mutual indemnity insurance, extended by protection and indemnity mutual associations and always provided in accordance with the applicableassociations’ rules and members’ agreed terms and conditions.Our fleet is currently entered for protection and indemnity insurance with International Group associations where, in line with all InternationalGroup Clubs, coverage for oil pollution is limited to $1.0 billion per event. The 13 P&I Associations that comprise the International Group insureapproximately 95% of the world’s commercial tonnage and have entered into a pooling agreement to collectively reinsure each association’s liabilities. Eachvessel that we acquire will be entered with P&I Associations of the International Group. Under the International Group reinsurance program for the currentpolicy year, each P&I club in the International Group is responsible for the first $10.0 million of every claim. In every claim the amount in excess of$10.0 million and up to $100.0 million is shared by the clubs under the pooling agreement. Any claim in excess of $100.0 million is reinsured by theInternational Group in the international reinsurance market under the General Excess of Loss Reinsurance Contract. This policy currently provides anadditional $2.0 billion of coverage for non-oil pollution claims. Further to this, an additional reinsurance layer has been placed by the International Groupfor claims up to $1.0 billion in excess of $2.1 billion, or $3.1 billion in total. For passengers and crew claims, the overall limit is $3.0 billion for any oneevent on 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 claimexceed Group reinsurance limits, the provisions of all International Group Club’s overspill claim rules will operate and members of any International GroupClub will be liable for additional contributions in accordance with such rules. To date, there has never been an overspill claim, or one even nearing this level.As a member of the P&I Associations that are members of the International Group, we will be subject to calls payable to the associations based onour individual fleet record, the associations’ overall its claim records as well as the claim records of all other members of the individual associations, andmembers of the pool of P&I Associations comprising the International Group. The P&I Associations’ policy year commences on February 20th. Calls arelevied by means of Estimated Total Premiums (“ETP”) and the amount of the final installment of the ETP varies according to the actual total premiumultimately required by the club for a particular policy year. Members have a liability to pay supplementary calls, which might be levied by the board ofdirectors 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 theClub’s Managers discretion, they may be also be liable to pay release calls or provide adequate security for the same amount. Such calls are levied in respectof potential outstanding Club/Member liabilities on open policy years and include but are not limited to liabilities for deferred calls and supplementary calls.Uninsured Risks: Not all risks are insured and not all risks are insurable. The principal insurable risks, which nonetheless remain uninsuredacross our businesses, are “loss of hire”, “strikes,” except in cases of loss of hire due to war or a piracy event, “defense,” and “credit risk. Specifically, we donot insure these risks because the costs are regarded as disproportionate. These 64Table of Contentsinsurances provide, subject to a deductible, a limited indemnity for hire that would not be receivable by the shipowner 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 mechanical breakdown, the daily hire will no longer bepayable by the charterer. The purpose of the loss of hire insurance is to secure the loss of hire during such periods. In the case of strikes insurance, if a vessel isbeing paid a fixed sum to perform a voyage and the ship becomes strike bound at a loading or discharging port, the insurance covers the loss of earningsduring such periods. However, in some cases when a vessel is transiting high risk war and/or piracy areas, we arrange war loss of hire insurance to cover up to270 days of detention/loss of time. When our charterers engage in legally permitted trading in locations which may still be subject to sanctions or boycott,such as Iran, Syria and Sudan, our insurers may be contractually or by operation of law prohibited from honoring our insurance contract for such trading,which could result in reduced insurance coverage for losses incurred by the related vessels. Furthermore, our insurers and we may be prohibited from postingor otherwise be unable to post security in respect of any incident in such locations, resulting in the loss of use of the relevant vessel and negative publicityfor our Company which could negatively impact our business, results of operations, cash flows and share price.There are no deductibles for the war loss of hire cover. We maintain strike insurance for our port terminal operations.Even if our insurance coverage is adequate to cover our losses, if we suffer a loss of a vessel, we may not be able to obtain a timely replacementfor any lost vessel. Furthermore, in the future, we may not be able to obtain adequate insurance coverage at reasonable rates for our fleet. For example, morestringent environmental regulations have led to increased costs for, and in the future may result in the lack of availability of, insurance against risks ofenvironmental damage or pollution. We may also be subject to calls, or premiums, in amounts based not only on our own claim records but also on the claimrecords of all other members of the protection and indemnity associations through which we receive indemnity insurance coverage. A catastrophic oil spill ormarine disaster could exceed our insurance coverage, which could have a material adverse effect on our business, results of operations and financialcondition. Any uninsured or underinsured loss could harm our business and financial condition. In addition, the insurance may be voidable by the insurers asa result of certain actions, such as vessels failing to maintain required certification.Risk ManagementRisk management in the shipping industry involves balancing a number of factors in a cyclical and potentially volatile environment.Fundamentally, the challenge is to appropriately allocate capital to competing opportunities of owning or chartering vessels. In part, this requires a view ofthe overall health of the market as well as an understanding of capital costs and returns. Thus, stated simply, one may charter-in part of a fleet as opposed toowning the entire fleet to maximize risk management and economic results. This is coupled with the challenge posed by the complex logistics of ensuringthat the vessels controlled by Navios Holdings are fully employed.Navios Holdings seeks to manage risk through a number of strategies, including vessel control strategies (chartering and ownership), freightcarriage and FFA trading. Navios Holdings’ vessel control strategies include seeking the appropriate mix of owned vessels, long- and short-term chartered-invessels, coupled with purchase options, when available, and spot charters. Navios Holdings also enters into COAs, which gives Navios Holdings, subject tocertain limitations, the flexibility to determine the means of getting a particular cargo to its destination.Legal ProceedingsNavios Holdings is not involved in any legal proceedings that it believes will have a material adverse effect on its business, financial position,results of operations and liquidity.From time to time, Navios Holdings may be subject to legal proceedings and claims in the ordinary course of business. It is expected that theseclaims would be covered by insurance if they involved liabilities such as those that arise from a collision, other marine casualty, damage to cargoes, oilpollution and death or personal injuries to crew, subject to customary deductibles. Those claims, even if lacking merit, could result in the expenditure ofsignificant financial and managerial resources.Refer to “Item 8. Financial Information” in “Legal Proceedings”. 65Table of ContentsCrewing and Shore EmployeesNavios Holdings crews its vessels primarily with Greek, Ukrainian, Georgian, Filipino, Polish, Romanian, Indian and Russian officers andFilipino, Georgian, Indian, Romanian, Ethiopian and Ukrainian seamen. Navios Holdings’ fleet manager is responsible for selecting its Greek officers. Othernationalities are referred to Navios Holdings’ fleet manager by local crewing agencies. Navios Holdings is also responsible for travel and payroll of the crew.The crewing agencies handle each seaman’s training. Navios Holdings requires that all of its seamen have the qualifications and licenses required to complywith international regulations and shipping conventions. Navios Logistics crews its fleet with Argentinean, Brazilian and Paraguayan officers and seamen.Navios Logistics’ fleet managers are responsible for selecting the crew.As of December 31, 2017, with respect to shore-side employees, Navios Holdings and its subsidiaries employed 222 employees in its Piraeus,Greece office, 11 employees in its New York office, seven employees in its Antwerp, Belgium office, three employees in its Monaco office and eightemployees in its Singapore office. Navios Logistics employs 50 employees in the Asuncion, Paraguay office, 21 employees at the port facility in SanAntonio, Paraguay, 103 employees in the Buenos Aires, Argentina office, eight employees in the Montevideo, Uruguay office, 203 employees at the portfacilities in Uruguay, and 10 employees at Hidronave South American Logistics S.A.’s (“Hidronave”) Corumba, Brazil office.FacilitiesNavios Holdings and its affiliates currently lease the following properties: • Navios Shipmanagement Inc. and Navios Corporation lease approximately 3,882.3 square meters of space at 85 Akti Miaouli, Piraeus, Greece, pursuantto one lease agreement that continues to be effective until either party terminates the agreement and other lease agreements that expire in 2019. • Kleimar N.V. leases approximately 632 square meters for its offices, in Antwerp, Belgium, pursuant to a lease that expires in 2019. • Navios Corporation leases approximately 16,703 square feet of space at 825 Third Avenue, New York, New York, pursuant to a lease that expires in2019. Navios Holdings sublets a portion of the 34th floor in the building located at 825 Third Avenue, New York, New York, which premises comprisea portion of the premises under the main lease, to a third party pursuant a sub-lease that expires in 2019. • Navios Tankers Management Inc. leases approximately 253.75 square meters of space at 85 Akti Miaouli, Piraeus, Greece, pursuant to a leaseagreement signed October 29, 2010 and expiring in 2019. • Navios Shipmanagement Inc., Navios Maritime Holdings Inc., and Navios Tankers Management Inc. lease office space in Monaco pursuant to a leasethat expires in June 2018.Navios Logistics and its subsidiaries currently lease, (or occupy as free zone users, as the case may be), the following premises: • CNSA, as a free zone direct user at the Nueva Palmira Free Zone, holds the right to occupy the land on which it operates its port and transfer facilities,located at Zona Franca, Nueva Palmira, Uruguay. CNSA was authorized to operate as a free zone user on November 29, 1955 by a resolution of theExecutive, who on September 27, 1956 approved an agreement, as required by applicable law at the time. On December 4, 1995, CNSA’s rights as adirect user were renewed in a single free zone user agreement, which was subsequently amended on multiple occasions, incorporating new plots of landuntil its final version dated March 4, 2016. The agreement currently in force permits CNSA to install and operate a transfer station to handle and storegoods, and to build and operate a plant to receive, prepare and dry grain, iron ore, minerals and all types of liquid cargo on land in the Nueva PalmiraFree Zone. The agreement expires on March 3, 2046, with a 20-year extension at Navios Logistics’ option, until 2066. Navios Logistics pays a fixedannual fee of approximately $0.3 million, payable over eight consecutive months beginning in January of each year and increasing yearly inproportion to the variation in the U.S. Consumer Price Index corresponding to the previous year. There is also a transhipment fee of $0.20 per tontransshipped until December 31, 2017 and of $0.25 per ton transshipped thereafter. Navios Logistics has certain obligations with respect to improvingthe land subject to the agreement, and the agreement is terminable by the Free Zone Division if it breaches the terms of the agreement, or labor laws andsocial security contributions, and if it commits illegal acts or acts expressly forbidden by the agreement. In March 2013, CNSA acquired Enresur, aNueva Palmira Free Zone direct user, and in December 2014, Navios Logistics acquired Cartisur and Edolmix, both also Nueva Palmira Free Zonedirect users. On March 4, 2016, the lands pertaining to Cartisur were assigned to CNSA. • CNSA also leases approximately 400 square meters of space at Paraguay 2141, Montevideo, Uruguay, pursuant to a lease that expires in November2020. 66Table of Contents• Compania Naviera Horamar S.A. leases approximately 409 square meters at Cepeda 429 Street, San Nicolás, Buenos Aires, Argentina, pursuant to alease agreement that expires in November 2020. • Petrolera San Antonio S.A. leases approximately 10,481 square meters of a land and a small warehouse next to the river Paraguay at San Miguel districtof Asunción over the way to the Club Mbigua, pursuant to a lease agreement that expires in June 2018. • Compania Naviera Horamar S.A. leases a piece of land called “La Misteriosa” in an Island in the Province of Entre Rios, Argentina, Department ofIslands of Ibicuy and Paranacito, pursuant to a lease agreement that expires in May 2018. • Compania Naviera Horamar S.A. leases approximately 1,370 square meters of office space at Av. Juana Manso 205, Buenos Aires, Argentina, pursuantto a lease agreement that expires in June 2021. • Merco Par S.A.C.I. leases approximately 655 square meters of office space at Avenida Aviadores del Chaco No 1.669 corner San Martín, Asuncion,Paraguay, pursuant to a lease agreement that expires in November 2018. • Merco Par S.A.C.I. leases some premises alongside the River Paraguay from Relámpago Servicios Import Export S.A. for docking purposes. Thisproperty has 380 meters of costal line, by 40 meters of front on the Paraguay River in Bañado Norte, Municipality of Blanco Cue, Asunción District, inParaguay. The lease is valid until July 2018 and it is automatically renewable for two years. • Petrolera San Antonio S.A: leases some premises alongside the Paraguay River from Ingeniería Naval Especializada S.R.L. (INAVE), located on BlancoCué. The lease is valid until June 2018.CNSA owns premises in Montevideo, Uruguay. This space is approximately 112 square meters and is located at Juan Carlos Gomez 1445, Oficina 701,Montevideo 1100, Uruguay.Petrolera San Antonio S.A. owns the premises from which it operates in Avenida San Antonio, Paraguay. This space is approximately 146,744 square metersand is located between Avenida San Antonio and Virgen de Caacupe, San Antonio, Paraguay.Compania Naviera Horamar S.A. owns two storehouses located at 880 Calle California, Ciudad Autonoma de Buenos Aires, Argentina and at 791/795 CalleGeneral Daniel Cerri, Ciudad Autonoma de Buenos Aires, Argentina of approximately 259 and 825 square meters, respectively. Compania Naviera HoramarS.A. also owns approximately 1,208 square meters of office space located in 846 Avenida Santa Fe, Ciudad Autonoma de Buenos Aires, Argentina.Petrovia Internacional S.A. owns three plots of land in Nueva Palmira, Uruguay, two of approximately 29 acres each and one of 23 acres.C. Organizational structureNavios Holdings and/or its subsidiaries maintain offices in Monaco, Piraeus, Greece, Antwerp, Belgium, New York and Singapore. Commercialship management, risk management, operation and technical management of Navios Holdings’ owned vessels are conducted through wholly-ownedsubsidiaries of Navios Holdings. Navios Logistics maintains offices in Montevideo, Uruguay, Buenos Aires, Argentina, Asuncion, Paraguay, and Corumba,Brazil. Navios Logistics conducts the commercial and technical management of its vessels, barges and pushboats through its wholly-owned subsidiaries.Navios Logistics holds the rights to operate the ports and transfer facilities in Nueva Palmira indirectly through its Uruguayan subsidiary, CNSA, and ownsthe San Antonio port facility through its Paraguayan subsidiary, Petrosan.As of December 31, 2017, all subsidiaries included in the consolidated financial statements are 100% owned, except for Navios Logistics and itssubsidiaries, which is 63.8% owned by Navios Holdings. 67Table of ContentsThe table below sets forth Navios Holdings’ corporate structure as of December 31, 2017.Subsidiaries included in the consolidation: Ownership Country of Statement of OperationsCompany Name Nature Interest Incorporation 2017 2016 2015Navios Maritime Holdings Inc. Holding Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Navios Corporation Sub-Holding Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Navios International Inc. Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Navimax Corporation Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Navios Handybulk Inc. Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Hestia Shipping Ltd Operating Company 100% Malta 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Anemos Maritime Holdings Inc. Sub-Holding Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Navios Shipmanagement Inc. Management Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31NAV Holdings Limited Sub-Holding Company 100% Malta 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Kleimar N.V. Operating Company/Vessel Owning Company/Management Company 100% Belgium 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Kleimar Ltd. Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Bulkinvest S.A. Operating Company 100% Luxembourg 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Primavera Shipping Corporation Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Ginger Services Co. Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Aquis Marine Corp. Sub-Holding Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Navios Tankers Management Inc. Management Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Astra Maritime Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Achilles Shipping Corporation Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Apollon Shipping Corporation Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Herakles Shipping Corporation Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Hios Shipping Corporation Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Ionian Shipping Corporation Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Kypros Shipping Corporation Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Meridian Shipping Enterprises Inc. Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Mercator Shipping Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Arc Shipping Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Horizon Shipping Enterprises Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Magellan Shipping Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Aegean Shipping Corporation Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Star Maritime Enterprises Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Corsair Shipping Ltd. Vessel Owning Company 100% Marshall Is 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Rowboat Marine Inc. Operating Company 100% Marshall Is 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Beaufiks Shipping Corporation Operating Company 100% Marshall Is 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Nostos Shipmanagement Corp. Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Portorosa Marine Corp. Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Shikhar Ventures S.A. Vessel Owning Company 100% Liberia 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Sizzling Ventures Inc. Operating Company 100% Liberia 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Rheia Associates Co. Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Taharqa Spirit Corp. Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Rumer Holding Ltd. Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Pharos Navigation S.A. Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Pueblo Holdings Ltd Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Quena Shipmanagement Inc. Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Aramis Navigation Inc. Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31White Narcissus Marine S.A. Vessel Owning Company 100% Panama 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Navios GP L.L.C. Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Red Rose Shipping Corp. Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Highbird Management Inc. Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Ducale Marine Inc. Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Vector Shipping Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Faith Marine Ltd. Vessel Owning Company 100% Liberia 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Navios Maritime Finance (US) Inc. Operating Company 100% Delaware 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Navios Maritime Finance II (US) Inc. Operating Company 100% Delaware 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Tulsi Shipmanagement Co. Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Cinthara Shipping Ltd. Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Rawlin Services Company Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 68Table of ContentsMauve International S.A. Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Serenity Shipping Enterprises Inc. Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Mandora Shipping Ltd Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Solange Shipping Ltd. Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Diesis Ship Management Ltd Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Navios Holdings Europe Finance Inc. Sub-Holding Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Navios Asia LLC Sub-Holding Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Iris Shipping Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Jasmine Shipping Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Emery Shipping Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Lavender Shipping Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Esmeralda Shipping Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/12 - 12/31 — Triangle Shipping Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/12 - 12/31 — Roselite Shipping Corporation Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 10/9 - 12/31 Smaltite Shipping Corporation Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 10/9 - 12/31 Motiva Trading Ltd Operating Company 100% Marshall Is. 1/1 - 12/31 11/2 - 12/31 — Alpha Merit Corporation Sub-Holding Company 100% Marshall Is. 11/3 - 12/31 — — Thalassa Marine S.A. Operating Company 100% Marshall Is. 12/15 - 12/31 — — Affiliates included in the financial statements accounted for under the equity method:In the consolidated financial statements of Navios Holdings, the following entities are included as affiliates and are accounted for under theequity method for such periods: (i) Navios Partners and its subsidiaries (ownership interest as of December 31, 2017 was 20.8%, which includes a 2.0%general partner interest); (ii) Navios Acquisition and its subsidiaries (economic interest as of December 31, 2017 was 46.2%); (iii) Acropolis (economicinterest as of December 31, 2017 was 35.0%); (iv) Navios Europe I and its subsidiaries (economic interest as of December 31, 2017 was 47.5%); NaviosEurope II and its subsidiaries (economic interest as of December 31, 2017 was 47.5%); and Navios Containers Inc. and its subsidiaries (economic interest as ofDecember 31, 2017 was 3.4%).D. Property, plants and equipmentOur only material property is the owned vessels, tanker vessels, barges and pushboats and the port terminal facilities in Paraguay and Uruguay.See “Item 4.B Business Overview” above.Item 4A. Unresolved Staff CommentsNone.Item 5. Operating and Financial Review and ProspectsThe following is a discussion of Navios Holdings’ financial condition and results of operations for each of the fiscal years ended December 31,2017, 2016 and 2015. Navios Holdings’ financial statements have been prepared in accordance with Generally Accepted Accounting Principles in the UnitedStates of America (U.S. GAAP). You should read this section together with the consolidated financial statements and the accompanying notes to thosefinancial statements, which are included in this document.This report contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Reform Act of 1995. Theseforward-looking statements are based on Navios Holdings’ current expectations and observations. Included among the factors that, in our view, could causeactual results to differ materially from the forward-looking statements contained in this report are those discussed under “Risk Factors” and “Forward-Looking Statements”.OverviewNavios Holdings is a global, vertically integrated seaborne shipping and logistics company focused on the transport and transshipment of drybulk commodities, including iron ore, coal and grain. Navios Holdings technically and commercially manages its owned fleet, Navios Acquisition’s fleet,Navios Partners’ fleet, Navios Midstream’s fleet, Navios Europe I’s fleet Navios Europe II’s fleet and Navios Containers’ fleet, and commercially manages itschartered-in fleet.On February 2, 2007, Navios Holdings acquired all of the outstanding share capital of Kleimar N.V. (“Kleimar”). Kleimar is a Belgian maritimetransportation company established in 1993. Kleimar is the owner and operator of Capesize, Panamax and Handymax vessels used in the transportation ofcargoes and has an extensive COA business. 69Table of ContentsNavios Logistics, a consolidated subsidiary of Navios Holdings, is one of the largest logistics companies in the Hidrovia region river system, themain navigable river system in the region, and on the cabotage trades along the eastern coast of South America, serving its customers in the Hidrovia regionthrough three port storage and transfer facilities, one for agricultural, forest-related exports, one for mineral-related exports and the other for refined petroleumproducts. Navios Logistics complements its three port terminals with a diverse fleet of 338 barges and pushboats and eight vessels, including six oceangoingtankers, one bunker vessel and one river and estuary tanker to be delivered which operate in its cabotage business. Navios Holdings currently owns 63.8% ofNavios Logistics.On August 7, 2007, Navios Holdings formed Navios Partners under the laws of Marshall Islands. Navios G.P. L.L.C. (“General Partner”), a whollyowned subsidiary of Navios Holdings, was also formed on that date to act as the general partner of Navios Partners and received a 2.0% general partnerinterest in Navios Partners. Navios Partners is an affiliate and not consolidated under Navios Holdings.On May 28, 2010, Navios Holdings acquired control over Navios Acquisition. As a result, Navios Holdings concluded a business combinationhad occurred and consolidated the results of Navios Acquisition from that date until March 30, 2011. From March 30, 2011, Navios Acquisition has beenconsidered as an affiliate entity of Navios Holdings. As of December 31, 2017, Navios Holdings’ ownership of the outstanding voting stock of NaviosAcquisition was 42.9% and its economic interest in Navios Acquisition was 46.2%.On October 9, 2013, Navios Holdings, Navios Acquisition and Navios Partners established Navios Europe I and have economic interests of47.5%, 47.5% and 5.0%, respectively, and effective November 2014 voting interests of 50%, 50% and 0%, respectively.On October 13, 2014, Navios Acquisition formed Navios Midstream under the laws of the Marshall Islands. Midstream General Partner, a whollyowned subsidiary of Navios Acquisition, was also formed on that date to act as the general partner of Navios Midstream and received a 2.0% general partnerinterest in Navios Midstream. As of December 31, 2017, Navios Acquisition had 59.0% economic interest and Navios Holdings had indirect economicinterest of 27.2% (through its ownership in Navios Acquisition) and no direct equity interest.On February 18, 2015, Navios Holdings, Navios Acquisition and Navios Partners established Navios Europe II and have economic interests of47.5%, 47.5% and 5.0%, respectively and voting interests of 50%, 50% and 0%, respectively.On June 8, 2017, Navios Containers completed a private placement and Navios Holdings invested $5.0 million. Navios Containers registered itsshares on the Norwegian Over-The-Counter Market (N-OTC) on June 12, 2017 under the ticker “NMCI”. On August 29, 2017 and on November 9, 2017,Navios Containers closed its additional private placements. As of December 31, 2017, Navios Holdings owned 3.4% of Navios Containers’ common stockand warrants, representing 1.7% of the equity of Navios Containers.Charter Policy and Industry OutlookNavios Holdings’ policy has been to take a portfolio approach to managing operating risks. This policy may lead Navios Holdings to timecharter-out many of the vessels that it is operating (i.e., vessels owned by Navios Holdings or which Navios Holdings has taken into its fleet under chartershaving a duration of more than 12 months) for long-term periods to various shipping industry counterparties considered by Navios Holdings to haveappropriate credit profiles. By doing this, Navios Holdings aims to lock in, subject to credit and operating risks, favorable forward revenue and cash flows,which it believes, will cushion it against unfavorable market conditions, when the Company deems necessary. In addition, Navios Holdings trades additionalvessels taken in on shorter term charters of less than 12 months duration as well as voyage charters or COAs.Generally, this chartering policy may have the effect of generating Time Charter Equivalents (“TCE”) that are higher than spot employment. Theaverage daily charter-in vessel cost for the Navios Holdings long-term charter-in fleet (excluding vessels, which are utilized to serve voyage charters orCOAs) was $12,586 per day for the year ended December 31, 2017. The average long-term charter-in hire rate per vessel was included in the amount of long-term hire included elsewhere in this document and was computed by (a) multiplying (i) the daily charter-in rate for each vessel by (ii) the number of days eachvessel is in operation for the year; (b) summing those individual multiplications; and (c) dividing such total by the total number of charter-in vessel days forthe year. Furthermore, Navios Holdings has the ability to increase its owned fleet through purchase options exercisable in the future at favorable pricesrelative to the then-current market.Navios Holdings believes that a decrease in global commodity demand from its current level, and the delivery of dry bulk carrier new buildingsinto the world fleet, could have an adverse impact on future revenue and profitability. However, Navios Holdings believes that the operating cost advantageof its owned vessels and long-term chartered fleet will continue to help mitigate the impact of any declines in freight rates. A reduced freight rateenvironment also has an adverse impact on the value of Navios Holdings’ owned fleet. In reaction to a decline in freight rates, available ship financing canalso be negatively impacted. 70Table of ContentsNavios Logistics owns and operates vessels, barges and pushboats located mainly in Argentina, the largest independent bulk transfer andstorage port facility in Uruguay, and an upriver liquid port facility located in Paraguay. Operating results for Navios Logistics are highly correlated to:(i) South American grain production and export, in particular Argentinean, Brazilian, Paraguayan, Uruguayan and Bolivian production and export; (ii) SouthAmerican iron ore production and export, mainly from Brazil; and (iii) sales (and logistic services) of petroleum products in the Argentine and Paraguayanmarkets. Navios Holdings believes that the continuing development of these businesses will foster throughput growth and therefore increase revenues atNavios Logistics. Should this development be delayed, grain harvests be reduced, or the market experience an overall decrease in the demand for grain oriron ore, the operations in Navios Logistics could be adversely affected.FleetThe following is the current “core fleet” employment profile (excluding Navios Logistics). The current “core fleet” consists of 71 vesselstotaling 7.2 million deadweight tons and has an average age of 7.7 years, assuming basis delivered fleet. The employment profile of the fleet as of March 26,2018 is reflected in the tables below. Navios Holdings has currently chartered-out 76.8% of available days for 2018, out of which 41.4% on fixed rate and35.4% on index or profit sharing. Although the fees as presented below are based on contractual charter rates, any contract is subject to performance by thecounterparties and us. Additionally, the level of these fees would decrease depending on the vessels’ off-hire days to perform periodic maintenance.Owned Vessels Vessels Type Built DWT Charter-outRate (1) Profit Share ExpirationDate (2) Navios Serenity Handysize 2011 34,690 7,125 No 04/2018 Navios Achilles Ultra Handymax 2001 52,063 8,313 No 05/2018 Navios Vector Ultra Handymax 2002 50,296 10,450 No 01/2019 Navios Meridian Ultra Handymax 2002 50,316 10,450 No 09/2018 Navios Mercator Ultra Handymax 2002 53,553 9,928 No 12/2018 Navios Arc Ultra Handymax 2003 53,514 5,035 No 04/2018 Navios Hios Ultra Handymax 2003 55,180 10,355 No 01/2019 Navios Kypros Ultra Handymax 2003 55,222 11,075— No100% of average 52 Baltic Supramax IndexRoutes 04/201801/2019 Navios Astra Ultra Handymax 2006 53,468 9,738 No 10/2018 Navios Ulysses Ultra Handymax 2007 55,728 9,405 No 04/2018 Navios Celestial Ultra Handymax 2009 58,063 — 97.5% of average 58 Baltic Supramax IndexRoutes 01/2019 Navios Vega Ultra Handymax 2009 58,792 10,873— No97.5% of average 58 Baltic Supramax IndexRoutes 04/201812/2018 Navios Magellan Panamax 2000 74,333 11,163 No 07/2018 Navios Star Panamax 2002 76,662 — 100% of average Baltic Panamax Index 4TCRoutes less $2,488/day 12/2018 Navios Northern Star Panamax 2005 75,395 9,738 No 04/2018 Navios Amitie Panamax 2005 75,395 — 100% of average Baltic Panamax Index 4TCRoutes less $2,488/day 12/2018 Navios Taurus Panamax 2005 76,596 11,020 No 06/2018 Navios Asteriks Panamax 2005 76,801 — 100% of average Baltic Panamax Index 4TCRoutes less $2,488/day 11/2018 N Amalthia Panamax 2006 75,318 — 100% of average Baltic Panamax Index 4TCRoutes less $2,488/day 12/2018 Navios Galileo Panamax 2006 76,596 — 100% of average Baltic Panamax Index 4TCRoutes less $2,488/day 12/2018 N Bonanza Panamax 2006 76,596 — 100% of average Baltic Panamax Index 4TCRoutes less $2,488/day 11/2018 Navios Avior Panamax 2012 81,355 10,925 No 06/2018 71Table of ContentsNavios Centaurus Panamax 2012 81,472 — 110% of average Panamax Index 4TC Routes lessadjustment to be based on index formula 12/2018 Navios Sphera Panamax 2016 84,872 12,076— No123% of average Panamax Index 4TC Routes lessadjustment to be based on index formula 04/201801/2019 Vessels Type Built DWT Charter-outRate (1) Profit Share ExpirationDate (2) Navios Equator Prosper Capesize 2000 171,191 9,064— No117.5% Weighted Average Baltic Capesize 5TCIndex Routes 04/201803/2019 Navios Stellar Capesize 2009 169,001 — 102% Weighted Average Baltic Capesize 5TCIndex Routes 01/2020 Navios Bonavis Capesize 2009 180,022 17,391 No 04/2018 Navios Happiness Capesize 2009 180,022 — 106% Weighted AverageBaltic Capesize 5TC Index Routes 04/2018 Navios Phoenix Capesize 2009 180,242 14,345— No107.5% Weighted Average Baltic Capesize 5TCIndex Routes 04/201812/2018 Navios Lumen Capesize 2009 180,661 11,74118,858 NoNo 04/201801/2019 Navios Antares Capesize 2010 169,059 9,399— No102% Weighted Average Baltic Capesize 5TCIndex Routes 04/201801/2020 Navios Etoile Capesize 2010 179,234 9,025 No 04/2018 Navios Bonheur Capesize 2010 179,259 17,391 No 04/2018 Navios Altamira Capesize 2011 179,165 — 101% Weighted Average Baltic Capesize 5TCIndex Routes 01/2019 Navios Azimuth Capesize 2011 179,169 14,725 No 04/2018 Navios Ray Capesize 2012 179,515 9,267— No$4,500 + 52% Weighted Average Baltic Capesize5TC Index Routes 04/201804/2018 Navios Gem Capesize 2014 181,336 20,045 No 12/2018 Navios Mars Capesize 2016 181,259 — 117.5% Weighted Average Baltic Capesize 5TCIndex Routes 02/2019 72Table of ContentsLong-term Chartered-in VesselsThe average daily charter-in rate for the active long-term charter-in vessels (excluding vessels which are utilized to fulfil COAs) for 2018 isestimated at $12,852/day. We estimate the days of the long-term charter-in vessels (excluding vessels which are utilized to fulfill COAs) for the next ninemonths of 2018 are 8,848 days. Vessels Type Built DWT PurchaseOption(3) Charter-outRate (1) ExpirationDate (2) Navios Lyra Handysize 2012 34,718 Yes(4) 8,241 03/2018 Navios Primavera Ultra Handymax 2007 53,464 Yes 9,975 08/2018 Mercury Ocean Ultra Handymax 2008 53,452 No 9,500 11/2018 Kouju Lily Ultra Handymax 2011 58,872 No 8,740 07/2018 Navios Oriana Ultra Handymax 2012 61,442 Yes — (6) 06/2018 Navios Mercury Ultra Handymax 2013 61,393 Yes — (7) 12/2018 Navios Venus Ultra Handymax 2015 61,339 Yes 9,025— (6) 04/201801/2019 Osmarine Panamax 2006 76,000 No 12,730 04/2018 Navios Aldebaran Panamax 2008 76,500 Yes 13,775 02/2019 KM Imabari Panamax 2009 76,619 No 12,326 04/2018 Navios Marco Polo Panamax 2011 80,647 Yes — (8) 08/2018 Navios Southern Star Panamax 2013 82,224 Yes 16,346— (9) 04/201804/2019 Sea Victory Panamax 2014 77,095 Yes — (10) 11/2018 Navios Amber Panamax 2015 80,994 Yes 11,589— (11) 04/201801/2019 Navios Sky Panamax 2015 82,056 Yes 11,473— (12) 04/201803/2019 Navios Coral Panamax 2016 84,904 Yes — (13) 01/2018 Navios Citrine Panamax 2017 81,626 Yes 9,500 09/2018 Navios Dolphin Panamax 2017 81,630 Yes 10,450 09/2018 Elsa S Panamax 2015 80,954 No 11,358— (14) 06/201801/2021 Pacific Explorer Capesize 2007 177,000 No — (15) 12/2018 King Ore Capesize 2010 176,800 Yes — Navios Koyo Capesize 2011 181,415 Yes 11,931— (16) 04/201802/2019 Navios Obeliks Capesize 2012 181,415 Yes — Dream Canary Capesize 2015 180,528 Yes 13,300 03/2019 Dream Coral Capesize 2015 181,249 Yes 14,013 03/2019 Navios Felix Capesize 2016 181,221 Yes — (17) 01/2019 73Table of ContentsLong-term Chartered-in Fleet to be delivered Vessels Type DeliveryDate DWT PurchaseOption(3) ExpirationDate TBN (18) Panamax April 2018 82,000 No 12/2020 TBN (19) Panamax May 2018 82,000 No 03/2021 TBN Panamax Q4 2018 81,500 No(5) Q3 2023 TBN Panamax Q1 2019 81,500 No(5) Q4 2023 Long-term Bareboat Chartered-in Fleet to be delivered Vessels Type DeliveryDate DWT PurchaseOption(3) ExpirationDate TBN Panamax Q4 2019 82,000 Yes Q4 2029 TBN Panamax Q1 2020 82,000 Yes Q4 2029 TBN Panamax Q4 2019 82,000 Yes Q1 2030 (1)Daily rate net of commissions.(2)Expected redelivery basis midpoint of full redelivery period.(3)Generally, Navios Holdings may exercise its purchase option after three to five years of service.(4)Navios Holdings holds the initial 50% purchase option on the vessel.(5)Navios Holdings has the right of first refusal and profit share on sale of vessel.(6)110% of average Baltic Supramax 52 Index Routes.(7)110% of average Baltic Supramax 58 10TC Index Routes.(8)113% of average Baltic Panamax Index 4TC Routes less adjustment to be based on index formula.(9)113.75% of average Baltic Panamax Index 4TC Routes.(10)114% of average Baltic Panamax Index 4TC Routes less $2,488/day.(11)120% of average Baltic Panamax Index 4TC Routes less adjustment to be based on index formula.(12)115% of average Baltic Panamax Index 4TC Routes less adjustment to be based on index formula.(13)118% of average Baltic Panamax Index 4TC Routes.(14)115% of average Baltic Panamax Index 4TC Routes.(15)103% of average Baltic Capesize Index 5TC Routes.(16)112% of average Baltic Capesize Index 5TC Routes.(17)120% of weighted average Baltic Capesize Index 5TC Routes.(18)Chartered-out at $11,358/day up to 06/2018, then 115% of average Baltic Panamax Index 4TC Routes up to 03/2021.(19)Chartered-out rate at $11,358/day up to 06/2018, then 115% of average Baltic Panamax Index 4TC Routes up to 05/2021.Recent DevelopmentsIn January 2018, Navios Holdings agreed to charter-in, under two ten-year bareboat contracts, from an unrelated third party two newbuildingbulk carriers of about 82,000 dwt per vessel, expected to be delivered in the fourth quarter of 2019 and the first quarter of 2020 respectively. Navios Holdingshas agreed to pay in total $11.1 million, representing a deposit for the option to acquire these vessels, of which $5.6 million was paid upon signing of thecontracts. The average charter-in rate per day amounts to $5,700 and $5,564 respectively.In February 2018, Navios Holdings acquired from an unrelated third party, a previously chartered-in vessel, Navios Equator Prosper, a 2000built, 171,191 dwt vessel, for a total acquisition price of $10.0 million paid in cash.On February 21, 2018, Navios Partners announced that it has closed an offering of 18,422,000 common units, which includes the sale of$5.0 million of common units to Navios Holdings, at $1.90 per common unit. In addition, Navios Holdings paid $0.7 million to retain its 2% generalpartnership interest. Following the closing of this offering, Navios Holdings owns a 20.2% interest in Navios Partners, including the 2% general partnershipinterest.In March 2018, Navios Holdings completed the sale to an unrelated third party the Navios Herakles, a 2000 built, 52,061 dwt vessel, for a totalnet sale price of $7.7 million paid in cash. The impairment loss due to the sale amounted to $6.7 million. 74Table of ContentsOn March 13, 2018, Navios Containers announced that it has closed a private placement of 5,454,546 common shares at a subscription price of$5.50 per common share. Navios Holdings invested $0.5 million in the private placement and currently owns 3.2% of the outstanding share capital of NaviosContainers. In addition, Navios Holdings received warrants, with a five-year term, for 1.7% of the newly issued equity.Navios AcquisitionOn March 27, 2018, Navios Holdings received $1.5 million from Navios Acquisition representing the cash dividend for the fourth quarter of2017.In February 2018, the Board of Directors of Navios Acquisition authorized a stock repurchase program for up to $25.0 million of NaviosAcquisition’s common stock, for two years. Stock repurchases will be made from time to time for cash in open market transactions at prevailing market pricesor in privately negotiated transactions. As of March 31, 2018, Navios Acquisition has repurchased 5,166,544 shares of common stock for a total cost ofapproximately $4.2 million. Following these repurchases and as of March 31, 2018, Navios Holdings’ ownership of the outstanding voting stock andeconomic interest in Navios Acquisition was 44.4% and 47.7%, respectively.A. Operating ResultsFactors Affecting Navios Holdings’ Results of Operations:Navios Holdings actively manages the risk in its operations by: (i) operating the vessels in its fleet in accordance with all applicableinternational standards of safety and technical ship management; (ii) enhancing vessel utilization and profitability through an appropriate mix of long-termcharters complemented by spot charters (time charters for short-term employment) and COAs; (iii) monitoring the financial impact of corporate exposure fromboth physical and FFAs transactions; (iv) monitoring market and counterparty credit risk limits; (v) adhering to risk management and operation policies andprocedures; and (vi) requiring counterparty credit approvals.Navios Holdings believes that the important measures for analyzing trends in its results of operations include the following: • Market Exposure: Navios Holdings manages the size and composition of its fleet by seeking a mix between chartering and owning vessels inorder to adjust to anticipated changes in market rates. Navios Holdings aims to achieve an appropriate balance between owned vessels and longand short-term chartered-in vessels and controls approximately 6.7 million dwt in dry bulk tonnage. Navios Holdings’ options to extend thecharter duration of vessels it has under long-term time charter (durations of over 12 months) and its purchase options on chartered vessels permitNavios Holdings to adjust the cost and the fleet size to correspond to market conditions. • Available days: Available days are the total number of days a vessel is controlled by a company less the aggregate number of days that the vesselis off-hire due to scheduled repairs or repairs under guarantee, vessel upgrades or special surveys. The shipping industry uses available days tomeasure the number of days in a period during which vessels should be capable of generating revenues. • Operating days: Operating days are the number of available days in a period less the aggregate number of days that the vessels are off-hire due toany reason, including lack of demand or unforeseen circumstances. The shipping industry uses operating days to measure the aggregate numberof days in a period during which vessels actually generate revenues. • Fleet utilization: Fleet utilization is obtained by dividing the number of operating days during a period by the number of available days duringthe period. The shipping industry uses fleet utilization to measure a company’s efficiency in finding suitable employment for its vessels andminimizing the amount of days that its vessels are off-hire for reasons other than scheduled repairs or repairs under guarantee, vessel upgrades,special surveys or vessel positioning. • TCE rates: TCE rates are defined as voyage and time charter revenues less voyage expenses during a period divided by the number of availabledays during the period. The TCE rate is a standard shipping industry performance measure used primarily to compare daily earnings generated byvessels on time charters with daily earnings generated by vessels on voyage charters, because charter hire rates for vessels on voyage charters aregenerally not expressed in per day amounts, while charter hire rates for vessels on time charters generally are expressed in such amounts. • Equivalent vessels: Equivalent vessels are defined as the available days of the fleet divided by the number of the calendar days in the period. 75Table of ContentsVoyage and Time CharterRevenues are driven primarily by the number and type of vessels in the fleet, the number of days during which such vessels operate and theamount of daily charter hire rates that the vessels earn under charters, which, in turn, are affected by a number of factors, including: • the duration of the charters; • the level of spot market rates at the time of charters; • decisions relating to vessel acquisitions and disposals; • the amount of time spent positioning vessels; • the amount of time that vessels spend in drydock undergoing repairs and upgrades; • the age, condition and specifications of the vessels; and • the aggregate level of supply and demand in the dry bulk shipping industry.Time charters are available for varying periods, ranging from a single trip (spot charter) to a long-term period which may be many years. Under atime charter, owners assume no risk for finding business and obtaining and paying for fuel or other expenses related to the voyage, such as port entry fees. Ingeneral, a long-term time charter assures the vessel owner of a consistent stream of revenue. Operating the vessel in the spot market affords the owner greaterspot market opportunity, which may result in high rates when vessels are in high demand or low rates when vessel availability exceeds demand. Vesselcharter rates are affected by world economics, international events, weather conditions, labor strikes, governmental policies, supply and demand, and manyother factors that might be beyond the control of management.Consistent with industry practice, Navios Holdings uses TCE rates, as a method of analyzing fluctuations between financial periods and as amethod of equating revenue generated from a voyage charter to time charter revenue.TCE rate also serves as an industry standard for measuring revenue and comparing results between geographical regions and among competitors.The cost to maintain and operate a vessel increases with the age of the vessel. Older vessels are less fuel efficient, cost more to insure and requireupgrades from time to time to comply with new regulations. The average age of Navios Holdings’ owned core fleet is 7.7 years, basis fully delivered fleet.However, as such fleet ages or if Navios Holdings expands its fleet by acquiring previously owned and older vessels, the cost per vessel would be expected torise and, assuming all else, including rates, remains constant, vessel profitability would be expected to decrease.Statement of Operations Breakdown by SegmentNavios Holdings reports financial information and evaluates its operations by charter revenues and not by vessel type, length of shipemployment, customers or type of charter. Navios Holdings does not use discrete financial information to evaluate the operating results for each such type ofcharter. Although revenue can be identified for each type of charters, management does not identify expenses, profitability or other financial information on acharter-by-charter or type of charter basis. The reportable segments reflect the internal organization of the Company and are strategic businesses that offerdifferent products and services. The Company currently has two reportable segments: the Dry bulk Vessel Operations and the Logistics Business. The Drybulk Vessel Operations segment consists of the transportation and handling of bulk cargoes through the ownership, operation, and trading of vessels, freight,and FFAs. The Logistics Business segment consists of port terminal business, barge business and cabotage business in the Hidrovia region of South America.Navios Holdings measures segment performance based on net income attributable to Navios Holdings’ common stockholders.For further segment information, please see Note 18 to the Consolidated Financial Statements included elsewhere in this Annual Report. 76Table of ContentsPeriod over Period ComparisonsFor the year ended December 31, 2017 compared to the year ended December 31, 2016The following table presents consolidated revenue and expense information for each of the years ended December 31, 2017 and 2016,respectively. This information was derived from the audited consolidated revenue and expense accounts of Navios Holdings for each of the years endedDecember 31, 2017 and 2016. (In thousands of U.S. dollars) Year EndedDecember 31,2017 Year EndedDecember 31,2016 Revenue $463,049 $419,782 Administrative fee revenue from affiliates 23,667 21,799 Time charter, voyage and logistics business expenses (213,929) (175,072) Direct vessel expenses (116,713) (127,396) General and administrative expenses incurred on behalf of affiliates (23,667) (21,799) General and administrative expenses (27,521) (25,295) Depreciation and amortization (104,112) (113,825) Provision for losses on accounts receivable (269) (1,304) Interest income 6,831 4,947 Interest expense and finance cost (121,611) (113,639) Impairment losses (50,565) — (Loss)/gain on bond and debt extinguishment (981) 29,187 Gain on sale of assets 1,064 — Other income 6,140 18,175 Other expense (13,761) (11,665) Loss before equity in net earnings of affiliated companies $(172,378) $(96,105) Equity/(loss) in net earnings of affiliated companies 4,399 (202,779) Loss before taxes $(167,979) $(298,884) Income tax benefit/(expense) 3,192 (1,265) Net loss $(164,787) $(300,149) Less: Net income attributable to the noncontrolling interest (1,123) (3,674) Net loss attributable to Navios Holdings common stockholders $(165,910) $(303,823) Set forth below are selected historical and statistical data for the dry bulk vessel operations segment for each of the years ended December 31,2017 and 2016 that the Company believes may be useful in better understanding the Company’s financial position and results of operations. Year EndedDecember 31, 2017 2016 FLEET DATA Available days 23,433 21,908 Operating days 23,359 21,742 Fleet utilization 99.7% 99.2% Equivalent vessels 64 60 AVERAGE DAILY RESULTS TCE $9,705 $8,220 During the year ended December 31, 2017, there were 1,525 more available days as compared to 2016, mainly due to an increase in long-termand short-term charter-in fleet available days by 2,003 days. This increase was partially mitigated by a decrease in available days for owned vessels by 478days, mainly due to the sale of Navios Ionian and Navios Horizon. Navios Holdings can increase or decrease its fleet’s size by chartering-in vessels for long orshort-term periods (less than one year).The average TCE rate for the year ended December 31, 2017 was $9,705 per day, $1,485 per day higher than the rate achieved in 2016, mainlydue to the improved freight market. 77Table of ContentsRevenue: Revenue from dry bulk vessel operations for the year ended December 31, 2017 was $250.4 million as compared to $199.5 million forthe same period during 2016. The increase in dry bulk revenue was mainly attributable to (i) the increase in TCE per day; and (ii) an increase in availabledays of our fleet.Revenue from the logistics business was $212.6 million for the year ended December 31, 2017 as compared to $220.3 million for the year endedDecember 31, 2016. The decrease of $7.7 million was mainly attributable to (i) a $22.9 million decrease in the barge business, mainly due to the expiration ofcertain iron ore transportation contracts in the second half of 2016; and (ii) a $4.5 million decrease in the cabotage business mainly attributable to a decreasein the cabotage fleet’s operating days. The overall decrease was partially mitigated by (i) a $17.2 million increase in the port terminal business mainlyattributable to the commencement of operations at the new iron ore terminal; and (ii) a $2.5 million increase in sales of products, mainly attributable to anincrease in volume and price of the products sold at the Paraguayan liquid port terminal.Administrative Fee Revenue from Affiliates: Administrative fee revenue from affiliates increased by $1.9 million, or 8.7%, to $23.7 million forthe year ended December 31, 2017, as compared to $21.8 million for the year ended December 31, 2016. See general and administrative expenses incurred onbehalf of affiliates and general and administrative expenses discussion below.Time Charter, Voyage and Logistics Business Expenses: Time charter, voyage and logistics business expenses increased by $38.8 million or22.2% to $213.9 million for the year ended December 31, 2017, as compared to $175.1 million for the year ended December 31, 2016.Time charter and voyage expenses from dry bulk operations increased by $34.1 million, or 29.5%, to $149.6 million for the year endedDecember 31, 2017, as compared to $115.5 million for the year ended December 31, 2016. This was primarily due to (i) an increase in charter-in expenses by$30.5 million, mainly due to an increase in charter-in available days in 2017, as compared to the same period in 2016; and (ii) an increase in port expenses by$4.1 million. The overall increase was partially mitigated by a decrease in other voyage expenses by $0.5 million.Of the total expenses for the years ended December 31, 2017 and 2016, $64.3 million and $59.6 million, respectively, related to NaviosLogistics. The increase of $4.7 million in time charter, voyage and logistics business was mainly due to (i) a $3.2 million increase in cost of products soldmainly attributable to the increase in the volume and price of the products sold at the Paraguayan liquid port terminal; and (ii) a $2.1 million increase in theport terminal business mainly attributable to the commencement of operations in the second quarter of 2017 at the new iron ore terminal. The overall increasewas partially mitigated by (i) a $0.4 million decrease in barge business mainly attributable to the reduced number of voyages; and (ii) a $0.2 million decreasein cabotage business mainly attributable to the decrease in the number of operating days of the fleet.Direct Vessel Expenses: Direct vessel expenses decreased by $10.7 million, or 8.4%, to $116.7 million for the year ended December 31, 2017, ascompared to $127.4 million for the year ended December 31, 2016. Direct vessel expenses include crew costs, provisions, deck and engine stores, lubricatingoils, insurance premiums and costs for maintenance and repairs.Direct vessel expenses from dry bulk operations decreased by $5.2 million, or 10.1%, to $46.2 million for the year ended December 31, 2017, ascompared to $51.4 million for the year ended December 31, 2016. This decrease was mainly attributable to (i) a decrease in operating days of the ownedvessels mainly due to the sale of the Navios Ionian and the Navios Horizon; (ii) a decrease in crew related costs; (iii) a decrease in insurance costs; and (iv) adecrease in spare expenses.Of the total amounts of direct vessel expenses for the years ended December 31, 2017 and 2016, $70.5 million and $76.0 million, respectively,related to the logistics business. The decrease of $5.5 million in direct vessel expenses was mainly due to (i) a $4.9 million decrease in barge business mainlyattributable to decreased repairs and maintenance and crew costs; and (ii) a $1.6 million decrease in cabotage business mainly attributable to a decrease in thecabotage fleet’s operating days. The overall decrease was partially mitigated by a $1.0 million increase in amortization of deferred drydock and specialsurvey costs of Navios Logistics’ fleet.General and Administrative Expenses Incurred on Behalf of Affiliates: General and administrative expenses incurred on behalf of affiliatesincreased by $1.9 million, or 8.7%, to $23.7 million for the year ended December 31, 2017, as compared to $21.8 million for the year ended December 31,2016. See general and administrative expenses discussion below. 78Table of ContentsGeneral and Administrative Expenses: General and administrative expenses of Navios Holdings are composed of the following: (in thousands of U.S. dollars) Year EndedDecember 31,2017 Year EndedDecember 31,2016 Administrative fee revenue from affiliates $(23,667) $(21,799) General and administrative expenses incurred on behalf of affiliates 23,667 21,799 General and administrative expenses 27,521 25,295 (in thousands of U.S. dollars) Year EndedDecember 31,2017 Year EndedDecember 31,2016 Dry bulk Vessel Operations $10,856 $11,001 Logistics Business 16,665 14,294 General and administrative expenses $27,521 $25,295 The increase in general and administrative expenses by $2.2 million, or 8.7%, to $27.5 million for the year ended December 31, 2017, ascompared to $25.3 million for the year ended December 31, 2016, was mainly attributable to a $2.4 million increase in general and administrative expensesof logistics business, partially mitigated by a $0.2 million decrease in other administrative expenses.Depreciation and Amortization: For the year ended December 31, 2017, depreciation and amortization decreased by $9.7 million to$104.1 million, as compared to $113.8 million for the year ended December 31, 2016.Depreciation expenses related to dry bulk operations decreased by $0.8 million, or 1.1%, to $73.8 million for the year ended December 31, 2017,as compared to $74.6 million for the year ended December 31, 2016. This decrease was primarily due to the sale of the Navios Ionian and the Navios Horizon.Amortization expenses related to dry bulk operations decreased by $9.2 million, or 72.2%, to $3.4 million for the year ended December 31, 2017, ascompared to $12.6 million for the year ended December 31, 2016. This decrease was mainly due to early redelivery of one vessel in the third quarter of 2016,resulting in the subsequent write-off of the related purchase option and the favorable lease balance.Of the total amount of depreciation and amortization for the year ended December 31, 2017 and 2016, $26.9 million and $26.7 million,respectively, related to Navios Logistics. The increase in depreciation and amortization of the logistics business was mainly due to (i) a $1.7 million increasein the port terminal business mainly due to the commencement of operations at the new iron ore terminal; and (ii) a $0.2 million increase in the cabotagebusiness. The overall increase was partially mitigated by $1.7 million decrease in the barge business mainly due to the accelerated depreciation of certainbarges, recorded in 2016.Provision for Losses on Accounts Receivable: For the year ended December 31, 2017, provision for losses on accounts receivable decreased by$1.0 million to $0.3 million, as compared to $1.3 million for the year ended December 31, 2016. The decrease was mainly attributable to (i) $0.7 milliondecrease in the provision for losses in the logistics business and (ii) $0.3 million recovery of bad debt provisions in the dry bulk vessel operations.Interest Income: Interest income increased by $1.9 million to $6.8 million for the year ended December 31, 2017, as compared to $4.9 millionfor the same period in 2016, mainly due to a $2.5 million increase in interest income of the dry bulk vessel operations, mainly due to higher interest incomefrom loans provided to Navios Europe I and Navios Europe II and the amortization of the premium from the transfer of Navios Holdings’ participation in theNavios Revolving Loans I (as defined herein) to Navios Partners in March 2017. The overall increase was partially mitigated by a $0.6 million decrease ininterest income of logistics business mainly due to lower income from short-term deposits.Interest Expense and Finance Cost: Interest expense and finance cost for the year ended December 31, 2017 increased by $8.0 million, or 7.0%,to $121.6 million, as compared to $113.6 million in the same period of 2016. This increase was due to (i) a $3.9 million increase in interest expense andfinance cost of the dry bulk vessel operations, mainly attributable to increase in interest expense and finance costs related to the Navios Acquisition Loan,and its full repayment in November 2017; and (ii) a $4.1 million increase in interest expense and finance cost of the logistics business mainly attributable tothe increased amount of debt, and the reduced amount of capitalized interest, following the completion of the new iron ore terminal, during the year endedDecember 31, 2017. 79Table of ContentsImpairment Losses: During the year ended December 31, 2017, the Company recognized (i) an impairment loss of $32.9 million for one of theCompany’s vessels; (ii) an impairment loss of $9.1 million relating to the sale of Navios Ionian which was completed on June 16, 2017; (iii) an impairmentloss of $5.1 million relating to the sale of Navios Horizon which was completed on July 2017; and (iv) an impairment loss of $3.4 million relating to afavorable lease term considered as impaired and written off.Gain on Bond and Debt Extinguishment: During year ended December 31, 2017, the Company refinanced one of its secured credit facilities anda benefit to nominal value of $1.7 million was achieved. During November 2017, the Company refinanced its 2019 Notes resulting in a loss on bondextinguishment of $2.7 million.Gain on Sale of Assets: Gain on sale of assets amounted to $1.1 million for the year ended December 31, 2017, mainly attributable to the sale oftwo self-propelled barges of the logistics business.Other Income: Other income decreased by $12.1 million to $6.1 million for the year ended December 31, 2017, as compared to $18.2 million forthe year ended December 31, 2016. The decrease was due to a $14.2 million decrease in other income of dry bulk vessels operations and a $2.1 millionincrease in other income of the logistics business.The decrease in other income of the dry bulk vessels operations is mainly due to the early redelivery of a vessel from its charterer in the firstquarter of 2016 in exchange for $13.0 million in cash and settlement of outstanding claims payable to the charterer amounting to $1.9 million, partiallymitigated by $0.7 million decrease in miscellaneous other income.The increase in other income of the logistics business is mainly due to (i) a $1.1 million increase in other income of barge business mainly due tothe income recorded from an arbitration award; and (ii) a $0.3 million increase in other income, partially mitigated by a $0.7 million decrease in taxes otherthan income taxes.Other Expense: Other expense increased by $2.1 million to $13.8 million for the year ended December 31, 2017, as compared to $11.7 millionfor the year ended December 31, 2016. This increase was due to a $1.2 million increase in other expense of the logistics business and a $0.9 million increasein other expense of dry bulk vessels operations.The increase in other expense of dry bulk vessels operations is mainly due to a $2.1 million increase in losses from foreign exchange differences,partially mitigated by $1.2 million decrease in other miscellaneous expenses.The increase in other expense of the logistics business is mainly due to an increase in loss from foreign exchange differences.Equity/(loss) in Net Earnings of Affiliated Companies: Equity in net earnings of affiliated companies increased by $207.2 million to$4.4 million income for the year ended December 31, 2017, as compared to $202.8 million loss for the same period in 2016. This increase was mainly due to(i) a $83.6 million OTTI loss relating to the investment in Navios Partners recognized in the fourth quarter of 2016; (ii) a $144.4 million OTTI loss relating tothe investment in Navios Acquisition recognized in the fourth quarter of 2016; and (iii) a $20.9 million decrease in equity method income, partiallymitigated by a $0.1 million increase in amortization of deferred gain from the vessels of Navios Partners (as more fully described below). The $20.9 milliondecrease in equity method income was mainly due to a $39.7 million decrease in equity method income from Navios Acquisition, partially mitigated by (i) a$18.5 million increase in equity method income from Navios Partners; (ii) a $0.2 million increase in equity method income from Navios Containers; (iii) a$0.2 million increase in equity method income from Acropolis; and (iv) a $0.1 million increase in equity method income from Navios Europe I and NaviosEurope II.The Company recognizes the gain from the sale of vessels to Navios Partners immediately in earnings only to the extent of the interest in NaviosPartners owned by third parties and defers recognition of the gain to the extent of its own ownership interest in Navios Partners (see also “Item 7.B. RelatedParty Transactions”).Income Tax Benefit/ (Expense): Income tax benefit increased by $4.5 million to a $3.2 million benefit for the year ended December 31, 2017, ascompared to a $1.3 million loss for the year ended December 31, 2016. The change in income tax was mainly attributable to Navios Logistics due to (i) a$4.2 million increase in tax benefit in barge business mainly due to a reduction of deferred tax liability due to the decrease in future Argentinean income taxrates from 2018 onwards; and (ii) a $0.3 million decrease in income tax expense in cabotage business mainly due to lower pretax profit.Net Income Attributable to the Noncontrolling Interest: Net income attributable to the noncontrolling interest decreased by $2.6 million to$1.1 million income for the year ended December 31, 2017, as compared to $3.7 million for the same period in 2016. This decrease was mainly attributable tologistics business net income for the year ended December 31, 2017 compared to the same period in 2016. 80Table of ContentsFor the year ended December 31, 2016 compared to the year ended December 31, 2015The following table presents consolidated revenue and expense information for each of the years ended December 31, 2016 and 2015,respectively. This information was derived from the audited consolidated revenue and expense accounts of Navios Holdings for each of the years endedDecember 31, 2016 and 2015. (In thousands of U.S. dollars) Year EndedDecember 31,2016 Year EndedDecember 31,2015 Revenue $419,782 $480,820 Administrative fee revenue from affiliates 21,799 16,177 Time charter, voyage and logistics business expenses (175,072) (247,882) Direct vessel expenses (127,396) (128,168) General and administrative expenses incurred on behalf of affiliates (21,799) (16,177) General and administrative expenses (25,295) (34,183) Depreciation and amortization (113,825) (120,310) Provision for losses on accounts receivable (1,304) (59) Interest income 4,947 2,370 Interest expense and finance cost (113,639) (113,151) Gain on bond and debt extinguishment 29,187 — Other income 18,175 4,840 Other expense (11,665) (34,982) Loss before equity in net earnings of affiliated companies $(96,105) $(190,705) (Loss)/Equity in net earnings of affiliated companies (202,779) 61,484 Loss before taxes $(298,884) $(129,221) Income tax (expense)/ benefit (1,265) 3,154 Net loss $(300,149) $(126,067) Less: Net income attributable to the noncontrolling interest (3,674) (8,045) Net loss attributable to Navios Holdings common stockholders $(303,823) $(134,112) Set forth below are selected historical and statistical data for the dry bulk vessel operations segment for each of the years ended December 31,2016 and 2015 that the Company believes may be useful in better understanding the Company’s financial position and results of operations. Year EndedDecember 31, 2016 2015 FLEET DATA Available days 21,908 23,787 Operating days 21,742 23,453 Fleet utilization 99.2% 98.6% Equivalent vessels 60 65 AVERAGE DAILY RESULTS TCE $8,220 $7,846 During the year ended December 31, 2016, there were 1,879 less available days as compared to 2015, due to a decrease in charter-in fleetavailable days by 2,895 days. This decrease was partially mitigated an increase in owned vessels available days by 1,016 days, mainly due to the delivery ofNavios Sphera and Navios Mars in the first quarter of 2016. Navios Holdings can increase or decrease its fleet’s size by chartering-in vessels for long or short-term periods (less than one year).The average TCE rate for the year ended December 31, 2016 was $8,220 per day, $374 per day higher than the rate achieved in 2015. This wasdue primarily to decreased voyage expenses in 2016 as compared to 2015, partially mitigated by the decline in the freight market during 2016 as comparedto 2015. 81Table of ContentsRevenue: Revenue from dry bulk vessel operations for the year ended December 31, 2016 was $199.5 million as compared to $229.8 million forthe same period during 2015. The decrease in dry bulk revenue was mainly (i) a decrease in available days of our fleet by 1,879 days, mainly due to adecrease in short-term charter-in fleet available days; and (ii) the decrease in the freight market.Revenue from the logistics business was $220.3 million for the year ended December 31, 2016 as compared to $251.0 million for the year endedDecember 31, 2015. The decrease of $30.7 million was mainly attributable to (i) a $10.7 million decrease in the cabotage business mainly attributable to adecrease in the available days of the cabotage fleet; (ii) a $9.2 million decrease in sales of products attributable to the decreased volume and sale price of theproducts sold at the Paraguayan liquid port terminal; (iii) a $6.1 million decrease in the port terminal business mainly attributable to a decrease in productstransported at the dry port terminal; and (iv) a $4.7 million decrease in the barge business.Administrative Fee Revenue From Affiliates: Administrative fee revenue from affiliates increased by $5.6 million, or 34.8%, to $21.8 millionfor the year ended December 31, 2016, as compared to $16.2 million for the year ended December 31, 2015. See general and administrative expenses incurredon behalf of affiliates and general and administrative expenses discussion below.Time Charter, Voyage and Logistics Business Expenses: Time charter, voyage and logistics business expenses decreased by $72.8 million or29.4% to $175.1 million for the year ended December 31, 2016, as compared to $247.9 million for the year ended December 31, 2015.Time charter and voyage expenses from dry bulk operations decreased by $62.0 million, or 34.9%, to $115.5 million for the year endedDecember 31, 2016, as compared to $177.5 million for the year ended December 31, 2015. This was primarily due to (i) the decrease in charter-in days (asdiscussed above); and (i) a decrease in voyage expenses mainly relating to fuel expenses.Of the total expenses for the years ended December 31, 2016 and 2015, $59.6 million and $70.4 million, respectively, related to NaviosLogistics. The decrease of $10.8 million in time charter, voyage and logistics business was mainly due to (i) a $8.8 million decrease in the port terminalbusiness mainly attributable to the decline in both the volume and the price of the products sold at the liquid port terminal in Paraguay; (ii) a $1.4 milliondecrease in the barge business mainly attributable to lower prices of fuel expense; and (iii) a $0.6 million decrease in the cabotage business mainlyattributable to the decrease in the number of available days of Navios Logistics’ fleet.Direct Vessel Expenses: Direct vessel expenses decreased by $0.8 million, or 0.6%, to $127.4 million for the year ended December 31, 2016, ascompared to $128.2 million for the year ended December 31, 2015. Direct vessel expenses include crew costs, provisions, deck and engine stores, lubricatingoils, insurance premiums and costs for maintenance and repairs.Direct vessel expenses from dry bulk operations increased by $5.3 million, or 11.4%, to $51.4 million for the year ended December 31, 2016, ascompared to $46.1 million for the year ended December 31, 2015. This increase was mainly attributable to (i) an increase in owned vessels available days dueto the delivery of Navios Sphera and Navios Mars in the first quarter of 2016; (ii) an increase in crew expenses; (ii) an increase in spares expenses; and (iii) anincrease in sundry general expenses.Of the total amounts of direct vessel expenses for the years ended December 31, 2016 and 2015, $76.0 million and $82.0 million, respectively,related to the Logistics Business. The decrease of $6.0 million in direct vessel expenses was mainly due to (i) a $8.2 million decrease in cabotage businessmainly attributable to a decrease in the cabotage fleet’s available days and a decrease in crew costs; and (ii) a $0.4 million decrease in amortization ofdeferred drydock and special survey costs of the Navios Logistics’ fleet. This decrease was partially mitigated by a $2.6 million increase in direct vesselexpenses of the barge business mainly attributable to increased repairs and maintenance and crew costs.General and Administrative Expenses Incurred on Behalf of Affiliates: General and administrative expenses incurred on behalf of affiliatesincreased by $5.6 million, or 34.8%, to $21.8 million for the year ended December 31, 2016, as compared to $16.2 million for the year ended December 31,2015. See general and administrative expenses discussion below.General and Administrative Expenses: General and administrative expenses of Navios Holdings are composed of the following: (in thousands of U.S. dollars) Year EndedDecember 31,2016 Year EndedDecember 31,2015 Administrative fee revenue from affiliates $(21,799) $(16,177) General and administrative expenses incurred on behalf of affiliates 21,799 16,177 General and administrative expenses 25,295 34,183 82Table of Contents(in thousands of U.S. dollars) Year EndedDecember 31,2016 Year EndedDecember 31,2015 Dry bulk Vessel Operations $11,001 $20,175 Logistics Business 14,294 14,008 General and administrative expenses $25,295 $34,183 The decrease in general and administrative expenses by $8.9 million, or 26.0%, to $25.3 million for the year ended December 31, 2016, ascompared to $34.2 million for the year ended December 31, 2015, was mainly attributable to (i) a $6.4 million decrease in payroll and other related costs;(ii) a $1.0 million decrease in professional, legal and audit fees; (iii) a $1.8 million decrease in other administrative expenses, including office expenses;partially mitigated by a $0.3 million increase attributable to the Logistics Business.Depreciation and Amortization: For the year ended December 31, 2016, depreciation and amortization decreased by $6.5 million to$113.8 million, as compared to $120.3 million for the year ended December 31, 2015. The decrease was primarily due to the net effect of (i) the increase indepreciation and amortization of dry bulk vessels by $2.9 million, mainly due to the delivery of Navios Mars and Navios Sphera in January 2016; (ii) adecrease in the amortization of favorable and unfavorable lease balances by $8.1 million, mainly attributable to the re-delivery of two vessels to theirheadowners in the fourth quarter of 2015, the re-delivery to the headowners of one vessel in the third quarter of 2016 and the subsequent write-off of theirpurchase option, favorable and unfavorable lease balances; and (iii) a decrease in depreciation and amortization of the logistics business by $1.3 million.Provision for Losses on Accounts Receivable: For the year ended December 31, 2016, provision for losses on accounts receivable increased by$1.2 million to $1.3 million, as compared to $0.1 million for the year ended December 31, 2015. The increase was mainly attributable to the logisticsbusiness.Interest Income: Interest income increased by $2.5 million to $4.9 million for the year ended December 31, 2016, as compared to $2.4 millionfor the same period in 2015, mainly due to (i) a $1.7 million increase of interest income from Navios Europe I and Navios Europe II; (ii) a $0.6 millionincrease of interest income from Navios Partners under the Navios Partners Credit Facility (as defined herein); and (ii) $0.2 million increase in interest incomeof the logistics business, mainly due to higher income from short-term deposits.Interest Expense and Finance Cost: Interest expense and finance cost for the year ended December 31, 2016 increased by $0.4 million, or 0.4%,to $113.6 million, as compared to $113.2 million in the same period of 2015. This increase was due to (i) a $3.3 million increase in interest expense andfinance cost of the dry bulk vessel operations, mainly attributable to the new loans concluded during 2016 and the decrease in the amount of interestcapitalized following the delivery of Navios Mars and Navios Sphera, partially mitigated by a decrease in interest expense due to the repurchase of$58.9 million of the 2019 Notes; and (ii) a $2.9 million decrease in interest expense and finance cost of the logistics business.Gain on bond and debt extinguishment: During the year ended December 31, 2016, the Company repurchased $58.9 million of the 2019 Notesfor a cash consideration of $30.7 million resulting in a gain on bond extinguishment of $27.7 million, net of deferred fees written-off. During October 2016,the Company prepaid one of its secured credit facilities, which had an outstanding balance of $15.3 million, using $13.8 million in cash, thus achieving a$1.5 million benefit to nominal value.Other Income: Other income increased by $13.4 million to $18.2 million for the year ended December 31, 2016, as compared to $4.8 million forthe year ended December 31, 2015. The increase was due to a $13.9 million increase in other income of dry bulk vessels operations and a $0.5 milliondecrease in other income of the logistics business.The increase in other income of the dry bulk vessels operations is mainly due to (i) a $14.9 million increase in other income relating to the earlyredelivery of one vessel during the first quarter of 2016; and (ii) a $0.4 million increase in miscellaneous other income. This increase was partially offset by a$1.4 million decrease in gains from foreign exchange differences.Other Expense: Other expense decreased by $23.3 million to $11.7 million for the year ended December 31, 2016, as compared to $35.0 millionfor the year ended December 31, 2015. This decrease was due to a $19.2 million decrease in other expense of dry bulk vessels operations and a $4.1 milliondecrease in other expense of the logistics business. 83Table of ContentsThe decrease in other expense of dry bulk vessels operations is mainly due to (i) a $18.8 million expense relating to claims under the NaviosPartners Guarantee (as defined below) initially recorded in 2015, (ii) a $0.1 million decrease in losses from foreign exchange differences; and (iii) a$1.7 million decrease in other miscellaneous expenses. This decrease was partially mitigated by a $1.4 million decrease in the reclassification to earnings ofavailable-for-sale securities for an “other-than-temporary” impairment during 2016 compared to last year. The decrease in other expense of the logisticsbusiness was mainly due to a decrease in taxes other-than-income taxes.Equity/(loss) in Net Earnings of Affiliated Companies: Equity in net earnings of affiliated companies decreased by $264.3 million to$202.8 million loss for the year ended December 31, 2016, as compared to $61.5 million income for the same period in 2015. This decrease was mainly dueto (i) a $83.6 million OTTI loss relating to its investment in Navios Partners recognized during the year ended December 31, 2016; (ii) a $144.4 million OTTIloss relating to its investment in Navios Acquisition recognized during the year ended December 31, 2016; (iii) a $35.5 million decrease in equity methodincome; and (iv) a $0.8 million decrease in amortization of deferred gain from the sale of vessels to Navios Partners (as more fully described below). The$35.5 million decrease in equity method income was mainly due to (i) a $20.7 million decrease in equity method income from Navios Partners; (ii)$13.5 million decrease in equity method income from Navios Acquisition; and (iii) a $1.3 million decrease in equity method income from Navios Europe Iand Navios Europe II.The Company recognizes the gain from the sale of vessels to Navios Partners immediately in earnings only to the extent of the interest in NaviosPartners owned by third parties and defers recognition of the gain to the extent of its own ownership interest in Navios Partners (see also “Item 7.B. RelatedParty Transactions”).Income Tax Benefit/ (Expense): Income tax benefit decreased by $4.5 million to $1.3 million expense for the year ended December 31, 2016, ascompared to a $3.2 million benefit for the year ended December 31, 2015. The change in income tax was mainly attributable to Navios Logistics due to theeffect of the pre-tax gains of certain subsidiaries of the barge business.Net (Income)/ Loss Attributable to the Noncontrolling Interest: Net income attributable to the noncontrolling interest decreased by $4.3 millionto $3.7 million income for the year ended December 31, 2016, as compared to $8.0 million for the same period in 2015. This decrease was mainly attributableto logistics business net income for the year ended December 31, 2016 compared to the same period in 2015.Non-Guarantor SubsidiariesOur non-guarantor subsidiaries accounted for $212.6 million, or 45.9%, of our revenue, $1.7 million net income of our total net loss,$61.1 million, or 88.8% of our Adjusted EBITDA, $952.6 million, or 36.2%, of our total assets and $588.5 million, or 29.2%, of our total liabilities, in eachcase, for the year ended and as of December 31, 2017. Our non-guarantor subsidiaries accounted for $220.3 million, or 52.5%, of our revenue, $5.4 millionnet income of our total net loss, $63.3 million of Adjusted EBITDA, $940.3 million, or 34.2%, of our total assets and $509.0 million, or 26.1%, of our totalliabilities for the year ended December 31, 2016. Our non-guarantor subsidiaries accounted for $251.0 million, or 52.2%, of our revenue, $16.2 million, or12.1%, of our total net loss and $74.4 million, or 66.0%, of Adjusted EBITDA, $871.8 million, or 29.5%, of our total assets and $449.6 million, or 24.3%, ofour total liabilities, in each case, for the year ended December 31, 2015.B. Liquidity and Capital ResourcesNavios Holdings has historically financed its capital requirements with cash flows from operations, equity contributions from stockholders,issuance of debt and borrowings under bank credit facilities. Main uses of funds have been capital expenditures for the acquisition of new vessels, newconstruction and upgrades at the port terminals, expenditures incurred in connection with ensuring that the owned vessels comply with international andregulatory standards, repayments of debt and payments of dividends. Navios Holdings may from time to time, subject to restrictions under its debt and equityinstruments, including limitations on dividends and repurchases under its preferred stock, depending upon market conditions and financing needs, use fundsto refinance or repurchase its debt in privately negotiated or open transactions, by tender offer or otherwise, in compliance with applicable laws, rules andregulations, at prices and on terms Navios Holdings deems appropriate and subject to Navios Holdings cash requirements for other purposes, compliance withthe covenants under Navios Holdings’ debt agreements, and other factors management deems relevant. Navios Holdings’ cash forecast indicates that it willgenerate sufficient cash for at least the next 12 months from April 13, 2018 to make the required principal and interest payments on its indebtedness, providefor the normal working capital requirements of the business and remain in a positive working capital position. Generally, our sources of funds may be fromcash from operations, long-term borrowings and other debt or equity financings, proceeds from asset sales and proceeds from sale of our stake in ourinvestments. We cannot assure you that we will be able to secure adequate financing or obtain additional funds on favorable terms, to meet our liquidityneeds.See “Item 4.B Business Overview — Exercise of Vessel Purchase Options”, “Working Capital Position” and “Long-Term Debt Obligations andCredit Arrangements” for further discussion of Navios Holdings’ working capital position. 84Table of ContentsThe following table presents cash flow information for each of the years ended December 31, 2017, 2016 and 2015. (in thousands of U.S. dollars) Year EndedDecember 31,2017 Year EndedDecember 31,2016 Year EndedDecember 31,2015 Net cash provided by operating activities $50,784 $36,920 $43,478 Net cash used in investing activities (42,365) (150,565) (36,499) Net cash (used in)/ provided by financing activities (16,779) 86,225 (91,123) Decrease in cash and cash equivalents (8,360) (27,420) (84,144) Cash and cash equivalents, beginning of year 135,992 163,412 247,556 Cash and cash equivalents, end of year $127,632 $135,992 $163,412 Cash provided by operating activities for the year ended December 31, 2017 as compared to the year ended December 31, 2016:Net cash provided by operating activities increased by $13.9 million to $50.8 million for the year ended December 31, 2017, as compared to$36.9 million for the year ended December 31, 2016. In determining net cash provided by operating activities, net loss is adjusted for the effects of certainnon-cash items, which may be analyzed in detail as follows: (in thousands of U.S. dollars) Year EndedDecember 31,2017 Year EndedDecember 31,2016 Net loss $(164,787) $(300,149) Adjustments to reconcile net loss to net cash provided by operatingactivities: Depreciation and amortization 104,112 113,825 Amortization and write-off of deferred financing costs 6,391 5,653 Amortization of deferred drydock and special survey costs 14,727 13,768 Provision for losses on accounts receivable 269 1,304 Share based compensation 4,296 3,446 Gain on bond and debt extinguishment (185) (29,187) Income tax (benefit)/expense (3,192) 1,265 Realized holding loss on investments in-available-for-sale-securities — 345 Impairment losses 50,565 — Gain on sale of assets (1,064) — Loss/(equity) in affiliates, net of dividends received 4,610 219,417 Net income adjusted for non-cash items $15,742 $29,687 Accounts receivable, net, decreased by $5.5 million, from $65.8 million at December 31, 2016 to $60.3 million at December 31, 2017. Thedecrease was primarily due to a $7.2 million decrease in accounts receivable of Navios Logistics, which relates to the $21.5 million cash received in March2017 following the favorable resolution of the arbitration proceedings in New York (see also “Item 5E. Off-Balance Sheet Arrangements”), partially mitigatedby (i) a $1.1 million increase in accounts receivable from charterers and other receivables in dry bulk operations business; and (ii) a $0.6 million increase inaccrued voyage income in dry bulk operations business.Amounts due from/(to) affiliate companies, including current and non-current portion, increased by $67.4 million from $15.3 million payable forthe year ended December 31, 2016 to $82.7 million payable for the year ended December 31, 2017. This decrease was due to (a) a $30.0 million net increasein payable of management and administrative fees, drydocking and other expenses prepaid by the affiliates according to our management agreements; (b) a$3.2 million increase in balances relating to Navios Europe I and Navios Europe II; and (c) a $34.2 million increase in balances following the transfer toNavios Partners, the Company’s rights to the Navios Revolving Loans I and Navios Term Loans I (as defined herein).Inventories increased by $1.7 million, from $28.5 million at December 31, 2016 to $30.2 million at December 31, 2017. The increase wasprimarily due to (i) a $1.2 million increase in inventories on board of our dry bulk vessels; and (ii) a $0.5 million increase in inventories of Navios Logisticsmainly attributable to an increase in inventories in the liquid port in Paraguay. 85Table of ContentsPrepaid expenses and other current assets decreased by $1.8 million, from $28.9 million at December 31, 2016 to $27.1 million at December 31,2017. The increase was primarily due to (i) a $4.5 million decrease in advances for working capital under our pooling arrangements; and (ii) a $3.6 milliondecrease in prepaid expenses and other current assets of Navios Logistics. This increase was partially mitigated by (i) a $3.2 million increase in claimsreceivables; (ii) a $1.5 million increase in prepaid voyage and operating costs; (iii) a $1.2 million increase in advances to agents and prepaid taxes; and (iv) a$0.4 million increase in other assets.Other long-term assets increased by $2.3 million, from $2.6 million at December 31, 2016 to $4.9 million at December 31, 2017. The increasewas primarily due to (i) a $2.7 million increase in long-term assets from dry bulk operations mainly due to $2.7 million deposit for option to acquire a vesselunder a bareboat contract; and (ii) a $0.2 increase in available-for-sale investments, partially mitigated by $0.6 million decrease in other long-term assets ofNavios Logistics.Accounts payable decreased by $5.8 million, from $85.5 million at December 31, 2016 to $79.7 million at December 31, 2017. The decrease wasprimarily due to (i) a $7.6 million decrease in accounts payable of Navios Logistics; (ii) a $0.8 million decrease in accounts payable relating to brokers andother accounts payable; (iii) a $0.7 million decrease in accounts payable relating to utilities and other service providers, legal and audit services. The overalldecrease was partially mitigated by (i) a $1.4 million increase in port agents payable; (ii) a $1.3 million increase in accounts payable to bunkers, lubricantsand other suppliers; and (iv) a $0.6 million increase in accounts payable to headowners.Accrued expenses and other liabilities increased by $3.2 million to $94.9 million at December 31, 2017 from $91.7 million at December 31,2016. The increase was primarily due to (i) a $3.7 million increase in accrued payroll and related expenses; (ii) a $2.6 million increase in accrued voyageexpenses; (iii) a $2.4 million increase in accrued direct vessel expenses; and (iii) a $2.5 million increase in accrued expenses of Navios Logistics. The overallincrease was partially mitigated by (i) a $4.8 million decrease in accrued interest; (ii) a $2.7 million decrease in other accrued expenses and other liabilities;and (iii) a $0.5 million decrease in accrued estimated losses on uncompleted voyages.Deferred income and cash received in advance increased by $1.8 million to $11.0 million at December 31, 2017 from $9.2 million atDecember 31, 2016. Deferred income primarily reflects freight and charter-out amounts collected on voyages that have not been completed and the currentportion of the deferred gain from the sale of various vessels to Navios Partners to be amortized over the next year. The increase was primarily due to (i) a$1.2 million increase in deferred income of Navios Logistics; and (ii) a $0.7 million increase in deferred freight, partially mitigated by a $0.1 million decreasein the current portion of deferred gain from the sale of assets to Navios Partners.Other long-term liabilities and deferred income remained stable to $43.4 million at December 31, 2017. The movement of the year was primarilydue to (i) a $1.5 million increase in other long-term payables; (ii) a $0.2 million related to the Navios Partners Guarantee (as defined below); and (iii) a$0.1 million increase in other long-term liabilities of Navios Logistics. The overall increase was mitigated by a $1.8 million decrease in the non-currentportion of deferred gain from the sale of vessels to Navios Partners.Cash used in investing activities for the year ended December 31, 2017 as compared to the year ended December 31, 2016:Cash used in investing activities was $42.4 million for the year ended December 31, 2017, as compared to $150.6 million for the same period of2016.Cash used in investing activities for the year ended December 31, 2017 was the result of: (i) $5.0 million payment for the investment in commonshares in Navios Containers; (ii) a $4.5 million loan to Navios Europe I and Navios Europe II; (iii) $2.7 million payment as a deposit for option to acquire avessel under a bareboat contract; (iv) $2.6 million in payments for the acquisition of general partner units in Navios Partners; (v) $0.4 million in payments inother fixed assets; (vi) $19.0 million in payments for the expansion of Navios Logistics’ dry port terminal; (vii) $14.6 million in payments for theconstruction of Navios Logistics’ three new pushboats delivered in February 2018, (viii) $6.1 million in payments for the construction of a river and estuarytanker; (ix) $5.5 million in payments for the improvement of barges, pushboats and vessels; (x) $0.7 million in payments for the purchase of other fixedassets; (xi) $0.6 million in payments for the purchase of covers for dry barges; (xii) $11.8 million of proceeds from sale of Navios Ionian and Navios Horizon;(xiii) $7.3 million dividends received from Navios Acquisition; and (xiv) $0.2 million in collections of Navios Logistics’ Note receivable.Cash used in investing activities for the year ended December 31, 2016 was the result of: (i) $60.1 million in payments relating to the acquisitionof two bulk carrier vessels delivered in January 2016; (ii) a $4.3 million loan to Navios Europe II; (iii) $0.3 million in payments in other fixed assets; (iv)$5.3 million proceeds from the sale of available-for-sale securities; and (v) $91.2 million in payments made by Navios Logistics described as follows: (a)$85.6 million in payments for the expansion of the dry port terminal; (b) $1.3 million in payments for the construction of three new pushboats; and (c)$4.3 million in payments for improvements and purchase of other fixed assets. 86Table of ContentsCash (used in)/provided by financing activities for the year ended December 31, 2017 as compared to the year ended December 31, 2016:Cash used in financing activities was $16.8 million for the year ended December 31, 2017, as compared to $86.2 million provided by financingactivities for the same period of 2016.Cash used in financing activities for the year ended December 31, 2017 was the result of (i) a $291.1 million repayment related to the refinancingof one of the Company’s secured notes; (ii) $55.1 million related to prepayment of Navios Acquisition loan ; (iii) $25.7 million related to scheduledrepayment installments; (iv) $25.3 million payments related to the dividend paid to the noncontrolling shareholders; (v) $15.6 million repayment related tothe refinancing of one of the Company’s secured credit facilities; (vi) $12.4 million of payments for the termination of obligations under capital leases; (vii)$7.3 million related to prepayment of indebtedness originally set to mature in the third quarter of 2018; (viii) $3.8 million increase in restricted cash relatingto loan repayments and security under certain facilities; and (ix) $0.6 million of fees relating to redemption of preferred stock. This was partially offset by (i)$291.2 million of loan proceeds (net of deferred financing cost and discount of $13.8 million) related to the refinancing of 2019 Notes; (ii) $95.5 million ofproceeds from the Term Loan B Facility (net of deferred financing cost and discount of $4.5 million); (iii) $14.7 million of loan proceeds (net of $0.5 millionfinance fees); (iv) $13.9 million of proceeds from Navios Logistics’ long-term debt (net of deferred financing cost of $0.1 million); (v) $4.1 million proceedsfrom the transfer of the Company’s participation in Navios Revolving Loans I, and Navios Term Loans I, to Navios Partners both relating to Navios Europe I;and (vi) $0.7 million of drawdowns under Navios Logistics’ Notes Payable.Cash provided by financing activities for the year ended December 31, 2016 was the result of (i) $54.7 million of loan proceeds (net of$1.3 million finance fees) to finance the acquisition of two bulk carrier vessels and to refinance another one; (ii) $48.4 million of proceeds from the NaviosAcquisition Loan; (iii) a $11.0 million decrease in restricted cash relating to loan repayments and security under certain credit facilities; and (iv)$60.3 million loan proceeds from Navios Logistics. Cash provided by financing activities was partially mitigated by (i) $30.7 million of payments for therepurchase of 2019 Notes; (ii) $9.3 million payment related to the Tender Offer for the redemption of preferred stock; (iii) $40.7 million of paymentsperformed in connection with the Company’s outstanding indebtedness, of which $21.6 million related to scheduled repayment installments for the year2016, $13.8 million related to the refinancing of one of our secured credit facilities and $5.3 million related to the balloon payments originally due in 2019and 2020; (iv) $3.7 million of dividends paid to the Company’s stockholders; (v) $0.8 million in payments for the acquisition of treasury stock; and (vi)$3.0 million relating to payments for capital lease obligations.Cash provided by operating activities for the year ended December 31, 2016 as compared to the year ended December 31, 2015:Net cash provided by operating activities decreased by $6.6 million to $36.9 million for the year ended December 31, 2016, as compared to$43.5 million for the year ended December 31, 2015. In determining net cash provided by operating activities, net loss is adjusted for the effects of certainnon-cash items, which may be analyzed in detail as follows: (in thousands of U.S. dollars) Year EndedDecember 31,2016 Year EndedDecember 31,2015 Net loss $(300,149) $(126,067) Adjustments to reconcile net loss to net cash provided by operatingactivities: Depreciation and amortization 113,825 120,310 Amortization and write-off of deferred financing costs 5,653 4,524 Amortization of deferred drydock and special survey costs 13,768 13,340 Provision for losses on accounts receivable 1,304 59 Share based compensation 3,446 5,591 Gain on bond and debt extinguishment (29,187) — Income tax expense/(benefit) 1,265 (3,154) Realized holding loss on investments in-available-for-sale-securities 345 1,782 Equity/(loss) in affiliates, net of dividends received 219,417 (30,398) Net income/ (loss) adjusted for non-cash items $29,687 $(14,013) Accounts receivable, net, increased by $1.0 million, from $64.8 million at December 31, 2015 to $65.8 million at December 31, 2016. Theincrease was primarily due to (i) a $6.8 million increase in accounts receivable of Navios Logistics mainly attributable to the receivables of the bargebusiness; and (ii) a $0.6 million increase in accrued voyage income and expenses in dry bulk operations business. The increase was partially mitigated by a$6.4 million decrease in accounts receivable from charterers and other receivables in dry bulk operations business. 87Table of ContentsAmounts due from/(to) affiliate companies, including current and non-current portion, increased by $12.2 million from $3.1 million payable forthe year ended December 31, 2015 to $15.3 million payable for the year ended December 31, 2016. This increase was due to (i) a $19.2 million net increasein payable of management and administrative fees, other expenses and reimbursement for drydocking costs; and (ii) a $7.0 million increase in balancesrelating to Navios Europe I and Navios Europe II.Inventories increased by $4.1 million, from $24.4 million at December 31, 2015 to $28.5 million at December 31, 2016. The increase wasprimarily due to (i) a $2.0 million increase in inventories of Navios Logistics mainly attributable to an increase in inventories in the liquid port in Paraguay;and (ii) a $2.1 million increase in inventories on board of our dry bulk vessels.Prepaid expenses and other current assets increased by $4.8 million, from $24.1 million at December 31, 2015 to $28.9 million at December 31,2016. The increase was primarily due to (i) a $4.5 million increase in advances for working capital under our pooling arrangements; and (ii) a $3.6 millionincrease in prepaid expenses and other current assets of Navios Logistics. This increase was partially mitigated by (i) a $1.7 million decrease in accountsreceivable claims; (ii) a $1.4 million decrease in prepaid voyage and operating costs; and (iii) a $0.2 million decrease in other assets.Other long-term assets decreased by $0.9 million, from $3.5 million at December 31, 2015 to $2.6 million at December 31, 2016. The decreasewas primarily due to (i) a $0.7 million decrease in long-term assets from dry bulk operations; and (ii) a $0.2 million decrease in other long-term assets ofNavios Logistics.Accounts payable increased by $12.9 million, from $72.6 million at December 31, 2015 to $85.5 million at December 31, 2016. The increasewas primarily due to (i) a $13.1 million increase in accounts payable relating to utilities and other service providers and legal and audit services; (ii) a$4.9 million increase in accounts payable to bunkers, lubricants and other suppliers; and (iii) a $3.6 million increase in accounts payable of Navios Logistics.This increase was partially mitigated by (i) a $6.7 million decrease in accounts payable relating to brokers and other accounts payable; (ii) a $1.7 milliondecrease in accounts payable to headowners; and (iii) a $0.3 million decrease in port agents payable.Accrued expenses and other liabilities decreased by $11.4 million to $91.7 million at December 31, 2016 from $103.1 million at December 31,2015. The decrease was primarily due to (i) a $8.8 million decrease in claims submitted under the Navios Partners Guarantee (as defined below); (ii) a$3.1 million decrease in accrued dividends; (iii) a $1.1 million decrease in accrued voyage expenses; (iv) a $1.3 million decrease in accrued direct vesselexpenses; (v) a $1.4 million decrease in accrued interest; and (vi) a $1.4 million decrease in other accrued expenses and other liabilities. The decrease waspartially mitigated by (i) a $4.2 million increase in accrued payroll; (ii) a $1.0 million increase in accrued estimated losses on uncompleted voyages; and(iii) a $0.5 million increase in accrued expenses of Navios Logistics.Deferred income and cash received in advance decreased by $4.3 million to $9.2 million at December 31, 2016 from $13.5 million atDecember 31, 2015. Deferred income primarily reflects freight and charter-out amounts collected on voyages that have not been completed and the currentportion of the deferred gain from the sale of various vessels to Navios Partners to be amortized over the next year. The decrease was primarily due to (i) a$1.7 million decrease in deferred freight; and (ii) a $2.7 million decrease in deferred income of Navios Logistics, partially mitigated by a $0.1 millionincrease in the current portion of deferred gain from the sale of assets to Navios Partners.Other long-term liabilities and deferred income increased by $22.5 million to $43.4 million at December 31, 2016 from $20.9 million atDecember 31, 2015. The increase was primarily due to (i) a $13.2 million increase in claims submitted under the Navios Partners Guarantee (as definedbelow); (ii) a $11.0 million increase in payable related to our long-term charter-in fleet; and (iii) a $0.2 million increase in other long-term payables. Thisincrease was partially offset by a $1.9 million decrease in the non-current portion of deferred gain from the sale of vessels to Navios Partners.Cash used in investing activities for the year ended December 31, 2016 as compared to the year ended December 31, 2015:Cash used in investing activities was $150.6 million for the year ended December 31, 2016, as compared to $36.5 million for the same period of2015.Cash used in investing activities for the year ended December 31, 2016 was the result of: (i) $60.1 million in payments relating to the acquisitionof two bulk carrier vessels delivered in January 2016; (ii) a $4.3 million loan to Navios Europe II; (iii) $0.3 million in payments in other fixed assets; (iv)$5.3 million proceeds from the sale of available-for-sale securities; and (v) $91.2 million in payments made by Navios Logistics described as follows: (a)$85.6 million in payments for the expansion of the dry port terminal; (b) $1.3 million in payments for the construction of three new pushboats; and (c)$4.3 million in payments for improvements and purchase of other fixed assets. 88Table of ContentsCash used in investing activities for the year ended December 31, 2015 was the result of (i) $16.2 million in payments for the acquisition ofcommon units and general partner units following Navios Partners’ offering in February 2015; (ii) a $6.7 million investment in Navios Europe II; (iii)$7.6 million in payments relating to deposits for the acquisition of two bulk carrier vessels delivered in January 2016; (iv) a $7.3 million loan to NaviosEurope II; (v) $0.3 million in payments in other fixed assets; and (vi) $27.0 million in payments in fixed assets by Navios Logistics as follows: (a)$0.8 million in payments for the transportation and other acquisition costs of new dry barges; (b) $12.1 million in payments for the expansion of the dry portterminal; (c) $7.1 million in payments for the construction of three new pushboats; and (d) $7.0 million in payments for improvements and purchase of otherfixed assets. The above were partially offset by (i) $18.2 million in dividends received from Navios Acquisition; and (ii) $10.4 million loan repayment fromNavios Acquisition.Cash provided by/ (used in) financing activities for the year ended December 31, 2016 as compared to the year ended December 31, 2015:Cash provided by financing activities was $86.2 million for the year ended December 31, 2016, as compared to $91.1 million used in financingactivities for the same period of 2015.Cash provided by financing activities for the year ended December 31, 2016 was the result of (i) $54.7 million of loan proceeds (net of$1.3 million finance fees) to finance the acquisition of two bulk carrier vessels and to refinance another one; (ii) $48.4 million of proceeds from the NaviosAcquisition Loan; (iii) a $11.0 million decrease in restricted cash relating to loan repayments and security under certain credit facilities; and (iv)$60.3 million loan proceeds from Navios Logistics. Cash provided by financing activities was partially mitigated by (i) $30.7 million of payments for therepurchase of 2019 Notes; (ii) $9.3 million payment related to the Tender Offer for the redemption of preferred stock; (iii) $40.7 million of paymentsperformed in connection with the Company’s outstanding indebtedness, of which $21.6 million related to scheduled repayment installments for the year2016, $13.8 million related to the refinancing of one of our secured credit facilities and $5.3 million related to the balloon payments originally due in 2019and 2020; (iv) $3.7 million of dividends paid to the Company’s stockholders; (v) $0.8 million in payments for the acquisition of treasury stock; and (vi)$3.0 million relating to payments for capital lease obligations.Cash used in financing activities for the year ended December 31, 2015 was the result of (i) $36.0 million of payments performed in connectionwith the Company’s outstanding indebtedness, of which $24.1 million related to installments for the year 2015, $6.9 million to installments for the year 2016and $5.0 million to balloon payments due in 2019 and 2020; (ii) $6.8 million for the payment of the balance of the purchase price for two companiesacquired by Navios Logistics in 2014 (both acquisitions of intangible assets), (iii) $1.5 million relating to payments for capital lease obligations; (iv)$35.4 million of dividends paid to the Company’s stockholders; (v) a $11.1 million increase in restricted cash relating to loan repayments and security undercertain credit facilities; (vi) $0.2 million in payments for the acquisition of treasury stock; and (vii) $0.1 million in payments for debt issuance cost, inrelation to the acquisition of two bulk carrier vessels delivered in January 2016.Adjusted EBITDA: EBITDA represents net (loss)/income attributable to Navios Holdings’ common stockholders before interest and financecosts, before depreciation and amortization and before income taxes. Adjusted EBITDA represents EBITDA before stock based compensation. We useAdjusted EBITDA as liquidity measure and reconcile Adjusted EBITDA to net cash provided by operating activities, the most comparable U.S. GAAPliquidity measure. Adjusted EBITDA is calculated as follows: net cash provided by operating activities adding back, when applicable and as the case may be,the effect of (i) net increase/(decrease) in operating assets, (ii) net (increase)/decrease in operating liabilities, (iii) net interest cost, (iv) deferred financecharges and gains/(losses) on bond and debt extinguishment, (v) (provision)/recovery for losses on accounts receivable, (vi) equity in affiliates, net ofdividends received, (vii) payments for drydock and special survey costs, (viii) noncontrolling interest, (ix) gain/ (loss) on sale of assets/ subsidiaries,(x) unrealized (loss)/gain on derivatives, and (xi) loss on sale and reclassification to earnings of available-for-sale securities and impairment charges. NaviosHoldings believes that Adjusted EBITDA is a basis upon which liquidity can be assessed and represents useful information to investors regarding NaviosHoldings’ ability to service and/or incur indebtedness, pay capital expenditures, meet working capital requirements and pay dividends. Navios Holdings alsobelieves that Adjusted EBITDA is used (i) by prospective and current lessors as well as potential lenders to evaluate potential transactions; (ii) to evaluateand price potential acquisition candidates; and (iii) by securities analysts, investors and other interested parties in the evaluation of companies in ourindustry.Adjusted EBITDA has limitations as an analytical tool, and therefore, should not be considered in isolation or as a substitute for the analysis ofNavios Holdings’ results as reported under U.S. GAAP. Some of these limitations are: (i) Adjusted EBITDA does not reflect changes in, or cash requirementsfor, working capital needs; (ii) Adjusted EBITDA does not reflect the amounts necessary to service interest or principal payments on our debt and otherfinancing arrangements; and (iii) 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, among others,Adjusted EBITDA should not be considered as a principal indicator of Navios Holdings’ performance. Furthermore, our calculation of Adjusted EBITDA maynot be comparable to that reported by other companies due to differences in methods of calculation. 89Table of ContentsFor a reconciliation of cash flows from operating activities to Adjusted EBITDA refer to “Item 3. Key Information- A. Selected Financial Data.”Adjusted EBITDA for the years ended December 31, 2017 and 2016 was $68.8 million and $(62.8) million, respectively. The $131.6 millionincrease in Adjusted EBITDA was primarily due to (i) a $207.2 million movement in equity in net earnings from affiliated companies following the OTTI lossrecognized during 2016; (ii) a $43.2 million increase in revenue; (iii) a $11.6 million decrease in direct vessel expenses (excluding the amortization ofdeferred drydock and special survey costs); (iv) a $2.6 million decrease in net income attributable to the noncontrolling interest; (v) a $1.1 million gain onsale of assets; and (vi) a $1.0 million decrease in provision for losses on accounts receivable. This overall increase of $266.7 million was partially mitigatedby (i) a $50.6 million impairment losses (ii) a $38.8 million increase in time charter, voyage and logistics business expenses; (iii) a $30.2 million decrease ingain on bond/debt extinguishment; (iv) a $12.1 million decrease in other income; (v) a $2.1 million increase in other expenses; and (vi) a $1.3 millionincrease in general and administrative expenses (excluding share-based compensation expenses).Adjusted EBITDA for the years ended December 31, 2016 and 2015 was $(62.8) million and $112.8 million, respectively. The $175.6 milliondecrease in Adjusted EBITDA was primarily due to (i) a $61.0 million decrease in revenue; (ii) a $264.3 million decrease in equity in net earnings fromaffiliated companies; and (iii) a $1.2 million increase in provision for losses on accounts receivable. This decrease was partially mitigated by (i) a$72.8 million decrease in time charter, voyage and logistics business expenses; (ii) a $23.3 million decrease in other expenses; (iii) a $13.2 million increasein other income; (iv) a $29.2 million increase in gain on bond and debt extinguishment; (v) a $6.7 million decrease in general and administrative expenses(excluding share-based compensation expenses); (vi) a $4.3 million decrease in net income attributable to the noncontrolling interest; and (vii) a$1.4 million decrease in direct vessel expenses (excluding the amortization of deferred drydock and special survey costs).Long-Term Debt Obligations and Credit Arrangements:Navios Holdings loansSenior Secured NotesOn November 21, 2017, the Company and its wholly owned subsidiary, Navios Maritime Finance II (US) Inc. (together with the Company, the“Co-Issuers”) issued $305.0 million of 2022 Senior Secured Notes, at a price of 97%.The 2022 Senior Secured Notes are secured by a first priority lien on the capital stock owned by certain of the subsidiary guarantors of NaviosHoldings in each of Navios Maritime Partners L.P., Navios GP L.L.C., Navios Maritime Acquisition Corporation, Navios South American Logistics Inc. andNavios Maritime Containers Inc. The 2022 Senior Secured Notes are unregistered and guaranteed by all of the Company’s direct and indirect subsidiaries,except for certain subsidiaries designated as unrestricted subsidiaries, including Navios South American Logistics Inc. The subsidiary guarantees are “fulland unconditional”, except that the indenture provides for an individual subsidiary’s guarantee to be automatically released in certain customarycircumstances, such as when a subsidiary is sold or all of the assets of the subsidiary are sold, the capital stock is sold, when the subsidiary is designated as an“unrestricted subsidiary” for purposes of the indenture, upon liquidation or dissolution of the subsidiary or upon legal or covenant defeasance or satisfactionand discharge of the 2022 Senior Secured Notes. The net proceeds of the offering were used to complete a cash tender offer for its outstanding 8.125% SeniorNotes due 2019 described below (the “2019 Notes”) and to redeem notes not purchased in the tender offer, including the payment of related fees andexpenses and any redemption premium,. The effect of this transaction was the recognition of a $2.7 million extinguishment loss in the consolidatedstatements of comprehensive (loss)/income under “(Loss)/gain on bond and debt extinguishment”.The Co-Issuers have the option to redeem the 2022 Senior Secured Notes in whole or in part, at any time on or after November 21, 2017 at a fixedprice of 108.438%, which price declines ratably until it reaches par in November 2019.The 2022 Senior Secured Notes contain covenants which, among other things, limit the incurrence of additional indebtedness, issuance ofcertain preferred stock, the payment of dividends, redemption or repurchase of capital stock or making restricted payments and investments, creation ofcertain liens, transfer or sale of assets, entering in transactions with affiliates, merging or consolidating or selling all or substantially all of the Co-Issuers’properties and assets and creation or designation of restricted subsidiaries. The Co-Issuers were in compliance with the covenants as of December 31, 2017.Senior NotesOn January 28, 2011, the Company and its wholly owned subsidiary, Navios Maritime Finance II (US) Inc. completed the sale of $350.0 millionof 2019 Notes. During July, August and October 2016, the Company repurchased $58.9 million of its 2019 Notes for a cash consideration of $30.7 millionresulting in a gain on bond extinguishment of $27.7 million, net of deferred fees written-off. On November 21, 2017, Co-Issuers completed the sale of 2022Senior Secured Notes. The net proceeds of the offering of the 2022 Senior Secured Notes have been used: (i) to repay, in full, the outstanding amount of the2019 Notes; and (ii) for general corporate purposes. 90Table of ContentsShip Mortgage NotesOn November 29, 2013, Navios Holdings completed the sale of $650.0 million of its 2022 NotesThe 2022 Notes are senior obligations of Navios Holdings and Navios Maritime Finance II (US) Inc. (the “2022 Co- Issuers”) and were originallysecured by first priority ship mortgages on 23 dry bulk vessels owned by certain subsidiary guarantors and certain other associated property and contractrights. In June 2017, Navios Ionian and Navios Horizon were released from the 2022 Notes and replaced by the Navios Galileo. In March 2018, NaviosHerakles was released from the 2022 Notes and replaced by the Navios Equator Prosper. The 2022 Notes are unregistered and fully and unconditionallyguaranteed, jointly and severally by all of the Company’s direct and indirect subsidiaries that guarantee the 2019 Notes and Navios Maritime Finance II (US)Inc. The guarantees of the Company’s subsidiaries that own mortgaged vessels are senior secured guarantees and the guarantees of the Company’ssubsidiaries that do not own mortgaged vessels are senior unsecured guarantees. In addition, the 2022 Co-Issuers have the option to redeem the 2022 Notes inwhole or in part, at any time on or after January 15, 2017, at a fixed price of 105.531%, which price declines ratably until it reaches par in January 2020.Furthermore, upon occurrence of certain change of control events, the holders of the 2022 Notes may require the 2022 Co-Issuers to repurchasesome or all of the 2022 Notes at 101% of their face amount. The 2022 Notes contain covenants, which among other things, limit the incurrence of additionalindebtedness, issuance of certain preferred stock, the payment of dividends, redemption or repurchase of capital stock or making restricted payments andinvestments, creation of certain liens, transfer or sale of assets, entering into certain transactions with affiliates, merging or consolidating or selling all orsubstantially all of the 2022 Co-Issuers’ properties and assets and creation or designation of restricted subsidiaries. The 2022 Co-Issuers were in compliancewith the covenants as of December 31, 2017.Secured Credit FacilitiesCredit Agricole (formerly Emporiki) Facilities: In December 2012, the Emporiki Bank of Greece’s facilities were transferred to Credit AgricoleCorporate and Investment Bank.In September 2010, Navios Holdings entered into a facility agreement with Emporiki Bank of Greece for an amount of up to $40.0 million inorder to partially finance the construction of one newbuilding Capesize vessel. In December 2017, the Company agreed to extend the last payment date toAugust 2021. As of December 31, 2017, the outstanding amount under the loan facility was repayable in one quarterly installment of $2.4 million, followedby seven semi-annual equal installments of $1.2 million with a final balloon payment of $6.8 million on the last payment date. The loan bears interest at arate of LIBOR plus 275 basis points. The loan facility requires compliance with certain financial covenants. As of December 31, 2017, the outstandingamount under this facility was $17.7 million.In August 2011, Navios Holdings entered into a facility agreement with Emporiki Bank of Greece for an amount of up to $23.0 million in orderto partially finance the construction of one Panamax vessel. As of December 31, 2017, the facility is repayable in one quarterly installment of $0.7 million,followed by nine semi-annual equal installments of $0.7 million, with a final balloon payment of $7.3 million on the last payment date. The loan bearsinterest at a rate of LIBOR plus 275 basis points. The loan facility requires compliance with certain covenants. As of December 31, 2017, the outstandingamount under this facility was $14.1 million.In December 2011, Navios Holdings entered into a facility agreement with Emporiki Bank of Greece for an amount of up to $23.0 million inorder to partially finance the construction of one newbuilding bulk carrier. As of December 31, 2017, the outstanding amount under the loan facility wasrepayable in one quarterly installment of $0.7 million after the drawdown date, followed by nine semi-annual equal installments of $0.7 million, with a finalballoon payment of $7.5 million on the last payment date. The loan bears interest at a rate of LIBOR plus 325 basis points. The loan facility requirescompliance with certain covenants. As of December 31, 2017, the outstanding amount under this facility was $14.5 million.On December 20, 2013, Navios Holdings entered into a facility with Credit Agricole Corporate and Investment Bank for an amount of up to$22.5 million in two equal tranches, in order to finance the acquisition of two Panamax vessels. The two tranches bear interest at a rate of LIBOR plus 300basis points. In December 2017, the Company agreed to extend the last payment date to August 2021. The first tranche is repayable in one quarterlyinstallment of $0.6 million, followed by seven equal semi-annual installments of $0.6 million, with a final balloon payment of $2.8 million on the lastrepayment date. The second tranche is repayable in one quarterly installment of $1.1 million, followed by seven equal semi-annual installments of$0.6 million, with a final balloon payment of $2.8 million on the last repayment date. The loan facility requires compliance with certain financial covenants.As of December 31, 2017, the outstanding amount of the loan was $15.2 million. 91Table of ContentsCommerzbank Facility: In June 2009, Navios Holdings entered into a facility agreement for an amount of up to $240.0 million (divided into fourtranches of $60.0 million) with Commerzbank AG in order to partially finance the acquisition of a Capesize vessel and the construction of three Capesizevessels. Following the delivery of two Capesize vessels, Navios Holdings cancelled two of the four tranches and in October 2010 fully repaid theiroutstanding loan balances of $53.6 million and $54.5 million, respectively. During October 2016, the Company fully prepaid the third tranche of the facility,which had an outstanding balance of $15.3 million, using $13.8 million of cash, thus achieving a $1.5 million benefit to nominal value. During May 2017,the Company fully repaid the fourth tranche of the facility, which had an outstanding loan balance of $17.3 million, using $15.6 million of cash, thusachieving a $1.7 million benefit to nominal value.HSH Nordbank Facility: On May 23, 2017, Navios Holdings entered into a facility agreement with HSH Nordbank AG for an amount of up to$15.3 million in order to partially refinance the fourth tranche of the Commerzbank facility. As of December 31, 2017, the facility is repayable in 15 quarterlyequal installments of $0.4 million, with a final balloon payment of $8.8 million on the last payment date. The loan bears interest at a rate of LIBOR plus 300basis points. The loan facility requires compliance with certain covenants. As of December 31, 2017, the outstanding amount under this facility was$14.5 million.DVB Bank SE Facilities: On March 23, 2012, Navios Holdings entered into a facility agreement with a syndicate of banks led by DVB Bank SEfor an amount of up to $42.0 million in two tranches: (i) the first tranche is for an amount of up to $26.0 million in order to finance the acquisition of aHandysize vessel; and (ii) the second tranche is for an amount of up to $16.0 million to refinance the outstanding debt of an Ultra-Handymax vessel. The twotranches bear interest at a rate of LIBOR plus 285 and 360 basis points, respectively. On June 27, 2014, Navios Holdings refinanced the existing facility,adding a new tranche for an amount of $30.0 million in order to finance the acquisition of a Capesize vessel, which was delivered in June 2014. The newtranche bears interest at a rate of LIBOR plus 275 basis points. As of December 31, 2017, the first tranche is repayable in nine quarterly installments of$0.4 million, with a final balloon payment of $14.4 million on the last repayment date, the second tranche is repayable in ten quarterly installments of$0.3 million, with a final balloon payment of $6.3 million on the last repayment date and the third tranche is repayable in ten quarterly installments of$0.5 million, with a final balloon payment of $18.8 million on the last repayment date. The loan facility requires compliance with certain financialcovenants. As of December 31, 2017, the total outstanding amount was $50.1 million.In September 2013, Navios Holdings entered into a facility agreement with DVB Bank SE for an amount of up to $40.0 million in order tofinance the acquisition of four Panamax vessels, delivered in August and September 2013. The facility bore interest at a rate of LIBOR plus 325 basis points.During 2017, Navios Holdings prepaid the indebtedness originally maturing in the third quarter of 2018 and released from collateral one Panamax vessel. InDecember 2017, Navios Holdings entered into a facility agreement with DVB Bank SE in order to extend the maturity of the outstanding balance originallydue by September 2018 for three years, to September 2021. As of December 31, 2017, the facility is repayable in 15 quarterly installments of $0.7 million,with a final balloon payment of $7.3 million payable on the last repayment date. The loan facility requires compliance with certain financial covenants. InDecember 2015, one newbuilding Panamax vessel and one newbuilding Capesize vessel were added as collateral to this facility. As of December 31, 2017,the outstanding amount was $18.2 million.In January 2016, Navios Holdings entered into a facility agreement with DVB Bank SE for an amount of up to $41.0 million, to be drawn in twotranches, to finance the acquisition of one newbuilding Panamax vessel and one newbuilding Capesize vessel. The facility bears interest at a rate of LIBORplus 255 basis points. The total amount drawn under the facility was $39.9 million. The first tranche is repayable in one quarterly installment of $0.5 million,followed by 16 quarterly installments of $0.4 million each, and a final balloon payment of $14.8 million on the last payment day. The second tranche isrepayable in one quarterly installment of approximately $0.4 million each, followed by 16 quarterly installments of $0.2 million each, and a final balloonpayment of $8.8 million on the last payment day. The loan facility also requires compliance with certain covenants. As of December 31, 2017, theoutstanding amount was $33.8 million.Alpha Bank A.E.: On November 6, 2014, Navios Holdings entered into a facility agreement with Alpha Bank A.E. for an amount of up to$31.0 million in order to finance part of the acquisition of a Capesize vessel. The loan bears interest at a rate of LIBOR plus 300 basis points. As ofDecember 31, 2017, the facility is repayable in 20 quarterly installments of $0.5 million, with a final balloon payment of $16.6 million on the last repaymentdate. The loan facility requires compliance with certain financial covenants. As of December 31, 2017, the outstanding amount was $25.6 million.On November 3, 2016, Navios Holdings entered into a facility agreement with Alpha Bank A.E. for an amount of up to $16.1 million in order torefinance one Capesize vessel. The facility bears interest at a rate of LIBOR plus 300 basis points. The facility is repayable in four quarterly installments of$0.3 million each, followed by 16 quarterly installments of $0.3 million each, with a final balloon payment of $10.7 million payable on the last repaymentdate. The first instalment will be due 15 months from the loan drawdown date. The loan facility requires compliance with certain financial covenants. As ofDecember 31, 2017, the outstanding amount was $16.1 million.The facilities are secured by first priority mortgages on certain of Navios Holdings’ vessels and other collateral. 92Table of ContentsThe credit facilities contain a number of restrictive covenants that limit Navios Holdings and/or certain of its subsidiaries from, among otherthings: incurring or guaranteeing indebtedness; entering into affiliate transactions; charging, pledging or encumbering the vessels securing such facilities;changing the flag, class, management or ownership of certain Navios Holdings’ vessels; changing the commercial and technical management of certainNavios Holdings’ vessels; selling or changing the ownership of certain Navios Holdings’ vessels; and subordinating the obligations under the credit facilitiesto any general and administrative costs relating to the vessels. The credit facilities also require the vessels to comply with the ISM Code and ISPS Code andto maintain valid safety management certificates and documents of compliance at all times. Additionally, the credit facilities require compliance with thecovenants contained in the indentures governing the 2022 Senior Secured Notes and the 2022 Notes. Among other events, it will be an event of default underthe credit facilities if the financial covenants are not complied with or if Angeliki Frangou and her affiliates, together, own less than 20% of the outstandingshare capital of Navios Holdings.The majority of the Company’s senior secured credit facilities require compliance with maintenance covenants, including (i) value-to-loan ratiocovenants, based on either charter-adjusted valuations, or charter-free valuations, ranging from over 110% to 135%, (ii) minimum liquidity up to a maximumof $30.0 million, and (iii) net total debt divided by total assets, as defined in each senior secured credit facility, ranging from a maximum of 75% to 80%.Certain covenants in our senior secured credit facilities have been waived for a specific period of time up to a maximum of four quarters (from the currentbalance sheet date) and/or amended to include net total debt divided by total assets, as defined in each senior secured credit facility, to a maximum of 90%.As of December 31, 2017, the Company was in compliance with all of the covenants under each of its credit facilities.Navios Acquisition LoanOn November 3, 2017, the Company prepaid in full the outstanding amount of $55.1 million under its secured loan facility of up to$70.0 million with Navios Acquisition entered into in September 2016. The prepayment amount consisted of the $50.0 million drawn under the facility and$5.1 million of accrued interest. See also “Item 7.B Related party transactions”.Navios Logistics loans2022 Logistics Senior NotesOn April 22, 2014, Navios Logistics and its wholly-owned subsidiary Navios Logistics Finance (US) Inc. (“Logistics Finance” and, together withNavios Logistics (the “Logistics Co-Issuers”) completed the sale of $375.0 million in aggregate principal amount of its Senior Notes due on May 1, 2022 (the“2022 Logistics Senior Notes”), at a fixed rate of 7.25%. The effect of this transaction was the recognition of a $27.3 million loss in the consolidatedstatement of operations under “(Loss)/gain on bond and debt extinguishment”. The 2022 Logistics Senior Notes are unregistered are fully andunconditionally guaranteed, jointly and severally, by all of Navios Logistics’ direct and indirect subsidiaries except for Horamar do Brasil Navegaçăo Ltda(“Horamar do Brasil”), Naviera Alto Parana S.A. (“Naviera Alto Parana”), and Terra Norte Group S.A. (“Terra Norte”), which do not guarantee the 2022Logistics Senior Notes pursuant to certain exceptions under the indenture, and Logistics Finance, which is the co-issuer of the 2022 Logistics Senior Notes.The subsidiary guarantees are “full and unconditional”, except that the indenture provides for an individual subsidiary’s guarantee to be automaticallyreleased in certain customary circumstances, such as in connection with a sale or other disposition of all or substantially all of the assets of the subsidiary, inconnection with the sale of a majority of the capital stock of the subsidiary, if the subsidiary is designated as an “unrestricted subsidiary” in accordance withthe indenture, upon liquidation or dissolution of the subsidiary or upon legal or covenant defeasance or satisfaction and discharge of the 2022 LogisticsSenior Notes.The Logistics Co-Issuers have the option to redeem the 2022 Logistics Senior Notes in whole or in part, at their option, at any time on or afterMay 1, 2017, at a fixed price of 105.438%, which price declines ratably until it reaches par in 2020. In addition, upon the occurrence of certain change ofcontrol events, the holders of the 2022 Logistics Senior Notes will have the right to require the Logistics Co-Issuers to repurchase some or all of the 2022Logistics Senior Notes at 101% of their face amount, plus accrued and unpaid interest to the repurchase date.The indenture governing the 2022 Logistics Senior Notes contains covenants which, among other things, limit the incurrence of additionalindebtedness, issuance of certain preferred stock, the payment of dividends in excess of 6% per annum of the net proceeds received by or contributed toNavios Logistics in or from any public offering, redemption or repurchase of capital stock or making restricted payments and investments, creation of certainliens, transfer or sale of assets, entering into transactions with affiliates, merging or consolidating or selling all or substantially all of Navios Logistics’properties and assets and creation or designation of restricted subsidiaries. 93Table of ContentsThe indenture governing the 2022 Logistics Senior Notes include customary events of default, including failure to pay principal and interest onthe 2022 Logistics Senior Notes, a failure to comply with covenants, a failure by Navios Logistics or any significant subsidiary or any group of restrictedsubsidiaries that, taken together, would constitute a significant subsidiary to pay material judgments or indebtedness and bankruptcy and insolvency eventswith respect to us or any significant subsidiary or any group of restricted subsidiaries that, taken together, would constitute a significant subsidiary.As of December 31, 2017, all subsidiaries, including Logistics Finance, Horamar do Brasil, Naviera Alto Parana and Terra Norte are 100% owned.Logistics Finance, Horamar do Brasil, Naviera Alto Parana and Terra Norte do not have any independent assets or operations.In addition, there are no significant restrictions on (i) the ability of the parent company, any issuer (or co-issuer) or any guarantor subsidiaries ofthe 2022 Logistics Senior Notes to obtain funds by dividend or loan from any of their subsidiaries or (ii) the ability of any subsidiaries to transfer funds to theissuer (or co-issuer) or any guarantor subsidiaries.The Logistics Co-Issuers were in compliance with the covenants as of December 31, 2017.Navios Logistics Notes PayableIn connection with the purchase of mechanical equipment for the expansion of its dry port terminal, Corporacion Navios S.A. (“CNSA”) enteredinto an unsecured export financing line of credit for a total amount of $42.0 million, including all related fixed financing costs of $5.9 million, available inmultiple drawings upon the completion of certain milestones (“Drawdown Events”). CNSA incurs the obligation for the respective amount drawn by signingpromissory notes (“Navios Logistics Notes Payable”). Each drawdown is repayable in 16 consecutive semi-annual installments, starting six months after thecompletion of each Drawdown Event. Together with each Note Payable, CNSA shall pay interest equal to six-month LIBOR. The unsecured export financingline is fully and unconditionally guaranteed by Navios Logistics. As of December 31, 2017, Navios Logistics had drawn the total available amount and theoutstanding balance of Notes Payable was $31.1 million.Navios Logistics BBVA Loan FacilityOn December 15, 2016, Navios Logistics entered into a facility with Banco Bilbao Vizcaya Argentaria Uruguay S.A. (“BBVA”) for an amount of$25.0 million, for general corporate purposes. The loan bears interest at a rate of LIBOR (180 days) plus 325 basis points. The loan is repayable in 20quarterly installments, starting on June 19, 2017, and secured by assignments of certain receivables. As of December 31, 2017, the outstanding amount of theloan was $23.3 million.Navios Logistics Alpha Bank LoanOn May 18, 2017, Navios Logistics enter into a $14.0 million term loan facility in order to finance the acquisition of two product tankers(“Navios Logistics Alpha Bank Loan”). The Navios Logistics Alpha Bank Loan bears interest at a rate of LIBOR (90 days) plus 315 basis points and isrepayable in 20 quarterly installments with a final balloon payment of $7.0 million on the last repayment date. As of December 31, 2017, the outstandingamount of the loan was $13.3 million.Navios Logistics Term Loan B FacilityOn November 3, 2017, Navios Logistics and Navios Logistics Finance (US) Inc., as co-borrowers, completed the issuance of a new$100.0 million Term Loan B Facility. The Term Loan B Facility bears an interest rate of LIBOR plus 475 basis points and has a four year term with 1.0%amortization per annum. The Term Loan B Facility is fully and unconditionally guaranteed jointly and severally, by all of Navios Logistics’ direct andindirect subsidiaries except for Horamar do Brasil Navegação Ltda (“Horamar do Brasil”), Naviera Alto Parana S.A. (“Naviera Alto Parana”) and Terra NorteGroup S.A. (“Terra Norte”), which are deemed to be immaterial, and Logistics Finance, which is the co-issuer of the Term Loan B Facility. The subsidiaryguarantees are “full and unconditional,” except that the credit agreement provides for an individual subsidiary’s guarantee to be automatically released incertain circumstances. The Term Loan B Facility is secured by first priority mortgages on five tanker vessels servicing our cabotage business as well as byassignments of the revenues arising from certain time charter contracts, and an iron ore port contract. The net proceeds of the Term Loan B Facility were used:(i) to finance a $70.0 million dividend of which $44.7 million was paid to Navios Holdings, and was eliminated in the consolidated financial statements, and$25.3 million to its noncontrolling shareholders, (ii) for general corporate purposes and (iii) to pay fees and expenses relating to the Term Loan B Facility.The Term Loan B Facility contains restrictive covenants including restrictions on indebtedness, liens, acquisitions and investments, restrictedpayments and dispositions. The Term Loan B Facility also provides for customary events of default, including change of control.As of December 31, 2017, a balance of $100.0 million was outstanding under the Term Loan B Facility. 94Table of ContentsNavios Logistics was in compliance with the covenants set forth in the Term Loan B as of December 31, 2017.Other indebtednessIn connection with the acquisition of Hidronave S.A. on October 29, 2009, Navios Logistics assumed a $0.8 million loan facility that wasentered into by Hidronave S.A. in 2001, in order to finance the construction of the pushboat Nazira. As of December 31, 2017, the outstanding loan balancewas $0.3 million ($0.3 million as of December 31, 2016). The loan facility bears interest at a fixed rate of 600 basis points. The loan is repayable in monthlyinstallments and the final repayment must occur prior to August 10, 2021.During the year ended December 31, 2017, the Company paid $48.6 million, of which $25.7 million related to scheduled repayment installmentsfor the year 2017, $7.3 million related to prepayments of indebtedness originally maturing the third quarter of 2018, and $15.6 million related to therefinancing of one of its secured credit facilities which had an outstanding balance of $17.3 million, thus achieving a $1.7 million benefit to nominal value.The annual weighted average interest rates of the Company’s total borrowings were 7.11%, 6.87% and 6.98% for the year ended December 31,2017, 2016 and 2015, respectively.The maturity table below reflects the principal payments for the next five years and thereafter of all borrowings of Navios Holdings (includingNavios Logistics) outstanding as of December 31, 2017, based on the repayment schedules of the respective loan facilities and the outstanding amount dueunder the debt securities. Year Amount inmillions ofU.S. dollars 2018 $36.0 2019 33.3 2020 71.5 2021 154.8 2022 1,414.7 2023 and thereafter 7.5 Total $1,717.8 Working Capital Position: On December 31, 2017, Navios Holdings’ current assets totaled $256.1 million, while current liabilities totaled$236.2 million, resulting in a positive working capital position of $19.9 million. Navios Holdings’ cash forecast indicates that it will generate sufficient cashduring the next 12 months from April 13, 2018 to make the required principal and interest payments on its indebtedness, provide for the normal workingcapital requirements of the business and remain in a positive working capital position through April 13, 2019.While projections indicate that existing cash balances and operating cash flows will be sufficient to service the existing indebtedness, NaviosHoldings continues to review its cash flows with a view toward increasing working capital.Capital Expenditures: On January 26, 2014, Navios Holdings entered into agreements to purchase two bulk carrier vessels, one 84,872 dwtPanamax vessel and one 181,259 dwt Capesize vessel, to be built in Japan. The vessels’ acquisition prices were $31.8 million and $52.0 million,respectively, and were delivered in January 2016. As of December 31, 2015 and 2014, Navios Holdings had paid deposits for both vessels totaling$29.7 million and $22.1 million, respectively. The remaining purchase price of $58.7 million was financed with a $39.9 million loan and the balance withavailable cash.Navios LogisticsOn February 11, 2014, Navios Logistics entered into an agreement for the construction of three newbuilding pushboats with a purchase price of$7.3 million for each pushboat. As of December 31, 2017, Navios Logistics had paid $30.7 million related to the construction of the new pushboats, whichwere delivered in February2018.Navios Logistics has signed a shipbuilding contract for the construction of a river and estuary tanker for a total consideration of $14.9 million(€12.4 million). As of December 31, 2017, Navios Logistics had paid $6.1 million related to the construction of the tanker vessel. The vessel is expected to bedelivered in the second quarter of 2018. 95Table of ContentsDuring the second quarter of 2017, Navios Logistics substantially completed the expansion of its dry port in Uruguay. As of December 31, 2017,Navios Logistics had paid $156.8 million related to the iron ore terminal expansion.On September 4, 2017, Navios Logistics has signed an agreement for the construction of covers for dry barges for a total consideration of$1.1 million. As of December 31, 2017, Navios Logistics had paid $0.6 million.Refer also to “Item 5F. Contractual Obligations as at December 31, 2017”.Dividend PolicyIn November 2015, due to the prolonged weakness in the dry bulk industry, Navios Holdings announced that the Board of Directors decided tosuspend the quarterly dividend to its common stockholders in order to conserve cash and improve its liquidity. In February 2016, in furtherance of its effortsto reduce its cash requirements, Navios Holdings announced the suspension of payment of quarterly dividends on its preferred stock, including the Series Gand Series H, until market conditions improve. The Board of Directors and Navios Holdings’ management believe such a decision is in the best long-terminterests of the Company and its stakeholders. The Board of Directors will reassess the Company’s distribution policy as the environment changes. Thereinstatement, declaration and payment of any further dividend remains subject to the discretion of the Board of Directors and will depend on, among otherthings, market conditions, Navios Holdings’ cash requirements after taking into account market opportunities, restrictions under its equity instruments, creditagreements, indentures and other debt obligations and such other factors as the Board of Directors may deem advisable.Concentration of Credit Risk:Accounts receivableConcentrations of credit risk with respect to accounts receivables are limited due to Navios Holdings’ large number of customers, who areinternationally dispersed and have a variety of end markets in which they sell. Due to these factors, management believes that no additional credit riskbeyond amounts provided for collection losses is inherent in Navios Holdings’ trade receivables. For the year ended December 31, 2017, no customersaccounted for more than 10% of the Company’s revenue. For the year ended December 31, 2016, two customers accounted for 14.7% and 13.1%,respectively, of the Company’s revenue and for the year ended December 31, 2015, one customer accounted for 15.1% of the Company’s revenue.Cash deposits with financial institutionsCash deposits in excess of amounts covered by government-provided insurance are exposed to loss in the event of non-performance by financialinstitutions. Navios Holdings does maintain cash deposits in excess of government-provided insurance limits. Navios Holdings also reduces exposure tocredit risk by dealing with a diversified group of major financial institutions.Effects of Inflation:Navios Holdings does not consider inflation to be a significant risk to the cost of doing business in the foreseeable future. Inflation has amoderate impact on operating expenses, drydocking expenses and corporate overhead.C. Research and development, patents and licenses, etc.Not applicable.D. Trend informationOur results of operations depend primarily on the charter hire rates that we are able to realize for our vessels, which depend on the demand andsupply dynamics characterizing the dry bulk market at any given time. For other trends affecting our business, please see other discussions in Item 5.“Operating and Financial Review and Prospects”. 96Table of ContentsE. Off-Balance Sheet ArrangementsCharter hire payments to third parties for chartered-in vessels are treated as operating leases for accounting purposes.Navios Holdings is also committed to making rental payments under operating leases for its office premises. Future minimum rental paymentsunder Navios Holdings’ non-cancelable operating leases are included in the contractual obligations schedule below. As of December 31, 2017, NaviosHoldings was contingently liable for letters of guarantee and letters of credit amounting to $0.6 million issued by various banks in favor of variousorganizations and the total amount was collateralized by cash deposits, which were included as a component of restricted cash.In November 2012 (as amended in March 2014), the Company entered into an agreement with Navios Partners (the “Navios Partners Guarantee”)to provide Navios Partners with guarantees against counterparty default on certain existing charters, which had previously been covered by the charterinsurance for the same vessels, same periods and same amounts. The Navios Partners Guarantee provides for a maximum possible payout of $20.0 million bythe Company to Navios Partners. Premiums that are calculated on the same basis as the restructured charter insurance are included in the management fee thatis paid by Navios Partners to Navios Holdings pursuant to the management agreement. As of December 31, 2017, Navios Partners has submitted one claimunder this agreement to the Company. As at December 31, 2017 and December 31, 2016, the fair value of the claim was estimated at $20.0 million and$19.7 million and included in “Other long-term liabilities and deferred income” in the consolidated balance sheet. The final settlement of the amount duewill take place at anytime but in no case later than December 31, 2019, in accordance with a letter of agreement effective as of December 29, 2017. During theyear ended December 31, 2015, the Company initially recognized this claim as “Other expense” in the consolidated statement of comprehensive(loss)/income.The Company is involved in various disputes and arbitration proceedings arising in the ordinary course of business. Provisions have beenrecognized in the financial statements for all such proceedings where the Company believes that a liability may be probable, and for which the amounts canbe reasonably estimated, based upon facts known on the date the financial statements were prepared. Although the Company cannot predict with certaintythe ultimate resolutions of these matters, in the opinion of management, the ultimate disposition of these matters is not expected to have a material adverseeffect on the Company’s financial position, results of operations or liquidity.On October 7, 2016, a putative class action complaint was filed against the Company and six of its directors in the United States District Courtfor the Southern District of New York by a purported holder of Series G American Depositary Shares and Series H American Depositary Shares. The complaintasserts claims for breach of fiduciary duty and contract. The complaint sought, among other things, unspecified monetary damages, a declaration regardingcertain of the Company’s alleged obligations under the applicable certificates of designation, the restoration of certain alleged rights to non-tenderingholders if the exchange offer that commenced on September 19, 2016 was consummated, and an award of plaintiff’s costs. On November 28, 2016, plaintiff’scounsel informed the Court that the litigation was moot in light of the failure of the consent solicitation (which did not attain the necessary support from theholders of Series G American Depositary Shares and Series H American Depositary Shares). On January 10, 2017, plaintiff’s counsel submitted a motion forattorneys’ fees to which the Company submitted an opposition brief on February 3, 2017, which requested that the Court deny the request for attorneys’ feesin its entirety. Plaintiff’s counsel’s motion for attorney’s fees was fully briefed on February 17, 2017. On September 26, 2017, the Court issued a decisiondenying plaintiff’s application for an award of attorneys’ fees and requiring that any party wishing to restore the case to the Court’s active docket do so byOctober 10, 2017. No party requested that the case be restored to the active docket by the October 10, 2017 deadline. No appeal of the Court’s denial ofplaintiff’s application for an award of attorneys’ fees has been taken to date and the time to file an appeal has expired.On April 1, 2016, Navios Holdings was named as a defendant in a putative shareholder derivative lawsuit brought by two alleged shareholders ofNavios Acquisition purportedly on behalf of nominal defendant, Navios Acquisition, in the United States District Court for the Southern District of NewYork, captioned Metropolitan Capital Advisors International Ltd., et al. v. Navios Maritime Holdings, Inc. et al., No. 1:16-cv-02437. The lawsuit challengedthe March 9, 2016 loan agreement between Navios Holdings and Navios Acquisition pursuant to which Navios Acquisition agreed to provide a $50.0 millioncredit facility (the “Revolver”) to Navios Holdings.On April 14, 2016, Navios Holdings and Navios Acquisition announced that the Revolver had been cancelled, and that no borrowings had beenmade under the Revolver. In June 2016, the parties reached an agreement resolving the plaintiffs’ application for attorneys’ fees and expenses, which wasapproved by an order of the Court. The litigation was dismissed upon notice of the order being provided to Navios Acquisition’s shareholders via theinclusion of the order as an attachment to a Navios Acquisition Form 6-K and the payment of $0.8 million by Navios Acquisition in satisfaction of theplaintiffs’ request for attorneys’ fees and expenses. A copy of the order was provided as an exhibit to Navios Acquisition’s Form 6-K filed with the Securitiesand Exchange Commission on June 9, 2016.Navios Logistics had a dispute with Vale regarding the termination date of a COA contract, which was under arbitration proceedings in NewYork. On February 10, 2017, the arbitration tribunal ruled in favor of Navios Logistics. Vale has been ordered to pay Navios Logistics $21.5 million,including all unpaid invoices, compensation for late payment of invoices, and reimbursement of legal fees incurred. The full amount was received in March2017. 97Table of ContentsOn March 30, 2016, Navios Logistics received written notice from Vale stating that Vale will not be performing the service contract entered intobetween Corporacion Navios S.A. and Vale on September 27, 2013, relating to the iron ore port facility currently under construction in Nueva Palmira,Uruguay. Navios Logistics initiated arbitration proceedings in London on June 10, 2016 pursuant to the dispute resolution provisions of the service contract.On December 20, 2016, a London arbitration tribunal ruled that the Vale port contract remains in full force and effect. If Vale were to further repudiate orrenounce the contract, we may elect to terminate the contract and then would be entitled to damages calculated by reference to guaranteed volumes andagreed tariffs for the remaining period of the contract.As of December 31, 2017, Navios Logistics’ subsidiaries in South America were not contingently liable for claims and penalties towards thelocal tax authorities. According to the Horamar acquisition agreement, if such cases are brought against us, the amounts involved will be reimbursed by theprevious shareholders.Navios Logistics has issued a guarantee and indemnity letter that guarantees the performance by Petrolera San Antonio S.A. (a consolidatedsubsidiary) of all its obligations to Vitol S.A. up to $12.0 million. This guarantee expires on March 1, 2019.Refer also to Item 5F. “Contractual Obligation as at December 31, 2017” below.F. Contractual Obligations as at December 31, 2017:Payment due by period ($ in millions) (unaudited) Contractual Obligations Total Less than1 year 1-3 years 3-5 years More than5 years Long-term debt(1) $1,717.8 $36.0 $104.8 $1,569.5 $7.5 Operating Lease Obligations (Time Charters) for vessels in operation (2) 482.3 119.0 178.7 106.8 77.8 Operating Lease Obligations (Time Charters) for vessels to be delivered 89.3 8.7 40.3 20.9 19.4 Operating Lease Obligations Pushboats and Barges 0.4 0.2 0.2 — — Deposit obligations for options to acquire vessels(3) 2.7 2.7 — — — Navios Logistics contractual payments(4) 10.1 10.1 — — — Rent Obligations(5) 4.0 2.0 1.8 0.2 — Total $2,306.6 $178.7 $325.8 $1,697.4 $104.7 (1)The amount identified does not include interest costs associated with the outstanding credit facilities, which are based on LIBOR rates, plus the costsof complying with any applicable regulatory requirements and a margin ranging from 2.55% to 3.60% per annum. The amount does not includeinterest costs for the 2022 Senior Secured Notes, the 2022 Notes, the 2022 Logistics Senior Notes, the Term Loan B Facility and the Navios LogisticsNotes Payable. The expected interest payments are: $128.0 million (less than 1 year), $250.2 million (1-3 years), $160.2 million (3-5 years) and$0.3 million (more than 5 years). Expected interest payments are based on outstanding principal amounts, currently applicable effective interest ratesand margins as of December 31, 2017, timing of scheduled payments and the term of the debt obligations. (2)Approximately 42% of the time charter payments included above is estimated to relate to operational costs for these vessels. (3)The table above incorporates the deposits the Company agreed to pay regarding the option to acquire a vessel. (4)Represents Navios Logistics’ future remaining contractual payments for the acquisition of three pushboats, which were delivered in February 2018,future remaining contractual payments for the acquisition of covers for dry barges and future remaining contractual payments for the acquisition of anestuary and river tanker. Navios Logistics has secured a credit from the shipbuilder to finance up to 50% of the purchase price, with a maximum amountof $7.4 million (€6.2 million). (5)The table above incorporates the lease obligations of the offices of Navios Holdings and of Navios Logistics. See also Item 4.B. “Business Overview —Facilities.”Refer to “Item 7.B. Related Party Transactions” for Navios Partners Guarantee (as defined herein), not reflected in the table above. 98Table of ContentsNavios Holdings, Navios Acquisition and Navios Partners will make available to Navios Europe II revolving loans of up to $43.5 million to fundworking capital requirements (collectively, the “Navios Revolving Loans II”). In March 2017, the amount undrawn from the Navios Revolving Loans IIincreased by $14.0 million. As of December 31, 2017, the amount undrawn from the Navios Revolving Loans II was $15.0 million, of which Navios Holdingsmay be required to fund an amount ranging from $0 to $15.0 million.Refer also to “Item 5. Operating and Financial Review and Prospects” in “Recent Developments” for the two ten-year bareboat contracts agreedin January 2018, not reflected in the table above.Critical Accounting PoliciesNavios Holdings’ consolidated financial statements have been prepared in accordance with U.S. GAAP. The preparation of these financialstatements requires Navios Holdings to make estimates in the application of its accounting policies based on the best assumptions, judgments and opinionsof management. Following is a discussion of the accounting policies that involve a higher degree of judgment and the methods of their application that affectthe reported amount of assets and liabilities, revenues and expenses and related disclosure of contingent assets and liabilities at the date of its financialstatements. Actual results may differ from these estimates under different assumptions or conditions.Critical accounting policies are those that reflect significant judgments or uncertainties, and potentially result in materially different resultsunder different assumptions and conditions. Navios Holdings has described below what it believes are its most critical accounting policies that involve ahigh degree of judgment and the methods of their application. For a description of all of Navios Holdings’ significant accounting policies, see Note 2 to theConsolidated Financial Statements, included herein.Use of Estimates: The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimatesand assumptions that affect the reported amounts of assets and liabilities and 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 assessment of other-than-temporary impairment related to the carryingvalue of investments in affiliates, the selection of useful lives for tangible and intangible assets, expected future cash flows from long-lived assets to supportimpairment tests, impairment test for goodwill, provisions necessary for accounts receivables and demurrages, provisions for legal disputes, pension benefits,contingencies, and guarantees. Management bases its estimates and judgments on historical experience and on various other factors that are believed to bereasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are notreadily apparent from other sources. Actual results could differ from those estimates under different assumptions and/or conditions.Stock-based Compensation: In December 2017, the Company authorized the grant of restricted common stock and restricted common units. InDecember 2016, the Company authorized the grant of restricted share units and share appreciation rights. In December 2015 and 2014, the Companyauthorized the issuance of shares of restricted common stock, restricted stock units and stock options in accordance with the Company’s stock option plan forits employees, officers and directors. These awards of restricted share units, share appreciation rights, restricted common stock, restricted stock units and stockoptions are based on service conditions only and vest over three and four years. In December 2014 and 2013, the Company also authorized the issuance ofshares of restricted common stock, restricted stock units and stock options for its employees, officers and directors that vest upon achievement of certaininternal performance criteria including certain targets on operational performance and cost efficiency.The fair value of share appreciation rights and stock option grants is determined with reference to option pricing model and principally adjustedBlack-Scholes models. The fair value of restricted share units, restricted stock and restricted stock units is determined by reference to the quoted stock priceon the date of grant. Compensation expense, net of estimated forfeitures, is recognized based on a graded expense model over the vesting period.Compensation expense for the awards that vest upon achievement of the performance criteria is recognized when it is probable that the performance criteriawill be met and are being accounted for as equity.Impairment of Long Lived Assets: Vessels, other fixed assets and other long-lived assets held and used by Navios Holdings 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 Holdings’ management evaluates the carrying amounts and periods over which long-lived assets are depreciated to determine if events orchanges in circumstances have occurred that would require modification to their carrying values or useful lives. Measurement of the impairment loss is basedon the fair value of the asset. Navios Holdings determines the fair value of its assets on the basis of management estimates and assumptions by making use ofavailable market data and taking into consideration third party valuations performed on an individual vessel basis. In evaluating useful lives and carryingvalues of long-lived assets, certain indicators of potential impairment are reviewed, such as undiscounted projected operating cash flows, vessel sales andpurchases, business plans and overall market conditions. 99Table of ContentsUndiscounted projected net operating cash flows are determined for each asset group and compared to the carrying value of the vessel, theunamortized portion of deferred drydock and special survey costs related to the vessel and the related carrying value of the intangible assets with respect tothe time 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 vessel assetgroup.During the fourth quarter of fiscal year 2017, management concluded that events occurred and circumstances had changed, which indicated thatpotential impairment of Navios Holdings’ long-lived assets might exist. These indicators included continued volatility in the spot market, and the relatedimpact of the current dry bulk sector has on management’s expectation for future revenues. As a result, an impairment assessment of long-lived assets (stepone) was performed.The Company determined undiscounted projected net operating cash flows for each vessel and compared it to the vessel’s carrying valuetogether with the carrying value of deferred drydock and special survey costs related to the vessel and the carrying value of the related intangible assets, ifapplicable. 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 (the Company’s remaining charter agreementrates) and an estimated daily time charter equivalent for the unfixed days (based on a combination of one-year average historical time charter rates and10-year average historical one-year time charter rates, adjusted for outliers) over the remaining economic life of each vessel, net of brokerage and addresscommissions excluding days of scheduled off-hires, running cost based on current year actuals, assuming an annual increase of 0.3% after 2018 and autilization rate of 99.2% based on the fleet’s historical performance.As of December 31, 2017, our assessment concluded that step two of the impairment analysis was required for one of our vessels held and used,as the undiscounted projected net operating cash flows did not exceed the carrying value. As a result, the Company recorded an impairment loss of$32.9 million for this vessel, being the difference between the fair value and the vessel’s carrying value together with the carrying value of deferred drydockand special survey costs related to this vessel, presented within the caption “Impairment losses” in the consolidated statements of comprehensive(loss)/income. The assessment performed for 2016 and 2015 did not indicate a step two was necessary for the Company’s other vessels held and used.As of December 31, 2017, the 10-year historical average rates for the Company’s vessels (which naturally varies by type of vessel) used indetermining future cash flows for purposes of its impairment analysis were 63.3% higher than the daily time charter equivalent rate of the owned fleetachieved in the fiscal year 2017 of $9,705 per day.In addition, the Company compared the 10-year historical average (of the one-year charter rate for similar vessels) with the five-year, three-yearand one-year historical averages (of the one-year charter rate for similar vessels). A comparison of the 10-year historical average (of the one-year charter rate)and the five-year, three-year and one-year historical averages (of the one-year charter rate for similar vessels) is as follows (as of December 31, 2017): Historical Average of One-year Charter Rates(over Various Periods) vs. the 10-year Historical Average(of the One-Year Charter Rate) 5-Year Average 3-Year Average 1-Year Average (% below the 10-year average) Handysize (24.8%) (30.6%) (16.6%) Ultra-Handymax (30.1%) (38.3%) (25.5%) Panamax (33.5%) (40.2%) (21.4%) Capesize (34.9%) (48.4%) (32.0%) If testing for impairment using the five-year, three-year and one-year historical averages (of the one-year charter rate for similar vessels) in lieu ofthe 10-year historical average (of the one-year charter rate for similar vessels), the Company estimates that 13, 19 and 8 of its vessels, respectively, wouldhave carrying values in excess of their projected undiscounted future cash flows.As of December 31, 2017 and 2016, the Company owns and operates a fleet of 38 and 40, respectively, with an aggregate carrying value of$1,295.1 million as of December 31, 2017, including the carrying value of existing time charters on its fleet of vessels. On a vessel-by-vessel basis, as ofDecember 31, 2017 and 2016, the carrying value of 38 and 40 of the Company’s vessels, respectively, (including the carrying value of the time charter, ifany, on the specified vessel) exceeds the estimated fair value of those same vessels (including the estimated fair value of the time charter, if any, on thespecified vessel) by approximately $591.1 million and $874.5 million, respectively, in the aggregate (the unrealized loss). 100Table of ContentsA vessel-by-vessel summary as of December 31, 2017 and 2016 follows (with an * indicating those individual vessels whose carrying valueexceeds its estimated fair value, including the related time charter): Vessel YearBuilt Purchase Price(in millions) (1) Carrying Value(as of December 31, 2017)(in millions) (1) Carrying Value(as of December 31, 2016)(in millions) (1) Navios Serenity 2011 $26.8 $21.1* $22.2* Navios Ionian 2000 — — 15.4* Navios Celestial 2009 34.7 24.1* 25.5* Navios Vector 2002 31.2 18.6* 20.5* Navios Horizon 2001 — — 12.3* Navios Herakles 2001 33.1 14.8* 16.4* Navios Achilles 2001 33.0 15.5* 17.1* Navios Meridian 2002 26.8 13.9* 13.9* Navios Mercator 2002 26.1 13.5* 13.7* Navios Arc 2003 25.5 13.2* 14.4* Navios Hios 2003 35.9 17.4* 19.0* Navios Kypros 2003 36.0 17.4* 18.9* Navios Ulysses 2007 16.5 16.5 52.0* Navios Vega 2009 72.7 47.7* 50.6* Navios Astra 2006 23.9 16.9* 18.1* Navios Magellan 2000 30.1 13.4* 14.8* Navios Star 2002 29.4 15.5* 16.1* Navios Asteriks 2005 54.0 30.7* 33.1* Navios Centaurus 2012 37.8 30.2* 30.9* Navios Avior 2012 39.9 32.0* 32.8* Navios Bonavis 2009 121.4 82.7* 87.4* Navios Happiness 2009 122.1 83.3* 88.0* Navios Lumen 2009 113.5 79.2* 83.6* Navios Stellar 2009 95.8 67.6* 71.2* Navios Phoenix 2009 106.8 74.7* 78.8* Navios Antares 2010 116.5 82.0* 86.4* Navios Etoile 2010 66.9 50.3* 52.7* Navios Bonheur 2010 69.6 52.3* 54.8* Navios Altamira 2011 56.2 42.9* 45.0* Navios Azimuth 2011 56.6 43.2* 45.3* Navios Galileo 2006 18.7 14.7* 15.7* Navios Northern Star 2005 17.7 13.8* 14.8* Navios Amitie 2005 17.7 13.9* 14.9* Navios Taurus 2005 17.8 13.7* 14.7* N Amalthia 2006 19.1 15.6* 15.5* N Bonanza 2006 18.8 15.0* 16.1* Navios Gem 2014 54.4 47.8* 49.6* Navios Ray 2012 52.2 46.2* 47.6* Navios Sphera 2016 34.4 32.0* 33.2* Navios Mars 2016 55.5 51.8* 53.7* $1,845.1 $1,295.1 $1,426.7 (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 the Company would sustain on ahypothetical disposition of those vessels as of December 31, 2017 and 2016, 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 less than thecarrying value of the vessel (including the carrying value of the time charter, if any, on the specified vessel). 101Table of ContentsVessels, Port Terminals, Tanker Vessels, Barges, Pushboats and Other Fixed Assets, net: Vessels, port terminals, tanker vessels, barges,pushboats and other fixed assets acquired as parts of business combinations are recorded at fair value on the date of acquisition, and if acquired as an assetacquisition, are recorded at cost (including transaction costs). Vessels constructed by the company would be stated at historical cost, which consists of thecontract price, capitalized interest and any material expenses incurred upon acquisition (improvements and delivery expenses). Subsequent expenditures formajor improvements and upgrades are capitalized, provided they appreciably extend the life, increase the earnings capability or improve the efficiency orsafety of the vessels. The cost and related accumulated depreciation of assets retired or sold are removed from the accounts at the time of sale or retirementand any gain or loss is included in the accompanying consolidated statements of comprehensive (loss)/income.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, port terminals, tanker vessels, barges, pushboats andother fixed assets, after considering the estimated residual value.Annual depreciation rates used, which approximate the useful life of the assets are: Vessels 25 yearsPort terminals 5 to 40 yearsTanker vessels, barges and pushboats 15 to 45 yearsFurniture, fixtures and equipment 3 to 10 yearsComputer equipment and software 5 yearsLeasehold improvements shorter of lease term or 6 yearsManagement estimates the residual values of the Company’s dry bulk vessels based on a scrap value cost of steel times the weight of the shipnoted in lightweight tons (“LWT”). Residual values are periodically reviewed and revised to recognize changes in conditions, new regulations or otherreasons. Revisions of residual values affect the depreciable amount of the vessels and the depreciation expense in the period of the revision and futureperiods. Management estimates the residual values of the Company’s vessels based on a scrap rate of $340 per LWT after considering current market trendsfor scrap rates and ten-year average historical scrap rates of the residual values of the Company’s vessels.Management estimates the useful life of its vessels to be 25 years from the vessel’s original construction. However, when regulations placelimitations on 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. Anincrease in the useful life of a vessel or in its residual value would have the effect of decreasing the annual depreciation charge and extending it into laterperiods. A decrease in the useful life of a vessel or in its residual value would have the effect of increasing the annual depreciation charge.Deferred Drydock and Special Survey Costs: The Company’s vessels, barges and pushboats are subject to regularly scheduled drydocking andspecial surveys which are carried out every 30 and 60 months, respectively, for ocean-going vessels, and up to every 96 months for pushboats and barges, tocoincide with the renewal of the related certificates issued by the classification societies, unless a further extension is obtained in rare cases and under certainconditions. The costs of drydocking and special surveys are deferred and amortized over the above periods or to the next drydocking or special survey date ifsuch date has been determined. Unamortized drydocking or special survey costs of vessels, barges and pushboats sold are written-off to income in the year thevessel, barge or pushboat is sold.Costs capitalized as part of the drydocking or special survey consist principally of the actual costs incurred at the yard, and expenses relating tospare parts, paints, lubricants and services incurred solely during the drydocking or special survey period.Goodwill and Other Intangibles:(i) Goodwill: Goodwill is tested for impairment at the reporting unit level at least annually.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 (step one). The Company determines the fair value of the reporting unit based on a combination of the income approach(i.e. discounted cash flows) and market approach (i.e. comparative market multiples) and believes that the combination of these two approaches is the bestindicator of fair value for its individual reporting units. If the fair value of a reporting unit exceeds the carrying amount, no impairment exists. If the carryingamount of the reporting unit exceeds the fair value, then the Company must perform the second step (step two) to determine the implied fair value of thereporting unit’s goodwill and compare it with its carrying amount. The implied fair value of goodwill is determined by allocating the fair value of thereporting unit to all the assets and liabilities of that reporting unit, as if the reporting unit had been acquired in a business combination and the fair value ofthe reporting unit was the purchase price. If the carrying amount of the goodwill exceeds the implied fair value, then goodwill impairment is recognized bywriting the goodwill down to its implied fair value. 102Table of ContentsAs of December 31, 2017, the Company performed its impairments test for its reporting units within: the Dry Bulk Vessel Operations and theLogistics Business. The Company additionally considered that its market capitalization continued to remain at a level well below the carrying value of itstotal net assets.As of December 31, 2017, the Company performed step one of the impairment test for the Dry Bulk Vessel Operations reporting unit, which isallocated goodwill of $56.2 million. Step one impairment test revealed that the fair value of the Dry Bulk Vessel Operations reporting unit substantiallyexceeded the carrying amount of its net assets. Accordingly, no step two analysis was required.The fair value of the Dry Bulk Vessel Operations reporting unit was estimated using a combination of income and market approaches. For theincome approach, the expected present value of future cash flows used judgments and assumptions that management believes were appropriate in thecircumstances. The significant factors and assumptions the Company used in its discounted cash flow analysis included: EBITDA, the discount rate used tocalculate the present value of future cash flows and future capital expenditures. EBITDA assumptions included revenue assumptions, general andadministrative expense growth assumptions, and direct vessel expense growth assumptions. The future cash flows were determined by considering the charterrevenues from existing time charters for the fixed fleet days (the Company’s remaining charter agreement rates) and an estimated daily time charter equivalentfor the non-fixed days (based on a combination of one-year average historical time charter rates and the 10-year average historical one-year time charter ratesadjusted for outliers), which the Company believes is an objective approach for forecasting charter rates over an extended time period for long-lived assetsand consistent with the cyclicality of the industry. In addition, a weighted average cost of capital (“WACC”) was used to discount future estimated cash flowsto their present values. The WACC was based on externally observable data considering market participants’ and the Company’s cost of equity and debt,optimal capital structure and risk factors specific to the Company. The market approach estimated the fair value of the Company’s business based oncomparable publicly-traded companies in its industry. In assessing the fair value, the Company utilized the results of the valuations and considered the rangeof fair values determined under all methods, which indicated that the fair value exceeded the carrying value of net assets.As of December 31, 2017, the Company performed step one of the impairment test for the Logistics Business, which is allocated goodwill of$104.1 million. Step one of the impairment test used the income method and revealed that the fair value substantially exceeded the carrying amount of its netassets. Accordingly, no step two analysis was required. The future cash flows from the Logistics Business were determined principally by combining revenuesfrom existing contracts and estimated revenues based on the historical performance of the segment, including utilization rates and actual storage capacity.The Logistics Business reporting unit has not been affected by the same volatile industry and market conditions as experienced in the Dry Bulk VesselOperations reporting unit. In addition, the cash flows of the long-lived assets in the Logistics Business have not experienced a significant decline.No impairment loss was recognized for any of the periods presented.(ii) Intangibles Other Than Goodwill: Navios Holdings’ intangible assets and liabilities consist of favorable lease terms, unfavorable lease terms,customer relationships, trade name and port terminal operating rights. The fair value of the trade name was determined based on the “relief from royalty”method, which values the trade name based on the estimated amount that a company would have to pay in an arm’s length transaction to use that trade name.The asset is being amortized under the straight line method over 32 years. Navios Logistics’ trade name is being amortized under the straight line methodover 10 years.The fair value of customer relationships of Navios Logistics was determined based on the “excess earnings” method, which relies upon the futurecash flow generating ability of the asset. The asset is amortized under the straight line method.Other intangibles that are being amortized, such as customer relationships and port terminal operating rights, would be considered impaired iftheir carrying value could not be recovered from the future undiscounted cash flows associated with the asset.When intangible assets or liabilities associated with the acquisition of a vessel are identified, they are recorded at fair value. Fair value isdetermined by reference to market data and the discounted amount of expected future cash flows. Where charter rates are higher than market charter rates, anasset is recorded, being the difference between the acquired charter rate and the market charter rate for an equivalent vessel. Where charter rates are less thanmarket charter 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 the Company to make significant assumptions and estimates of manyvariables including market charter rates, expected future charter rates, the level of utilization of the Company’s vessels and the Company’s weighted averagecost of capital. The use of different assumptions could result in a material change in the fair value of these items, which could have a material impact on theCompany’s financial position and results of operations. 103Table of ContentsThe amortizable value of favorable and unfavorable leases is amortized over the remaining life of the lease term and the amortization expense isincluded in the consolidated statements of comprehensive (loss)/income in the “Depreciation and Amortization” line item.The amortizable value of favorable leases would be considered impaired if its carrying value could not be recovered from the futureundiscounted cash flows associated with the asset. Vessel purchase options that have not been exercised, which are included in favorable lease terms, wouldbe considered impaired if the carrying value of an option, when added to the option price of the vessel, exceeded the fair value of the vessel.Vessel purchase options that are included in favorable leases are not amortized and when the purchase option is exercised, the asset is capitalizedas part of the cost of the vessel and depreciated over the remaining useful life of the vessel and if not exercised, the intangible asset is written off. Vesselpurchase options that are included in unfavorable lease terms are not amortized and when the purchase option is exercised by the charterer and theunderlying vessel is sold, it will be recorded as part of gain/loss on sale of the assets. If the option is not exercised at the expiration date, it is written-off in theconsolidated statements of comprehensive (loss)/income.During the fourth quarter of fiscal year 2017, management concluded that circumstances had changed, which indicated that potential impairmentof Navios Holdings’ intangible assets other than goodwill might exist. These indicators included continued volatility in the spot market and the relatedimpact of the current dry bulk sector has on management’s expectations for the future, consistent with those used in its vessel impairment assessment. As ofDecember 31, 2017, the Company performed an assessment, which indicated that the amortizable value of one of its favorable leases would not berecoverable from the future undiscounted cash flows associated with the asset. As a result, the Company recognized an impairment loss of $3.4 million in thecaption “Impairment losses” in the consolidated statements of comprehensive (loss)/income. There were no other impairment losses recognized for theCompany’s intangible assets other than goodwill for any of the years ended December 31, 2016 and 2015.The weighted average amortization periods for intangibles are: Intangible Assets/Liabilities Years Trade name 29.7 Favorable lease terms 7.9 Port terminal operating rights 47.0 Customer relationships 20.0 Investments in Equity Securities: Navios Holdings evaluates its investments in Navios Acquisition, Navios Partners, Navios Europe I, NaviosEurope II and Navios Containers for OTTI on a quarterly basis. Consideration is given to (i) the length of time and the extent to which the fair value has beenless than the carrying value, (ii) the financial condition and near-term prospects of Navios Partners, Navios Acquisition, Navios Europe I, Navios Europe IIand Navios Containers, and (iii) the intent and ability of the Company to retain its investment in Navios Acquisition, Navios Partners, Navios Europe I,Navios Europe II and Navios Containers, for a period of time sufficient to allow for any anticipated recovery in fair value.Navios Holdings considers whether the fair values of its equity method investments have declined below their carrying values whenever adverseevents or changes in circumstances indicate that the carrying value may not be recoverable. If we consider any such decline to be “other-than-temporary”(based on various factors, including historical financial results, economic and industry events resulting in changes in the affiliate’s trading performance andthe overall health of the affiliate’s industry), then we would write down the carrying amount of the investment to its estimated fair value.As of December 31, 2017, management considers the decline in the market value of its investment in Navios Acquisition to be temporary.However, there is the potential for future impairment changes relative to this security if its respective fair value does not recover and an OTTI analysisindicates such write down is necessary, which may have a material adverse impact on our results of operations in the period recognized. During the yearended December 31, 2017, we did not recognize any impairment loss in earnings.As of December 31, 2016, the Company considered the decline in fair value of its investment in Navios Partners and Navios Acquisition as“other-than-temporary” and therefore recognized a loss of $228.0 million in the accompanying consolidated statement of comprehensive (loss)/income.As of June 30, 2016, the Company considered the decline in fair value of the KLC and STX shares as “other-than-temporary” and thereforerecognized a loss of $0.3 million out of accumulated other comprehensive income/(loss). The respective loss was included in other (expense)/ income, net inthe accompanying consolidated statement of comprehensive (loss)/income. During the third quarter of 2016, the Company sold all KLC and STX securitiesheld. 104Table of ContentsAs of September 30, 2015, the Company considered the decline in fair value of the KLC shares as “other-than-temporary” and therefore,recognized a loss out of accumulated other comprehensive income /(loss) of $1.8 million. The respective loss was included in other expense in theaccompanying consolidated statement of comprehensive (loss)/income.Recent Accounting PronouncementsFor a description of Navios Holdings’ recent accounting pronouncements, see Note 2 to the consolidated financial statements, included herein.G. Safe HarborApplicable to the extent the disclosures in Item 5.E and 5.F above are eligible for the statutory safe harbor protections provided to forward-looking statements.Item 6. Directors, Senior Management and EmployeesA. Directors and Senior ManagementThe current board of directors, executive officers and significant employees are as follows: Name Age PositionAngeliki Frangou 52 Chairman of the Board and Chief Executive OfficerGeorge Achniotis 53 Chief Financial OfficerTed C. Petrone* 62 Vice Chairman of Navios CorporationVasiliki Papaefthymiou 49 Executive Vice President—Legal and DirectorAnna Kalathakis 47 Chief Legal Risk OfficerShunji Sasada* 59 President of Navios Corporation and DirectorLeonidas Korres 42 Senior Vice President—Business DevelopmentEfstratios Desypris 43 Chief Financial ControllerIoannis Karyotis 41 Senior Vice President—Strategic PlanningErifili Tsironi 43 Senior Vice President – Credit ManagementChris Christopoulos* 40 Senior Vice President of Navios Corporation – Financial Business DevelopmentSpyridon Magoulas 63 DirectorJohn Stratakis 53 DirectorEfstathios Loizos 56 DirectorGeorge Malanga 59 Director *Significant employeeAngeliki Frangou has been our Chairman and CEO since August 25, 2005. In addition, Ms. Frangou has been the Chairman and ChiefExecutive Officer of Navios Maritime Partners L.P. (NYSE: NMM), an affiliated limited partnership, since August 2007, the Chairman and Chief ExecutiveOfficer of Navios Maritime Acquisition Corporation (NYSE: NNA), an affiliated corporation, since March, 2008 the Chairman and Chief Executive Officer ofNavios Maritime Midstream Partners L.P. (NYSE: NAP), an affiliated limited partnership since October 2014 and the Chairman and Chief Executive Officer ofNavios Maritime Containers Inc. (N-OTC:NMCI), an affiliated corporation since April, 2017. Ms. Frangou has been the Chairman of the Board of Directors ofNavios Logistics since its inception in December 2007. Previously, Ms. Frangou served as Chairman, Chief Executive Officer and President of InternationalShipping Enterprises Inc., which acquired Navios Holdings. From 1990 until August 2005, Ms. Frangou was the Chief Executive Officer of MaritimeEnterprises Management S.A. and its predecessor company, which specialized in the management of dry cargo vessels. Ms. Frangou is the non-executiveChairman of IRF European Finance Investments Ltd., listed on the SFM of the London Stock Exchange. Ms. Frangou is Member of the Board of the UnitedKingdom Mutual Steam Ship Assurance Association (Bermuda) Limited, Vice Chairman of China Classification Society Mediterranean Committee, amember of the International General Committee and of the Hellenic and Black Sea Committee of Bureau Veritas, as well as a member of Greek Committee ofNippon Kaiji Kyokai. Since March 2016, Ms. Frangou is a Member of the DNV GL Greek National Committee. Since May 2014, Ms. Frangou has been aMember of the Board of The Hellenic Mutual War Risks Association (Bermuda) Limited. Since February 2015, Ms. Frangou has been a Member of the Boardof the Union of Greek Shipowners. Since October 2015, Ms. Frangou has been a Member of the Board of Trustees of Fairleigh Dickinson University. SinceJuly 2013, Ms. Frangou has been a member of the Board of Visitors of the Columbia University School of Engineering and Applied Science. Ms. Frangoureceived a bachelor’s degree in mechanical engineering, summa cum laude, from Fairleigh Dickinson University and a master’s degree in mechanicalengineering from Columbia University. 105Table of ContentsGeorge Achniotis has been Navios Holdings’ Chief Financial Officer since April 12, 2007. Prior to being appointed Chief Financial Officer ofNavios Holdings, Mr. Achniotis served as Senior Vice President-Business Development of Navios Holdings from August 2006 to April 2007. Before joiningNavios Holdings, Mr. Achniotis was a partner at PricewaterhouseCoopers (“PwC”) in Greece, heading the Piraeus office and the firm’s shipping practice. Hebecame a partner at PwC in 1999 when he set up and headed the firm’s internal audit services department from which all SOX implementation andconsultation projects were performed. Mr. Achniotis is currently a Director and Executive Vice President-Business Development of Navios Partners; a NewYork Stock Exchange traded limited partnership, which is an affiliate of Navios Holdings. He has more than 19 years’ experience in the accountingprofession with work experience in England, Cyprus and Greece. Mr. Achniotis qualified as a Chartered Accountant in England and Wales in 1991, and holdsa Bachelor’s degree in Civil Engineering from the University of Manchester.Ted C. Petrone became Vice Chairman of Navios Corporation in January 2015 having previously served as a director of Navios Holdings fromMay 2007 to January 2015 and President of Navios Corporation from September 2006 to January 2015. Mr. Petrone has served in the maritime industry for39 years, 35 of which he has spent with Navios Holdings. After joining Navios Holdings as an assistant vessel operator, Mr. Petrone worked in variousoperational and commercial positions. Mr. Petrone was previously responsible for all aspects of the daily commercial activity, encompassing the trading oftonnage, derivative hedge positions and cargoes. Mr. Petrone is currently also a director of Navios Acquisition, a New York Stock Exchange listed company,and an affiliate of the Company; and has served in such capacity since June 2008. Mr. Petrone graduated from New York Maritime College at Fort Schuylerwith a Bachelor of Science degree in maritime transportation. He has served aboard U.S. Navy (Military Sealift Command) tankers.Vasiliki Papaefthymiou has been Executive Vice President — Legal and a member of Navios Holdings’ board of directors since its inception,and prior to that was a member of the board of directors of ISE. Ms. Papaefthymiou has served as general counsel for Maritime Enterprises Management S.A.since October 2001, where she has advised the Company on shipping, corporate and finance legal matters. Ms. Papaefthymiou provided similar services asgeneral counsel to Franser Shipping from October 1991 to September 2001. Ms. Papaefthymiou received her undergraduate degree from the Law School ofthe University of Athens and a master degree in Maritime Law from Southampton University in the United Kingdom. Ms. Papaefthymiou is admitted topractice law before the Bar in Piraeus, Greece.Anna Kalathakis has been Chief Legal Risk Officer since November 2012, and Senior Vice President — Legal Risk Management of NaviosMaritime Holdings Inc. from December 2005 until October 2012. Before joining Navios Holdings, Ms. Kalathakis was the General Manager of the Greekoffice of A. Bilbrough & Co. Ltd. and an Associate Director of the Company (Managers of the London Steam-Ship Owners’ Mutual Insurance AssociationLimited). She has previously worked for a U.S. maritime law firm in New Orleans, was admitted to practice law in the state of Louisiana in 1995, and has alsoworked in a similar capacity at a London maritime law firm. She qualified as a solicitor in England and Wales in 1999 and was admitted to practice law beforethe Bar in Piraeus, Greece in 2003. She has studied International Relations at Georgetown University, Washington D.C. (1991). She holds an MBA fromEuropean University at Brussels (1992) and a J.D. from Tulane Law School (1995).Shunji Sasada became a director of Navios Holdings and President of Navios Corporation in January 2015. Mr. Sasada has also served as adirector in Navios Maritime Partners L.P. since August 2007 and as a director in Navios Maritime Midstream Partners L.P. since October 2014. Previously, asChief Operating Officer of Navios Corporation and Senior Vice President of Fleet Development, he headed Navios Holdings’ program for the growth anddevelopment of the Company’s long-term chartered-in and owned tonnage. Mr. Sasada is also President of Navimax Corporation, the Ultra Handymaxoperating subsidiary of the group. Mr. Sasada started his shipping career in 1981 in Japan with Mitsui’s O.S.K. Lines, Ltd. (“MOSK”). Mr. Sasada’s firstposition with MOSK was in steel products in the Tokyo branch as a salesman for exporting steel products to worldwide destinations. Two years later,Mr. Sasada moved to the tramp section in Mitsui’s bulk carrier division and was in charge of operations and then of chartering 20-40 smaller Handysizevessels between 21,000 dwt and 35,000 dwt. In 1991, Mr. Sasada moved to Norway to join Trinity Bulk Carriers as its chartering manager as well assubsidiary board member, representing MOSK as one of the shareholders. After an assignment in Norway, Mr. Sasada moved to London and started MOSK’sown Ultra Handymax operation as its General Manager. Mr. Sasada joined Navios Holdings in May 1997. Mr. Sasada is the member of the North AmericanCommittee of Nippon Kaiji Kyokai (Class NK). He is a graduate of Keio University, Tokyo, with a B.A. degree in Business and he is a member of the Board ofTrustees of Keio Academy of New York. 106Table of ContentsLeonidas Korres has been our Senior Vice President — Business Development since January 2010. Mr. Korres is also the Chief Financial Officerof Navios Maritime Acquisition Corporation since April 2010. Mr. Korres served as the Special Secretary for Public Private Partnerships in the Ministry ofEconomy and Finance of the Hellenic Republic from October 2005 until November 2009. Prior to that, from April 2004 to October 2005, Mr. Korres served asSpecial Financial Advisor to the Minister of Economy and Finance of the Hellenic Republic and as liquidator of the Organizational Committee for theOlympic Games Athens 2004 S.A. From 2001 to 2004, Mr. Korres worked as a Senior Financial Advisor for KPMG Corporate Finance. From October 2007until January 2010, Mr. Korres was a member of the board of directors of Navios Partners. From May 2003 to December 2006, Mr. Korres was Chairman of theCenter for Employment and Entrepreneurship, a Non-Profit Company. From June 2008 until February 2009, Mr. Korres served as a board member and auditcommittee member of Hellenic Telecommunications Organization S.A. (trading on the Athens and New York Stock Exchanges). From June 2004 untilNovember 2009, Mr. Korres served on the board of Hellenic Olympic Properties S.A., which was responsible for exploiting the Olympic venues. Mr. Korresearned his Bachelor’s degree in Economics from the Athens University of Economics and Business and his master’s degree in Finance from the University ofLondon.Efstratios Desypris has been our Chief Financial Controller since February 2011. Mr. Desypris has previously served as Financial Controllersince May 2006. Mr. Desypris is also a director and Senior Vice President of Navios Maritime Midstream Partners L.P. since October 2014. In addition,Mr. Desypris is the Chief Financial Officer of Navios Maritime Partners since January 2010. He also serves as Senior Vice President — Strategic Planning andDirector of Navios Logistics, and as director in Navios Europe Inc. Before joining Navios Group, Mr. Desypris worked for 9 years in the accountingprofession, most recently as manager of the audit department at Ernst & Young in Greece. Mr. Desypris started his career as an auditor with Arthur Andersen &Co. in 1997. He holds a Bachelor of Science degree in Economics from the University of Piraeus.Ioannis Karyotis has been our Senior Vice President — Strategic Planning since February 2011. Mr. Karyotis is also Chief Financial Officer ofNavios Logistics since March 2011. Prior to joining the Company, from 2006 until 2011, Mr. Karyotis was Consultant and later Project Leader at The BostonConsulting Group (BCG), an international management consulting firm. From 2003 until 2005, Mr. Karyotis was Senior Equity Analyst at EurocorpSecurities, a Greek brokerage house, and in 2003, he was Senior Analyst in the Corporate Finance Department at HSBC Pantelakis Securities, a subsidiary ofHSBC Bank. Mr. Karyotis began his career in 2002 with Marfin Hellenic Securities as Equity Analyst. He received his bachelor’s degree in Economics fromthe Athens University of Economics and Business (1998). He holds a master’s of Science in Finance and Economics from the London School of Economics(1999) and an MBA from INSEAD (2006).Erifili Tsironi has been our Senior Vice President – Credit Management since October 2014. Ms. Tsironi is also Chief Financial Officer ofNavios Maritime Midstream Partners LP. Ms. Tsironi has over 17 years of experience in ship finance. Before joining the Company, she was the Senior VicePresident—Global Dry Bulk Sector Coordinator of DVB Bank SE. Ms. Tsironi joined DVB Bank SE in 2000 serving as Assistant Local Manager and SeniorRelationship Manager. Previously, she served as account manager in ANZ Investment Bank / ANZ Grindlays Bank Ltd from May 1997 until December 1999.Ms. Tsironi holds a BSc. in Economics, awarded with Honours, from the London School of Economics and Political Science and an MSc in Shipping, Tradeand Finance, awarded with Distinction, from Cass Business School of City University in London.Chris Christopoulos has been the Senior Vice President—Financial Business Development of Navios Corporation since joining the Company inApril 2017. Mr. Christopoulos is also Chief Financial Officer of Navios Maritime Containers, Inc. Mr. Christopoulos has over 15 years of experience infinancial markets and shipping. Before joining us, he was a Director in the investment banking division of Bank of America Merrill Lynch where he led theorigination, structuring and execution of advisory and capital markets transactions for companies in the transportation sector. Previously he was part of thetransportation investment banking team at Merrill Lynch, and the industrials investment banking team at CIBC World Markets, which he joined in 2004.Mr. Christopoulos received a Bachelor of Arts degree in Economics from Yale University.Spyridon Magoulas has been a member of Navios Holdings’ Board of Directors since its inception, and prior to that was a member of the boardof directors of ISE. Mr. Magoulas is the co-founder and director of Doric Shipbrokers S.A., a chartering firm based in Athens, Greece, and has served as themanaging director of Doric Shipbrokers S.A. since its formation in 1994. From 1982 to 1993, Mr. Magoulas was chartering director and shipbroker forNicholas G. Moundreas Shipping S.A., a company located in Piraeus, Greece, and from 1980 to 1982, Mr. Magoulas served at Orion and Global CharteringInc. in New York. Mr. Magoulas received a bachelor’s degree in Economics (honors) from the City University of New York, New York, a master’s degree inTransportation Management from the Maritime College in New York and a master degree in Political Economy from the New School for Social Research inNew York. In addition to his role on the Board of Directors, Mr. Magoulas also serves as a member of the Audit Committee, the Compensation Committee andthe Nominating and Governance Committee. Mr. Magoulas is an independent director. 107Table of ContentsJohn Stratakis has been a member of Navios Holdings’ Board of Directors since its inception, and prior to that was a member of the board ofdirectors of ISE. Since 1994, Mr. Stratakis has been a partner with the law firm of Poles, Tublin, Stratakis & Gonzalez, LLP, in New York, New York, where hespecializes in all aspects of marine finance and admiralty law, real estate, trusts and estates and general corporate law. From 1992 to 1993, Mr. Stratakis wasan associate attorney with Wilson, Elser, Moskowitz Edelman & Dicker, in New York, New York. Mr. Stratakis also has been a director and the President ofthe Hellenic-American Chamber of Commerce in New York. He serves on the board of New York Maritime Inc., an association that promotes the New Yorkregion as a maritime business center. Mr. Stratakis received a Bachelor of Arts (cum laude) from Trinity College and a Juris Doctor degree from WashingtonCollege of Law at American University. Mr. Stratakis is admitted to practice law in the State of New York and in the courts of the Southern and EasternDistricts of New York. In addition to his role on the Board of Directors, Mr. Stratakis also serves as chairman of the Nominating and Governance Committeeand a member of the Compensation Committee. Mr. Stratakis is an independent director.Efstathios Loizos was appointed to our Board of Directors in July 2010. Mr. Loizos was also director of Navios Partners from October 2007 untilJune 2010. In October 2008, Mr. Loizos joined the Managing Team of ION S.A., a leading Greek chocolate and cocoa group of companies, with theresponsibility of supervising MABEL S.A., one of the affiliated companies of the group. In June 2010, Mr. Loizos was appointed to the Board of Directors ofION S.A. and assumed enlarged executive responsibilities within the group. Since March 2014, Mr. Loizos serves as the CEO of the affiliated companyINTERION S.A., which operates in Bulgaria. In May 2010, Mr. Loizos was elected as a member of the Board of Directors of IOBE (Foundation of Economicand Industrial Research). Between 2001 and 2008, Mr. Loizos served as the General Manager and a member of the Board of Directors of ELSA S.A., a Greeksteel packaging company, and also as the Vice Chairman of the Board of Directors of its affiliated company ATLAS S.A. From 2005 to 2007, Mr. Loizosserved as the President of the International Packaging Association and as the Vice President of the Greek Association of Steel Packaging Manufacturers. He isone of the founders/owners of Facility Plus, which is engaged in the field of property & facility management. Mr. Loizos received a Maitrise en SciencesEconomiques from the University of Strasbourg and an M.B.A. in Finance from New York University. Mr. Loizos also serves as Chairman of the AuditCommittee and chairman of the Compensation Committee. Mr. Loizos is an independent director.George Malanga has been a member of our Board of Directors since April 2010. He is currently serving as the Chief Credit Officer of BNYMellon. Mr. Malanga has held a variety of positions during his 30 year tenure with the bank. He began his banking career in various relationshipmanagement roles before moving to risk management in 2000. Mr. Malanga has served in roles with increased responsibility in credit risk management overthe past 18 years. His credit risk experience includes head of asset recovery, head of domestic corporate credit and currently as Chief Credit Officer of BNYMellon. Mr. Malanga is a member of BNY Mellon’s Operating Committee and holds a Bachelor’s Degree in Business Administration from Rutgers Collegeand an M.B.A. in Finance from New York University. Mr. Malanga also serves as a member of the Audit Committee and the Nominating and GovernanceCommittee. Mr. Malanga is an independent director.There are no family relationships between any of our directors, executive officers or significant employees.B. CompensationThe aggregate annual compensation (salaries and bonus) paid to our current executive officers was approximately $2.2 million for the yearended December 31, 2017. Navios Holdings provides administrative services to Navios Partners, Navios Acquisition, Navios Midstream, Navios Logistics,Navios Containers, Navios Europe I and Navios Europe II. Navios Holdings is reimbursed for reasonable costs and expenses, incurred in connection with theprovision of these services. In February 2015, the Board of Directors approved the adoption of the Navios Holdings 2015 Equity Incentive Plan, as amendedin December 2017 (the “2015 Equity Incentive Plan”) which amendment increased the number of authorized shares available for issuance under such plan.The 2015 Equity Incentive Plan authorizes the issuance of stock grants to our officers, employees, directors and consultants in such amounts and pursuant tosuch terms as may be determined by the Board of Directors at the time of the grant.On December 15, 2015, December 11, 2016, and December 13, 2017 the Company authorized the granting of restricted share units and shareappreciation rights and the issuance of shares of restricted common stock, restricted stock units and stock options in accordance with the Company’s stockoption plan for its employees, officers and directors. These awards of restricted share units, share appreciation rights, restricted common stock units, restrictedcommon stock and stock options to its employees, officers and directors, vest over three and four years.Details of options grantedAs of the filing of this Annual Report on Form 20-F, 7,705,995 stock options to purchase the Company’s common stock and 2,500,000 shareappreciation rights have been granted of which 5,377,797 have vested, 1,714,268 have expired, 2,526,779 remain unvested and 587,151 have been exercisedin total, of which 411,438 at an exercise price of $3.18 per share, 30,595 at an exercise price of $5.87 per share, 63,172 at an exercise price of $5.15 per share,59,546 at an exercise price of $3.81 per share, and 22,400 at an exercise price of $3.44 per share. 108Table of ContentsOut of the 7,705,995 stock options granted and 2,500,000 share appreciation rights granted, 288,000 options were granted at an exercise price of$16.75 per share; 571,266 options were granted at an exercise price of $3.18 per share; 405,365 options were granted at an exercise price of $5.87 per share;954,842 options were granted at an exercise price of $5.15 per share; 1,344,353 options were granted at an exercise price of $3.81 per share; 1,344,357options were granted at an exercise price of $3.44 per share; 674,809 options were granted at an exercise price of $8.63 per share; 1,123,003 options weregranted at an exercise price of $3.64 per share; and 1,000,000 options were granted at an exercise price of $1.20 per share. Total 2,500,000 share appreciationrights were granted at an exercise price of $1.20 per share.Details of restricted stock and restricted stock units issuedAs of the filing of this Annual Report on Form 20-F, 12,014,305 shares of restricted stock and restricted stock units have been granted and2,540,000 restricted share units have been granted, of which 7,459,277 have vested and in the aggregate 77,715 were forfeited during the years from 2007until 2017. See Note 12 to the Consolidated Financial Statements, included herein.Non-employee directors receive annual fees, effective January 1, 2014, in the amount of $80,000 each plus reimbursement of their out-of-pocketexpenses. In addition, the non-executive serving as chairman of the Audit Committee receives an annual fee of $20,000, the chairman of the Nominating andGovernance Committee receives an annual fee of $17,000, and the chairman of the Compensation Committee receives an annual fee of $20,000, plusreimbursement of their out-of-pocket expenses.C. Board PracticesThe board of directors of Navios Holdings is divided into three classes with only one class of directors being elected in each year and each classserving a three-year term. In January 2015, Navios Holdings, following the resignation of Ted Petrone, appointed Shunji Sasada to its Board of Directors. Theterm of office of the first class of directors, consisting of Efstathios Loizos, George Malanga and John Stratakis will expire in 2018. The term of office of thesecond class of directors, consisting of Shunji Sasada and Spyridon Magoulas will expire in 2019. The term of office of the third class of directors, consistingof Angeliki Frangou and Vasiliki Papaefthymiou, will expire in 2020. No directors are entitled to any benefits upon termination of their term.The board of directors has established an audit committee of three independent directors. The audit committee is governed by a written charter,which was approved by the board of directors. One of the members of the audit committee is an “audit committee financial expert” for purposes of SEC rulesand regulations. The audit committee, among other things, reviews our external financial reporting, engages our external auditors, approves all fees paid toauditors and oversees our internal audit activities and procedures and the adequacy of our internal accounting controls. Our audit committee is comprised ofMessrs. George Malanga, Efstathios Loizos and Spyridon Magoulas, and our audit committee financial expert is Mr. Efstathios Loizos.The board of directors has established a nominating and governance committee of three independent directors, Messrs. John Stratakis, whoserves as a Chairman, Spyridon Magoulas and George Malanga. This committee is governed by a written charter, which was approved by the board ofdirectors. The nominating and governance committee is responsible for providing assistance to the board of directors in fulfilling its responsibility to theCompany’s stockholders relating to the Company’s nominating procedures and practices for appointing officers and directors as well as the Company’soversight, analysis and recommendations with respect to corporate governance and best practices, and the Company’s process for monitoring compliancewith laws and regulations.The board of directors has established a compensation committee of three independent directors, Messrs. Efstathios Loizos, who serves as aChairman, Spyridon Magoulas and John Stratakis. The compensation committee is governed by a written charter, which was approved by the board ofdirectors. The compensation committee is responsible for reviewing and approving the compensation of the Company’s executive officers, for establishing,reviewing and evaluating, in consultation with senior management, the long-term strategy of employee compensation and approving any material change toexisting compensation plans.The board of directors, from time to time, establishes special conflicts committees to review specific matters that the board believes may involvepotential conflicts of interest. The conflicts committees determine if the resolution of the conflict of interest is fair and reasonable to us. The members of theconflicts committees may not be our officers or employees or directors, officers or employees of our affiliates, and must meet the independence standardsestablished by the New York Stock Exchange to serve on an audit committee of a board of directors and certain other requirements. 109Table of ContentsD. EmployeesNavios Holdings crews its vessels primarily with Greek, Ukrainian, Georgian, Filipino, Polish, Romanian, Indian and Russian officers andFilipino, Georgian, Indian, Romanian, Ethiopian and Ukrainian seamen. Navios Holdings’ fleet manager is responsible for selecting its Greek officers. Othernationalities are referred to Navios Holdings’ fleet manager by local crewing agencies. Navios Holdings is also responsible for travel and payroll of the crew.The crewing agencies handle each seaman’s training. Navios Holdings requires that all of its seamen have the qualifications and licenses required to complywith international regulations and shipping conventions.Navios Logistics crews its fleet with Argentine, Brazilian and Paraguayan officers and seamen. Navios Logistics’ fleet managers are responsiblefor selecting the crew.With respect to shore-side employees, as of December 31, 2017, Navios Holdings and its subsidiaries employed 222 employees in its Piraeus,Greece office, 11 employees in its New York office, seven employees in its Antwerp, Belgium office, three employees in its Monaco office and eightemployees in its Singapore office. Navios Logistics employs 50 employees in the Asuncion, Paraguay office, 21 employees at the port facility in SanAntonio, Paraguay, 103 employees in the Buenos Aires, Argentina office, eight employees in the Montevideo, Uruguay office, 203 employees at the portfacilities in Uruguay, and 10 employees in the Corumba, Brazil office.E. Share OwnershipThe following table sets forth information regarding the beneficial ownership of the common stock of Navios Holdings as of March 31, 2018,based on 124,709,280 shares of common stock outstanding as of such day, by each of Navios Holdings’ executive officers and directors.Unless otherwise indicated based upon Schedules 13D filed with the SEC and the Company’s knowledge, Navios Holdings believes that all persons named inthe table have sole voting and investment power with respect to all shares of common stock beneficially owned by them. Name and Address of Beneficial Owner(1) Amount and Natureof BeneficialOwnership Percentage ofOutstandingCommon Stock Angeliki Frangou(2)(3) 39,665,352 30.6% George Achniotis * *Ted C. Petrone * *Vasiliki Papaefthymiou * *Anna Kalathakis * *Shunji Sasada * *Leonidas Korres * *Efstratios Desypris * *Ioannis Karyotis * *Erifili Tsironi * *Chris Christopoulos * *Spyridon Magoulas * *John Stratakis * *Efstathios Loizos * *George Malanga * * *Less than one percent(1)The business address of each of the individuals is c/o Navios Maritime Holdings Inc., 7 Avenue de Grande Bretagne, Office 11B2, Monte Carlo, MC98000 Monaco.(2)Angeliki Frangou has filed a Schedule 13D amendment indicating that she intends, subject to market conditions, to purchase up to $20.0 million ofcommon stock and as of March 31, 2018, she had purchased approximately $10.0 million in value of common stock.(3)The amount and nature of beneficial ownership and the percentage of outstanding common stock includes 5,111,991 options, each for one share,vested but not yet exercised. 110Table of ContentsItem 7. Major Shareholders and Related Party TransactionsA. Major ShareholdersThe following table sets forth information regarding the beneficial ownership of the common stock of Navios Holdings as of March 31, 2018based on shares of common stock outstanding as of such date of each person known by Navios Holdings to be the beneficial owner of more than 5% of itsoutstanding shares of common stock based upon the amounts and percentages as are contained in the public filings of such persons. All such stockholdershave the same voting rights with respect to their shares of common stock.Unless otherwise indicated, based upon Schedules 13D filed with the SEC and the Company’s knowledge, Navios Holdings believes that allpersons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them. Name Amount andNature ofBeneficialOwnership Percentage ofOutstandingCommon Stock Angeliki Frangou(1)(2) 39,665,352 30.6% (1)The amount and nature of beneficial ownership and the percentage of outstanding common stock includes 5,111,991 options, each for one share,vested but not yet exercised. (2)As disclosed in a 13D Amendment dated March 29, 2018, Ms. Frangou has disclosed that she and her affiliates have pledged 14,511,171 of the sharesof common stock disclosed in the table above.B. Related Party TransactionsOffice Rent: The Company has entered into lease agreements with Goldland Ktimatiki-Ikodomiki-Touristiki Xenodohiaki Anonimos Eteria andEmerald Ktimatiki-Ikodomiki Touristiki Xenodohiaki Anonimos Eteria, both of which are Greek corporations that are currently majority-owned by AngelikiFrangou, Navios Holdings’ Chairman and Chief Executive Officer. The lease agreements provide for the leasing of facilities located in Piraeus, Greece tohouse the operations of most of the Company’s subsidiaries. The total annual lease payments are in aggregate €0.9 million (approximately $1.1 million) andthe lease agreements continue to be effective until either party terminates the agreement or until they expire in 2019. These payments are subject to annualadjustments, which are based on the inflation rate prevailing in Greece as reported by the Greek State at the end of each year.Purchase of Services: The Company utilizes its affiliate company, Acropolis, as a broker. Navios Holdings has a 50% interest in Acropolis.Although Navios Holdings owns 50% of Acropolis’ stock, Navios Holdings agreed with the other shareholder that the earnings and amounts declared by wayof dividends will be allocated 35% to the Company with the balance to the other shareholder. As of December 31, 2017 and 2016, the carrying amount of theinvestment was $0.2 million and $0.1 million, respectively. Dividends received for each of the years ended December 31, 2017, 2016 and 2015 were$0.1 million, $0.1 million and $0.5 million, respectively. Commissions charged from Acropolis for the year ended December 31, 2017, were $0 million andcommissions charged for the years ended December 31, 2016 and 2015 were $0 and less than $0.1 million, respectively. Included in the trade accountspayable at both December 31, 2017 and 2016 was an amount due to Acropolis of $0.1 million.Vessels Charter Hire: From 2012, Navios Holdings has entered into charter-in contracts for certain of Navios Partners’ vessels, all of which havebeen redelivered by April 2016.In May 2012 and 2013, the Company entered into two charters with Navios Partners for the Navios Aldebaran and the Navios Prosperity. OnFebruary 11, 2015, the Company and Navios Partners entered into a novation agreement whereby the rights to the time charter contract of the NaviosAldebaran and the Navios Prosperity were transferred to Navios Holdings on February 28 and March 5, 2015, respectively.In 2012 and 2013, the Company entered into various charters with Navios Partners for the Navios Apollon, Navios Libra, Navios Felicity andNavios Hope. In April 2015, these charters were further extended for approximately one year at a net daily rate of $12,500, $12,000, $12,000, $10,000 plus50/50 profit sharing based on actual earnings at the end of the period.In 2015, the Company entered into various charters with Navios Partners for the Navios Gemini, Navios Hyperion, Navios Soleil, NaviosHarmony, Navios Orbiter, Navios Fantastiks, Navios Alegria, Navios Pollux and Navios Sun. The terms of these charters were approximately nine to twelvemonths, at a net daily rate of $7,600, $12,000, $12,000, $12,000, $12,000, $12,500, $12,000, $11,400 and $12,000, respectively plus 50/50 profit sharingbased on actual earnings at the end of the period.In November 2016, the Company entered into a charter with Navios Partners for the Navios Fulvia, a 2010-built Capesize vessel. The term of thischarter was approximately three months from November 2016, at a net daily rate of $11,500. 111Table of ContentsTotal charter hire expense for all vessels for the years ended December 31, 2017, 2016 and 2015 was $0.7 million, $1.7 million and$39.7 million, respectively, and was included in the consolidated statements of comprehensive (loss)/income under “Time charter, voyage and logisticsbusiness expenses”.Management Fees: Navios Holdings provides commercial and technical management services to Navios Partners’ vessels for a daily fixed fee.This daily fee covers all of the vessels’ operating expenses, including the cost of drydock and special surveys. In each of October 2013, August 2014 andFebruary 2015, the Company amended its existing management agreement with Navios Partners to fix the fees for ship management services of its ownedfleet at : (i) $4,000 daily rate per Ultra-Handymax vessel; (ii) $4,100 daily rate per Panamax vessel; (iii) $5,100 daily rate per Capesize vessel; (iv) $6,500daily rate per container vessel of TEU 6,800; (v) $7,200 daily rate per container vessel of more than TEU 8,000; and (vi) $8,500 daily rate per very largecontainer vessel of more than TEU 13,000 through December 31, 2015. In February 2016, the Company further amended its existing management agreementto fix the fees for ship management services of its owned fleet at: (i) $4,100 daily rate per Ultra-Handymax vessel; (ii) $4,200 daily rate per Panamax vessel;(iii) $5,250 daily rate per Capesize vessel; (iv) $6,700 daily rate per container vessel of TEU 6,800; (v) $7,400 daily rate per container vessel of more thanTEU 8,000; and (vi) $8,750 daily rate per very large container vessel of more than TEU 13,000 through December 31, 2017. In November 2017, the Companyfurther amended its existing management agreement to fix the fees for ship management services of its owned fleet at: (i) $4,225 daily rate per Ultra-Handymax vessel; (ii) $4,325 daily rate per Panamax vessel; (iii) $5,250 daily rate per Capesize vessel; (iv) $6,700 daily rate per container vessel of TEU6,800; (v) $7,400 daily rate per container vessel of more than TEU 8,000; and (vi) $8,750 daily rate per very large container vessel of more than TEU 13,000through December 31, 2019. Drydocking expenses will be reimbursed by Navios Partners at cost at occurrence.Total management fees for the years ended December 31, 2017, 2016 and 2015, amounted to $62.2 million, $59.2 million and $56.5 million,respectively, and are presented net under the caption “Direct vessel expenses”.Effective August 31, 2016, Navios Partners could, upon request to Navios Holdings, partially or fully defer the reimbursement of dry dockingand other extraordinary fees and expenses under the management agreement to a later date, but not later than January 5, 2018, and if reimbursed on a laterdate, such amounts would bear interest at a rate of 1% per annum over LIBOR. Total amount due from Navios Partners as of December 31, 2017 amounted to$0 million (December 31, 2016: $11.1 million) and is presented under the caption “Long-term receivable from affiliate company”.Navios Holdings provides commercial and technical management services to Navios Acquisition’s vessels for a daily fee that was fixed. Thisdaily fee covers all of the vessels’ operating expenses, other than certain fees and costs. Actual operating costs and expenses would be determined in amanner consistent with how the initial fixed fees were determined. In May 2014, Navios Holdings extended the duration of its existing managementagreement with Navios Acquisition until May 2020 and fixed the fees for ship management services of Navios Acquisition owned fleet for two additionalyears through May 2016 at $6,000 per owned MR2 product tanker and chemical tanker vessel, $7,000 per owned LR1 product tanker vessel and reduced thedaily rate to $9,500 per VLCC vessel. In May 2016, Navios Holdings amended its agreement with Navios Acquisition to fix the fees for ship managementservices of Navios Acquisition owned fleet at a daily fee of (i) $6,350 per MR2 product tanker and chemical tanker vessel; (ii) $7,130 per LR1 product tankervessel; and (iii) $9,500 per VLCC through May 2018. Drydocking expenses under this agreement will be reimbursed at cost at occurrence for all vessels.Total management fees for the years ended December 31, 2017, 2016 and 2015 amounted to $95.0 million, $97.9 million and $95.3 million,respectively, and are presented net under the caption “Direct vessel expenses”.Pursuant to a management agreement dated December 13, 2013, Navios Holdings provides commercial and technical management services toNavios Europe I’s tanker and container vessels. The term of this agreement is for a period of six years. Management fees under this agreement will bereimbursed at cost at occurrence. Total management fees for the years ended December 31, 2017, 2016 and 2015 amounted to $21.5 million, $20.9 millionand $20.4 million, respectively, and are presented net under the caption “Direct vessel expenses”.Pursuant to a management agreement dated November 18, 2014, as further amended in October 2016, Navios Holdings provides commercial andtechnical management services to Navios Midstream’s vessels for a daily fixed fee of $9,500 per owned VLCC vessel, effective through December 31, 2018.Drydocking expenses under this agreement will be reimbursed at cost at occurrence for all vessels. The term of this agreement is for a period of five years.Total management fees for the years ended December 31, 2017, 2016 and 2015 amounted to $20.8 million, $20.9 million and $17.6 million, respectively,and are presented net under the caption “Direct vessel expenses”.Pursuant to a management agreement dated June 5, 2015, Navios Holdings provides commercial and technical management services to NaviosEurope II’s dry bulk and container vessels. The term of this agreement is for a period of six years. Management fees under this agreement will be reimbursed atcost at occurrence. Total management fees for the year ended December 31, 2017, 2016 and 2015 amounted to $22.1 million, $23.5 million and $9.6 million,respectively, and are presented net under the caption “Direct vessel expenses”. 112Table of ContentsPursuant to a management agreement dated June 7, 2017, as amended in November 2017, Navios Holdings, provides commercial and technicalmanagement services to Navios Containers’ vessels. The term of this agreement is for an initial period of five years with an automatic extension for period offive years thereafter unless a notice for termination is received by either party. The fee for the ship management services provided by Navios Holdings is adaily fee of $6,100 per day for 4,250 TEU, 3,450 TEU and 5,500 TEU container vessels. Drydocking expenses under this agreement are reimbursed by NaviosContainers at cost. Total management fees for the period ended December 31, 2017 amounted to $16.7 million and are presented net under the caption“Direct vessel expenses”.Navios Partners Guarantee: In November 2012 (as amended in March 2014), the Company entered into an agreement with Navios Partners (the“Navios Partners Guarantee”) to provide Navios Partners with guarantees against counterparty default on certain existing charters, which had previously beencovered by the charter insurance for the same vessels, same periods and same amounts. The Navios Partners Guarantee provides for a maximum possiblepayout of $20.0 million by the Company to Navios Partners. Premiums that are calculated on the same basis as the restructured charter insurance are includedin the management fee that is paid by Navios Partners to Navios Holdings pursuant to the management agreement. As of December 31, 2017, Navios Partnershas submitted one claim under this agreement to the Company. As at December 31, 2017 and December 31, 2016, the fair value of the claim was estimated at$20.0 million and $19.7 million, respectively and included in “Other long-term liabilities and deferred income” in the consolidated balance sheet. The finalsettlement of the amount due will take place at anytime but in no case later than December 31, 2019, in accordance with a letter of agreement effective as ofDecember 29, 2017. During the year ended December 31, 2015, the Company initially recognized this claim as “Other expense” in the consolidatedstatement of comprehensive (loss)/income.General and Administrative Expenses incurred on behalf of affiliates/Administrative fee revenue from affiliates: Navios Holdings providesadministrative services to Navios Partners. Navios Holdings is reimbursed for reasonable costs and expenses incurred in connection with the provision ofthese services. Navios Holdings extended the duration of its existing administrative services agreement with Navios Partners until December 31, 2022,pursuant to its existing terms. Total general and administrative fees for the years ended December 31, 2017, 2016 and 2015 amounted to $8.4 million,$7.8 million and $6.2 million, respectively.Navios Holdings provides administrative services to Navios Acquisition. Navios Holdings extended the duration of its existing administrativeservices agreement with Navios Acquisition until May 2020, pursuant to its existing terms. Navios Holdings is reimbursed for reasonable costs and expensesincurred in connection with the provision of these services. Total general and administrative fees for the years ended December 31, 2017, 2016 and 2015amounted to $9.0 million, $9.4 million and $7.6 million, respectively.Navios Holdings provides administrative services to Navios Logistics. In April 2016, Navios Holdings extended the duration of its existingadministrative services agreement with Navios Logistics until December 2021, pursuant to its existing terms. Navios Holdings is reimbursed for reasonablecosts and expenses incurred in connection with the provision of these services. Total general and administrative fees for all the years ended December 31,2017, 2016 and 2015 amounted to $1.0 million, $1.0 million and $0.8 million, respectively. The general and administrative fees have been eliminated uponconsolidation.Pursuant to an administrative services agreement dated December 13, 2013, Navios Holdings provides administrative services to Navios EuropeI’s tanker and container vessels. The term of this agreement is for a period of six years. Navios Holdings is reimbursed for reasonable costs and expensesincurred in connection with the provision of these services. Total general and administrative fees for the years ended December 31, 2017, 2016 and 2015amounted to $1.2 million, $1.3 million and $0.8 million, respectively.Pursuant to an administrative services agreement dated November 18, 2014, Navios Holdings provides administrative services to NaviosMidstream. The term of this agreement is for a period of five years. Navios Holdings is reimbursed for reasonable costs and expenses incurred in connectionwith the provision of these services. Total general and administrative fees for the years ended December 31, 2017, 2016 and 2015 amounted to $1.5 million,$1.5 million and $1.0 million, respectively.Pursuant to an administrative services agreement dated June 5, 2015, Navios Holdings provides administrative services to Navios Europe II’s drybulk and container vessels. The term of this agreement is for a period of six years. Navios Holdings is reimbursed for reasonable costs and expenses incurredin connection with the provision of these services. Total general and administrative fees charged for the year ended December 31, 2017, 2016 and 2015amounted to $1.8, $1.8 and $0.6 million, respectively.Pursuant to the administrative services agreement dated June 7, 2017, Navios Holdings provides administrative services to Navios Containers.Navios Holdings is reimbursed for reasonable costs and expenses incurred in connection with the provision of these services. The term of this agreement is foran initial period of five years with an automatic extension for a period of five years thereafter unless a notice of termination is received by either party. Totalgeneral and administrative fees attributable to this agreement for the period ended December 31, 2017, amounted to $1.9 million. 113Table of ContentsAdministrative services under these agreements include bookkeeping, audit and accounting services, legal and insurance services,administrative and clerical services, banking and financial services, advisory services, investor relations and other services.Balance due from/to affiliates (excluding Navios Europe I and Navios Europe II): Balance due to Navios Partners as of December 31, 2017amounted to $8.3 million (December 31, 2016: $8.7 million), and the Long-term payable to Navios Partners amounted to $14.9 million (December 31, 2016:$0 million). Balance due to Navios Acquisition as of December 31, 2017 amounted to $2.8 million (December 31, 2016: $19.4 million), and the Long-termpayable to Navios Acquisition amounted to $15.2 million (December 31, 2016: $6.4 million). Balance due to Navios Midstream as of December 31, 2017amounted to $1.0 million (December 31, 2016: $4.8 million), and the Long-term payable to Navios Midstream amounted to $4.6 million (December 31,2016: $0 million). Balance due to Navios Containers as of December 31, 2017 amounted to $3.3 million (December 31, 2016: $0 million), and the Long-termpayable to Navios Containers amounted to $8.0 million (December 31, 2016: $0 million).The balances mainly consisted of management fees, administrative fees, drydocking and other expenses prepaid by the affiliates according to ourmanagement agreements and other amounts payable to affiliates.Omnibus Agreements: Navios Holdings has entered into an omnibus agreement with Navios Partners (the “Partners Omnibus Agreement”) inconnection with the closing of Navios Partners’ IPO governing, among other things, when Navios Holdings and Navios Partners may compete against eachother as well as rights of first offer on certain dry bulk carriers. Pursuant to the Partners Omnibus Agreement, Navios Partners generally agreed not to acquireor own Panamax or Capesize dry bulk carriers under time charters of three or more years without the consent of an independent committee of Navios Partners.In addition, Navios Holdings has agreed to offer to Navios Partners the opportunity to purchase vessels from Navios Holdings when such vessels are fixedunder time charters of three or more years.Navios Holdings entered into an omnibus agreement with Navios Acquisition and Navios Partners (the “Acquisition Omnibus Agreement”) inconnection with the closing of Navios Acquisition’s initial vessel acquisition, pursuant to which, among other things, Navios Holdings and Navios Partnersagreed not to acquire, charter-in or own liquid shipment vessels, except for container vessels and vessels that are primarily employed in operations in SouthAmerica, without the consent of an independent committee of Navios Acquisition. In addition, Navios Acquisition, under the Acquisition OmnibusAgreement, agreed to cause its subsidiaries not to acquire, own, operate or charter dry bulk carriers subject to specific exceptions. Under the AcquisitionOmnibus Agreement, Navios Acquisition and its subsidiaries granted to Navios Holdings and Navios Partners, a right of first offer on any proposed sale,transfer or other disposition of any of its dry bulk carriers and related charters owned or acquired by Navios Acquisition. Likewise, Navios Holdings andNavios Partners agreed to grant a similar right of first offer to Navios Acquisition for any liquid shipment vessels it might own. These rights of first offer willnot apply to a (i) sale, transfer or other disposition of vessels between any affiliated subsidiaries, or pursuant to the terms of any charter or other agreementwith a counterparty, or (ii) merger with or into, or sale of substantially all of the assets to, an unaffiliated third party.Navios Holdings entered into an omnibus agreement with Navios Midstream, Navios Acquisition and Navios Partners in connection with theNavios Midstream IPO, pursuant to which Navios Acquisition, Navios Holdings, Navios Partners and their controlled affiliates generally have agreed not toacquire or own any VLCCs, crude oil tankers, refined petroleum product tankers, LPG tankers or chemical tankers under time charters of five or more yearswithout the consent of Navios Midstream. The omnibus agreement contains significant exceptions that will allow Navios Acquisition, Navios Holdings,Navios Partners or any of their controlled affiliates to compete with Navios Midstream under specified circumstances.`Navios Holdings entered into an omnibus agreement with Navios Containers, Navios Acquisition, Navios Partners and Navios Midstream,pursuant to which Navios Acquisition, Navios Holdings, Navios Partners, Navios Midstream and their controlled affiliates generally have granted a right offirst refusal to Navios Containers over any container vessels to be sold or acquired in the future, subject to significant exceptions that would allow NaviosAcquisition, Navios Holdings, Navios Partners and Navios Midstream or any of their controlled affiliates to compete with Navios Containers under specifiedcircumstances.Midstream General Partner Option Agreement: Navios Holdings entered into an option agreement, with Navios Acquisition under whichNavios Acquisition, which owns and controls Midstream General Partner, granted Navios Holdings the option to acquire a minimum of 25% of theoutstanding membership interests in Midstream General Partner and the incentive distribution rights in Navios Midstream representing the right to receive anincreasing percentage of the quarterly distributions when certain conditions are met. The option shall expire on November 18, 2024. The purchase price forthe acquisition for all or part of the option interest shall be an amount equal to its fair market value. As of December 31, 2017, Navios Holdings had notexercised any part of that option. 114Table of ContentsSale of Vessels and Sale of Rights to Navios Partners: Upon the sale of vessels to Navios Partners, Navios Holdings recognizes the gainimmediately in earnings only to the extent of the interest in Navios Partners owned by third parties and defers recognition of the gain to the extent of its ownownership interest in Navios Partners (the “deferred gain”). Subsequently, the deferred gain is amortized to income over the remaining useful life of thevessel. The recognition of the deferred gain is accelerated in the event that (i) the vessel is subsequently sold or otherwise disposed of by Navios Partners or(ii) the Company’s ownership interest in Navios Partners is reduced. In connection with the public offerings of common units by Navios Partners, a pro rataportion of the deferred gain is released to income upon dilution of the Company’s ownership interest in Navios Partners. As of December 31, 2017 and 2016,the unamortized deferred gain for all vessels and rights sold totaled $10.0 million and $11.8 million, respectively. For the years ended December 31, 2017,2016 and 2015, Navios Holdings recognized $1.9 million, $1.8 million and $2.6 million of the deferred gain, respectively, in “Equity in net earnings ofaffiliated companies”.Participation in Offerings of Affiliates: Refer to “Item 4.—Information on the Company” and “Item 5.—Operating and Financial Review andProspects” for Navios Holdings’ participation in Navios Acquisition’s and Navios Partners’ offerings. On February 4, 2015, Navios Holdings entered into ashare purchase agreement with Navios Partners pursuant to which Navios Holdings made an investment in Navios Partners by purchasing common units, andgeneral partnership interests, in order to maintain its 20.0% partnership interest in Navios Partners following its equity offering in February 2015. Inconnection with this agreement, Navios Holdings entered into a registration rights agreement with Navios Partners pursuant to which Navios Partnersprovided Navios Holdings with certain rights relating to the registration of the common units. Navios Holdings has entered into additional share purchaseagreements on December 30, 2016, March 3, 2017, March 23, 2017 and March 31, 2017 for the purchase up to a total of 1,313,399 general partnershipinterests.The Navios Acquisition Credit Facilities: On September 19, 2016, Navios Holdings entered into a secured credit facility of up to $70.0 millionwith Navios Acquisition. This credit facility is secured by all of the Company’s’ interest in Navios Acquisition and 78.5% of the Company’s interest inNavios Logistics, representing a majority of the shares outstanding of Navios Logistics. This facility was provided for an arrangement fee of $0.7 million. OnNovember 3, 2017, Navios Holdings prepaid in full the outstanding amount under this credit facility with Navios Acquisition and all collateral was released.In 2010, Navios Acquisition entered into a $40.0 million credit facility with Navios Holdings, which matured in December 2015. The facilitywas available for multiple drawings up to a limit of $40.0 million and had a margin of LIBOR plus 300 basis points. The final maturity date was January 2,2017. As of December 31, 2017 and 2016, there was no outstanding amount under this facility.The Navios Partners Credit Facility: In May 2015, Navios Partners entered into a credit facility with Navios Holdings of up to $60.0 million.The Navios Partners Credit Facility bears an interest of LIBOR plus 300 bps. The final maturity date was January 2, 2017. As of December 31, 2017, there wasno outstanding amount under this facility. In April 2016, Navios Partners has drawn $21.0 million from the Navios Partners Credit Facility, which was fullyrepaid during April 2016.Balance due from Navios Europe I: Balance due from Navios Europe as of December 31, 2017 amounted to $7.2 million (December 31, 2016:$2.4 million), which included the net current amount receivable of $4.0 million (December 31, 2016: $0.2 million) mainly consisting of management fees,accrued interest income earned under the Navios Revolving Loans I and other expenses and the non-current amount of $3.2 million (December 31, 2016:$2.2 million) related to the accrued interest income earned under the Navios Term Loans I.The Navios Revolving Loans I and the Navios Term Loans I earn interest and an annual preferred return, respectively, at 1,270 basis points perannum, on a quarterly compounding basis and are repaid from free cash flow (as defined in the loan agreement) to the fullest extent possible at the end ofeach quarter. There are no covenant requirements or stated maturity dates.As of December 31, 2017 and 2016, the outstanding amount relating to Navios Holdings’ portion under the Navios Revolving Loans I was$11.1 million and $7.1 million respectively, under the caption “Loan receivable from affiliate companies”. As of December 31, 2017, the amount undrawnunder the Revolving Loans was $0 million.On March 17, 2017, Navios Holdings transferred to Navios Partners its rights to the Navios Revolving Loans I and the Navios Term Loans I(including the respective accrued receivable interest), with a total carrying value of $21.4 million for a total consideration of $33.5 million, comprised of$4.1 million in cash and 13,076,923 newly issued common units of Navios Partners with a fair value of $29.4 million (based on Navios Partners’ trading priceas of the closing of the transaction). The Company evaluated this transaction in accordance with ASC 860, classifying it as a secured borrowing arrangement.At the date of this transaction, the Company recognized a long-term liability of $33.5 million, including a premium of $12.1 million which will be amortizedthrough “Interest expense and finance cost” over the term of the loans, until 2023, and is included within “Long-term payables to affiliate companies”.Navios Holdings may be required from Navios Partners, under certain conditions, to repurchase the loans after the third anniversary of the date of thetransaction based on the then-outstanding balance of the loans. As of December 31, 2017, the balance payable to Navios Partners amounted to $34.2 million,including the unamortized premium of $10.4 million. 115Table of ContentsBalance due from Navios Europe II: Balance due from Navios Europe II as of December 31, 2017, amounted to $2.4 million (December 31,2016: $10.5 million), which included the net current payable amount of $1.3 million (December 31, 2016: $8.4 million), mainly consisting of managementfees and accrued interest income earned under the Navios Revolving Loans II and other expenses and the non-current receivable amount of $3.8 million(December 31, 2016: $2.1 million) related to the accrued interest income earned under the Navios Term Loans II.The Navios Revolving Loans II and the Navios Term Loans II earn interest and an annual preferred return, respectively, at 1,800 basis points perannum, on a quarterly compounding basis and are repaid from free cash flow (as defined in the loan agreement) to the fullest extent possible at the end ofeach quarter. There are no covenant requirements or stated maturity dates.As of December 31, 2017, the outstanding amount relating to Navios Holdings’ portion under the Navios Revolving Loans II was $12.1 million(December 31, 2016: $11.6 million), under the caption “Loan receivable from affiliate companies.” In March 2017, the amount undrawn from the NaviosRevolving Loans II increased by $14.0 million. As of December 31, 2017, the amount undrawn from the Revolving Loans II was $15.0 million, of whichNavios Holdings may be required to fund an amount ranging from $0 to $15.0 million.C. Interests of experts and counsel.Not applicable.Item 8. Financial InformationA. Consolidated Statements and Other Financial InformationConsolidated Financial Statements: See Item 18.Legal Proceedings: Navios Holdings is not involved in any legal proceedings that it believes will have a significant effect on its business,financial position, results of operations or liquidity.From time to time, Navios Holdings may be subject to legal proceedings and claims in the ordinary course of business. It is expected that theseclaims would be covered by insurance if they involve liabilities such as arise from a collision, other marine casualty, damage to cargoes, oil pollution, deathor personal injuries to crew, subject to customary deductibles. Those claims, even if lacking merit, could result in the expenditure of significant financial andmanagerial resources.On October 7, 2016, a putative class action complaint was filed against the Company and six of its directors in the United States District Courtfor the Southern District of New York by a purported holder of Series G American Depositary Shares and Series H American Depositary Shares. The complaintasserts claims for breach of fiduciary duty and contract. The complaint sought, among other things, unspecified monetary damages, a declaration regardingcertain of the Company’s alleged obligations under the applicable certificates of designation, the restoration of certain alleged rights to non-tenderingholders if the exchange offer that commenced on September 19, 2016 was consummated, and an award of plaintiff’s costs. On November 28, 2016, plaintiff’scounsel informed the Court that the litigation was moot in light of the failure of the consent solicitation (which did not attain the necessary support from theholders of Series G American Depositary Shares and Series H American Depositary Shares). On January 10, 2017, plaintiff’s counsel submitted a motion forattorneys’ fees to which the Company submitted an opposition brief on February 3, 2017, which requested that the Court deny the request for attorneys’ feesin its entirety. Plaintiff’s counsel’s motion for attorney’s fees was fully briefed on February 17, 2017. On September 26, 2017, the Court issued a decisiondenying plaintiff’s application for an award of attorneys’ fees and requiring that any party wishing to restore the case to the Court’s active docket do so byOctober 10, 2017. No party requested that the case be restored to the active docket by the October 10, 2017 deadline. No appeal of the Court’s denial ofplaintiff’s application for an award of attorneys’ fees has been taken to date and the time to file an appeal has expired.On April 1, 2016, Navios Holdings was named as a defendant in a putative shareholder derivative lawsuit brought by two alleged shareholders ofNavios Acquisition purportedly on behalf of nominal defendant, Navios Acquisition, in the United States District Court for the Southern District of NewYork, captioned Metropolitan Capital Advisors International Ltd., et al. v. Navios Maritime Holdings, Inc. et al., No. 1:16-cv-02437. The lawsuit challengedthe March 9, 2016 loan agreement between Navios Holdings and Navios Acquisition pursuant to which Navios Acquisition agreed to provide a $50.0 millioncredit facility (the “Revolver”) to Navios Holdings. 116Table of ContentsOn April 14, 2016, Navios Holdings and Navios Acquisition announced that the Revolver had been cancelled, and that no borrowings had beenmade under the Revolver. In June 2016, the parties reached an agreement resolving the plaintiffs’ application for attorneys’ fees and expenses, which wasapproved by an order of the Court. The litigation was dismissed upon notice of the order being provided to Navios Acquisition’s shareholders via theinclusion of the order as an attachment to a Navios Acquisition Form 6-K and the payment of $0.8 million by Navios Acquisition in satisfaction of theplaintiffs’ request for attorneys’ fees and expenses. A copy of the order was provided as an exhibit to Navios Acquisition’s Form 6-K filed with the Securitiesand Exchange Commission on June 9, 2016.Refer also to Note 13 to the consolidated financial statements, included herein.Dividend Policy: Navios Holdings has announced the suspension of dividends to its common stock shareholders in November 2015 and itspreferred shareholders, including holders of the Series G and Series H in February 2016. Navios Holdings intends to retain most of its available earningsgenerated by operations to conserve cash and improve liquidity. The reinstatement, declaration and payment of any dividend remains subject to thediscretion of the Board of Directors, and will depend on, among other things, Navios Holdings’ cash requirements after taking into account marketopportunities, debt obligations, market conditions, and restrictions contained in its equity and debt instruments, including limitations on dividends under itspreferred stock. In addition, the terms and provisions of our current secured credit facilities and indentures limit our ability to declare and pay dividends inexcess of certain amounts or if certain covenants are not met. (See also Item 5.B. “Long-term Debt Obligations and Credit Arrangements”).On February 16, 2015, the Board of Directors declared a quarterly cash dividend of approximately $6.3 million for the fourth quarter of 2014 of$0.06 per share of common stock, paid on March 27, 2015 to stockholders of record as of March 20, 2015.On May 18, 2015, the Board of Directors declared a quarterly cash dividend of approximately $6.4 million for the first quarter of 2015 of $0.06per share of common stock, paid on June 26, 2015 to stockholders of record as of June 18, 2015.On August 17, 2015, the Board of Directors declared a quarterly cash dividend of approximately $6.5 million for the second quarter of 2015 of$0.06 per share of common stock, paid on September 25, 2015 to stockholders of record as of September 18, 2015.B. Significant ChangesNot applicable.Item 9. Listing DetailsAs of February 22, 2007, the Company’s common stock and warrants were no longer trading as a unit, and as of such date, the principal tradingmarket for our securities has been NYSE under the symbols “NM” for our common stock and “NMWS” for our warrants. On December 9, 2008, our publiclytraded warrants expired and ceased to be publicly traded. For the period from November 3, 2005 to February 22, 2007 our common stock, warrants and unitswere trading on the Nasdaq National Market (“NASDAQ”) under the symbols “BULK”, “BULKW” and “BULKU”, respectively. Prior to November 3, 2005,the principal trading market of our securities was the Over-The-Counter Bulletin Board (“OTCBB”). Our Series G and Series H issued in January and July2014, respectively, are trading on the NYSE under the symbols “NMPrG.” and “NMPrH.”The following table sets forth, for the periods indicated, the reported high and low market prices of our common and preferred stock (Series G andSeries H) on the NYSE.On April 12, 2018, the closing price of our common stock was $0.74. The quotations listed below reflect high and low market prices, withoutretail markup, markdown or commission, and may not necessarily represent actual transactions:(a) For the five most recent full financial years: the annual high and low market prices: Common Stock Series G Series H Year Ended High Low High Low High Low December 31, 2017 $2.26 $0.95 $19.99 $7.34 $18.89 $7.22 December 31, 2016 $2.40 $0.57 $11.68 $2.50 $11.46 $2.37 December 31, 2015 $4.68 $1.13 $26.50 $5.64 $22.45 $5.06 December 31, 2014 $12.12 $3.50 $26.49 $16.47 $25.05 $16.55 December 31, 2013 $11.73 $3.40 $— $— $— $— 117Table of Contents(b) For the two most recent full financial years and any subsequent period: the high and low closing prices for each financial quarter: Common Stock Series G Series H Quarter Ended High Low High Low High Low March 31, 2018 $1.48 $0.86 $17.33 $12.18 $17.00 $12.10 December 31, 2017 $1.90 $1.20 $19.99 $13.87 $18.89 $14.14 September 30, 2017 $1.84 $1.10 $17.66 $13.50 $17.14 $13.00 June 30, 2017 $1.99 $0.95 $18.86 $14.30 $18.41 $13.73 March 31, 2017 $2.26 $1.40 $16.09 $7.34 $16.00 $7.22 December 31, 2016 $2.40 $1.00 $10.60 $4.85 $10.29 $4.61 September 30, 2016 $1.42 $0.79 $6.82 $4.03 $6.64 $3.40 June 30, 2016 $1.66 $0.57 $6.03 $2.82 $5.80 $2.76 (c) For the most recent six months: the high and low closing prices for each month: Common Stock Series G Series H Month Ended High Low High Low High Low March 2018 $1.32 $0.86 $15.00 $12.18 $14.74 $12.10 February 2018 $1.37 $1.11 $15.60 $14.40 $15.70 $13.64 January 2018 $1.48 $1.19 $17.33 $15.00 $17.00 $15.00 December 2017 $1.44 $1.20 $16.75 $15.20 $16.50 $14.78 November 2017 $1.87 $1.22 $19.99 $15.60 $18.89 $15.27 October 2017 $1.90 $1.64 $17.48 $13.87 $17.15 $14.14 Item 10. Additional InformationA. Share CapitalNot applicable.B. Memorandum of articles of associationPlease refer to Exhibit 3.1 of Form F-1, filed with the Securities and Exchange Commission (“SEC”) on November 2, 2005 with file number333-129382; Exhibit 99.1 of Form 6-K, filed on January 17, 2007 with file number 000-51047, which the Company hereby incorporates by reference and thefollowing filings on Form 6-K or Form 8-A, as applicable, (file number 001-33311) filed with the SEC : Exhibit 99.2 of Form 6-K filed on October 6, 2008;Exhibit 3.1 of Form 6-K filed on July 7, 2009; Exhibit 3.1 of Form 6-K filed on September 22, 2009; Exhibit 3.1 of Form 6-K filed on September 24, 2009;Exhibit 3.1 of Form 6-K filed on February 4, 2010; Exhibit 1.1 of Form 6-K filed on November 15, 2010; Exhibit 1.1 of Form 6-K filed on December 22,2010; Exhibit 3.3 of Form 8-A filed on January 24, 2014 and Exhibit 3.3 of Form 8-A filed on July 7, 2014, each of which the Company hereby incorporatesby reference.C. Material ContractsRefer to “Item 4. – Information on the Company” for a discussion of various agreements relating to our business and certain vessel transactions,including Item 4.B. for a discussion of our option agreements to purchase 20 chartered-in vessels, and to Item 5. – Operating and Financial Review andProspects” for a discussion of our long-term debt, including Item 5.F for a discussion of the long-term debt, the operating lease obligations and the rentobligations. Other than these agreements, there are no material contracts, other than the contracts entered into in the ordinary course of business, to which theCompany or any of its subsidiaries is a party.D. Exchange controlsUnder the laws of the Marshall Islands, Uruguay, Liberia, Panama, Belgium, Luxembourg, Malta, Brazil, Paraguay, Cayman Islands, Hong Kongand the British Virgin Islands, the countries of incorporation of the Company and its subsidiaries, there are currently no restrictions on the export or import ofcapital, including foreign exchange controls, or restrictions that affect the remittance of dividends, interest or other payments to non-resident holders of ourcommon stock. 118Table of ContentsIn the case of Argentina, however, it should be noted that since the year 2001, local authorities have established certain foreign exchangerestrictions that affect the export or import of capital. Such restrictions have been progressively eased since 2003 while the current Argentinian governmentimplemented certain reforms that provided greater flexibility and easier access to the foreign exchange market. As of the date of this report, almost all of theserestrictions have been lifted. However, there can be no assurance that local authorities in Argentina will not modify such regulations in the near future.E. TaxationMarshall Islands Tax ConsiderationsNavios Holdings is incorporated in the Marshall Islands. Under current Marshall Islands law, Navios Holdings will not be subject to tax onincome or capital gains, and no Marshall Islands withholding tax will be imposed upon payments.Other Tax JurisdictionsCertain of Navios Holdings’ subsidiaries are incorporated in countries, which impose taxes, such as Belgium, however such taxes are immaterialto Navios Holdings’ operations.Marshall Islands, Liberia, Panama and Malta do not impose a tax on international shipping income. Under the laws of Marshall Islands, Malta,Liberia and Panama, the countries of incorporation of the Company and its subsidiaries and the vessels’ registration, the companies are subject to registrationand tonnage taxes, which have been included in direct vessel expenses in the accompanying consolidated statements of comprehensive (loss)/income.Certain of the Company’s subsidiaries have registered offices in Greece under Greek Law 27/75 as amended and in force (former law 89/67).These companies are allowed to conduct the specific business activities provided in their license and the provisions of the above legislation. Same law(27/75) provides that these companies are exempted in Greece from any tax, duty, levy, contribution or deduction in respect of income.In accordance with the currently applicable Greek law, ship owning companies of foreign flagged vessels that are managed by Greek or foreignship management companies having established an office/branch in Greece under law 27/75 are subject to duties towards the Greek state which are calculatedon the basis of the relevant vessel’s tonnage. In case that tonnage tax and/or similar taxes/duties are paid by the shipowning companies to the vessel’s flagstate, these are deducted from the amount of the duty to be paid in Greece by the ship owner. The payment of said duties exhausts the tax liability of theforeign ship owning company against any tax, duty, charge or contribution payable on income from the exploitation of the foreign flagged vessel.Navios Logistics subsidiaries are incorporated in countries, which impose taxes, such as Argentina, Uruguay, Brazil and Paraguay. Income taxliabilities of the Argentinean subsidiaries for the current and prior periods are measured at the amount expected to be paid to the taxation authorities using atax rate of 35.0% on the taxable net income. As a result of the tax reforms voted by the Argentinean Parliament in December 2017, the corporate income taxrate will decrease to 30.0% for the year 2018, and to 25.0% from 2019 onwards. Tax rates and tax laws used to assess the income tax liability are those thatare effective on the close of the fiscal period. Additionally, at the end of the fiscal year local companies in Argentina have to calculate an assets tax(Minimum Presumed Income Tax). This tax is supplementary to income tax and is calculated by applying the effective tax rate of 1.0% over the gross valueof the corporate assets (based on tax law criteria). The subsidiaries’ tax liabilities will be the higher of income tax or Minimum Presumed Income Tax.However, if the Minimum Presumed Income Tax exceeds income tax during any fiscal year, such excess may be computed as a prepayment of any income taxexcess over the Minimum Presumed Income Tax that may arise in the next ten fiscal years. Relating to the Paraguayan subsidiaries there are two possibleoptions to determine the income tax liability. Under the first option, income tax liabilities for the current and prior periods are measured at the amountexpected to be paid to the taxation authorities, by applying the tax rate of 10.0% on the fiscal profit and loss. 50.0% of revenues derived from internationalfreights are considered Paraguayan sourced (and therefore taxed) if carried between Paraguay and Argentina, Bolivia, Brazil or Uruguay. In any other case,only 30.0% of revenues derived from international freights are considered Paraguayan sourced. Companies whose operations are considered internationalfreights can choose to pay income taxes on their revenues at an effective tax rate of 1.0% on such revenues, without considering any other kind ofadjustments. Fiscal losses, if any, are neither deducted nor carried forward. 119Table of ContentsMaterial U.S. Federal Income Tax ConsiderationsThe following discussion addresses certain U.S. federal income tax considerations applicable to us and to the purchase, ownership anddisposition of our common stock. The discussion is based on the U.S. Internal Revenue Code of 1986, as amended (the “Code”), judicial decisions,administrative pronouncements, and existing and proposed regulations issued by the U.S. Treasury (the “Treasury Regulations”), all of which are subject tochange, possibly with retroactive effect. Changes in these authorities may cause the tax consequences to vary substantially from the consequences describedbelow. No party has sought or will seek any rulings from the U.S. Internal Revenue Service (the “IRS”) with respect to the U.S. federal income taxconsequences discussed below. The discussion below is not in any way binding on the IRS or the courts or in any way an assurance that the U.S. federalincome tax consequences discussed herein will be accepted by the IRS or the courts.The U.S. federal income tax consequences to a beneficial owner of our common stock may vary depending on such beneficial owner’s particularsituation or status. This discussion is limited to beneficial owners of our common stock who hold our common stock as capital assets, and it does not addressaspects of U.S. federal income taxation that may be relevant to persons who are subject to special treatment under U.S. federal income tax laws, including butnot limited to: dealers in securities; banks and other financial institutions; insurance companies; tax-exempt entities, plans or accounts; persons holding ourcommon stock as part of a “hedge,” “straddle” or other risk reduction transaction; partnerships or other pass-through entities (or investors in such entities);U.S. persons whose functional currency is not the U.S. dollar; persons that actually or constructively own 10.0% or more (by voting power or value) of ouroutstanding stock; U.S. expatriates; persons that are accrual method taxpayers required to accelerate the recognition of any item of gross income for U.S.federal income tax purposes as a result of such income being recognized on an applicable financial statement; and persons subject to alternative minimumtax. The following discussion is for general information purposes only and does not address any U.S. state or local tax matters, any non-U.S. tax matters, orany U.S. federal taxes other than income taxes (such as estate and gift taxes or the Medicare tax on certain investment income).You are encouraged to consult your own tax advisor regarding the particular U.S. federal, state and local and non-U.S. income and other taxconsequences applicable to us and to the purchase, ownership and disposition of our common stock that may be applicable to you.U.S. Federal Income Taxation of the CompanyTaxation of Our Shipping IncomeNavios Holdings is incorporated under the laws of the Marshall Islands. Accordingly, we take the position that Navios Holdings is taxed as aforeign corporation by the U.S., and the remainder of this discussion assumes the correctness of this position. If Navios Holdings were taxed as a U.S.corporation, it could be subject to substantially greater U.S. federal income tax than contemplated below. See “Risk Factors—Tax Risks— Navios MaritimeHoldings Inc. may be taxed as a U.S. corporation.”Subject to the discussion of “effectively connected” income below, unless exempt from U.S. federal income tax under the rules contained inSection 883 of the Code and the Treasury Regulations promulgated thereunder, a non-U.S. corporation is subject to a 4.0% U.S. federal income tax in respectof its U.S.-source gross shipping income (without allowance for deductions). For this purpose, U.S.-source gross shipping income includes 50.0% of theshipping income that is attributable to transportation that begins or ends (but that does not both begin and end) in the U.S.. Shipping income attributable totransportation that both begins and ends in the U.S. is considered to be 100.0% U.S.-source. Shipping income attributable to transportation exclusivelybetween non-U.S. destinations is considered to be 100.0% non-U.S. source and generally is not subject to U.S. federal income tax. “Shipping income” meansincome that is derived from the use of vessels, the hiring or leasing of vessels for use on a time, voyage or bareboat charter basis, the participation in a pool,partnership, strategic alliance, joint operating agreement, code sharing agreement or other joint venture it directly or indirectly owns or participates in thatgenerates such income, or the performance of services directly related to these uses.Under Section 883 of the Code and the Treasury Regulations promulgated thereunder, a non-U.S. corporation will be exempt from U.S. federalincome tax on its U.S.-source shipping income if the following three requirements are satisfied: • It is organized in a jurisdiction outside the United States that grants an “equivalent exemption” from tax to corporations organized in the United Stateswith respect to the types of U.S.-source shipping income that we earn; • Either (i) its stock is “primarily traded” and “regularly traded” on an “established securities market” in the United States, in its country of organization,or in another country that grants an “equivalent exemption” to U.S. corporations or (ii) more than 50.0% of the value of its stock is owned, directly orindirectly, by (a) individuals who are “residents” of foreign countries that grants an “equivalent exemption,” (b) non-U.S. corporations organized inforeign countries that grant an “equivalent exemption” and that meet the test described in (i), and/or (c) certain other qualified shareholders describedin the Treasury Regulations promulgated under Section 883; and • It meets certain substantiation and reporting requirements. 120Table of ContentsWe believe that we and each of our subsidiaries qualifies and will continue to qualify for the foreseeable future for this statutory tax exemptionunder Section 883 with respect to our U.S.-source shipping income, provided that our common stock continues to be listed on the NYSE and represents morethan 50.0% of the total combined voting power of all classes of our stock entitled to vote and of the total value of our stock, and less than 50.0% of ourcommon stock is owned, actually or constructively under specified stock attribution rules, on more than half the number of days in the relevant year bypersons who each own 5.0% or more of the vote and value of our common stock. However, no assurance can be given that we will satisfy these requirementsor qualify for this exemption.If we or our subsidiaries are not entitled to this exemption under Section 883 for any taxable year, we or our subsidiaries would be subject forthose years to the 4.0% U.S. federal income tax on our gross U.S.-source shipping income described above, subject to the discussion of “effectivelyconnected” income below. We expect that no more than a small portion of our gross shipping income would be treated as U.S.-source and we expect that theeffective rate of U.S. federal income tax on our gross shipping income would be significantly below 1.0%.To the extent exemption under Section 883 is unavailable, our U.S.-source gross shipping income that is considered to be “effectivelyconnected” with the conduct of a U.S. trade or business (net of applicable deductions) would be subject to the U.S. federal corporate income tax currentlyimposed at rates of up to 21.0%, but would not be subject to the 4% tax discussed above. In addition, we may be subject to the 30.0% U.S. “branch profits”tax on any earnings and profits effectively connected with the conduct of such trade or business, as determined after allowance for certain adjustments, andon certain interest paid or deemed paid that is attributable to the conduct of such U.S. trade or business.Our U.S.-source shipping income attributable to time or voyage charters (which currently represent, and are expected to continue to represent,substantially all of our shipping income) would be considered “effectively connected” with the conduct of a U.S. trade or business only if: • we had, or were considered to have, a fixed place of business in the U.S. involved in the earning of such shipping income; and • Substantially all of our U.S.-source shipping were attributable to regularly scheduled transportation.We do not have, or intend to have or permit circumstances that would result in us having, such a fixed place of business in the U.S. or any vesselsailing to or from the U.S. on a regularly scheduled basis. Based on the foregoing and on the expected mode of our shipping operations and activities, webelieve that none of our U.S.-source shipping income will be “effectively connected” with the conduct of a U.S. trade or business.In addition, income attributable to transportation that both begins and ends in the U.S. is not subject to the tax rules described above. Suchincome is subject to either a 30.0% gross-basis tax or to U.S. federal corporate income tax on net income at rates of up to 21.0% (and the branch profits taxdiscussed above). Although there can be no assurance, we do not expect to engage in transportation that produces shipping income of this type.Taxation of Gain on Our Sale of VesselsOn the sale of a vessel that has produced “effectively connected” income (as discussed above), we could be subject to net basis U.S. federalcorporate income tax as well as branch profits tax with respect to the gain recognized up to the amount of certain prior deductions for depreciation thatreduced effectively connected income. Otherwise, we should not be subject to U.S. federal income tax with respect to gain realized on the sale of a vessel,provided the sale is considered to occur outside of the U.S. (as determined under U.S. tax principles) and the gain is not attributable to an office or other fixedplace of business maintained by us in the U.S. under U.S. federal income tax principles. 121Table of ContentsTaxation of U.S. Holders of our Common StockThe following discussion is limited to persons that are “U.S. holders” of our common stock. For purposes of this discussion, a “U.S. holder” is abeneficial owner of our common stock that is: • an individual U.S. citizen or resident (as determined for U.S. federal income tax purposes); • a corporation (or other entity that is classified as a corporation for U.S. federal income tax purposes) organized under the laws of the U.S. or any of itspolitical subdivisions; • an estate the income of which is subject to U.S. federal income taxation regardless of its source; or • a trust if a court within the U.S. is able to exercise primary supervision over the administration of the trust and one or more U.S. persons (as determinedfor U.S. federal income tax purposes) have the authority to control all substantial decisions of that trust, or if the trust has validly elected to be treatedas a U.S. trust.If an entity treated for U.S. federal income tax purposes as a partnership holds our common stock, the tax treatment of a partner will generallydepend upon the status of the partner, upon the activities of the partnership and certain determinations made at the partner level. If you are a partner in apartnership considering an investment in our common stock, you should consult your tax advisor.Distributions on Our Common StockSubject to the discussion of “passive foreign investment companies” below, any distributions that you receive with respect to our common stockgenerally will constitute dividends, which may be taxable as ordinary income or “qualified dividend income” as described below, to the extent of our currentor accumulated earnings and profits (as determined under U.S. federal income tax principles). Distributions in excess of our earnings and profits will betreated first as a non-taxable return of capital to the extent of your tax basis in our common stock and thereafter as gain from the sale of such stock. We do notmaintain calculations of earnings and profits under U.S. federal income tax principles. Therefore, you should expect that a distribution with respect to yourcommon stock generally will be treated as dividend income, even if that distribution might otherwise be treated as a non-taxable return of capital or as capitalgain under the rules described above.Because we are not a U.S. corporation, if you are a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes), youwill not be entitled to claim a dividends-received deduction with respect to any distributions you receive from us. Dividends paid with respect to ourcommon stock will generally be treated as “passive category income” for purposes of computing allowable foreign tax credits for U.S. foreign tax creditpurposes.If you are an individual, trust or estate, dividends you receive from us should be treated as “qualified dividend income,” provided that: (i) ourcommon stock is readily tradable on an established securities market in the U.S., which we expect to be the case, provided that our common stock continuesto be listed on the NYSE; (ii) we are not a “passive foreign investment company” for the taxable year during which the dividend is paid or the immediatelypreceding taxable year (see the discussion below under “—Passive Foreign Investment Company Status”); (iii) you have owned our common stock for morethan 60 days in the 121-day period beginning 60 days before the date on which the common stock become ex-dividend (and have not entered into certainrisk limiting transactions with respect to such common stock); (iv) you are not under an obligation to make related payments with respect to positions insubstantially similar or related property; and (v) you do not treat the dividends as “investment income” for purposes of the investment interest deduction.Qualified dividend income is taxed at the preferential rates applicable to long-term capital gain, depending on the income level of the taxpayer.Dividends you receive from us that are not eligible for the preferential rates will be taxed at the ordinary income rates.Special rules may apply to any amounts received in respect of our common stock that are treated as “extraordinary dividends.” Generally, anextraordinary dividend is a dividend with respect to a share of our common stock in an amount that is equal to or in excess of 10.0% of your adjusted taxbasis (or fair market value in certain circumstances) in such share of common stock. In addition, extraordinary dividends include dividends received within aone-year period that, in the aggregate, equal or exceed 20.0% of your adjusted tax basis (or fair market value in certain circumstances). If we pay anextraordinary dividend on any shares of our common stock that is treated as “qualified dividend income,” and you are an individual, estate or trust, then anyloss you derive from a subsequent sale or exchange of such shares of our common stock will be treated as long-term capital loss to the extent of suchdividend. 122Table of ContentsSale, Exchange or Other Disposition of Common StockProvided that we are not a passive foreign investment company for any taxable year during which you hold our common stock, you generallywill recognize capital gain or loss upon a sale, exchange or other disposition of our common stock in an amount equal to the difference, if any, between theamount realized by you from such sale, exchange or other disposition and your tax basis in such common stock. Any such gain or loss will be treated as long-term capital gain or loss if your holding period is greater than one year at the time of the sale, exchange or other disposition. Any such capital gain or losswill generally be treated as U.S. source income or loss, as applicable, for U.S. foreign tax credit purposes. If you are an individual, trust or estate, your long-term capital gains are currently subject to tax at preferential rates. Your ability to deduct capital losses against ordinary income is subject to limitations.Passive Foreign Investment Company StatusSpecial U.S. federal income tax rules apply to you if you hold stock in a non-U.S. corporation that is classified as a passive foreign investmentcompany (“PFIC”) for U.S. federal income tax purposes. In general, we will be a PFIC for any taxable year in which, after applying certain look-through rules,either: • at least 75.0% 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 50.0% of the quarterly average value of our assets during such taxable year consists of “passive assets” (i.e., assets that produce, or are held forthe 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 of our subsidiary corporations in which we own at least 25.0% of the value of the subsidiary’s stock. Income we earn, or are deemed toearn, in connection with the performance of services will not constitute passive income. By contrast, rental income will generally constitute passive income(unless we are treated under certain special rules as deriving our rental income in the active conduct of a trade or business).Based upon our actual and projected income, assets and activities, we believe that we should not be a PFIC for our taxable year endedDecember 31, 2017 or for subsequent taxable years. However, no assurance can be given as to our current and future PFIC status, because such status requiresan annual factual determination based upon the composition of our income and assets for the entire taxable year. The PFIC determination also depends on theapplication of complex U.S. federal income tax rules concerning the classification of our income and assets for this purpose, and there are legal uncertaintiesinvolved in determining whether the income derived from our chartering activities and from our logistics activities constitutes rental income or incomederived from the performance of services. In Tidewater Inc. v. United States, 565 F.2d 299 (5th Cir. 2009), the Fifth Circuit held that income derived fromcertain time chartering activities should be treated as rental income rather than services income for purposes of a foreign sales corporation provision of theCode. The IRS has announced, in an Action on Decision (AOD 2010-001), its nonacquiescence with the court’s holding in the Tidewater case and, at thesame time, announced the position of the IRS that the vessel time charter agreements at issue in that case should be treated as service contracts. The IRS’AOD, however, is an administrative action that cannot be relied upon or otherwise cited as precedent by taxpayers. We have not sought, and we do not expectto seek, an IRS ruling on this issue. As a result, the IRS or a court could disagree with our position. In addition, although we intend to conduct our affairs in amanner to avoid, to the extent possible, being classified as a PFIC with respect to any taxable year, we cannot assure you that the nature of our operations, orthe nature or composition of our income or assets, will not change in the future, or that we can avoid PFIC status in the future.As discussed below, if we are a PFIC for a taxable year during which you actually or constructively own our common stock, you generally wouldbe subject to one of three different U.S. federal income tax regimes, depending on whether or not you make certain elections. Additionally, for each yearduring which we are treated as a PFIC and you actually or constructively own common stock you generally will be required to file IRS Form 8621 with yourU.S. federal income tax return to report certain information concerning your ownership of our common stock. In the event that a person that is required to fileIRS Form 8621 does not file such form, the statute of limitations on the assessment and collection of U.S. federal income taxes of such person for the relatedtax year may not close until three years after the date that the required information is filed.The PFIC rules are complex, and you are encouraged to consult your own tax advisor regarding the PFIC rules, including the annual PFICreporting requirement. 123Table of ContentsTaxation of U.S. Holders That Make a Timely QEF ElectionIf we were treated as a PFIC for any taxable year during which you actually or constructively own our common stock, and if you make a timelyelection to treat us as a “Qualifying Electing Fund” for U.S. tax purposes (a “QEF Election”), you would be required to report each year your pro rata share ofour ordinary earnings (as ordinary income) and our net capital gain (as long-term capital gain), if any, for our taxable year that ends with or within yourtaxable year, regardless of whether we make any distributions to you. Such income inclusions would not be eligible for the preferential tax rates applicable toqualified dividend income. Your adjusted tax basis in our common stock would be increased to reflect such taxed but undistributed earnings and profits.Distributions of earnings and profits that had previously been taxed would result in a corresponding reduction in your adjusted tax basis in our commonstock and would not be taxed again once distributed. You would generally recognize capital gain or loss on the sale, exchange or other disposition of ourcommon stock. Even if you make a QEF Election for one of our taxable years, if we were a PFIC for a prior taxable year during which you held our commonstock and for which you did not make a timely QEF Election, you would also be subject to the more adverse rules described below under “—Taxation of U.S.Holders That Make No Election.” Additionally, to the extent any of our subsidiaries is a PFIC, your election to treat us as a “Qualifying Electing Fund”would not be effective with respect to your deemed ownership of the stock of such subsidiary and a separate QEF Election with respect to such subsidiarywould be required.You would make a QEF Election by completing and filing IRS Form 8621 with your U.S. federal income tax return for the year for which theelection is made in accordance with the relevant instructions. If we were to become aware that we were a PFIC for any taxable year, we would notify all U.S.holders of such treatment and would provide all necessary information to any U.S. holder who requests such information in order to make the QEF Electiondescribed above with respect to us and the relevant subsidiaries.A QEF Election generally will not have any effect with respect to any taxable year for which we are not a PFIC, but will remain in effect withrespect to any subsequent taxable year for which we are a PFIC. It should be noted that the beneficial effect of a QEF Election may be substantiallydiminished if such election is not made in the first year of your holding period in which we are a PFIC. If some instances, you may be permitted to make aQEF election that is retroactive to the beginning of your holding period if we unexpectedly are treated as a PFIC.Taxation of U.S. Holders That Make a Timely “Mark-to-Market” ElectionAlternatively, if we were to be treated as a PFIC for any taxable year during which you actually or constructively own our common stock and, ourcommon stock is treated as “marketable stock,” you would be allowed to make a “mark-to-market” election with respect to our common stock, provided youcomplete and file IRS Form 8621 with your U.S. federal income tax return for the year for which the election is made in accordance with the relevantinstructions. If that election is made, you generally would include as ordinary income in each taxable year the excess, if any, of the fair market value of ourcommon stock at the end of the taxable year over your adjusted tax basis in our common stock. You also would be permitted an ordinary loss in respect of theexcess, if any, of your adjusted tax basis in our common stock over the fair market value of such common stock at the end of the taxable year (but only to theextent of the net amount of gain previously included in income as a result of the mark-to-market election). Your tax basis in our common stock would beadjusted to reflect any such income or loss amount. Gain realized on the sale, exchange or other disposition of our common stock would be treated asordinary income, and any loss realized on the sale, exchange or other disposition of the common stock would be treated as ordinary loss to the extent thatsuch loss does not exceed the net mark-to-market gains you previously included. However, to the extent any of our subsidiaries is a PFIC, your“mark-to-market” election with respect to our common stock would not apply to your deemed ownership of the stock of such subsidiary. This maysignificantly limit the beneficial effect of making a mark-to-market election.It should be noted that the beneficial effect of a “mark-to-market” election may be substantially diminished if such election is not made in thefirst year of your holding period in which we are a PFIC.Taxation of U.S. Holders That Make No ElectionFinally, if we were treated as a PFIC for any taxable year during which you actually or constructively own our common stock, and you do notmake either a QEF Election or a “mark-to-market” election for that year, you would be subject to special rules with respect to (a) any excess distribution (thatis, the portion of any distributions you receive on our common stock in a taxable year in excess of 125.0% of the average annual distributions you receivedin the three preceding taxable years, or, if shorter, your holding period for our common stock) and (b) any gain realized on the sale, exchange or otherdisposition of our common stock. Under these special rules: (i) the excess distribution or gain would be allocated ratably over your aggregate holding periodfor our common stock (ii) the amount allocated to the current taxable year would be taxed as ordinary income; (iii) the amount allocated to each of the othertaxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year; and (iv) an interest charge for thedeemed deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year. 124Table of ContentsIf you died while owning our common stock, your successor generally would not receive a step-up in tax basis with respect to such shares forU.S. tax purposes.If we are treated as a PFIC during any taxable year during your holding period, unless you make a timely QEF Election, or a timely“mark-to-market” election, for the first taxable year in which you hold our common stock, we will continue to be treated as a PFIC for all succeeding yearsduring which you are treated as a direct or indirect U.S. holder, even if we are not a PFIC for such years. You are encouraged to consult your own tax advisorwith respect to any available elections that may be applicable in such a situation, as well as the IRS information and filing obligations that may arise as aresult of the ownership of shares in a PFIC.Taxation of Non-U.S. HoldersYou are a “non-U.S. holder” if you are a beneficial owner of our common stock (other than an entity or arrangement treated as a partnership forU.S. federal income tax purposes) and you are not a U.S. holder.Distributions on Our Common StockYou generally will not be subject to U.S. federal income or withholding taxes on a distribution with respect to our common stock, unless theincome arising from such distribution is effectively connected with your conduct of a trade or business in the U.S.. If you are entitled to the benefits of anapplicable income tax treaty with respect to that income, such income generally is taxable in the U.S. only if it is attributable to a permanent establishmentmaintained by you in the U.S..Sale, Exchange or Other Disposition of Our Common StockYou generally will not be subject to U.S. federal income tax or withholding tax on any gain realized upon the sale, exchange or other dispositionof our common stock, unless: • the gain is effectively connected with your conduct of a trade or business in the U.S. (and, if you are entitled to the benefits of anapplicable income tax treaty with respect to that gain, that gain is attributable to a permanent establishment maintained by you in theU.S.); or • you are an individual who is present in the U.S. for 183 days or more during the taxable year of disposition and certain other conditionsare met.Gain that is effectively connected with your conduct of a trade or business in the U.S. (or so treated) generally will be subject to U.S. federalincome tax, net of certain deductions, at regular U.S. federal income tax rates. If you are a corporate non-U.S. holder, your earnings and profits that areattributable to the effectively connected income (subject to certain adjustments) may be subject to an additional U.S. branch profits tax at a rate of 30.0% (orsuch lower rate as may be specified by an applicable income tax treaty).Gain described in clause the second bullet point above (net of certain U.S.-source losses) will be taxed at a flat rate of 30.0% (or such lower rateas may be specified by an applicable tax treaty).U.S. Backup Withholding and Information ReportingIn general, if you are a non-corporate U.S. holder, distributions and proceeds from the disposition of our common stock may be subject toinformation reporting requirements. These payments to a non-corporate U.S. holder may also be subject to backup withholding tax if the non-corporate U.S.holder: (i) fails to provide an accurate taxpayer identification number; (ii) is notified by the IRS that it has become subject to backup withholding due to aprior failure to report all interest or distributions required to be shown on its federal income tax returns; or (iii) fails to comply with applicable certificationrequirements.If you are a non-U.S. holder, you may be required to establish your exemption from information reporting and backup withholding by certifyingyour non-U.S. status on IRS Form W-8BEN, W-8BEN-E, W-8ECI or W-8IMY, as applicable.Backup withholding tax is not an additional tax. Rather, you generally may obtain a refund of any amounts withheld under backup withholdingrules that exceed your income tax liability by accurately completing and timely filing a refund claim with the IRS. 125Table of ContentsTax Return Disclosure RequirementsIndividual U.S. holders (and to the extent specified in applicable Treasury Regulations, certain individual non-U.S. holders and certain U.S.holders that are entities) that hold certain specified foreign assets with values in excess of certain dollar thresholds are required to report such assets on IRSForm 8938 with their U.S. federal income tax return, subject to certain exceptions (including an exception for foreign assets held in accounts maintained withU.S. financial institutions). Stock in a foreign corporation, including our common stock is a specified foreign asset for this purpose, unless such stock is heldin an account maintained with a U.S. financial institution. Substantial penalties apply for failure to properly complete and file Form 8938. You areencouraged to consult your own tax advisor regarding the filing of this form. Additionally, in the event that an individual U.S. holder (and to the extentspecified in applicable Treasury Regulations, an individual non-U.S. holder or a U.S. entity) that is required to file IRS Form 8938 does not file such form, thestatute of limitations on the assessment and collection of U.S. federal income taxes of such person for the related tax year may not close until three years afterthe 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 theirreporting obligations with respect to specified foreign assets.F. Dividends and paying agentsNot applicable.G. Statement by expertsNot applicable.H. Documents on displayWe file reports and other information with the Securities and Exchange Commission (“SEC”). These materials, including this annual report andthe accompanying exhibits, may be inspected and copied at the public facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549, orfrom the SEC’s website www.sec.gov. You may obtain information on the operation of the public reference room by calling 1-(800)-SEC-0330 and you mayobtain copies at prescribed rates.I. Subsidiary informationNot applicable.Item 11. Quantitative and Qualitative Disclosures about Market RisksNavios Holdings is exposed to certain risks related to interest rate, foreign currency and charter rate risks. To manage these risks, NaviosHoldings may use interest rate swaps (for interest rate risk) and FFAs (for charter rate risk).Interest Rate Risk:Debt Instruments — On December 31, 2017 and 2016, Navios Holdings had a total of $1,717.8 million and $1,675.4 million, respectively, oflong-term indebtedness. All of the Company’s debt is U.S. dollar-denominated and bears interest at a floating rate, except for the 2022 Senior Secured Notes,the 2022 Notes, the 2022 Logistics Senior Notes and two Navios Logistics’ loans discussed in “Item 5.B Liquidity and Capital Resources” that bear interestat a fixed rate.Changes in interest rates for our floating-rate loan facilities would affect their interest rate and related interest expense. As of December 31, 2017,the outstanding amount of the Company’s floating rate loan facilities was $287.5 million. The interest rate on the 2022 Senior Secured Notes, the 2022Notes, the 2022 Logistics Senior Notes, and two Navios Logistics’ loans is fixed and, therefore, changes in interest rates affect their fair value, which as ofDecember 31, 2017 was $1,283.7 million, but do not affect their related interest expense. A change in the LIBOR rate of 100 basis points would increaseinterest expense for the year ended December 31, 2017, by $3.0 million.For a detailed discussion on Navios Holdings’ debt instruments refer to section “Long-Term Debt Obligations and Credit Arrangements”included in Item 5.B. of this Annual Report. 126Table of ContentsInterest Rate Swaps — Navios Holdings enters from time to time into interest rate swap contracts to hedge its exposure to variability in itsfloating rate long-term debt. Under the terms of interest rate swaps, Navios Holdings and the banks agree to exchange, at specified intervals, the differencebetween a paying fixed rate and floating rate interest amount calculated by reference to the agreed principal amounts and maturities. The interest rate swapsallow Navios Holdings to convert long-term borrowings issued at floating rates into equivalent fixed rates.There are no swap agreements as of December 31, 2017 and 2016.FFAs Derivative Risk:FFAs — Navios Holdings may enter into dry bulk shipping FFAs as economic hedges relating to identifiable ship and/or cargo positions and aseconomic hedges of transactions that Navios Holdings expects to carry out in the normal course of its shipping business. In entering into these contracts, theCompany has assumed the risk that might arise from the possible inability of counterparties to perform in accordance with the terms of their contracts. TheCompany records all of its derivative financial instruments and hedges as economic hedges. Currently, Navios Holdings holds no FFA contracts.Inflation:Inflation has had a minimal impact on vessel operating expenses and general and administrative expenses. Our management does not considerinflation to be a significant risk to direct expenses in the current and foreseeable economic environment.Item 12. Description of Securities Other than Equity SecuritiesNot applicable.PART IIItem 13. Defaults, Dividend Arrearages and DelinquenciesIn February 2016, Navios Holdings announced the suspension of payment of quarterly dividends on the Company’s Series G and Series H. OnJuly 15, 2017, the Company reached six quarterly dividend payments in arrears relating to its Series G and Series H and as a result the respective dividendrate increased by 0.25%. As of the date of this Annual Report, the Company has reached eight quarterly dividend payments in arrears relating to its Series Gand Series H.Item 14. Material Modifications to the Rights of Security Holders and Use of ProceedsNone.Item 15. Controls and ProceduresA. Disclosure Controls and ProceduresThe Company’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, conducted an evaluation,pursuant to Rule 13a-15 (e) promulgated under the Exchange Act, of the effectiveness of our disclosure controls and procedures as of December 31, 2017.Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as ofDecember 31, 2017.Disclosure controls and procedures means controls and other procedures that are designed to ensure that information required to be disclosed byus in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in theSEC’s rules and forms and that such information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulatedand communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, asappropriate to allow timely decisions regarding required disclosures. 127Table of ContentsB. Management’s Annual Report on Internal Control over Financial ReportingThe management of Navios Holdings is responsible for establishing and maintaining adequate internal control over financial reporting asdefined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act. Navios Holdings’ internal control system was designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally acceptedaccounting principles in the U.S..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 Holdings’ management assessed the effectiveness of Navios Holdings’ internal control over financial reporting as of December 31, 2017.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, 2017, Navios Holdings’ internal controlover financial reporting is effective based on those criteria.Navios Holdings’ independent registered public accounting firm has issued an attestation report on Navios Holdings’ internal control overfinancial reporting.C. Attestation Report of the Registered Public Accounting FirmNavios Holdings’ independent registered public accounting firm has issued an audit report on Navios Holdings’ internal control over financialreporting. This report appears on Page F-2 of the consolidated financial statements.D. Changes in Internal Control over Financial ReportingThere have been no changes in internal controls over financial reporting (identified in connection with management’s evaluation of suchinternal controls over financial reporting) that occurred during the year covered by this Annual Report that have materially affected, or are reasonably likelyto materially affect, Navios Holdings’ internal controls over financial reporting.Item 16. [Reserved]Item 16A. Audit Committee financial expertNavios Holdings’ Audit Committee consists of three independent directors, Spyridon Magoulas, Efstathios Loizos and George Malanga. TheBoard of Directors has determined that Efstathios Loizos qualifies as “an audit committee financial expert” as defined in the instructions of Item 16A ofForm 20-F. Mr. Loizos is independent under applicable NYSE and SEC standards.Item 16B. Code of EthicsNavios Holdings has adopted a code of ethics, the Navios Code of Corporate Conduct and Ethics, applicable to officers, directors and employeesof Navios Holdings that complies with applicable guidelines issued by the SEC. The Navios Code of Corporate Conduct and Ethics is available for review onNavios Holdings’ website at www.navios.com.Item 16C. Principal Accountant Fees and ServicesAudit FeesOur principal accountants for fiscal years 2017 and 2016 were PricewaterhouseCoopers S.A. The audit fees for the audit of the years endedDecember 31, 2017 and 2016 were $1.6 million and $1.4 million, respectively.The 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 the Company. The Audit Committee may delegate, to one or more of its designated members,the authority to grant such pre-approvals. The decision of any member to whom such authority is delegated is be presented to the full Committee at each ofits scheduled meetings.All audit services and other services provided by PricewaterhouseCoopers S.A., after the formation of our Audit Committee in October 2005 werepre-approved by the Audit Committee. 128Table of ContentsAudit-Related FeesThere were no audit-related fees billed in 2017 and 2016.Tax FeesThere were no tax fees billed in 2017 and 2016.All Other FeesThere were no other fees billed in 2017 and 2016.Item 16D. Exemptions from the Listing Standards for Audit CommitteesNot applicable.Item 16E. Purchases of Equity Securities by the Issuer and Affiliated PurchasersIn November 2015, the Board of Directors approved a share repurchase program for up to $25.0 million of Navios Holdings’ common stock.Share repurchases were made pursuant to a program adopted under Rule 10b5-1 under the Securities Exchange Act. Repurchases were subject to restrictionsunder the terms of the Company’s credit facilities and indenture. The program did not require any minimum purchase or any specific number or amount ofshares and may be suspended or reinstated at any time in the Navios Holdings’ discretion and without notice. In particular, Navios Holdings, pursuant to theterms of its Series G and Series H, may not redeem, repurchase or otherwise acquire its common shares or preferred shares, including the Series G and Series H(other than through an offer made to all holders of Series G and Series H) unless full cumulative dividends on the Series G and Series H, when payable, havebeen paid. In total, up until February 2016, 1,147,908 common stocks were repurchased under this program, for approximately $1.1 million. Since that time,this program has been suspended by the Company.Item 16F. Changes 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.companies under the NYSE listing standards. However, we have voluntarily adopted all of the NYSE required practices, except that, as permitted underMarshall Islands law, we do not need or intend to obtain prior shareholder approval to adopt or re-use equity compensation plans, including our 2015 EquityIncentive Plan.Item 16H. Mine Safety disclosuresNot applicable.PART IIIItem 17. Financial StatementsSee Item 18.Item 18. Financial StatementsThe financial information required by this Item is set forth on pages F-1 to F-62 and are filed as part of this annual report.Separate consolidated financial statements and notes thereto for Navios Acquisition for each of the years ended December 31, 2017, 2016 and2015 are being provided as a result of Navios Acquisition meeting a significance test for the year ended December 31, 2015 pursuant to Rule 3-09 ofRegulation S-X and, accordingly, the financial statements of Navios Acquisition for the year ended December 31, 2017 are required to be filed as part of thisAnnual Report on Form 20-F. See Exhibit 15.3 for Navios Acquisition to this Annual Report on Form 20-F. 129Table of ContentsItem 19. Exhibits 1.1 Amended and Restated Articles of Incorporation of Navios Maritime Holdings Inc. (Incorporated by reference to Exhibit 3.1 to the Registrant’sRegistration Statement on Form F-1 (File No. 333-129382)).1.2 Bylaws of Navios Maritime Holdings Inc. (Incorporated by reference to Exhibit 3.2 to the Registrant’s Registration Statement on Form F-1 (FileNo. 333-129382)).1.3 Articles of Amendment of Articles of Incorporation of Navios Maritime Holdings Inc. (Incorporated by reference to Exhibit 99.1 to theRegistrant’s Form 6-K, filed on January 17, 2007).2.1 Specimen Unit Certificate (Incorporated by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form F-1 (FileNo. 333-129382)).2.2 Specimen Common Stock Certificate. (Incorporated by reference to Exhibit 4.2 to the Registrant’s Registration Statement on Form F-1 (FileNo. 333-129382)).2.3 Stockholders Rights Agreement, dated as of October 6, 2008, between Navios Maritime Holdings Inc. and Continental Stock Transfer and TrustCompany (Incorporated by reference to Exhibit 99.1 to the Registrant’s Form 6-K, filed on October 6, 2008).2.4 Certificate of Designations of Rights, Preferences and Privileges of Preferred Stock of Navios Maritime Holdings Inc. (Incorporated by referenceto Exhibit 99.2 to the Registrant’s Form 6-K, filed on October 6, 2008).2.5 Certificate of Designation, Preferences and Rights of Series A Convertible Preferred Stock of Navios Maritime Holdings Inc. (Incorporated byreference to Exhibit 3.1 to the Registrant’s Form 6-K, filed on July 7, 2009).2.6 Form of $20.0 million 6% Bond Due 2012 (Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 6-K, filed on August 5, 2009).2.7 Certificate of Designation, Preferences and Rights of Series B Convertible Preferred Stock of Navios Maritime Holdings Inc. (Incorporated byreference to Exhibit 3.1 to the Registrant’s Form 6-K, filed on September 22, 2009).2.8 Certificate of Designation, Preferences and Rights of Series C Convertible Preferred Stock of Navios Maritime Holdings Inc. (Incorporated byreference to Exhibit 3.1 to the Registrant’s Form 6-K, filed on September 24, 2009).2.9 Certificate of Designation, Preferences and Rights of Series D Convertible Preferred Stock of Navios Maritime Holdings Inc. (Incorporated byreference to Exhibit 3.1 to the Registrant’s Form 6-K, filed on February 4, 2010).2.10 Certificate of Designation, Preferences and Rights of Series E Convertible Preferred Stock of Navios Maritime Holdings Inc. (Incorporated byreference to Exhibit 1.1 to the Registrant’s Form 6-K, filed on November 15, 2010).2.11 Certificate of Designation, Preferences and Rights of Series F Convertible Preferred Stock of Navios Maritime Holdings Inc. (Incorporated byreference to Exhibit 1.1 to the Registrant’s Form 6-K, filed on December 22, 2010).2.12 Registration Rights Agreement, dated as of July 10, 2012, among Navios Maritime Holdings Inc., Navios Maritime Finance (US) Inc. andMorgan Stanley & Co. LLC, J.P. Morgan Securities LLC, S. Goldman Capital LLC, Commerz Markets LLC, DVB Capital Markets LLC, DNBMarkets, Inc. and ABN AMRO Securities (USA) LLC (Incorporated by reference to Exhibit 99.3 to the Registrant’s Form 6-K, filed on July 18,2012).2.13 Indenture relating to the 7.375% First Priority Ship Mortgage Notes due 2022, dated as of November 29, 2013, among Navios MaritimeHoldings Inc., Navios Logistics Finance II (US) Inc., the guarantors party thereto, and Wells Fargo Bank, National Association, as trustee andcollateral trustee (Incorporated by reference to Exhibit 99.2 to the Registrant’s Form 6-K, filed on December 13, 2013).2.13.1 First Supplemental Indenture relating to the 7.375% First Priority Ship Mortgage Notes due 2022, dated as of February 20, 2014 (Incorporatedby reference to Exhibit 10.3 to the Registrant’s Form 6-K, filed on March 3, 2014).2.13.2 Second Supplemental Indenture relating to the 7.375% First Priority Ship Mortgage Notes due 2022, dated as of June 24, 2014 (Incorporated byreference to Exhibit 10.2 to the Registrant’s Form 6-K, filed on July 23, 2014).2.13.3 Third Supplemental Indenture relating to the 7.375% First Priority Ship Mortgage Notes due 2022, dated as of October 24, 2014 (Incorporatedby reference to Exhibit 10.2 to the Registrant’s Form 6-K, filed on December 8, 2014).2.13.4 Fourth Supplemental Indenture relating to the 7.375% First Priority Ship Mortgage Notes due 2022, dated as of October 24, 2014 (Incorporatedby reference to Exhibit 10.3 to the Registrant’s Form 6-K, filed on February 25, 2016).2.14 Indenture relating to the 11.25% Senior Secured Notes due 2022, dated as of November 21, 2017, among Navios Maritime Holdings Inc., NaviosLogistics Finance II (US) Inc., the guarantors party thereto, and Wells Fargo Bank, National Association, as trustee and collateral trustee(Incorporated by reference to Exhibit 99.2 to the Registrant’s Form 6-K, filed on November 21, 2017). 130Table of Contents2.15 Deposit Agreement, dated as of January 21, 2014, by and among Navios Maritime Holdings Inc., The Bank of New York Mellon, and the holdersfrom time to time of the American depositary receipts described therein (incorporated by reference to Exhibit 4.1 to the Registrant’s RegistrationStatement on Form 8-A (File No. 001-33311), filed on January 24, 2014).2.16 Certificate of Designation of 8.75% Series G Cumulative Redeemable Perpetual Preferred Stock of Navios Maritime Holdings Inc. (Incorporated byreference to Exhibit 3.3 to the Registrant’s Registration Statement on Form 8-A (File No. 001-33311), filed on January 24, 2014).2.17 Form of American Depositary Receipt representing the American Depositary Shares (Incorporated by reference to Exhibit A to Exhibit 4.1 to theRegistrant’s Registration Statement on Form 8-A (File No. 001-33311), filed on January 24, 2014).2.18 Form of Certificate representing the 8.75% Series G Cumulative Redeemable Perpetual Preferred Stock (Incorporated by reference to Exhibit 4.3 tothe Registrant’s Registration Statement on Form 8-A (File No. 001-33311), filed on January 24, 2014).2.19 Certificate of Designation of 8.625% Series H Cumulative Redeemable Perpetual Preferred Stock of Navios Maritime Holdings Inc. (Incorporated byreference to Exhibit 3.3 to the Registrant’s Registration Statement on Form 8-A (File No. 001-33311), filed on July 7, 2014).2.20 Form of Certificate representing the 8.625% Series H Cumulative Redeemable Perpetual Preferred Stock (Incorporated by reference to Exhibit 4.3 tothe Registrant’s Registration Statement on Form 8-A (File No. 001-33311), filed on July 7, 2014).4.1 2006 Employee, Director and Consultant Stock Plan (Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 6-K, filed on May 16,2007).4.2 Financial Agreement relating to a loan facility of up to $70.0 million, dated as of March 31, 2008, between Nauticler S.A. and Marfin EgnatiaBank, S.A. (Incorporated by reference to Exhibit 99.3 to the Registrant’s Form 6-K, filed on June 13, 2008).4.3 Facility Agreement for a loan amount up to $133.0 million, dated as of June 24, 2008, by and between Shikhar Ventures S.A., Sizzling VenturesInc. and DnB NOR Bank ASA (Incorporated by reference to Exhibit 99.1 to the Registrant’s Form 6-K, filed on July 14, 2008).4.4 Third Supplemental Agreement in relation to the Facility Agreement dated February 1, 2007 for a loan facility of up to $280.0 million and arevolving credit facility of up to $120.0 million, dated March 23, 2009, between Navios Maritime Holdings Inc., Commerzbank AG and HSHNordbank AG (Incorporated by reference to Exhibit 99.4 to the Registrant’s Form 6-K, filed on May 18, 2009).4.5 Amendment to Share Purchase Agreement, dated June 29, 2009, by and between Anemos Maritime Holdings Inc. and Navios Maritime Partners L.P.(Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 6-K, filed on July 7, 2009).4.6 Amendment to Omnibus Agreement, dated June 29, 2009, by and among Navios Maritime Holdings Inc., Navios GP L.L.C., Navios MaritimeOperating L.L.C. and Navios Maritime Partners L.P. (Incorporated by reference to Exhibit 10.2 to the Registrant’s Form 6-K, filed on July 7, 2009).4.7 Facility Agreement for a $240.0 million term loan facility, dated June 24, 2009, by and between Floral Marine Ltd., Nostos Shipmanagement Corp.,Pandora Marine Inc., Red Rose Shipping Corp. and Commerzbank AG (Incorporated by reference to Exhibit 10.3 to the Registrant’s Form 6-K, filedon July 7, 2009).4.8 Supplemental Agreement in relation to the Facility Agreement dated December 11, 2007 for a loan facility of up to $154.0 million, dated July 10,2009, among Chilali Corp., Rumer Holding Ltd. and Credit Agricole Corporate and Investment Bank (formerly Emporiki Bank of Greece S.A.)(Incorporated by reference to Exhibit 99.3 to the Registrant’s Form 6-K, filed on August 5, 2009).4.9 Second Supplemental Agreement in relation to the Facility Agreement dated December 11, 2007 for a loan facility of up to $130.0 million, datedAugust 28, 2009, between Chilali Corp, Rumer Holding Ltd. and Credit Agricole Corporate and Investment Bank (formerly Emporiki Bank ofGreece S.A.) (Incorporated by reference to Exhibit 99.3 to the Registrant’s Form 6-K, filed on October 8, 2009).4.10 Facility Agreement in respect of a loan of up to $75.0 million, dated August 28, 2009, between Kohylia Shipmanagement S.A., Ducale Marine Inc.and Credit Agricole Corporate and Investment Bank (formerly Emporiki Bank of Greece S.A.) (Incorporated by reference to Exhibit 99.5 to theRegistrant’s Form 6-K, filed on October 8, 2009).4.11 Loan Agreement relating to a revolving credit facility of up to $110.0 million, dated October 23, 2009, between Navios Shipmanagement Inc. andMarfin Egnatia Bank S.A. (Incorporated by reference to Exhibit 99.1 to the Registrant’s Form 6-K, filed on November 10, 2009).4.12 Facility Agreement for a $150.0 million term loan facility, dated as of April 7, 2010, by and between Amorgos Shipping Corporation, AndrosShipping Corporation, Antiparos Shipping Corporation, Ikaria Shipping Corporation, Kos Shipping Corporation, Mytilene Shipping Corporation,Deutsche Schiffsbank AG, Alpha Bank AE and Credit Agricole Corporate and Investment Bank (Incorporated by reference to Exhibit 10.1 to theRegistrant’s Form 6-K, filed on April 8, 2010). 131Table of Contents4.13 Facility Agreement for a $75.0 million term loan facility, dated as of April 8, 2010, by and between Sifnos Corporation, Skiathos ShippingCorporation, Syros Shipping Corporation, Fortis Bank and DVB Bank SE (Incorporated by reference to Exhibit 10.2 to the Registrant’s Form 6-K,filed on April 8, 2010).4.14 Fourth Supplemental Facility Agreement in relation to a term loan of $280.0 million and a reducing revolving credit facility of up to$120.0 million, dated as of January 8, 2010, by and between Navios Maritime Holdings Inc., Commerzbank AG and HSH Nordbank AG(Incorporated by reference to Exhibit 10.2 to the Registrant’s Form 6-K, filed on May 18, 2010).4.15 Fifth Supplemental Agreement in relation to a Facility Agreement dated February 1, 2007 (as amended) for a term loan facility of up to$280.0 million and a reducing revolving credit facility of up to $120.0 million, dated as of April 28, 2010, by and between Navios MaritimeHoldings Inc., Commerzbank AG and HSH Nordbank AG (Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 6-K, filed on May 18,2010).4.16 Facility Agreement for a $40.0 million term loan facility, dated as of August 20, 2010, by and between Faith Marine Ltd. and DnB NOR Bank ASA(Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 6-K, filed on September 1, 2010).4.17 Loan Agreement for a loan up to $40.0 million, dated as of September 7, 2010, by and between Navios Maritime Acquisition Corporation andNavios Maritime Holdings Inc. (Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 6-K, filed on October 14, 2010).4.18 Facility Agreement in respect of a loan of up to $40.0 million, dated as of September 30, 2010, between Aramis Navigation Inc. and Credit AgricoleCorporate and Investment Bank (formerly Emporiki Bank of Greece S.A.) (Incorporated by reference to Exhibit 10.3 to the Registrant’s Form 6-K,filed on October 14, 2010).4.19 Amended and Restated Loan Agreement relating to a facility of up to $120.0 million, by and between Portorosa Marine Corp., Floral Maritime Ltd.,the banks and financial institutions listed therein and Dekabank Deutsche Girozentrale (Incorporated by reference to Exhibit 10.1 to theRegistrant’s Form 6-K, filed on November 15, 2010).4.20 Supplemental Agreement relating to the Facility Agreement dated as of June 24, 2009 for a term loan facility of up to $240.0 million, datedJanuary 28, 2011, between Nostos Shipmanagement Corp, Red Rose Shipping Corp. and Commerzbank AG (Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 6-K, filed on February 4, 2011).4.21 Supplemental Agreement relating to the Facility Agreement dated as of September 30, 2010 for a term loan facility of up to $40.0 million, datedJanuary 28, 2011, between Aramis Navigation Inc. and Credit Agricole Corporate and Investment Bank (formerly Emporiki Bank of Greece S.A.)(Incorporated by reference to Exhibit 10.2 to the Registrant’s Form 6-K, filed on February 4, 2011).4.22 Supplemental Agreement relating to the Facility Agreement dated as of December 11, 2007 (as amended) for a term loan facility of up to$154.0 million, dated January 28, 2011, between Rumer Holding Ld. and Credit Agricole Corporate and Investment Bank (formerly Emporiki Bankof Greece S.A.) (Incorporated by reference to Exhibit 10.3 to the Registrant’s Form 6-K, filed on February 4, 2011).4.23 Supplemental Agreement relating to the Facility Agreement dated as of August 28, 2009 (as amended) for a term loan facility of up to$75.0 million, dated January 28, 2011, between Kohylia Shipmanagement S.A., Ducale Marine Inc. and Credit Agricole Corporate and InvestmentBank (formerly Emporiki Bank of Greece S.A.) (Incorporated by reference to Exhibit 10.4 to the Registrant’s Form 6-K, filed on February 4, 2011).4.24 Supplemental Agreement relating to the Amended and Restated Loan Agreement dated as of October 27, 2010 in respect of a loan facility of up to$120.0 million, dated January 28, 2011, between Portorosa Marine Corp., Floral Marine Ltd., the banks and financial institutions listed thereto andDekabank Deutsche Girozentrale (Incorporated by reference to Exhibit 10.5 to the Registrant’s Form 6-K, filed on February 4, 2011).4.25 Supplemental Agreement in relation to the Loan Agreement dated as of October 23, 2009 (as amended) for a revolving credit facility of up to$110.0 million, dated January 28, 2011, between Navios Shipmanagement Inc. and Marfin Egnatia Bank S.A. (Incorporated by reference to Exhibit 10.6 to the Registrant’s Form 6-K, filed on February 4, 2011).4.26 Sixth Supplemental Agreement in relation to the Facility Agreement dated February 1, 2007 (as amended) for a term loan facility of up to$280.0 million and a reducing revolving credit facility of up to $120.0 million, dated January 28, 2011, between Navios Maritime Holdings Inc.,Commerzbank AG and HSH Nordbank AG (Incorporated by reference to Exhibit 10.7 to the Registrant’s Form 6-K, filed on February 4, 2011).4.27 Supplemental Agreement in relation to the Facility Agreement dated as of August 20, 2010 for a term loan facility of up to $40.0 million, datedJanuary 28, 2011, between Faith Marine Ltd. and DnB NOR Bank ASA (Incorporated by reference to Exhibit 10.8 to the Registrant’s Form 6-K,filed on February 4, 2011).4.28 Supplemental Agreement No. 2 relating to a Loan Agreement dated October 23, 2009 (as amended) in respect of a revolving credit facility of up to$110.0 million, dated May 6, 2011, between Marfin Popular Bank Public Co Ltd, Navios Shipmanagement Inc., Navios Maritime Holdings Inc. andAstra Maritime Corporation (Incorporated by reference to Exhibit 10.2 to the Registrant’s Form 6-K, filed on May 25, 2011). 132Table of Contents4.29 Administrative Services Agreement, dated April 12, 2011, between Navios South American Logistics Inc. and Navios Maritime Holdings Inc.(Incorporated by reference to Exhibit 10.3 to the Registrant’s Form 6-K, filed on May 25, 2011).4.30 Letter of Amendment No. 1 to the Loan Agreement dated September 7, 2010, dated October 21, 2010, between Navios Maritime AcquisitionCorporation and Navios Maritime Holdings Inc. (Incorporated by reference to Exhibit 10.4 to the Registrant’s Form 6-K, filed on May 25, 2011).4.31 Facility Agreement No. 242 in respect of a loan up to $23.0 million, dated August 19, 2011, between Solange Shipping Ltd. and Credit AgricoleCorporate and Investment Bank (formerly Emporiki Bank of Greece S.A.) (Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 6-K,filed on August 25, 2011).4.32 Letter Agreement No. 2 to the Loan Agreement dated September 7, 2010, dated November 8, 2011, between Navios Maritime AcquisitionCorporation and Navios Maritime Holdings Inc. (Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 6-K, filed on November 28,2011).4.33 Facility agreement in respect of a loan of up to $23.0 million, dated December 29, 2011, between Mandora Shipping Ltd. and Credit AgricoleCorporate and Investment Bank (formerly Emporiki Bank of Greece S.A.) (Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 6-K,filed on January 26, 2012).4.34 Shareholders’ Agreement, dated as of June 17, 2010, between Navios South American Logistics Inc., Navios Corporation and Grandall InvestmentS.A (Incorporated by reference to Exhibit 4.1 to Navios South American Logistics Inc.’s Registration Statement on Form F-4 (RegistrationNo. 333-179250), filed on January 31, 2012).4.35 Facility agreement for a $42.0 million term loan facility, dated March 23, 2012, by and between Astra Maritime Corporation, Serenity ShippingEnterprises Inc., DVB Bank SE, Credit Agricole Corporate and Investment Bank (formerly Emporiki Bank of Greece S.A.) and NorddeutscheLandesbank Girozentrale (Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 6-K, filed on April 6, 2012).4.36 Fifth Supplemental Agreement relating to the Loan Agreement dated December 11, 2007 (as amended) for a term loan facility of up to$154.0 million, dated March 28, 2012, between Rumer Holding Ltd. and Credit Agricole Corporate and Investment Bank (formerly Emporiki Bankof Greece S.A.) (Incorporated by reference to Exhibit 10.2 to the Registrant’s Form 6-K, filed on April 6, 2012).4.37 Second Supplemental Agreement relating to the Facility Agreement dated June 24, 2009 (as amended) for a term loan facility of up to$240.0 million, dated March 30, 2012, between Notros Shipmanagement Corp., Red Rose Shipping Corp. and Commerzbank AG (Incorporated byreference to Exhibit 10.3 to the Registrant’s Form 6-K, filed on April 6, 2012).4.38 Facility Agreement for a $40.0 million term loan facility, dated September 19, 2013, between Kleimar NV and DVB Bank SE (Incorporated byreference to Exhibit 10.1 to the Registrant’s Form 6-K, filed on October 8, 2013).4.39 Facility Agreement for a $22.5 million term loan facility, dated December 20, 2013, between Iris Shipping Corporation, Jasmine ShippingCorporation and Credit Agricole Corporate and Investment Bank (Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 6-K, filed onMarch 3, 2014).4.40 Loan Agreement, dated December 13, 2013, between Navios Europe Inc., Navios Partners Europe Finance Inc., Navios Acquisition Europe FinanceInc. and Navios Holdings Europe Finance Inc. (Incorporated by reference to Exhibit 10.2 to the Registrant’s Form 6-K, filed on March 3, 2014).4.41 Facility Agreement for a $65.5 million term loan facility, dated June 27, 2014, between Astra Maritime Corporation, Emery Shipping Corporation,Serenity Shipping Enterprises Inc., DVB Bank SE, Credit Agricole Corporate and Investment Bank and Norddeutsche Landesbank Girozentrale(Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 6-K, filed on July 23, 2014).4.42 Loan Agreement in respect of a loan of up to $31.0 million, dated November 6, 2014, between Lavender Shipping Corporation and Alpha BankA.E. (Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 6-K, filed on December 8, 2014).4.43 Fourth Supplemental Agreement relating to the Facility Agreement dated as of June 24, 2009 (as amended) for a term loan facility of up to$240.0 million, dated March 31, 2015 between Nostos Shipmanagement Corp, Red Rose Shipping Corp. and Commerzbank AG (Incorporated byreference to Exhibit 10.1 to the Registrant’s Form 6-K, filed on April 14, 2015).4.44 Facility Agreement for a $41.0 million term loan facility, dated January 5, 2016, Triangle Shipping Corporation, Esmeralda Shipping Corporation,Navios Maritime Holdings Inc. and DVB Bank SE. (Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 6-K, filed on February 25,2016).4.45 Third Supplemental Agreement related to the Facility Agreement (as amended) dated December 20, 2013 for a $22.5 million term loan facility,dated December 30, 2015, between Iris Shipping Corporation, Jasmine Shipping Corporation and Credit Agricole Corporate and Investment Bank(Incorporated by reference to Exhibit 10.2 to the Registrant’s Form 6-K, filed on February 25, 2016). 133Table of Contents4.46 Loan Agreement for a Revolving Loan Facility of up to $50.0 million, dated as of March 9, 2016, between Navios Maritime Holdings Inc. andNavios Maritime Acquisition Corporation (Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 6-K, filed on March 9, 2016).4.47 Termination of Loan Agreement, dated as of April 14, 2016, among Navios Maritime Holdings Inc. and Navios Maritime Acquisition Corporation(Incorporated by reference to Exhibit 4.47 to the Registrant’s Form 20-F, filed on April 25, 2016).4.48 Loan Agreement for a Loan of up to $16.125 million, dated as of November 3, 2016, by and between Nostos Shipmanagement Corp. and AlphaBank A.E (Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 6-K, filed on December 1, 2016).4.49 Facility Agreement relating to a facility of up to $18,253,968.25, dated December 21, 2017, between Kleimar NV. and DVB Bank SE (Incorporatedby reference to Exhibit 10.1 to the Registrant’s Form 6-K, filed on January 17, 2018).8.1 List of subsidiaries.12.1 Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act.12.2 Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act.13.1 Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act.15.1 Consent of PricewaterhouseCoopers S.A.15.2 Consent of PricewaterhouseCoopers S.A.15.3 Financial Statements of Navios Maritime Acquisition Corporation for the year ended December 31, 2017.101 The following materials from the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2017, formatted in eXtensibleBusiness Reporting Language (XBRL): (i) Consolidated Balance Sheets at December 31, 2017 and 2016; (ii) Consolidated Statements ofComprehensive (Loss)/Income for each of the years ended December 31, 2017, 2016 and 2015; (iii) Consolidated Statements of Cash Flows for eachof the years ended December 31, 2017, 2016 and 2015; (iv) Consolidated Statements of Changes in Equity for each of the years endedDecember 31, 2017, 2016 and 2015; and (v) the Notes to Consolidated Financial Statements. 134Table of ContentsSIGNATURENavios Maritime Holdings Inc. hereby certifies that it meets all of the requirements for filing its Annual Report on Form 20-F and that it has dulycaused and authorized the undersigned to sign this Annual Report on its behalf. Navios Maritime Holdings Inc.By: /s/ Angeliki Frangou Name: Angeliki Frangou Title: Chairman and Chief Executive OfficerDate: April 13, 2018 135Table of ContentsINDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page NAVIOS MARITIME HOLDINGS INC. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM F-2 CONSOLIDATED BALANCE SHEETS AT DECEMBER 31, 2017 AND 2016 F-4 CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME FOR EACH OF THE YEARS ENDED DECEMBER 31, 2017, 2016AND 2015 F-5 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR EACH OF THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015 F-6 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR EACH OF THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015 F-8 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS F-9 F-1Table of ContentsReport of Independent Registered Public Accounting FirmTo the Board of Directors and Stockholders of Navios Maritime Holdings Inc.Opinions on the Financial Statements and Internal Control over Financial ReportingWe have audited the accompanying consolidated balance sheets of Navios Maritime Holdings Inc. and its subsidiaries (the “Company”) as of December 31,2017 and 2016, and the related consolidated statements of comprehensive (loss)/ income, of changes in equity and of cash flows for each of the three years inthe period ended December 31, 2017, including the related notes (collectively referred to as the “consolidated financial statements”). We also have auditedthe Company’s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control—Integrated Framework(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as ofDecember 31, 2017 and 2016, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2017 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, 2017, based on criteria established in Internal Control—Integrated Framework(2013) issued by the COSO.Basis for OpinionsThe Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting,and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control overFinancial Reporting, appearing under item 15 (b) of the Company’s 2017 Annual Report on Form 20-F. Our responsibility is to express opinions on theCompany’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a publicaccounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respectto the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission andthe PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonableassurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internalcontrol over financial reporting was maintained in all material respects.Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financialstatements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles usedand significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internalcontrol over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weaknessexists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performingsuch other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. F-2Table of ContentsDefinition and Limitations of Internal Control over Financial ReportingA 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, GreeceApril 13, 2018We have served as the Company’s (or its predecessor) auditor since 2002. F-3Table of ContentsNAVIOS MARITIME HOLDINGS INC.CONSOLIDATED BALANCE SHEETS(Expressed in thousands of U.S. dollars — except share data) Notes December 31,2017 December 31,2016 ASSETS Current assets Cash and cash equivalents 3, 11 $127,632 $135,992 Restricted cash 10, 11 6,558 5,386 Accounts receivable, net 4 60,331 65,829 Due from affiliate companies 15 4,002 8,548 Inventories 30,170 28,489 Prepaid expenses and other current assets 5 27,383 28,896 Total current assets 256,076 273,140 Deposits for vessels, port terminals and other fixed assets 6 36,849 136,891 Vessels, port terminals and other fixed assets, net 6 1,809,225 1,821,101 Deferred dry dock and special survey costs, net 32,945 37,781 Loan receivable from affiliate companies 11, 15 30,112 23,008 Long-term receivable from affiliate companies 11, 15 — 11,105 Investments in affiliates 8 183,160 160,071 Other long-term assets 11, 13, 8 4,856 2,647 Intangible assets other than goodwill 7 116,422 126,815 Goodwill 2, 18 160,336 160,336 Total non-current assets 2,373,905 2,479,755 Total assets $2,629,981 $2,752,895 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable $79,671 $85,538 Accrued expenses and other liabilities 7, 9, 15 94,859 91,749 Deferred income and cash received in advance 15 11,030 9,183 Due to affiliate companies 15 16,749 32,847 Current portion of capital lease obligations 6, 11 — 2,639 Current portion of long-term debt, net 10, 11 33,885 29,827 Total current liabilities 236,194 251,783 Senior and ship mortgage notes, net 10, 11 1,301,999 1,296,537 Long-term debt, net of current portion 10, 11 346,604 274,855 Capital lease obligations, net of current portion 6, 11 — 14,978 Other long-term liabilities and deferred income 15 43,382 43,388 Loan payable to affiliate company 10, 11 — 49,876 Long-term payable to affiliate companies 15 76,872 6,399 Deferred tax liability 20 7,766 11,526 Total non-current liabilities 1,776,623 1,697,559 Total liabilities 2,012,817 1,949,342 Commitments and contingencies 13 — — Stockholders’ equity Preferred Stock — $0.0001 par value, authorized 1,000,000 shares, 46,302 and 49,504 issued andoutstanding as of December 31, 2017 and 2016, respectively. 16 — — Common stock — $0.0001 par value, authorized 250,000,000 shares, 120,386,472 and 117,131,407issued and outstanding as of December 31, 2017 and 2016, respectively. 16 12 12 Additional paid-in capital 682,105 678,531 Accumulated other comprehensive income 2 — Accumulated deficit (166,021) (256) Total Navios Holdings stockholders’ equity 516,098 678,287 Noncontrolling interest 101,066 125,266 Total stockholders’ equity 617,164 803,553 Total liabilities and stockholders’ equity $2,629,981 $2,752,895 See notes to consolidated financial statements. F-4Table of ContentsNAVIOS MARITIME HOLDINGS INC.CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME(Expressed in thousands of U.S. dollars — except share and per share data) Notes Year EndedDecember 31,2017 Year EndedDecember 31,2016 Year EndedDecember 31,2015 Revenue 18 $463,049 $419,782 $480,820 Administrative fee revenue from affiliates 15, 18 23,667 21,799 16,177 Time charter, voyage and logistics business expenses 15 (213,929) (175,072) (247,882) Direct vessel expenses 15 (116,713) (127,396) (128,168) General and administrative expenses incurred on behalf of affiliates 15 (23,667) (21,799) (16,177) General and administrative expenses (27,521) (25,295) (34,183) Depreciation and amortization 6, 7, 18 (104,112) (113,825) (120,310) Provision for losses on accounts receivable 4 (269) (1,304) (59) Interest income 15, 18 6,831 4,947 2,370 Interest expense and finance cost 17, 18 (121,611) (113,639) (113,151) Impairment losses 6 (50,565) — — (Loss)/gain on bond and debt extinguishment 10 (981) 29,187 — Gain on sale of assets 6 1,064 — — Other income 21 6,140 18,175 4,840 Other expense 8, 21 (13,761) (11,665) (34,982) Loss before equity in net earnings of affiliated companies $(172,378) $(96,105) $(190,705) Equity/(loss) in net earnings of affiliated companies 8, 15, 18 4,399 (202,779) 61,484 Loss before taxes $(167,979) $(298,884) $(129,221) Income tax benefit/(expense) 20 3,192 (1,265) 3,154 Net loss $(164,787) $(300,149) $(126,067) Less: Net income attributable to the noncontrolling interest (1,123) (3,674) (8,045) Net loss attributable to Navios Holdings common stockholders $(165,910) $(303,823) $(134,112) Loss attributable to Navios Holdings common stockholders, basic anddiluted 19 $(175,298) $(273,105) $(150,314) Basic and diluted loss per share attributable to Navios Holdings commonstockholders $(1.50) $(2.54) $(1.42) Weighted average number of shares, basic and diluted 19 116,673,459 107,366,783 105,896,235 Other comprehensive income/(loss) Unrealized holding gain/(loss) on investments in-available-for-sale securities 8 2 100 (1,649) Reclassification to earnings 8 — 345 1,782 Total other comprehensive income $2 $445 $133 Total comprehensive loss (164,785) (299,704) (125,934) Comprehensive income attributable to noncontrolling interest $(1,123) $(3,674) $(8,045) Total comprehensive loss attributable to Navios Holdings commonstockholders $(165,908) $(303,378) $(133,979) See notes to consolidated financial statements. F-5Table of ContentsNAVIOS MARITIME HOLDINGS INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(Expressed in thousands of U.S. dollars) Notes Year EndedDecember 31,2017 Year EndedDecember 31,2016 Year EndedDecember 31,2015 OPERATING ACTIVITIES: Net loss $(164,787) $(300,149) $(126,067) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 6, 7 104,112 113,825 120,310 Amortization and write-off of deferred financing costs 17 6,391 5,653 4,524 Amortization of deferred drydock and special survey costs 14,727 13,768 13,340 Provision for losses on accounts receivable 4 269 1,304 59 Share based compensation 12 4,296 3,446 5,591 Gain on bond and debt extinguishment 10 (185) (29,187) — Income tax (benefit)/expense 20 (3,192) 1,265 (3,154) Realized holding loss on investments in-available-for-sale-securities 8 — 345 1,782 Loss/(equity) in affiliates, net of dividends received 8, 15 4,610 219,417 (30,398) Gain on sale of assets 6 (1,064) — — Impairment losses 6 50,565 — — Changes in operating assets and liabilities: Decrease/(increase) in restricted cash 2,666 (2,906) 198 Decrease/(increase) in accounts receivable 5,293 (2,350) 20,588 (Increase)/decrease in inventories (1,681) (4,046) 8,079 Decrease /(increase) in prepaid expenses and other assets 3,123 (4,313) 375 Decrease/(increase) in due from affiliate companies 15,651 (6,984) 13,802 (Decrease)/increase in accounts payable (7,392) 7,209 17,606 Increase/ (decrease) in accrued expenses and other liabilities 2,422 (9,159) 3,104 Increase in due to affiliate companies 23,980 22,694 14,142 Increase/(decrease) in deferred income and cash received in advance 1,847 (4,309) 1,046 (Decrease)/increase in other long-term liabilities and deferred income (43) 22,493 3,391 Payments for drydock and special survey costs (10,824) (11,096) (24,840) Net cash provided by operating activities $50,784 $36,920 $43,478 INVESTING ACTIVITIES: Loan to affiliate company 15 (4,461) (4,275) (7,327) Decrease in long-term receivable from affiliate companies 15 — — 10,351 Dividends from affiliate companies 8 7,298 — 18,244 Deposits for vessels, port terminals and other fixed assets 6 (36,589) (86,911) (26,713) Proceeds from lease receivable 200 — — Proceeds from sale of asset 6 11,828 — — Acquisition of investments in affiliates 8 (7,638) — (22,846) Acquisition of vessels 6 — (60,115) — Purchase of property, equipment and other fixed assets 6 (10,279) (4,567) (8,208) Disposal of available-for-sale securities 8 — 5,303 — Deposit for option to acquire vessel 13 (2,724) — — Net cash used in investing activities $(42,365) $(150,565) $(36,499) F-6Table of ContentsNAVIOS MARITIME HOLDINGS INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(Expressed in thousands of U.S. dollars) Notes Year EndedDecember 31,2017 Year EndedDecember 31,2016 Year EndedDecember 31,2015 FINANCING ACTIVITIES: Repurchase of preferred stock 16 $(571) $(9,323) $— (Repayment of)/proceeds from loan payable to affiliate company 15 (55,132) 50,000 — Proceeds from transfer of rights to affiliate company 8, 15 4,050 — — Proceeds from long-term loans 10 125,495 116,331 — Proceeds from issuance of senior and ship mortgage notes net of discount and debt issuancecosts 10 291,218 — — Repayment of long-term debt and payment of principal 10 (48,600) (40,737) (36,056) Repayment/repurchase of senior notes 10 (291,094) (30,671) — Payments of obligations under capital leases 6 (12,374) (3,032) (1,501) Debt issuance costs (609) (2,844) (50) (Increase)/ decrease in restricted cash (3,839) 11,000 (11,114) Payment for acquisition of intangible asset 7 — — (6,800) Acquisition of treasury stock 16 — (818) (252) Dividends paid to noncontrolling shareholders (25,323) — — Dividends paid — (3,681) (35,350) Net cash (used in)/provided by financing activities $(16,779) $86,225 $(91,123) Decrease in cash and cash equivalents (8,360) (27,420) (84,144) Cash and cash equivalents, beginning of year 135,992 163,412 247,556 Cash and cash equivalents, end of year $127,632 $135,992 $163,412 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid for interest, net of capitalized interest $115,898 $108,380 $108,461 Cash paid for income taxes $393 $92 $139 Non-cash investing and financing activities Purchase of property, equipment and other fixed assets 6 $— $(472) $(710) Deposits for vessels, port terminals and other fixed assets 6 $(726) $(5,726) $(1,871) Revaluation of vessels due to termination/restructuring of capital lease obligations 6 $5,243 $— $210 Decrease in capital lease obligations due to restructuring $— $— $(210) Dividends payable $— $— $3,081 Accrued interest income on loan receivable from affiliate company 15 $(2,643) $(2,259) $(1,356) Accrued interest expense on loan payable to affiliate company 10, 15 $— $1,240 $— Accrued interest expense payable to affiliate company 10, 15 $815 $— $— Acquisition of vessels, port terminals and other fixed assets 6 $(843) $— $— Long-term payable to affiliate company 8, 15 $29,423 $— $— Transfers from deposits for vessels, port terminals and other fixed assets 6 $137,357 $— $— See notes to consolidated financial statements. F-7Table of ContentsNAVIOS MARITIME HOLDINGS INC.CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY(Expressed in thousands of U.S. dollars — except share data) Number ofPreferredShares PreferredStock Number ofCommonShares CommonStock AdditionalPaid-inCapital RetainedEarnings/(AccumulatedDeficit) AccumulatedOtherComprehensiveIncome/(Loss) TotalNavios Holdings’Stockholders’Equity NoncontrollingInterest TotalStockholders’Equity BalanceDecember 31,2014 75,069 $— 105,831,718 $11 $721,465 $432,065 $(578) $1,152,963 $113,547 $1,266,510 Net loss — — — — — (134,112) — (134,112) 8,045 (126,067) Total othercomprehensiveincome — — — — — — 133 133 — 133 Conversion ofpreferred stock tocommon stock(Note 16) (1,134) — 1,134,000 — — — — — — — Stock-basedcompensationexpenses(Note 16) — — 3,711,678 — 5,578 — — 5,578 — 5,578 Cancellation ofshares (Note 16) — — (9,319) — — — — — — — Acquisition oftreasury stock(Note 16) — — (199,324) — (252) — — (252) — (252) Dividendsdeclared/ paid — — — — — (35,350) — (35,350) — (35,350) BalanceDecember 31,2015 73,935 $— 110,468,753 $11 $726,791 $262,603 $(445) $988,960 $121,592 $1,110,552 Net loss — — — — — (303,823) — (303,823) 3,674 (300,149) Total othercomprehensiveincome — — — — — — 445 445 — 445 Tender Offer -Redemption ofpreferred stock(Note 16) (24,431) — 7,589,176 1 (50,888) 41,564 — (9,323) — (9,323) Stock-basedcompensationexpenses(Note 16) — — 24,970 — 3,446 — — 3,446 — 3,446 Cancellation ofshares (Note 16) — — (2,908) — — — — — — — Acquisition oftreasury stock(Note 16) — — (948,584) — (818) — — (818) — (818) Dividendsdeclared/ paid — — — — — (600) — (600) — (600) BalanceDecember 31,2016 49,504 $— 117,131,407 $12 $678,531 $(256) $— $678,287 $125,266 $803,553 Net loss — — — — — (165,910) — (165,910) 1,123 (164,787) Total othercomprehensiveincome — — — — — — 2 2 — 2 Tender Offer -Redemption ofpreferred stock(Note 16) (766) — 625,815 — (716) 145 — (571) — (571) Conversion ofconvertiblepreferred stock/undeclaredpreferreddividend tocommon stock(Note 16) (2,436) — 1,790,150 — — — — — — — Stock-basedcompensationexpenses (Note16) — — 843,332 — 4,296 — — 4,296 — 4,296 Cancellation ofshares (Note 16) — — (4,232) — (6) — — (6) — (6) Dividends paid toNoncontrollingShareholders — — — — — — — — (25,323) (25,323) BalanceDecember 31,2017 46,302 $— 120,386,472 $12 $682,105 $(166,021) $2 $516,098 $101,066 $617, 164 See notes to consolidated financial statements. F-8Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data)NOTE 1: DESCRIPTION OF BUSINESSNavios Maritime Holdings Inc. (“Navios Holdings” or the “Company”) (NYSE:NM) is a global, vertically integrated seaborne shipping and logisticscompany focused on the transport and transshipment of dry bulk commodities, including iron ore, coal and grain.Navios LogisticsNavios South American Logistics Inc. (“Navios Logistics”), a consolidated subsidiary of the Company, is one of the largest logistics companies in theHidrovia region of South America, focusing on the Hidrovia river system, the main navigable river system in the region, and on cabotage trades along theeastern coast of South America. Navios Logistics is focused on providing its customers integrated transportation, storage and related services through its portfacilities, its large, versatile fleet of dry and liquid cargo barges and its product tankers. Navios Logistics serves the needs of a number of growing SouthAmerican industries, including mineral and grain commodity providers as well as users of refined petroleum products. As of December 31, 2017, NaviosHoldings owned 63.8% of Navios Logistics.Navios PartnersNavios Maritime Partners L.P. (“Navios Partners”) (NYSE:NMM) is an international owner and operator of dry cargo vessels and is engaged in seabornetransportation services of a wide range of dry cargo commodities including iron ore, coal, grain, fertilizer and also containers, chartering its vessels undermedium to long-term charters.As of December 31, 2017, Navios Holdings owned a 20.8% interest in Navios Partners, including a 2.0% general partner interest.Navios AcquisitionNavios Maritime Acquisition Corporation (“Navios Acquisition”) (NYSE: NNA), is an owner and operator of tanker vessels focusing on thetransportation of petroleum products (clean and dirty) and bulk liquid chemicals.As of December 31, 2017, Navios Holdings’ ownership of the outstanding voting stock of Navios Acquisition was 42.9% and its economic interest was46.2%.Navios MidstreamNavios Maritime Midstream Partners L.P. (“Navios Midstream”) (NYSE: NAP) is a publicly traded master limited partnership which owns and operatescrude oil tankers under long-term employment contracts.As of December 31, 2017, Navios Holdings owned no direct equity interest in Navios Midstream.Navios Europe IOn October 9, 2013, Navios Holdings, Navios Acquisition and Navios Partners established Navios Europe Inc. (“Navios Europe I”) and have economicinterests of 47.5%, 47.5% and 5.0%, respectively. Navios Europe I is engaged in the marine transportation industry through the ownership of five tanker andfive container vessels. Effective November 2014, Navios Holdings, Navios Acquisition and Navios Partners have voting interests of 50%, 50% and 0%,respectively.Navios Europe IIOn February 18, 2015, Navios Holdings, Navios Acquisition and Navios Partners established Navios Europe (II) Inc. (“Navios Europe II”) and haveeconomic interests of 47.5%, 47.5% and 5.0%, respectively and voting interests of 50%, 50% and 0%, respectively. Navios Europe II is engaged in themarine transportation industry through the ownership of seven dry bulkers and seven container vessels. F-9Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Navios ContainersNavios Maritime Containers Inc. (“Navios Containers”) is a growth vehicle dedicated to the container sector of the maritime industry. On June 8,2017, Navios Containers completed a private placement in which Navios Holdings invested $5,000. Navios Containers registered its shares on theNorwegian Over-The-Counter Market (N-OTC) on June 12, 2017 under the ticker “NMCI”. On August 29, 2017 and on November 9, 2017, NaviosContainers closed additional private placements. As of December 31, 2017, Navios Holdings owned 3.4% of Navios Containers’ common stock andwarrants, for 1.7% of the equity of Navios Containers.NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a)Basis of presentation: The accompanying consolidated financial statements are prepared in accordance with accounting principles generally acceptedin the United States of America (U.S. GAAP).The Company elected to early adopt the requirements of ASU 2017-01 “Business Combinations” effective beginning the second quarter endingJune 30, 2017 and applied this guidance prospectively in the current period presented in the Company’s consolidated financial information. The earlyadoption of this ASU did not have a material effect on the Company’s consolidated financial statements. (b)Principles of consolidation: The accompanying consolidated financial statements include the accounts of Navios Holdings, a Marshall Islandscorporation, and both its majority and wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in theconsolidated statements.The Company also consolidates entities that are determined to be variable interest entities (“VIE”) as defined in the accounting guidance, if theCompany determines that it is the primary beneficiary. A VIE is defined as a legal entity where either (i) equity interest holders as a group lack thecharacteristics of a controlling financial interest, including decision making ability and an interest in the entity’s residual risks and rewards, or (ii) theequity interest holders have not provided sufficient equity investment to permit the entity to finance its activities without additional subordinatedfinancial support, or (iii) the voting rights of some investors are not proportional to their obligations to absorb the expected losses of the entity, theirrights to receive the expected residual returns of the entity, or both and substantially all of the entity’s activities either involve or are conducted onbehalf of an investor that has disproportionately few voting rights.Based on internal forecasts and projections that take into account reasonably possible changes in our trading performance, management believes thatthe Company has adequate financial resources to continue in operation and meet its financial commitments, including but not limited to capitalexpenditures and debt service obligations, for a period of at least twelve months from the date of issuance of these consolidated financial statements.Accordingly, the Company continues to adopt the going concern basis in preparing its financial statements.Subsidiaries: Subsidiaries are those entities in which the Company has an interest of more than one half of the voting rights or otherwise has power togovern the financial and operating policies of the entity. The acquisition method of accounting is used to account for the acquisition of subsidiaries.The cost of an acquisition is measured as the fair value of the assets given up, shares issued or liabilities undertaken at the date of acquisition. Theexcess of the cost of acquisition over the fair value of the net assets acquired and liabilities assumed is recorded as goodwill. All subsidiaries includedin the consolidated financial statements are 100% owned, except for Navios Logistics, which is 63.8% owned by Navios Holdings.Investments in Affiliates: Affiliates are entities over which the Company generally has between 20% and 50% of the voting rights, or over which theCompany has significant influence, but it does not exercise control. Investments in these entities are accounted for under the equity method ofaccounting. Under this method, the Company records an investment in the stock of an affiliate at cost, and adjusts the carrying amount for its share ofthe earnings or losses of the affiliate subsequent to the date of investment and reports the recognized earnings or losses in income. Dividends receivedfrom an affiliate reduce the carrying amount of the investment. The Company recognizes gains and losses in earnings for the issuance of shares by itsaffiliates, provided that the issuance of shares qualifies as a sale of shares. When the Company’s share of losses in an affiliate equals or exceeds itsinterest in the affiliate, the Company does not recognize further losses, unless the Company has incurred obligations or made payments on behalf of theaffiliate. F-10Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Affiliates included in the financial statements accounted for under the equity methodIn the consolidated financial statements of Navios Holdings, the following entities are included as affiliates and are accounted for under the equitymethod for such periods: (i) Navios Partners and its subsidiaries (ownership interest as of December 31, 2017 was 20.8%, which includes a 2.0% generalpartner interest); (ii) Navios Acquisition and its subsidiaries (economic interest as of December 31, 2017 was 46.2%); (iii) Acropolis Chartering andShipping Inc. (“Acropolis”) (economic interest as of December 31, 2017 was 35.0%), (iv) Navios Europe I and its subsidiaries (economic interest as ofDecember 31, 2017 was 47.5%); (v) Navios Europe II and its subsidiaries (economic interest as of December 31, 2017 was 47.5%); and (vi) NaviosContainers and its subsidiaries (economic interest as of December 31, 2017 was 3.4%).Subsidiaries Included in the Consolidation: Statement of Operations Company Name Nature OwnershipInterest Country ofIncorporation 2017 2016 2015 Navios Maritime Holdings Inc. Holding Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Navios Corporation Sub-Holding Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Navios International Inc. Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Navimax Corporation Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Navios Handybulk Inc. Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Hestia Shipping Ltd Operating Company 100% Malta 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Anemos Maritime Holdings Inc. Sub-Holding Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Navios Shipmanagement Inc. Management Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 NAV Holdings Limited Sub-Holding Company 100% Malta 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Kleimar N.V. Operating Company/Vessel Owning Company/Management Company 100% Belgium 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Kleimar Ltd. Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Bulkinvest S.A. Operating Company 100% Luxembourg 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Primavera Shipping Corporation Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Ginger Services Co. Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Aquis Marine Corp. Sub-Holding Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Navios Tankers Management Inc. Management Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Astra Maritime Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Achilles Shipping Corporation Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Apollon Shipping Corporation Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Herakles Shipping Corporation Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Hios Shipping Corporation Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 F-11Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Statement of Operations Company Name Nature OwnershipInterest Country ofIncorporation 2017 2016 2015 Ionian Shipping Corporation Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Kypros Shipping Corporation Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Meridian Shipping Enterprises Inc. Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Mercator Shipping Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Arc Shipping Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Horizon Shipping Enterprises Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Magellan Shipping Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Aegean Shipping Corporation Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Star Maritime Enterprises Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Corsair Shipping Ltd. Vessel Owning Company 100% Marshall Is 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Rowboat Marine Inc. Operating Company 100% Marshall Is 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Beaufiks Shipping Corporation Operating Company 100% Marshall Is 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Nostos Shipmanagement Corp. Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Portorosa Marine Corp. Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Shikhar Ventures S.A. Vessel Owning Company 100% Liberia 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Sizzling Ventures Inc. Operating Company 100% Liberia 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Rheia Associates Co. Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Taharqa Spirit Corp. Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Rumer Holding Ltd. Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Pharos Navigation S.A. Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Pueblo Holdings Ltd Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Quena Shipmanagement Inc. Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Aramis Navigation Inc. Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 White Narcissus Marine S.A. Vessel Owning Company 100% Panama 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Navios GP L.L.C. Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Red Rose Shipping Corp. Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 F-12Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Statement of Operations Company Name Nature OwnershipInterest Country ofIncorporation 2017 2016 2015 Highbird Management Inc. Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Ducale Marine Inc. Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Vector Shipping Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Faith Marine Ltd. Vessel Owning Company 100% Liberia 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Navios Maritime Finance (US) Inc. Operating Company 100% Delaware 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Navios Maritime Finance II (US) Inc. Operating Company 100% Delaware 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Tulsi Shipmanagement Co. Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Cinthara Shipping Ltd. Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Rawlin Services Company Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Mauve International S.A. Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Serenity Shipping Enterprises Inc. Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Mandora Shipping Ltd Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Solange Shipping Ltd. Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Diesis Ship Management Ltd Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Navios Holdings Europe Finance Inc. Sub-Holding Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Navios Asia LLC Sub-Holding Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Iris Shipping Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Jasmine Shipping Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Emery Shipping Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Lavender Shipping Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Esmeralda Shipping Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/12 - 12/31 — Triangle Shipping Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/12 - 12/31 — Roselite Shipping Corporation Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 10/9 - 12/31 Smaltite Shipping Corporation Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 10/9 - 12/31 Motiva Trading Ltd Operating Company 100% Marshall Is. 1/1 - 12/31 11/2 - 12/31 — Alpha Merit Corporation Sub-Holding Company 100% Marshall Is. 11/3 - 12/31 — — Thalassa Marine S.A. Operating Company 100% Marshall Is. 12/15 - 12/31 — — F-13Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) (c)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 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 estimatesand judgments, including those related to uncompleted voyages, future drydock dates, the assessment of other-than-temporary impairment related tothe carrying value of investments in affiliates, the selection of useful lives for tangible and intangible assets, expected future cash flows from long-lived assets to support impairment tests, impairment test for goodwill, provisions necessary for accounts receivables and demurrages, provisions forlegal disputes, pension benefits, contingencies and guarantees. Management bases its estimates and judgments on historical experience and on variousother factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carryingvalues of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates under differentassumptions and/or conditions. (d)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. (e)Restricted Cash: As of December 31, 2017 and 2016, restricted cash included $5,968 and $1,896, respectively, which related to amounts held inretention accounts in order to service debt and interest payments, as required by certain of Navios Holdings’ credit facilities. Also included in restrictedcash as of December 31, 2017 and 2016 are amounts held as security in the form of letters of guarantee or letters of credit totaling $590 for bothreporting periods. As of December 31, 2016, restricted cash also included $2,900 which related to amounts held in a Navios Logistics’ retentionaccount as part of the Vale International S.A. (“Vale”) arbitration in New York. See also Note 13. (f)Insurance Claims: Insurance claims at each balance sheet date consist of claims submitted and/or claims in the process of compilation or submission(claims pending). They are recorded on an accrual basis and represent the claimable expenses, net of applicable deductibles, incurred throughDecember 31 of each reporting period, which are probable to be recovered from insurance companies. Any remaining costs to complete the claims areincluded in accrued liabilities. The classification of insurance claims into current and non-current assets is based on management’s expectations as totheir collection dates. (g)Inventories: Inventories, which are comprised of lubricants, bunkers (when applicable) and stock provisions on board of the vessels, as well aspetroleum products held by Navios Logistics, are valued at cost as determined on the first-in, first-out basis. (h)Vessels, Port Terminals, Tanker Vessels, Barges, Pushboats and Other Fixed Assets, net: Vessels, port terminals, tanker vessels, barges, pushboats andother fixed assets acquired as parts of business combinations are recorded at fair value on the date of acquisition, and if acquired as an asset acquisition,are recorded at cost (including transaction costs). Vessels constructed by the company would be stated at historical cost, which consists of the contractprice, capitalized interest and any material expenses incurred upon acquisition (improvements and delivery expenses). Subsequent expenditures formajor improvements and upgrades are capitalized, provided they appreciably extend the life, increase the earnings capability or improve the efficiencyor safety of the vessels. The cost and related accumulated depreciation of assets retired or sold are removed from the accounts at the time of sale orretirement and any gain or loss is included in the accompanying consolidated statements of comprehensive (loss)/income.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, port terminals, tanker vessels, barges, pushboats and otherfixed assets, after considering the estimated residual value.Annual depreciation rates used, which approximate the useful life of the assets are: Vessels 25 yearsPort terminals 5 to 40 yearsTanker vessels, barges and pushboats 15 to 45 yearsFurniture, fixtures and equipment 3 to 10 yearsComputer equipment and software 5 yearsLeasehold improvements shorter of lease term or 6 yearsManagement estimates the residual values of the Company’s dry bulk vessels based on a scrap value cost of steel times the weight of the ship noted inlightweight tons (“LWT”). Residual values are periodically reviewed and revised to recognize changes in conditions, new regulations or other reasons.Revisions of residual values affect the depreciable amount of the vessels and the depreciation expense in the period of the revision and future periods.Management estimates the residual values of the Company’s vessels based on a scrap rate of $340 per LWT after considering current market trends forscrap rates and ten-year average historical scrap rates of the residual values of the Company’s vessels. F-14Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Management estimates the useful life of its vessels to be 25 years from the vessel’s original construction. However, when regulations place limitationson 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. An increase inthe useful life of a vessel or in its residual value would have the effect of decreasing the annual depreciation charge and extending it into later periods.A decrease in the useful life of a vessel or in its residual value would have the effect of increasing the annual depreciation charge. (i)Deposits for Vessels, Port Terminals and Other Fixed Assets: This represents amounts paid by the Company in accordance with the terms of thepurchase agreements for the construction of vessels, port terminals and other long-lived fixed assets. Deposits for vessels, port terminals and other fixedassets also include pre-delivery expenses. Pre-delivery expenses represent any direct costs to bring the asset to the location and condition necessary forit to be capable of operating in the manner intended by management. Interest costs incurred during the construction (until the asset is substantiallycomplete and ready for its intended use) are capitalized. Capitalized interest for the years ended December 31, 2017, 2016 and 2015 amounted to$4,764, $5,843 and $5,154, respectively. (j)Assets Held for Sale: It is the Company’s policy to dispose of vessels and other fixed assets when suitable opportunities occur and not necessarily tokeep them until the end of their useful life. The Company classifies assets and disposal groups as being held for sale when the following criteria aremet: management has committed to a plan to sell the asset (disposal group); the asset (disposal group) is available for immediate sale in its presentcondition; an active program to locate a buyer and other actions required to complete the plan to sell the asset (disposal group) have been initiated; thesale of the asset (disposal group) is probable, and transfer of the asset (disposal group) is expected to qualify for recognition as a completed sale withinone year; the asset (disposal group) is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and actionsrequired to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Long-lived assets or disposal groups classified as held for sale are measured at the lower of their carrying amount or fair value less cost to sell. These assetsare not depreciated once they meet the criteria to be held for sale. No assets were classified as held for sale in any of the periods presented. (k)Impairment of Long Lived Assets: Vessels, other fixed assets and other long-lived assets held and used by Navios Holdings are reviewed periodicallyfor potential impairment whenever events or changes in circumstances indicate that the carrying amount of a particular asset may not be fullyrecoverable. Navios Holdings’ 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. Measurement of theimpairment loss is based on the fair value of the asset. Navios Holdings determines the fair value of its assets on the basis of management estimates andassumptions by making use of available market data and taking into consideration third party valuations performed on an individual vessel basis. Inevaluating useful lives and carrying values of long-lived assets, certain indicators of potential impairment are reviewed, such as undiscountedprojected operating cash flows, vessel sales and purchases, business plans and overall market conditions.Undiscounted projected net operating cash flows are determined for each asset group and compared to the carrying value of the vessel, the unamortizedportion of deferred drydock and special survey costs related to the vessel and the related carrying value of the intangible assets with respect to the timecharter 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-currentmarket rates. The loss recognized either on impairment (or on disposition) will reflect the excess of carrying value over fair value (selling price) for thevessel asset group.During the fourth quarter of fiscal year 2017, management concluded that events occurred and circumstances had changed, which indicated thatpotential impairment of Navios Holdings’ long-lived assets might exist. These indicators included continued volatility in the spot market, and therelated impact of the current dry bulk sector has on management’s expectation for future revenues. As a result, an impairment assessment of long-livedassets (step one) was performed.The Company determined undiscounted projected net operating cash flows for each vessel and compared it to the vessel’s carrying value together withthe carrying value of deferred drydock and special survey costs related to the vessel and the carrying value of the related intangible assets, ifapplicable. The significant factors and assumptions used in the undiscounted projected net operating cash flow analysis included: determining theprojected net operating cash flows by considering the charter revenues from existing time charters for the fixed fleet days (the Company’s remainingcharter agreement rates) and an estimated daily time charter equivalent for the unfixed days (based on a combination of one-year average historicaltime charter rates and 10-year average historical one-year time charter rates, adjusted for outliers) over the remaining economic life of each vessel, netof brokerage and address commissions excluding days of scheduled off-hires, running cost based on current year actuals, assuming an annual increaseof 0.3% after 2018 and a utilization rate of 99.2% based on the fleet’s historical performance. F-15Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) As of December 31, 2017, our assessment concluded that step two of the impairment analysis was required for one of our vessels held and used, as theundiscounted projected net operating cash flows did not exceed the carrying value. As a result, the Company recorded an impairment loss of $32,930for this vessel, being the difference between the fair value and the vessel’s carrying value together with the carrying value of deferred drydock andspecial survey costs related to this vessel, presented within the caption “Impairment losses” in the consolidated statements of comprehensive(loss)/income. The assessment performed for 2016 and 2015 did not indicate a step two was necessary for the Company’s other vessels held and used.See also Note 6. (l)Deferred Drydock and Special Survey Costs: The Company’s vessels, barges and pushboats are subject to regularly scheduled drydocking and specialsurveys which are carried out every 30 and 60 months, respectively, for ocean-going vessels, and up to every 96 months for pushboats and barges, tocoincide with the renewal of the related certificates issued by the classification societies, unless a further extension is obtained in rare cases and undercertain conditions. The costs of drydocking and special surveys are deferred and amortized over the above periods or to the next drydocking or specialsurvey date if such date has been determined. Unamortized drydocking or special survey costs of vessels, barges and pushboats sold are written-off toincome in the year the vessel, barge or pushboat is sold.Costs capitalized as part of the drydocking or special survey consist principally of the actual costs incurred at the yard, and expenses relating to spareparts, paints, lubricants and services incurred solely during the drydocking or special survey period. For each of the years ended December 31, 2017,2016 and 2015, the amortization of deferred drydock and special survey costs was $14,727, $13,768, and $13,340, respectively. (m)Deferred Financing Costs: Deferred financing costs include fees, commissions and legal expenses associated with obtaining or modifying loanfacilities. Deferred financing costs are presented as a deduction from the corresponding liability. These costs are amortized over the life of the relateddebt using the effective interest rate method, and are included in interest expense. Amortization and write-off of deferred financing costs for each of theyears ended December 31, 2017, 2016 and 2015 were $6,391, $5,653 and $4,524, respectively. See also Note 17. (n)Goodwill and Other Intangibles (i)Goodwill: Goodwill is tested for impairment at the reporting unit level at least annually.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 (step one). The Company determines the fair value of the reporting unit based on a combination of the incomeapproach (i.e. discounted cash flows) and market approach (i.e. comparative market multiples) and believes that the combination of these twoapproaches is the best indicator of fair value for its individual reporting units. If the fair value of a reporting unit exceeds the carrying amount, noimpairment exists. If the carrying amount of the reporting unit exceeds the fair value, then the Company must perform the second step (step two) todetermine the implied fair value of the reporting unit’s goodwill and compare it with its carrying amount. The implied fair value of goodwill isdetermined by allocating the fair value of the reporting unit to all the assets and liabilities of that reporting unit, as if the reporting unit had beenacquired in a business combination and the fair value of the reporting unit was the purchase price. If the carrying amount of the goodwill exceeds theimplied fair value, then goodwill impairment is recognized by writing the goodwill down to its implied fair value.As of December 31, 2017, the Company performed its impairments test for its reporting units within: the Dry Bulk Vessel Operations and the LogisticsBusiness. The Company additionally considered that its market capitalization continued to remain at a level well below the carrying value of its totalnet assets.As of December 31, 2017, the Company performed step one of the impairment test for the Dry Bulk Vessel Operations reporting unit, which is allocatedgoodwill of $56,240. Step one impairment test revealed that the fair value of the Dry Bulk Vessel Operations reporting unit substantially exceeded thecarrying amount of its net assets. Accordingly, no step two analysis was required.The fair value of the Dry Bulk Vessel Operations reporting unit was estimated using a combination of income and market approaches. For the incomeapproach, the expected present value of future cash flows used judgments and assumptions that management believes were appropriate in thecircumstances. The significant factors and assumptions the Company used in its discounted cash flow analysis included: EBITDA, the discount rateused to calculate the present value of future cash flows and future capital expenditures. EBITDA assumptions included revenue assumptions, generaland administrative expense growth assumptions, and direct vessel expense growth assumptions. The future cash flows were determined by consideringthe charter F-16Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) revenues from existing time charters for the fixed fleet days (the Company’s remaining charter agreement rates) and an estimated daily time charterequivalent for the non-fixed days (based on a combination of one-year average historical time charter rates and the 10-year average historical one-yeartime charter rates adjusted for outliers), which the Company believes is an objective approach for forecasting charter rates over an extended time periodfor long-lived assets and consistent with the cyclicality of the industry. In addition, a weighted average cost of capital (“WACC”) was used to discountfuture estimated cash flows to their present values. The WACC was based on externally observable data considering market participants’ and theCompany’s cost of equity and debt, optimal capital structure and risk factors specific to the Company. The market approach estimated the fair value ofthe Company’s business based on comparable publicly-traded companies in its industry. In assessing the fair value, the Company utilized the results ofthe valuations and considered the range of fair values determined under all methods which indicated that the fair value exceeded the carrying value ofnet assets.As of December 31, 2017, the Company performed step one of the impairment test for the Logistics Business, which is allocated goodwill of $104,096.Step one of the impairment test used the income method and revealed that the fair value substantially exceeded the carrying amount of its net assets.Accordingly, no step two analysis was required. The future cash flows from the Logistics Business were determined principally by combining revenuesfrom existing contracts and estimated revenues based on the historical performance of the segment, including utilization rates and actual storagecapacity. The Logistics Business has not been affected by the same volatile industry and market conditions as experienced in the Dry Bulk VesselOperations reporting unit. In addition, the cash flows of the long-lived assets in the Logistics Business reporting unit have not experienced asignificant decline.No impairment loss was recognized for any of the periods presented.(ii) Intangibles Other Than Goodwill: Navios Holdings’ intangible assets and liabilities consist of favorable lease terms, unfavorable lease terms,customer relationships, trade name and port terminal operating rights. The fair value of the trade name was determined based on the “relief fromroyalty” method which values the trade name based on the estimated amount that a company would have to pay in an arm’s length transaction to usethat trade name. The asset is being amortized under the straight line method over 32 years. Navios Logistics’ trade name is being amortized under thestraight line method over 10 years.The fair value of customer relationships of Navios Logistics was determined based on the “excess earnings” method, which relies upon the future cashflow generating ability of the asset. The asset is amortized under the straight line method.Other intangibles that are being amortized, such as customer relationships and port terminal operating rights, would be considered impaired if theircarrying value could not be recovered from the future undiscounted cash flows associated with the asset.When intangible assets or liabilities associated with the acquisition of a vessel are identified, they are recorded at fair value. Fair value is determinedby reference to market data and the discounted amount of expected future cash flows. Where charter rates are higher than market charter rates, an assetis recorded, being the difference between the acquired charter rate and the market charter rate for an equivalent vessel. Where charter rates are less thanmarket charter rates, a liability is recorded, being the difference between the assumed charter rate and the market charter rate for an equivalent vessel.The determination of the fair value of acquired assets and assumed liabilities requires the Company to make significant assumptions and estimates ofmany variables including market charter rates, expected future charter rates, the level of utilization of the Company’s vessels and the Company’sweighted average cost of capital. The use of different assumptions could result in a material change in the fair value of these items, which could have amaterial impact on the Company’s financial position and results of operations.The amortizable value of favorable and unfavorable leases is amortized over the remaining life of the lease term and the amortization expense isincluded in the consolidated statements of comprehensive (loss)/income in the “Depreciation and amortization” line item.The amortizable value of favorable leases would be considered impaired if its carrying value could not be recovered from the future undiscounted cashflows associated with the asset. Vessel purchase options that have not been exercised, which are included in favorable lease terms, would be consideredimpaired if the carrying value of an option, when added to the option price of the vessel, exceeded the fair value of the vessel.Vessel purchase options that are included in favorable leases are not amortized and when the purchase option is exercised, the asset is capitalized aspart of the cost of the vessel and depreciated over the remaining useful life of the vessel and if not exercised, the intangible asset is written off. Vesselpurchase options that are included in unfavorable lease terms are not amortized and when the purchase option is exercised by the charterer and theunderlying vessel is sold, it will be recorded as part of gain/loss on sale of the assets. If the option is not exercised at the expiration date it is written-offin the consolidated statements of comprehensive (loss)/income. F-17Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) During the fourth quarter of fiscal year 2017, management concluded that circumstances had changed, which indicated that potential impairment ofNavios Holdings’ intangible assets other than goodwill might exist. These indicators included continued volatility in the spot market and the relatedimpact of the current dry bulk sector has on management’s expectations for the future, consistent with those used in its vessel impairment assessment.As of December 31, 2017, the Company performed an assessment which indicated that the amortizable value of one of its favorable leases would not berecoverable from the future undiscounted cash flows associated with the asset. As a result, the Company recognized an impairment loss of $3,397 in thecaption “Impairment losses” in the consolidated statements of comprehensive (loss)/income. There were no other impairment losses recognized for theCompany’s intangible assets other than goodwill for any of the years ended December 31, 2016 and 2015.The weighted average amortization periods for intangibles are: Intangible assets/liabilities Years Trade name 30 Favorable lease terms 8 Port terminal operating rights 47 Customer relationships 20 See also Note 7. (o)Foreign Currency Translation: The Company’s functional and reporting currency is the U.S. dollar. The Company engages in worldwide commercewith a variety of entities. Although its operations may expose it to certain levels of foreign currency risk, its transactions are predominantly U.S. dollardenominated. The Company’s subsidiaries in Uruguay, Argentina, Brazil and Paraguay transact a nominal amount of their operations in Uruguayanpesos, Argentinean pesos, Brazilian reales and Paraguayan guaranies, whereas the Company’s wholly-owned vessel subsidiaries and the vesselmanagement subsidiaries transact a nominal amount of their operations in Euros; however, all of the subsidiaries’ primary cash flows are U.S. dollardenominated. The financial statements of the foreign operations are translated using the exchange rate at the balance sheet date except for property andequipment and equity, which are translated at historical rates. 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 statements of comprehensive(loss)/income. The foreign currency gains/(losses) recognized under the caption “Other expense” or “Other income” in the consolidated statements ofcomprehensive (loss)/income for each of the years ended December 31, 2017, 2016 and 2015, were $(3,000), $1,600 and $1,646, respectively. (p)Provisions: The Company, in the ordinary course of business, is subject to various claims, suits and complaints. Management, in consultation withinternal and external advisers, will provide for a contingent loss in the financial statements if the contingency had occurred at the date of the financialstatements and the likelihood of loss was probable and the amount can be reasonably estimated. If the Company has determined that the reasonableestimate of the loss is a range and there is no best estimate within the range, the Company will provide for the lower amount within the range. See alsoNote 13.The Company participates in Protection and Indemnity (P&I) insurance plans provided by mutual insurance associations known as P&I clubs. Underthe terms of these plans, participants may be required to pay additional premiums (supplementary calls) to fund operating deficits incurred by the clubs(“back calls”). Obligations for back calls are accrued annually based on information provided by the P&I clubs.Provisions for estimated losses on vessels under time charter are provided for in the period in which such losses are determined. As of December 31,2017 and 2016, the balance for this provision was $2,631 and $3,129, respectively. (q)Segment Reporting: Operating segments, as defined, are components of an enterprise about which separate financial information is available that isevaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Based on theCompany’s methods of internal reporting and management structure, the Company currently has two reportable segments: the Dry Bulk VesselOperations segment and the Logistics Business segment. F-18Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) (r)Revenue and Expense Recognition:Revenue Recognition: Revenue is recorded when services are rendered, the Company has a signed charter agreement or other evidence of anarrangement, the price is fixed or determinable, and collection is reasonably assured. The Company generates revenue from transportation of cargo,time charter of vessels, port terminal operations, bareboat charters, contracts of affreightment/voyage contracts, demurrages and contracts covering dryor liquid port terminal operations.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 arrives at the loading port, as applicable under the contract, and is deemed to end upon the completion of the discharge of thecurrent cargo. Under a voyage charter, the Company agrees to provide a vessel for the transportation of specific goods between specific ports in returnfor payment of an agreed upon freight rate per ton of cargo.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 rate. Since address commissions represent a discount (sales incentive) on services rendered by the Company andno identifiable benefit is received in exchange for the consideration provided to the charterer, these commissions are presented as a reduction ofrevenue.Revenue from time chartering and bareboat chartering is earned and recognized on a daily basis as the service is delivered. Revenue from contracts ofaffreightment (“COA”)/voyage contracts relating to our barges is recognized based upon the percentage of voyage completion. A voyage is deemed tocommence upon the barge’s arrival at the loading port, as applicable under the contract, and is deemed to end upon the completion of discharge underthe current voyage. The percentage of voyage completion is based on the days traveled as of the balance sheet date divided by the total days expectedfor the voyage. The position of the barge at the balance sheet date is determined by the days traveled as of the balance sheet date over the total voyageof the pushboat having the barge in tow. Revenue arising from contracts that provide our customers with continuous access to convoy capacity isrecognized ratably over the period of the contracts.Demurrage income represents payments made by the charterer to the vessel owner when loading or discharging time exceeds the stipulated time in thevoyage charter and is recognized as it is earned.Revenues arising from contracts that provide our customers with continuous access to convoy capacity are recognized ratably over the period of thecontracts.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) or the Baltic Dry Index over an agreed amount and accounted for on an accrual basis based on provisional amounts and for those contractsthat provisional accruals cannot be made due to the nature of the profit sharing elements, these are accounted for on the actual cash settlement.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, except for loss generating time charters, in which case the loss is recognizedin the period when such loss is determined. A time charter involves placing a vessel at the charterer’s disposal for a period of time during which thecharterer uses the vessel in return for the payment of a specified daily hire rate. Short period charters for less than three months are referred to as spot-charters. Charters extending three months to a year are generally referred to as medium-term charters. All other charters are considered long-term. Undertime charters, operating costs such as for crews, maintenance and insurance are typically paid by the owner of the vessel.For vessels operating in pooling arrangements, the Company earns a portion of total revenues generated by the pool, net of expenses incurred by thepool. The amount allocated to each pool participant vessel, including the Company’s vessels, is determined in accordance with an agreed-uponformula, which is determined by margins awarded to each vessel in the pool based on the vessel’s age, design and other performance characteristics.Revenue under pooling arrangements is accounted for on the accrual basis and is recognized when an agreement with the pool exists, price is fixed,service is provided and the collectability is reasonably assured. Revenue for vessels operating in pooling arrangements amounted to $8,041, $15,115and $1,825, for the years ended December 31, 2017, 2016 and 2015, respectively. The allocation of such net revenue may be subject to futureadjustments by the pool, however, such changes are not expected to be material.Revenues from port terminal operations consist of an agreed flat fee per ton and cover the services performed to unload barges (or trucks), transfer theproduct into silos or the stockpiles for temporary storage and then loading the ocean-going vessels. Revenues are recognized upon completion ofloading the ocean-going vessels. Additionally, fees are charged for vessel dockage and for storage time in excess of contractually specified terms.Dockage revenues are recognized ratably up to completion of loading. Storage fees are assessed and recognized when the product remains in the silostorage beyond the contractually agreed time allowed. Storage fee revenue is recognized ratably over the storage period and ends when the product isloaded onto the ocean-going vessel.Revenues from liquid port terminal operations consist mainly of sales of petroleum products in the Paraguayan market. F-19Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Additionally, revenues consist of an agreed flat fee per cubic meter to cover the services performed to unload barges, transfer the products into thetanks for temporary storage and then loading the trucks. Revenues are recognized upon completion of loading the trucks. Additionally, fees arecharged for storage time in excess of contractually specified terms. Storage fee revenue is recognized ratably over the storage period and ends when theproduct is loaded onto the trucks.Recovery of lost revenue under credit default insurance for charterers is accounted for as gain contingency and is recognized when all contingenciesare resolved. The amount of recovery of lost revenue is recorded within the caption “Revenue” and any amount recovered in excess of the lost revenueis recorded within the caption “Other income”.Expenses related to our revenue-generating contracts are recognized as incurred.Administrative fee revenue from affiliates: Administrative fee revenue from affiliates consists of fees earned on the provision of administrativeservices pursuant to administrative services agreements with our affiliates (Refer to Note 15). Administrative services include: bookkeeping, audit andaccounting services, legal and insurance services, administrative and clerical services, banking and financial services, advisory services, client andinvestor relations and other general and administrative services. These revenues are recognized as the services are provided to affiliates.The general and administrative expenses incurred on behalf of affiliates are determined based on a combination of actual expenses incurred on behalfof the affiliates as well as a reasonable allocation of expenses that are not affiliate specific but incurred on behalf of all affiliates.Forward Freight Agreements (“FFAs”): Realized gains or losses from FFAs are recognized monthly concurrent with cash settlements. In addition,FFAs are “marked-to-market” quarterly to determine the fair values which generate unrealized gains or losses. The Company has not entered into FFAtrades for any of the periods presented.Deferred Income and Cash Received In Advance: Deferred voyage revenue primarily relates to cash received from charterers prior to it being earned.These amounts are recognized as revenue over the voyage or charter period.Time Charter, Voyage and Logistics Business Expenses: Time charter, voyage and logistics business expenses comprise all expenses related to eachparticular voyage, including time charter hire paid and voyage freight paid, bunkers, port charges, canal tolls, cargo handling, agency fees andbrokerage commissions. Also included in time charter, voyage and logistics business expenses are charterers’ liability insurances, provision for losseson time charters and voyages in progress at year-end, direct port terminal expenses and other miscellaneous expenses.Direct Vessel Expenses: Direct vessel expenses consist of all expenses relating to the operation of vessels, including crewing, repairs and maintenance,insurance, stores and lubricants and miscellaneous expenses such as communications and amortization of drydocking and special survey costs net ofrelated party management fees.Prepaid Voyage Costs: Prepaid voyage costs relate to cash paid in advance for expenses associated with voyages. These amounts are recognized asexpenses over the voyage or charter period. (s)Employee benefits:Pension and Retirement Obligations-Crew: The Company’s ship-owning subsidiaries employ the crew on board under short-term contracts (usuallyup to nine months) and, accordingly, they are not liable for any pension or post-retirement benefits.Provision for Employees’ Severance and Retirement Compensation: The employees in the Company’s office in Greece are protected by Greek laborlaw. According to the law, the Company is required to pay retirement indemnities to employees upon dismissal or upon leaving with an entitlement toa full security retirement pension. The amount of compensation is based on the number of years of service and the amount of remuneration at the dateof dismissal or retirement up to a maximum of two years’ salary. If the employees remain in the employment of the Company until normal retirementage, they are entitled to retirement compensation which is equal to 40% of the compensation amount that would be payable if they were dismissed atthat time. The number of employees that will remain with the Company until retirement age is not known. The Company considers this plan equivalentto a lump sum defined benefit pension plan and accounts for it under relevant guidance on employer’s accounting for pensions. The Company isrequired to annually value the statutory terminations indemnities liability. Management obtains a valuation from independent actuaries to assist in thecalculation of the benefits. The Company provides, in full, for the employees’ termination indemnities liability. This liability amounted to $1,336 and$1,127 at December 31, 2017 and 2016, respectively. F-20Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) U.S. Retirement Savings Plan: The Company sponsors a 401(k) retirement savings plan, which is categorized as a defined contribution plan. The planis available to full time employees who meet the plan’s eligibility requirements. The plan permits employees to make contributions up to 15% of theirannual salary with the Company matching up to the first 6%. The Company makes monthly contributions (matching contributions) to the plan basedon amounts contributed by employees. Subsequent to making the matching contributions, the Company has no further obligations. The Company maymake an additional discretionary contribution annually if such a contribution is authorized by the Board of Directors. The plan is administered by anindependent professional firm that specializes in providing such services. See also Note 12.Other Post-Retirement Obligations: The Company has a legacy pension arrangement for certain Bahamian, Uruguayan and former NaviosCorporation employees. The entitlement to these benefits is only to these former employees. The expected costs of these benefits are accrued each year,using an accounting methodology similar to that for defined benefit pension plans.Stock-Based Compensation: In December 2017, the Company authorized the grant of restricted common stock and restricted stock units. In December2016, the Company authorized the grant of restricted share units and share appreciation rights. In December 2015, the Company authorized theissuance of shares of restricted common stock, restricted stock units and stock options in accordance with the Company’s stock option plan for itsemployees, officers and directors. These awards of restricted share units, share appreciation rights, restricted common stock, restricted stock units andstock options are based on service conditions only and vest over three and four years. In December 2014, the Company also authorized the issuance ofshares of restricted common stock, restricted stock units and stock options for its employees, officers and directors that vest upon achievement ofcertain internal performance criteria including certain targets on operational performance and cost efficiency. See also Note 12.The fair value of share appreciation rights and stock option grants is determined with reference to option pricing model and principally adjusted Black-Scholes models. The fair value of restricted share units, restricted stock and restricted stock units is determined by reference to the quoted stock priceon the date of grant. Compensation expense, net of estimated forfeitures, is recognized based on a graded expense model over the vesting period.Compensation expense for the awards that vest upon achievement of the performance criteria is recognized when it is probable that the performancecriteria will be met and are being accounted for as equity. (t)Financial Instruments: Financial instruments carried on the balance sheet include cash and cash equivalents, restricted cash, trade receivables andpayables, other receivables and other liabilities, long-term debt, capital leases and available-for-sale securities. The particular recognition methodsapplicable to each class of financial instrument are disclosed in the applicable significant policy description of each item, or included below asapplicable.Financial Risk Management: The Company’s activities expose it to a variety of financial risks including fluctuations in future freight rates, timecharter hire rates, fuel prices and credit and interest rates risk. Risk management is carried out under policies approved by executive management.Guidelines are established for overall risk management, as well as specific areas of operations.Credit Risk: The Company closely monitors its credit exposure to customers and counterparties for credit risk. The Company has policies in place toensure that it trades with customers and counterparties with an appropriate credit history.Interest Rate Risk: Any differential to be paid or received on an interest rate swap agreement is recognized as a component of gain/loss on derivativesover the period of the agreement. Gains and losses on early termination of interest rate swaps are reflected in the consolidated statements ofcomprehensive (loss)/income. The effective portion of changes in the fair value of interest rate swap agreements that are designated and qualify as cashflow hedges are recognized in equity.Liquidity Risk: Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding throughan adequate amount of committed credit facilities and the ability to close out market positions. The Company monitors cash balances appropriately tomeet working capital needs.Foreign Exchange Risk: Foreign currency transactions are translated into the measurement currency at rates prevailing on the dates of the relevanttransactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets andliabilities denominated in foreign currencies are recognized in the consolidated statements of comprehensive (loss)/income.Accounting for Derivative Financial Instruments and Hedging Activities: The Company may enter into dry bulk shipping FFAs as economic hedgesrelating to identifiable ship and/or cargo positions and as economic hedges of transactions the Company expects to carry out in the normal course of itsshipping business. By utilizing certain derivative instruments, including dry bulk shipping FFAs, the Company manages the financial risk associatedwith fluctuating market conditions. The Company records all of its derivative financial instruments and hedges as economic hedges. The Companyclassifies cash flows related to derivative financial instruments within cash provided by operating activities in the consolidated statements of cashflows. F-21Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) (u)(Loss)/Earnings Per Share: Basic (loss)/earnings per share are computed by dividing net (loss)/income attributable to Navios Holdings commonstockholders by the weighted average number of shares of common stock outstanding during the periods presented. Net (loss)/income attributable toNavios Holdings common stockholders is calculated by adding to (if a discount) or deducting from (if a premium) net (loss)/ income attributable toNavios Holdings common stockholders the difference between the fair value of the consideration paid upon redemption and the carrying value of thepreferred stock, including the unamortized issuance costs of the preferred stock, and the amount of any undeclared dividend cancelled. Diluted(loss)/earnings per share reflect the potential dilution that would occur if securities or other contracts to issue common stock were exercised orconverted. Dilution has been computed by the treasury stock method whereby all of the Company’s dilutive securities (stock options and warrants) areassumed to be exercised and the proceeds are used to repurchase common shares at the weighted average market price of the Company’s common stockduring the relevant periods. The incremental shares (the difference between the number of shares assumed issued and the number of shares assumedpurchased) are included in the denominator of the diluted (loss)/earnings per share computation. Restricted share units, restricted stock and restrictedstock units (vested and unvested) are included in the calculation of the diluted (loss)/earnings per share, based on the weighted average number ofrestricted share units, restricted stock and restricted stock units assumed to be outstanding during the period. Convertible shares are included in thecalculation of the diluted (loss)/earnings per share, based on the weighted average number of convertible shares assumed to be outstanding during theperiod. See also Note 19. (v)Income Taxes: The Company is a Marshall Islands Corporation. Pursuant to various treaties and the United States Internal Revenue Code, theCompany believes that substantially all its operations are exempt from income taxes in the Marshall Islands and the United States of America. The taxexpense reflected in the Company’s consolidated financial statements for the years ended December 31, 2017, 2016 and 2015 was mainly attributableto its subsidiaries in South America, which are subject to the Argentinean and Paraguayan income tax regimes.The asset and liability method is used to account for future income taxes. Under this method, future income tax assets and liabilities are recognized forthe estimated future tax consequences attributable to differences between the financial statement carrying amounts and the tax bases of assets andliabilities. Future income tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences areexpected to be recovered or settled. The effect on future income tax assets and liabilities of a change in tax rates is recognized in income in the periodthat includes the enactment date. A deferred tax asset is recognized for temporary differences that will result in deductible amounts in future years. Avaluation allowance is recognized if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred taxasset will not be realized.On December 29, 2017, the Argentine government enacted the Law 27,430 introducing changes to the income tax law in Argentina. The new lawmodifies the rates for income taxes applicable in the next years. In measuring its income tax assets and liabilities, Navios Logistics used the rate that isexpected to be enacted at the time of the reversal of the asset or liability in the calculation of the deferred tax for the items related to Argentina. Anincome tax rate of 30% was applied on temporary differences whose reversal is expected to occur in the years before 2020, and a rate of 25% ontemporary differences remaining thereafter. During the year ended December 31, 2017, the Company has recorded an income tax benefit of $2,837within the caption “Income tax benefit/(expense)” in the consolidated statements of comprehensive (loss)/income related to the change in the rate ofthe income tax. (w)Dividends: Dividends are recorded in the Company’s financial statements in the period in which they are declared. Navios Holdings paid $0, $0 and$19,325 to its common stockholders during the years ended December 31, 2017, 2016 and 2015, respectively, and $0, $3,681 and $16,025 to itspreferred stockholders during the years ended December 31, 2017, 2016 and 2015, respectively. In November 2015, Navios Holdings announced thatthe Board of Directors decided to suspend the dividend to its common stockholders. In February 2016, Navios Holdings announced the suspension ofpayment of quarterly dividends on its preferred stock, including the Series G Cumulative Redeemable Perpetual Preferred Stock (the “Series G”) andSeries H Cumulative Redeemable Perpetual Preferred Stock (the “Series H”). All inter-company dividends are eliminated upon consolidation. (x)Guarantees: A liability for the fair value of an obligation undertaken in issuing the guarantee is recognized. The recognition of fair value is notrequired for certain guarantees such as the parent’s guarantee of a subsidiary’s debt to a third party or guarantees on product warranties. For thoseguarantees excluded from the above guidance requiring the fair value recognition provision of the liability, financial statement disclosures of theirterms are made.On November 15, 2012, the Company agreed to provide Navios Partners with guarantees against counterparty default on certain existing charters (seealso Note 15). (y)Leases: Vessel leases where Navios Holdings is regarded as the lessor are classified as either finance leases or operating leases based on an assessmentof the terms of the lease. F-22Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) For charters classified as finance leases the minimum lease payments are recorded as the gross investment in the lease. The difference between the grossinvestment in the lease and the sum of the present values of the two components of the gross investment is recorded as unearned income which isamortized to income over the lease term as finance lease interest income to produce a constant periodic rate of return on the net investment in the lease.For charters classified as operating leases where Navios Holdings is regarded as the lessor, refer to Note 2(r).For charters classified as operating leases where Navios Holdings is regarded as the lessee, the expense is recognized on a straight line basis over therental periods of such charter agreements. The expense is included under the line item “Time charter, voyage and logistics business expenses”. (z)Treasury Stock: Treasury stock is accounted for using the cost method. Excess of the purchase price of the treasury stock acquired, plus directacquisition costs over its par value is recorded in additional paid-in capital. (aa)Trade Accounts Receivable: The amount shown as accounts receivable, trade, at each balance sheet date, includes receivables from charterers for hire,freight and demurrage billings and FFA counterparties, net of a provision for doubtful accounts. At each balance sheet date, all potentiallyuncollectible accounts are assessed individually for purposes of determining the appropriate provision for doubtful accounts. (ab)Convertible Preferred Stock: The Company’s 2% Mandatorily Convertible Preferred Stock (“Preferred Stock”) is recorded at fair market value on thedate of issuance. The fair market value is determined using a binomial valuation model. The model which is used takes into account the credit spreadof the Company, the volatility of its stock, as well as the price of its stock at the issuance date. Each preferred share has a par value of $0.0001. Eachholder of Preferred Stock is entitled to receive an annual dividend equal to 2.0% on the nominal value of the Preferred Stock, payable quarterly, untilsuch time as the Preferred Stock converts into common stock. Five years after the issuance date, 30.0% of the then-outstanding shares of Preferred Stockshall automatically convert into shares of common stock at a conversion price equal to $10.00 per share of common stock with the remaining balanceof the then-outstanding shares of Preferred Stock being converted into shares of common stock under the same terms 10 years after their issuance date.At any time following the third anniversary from their issuance date, if the closing price of the common stock has been at least $20.00 per share, for 10consecutive business days, the remaining balance of the then-outstanding preferred shares shall automatically convert at a conversion price equal to$14.00 per share of common stock. The holders of Preferred Stock are entitled, at their option, at any time following their issuance date and prior totheir final conversion date, to convert all or any such then-outstanding preferred shares into common stock at a conversion price equal to $14.00 percommon stock. See also Note 16. (ac)Cumulative Redeemable Perpetual Preferred Stock: The Company’s 2,000,000 American Depositary Shares, Series G and the 4,800,000 AmericanDepositary Shares, Series H are recorded at fair market value on issuance. Each of the shares represents 1/100th of a share of the Series G, with aliquidation preference of $2,500.00 per share ($25.00 per American Depositary Share). Dividends are payable quarterly in arrears on the Series G at arate of 8.75% per annum and on the Series H at a rate of 8.625% per annum of the stated liquidation preference. At any time on or after January 28,2019, the Series G may be redeemed at the Company’s option and at any time on or after July 8, 2019, the Series H may be redeemed at the Company’soption (and the American Depositary Shares can be caused to be redeemed), in whole or in part, out of amounts legally available therefore, at aredemption price of $2,500.00 per share (equivalent to $25.00 per American Depositary Share) plus an amount equal to all accumulated and unpaiddividends thereon to the date of redemption, whether or not declared. The Company has accounted for these shares as equity. See also Note 16. (ad)Investment in Available-for-Sale Securities: The Company classifies its existing marketable equity securities as available-for-sale. These securities arecarried at fair value, with unrealized gains and losses excluded from earnings and reported directly in stockholders’ equity as a component of othercomprehensive (loss)/income unless an unrealized loss is considered “other-than-temporary,” in which case it is transferred to the consolidatedstatements of comprehensive (loss)/income. Management evaluates securities for other-than-temporary impairment (“OTTI”) on a 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 and near-termprospects 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 to allowfor any anticipated recovery in fair value.Investment in Equity Securities: Navios Holdings evaluates its investments in Navios Acquisition, Navios Partners, Navios Europe I, Navios Europe IIand Navios Containers for OTTI on a quarterly basis. Consideration is given to (i) the length of time and the extent to which the fair value has been lessthan the carrying value, (ii) the financial condition and near-term prospects of Navios Partners, Navios Acquisition, Navios Europe I, Navios Europe IIand Navios Containers, and (iii) the intent and ability of the Company to retain its investment in Navios Acquisition, Navios Partners, Navios Europe I,Navios Europe II and Navios Containers, for a period of time sufficient to allow for any anticipated recovery in fair value. If we consider any decline tobe “other-than-temporary”, then we would write down the carrying amount of the investment to its estimated fair value. F-23Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) (ae)Financial Instruments and Fair Value: Guidance on Fair Value Measurements provides a fair value hierarchy that prioritizes the inputs to valuationtechniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets orliabilities (Level I measurements) and the lowest priority to unobservable inputs (Level III measurements).A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.In determining the appropriate levels, the Company performs a detailed analysis of the assets and liabilities that are subject to guidance on Fair ValueMeasurements. (af)Recent Accounting Pronouncements:In May 2017, the Financial Accounting Standards Board (“FASB”) issued ASU 2017-09, “Compensation — Stock Compensation (Topic 718)”. Thisupdate provides clarity and reduces both diversity in practice and cost and complexity when applying the guidance in Topic 718 to a change to theterms or conditions of a share-based payment award. The amendments in this update affect any entity that changes the terms or conditions of a share-based payment award and are effective for all entities for annual periods, and interim periods within those annual periods, beginning afterDecember 15, 2017. Early adoption is permitted, including adoption in any interim period, for public business entities for reporting periods for whichfinancial statements have not yet been issued and all other entities for reporting periods for which financial statements have not yet been madeavailable for issuance. The amendments in this update should be applied prospectively to an award modified on or after the adoption date. Theadoption of this new accounting standard is not expected to have material impact on the Company’s results of operations, financial position or cashflows.In February 2017, FASB issued ASU 2017-05, “Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20)”.This update clarifies the scope of Subtopic 610-20 “Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets” and providesguidance for partial sales of nonfinancial assets. Subtopic 610-20, which was issued in May 2014 as a part of ASU 2014-09, “Revenue from Contractswith Customers (Topic 606)”, provides guidance for recognizing gains and losses from the transfer of nonfinancial assets in contracts withnoncustomers. The amendments in ASU 2017-05 are effective at the same time as the amendments in ASU 2014-09. Therefore, for public entities, theamendments are effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reportingperiod. The adoption of this new standard is not expected to have material impact on the Company’s results of operations, financial position or cashflows.In January 2017, FASB issued ASU 2017-04, “Intangibles-Goodwill and Other (Topic 350)”. This update addresses concern expressed about the costand complexity of the goodwill impairment test and simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from thegoodwill impairment test. The amendments in this ASU are required for public business entities and other entities that have goodwill reported in theirfinancial statements and have not elected the private company alternative for the subsequent measurement of goodwill. The amendments are effectivefor public business entities that are SEC filers for fiscal years beginning after December 15, 2019. Early adoption is permitted for all entities. TheCompany is currently assessing the impact that adopting this new accounting guidance will have on its consolidated financial statements.In January 2017, FASB issued ASU 2017-03, “Accounting Changes and Error Corrections (Topic 250) and Investments-Equity Method and JointVentures (Topic 323)”. The ASU amends the Codification for SEC staff announcements made at recent Emerging Issues Task Force (EITF) meetings.The SEC guidance that specifically relates to our consolidated financial statement was from the September 2016 meeting, where the SEC staffexpressed their expectations about the extent of disclosures registrants should make about the effects of the new FASB guidance as well as anyamendments issued prior to adoption, on revenue (ASU 2014-09), leases (ASU 2016-02) and credit losses on financial instruments (ASU 2016-13) inaccordance with SAB Topic 11.M. Registrants are required to disclose the effect that recently issued accounting standards will have on their financialstatements when adopted in a future period. In cases where a registrant cannot reasonably estimate the impact of the adoption, then additionalqualitative disclosures should be considered. The ASU incorporates these SEC staff views into ASC 250 and adds references to that guidance in thetransition paragraphs of each of the three new standards. The adoption of this ASU did not have a material effect on the Company’s consolidatedfinancial statements.In December 2016, FASB issued ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers”. Theamendments in this ASU affect narrow aspects of the guidance issued in ASU 2014-09, which is not yet effective, and are of a similar nature to the itemstypically addressed in the Technical Corrections and Improvements project. The effective date and transition requirements for the amendments are thesame as the effective date and transition requirements for Topic 606 (and any other Topic amended by Update 2014-09). ASU 2015-14, “Revenue fromContracts with Customers (Topic 606): Deferral of the Effective Date”, defers the effective date of Update 2014-09 by one year, as noted below. F-24Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) In November 2016, FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash”. This update addresses the classification andpresentation of changes in restricted cash on the statement of cash flows under Topic 230, Statement of Cash Flows. The amendments are effective forpublic business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Retrospective transitionmethod is required. Early adoption is permitted for all entities. The Company currently presents changes in restricted cash and cash equivalentsdepending on the nature of the cash flow within the consolidated statement of cash flows. The new guidance will not impact financial results, but willresult in a change in the presentation of restricted cash and cash equivalents within the statement of cash flows. The Company currently plans to adoptthis guidance from January 1, 2018.In August 2016, FASB issued ASU 2016-15, “Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments”. This updateaddresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The amendments are effective for publicbusiness entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. This update will be adopted as fromJanuary 1, 2018 and applied on a retrospective basis. The Company has assessed each of the eight specific presentation issues and determined that theadoption of this ASU does not have a material impact on the Company’s consolidated financial statements.In June 2016, FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on FinancialInstruments.” This standard requires entities to measure all expected credit losses of financial assets held at a reporting date based on historicalexperience, current conditions, and reasonable and supportable forecasts in order to record credit losses in a more timely matter. ASU 2016-13 alsoamends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The standard iseffective for interim and annual reporting periods beginning after December 15, 2019, although early adoption is permitted for interim and annualperiods beginning after December 15, 2018. The Company is currently assessing the impact that adopting this new accounting guidance will have onits consolidated financial statements.In February 2016, FASB issued ASU 2016-02, “Leases (Topic 842)”. ASU 2016-02 will apply to both capital (or finance) leases and operating leases.According to ASU 2016-02, lessees will be required to recognize assets (right of use asset) and liabilities (lease liabilities) on the balance sheet for bothtypes of leases, capital (or finance) leases and operating leases, with terms greater than 12 months. ASU 2016 – 02 is effective for fiscal years beginningafter December 15, 2018, including interim periods within those fiscal years. Early application is permitted.This guidance requires companies to identify lease and non-lease components of a lease agreement. Lease components relate to the right to use theleased asset and non-lease components relate to payments for goods or services that are transferred separately from the right to use the underlying asset.Total lease consideration is allocated to lease and non-lease components on a relative standalone basis. The recognition of revenues related to leasecomponents will be governed by ASC 842 while revenue related to non-lease components will be subject to ASC 606.In January 2018, the FASB issued a proposed amendment to ASC 842, Leases, that would provide an entity the optional transition method to initiallyaccount for the impact of the adoption with a cumulative adjustment to accumulated deficit on the effective date of the ASU, January 1, 2019 ratherthan January 1, 2017, which would eliminate the need to restate amounts presented prior to January 1, 2019. In addition, this proposed amendment,lessors can elect, as a practical expedient, not to allocate the total consideration to lease and non-lease components based on their relative standaloneselling prices. If adopted, this practical expedient will allow lessors to elect a combined single lease component presentation if (i) the timing andpattern of the revenue recognition of the combined single lease component is the same, and (ii) the related lease component and, the combined singlelease component would be classified as an operating lease.ASC 842 provides practical expedients that allow entities to not (i) reassess whether any expired or existing contracts are considered or contain leases;(ii) reassess the lease classification for any expired or existing leases; and (iii) reassess initial direct costs for any existing leases.The Company plans to adopt the standard on January 1, 2019 and expects to elect the use of practical expedients. If the proposed amendment to ASC842 is adopted, the Company would elect the transition method for adoption as described above. Based on a preliminary assessment, the Companyexpects the adoption of this guidance to have a material impact on its assets and liabilities due to its charter-in contracts and the recognition ofright-of-use assets and lease liabilities on its consolidated balance sheets although adoption is not expected to significantly change the recognition,measurement or presentation of lease expenses within the statements of comprehensive (loss)/income or cash flows.With regards to the Company’s charter-out contracts, the Company is not expecting that the adoption will have a material effect on its consolidatedfinancial statements since the Company is a lessor for these charter-out contracts and the changes are fairly minor. If the proposed practical expedientmentioned above is adopted and elected, good and services embedded in the charter-out contract that qualify as non-lease components will becombined under a single lease component presentation. However, without the proposed practical expedient, the Company expects that it will continueto recognize the lease revenue component F-25Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) using an approach that is substantially equivalent to existing guidance. The components of the charter hire that are categorized as lease componentswill generally be a fixed rate per day with revenue recognized straight line over the lease contract. Other goods and services that are categorized asnon-lease components will be recognized at either a point in time or over time based on the pattern of transfer of the underlying goods or services toour charterers.The Company is continuing its assessment of other miscellaneous leases, which have lease terms greater than 12 months and the Company is the lesseeand may identify additional impacts this guidance will have on the consolidated financial statements and disclosures.In January 2016, FASB issued ASU 2016-01, “Financial Instruments—Overall (Subtopic 825-10)—Recognition and Measurement of Financial Assetsand Financial Liabilities”. The amendments in this ASU require an entity (i) to measure equity investments (except those accounted for under theequity method of accounting or those that result in consolidation of the investee) at fair value with changes in fair value recognized in net income;(ii) to perform a qualitative assessment to identify impairment in equity investments without readily determinable fair values; (iii) to present separatelyin other comprehensive income the fair value of a liability resulting from a change in the instrument-specific credit risk; and (iv) to present separatelyfinancial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balancesheet. The amendments also eliminate the requirement, for public business entities, to disclose the methods and significant assumptions used toestimate the fair value of financial instruments measured at amortized cost on the balance sheet and clarify that an entity should evaluate the need for avaluation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. For publicbusiness entities, ASU 2016-01 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Theadoption of this new standard is not expected to have a material impact on the Company’s results of operations, financial position or cash flows.In May 2014, FASB issued ASU 2014-09, “Revenue from Contracts with Customers”, clarifying 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 acontract, the transaction price and allocate the price to specific performance obligations to recognize the revenue when the obligation is completed.The amendments in this update also require disclosure of sufficient information to allow users to understand the nature, amount, timing and uncertaintyof revenue and cash flow arising from contracts. In August 2015, the FASB issued ASU 2015-14 which deferred the effective date of ASU 2014-09 forall entities by one year. The standard will be effective for public entities for annual reporting periods beginning after December 15, 2017 and interimperiods therein. The Company will adopt the standard as of January 1, 2018 and will utilize the modified retrospective approach and is expecting thatthe adoption will not have a material effect on its financial statements. The Company has chartered certain of its vessels since inception in time charteragreements and in this respect revenue is accounted under ASC 840, Leases. The Company also operates certain of its vessels under voyage contractsand/or contracts of affreightment, contracts for which currently revenue is recognized ratably from when a vessel becomes available for loading to thecompletion of the discharge of the current cargo, provided an agreed non-cancelable charter between the Company and the charterer is in existence.Upon adoption, the Company will recognize revenue ratably from the vessel’s arrival at the loading port, as applicable under the contract, to when thecharterer’s cargo is discharged as well as defer costs that meet the definition of “costs to fulfill a contract” and relate directly to the contract. Theestimated impact of the adoption of this standard is expected to be minimal in operating revenues and expenses and net income/(loss).NOTE 3: CASH AND CASH EQUIVALENTSCash and cash equivalents consisted of the following: December 31,2017 December 31,2016 Cash on hand and at banks $127,625 $126,584 Short-term deposits and highly liquid funds 7 9,408 Cash and cash equivalents $127,632 $135,992 Short-term deposits and highly liquid funds relate to amounts held in banks for general financing purposes and represent deposits with anoriginal maturity of less than three months.Cash deposits and cash equivalents in excess of amounts covered by government-provided insurance are exposed to loss in the event ofnon-performance by financial institutions. Navios Holdings does maintain cash deposits and equivalents in excess of government provided insurance limits.Navios Holdings reduces exposure to credit risk by dealing with a diversified group of major financial institutions. F-26Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) NOTE 4: ACCOUNTS RECEIVABLE, NETAccounts receivable consisted of the following: December 31,2017 December 31,2016 Accounts receivable $80,037 $85,266 Less: provision for doubtful receivables (19,706) (19,437) Accounts receivable, net $60,331 $65,829 Changes to the provisions for doubtful accounts are summarized as follows: Allowance for doubtful receivables Balance atBeginning ofPeriod Charges toCosts andExpenses AmountUtilized BalanceatEnd ofPeriod Year ended December 31, 2015 $(18,464) $(59) $245 $(18,278) Year ended December 31, 2016 $(18,278) $(1,304) $145 $(19,437) Year ended December 31, 2017 $(19,437) $(269) $— $(19,706) Concentration of credit risk with respect to accounts receivable is limited due to the Company’s large number of customers, who areinternationally dispersed and have a variety of end markets in which they sell. Due to these factors, management believes that no additional credit riskbeyond amounts provided for collection losses is inherent in the Company’s trade receivables. For the year ended December 31, 2017, no customersaccounted for more than 10% of the Company’s revenue. For the year ended December 31, 2016, two customers accounted for 14.7% and 13.1%,respectively, of the Company’s revenue. For the year ended December 31, 2015, one customer accounted for 15.1% of the Company’s revenue being thecustomer who accounted for 14.7% in the year ended December 31, 2016.NOTE 5: PREPAID EXPENSES AND OTHER CURRENT ASSETSPrepaid expenses and other current assets consisted of the following: December 31,2017 December 31,2016 Prepaid voyage and operating costs $8,022 $8,352 Claims receivable 12,307 9,822 Prepaid other taxes 4,520 4,279 Advances for working capital purposes 18 4,486 Other 2,516 1,957 Total prepaid expenses and other current assets $27,383 $28,896 Claims receivable mainly represents claims against vessels’ insurance underwriters in respect of damages arising from accidents or other insuredrisks, as well as claims under charter contracts including off-hires. While it is anticipated that claims receivable will be recovered within one year, such claimsmay not all be recovered within one year due to the attendant process of settlement. Nonetheless, amounts are classified as current as they represent amountscurrently due to the Company. All amounts are shown net of applicable deductibles. F-27Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) NOTE 6: VESSELS, PORT TERMINALS AND OTHER FIXED ASSETS, NET Vessels Cost AccumulatedDepreciation Net BookValue Balance December 31, 2014 $1,841,140 $(376,794) $1,464,346 Additions — (70,894) (70,894) Balance December 31, 2015 1,841,140 (447,688) 1,393,452 Additions 60,115 (73,847) (13,732) Transfers 29,695 — 29,695 Balance December 31, 2016 1,930,950 (521,535) 1,409,415 Additions — (73,017) (73,017) Impairment losses (104,157) 58,034 (46,123) Disposals (11,828) — (11,828) Balance December 31, 2017 $1,814,965 $(536,518) $1,278,447 Port Terminals (Navios Logistics) Cost AccumulatedDepreciation Net BookValue Balance December 31, 2014 $106,399 $(20,467) $85,932 Additions 2,287 (3,431) (1,144) Balance December 31, 2015 108,686 (23,898) 84,788 Additions 2,051 (3,493) (1,442) Transfers (1,513) — (1,513) Balance December 31, 2016 109,224 (27,391) 81,833 Additions 5,060 (5,237) (177) Transfers from deposits for vessels, port terminals and other fixed assets 137,357 — 137,357 Balance December 31, 2017 $251,641 $(32,628) $219,013 Tanker vessels, barges and pushboats (Navios Logistics) Cost AccumulatedDepreciation Net BookValue Balance December 31, 2014 $464,966 $(111,137) $353,829 Additions 6,188 (20,007) (13,819) Restructure of capital lease (210) — (210) Balance December 31, 2015 470,944 (131,144) 339,800 Additions 738 (18,894) (18,156) Transfers 3,696 — 3,696 Balance December 31, 2016 475,378 (150,038) 325,340 Additions 5,531 (17,603) (12,072) Disposals (3,585) 3,585 — Revaluation of vessels due to termination of capital lease obligation (5,243) — (5,243) Balance December 31, 2017 $472,081 $(164,056) $308,025 F-28Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Other fixed assets Cost AccumulatedDepreciation Net BookValue Balance December 31, 2014 $13,426 $(6,390) $7,036 Additions 443 (1,558) (1,115) Balance December 31, 2015 13,869 (7,948) 5,921 Additions 2,250 (1,475) 775 Transfers (2,183) — (2,183) Balance December 31, 2016 13,936 (9,423) 4,513 Additions 531 (1,257) (726) Disposals (75) 28 (47) Write offs (32) 32 — Balance December 31, 2017 $14,360 $(10,620) $3,740 Total Cost AccumulatedDepreciation Net BookValue Balance December 31, 2014 $2,425,931 $(514,788) $1,911,143 Additions 8,918 (95,890) (86,972) Restructure of capital lease (210) — (210) Balance December 31, 2015 2,434,639 (610,678) 1,823,961 Additions 65,154 (97,709) (32,555) Transfers 29,695 — 29,695 Balance December 31, 2016 2,529,488 (708,387) 1,821,101 Additions 11,122 (97,114) (85,992) Impairment losses (104,157) 58,034 (46,123) Disposals (15,488) 3,613 (11,875) Write offs (32) 32 — Revaluation of vessels due to termination of capital lease obligation (5,243) — (5,243) Transfers from deposits for vessels, port terminals and other fixed assets 137,357 — 137,357 Balance December 31, 2017 $2,553,047 $(743,822) $1,809,225 Deposits for Vessels and Port Terminals AcquisitionsOn February 11, 2014, Navios Logistics entered into an agreement, as amended on June 3, 2016, for the construction of three new pushboats witha purchase price of $7,344 for each pushboat. As of December 31, 2017 and December 31, 2016, Navios Logistics had paid $30,708 and $16,156,respectively, for the construction of the new pushboats which were delivered in February 2018. Capitalized interest included in deposits for vessels, portterminals and other fixed assets for the construction of the three new pushboats amounted to $3,384 and $1,934 as of December 31, 2017 and December 31,2016, respectively.Navios Logistics has signed a shipbuilding contract for the construction of a river and estuary tanker for a total consideration of $14,854(€12,400). As of December 31, 2017, Navios Logistics had paid $6,141 (including supervision costs). Capitalized interest included in deposits for vessels,port terminals and other fixed assets for the construction of the vessel amounted to $205 as of December 31, 2017. The vessel is expected to be delivered inthe second quarter of 2018. Navios Logistics has secured a credit from the shipbuilder to finance up to 50% of the purchase price, with a maximum amount of$7,427 (€6,200).During the second quarter of 2017, Navios Logistics substantially completed the expansion of its dry port in Uruguay. As of December 31, 2017,a total of $137,357 had been transferred to “Vessels, port terminals and other fixed assets, net” in the consolidated balance sheets of which capitalizedinterest amounted to $9,971. As of December 31, 2016, Navios Logistics had paid $120,735 for the expansion of its dry port in Uruguay. Capitalized interestincluded in deposits for vessels, port terminals and other fixed assets for the expansion of dry port amounted to $6,862 as of December 31, 2016. F-29Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Impairment lossesDuring year ended December 31, 2017, Navios Holdings recorded an impairment loss of $32,930 for one of its vessels.On June 16, 2017, Navios Holdings completed the sale to an unrelated third party of the Navios Ionian, a 2000 built Japanese dry bulk vessel of52,067 dwt, for a total net sale price of $5,280 paid in cash. As of December 31, 2017, Navios Holdings total impairment loss recognized due to the saleamounted to $9,098 (including $551 remaining carrying balance of dry dock and special survey costs).On July 13, 2017 Navios Holdings completed the sale to an unrelated third party of the Navios Horizon, a 2001 built Japanese dry bulk vessel of50,346 dwt, for a total net sale price of $6,548 paid in cash. As of December 31, 2017, Navios Holdings total impairment loss recognized due to the saleamounted to $5,141 (including $495 remaining carrying balance of dry dock and special survey costs).Vessel AcquisitionsOn January 12, 2016, Navios Holdings took delivery of the Navios Sphera, a 2016-Japanese built 84,872 dwt Panamax vessel, and Navios Mars,a 2016-Japanese built 181,259 dwt Capesize vessel, for an acquisition cost of $34,352 and $55,458, respectively, of which $49,910 was paid in cash and$39,900 was financed through a loan. As of March 31, 2016, deposits of $29,695, relating to the acquisition of Navios Sphera and Navios Mars, had beentransferred to vessels’ cost.Navios LogisticsOn September 4, 2017, Navios Logistics has signed an agreement for the construction of covers for dry barges for a total consideration of $1,115.As of December 31, 2017, Navios Logistics had paid $629.On May 18, 2017, Navios Logistics acquired two product tankers, Ferni H (16,871 DWT) and San San H (16,871 DWT) for $11,239 which werepreviously leased with an obligation to purchase in 2020. Following the acquisition of the two product tankers, the remaining capital lease obligation wasterminated and the carrying value of the tankers was adjusted for the difference between the purchase price and the carrying value. As of December 31, 2016,the obligations for these vessels were accounted for as capital leases and the lease payments during the year ended December 31, 2016 for both vessels were$3,032.In February 2017, two fully depreciated self-propelled barges of Navios Logistics’ fleet, Formosa and San Lorenzo, were sold for a total amountof $1,109, to be paid in cash. Sale prices for the barges will be received in installments in the form of lease payments through 2023. The barges may betransferred at the lessee’s option at no cost at the end of the lease period. As of December 31, 2017, the current portion of the outstanding receivableamounted to $318 and is included in “Prepaid expenses and other current assets” and the non-current portion of the outstanding receivable amounted to$500 and is included in “Other long-term assets” in the consolidated balance sheet. Gain on sale of assets of $1,075 was included in the statement ofcomprehensive (loss)/income within the caption of “Gain on sale of assets”.NOTE 7: INTANGIBLE ASSETS/LIABILITIES OTHER THAN GOODWILLNet Book Value of Intangible Assets/Liabilities other than Goodwill as at December 31, 2017 AcquisitionCost AccumulatedAmortization Writeoff Net Book ValueDecember 31,2017 Trade name $100,420 $(45,156) $— $55,264 Port terminal operating rights 53,152 (10,889) — 42,263 Customer relationships 35,490 (17,745) — 17,745 Favorable lease terms(*) 11,548 — (10,398) 1,150 Total Intangible assets $200,610 $(73,790) $(10,398) $116,422 F-30Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Net Book Value of Intangible Assets/Liabilities other than Goodwill as at December 31, 2016 AcquisitionCost AccumulatedAmortization Writeoff Net Book ValueDecember 31,2016 Trade name $100,420 $(41,303) $— $59,117 Port terminal operating rights 53,152 (10,162) — 42,990 Customer relationships 35,490 (15,971) — 19,519 Favorable lease terms(*) 82,485 (6,359) (70,937) 5,189 Total Intangible assets 271,547 (73,795) (70,937) 126,815 Unfavorable lease terms(**) (24,721) — 24,721 — Total $246,826 $(73,795) $(46,216) $126,815 (*)As of December 31, 2017 and 2016, intangible assets associated with the favorable lease terms included an amount of $1,150 and $1,180, respectivelyrelated to purchase options for the vessels (see also Note 2(n)). During the year ended December 31, 2017, acquisition costs of $10,398 andaccumulated amortization of $7,001 of favorable lease terms considered impaired and were written off resulting in a loss of $3,397. During the yearended December 31, 2016, acquisition costs of $70,937 and accumulated amortization of $57,930 of favorable lease terms were written off resulting ina loss of $13,007. This write-off resulted from the early redelivery of one vessel.(**)As of December 31, 2016, the intangible liability associated with the unfavorable lease terms included an amount of $0, related to purchase optionsheld by third parties (see also Note 2(n)). During the year ended December 31, 2016, acquisition costs of $24,721 and accumulated amortization of$17,406 of unfavorable lease terms were written off resulting in an income of $7,315. This write-off resulted from the early redelivery of one vessel. Asof December 31, 2016, no purchase options held by third parties have been exercised.On December 15, 2014, Navios Logistics acquired two companies for a total consideration of $17,000, of which $10,200 was paid in 2014 and $6,800was paid in 2015. These companies, as free zone direct users, hold the right to occupy approximately 53 acres of undeveloped riverfront land located in theNueva Palmira free zone in Uruguay, adjacent to Navios Logistics’ existing port. AmortizationExpense andWrite OffsYear EndedDecember 31,2017 AmortizationExpense andWrite OffsYear EndedDecember 31,2016 AmortizationExpense andWrite OffsYear EndedDecember 31,2015 Trade name $3,853 $3,902 $3,811 Port terminal operating rights 727 706 1,006 Customer relationships 1,775 1,775 1,775 Favorable lease terms 4,038 17,260 32,444 Unfavorable lease terms — (7,526) (14,615) Total $10,393 $16,117 $24,420 The remaining aggregate amortization of acquired intangibles as of December 31, 2017 was as follows: Description Within oneyear Year Two Year Three Year Four Year Five Thereafter Total Trade name $2,811 $2,811 $2,818 $2,811 $2,811 $41,202 $55,264 Port terminal operating rights 985 985 985 985 985 37,338 42,263 Customer relationships 1,775 1,775 1,775 1,775 1,775 8,870 17,745 Total amortization $5,571 $5,571 $5,578 $5,571 $5,571 $87,410 $115,272 F-31Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) NOTE 8: INVESTMENTS IN AFFILIATES AND INVESTMENTS IN AVAILABLE –FOR-SALE SECURITIESNavios PartnersOn August 7, 2007, Navios Holdings formed Navios Partners under the laws of Marshall Islands. Navios GP L.L.C. (the “General Partner”), awholly owned subsidiary of Navios Holdings, was also formed on that date to act as the general partner of Navios Partners and received a 2.0% generalpartner interest.In February 2015, Navios Partners completed a public offering of 4,600,000 common units, raising gross proceeds of $60,214. Following thistransaction, Navios Holdings paid $1,229 to retain its 2.0% general partner interest. In addition, Navios Partners completed a private placement of 1,120,547common units and 22,868 general partner units to Navios Holdings raising additional gross proceeds of $14,967.On March 17, 2017, Navios Holdings transferred to Navios Partners its participation in the Navios Revolving Loans I and the Navios Term LoansI, both as defined herein, and relating to Navios Europe I, for a consideration of $33,473, comprised of $4,050 in cash and 13,076,923 newly issued commonunits of Navios Partners with a fair value of $29,423 (based on Navios Partners’ trading price as of the closing of the transaction). Concurrently, NaviosHoldings acquired 266,876 common units in Navios Partners in order to maintain its 2% general partner interest for a cash consideration of $468. See alsoNote 15.On March 20, 2017, Navios Partners announced that it has closed an offering of 47,795,000 common units at $2.10 per common unit. NaviosHoldings acquired 975,408 common units in Navios Partners in order to maintain its 2% general partner interest for a cash consideration of $2,048.During the first quarter of 2017, Navios Partners also issued 2,040,000 of common units to certain Navios Partners’ directors and/or officers, and1,200,442 common units pursuant to Navios Partners’ Continuous Offering Program Sales Agreement. Concurrently, Navios Holdings acquired 66,131common units in Navios Partners in order to maintain its 2% general partner interest for a cash consideration of $110.In September 2017, Navios Holdings acquired 7,376 common units in Navios Partners in order to maintain its 2% general partner interest for acash consideration of $12.As of December 31, 2017, Navios Holdings held a total of 28,421,233 common units and 3,016,284 general partners units, representing a 20.8%interest in Navios Partners, including the 2.0% general partner interest, and the entire investment in Navios Partners is accounted for under the equity method.As of December 31, 2017 and 2016, the unamortized difference between the carrying amount of the investment in Navios Partners and theamount of the Company’s underlying equity in net assets of Navios Partners was $98,608 and $112,417, respectively, and is amortized through“Equity/(loss) in net earnings of affiliated companies” over the remaining life of Navios Partners’ tangible and intangible assets.As of December 31, 2017 and 2016, the carrying amount of the investment in Navios Partners was $66,773 and $24,033, respectively. During theyear ended December 31, 2016, the Company recognized an OTTI loss of $83,596 relating to its investment in Navios Partners and the amount was includedin “Equity/(loss) in net earnings of affiliated companies”.Total pre-OTTI equity method income/(loss) and amortization of deferred gain of $12,570, $(5,979) and $15,462 were recognized in“Equity/(loss) in net earnings of affiliated companies” for the years ended December 31, 2017, 2016 and 2015, respectively.Dividends received during the year ended December 31, 2017, 2016 and 2015 were $0, $0 and $27,993, respectively.As of December 31, 2017, the market value of the investment in Navios Partners was $74,193.AcropolisNavios Holdings has a 50% interest in Acropolis, a brokerage firm for freight and shipping charters. Although Navios Holdings owns 50% ofAcropolis’ stock, Navios Holdings agreed with the other shareholder that the earnings and amounts declared by way of dividends will be allocated 35% tothe Company with the balance to the other shareholder. As of December 31, 2017 and 2016, the carrying amount of the investment was $228 and $105,respectively. Dividends received for each of the years ended December 31, 2017, 2016 and 2015 were $55, $85 and $454, respectively. F-32Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Navios AcquisitionAs of December 31, 2017, Navios Holdings had a 42.9% voting and a 46.2% economic interest in Navios Acquisition.As of December 31, 2017 and 2016, the unamortized difference between the carrying amount of the investment in Navios Acquisition and theamount of the Company’s underlying equity in net assets of Navios Acquisition was $113,597 and $140,131, respectively, and is amortized through“Equity/(loss) in net earnings of affiliated companies” over the remaining life of Navios Acquisition tangible and intangible assets.As of December 31, 2017 and 2016, the carrying amount of the investment in Navios Acquisition was $99,590 and $124,062, respectively.During the year ended December 31, 2016, the Company recognized an OTTI loss of $144,430 relating to its investment in Navios Acquisition and theamount was included in “Equity /(loss) in net earnings of affiliated companies”.Total pre-OTTI equity method (loss)/income of $(9,875), $29,801 and $43,299 were recognized in “Equity/(loss) in net earnings of affiliatedcompanies” for the years ended December 31, 2017, 2016 and 2015, respectively.Dividends received for each of the years ended December 31, 2017, 2016 and 2015 were $14,595, $14,595 and $18,244, respectively.As of December 31, 2017, the market value of the investment in Navios Acquisition was $81,005.Navios Europe IOn December 18, 2013, Navios Europe I acquired ten vessels for aggregate consideration consisting of (i) cash (which was funded with theproceeds of senior loan facilities (the “Senior Loans I”) and loans aggregating to $10,000 from Navios Holdings, Navios Acquisition and Navios Partners (ineach case, in proportion to their economic interests in Navios Europe I) (collectively, the “Navios Term Loans I”) and (ii) the assumption of a juniorparticipating loan facility (the “Junior Loan I”). In addition to the Navios Term Loans I, Navios Holdings, Navios Acquisition and Navios Partners will alsomake available to Navios Europe I revolving loans up to $24,100 to fund working capital requirements (collectively, the “Navios Revolving Loans I”). TheNavios Term Loans I will be repaid from the future sale of vessels owned by Navios Europe I.On an ongoing basis, Navios Europe I is required to distribute cash flows (after payment of operating expenses and amounts due pursuant to theterms of the Senior Loans I) according to a defined waterfall calculation.Navios Holdings evaluated its investment in Navios Europe I under ASC 810 and concluded that Navios Europe I is a VIE and that it is not theparty most closely associated with Navios Europe I and, accordingly, is not the primary beneficiary of Navios Europe I.Navios Holdings further evaluated its investment in the common stock of Navios Europe I under ASC 323 and concluded that it has the abilityto exercise significant influence over the operating and financial policies of Navios Europe I and, therefore, its investment in Navios Europe I is accountedfor under the equity method.The initial amount provided for in Navios Europe I of $4,750 at the inception included the Company’s share of the basis difference between thefair value and the underlying book value of the assets of Navios Europe I, which amounted to $6,763. This difference is amortized through “Equity/(loss) innet earnings of affiliated companies” over the remaining life of Navios Europe I. As of December 31, 2017 and December 31, 2016, the unamortized basisdifference of Navios Europe I was $4,034, and $4,710, respectively.As of December 31, 2017 and 2016, the estimated maximum potential loss by Navios Holdings in Navios Europe I would have been $23,838 and$18,268, respectively, which represents the Company’s carrying value of its investment and balance of Navios Term Loans I of $7,924 and $8,198,respectively, including accrued interest, plus the Company’s balance of the Navios Revolving Loans I of $15,914 and $10,070, respectively, includingaccrued interest, and does not include the undrawn portion of the Navios Revolving Loans I.(Loss)/Income of $(1,089), $1,303 and $1,293 was recognized in “Equity/(loss) in net earnings of affiliated companies” for the years endedDecember 31, 2017, 2016 and 2015, respectively. F-33Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) As of December 31, 2017 and 2016, the carrying amount of the investment in Navios Europe I was $4,750 and $5,967, respectively.Navios Europe IIOn February 18, 2015, Navios Holdings, Navios Acquisition and Navios Partners established Navios Europe II. From June 8, 2015 throughDecember 31, 2015, Navios Europe II acquired 14 vessels for aggregate consideration consisting of: (i) cash (which was funded with the proceeds of a seniorloan facility (the “Senior Loans II”) and loans aggregating to $14,000 from Navios Holdings, Navios Acquisition and Navios Partners (in each case, inproportion to their economic interests in Navios Europe II) (collectively, the “Navios Term Loans II”) and (ii) the assumption of a junior participating loanfacility (the “Junior Loan II”). In addition to the Navios Term Loans II, Navios Holdings, Navios Acquisition and Navios Partners will also make available toNavios Europe II revolving loans up to $43,500 to fund working capital requirements (collectively, the “Navios Revolving Loans II”). The Navios TermLoans II will be repaid from the future sale of vessels owned by Navios Europe II. In March 2017, the amount of the Navios Revolving Loans II increased by$14,000.On an ongoing basis, Navios Europe II is required to distribute cash flows (after payment of operating expenses, amounts due pursuant to theterms of the Senior Loans II) according to a defined waterfall calculation.Navios Holdings evaluated its investment in Navios Europe II under ASC 810 and concluded that Navios Europe II is a VIE and that it is not theparty most closely associated with Navios Europe II and, accordingly, is not the primary beneficiary of Navios Europe II.Navios Holdings further evaluated its investment in the common stock of Navios Europe II under ASC 323 and concluded that it has the abilityto exercise significant influence over the operating and financial policies of Navios Europe II and, therefore, its investment in Navios Europe II is accountedfor under the equity method.The initial amount provided for in Navios Europe II of $6,650, at the inception included the Company’s share of the basis difference between thefair value and the underlying book value of the assets of Navios Europe II, which amounted to $9,419. This difference is amortized through “Equity/(loss) innet earnings of affiliated companies” over the remaining life of Navios Europe II. As of December 31, 2017 and December 31, 2016, the unamortized basisdifference of Navios Europe II was $7,011 and $7,953, respectively.As of December 31, 2017 and 2016, the estimated maximum potential loss by Navios Holdings in Navios Europe II would have been $22,463and $22,287, respectively, which represents the Company’s carrying value of its investment and balance of Navios Term Loans II of $10,400 and $7,944,respectively, plus the Company’s balance of the Navios Revolving Loans II of $12,063 and $14,343, respectively, including accrued interest, and does notinclude the undrawn portion of the Navios Revolving Loans II.Income/(loss)of $2,456 and $(14) was recognized in “Equity/(loss) in net earnings of affiliated companies” for the years ended December 31,2017 and 2016, respectively.As of December 31, 2017 and December 31, 2016, the carrying amount of the investment in Navios Europe II was $6,650 and $5,894,respectively.Navios ContainersOn June 8, 2017, Navios Containers closed a private placement of 10,057,645 shares of its common stock at a subscription price of $5.00 pershare resulting in gross proceeds of $50,288. Navios Holdings invested $5,000, and Navios Partners invested $30,000 in Navios Containers. Each of NaviosHoldings and Navios Partners also received warrants for the purchase of an additional 1.7% and 6.8%, respectively, of the equity of Navios Containers. Thewarrants can be exercised for shares of common stock of Navios Containers at the holder’s option at an exercise price of $5.00 per share. The warrants have afive year-term, which may be reduced to an earlier expiration date in the event of conversion of Navios Containers into a partnership.As of December 31, 2017, and following Navios Containers’ private placements in August and November 2017, Navios Holdings owned 3.4% inNavios Containers and warrants, for the purchase of an additional 1.7% of the equity of Navios Containers. F-34Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Navios Holdings evaluated its investment in the common stock of Navios Containers under ASC 323 and concluded that it has the ability toexercise significant influence over the operating and financial policies of Navios Containers and, therefore, its investment in Navios Containers is accountedfor under the equity method.Total equity method income of $161 was recognized in “Equity/(loss) in net earnings of affiliated companies” for the year ended December 31,2017.As of December 31, 2017, the carrying amount of the investment in Navios Containers was $5,161. As of December 31, 2017, the market value ofthe investment in Navios Containers was $5,581.Following the results of the significant tests performed by the Company, it was concluded that one affiliate met the significant threshold requiringsummarized financial information of all affiliated companies being presented.Summarized financial information of the affiliated companies is presented below: December 31, 2017 December 31, 2016 Balance Sheet Navios Partners Navios Europe I Navios Europe II NaviosContainers Navios Partners Navios Europe I NaviosEurope II Cash and cash equivalents,including restricted cash $29,933 $19,185 $16,882 $14,501 $25,088 $10,785 $16,916 Current assets 60,306 22,417 28,403 21,371 56,349 15,980 19,487 Non-current assets 1,244,996 145,940 195,784 245,440 1,212,231 169,925 232,363 Current liabilities 54,247 21,284 25,805 49,559 98,950 18,490 24,126 Long- term debt includingcurrent portion, net 493,463 75,472 109,223 119,033 523,776 86,060 119,234 Non-current liabilities 483,345 125,283 164,276 76,534 489,421 155,387 184,530 December 31, 2017 December 31, 2016 December 31, 2015 Income Statement NaviosPartners NaviosEurope I NaviosEurope II NaviosContainers NaviosPartners NaviosEurope I NaviosEurope II NaviosPartners NaviosEurope I NaviosEurope II Revenue $211,652 $37,468 $38,633 $39,188 $190,524 $40,589 $30,893 $223,676 $41,437 $20,767 Net (loss)/ income beforenon-cash change in fairvalue of Junior Loan I andJunior Loan II $(15,090) $(20,778) $22,749 $2,638 $(52,549) $(2,174) $(25,062) $41,805 $(1,347) $1,673 Net (loss)/income $(15,090) $9,762 $(9,086) $2,638 $(52,549) $16,137 $(34,059) $41,805 $(1,118) $77,252 Available-for-sale securities (“AFS Securities”)During the year ended December 31, 2017, the Company received shares of Pan Ocean Co.Ltd (“STX”) as partial compensation for the claimsfiled under the Korean court for all unpaid amounts in respect of the employment of the Company’s vessels. The shares were recorded at fair value upon theirissuance and subsequent changes in market value are recognized within accumulated other comprehensive income/(loss) and the unrealized holding gain was$2 and $0 as of December 31, 2017 and 2016, respectively.During the year ended December 31, 2013, the Company received shares of Korea Line Corporation (“KLC”), and during the year endedDecember 31, 2015, the Company received shares of STX. During the third quarter of 2016, the Company sold all its KLC and STX securities it held at thetime for a total consideration of $5,303.The shares received from KLC and STX were accounted for under the guidance for AFS Securities. The Company has no other types of AFSsecurities.As of December 31, 2017 and 2016, the carrying amount of the available-for-sale securities related to STX was $238 and $0, respectively andwas recorded under “Other long-term assets” in the consolidated balance sheet. During each of the years ended December 31, 2016 and 2015, the Companyconsidered the decline in fair value of the KLC shares as “other-than-temporary” and therefore, recognized a loss out of accumulated other comprehensiveincome /(loss) of $345 and $1,783, respectively. The respective losses were included within the caption “Other expense” in the accompanying consolidatedstatement of comprehensive (loss)/income. F-35Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) NOTE 9: ACCRUED EXPENSES AND OTHER LIABILITIESAccrued expenses and other liabilities as of December 31, 2017 and 2016 consisted of the following: December 31,2017 December 31,2016 Payroll $18,889 $14,730 Accrued interest 32,555 36,273 Accrued voyage expenses 4,843 2,217 Accrued running costs 23,812 21,394 Provision for estimated losses on vessels under time charter 2,631 3,129 Audit fees and related services 364 266 Accrued taxes 5,376 5,092 Professional fees 2,236 1,707 Other accrued expenses 4,153 6,941 Total accrued expenses $94,859 $91,749 NOTE 10: BORROWINGSBorrowings as of December 31, 2017 and 2016 consisted of the following: Navios Holdings borrowings December 31,2017 December 31,2016 Commerzbank A.G. ($240,000) $— $19,857 HSH Nordbank ($15,300) 14,535 — Loan Facility Credit Agricole ($40,000) 17,674 18,880 Loan Facility Credit Agricole ($23,000) 14,074 14,755 Loan Facility Credit Agricole ($23,000) 14,450 15,150 Loan Facility DVB Bank SE ($72,000) 50,140 54,540 Loan Facility DVB Bank SE ($41,000) 33,816 37,293 Loan Facility Credit Agricole ($22,500) 15,188 16,313 Loan Facility DVB Bank SE ($40,000) 18,254 28,000 Loan Facility Alpha Bank ($31,000) 25,600 27,400 Loan Facility Alpha Bank ($16,125) 16,125 16,125 Navios Acquisition Loan — 51,240 2019 Notes — 291,094 2022 Senior Secured Notes 305,000 — 2022 Notes 650,000 650,000 Total Navios Holdings borrowings $1,174,856 $1,240,647 Navios Logistics borrowings December 31,2017 December 31,2016 2022 Logistics Senior Notes $375,000 $375,000 Navios Logistics Notes Payable 31,109 34,447 Navios Logistics BBVA Loan Facility 23,250 25,000 Navios Logistics Alpha Bank Loan 13,300 — Navios Logistics Term Loan B Facility 100,000 — Other long-term loans 253 321 Total Navios Logistics borrowings $542,912 $434,768 Total December 31,2017 December 31,2016 Total borrowings $1,717,768 $1,675,415 Less: current portion, net (33,885) (29,827) Less: deferred finance costs and discount, net (35,280) (24,320) Total long-term borrowings $1,648,603 $1,621,268 F-36Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Navios Holdings loansSenior Secured NotesOn November 21, 2017, the Company and its wholly owned subsidiary, Navios Maritime Finance II (US) Inc. (together with the Company, the“Co-Issuers”) issued $305,000 of 11.25% Senior Notes due 2022 (the “2022 Senior Secured Notes”), at a price of 97%.The 2022 Senior Secured Notes are secured by a first priority lien on the capital stock owned by certain of the subsidiary guarantors of NaviosHoldings in each of Navios Maritime Partners L.P., Navios GP L.L.C., Navios Maritime Acquisition Corporation, Navios South American Logistics Inc. andNavios Maritime Containers Inc. The 2022 Senior Secured Notes are unregistered and guaranteed by all of the Company’s direct and indirect subsidiaries,except for certain subsidiaries designated as unrestricted subsidiaries, including Navios South American Logistics Inc. The subsidiary guarantees are “fulland unconditional”, except that the indenture provides for an individual subsidiary’s guarantee to be automatically released in certain customarycircumstances, such as when a subsidiary is sold or all of the assets of the subsidiary are sold, the capital stock is sold, when the subsidiary is designated as an“unrestricted subsidiary” for purposes of the indenture, upon liquidation or dissolution of the subsidiary or upon legal or covenant defeasance or satisfactionand discharge of the 2022 Senior Secured Notes. The net proceeds of the offering were used to complete a cash tender offer for its outstanding 8.125% SeniorNotes due 2019 described below (the “2019 Notes”) and to redeem notes not purchased in the tender offer, including the payment of related fees andexpenses and any redemption premium. The effect of this transaction was the recognition of a $2,695 extinguishment loss in the consolidated statements ofcomprehensive (loss)/income under “(Loss)/gain on bond and debt extinguishment”.The Co-Issuers have the option to redeem the 2022 Senior Secured Notes in whole or in part, at any time on or after November 21, 2017 at a fixedprice of 108.438%, which price declines ratably until it reaches par in 2019.The 2022 Senior Secured Notes contain covenants which, among other things, limit the incurrence of additional indebtedness, issuance ofcertain preferred stock, the payment of dividends, redemption or repurchase of capital stock or making restricted payments and investments, creation ofcertain liens, transfer or sale of assets, entering in transactions with affiliates, merging or consolidating or selling all or substantially all of the Co-Issuers’properties and assets and creation or designation of restricted subsidiaries. The Co-Issuers were in compliance with the covenants as of December 31, 2017.Senior NotesOn January 28, 2011, the Company and its wholly owned subsidiary, Navios Maritime Finance II (US) Inc. completed the sale of $350,000 of2019 Notes. During July, August and October 2016, the Company repurchased $58,906 of its 2019 Notes for a cash consideration of $30,671 resulting in again on bond extinguishment of $27,670, net of deferred fees written-off. On November 21, 2017, Co-Issuers completed the sale of 2022 Senior SecuredNotes. The net proceeds of the offering of the 2022 Senior Secured Notes have been used: (i) to repay, in full, the outstanding amount of the 2019 Notes; and(ii) for general corporate purposes.Ship Mortgage NotesOn November 29, 2013, Navios Holdings completed the sale of $650,000 of its 7.375% First Priority Ship Mortgage Notes due 2022 (the “2022Notes”).The 2022 Notes are senior obligations of Navios Holdings and Navios Maritime Finance II (US) Inc. (the “2022 Co- Issuers”) and were originallysecured by first priority ship mortgages on 23 dry bulk vessels owned by certain subsidiary guarantors and certain other associated property and contractrights. In June 2017, Navios Ionian and Navios Horizon were released from the 2022 Notes and replaced by the Navios Galileo. In March 2018, NaviosHerakles was released from the 2022 Notes and replaced by the Navios Equator Prosper. The 2022 Notes are unregistered and fully and unconditionallyguaranteed, jointly and severally by all of the Company’s direct and indirect subsidiaries that guarantee the 2019 Notes and Navios Maritime Finance II (US)Inc. The guarantees of the Company’s subsidiaries that own mortgaged vessels are senior secured guarantees and the guarantees of the Company’ssubsidiaries that do not own mortgaged vessels are senior unsecured guarantees. In addition, the 2022 Co-Issuers have the option to redeem the 2022 Notes inwhole or in part, at any time on or after January 15, 2017, at a fixed price of 105.531%, which price declines ratably until it reaches par in 2020.Furthermore, upon occurrence of certain change of control events, the holders of the 2022 Notes may require the 2022 Co-Issuers to repurchasesome or all of the 2022 Notes at 101% of their face amount. The 2022 Notes contain covenants, which among other things, limit the incurrence of additionalindebtedness, issuance of certain preferred stock, the payment of dividends, redemption F-37Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) or repurchase of capital stock or making restricted payments and investments, creation of certain liens, transfer or sale of assets, entering into certaintransactions with affiliates, merging or consolidating or selling all or substantially all of the 2022 Co-Issuers’ properties and assets and creation ordesignation of restricted subsidiaries. The 2022 Co-Issuers were in compliance with the covenants as of December 31, 2017.Secured credit facilitiesCredit Agricole (formerly Emporiki) Facilities: In December 2012, the Emporiki Bank of Greece’s facilities were transferred to Credit AgricoleCorporate and Investment Bank.In September 2010, Navios Holdings entered into a facility agreement with Emporiki Bank of Greece for an amount of up to $40,000 in order topartially finance the construction of one newbuilding Capesize vessel. In December 2017, the Company agreed to extend the last payment date to August2021. As of December 31, 2017, the outstanding amount under the loan facility was repayable in one quarterly installment of $2,411, followed by sevensemi-annual equal installments of $1,205 with a final balloon payment of $6,810 on the last payment date. The loan bears interest at a rate of LIBOR plus275 basis points. The loan facility requires compliance with certain financial covenants. As of December 31, 2017, the outstanding amount under this facilitywas $17,674.In August 2011, Navios Holdings entered into a facility agreement with Emporiki Bank of Greece for an amount of up to $23,000 in order topartially finance the construction of one Panamax vessel. As of December 31, 2017, the facility is repayable in one quarterly installment of $681, followed bynine semi-annual equal installments of $681, with a final balloon payment of $7,264 on the last payment date. The loan bears interest at a rate of LIBOR plus275 basis points. The loan facility requires compliance with certain covenants. As of December 31, 2017, the outstanding amount under this facility was$14,074.In December 2011, Navios Holdings entered into a facility agreement with Emporiki Bank of Greece for an amount of up to $23,000 in order topartially finance the construction of one newbuilding bulk carrier. As of December 31, 2017, the outstanding amount under the loan facility was repayable inone quarterly installment of $700 after the drawdown date, followed by nine semi-annual equal installments of $700, with a final balloon payment of $7,450on the last payment date. The loan bears interest at a rate of LIBOR plus 325 basis points. The loan facility requires compliance with certain covenants. As ofDecember 31, 2017, the outstanding amount under this facility was $14,450.On December 20, 2013, Navios Holdings entered into a facility with Credit Agricole Corporate and Investment Bank for an amount of up to$22,500 in two equal tranches, in order to finance the acquisition of two Panamax vessels. The two tranches bear interest at a rate of LIBOR plus 300 basispoints. In December 2017, the Company agreed to extend the last payment date to August 2021. The first tranche is repayable in one quarterly installment of$563, followed by seven equal semi-annual installments of $563, with a final balloon payment of $2,812 on the last repayment date. The second tranche isrepayable in one quarterly installment of $1,125, followed by seven equal semi-annual installments of $563, with a final balloon payment of $2,812 on thelast repayment date. The loan facility requires compliance with certain financial covenants. As of December 31, 2017, the outstanding amount of the loan was$15,188.Commerzbank Facility: In June 2009, Navios Holdings entered into a facility agreement for an amount of up to $240,000 (divided into fourtranches of $60,000) with Commerzbank AG in order to partially finance the acquisition of a Capesize vessel and the construction of three Capesize vessels.Following the delivery of two Capesize vessels, Navios Holdings cancelled two of the four tranches and in October 2010 fully repaid their outstanding loanbalances of $53,600 and $54,500, respectively. During October 2016, the Company fully prepaid the third tranche of the facility, which had an outstandingbalance of $15,319, using $13,802 of cash, thus achieving a $1,517 benefit to nominal value. During May 2017, the Company fully repaid the fourth trancheof the facility, which had an outstanding loan balance of $17,322, using $15,607 of cash, thus achieving a $1,715 benefit to nominal value.HSH Nordbank Facility: On May 23, 2017, Navios Holdings entered into a facility agreement with HSH Nordbank AG for an amount of up to$15,300 in order to partially refinance the fourth tranche of the Commerzbank facility. As of December 31, 2017, the facility is repayable in 15 quarterlyequal installments of $383, with a final balloon payment of $8,798 on the last payment date. The loan bears interest at a rate of LIBOR plus 300 basis points.The loan facility requires compliance with certain covenants. As of December 31, 2017, the outstanding amount under this facility was $14,535. F-38Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) DVB Bank SE Facilities: On March 23, 2012, Navios Holdings entered into a facility agreement with a syndicate of banks led by DVB Bank SEfor an amount of up to $42,000 in two tranches: (i) the first tranche is for an amount of up to $26,000 in order to finance the acquisition of a Handysizevessel; and (ii) the second tranche is for an amount of up to $16,000 to refinance the outstanding debt of an Ultra-Handymax vessel. The two tranches bearinterest at a rate of LIBOR plus 285 and 360 basis points, respectively. On June 27, 2014, Navios Holdings refinanced the existing facility, adding a newtranche for an amount of $30,000 in order to finance the acquisition of a Capesize vessel. The new tranche bears interest at a rate of LIBOR plus 275 basispoints. As of December 31, 2017, the first tranche is repayable in nine quarterly installments of $362, with a final balloon payment of $14,400 on the lastrepayment date, the second tranche is repayable in ten quarterly installments of $269, with a final balloon payment of $6,354 on the last repayment date andthe third tranche is repayable in ten quarterly installments of $469, with a final balloon payment of $18,750 on the last repayment date. The loan facilityrequires compliance with certain financial covenants. As of December 31, 2017, the total outstanding amount was $50,140.In September 2013, Navios Holdings entered into a facility agreement with DVB Bank SE for an amount of up to $40,000 in order to finance theacquisition of four Panamax vessels, delivered in August and September 2013. The facility bore interest at a rate of LIBOR plus 325 basis points. During2017, Navios Holdings prepaid the indebtedness originally maturing in the third quarter of 2018 and released from collateral one Panamax vessel. InDecember 2017, Navios Holdings entered into a facility agreement with DVB Bank SE in order to extend the maturity of the outstanding balance originallydue by September 2018 for three years, to September 2021. As of December 31, 2017, the facility is repayable in 15 quarterly installments of $730, with afinal balloon payment of $7,302 payable on the last repayment date. The loan facility requires compliance with certain financial covenants. In December2015, one newbuilding Panamax vessel and one newbuilding Capesize vessel were added as collateral to this facility. As of December 31, 2017, theoutstanding amount was $18,254.In January 2016, Navios Holdings entered into a facility agreement with DVB Bank SE for an amount of up to $41,000 to be drawn in twotranches, to finance the acquisition of one newbuilding Panamax vessel and one newbuilding Capesize vessel. The facility bears interest at a rate of LIBORplus 255 basis points. The total amount drawn under the facility was $39,900. The first tranche is repayable in one quarterly installment of $492, followed by16 quarterly installments of $369 each, and a final balloon payment of $14,760 on the last payment day. The second tranche is repayable in one quarterlyinstallment of approximately $377, followed by 16 quarterly installments of $220 each, and a final balloon payment of $8,764 on the last payment day. Theloan facility also requires compliance with certain covenants. As of December 31, 2017, the outstanding amount was $33,816.Alpha Bank A.E.: On November 6, 2014, Navios Holdings entered into a facility agreement with Alpha Bank A.E. for an amount of up to $31,000in order to finance part of the acquisition of a Capesize vessel. The loan bears interest at a rate of LIBOR plus 300 basis points. As of December 31, 2017, thefacility is repayable in 20 quarterly installments of $450, with a final balloon payment of $16,600 on the last repayment date. The loan facility requirescompliance with certain financial covenants. As of December 31, 2017, the outstanding amount was $25,600.On November 3, 2016, Navios Holdings entered into a facility agreement with Alpha Bank A.E. for an amount of up to $16,125 in order torefinance one Capesize vessel. The facility bears interest at a rate of LIBOR plus 300 basis points. The facility is repayable in four quarterly installments of$250 each, followed by 16 quarterly installments of $275 each, with a final balloon payment of $10,725 payable on the last repayment date. The firstinstalment will be due 15 months from the loan drawdown date. The loan facility requires compliance with certain financial covenants. As of December 31,2017, the outstanding amount was $16,125.The facilities are secured by first priority mortgages on certain of Navios Holdings’ vessels and other collateral.The credit facilities contain a number of restrictive covenants that limit Navios Holdings and/or certain of its subsidiaries from, among otherthings: incurring or guaranteeing indebtedness; entering into affiliate transactions; charging, pledging or encumbering the vessels securing such facilities;changing the flag, class, management or ownership of certain Navios Holdings’ vessels; changing the commercial and technical management of certainNavios Holdings’ vessels; selling or changing the ownership of certain Navios Holdings’ vessels; and subordinating the obligations under the credit facilitiesto any general and administrative costs relating to the vessels. The credit facilities also require the vessels to comply with the ISM Code and ISPS Code andto maintain valid safety management certificates and documents of compliance at all times. Additionally, the credit facilities require compliance with thecovenants contained in the indentures governing the 2022 Senior Secured Notes and the 2022 Notes. Among other events, it will be an event of default underthe credit facilities if the financial covenants are not complied with or if Angeliki Frangou and her affiliates, together, own less than 20% of the outstandingshare capital of Navios Holdings. F-39Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) The majority of the Company’s senior secured credit facilities require compliance with maintenance covenants, including (i) value-to-loan ratiocovenants, based on either charter-adjusted valuations, or charter-free valuations, ranging from over 110% to 135%, (ii) minimum liquidity up to a maximumof $30,000, and (iii) net total debt divided by total assets, as defined in each senior secured credit facility, ranging from a maximum of 75% to 80%. Certaincovenants in our senior secured credit facilities have been waived for a specific period of time up to a maximum of four quarters (from the current balancesheet date) and/or amended to include net total debt divided by total assets, as defined in each senior secured credit facility, to a maximum of 90%.As of December 31, 2017, the Company was in compliance with all of the covenants under each of its credit facilities.Navios Acquisition LoanOn November 3, 2017, the Company prepaid in full the outstanding amount of $55,132 under its secured loan facility of up to $70,000 withNavios Acquisition entered into in September 2016. The prepayment amount consisted of the $50,000 drawn under the facility and $5,132 of accruedinterest. Please see also Note 15.Navios Logistics loans2022 Logistics Senior NotesOn April 22, 2014, Navios Logistics and its wholly-owned subsidiary Navios Logistics Finance (US) Inc. (“Logistics Finance” and, together withNavios Logistics (the “Logistics Co-Issuers”) completed the sale of $375,000 in aggregate principal amount of its Senior Notes due on May 1, 2022 (the“2022 Logistics Senior Notes”), at a fixed rate of 7.25%. The 2022 Logistics Senior Notes are unregistered are fully and unconditionally guaranteed, jointlyand severally, by all of Navios Logistics’ direct and indirect subsidiaries except for Horamar do Brasil Navegaçăo Ltda (“Horamar do Brasil”), Naviera AltoParana S.A. (“Naviera Alto Parana”) and Terra Norte Group S.A. (“Terra Norte”), which do not guarantee the 2022 Logistics Senior Notes pursuant to certainexceptions under the indenture, and Logistics Finance, which is the co-issuer of the 2022 Logistics Senior Notes. The subsidiary guarantees are “full andunconditional” except that the indenture provides for an individual subsidiary’s guarantee to be automatically released in certain customary circumstances,such as in connection with a sale or other disposition of all or substantially all of the assets of the subsidiary, in connection with the sale of a majority of thecapital stock of the subsidiary, if the subsidiary is designated as an “unrestricted subsidiary” in accordance with the indenture, upon liquidation ordissolution of the subsidiary or upon legal or covenant defeasance or satisfaction and discharge of the 2022 Logistics Senior Notes.The Logistics Co-Issuers have the option to redeem the 2022 Logistics Senior Notes in whole or in part, at their option, at any time on or afterMay 1, 2017, at a fixed price of 105.438%, which price declines ratably until it reaches par in 2020. In addition, upon the occurrence of certain change ofcontrol events, the holders of the 2022 Logistics Senior Notes will have the right to require the Logistics Co-Issuers to repurchase some or all of the 2022Logistics Senior Notes at 101% of their face amount, plus accrued and unpaid interest to the repurchase date.The indenture governing the 2022 Logistics Senior Notes contains covenants which, among other things, limit the incurrence of additionalindebtedness, issuance of certain preferred stock, the payment of dividends in excess of 6% per annum of the net proceeds received by or contributed toNavios Logistics in or from any public offering, redemption or repurchase of capital stock or making restricted payments and investments, creation of certainliens, transfer or sale of assets, entering into transactions with affiliates, merging or consolidating or selling all or substantially all of Navios Logistics’properties and assets and creation or designation of restricted subsidiaries.The indenture governing the 2022 Logistics Senior Notes include customary events of default, including failure to pay principal and interest onthe 2022 Logistics Senior Notes, a failure to comply with covenants, a failure by Navios Logistics or any significant subsidiary or any group of restrictedsubsidiaries that, taken together, would constitute a significant subsidiary to pay material judgments or indebtedness and bankruptcy and insolvency eventswith respect to us or any significant subsidiary or any group of restricted subsidiaries that, taken together, would constitute a significant subsidiary.As of December 31, 2017, all subsidiaries, including Logistics Finance, Horamar do Brasil, Naviera Alto Parana and Terra Norte are 100% owned.Logistics Finance, Horamar do Brasil, Naviera Alto Parana and Terra Norte do not have any independent assets or operations. F-40Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) In addition, there are no significant restrictions on (i) the ability of the parent company, any issuer (or co-issuer) or any guarantor subsidiaries ofthe 2022 Logistics Senior Notes to obtain funds by dividend or loan from any of their subsidiaries or (ii) the ability of any subsidiaries to transfer funds to theissuer (or co-issuer) or any guarantor subsidiaries.The 2022 Logistics Co-Issuers were in compliance with the covenants as of December 31, 2017.Navios Logistics Notes PayableIn connection with the purchase of mechanical equipment for the expansion of its dry port terminal, Corporacion Navios S.A. (“CNSA”) enteredinto an unsecured export financing line of credit for a total amount of $41,964, including all related fixed financing costs of $5,949, available in multipledrawings upon the completion of certain milestones (“Drawdown Events”). CNSA incurs the obligation for the respective amount drawn by signingpromissory notes (“Navios Logistics Notes Payable”). Each drawdown is repayable in 16 consecutive semi-annual installments, starting six months after thecompletion of each Drawdown Event. Together with each Note Payable, CNSA shall pay interest equal to six-month LIBOR. The unsecured export financingline is fully and unconditionally guaranteed by Navios Logistics. As of December 31, 2017, Navios Logistics had drawn the total available amount and theoutstanding balance of Notes Payable was $31,109.Navios Logistics BBVA Loan FacilityOn December 15, 2016, Navios Logistics entered into a facility with Banco Bilbao Vizcaya Argentaria Uruguay S.A. (“BBVA”) for an amount of$25,000, for general corporate purposes. The loan bears interest at a rate of LIBOR (180 days) plus 325 basis points. The loan is repayable in 20 quarterlyinstallments, starting on June 19, 2017, and secured by assignments of certain receivables. As of December 31, 2017, the outstanding amount of the loan was$23,250.Navios Logistics Alpha Bank LoanOn May 18, 2017, Navios Logistics enter into a $14,000 term loan facility in order to finance the acquisition of two product tankers (“NaviosLogistics Alpha Bank Loan”). The Navios Logistics Alpha Bank Loan bears interest at a rate of LIBOR (90 days) plus 315 basis points and is repayable in 20quarterly installments with a final balloon payment of $7,000 on the last repayment date. As of December 31, 2017, the outstanding amount of the loan was$13,300.Navios Logistics Term Loan B FaciliyOn November 3, 2017, Navios Logistics and Navios Logistics Finance (US) Inc., as co-borrowers, completed the issuance of a new $100,000Term Loan B Facility (the “Term Loan B Facility”). The Term Loan B Facility bears an interest rate of LIBOR plus 475 basis points and has a four year termwith 1.0% amortization per annum. The Term Loan B Facility is fully and unconditionally guaranteed jointly and severally, by all of Navios Logistics’ directand indirect subsidiaries except for Horamar do Brasil Navegação Ltda (“Horamar do Brasil”), Naviera Alto Parana S.A. (“Naviera Alto Parana”) and TerraNorte Group S.A. (“Terra Norte”), which are deemed to be immaterial, and Logistics Finance, which is the co-issuer of the Term Loan B Facility. Thesubsidiary guarantees are “full and unconditional,” except that the credit agreement provides for an individual subsidiary’s guarantee to be automaticallyreleased in certain circumstances. The Term Loan B Facility is secured by first priority mortgages on five tanker vessels servicing our cabotage business aswell as by assignments of the revenues arising from certain time charter contracts, and an iron ore port contract. The net proceeds of the Term Loan B Facilitywere used: (i) to finance a $70,000 dividend of which $44,677 was paid to Navios Holdings, and was eliminated in the consolidated financial statements, and$25,323 to its noncontrolling shareholders, (ii) for general corporate purposes and (iii) to pay fees and expenses relating to the Term Loan B Facility.The Term Loan B Facility contains restrictive covenants including restrictions on indebtedness, liens, acquisitions and investments, restrictedpayments and dispositions. The Term Loan B Facility also provides for customary events of default, including change of control.As of December 31, 2017, a balance of $100,000 was outstanding under the Term Loan B Facility.Navios Logistics was in compliance with the covenants set forth in the Term Loan B Facility as of December 31, 2017. F-41Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Other indebtednessIn connection with the acquisition of Hidronave S.A. on October 29, 2009, Navios Logistics assumed a $817 loan facility that was entered intoby Hidronave S.A. in 2001, in order to finance the construction of the pushboat Nazira. As of December 31, 2017, the outstanding loan balance was $253($321 as of December 31, 2016). The loan facility bears interest at a fixed rate of 600 basis points. The loan is repayable in monthly installments of $6 eachand the final repayment must occur prior to August 10, 2021.During the year ended December 31, 2017, the Company paid $48,600, of which $25,707 related to scheduled repayment installments for theyear 2017, $7,286 related to prepayments of indebtedness originally maturing the third quarter of 2018, and $15,607 related to the refinancing of one of itssecured credit facilities which had an outstanding balance of $17,332, thus achieving a $1,715 benefit to nominal value.The annual weighted average interest rates of the Company’s total borrowings were 7.11%, 6.87% and 6.98% for the year ended December 31,2017, 2016 and 2015, respectively.The maturity table below reflects the principal payments for the next five years and thereafter of all borrowings of Navios Holdings (includingNavios Logistics) outstanding as of December 31, 2017, based on the repayment schedules of the respective loan facilities and the outstanding amount dueunder the debt securities. Year 2018 $35,988 2019 33,326 2020 71,454 2021 154,825 2022 1,414,638 2023 and thereafter 7,537 Total $1,717,768 NOTE 11: 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 and money marketfunds approximate their fair value because 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 valuebecause of the short maturity of these investments.Borrowings: The book value has been adjusted to reflect the net presentation of deferred financing costs. The outstanding balance of thefloating rate loans continues to approximate their fair value, excluding the effect of any deferred finance costs. The 2019 Notes, the 2022 Notes, the 2022Logistics Senior Notes, the 2022 Senior Secured Notes, the Navios Acquisition Loan and one Navios Logistics’ loan are fixed rate borrowings and their fairvalue was determined based on quoted market prices.Capital leases: The capital leases are fixed rate obligations and their carrying amounts approximate their fair value.Loan receivable from affiliate companies: The carrying amount of the fixed rate loan approximates its fair value.Loan payable to affiliate company: The carrying amount of the fixed rate loan approximates its fair value.Long-term receivable from affiliate company: The carrying amount of the floating rate receivable approximates its fair value.Long-term payable to affiliate companies: The carrying amount of the long-term payable approximates its fair value. F-42Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Investments in available-for-sale securities: The carrying amount of the investments in available-for-sale securities reported in the consolidatedbalance sheets represents unrealized gains and losses on these securities, which are reflected directly in equity unless an unrealized loss is considered “other-than-temporary”, in which case it is transferred to the consolidated statements of comprehensive (loss)/income.Long-term payable to affiliate companies:The carrying amount of other long-term payables to affiliate companies approximates their fair value.The estimated fair values of the Company’s financial instruments were as follows: December 31, 2017 December 31, 2016 Book Value Fair Value Book Value Fair Value Cash and cash equivalents $127,632 $127,632 $135,992 $135,992 Restricted cash $6,558 $6,558 $5,386 $5,386 Investments in available-for-sale-securities $238 $238 $— $— Loan receivable from affiliate companies $30,112 $30,112 $23,008 $23,008 Long-term receivable from affiliate companies $— $— $11,105 $11,105 Capital lease obligations, including current portion $— $— $(17,617) $(17,617) Senior and ship mortgage notes, net $(1,301,999) $(1,181,838) $(1,296,537) $(974,170) Long-term debt, including current portion $(380,489) $(389,332) $(304,682) $(308,080) Loan payable to affiliate company $— $— $(49,876) $(51,240) Long-term payable to affiliate companies $(76,872) $(76,872) $(6,399) $(6,399) The following table sets forth our assets that are measured at fair value on a recurring basis categorized by fair value hierarchy level. As requiredby the fair value guidance, assets are categorized in their entirety based on the lowest level of input that is significant to the fair value measurement. Therewere no assets and/or liabilities measured at fair value on a recurring basis as of December 31, 2016. Fair Value Measurements as of December 31, 2017 Total Quoted Prices inActive Markets forIdentical Assets(Level I) Significant OtherObservableInputs(Level II) SignificantUnobservableInputs(Level III) Investments in available-for-sale-securities $238 $238 $— $— Total $238 $238 $— $— The Company’s assets measured at fair value on a non-recurring basis were: Fair Value Measurements as of December 31, 2017 Total Quoted Prices inActive Markets forIdentical Assets(Level I) Significant OtherObservableInputs(Level II) SignificantUnobservableInputs(Level III) Vessels, port terminals and other fixed assets, net $16,500 $— $16,500 $— The Company recorded an impairment loss of $32,930 during the year ended December 31, 2017 for one of its vessels, thus reducing vessel’s net bookvalue to $16,500, as at December 31, 2017. F-43Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Fair Value Measurements as of December 31, 2016 Total Quoted Prices inActive Markets forIdentical Assets(Level I) Significant OtherObservableInputs(Level II) SignificantUnobservableInputs(Level III) Investments in affiliates $148,095 $148,095 $— $— The Company recorded an OTTI loss of $228,026 on its investments in Navios Partners and Navios Acquisition during the year ended December 31,2016, thus reducing their total carrying value to $148,095 as at December 31, 2016.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 fairvalue 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 ofthese items does 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 dataat the measurement date.Level III: Inputs that are unobservable. Fair Value Measurements at December 31, 2017 Total (Level I) (Level II) (Level III) Cash and cash equivalents $127,632 $127,632 $— $— Restricted cash $6,558 $6,558 $— $— Investments in available-for-sale-securities $238 $238 $— $— Loan receivable from affiliate companies(2) $30,112 $— $30,112 $— Senior and ship mortgage notes $(1,181,838) $(1,181,838) $— $— Long-term debt, including current portion(1) $(389,332) $— $(389,332) $— Long-term payable to affiliate companies(2) $(76,872) $— $(76,872) $— Fair Value Measurements at December 31, 2016 Total (Level I) (Level II) (Level III) Cash and cash equivalents $135,992 $135,992 $— $— Restricted cash $5,386 $5,386 $— $— Loan receivable from affiliate company(2) $23,008 $— $23,008 $— Long-term receivable from affiliate companies (2) $11,105 $— $11,105 $— Capital lease obligations, including current portion (1) $(17,617) $— $(17,617) $— Senior and ship mortgage notes $(974,170) $(974,170) $— $— Long-term debt, including current portion(1) $(308,080) $— $(308,080) $— Loan payable to affiliate company(2) $(51,240) $— $(51,240) $— Long-term payable to affiliate companies(2) $(6,399) $— $(6,399) $— (1)The fair value of the Company’s long-term debt/ Capital lease obligations is estimated based on currently available debt with similar contract terms,interest rates and remaining maturities, published quoted market prices as well as taking into account the Company’s creditworthiness.(2)The fair value of the Company’s loan receivable from/ payable to affiliate companies and long-term receivable from/payable to affiliate companies isestimated based on currently available debt with similar contract terms, interest rate and remaining maturities as well as taking into account thecounterparty’s creditworthiness. F-44Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) NOTE 12: EMPLOYEE BENEFIT PLANSRetirement Saving PlanThe Company sponsors an employee saving plan covering all of its employees in the United States. The Company’s contributions to theemployee saving plan during the years ended December 31, 2017, 2016 and 2015, were approximately $115, $69 and $96, respectively, which included adiscretionary contribution of $22, $0, and $14, respectively.Defined Benefit Pension PlanThe Company sponsors a legacy unfunded defined benefit pension plan that covers certain Bahamian and Uruguayan nationals and formerNavios Corporation employees. The liability related to the plan is recognized based on actuarial valuations. The current portion of the liability is included inaccrued expenses and the non-current portion of the liability is included in other long-term liabilities. There are no pension plan assets.The Greek office employees are protected by the Greek Labor Law. According to the law, the Company is required to pay retirement indemnitiesto employees on dismissal, or on leaving with an entitlement to a full security retirement pension. Please refer to Note 2(s).Stock PlanThe Company has awarded restricted share units, shares of restricted common stock and restricted stock units to its employees, officers anddirectors. The restriction lapses in two, three or four equal tranches, over the requisite service periods, of one, two, three and four years from the grant date.The Company has also awarded share appreciation rights and stock options to its officers and directors only, based on service conditions, which vest in threeequal tranches over the requisite service periods of one, two and three years from the grant date. Each option expires seven years after its grant date. Pleaserefer to Note 2(s).On December 15, 2014, the Company awarded shares of restricted stock and restricted stock units to its employees, officers and directors andstock options to its officers and directors, which vest all at once upon achievement of the internal performance criteria. As of December 31, 2015, theCompany determined that it was probable that the performance criteria of these awards would be met and recognized a compensation expense of $2,615.During the years ended December 31, 2017, 2016 and 2015, the Company did not award any restricted stock, restricted stock units or stockoptions, which vest upon achievement of certain performance conditions.The fair value of all share appreciation rights awards and stock option awards has been calculated based on the modified Black-Scholes method.A description of the significant assumptions used to estimate the fair value of the stock option awards is set out below: • Expected term: The Company began granting stock options in October 2007. The first stock option exercise was in 2010 and the numberof options exercised during each of the years ended December 31, 2014 (143,189), 2013 (153,556), 2012 (29,251), 2011 (130,578) and2010 (130,577) was small in relation to the total number of options granted. No stock options were exercised during the year endedDecember 31, 2017, 2016 and 2015. Therefore, due to limited historical share option exercise experience to provide for a reasonablebasis upon which to estimate expected term, the Company opted to apply the simplified method.The “simplified method” used includes taking the average of the weighted average time to vesting and the contractual term of the share appreciationrights and option awards. The service conditions share appreciation rights and option awards vest over three years at 33.3%, 33.3% and 33.4% respectively,resulting in a weighted average time to vest of approximately 2 years. The contractual term of the award is 7 years. Utilizing the simplified approach formula,the derived expected term estimate for the Company’s service conditions share appreciation rights and option award is 4.5 years. F-45Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) • Expected volatility: The historical volatility of Navios Holdings’ shares was used in order to estimate the volatility of the shareappreciation rights and stock option awards. The final expected volatility estimate, which equals the historical estimate, for the serviceconditions option awards was 84.71% and 55.17% for 2016 and 2015, respectively. • Expected dividends: The expected dividend is based on the current dividend, our historical pattern of dividend changes and the marketprice of our stock. • Risk-free rate: Navios Holdings has selected to employ the risk-free yield-to-maturity rate to match the expected term estimated underthe “simplified method”. For the service conditions share appreciation rights and option awards, the 4.5 year yield-to-maturity rate as ofthe grant date was 1.81% and 1.46% for 2016 and 2015, respectively.The fair value of restricted share unit, restricted stock and restricted stock unit grants excludes dividends to which holders of restricted shareunits, restricted stock and restricted stock units are not entitled. The expected dividend assumption used in the valuation of restricted share unit, restrictedstock and restricted stock units grant is $0 for 2017, 2016 and 2015.The weighted average grant date fair value of restricted units and restricted stock granted during the year ended December 31, 2017 was $1.27and $1.27, respectively.The weighted average grant date fair value of stock options and restricted stock granted during the year ended December 31, 2016 was $0.78 and$1.20, respectively.The weighted average grant date fair value of stock options and restricted stock granted during the year ended December 31, 2015 was $0.55 and$1.20, respectively.The effect of compensation expense arising from the stock-based arrangements described above amounted to $4,296, $3,446 and $5,591 for theyears ended December 31, 2017, 2016 and 2015, respectively and it was reflected in general and administrative expenses on the consolidated statements ofcomprehensive (loss)/income. The recognized compensation expense for the year is presented as an adjustment to reconcile net income to net cash providedby operating activities on the consolidated statements of cash flows. F-46Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) The summary of stock-based awards is summarized as follows (in thousands except share and per share data): Shares Weightedaverageexerciseprice Weightedaverageremainingterm Aggregatefair value Options Outstanding as of December 31, 2014 5,804,594 $4.57 4.64 $8,410 Vested at December 31, 2014 1,643,665 — — — Exercisable at December 31, 2014 1,500,476 — — — Forfeited or expired (159,828) — — (193) Granted 1,000,000 1.2 — 552 Outstanding as of December 31, 2015 6,644,766 $4.09 4.23 $8,769 Vested at December 31, 2015 730,592 — — — Exercisable at December 31, 2015 730,592 — — — Forfeited or expired (348,520) — — — Granted 2,500,000 1.2 — — Outstanding as of December 31, 2016 8,796,246 $3.20 4.41 $9,804 Vested at December 31, 2016 1,210,824 — — — Exercisable at December 31, 2016 1,210,824 — — — Forfeited or expired (891,670) — — — Granted — — — — Outstanding as of December 31, 2017 7,904,576 $2.98 3.80 $7,539 Restricted stock and restricted stock units Non Vested as of December 31, 2014 1,997,344 $— 2.00 $10,899 Granted 2,540,000 — — 3,048 Vested (812,847) — — (5,746) Forfeited or expired (3,538) — — (15) Non Vested as of December 31, 2015 3,720,959 $— 2.45 $8,186 Granted 2,540,000 — — 3,048 Vested (1,755,017) — — (5,122) Forfeited or expired (3,408) — — (12) Non Vested as of December 31, 2016 4,502,534 $— 2.55 $6,100 Granted 4,353,975 — — 42 Vested (1,839,195) — — (2,630) Forfeited or expired — — — — Non Vested as of December 31, 2017 7,017,314 $— 3.21 $3,512 The estimated compensation cost relating to service conditions of non-vested (i) share appreciation rights and stock options and (ii) restrictedshare units, restricted stock and restricted stock unit awards, not yet recognized was $785 and $7,271, respectively, as of December 31, 2017 and is expectedto be recognized over the weighted average period of 2.93 years.NOTE 13: COMMITMENTS AND CONTINGENCIESAs of December 31, 2017, the Company was contingently liable for letters of guarantee and letters of credit amounting to $590 (December 31,2016: $590) issued by various banks in favor of various organizations and the total amount was collateralized by cash deposits, which were included as acomponent of restricted cash.In December 2017, the Company agreed to charter-in, under a ten year bareboat contract, from an unrelated third party a newbuilding bulk carriervessel of about 82,000 dwt, expected to be delivered in the fourth quarter of 2019. The Company has agreed to pay in total $5,410 representing a deposit forthe option to acquire the vessel, of which $2,705 was paid during the year ended December 31, 2017. The total amount of $2,724, including expenses andinterest, is presented under the caption “Other long-term assets”.Navios Logistics has issued a guarantee and indemnity letter that guarantees the performance by Petrolera San Antonio S.A. (a consolidatedsubsidiary) of all its obligations to Vitol S.A. up to $12,000. This guarantee expires on March 1, 2019. F-47Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) The Company is involved in various disputes and arbitration proceedings arising in the ordinary course of business. Provisions have beenrecognized in the financial statements for all such proceedings where the Company believes that a liability may be probable, and for which the amounts canbe reasonably estimated, based upon facts known on the date the financial statements were prepared. Although the Company cannot predict with certaintythe ultimate resolutions of these matters, in the opinion of management, the ultimate disposition of these matters is not expected to have a material adverseeffect on the Company’s financial position, results of operations or liquidity.As of December 31, 2017, Navios Logistics had operating lease obligations relating to chartered-in barges through March 2020.As of December 31, 2017, Navios Logistics had obligations related to the construction of three new pushboats and the construction of a river andestuary tanker (including supervision costs) and the construction of covers for barges of $580, $9,024 and $486, respectively, until the second quarter of2018.Navios Logistics had a dispute with Vale regarding the termination date of a COA contract, which was under arbitration proceedings in NewYork. Navios Logistics has received full security for its claim to date. As of December 31, 2017, related to this arbitration, Navios Logistics issued a letter ofcredit amounting to $2,900 and the total amount was collateralized by a cash deposit, which was presented as restricted cash in the accompanying balancesheets as of December 31, 2016. On February 10, 2017, the arbitration tribunal ruled in favor of Navios Logistics. Vale has been ordered to pay NaviosLogistics $21,500, compensating for all unpaid invoices, late payment of invoices, and legal fees incurred. An amount of $1,157 was recorded in theconsolidated statements of comprehensive (loss)/income under “Other income” as part of this compensation. The full amount was received in March 2017,and the collateralized cash amount of $2,900, was released.On March 30, 2016, Navios Logistics received written notice from Vale stating that Vale will not be performing the service contract entered intobetween CNSA and Vale on September 27, 2013, relating to the iron ore port facility in Nueva Palmira, Uruguay. Navios Logistics initiated arbitrationproceedings in London on June 10, 2016 pursuant to the dispute resolution provisions of the service contract. On December 20, 2016, a London arbitrationtribunal ruled that the Vale port contract remains in full force and effect. If Vale were to further repudiate or renounce the contract, Navios Logistics may electto terminate the contract and then would be entitled to damages calculated by reference to guaranteed volumes and agreed tariffs for the remaining period ofthe contract.On October 7, 2016, a putative class action complaint was filed against the Company and six of its directors in the United States District Courtfor the Southern District of New York by a purported holder of Series G American Depositary Shares and Series H American Depositary Shares. The complaintasserts claims for breach of fiduciary duty and contract. The complaint sought, among other things, unspecified monetary damages, a declaration regardingcertain of the Company’s alleged obligations under the applicable certificates of designation, the restoration of certain alleged rights to non-tenderingholders if the exchange offer that commenced on September 19, 2016 was consummated, and an award of plaintiff’s costs. On November 28, 2016, plaintiff’scounsel informed the Court that the litigation was moot in light of the failure of the consent solicitation (which did not attain the necessary support from theholders of Series G American Depositary Shares and Series H American Depositary Shares). On January 10, 2017, plaintiff’s counsel submitted a motion forattorneys’ fees to which the Company submitted an opposition brief on February 3, 2017, which requested that the Court deny the request for attorneys’ feesin its entirety. Plaintiff’s counsel’s motion for attorney’s fees was fully briefed on February 17, 2017. On September 26, 2017, the Court issued a decisiondenying plaintiff’s application for an award of attorneys’ fees and requiring that any party wishing to restore the case to the Court’s active docket do so byOctober 10, 2017. No party requested that the case be restored to the active docket by the October 10, 2017 deadline. No appeal of the Court’s denial ofplaintiff’s application for an award of attorneys’ fees has been taken to date and the time to file an appeal has expired.On April 1, 2016, Navios Holdings was named as a defendant in a putative shareholder derivative lawsuit brought by two alleged shareholders ofNavios Acquisition purportedly on behalf of nominal defendant, Navios Acquisition, in the United States District Court for the Southern District of NewYork, captioned Metropolitan Capital Advisors International Ltd., et al. v. Navios Maritime Holdings, Inc. et al., No. 1:16-cv-02437. The lawsuit challengedthe March 9, 2016 loan agreement between Navios Holdings and Navios Acquisition pursuant to which Navios Acquisition agreed to provide a $50,000credit facility (the “Revolver”) to Navios Holdings. F-48Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) On April 14, 2016, Navios Holdings and Navios Acquisition announced that the Revolver had been cancelled, and that no borrowings had beenmade under the Revolver. In June 2016, the parties reached an agreement resolving the plaintiffs’ application for attorneys’ fees and expenses which wasapproved by an order of the Court. The litigation was dismissed upon notice of the order being provided to Navios Acquisition’s shareholders via theinclusion of the order as an attachment to a Navios Acquisition Form 6-K and the payment of $775 by Navios Acquisition in satisfaction of the plaintiffs’request for attorneys’ fees and expenses. A copy of the order was provided as an exhibit to Navios Acquisition’s Form 6-K filed with the Securities andExchange Commission on June 9, 2016.The Company, in the normal course of business, entered into contracts to time charter-in vessels for various periods through 2030.NOTE 14: LEASESChartered-in vessels, barges, pushboats and office space:As of December 31, 2017, the Company’s future minimum commitments, net of commissions under chartered-in vessels, barges, pushboats andoffice space were as follows: Charter-invesselsin operation Charter-invesselsto be delivered Office space 2018 $119,023 $8,725 $1,992 2019 96,048 19,316 1,314 2020 82,638 20,945 509 2021 63,040 10,807 184 2022 43,689 10,109 — 2023 and thereafter 77,828 19,371 — Total $482,266 $89,273 $3,999 Charter hire expense for Navios Holdings chartered-in vessels amounted to $122,668, $84,114 and $134,364, for each of the years endedDecember 31, 2017, 2016 and 2015, respectively. Charter hire expense for logistics business chartered-in vessels amounted to $1,564, $1,521 and $1,307, foreach of the years ended December 31, 2017, 2016 and 2015, respectively.Rent expense for office space amounted to $2,648, $2,748, and $2,508 for each of the years ended December 31, 2017, 2016 and 2015,respectively. The Company leases office space at 825 3rd Avenue, New York, New York, pursuant to a lease that expires in April 2019. The Company alsoleases office space at 85 Akti Miaouli, Piraeus, Greece, pursuant to one lease agreement that continues to be effective until either party terminates theagreement and other lease agreements that expire in 2019. The Company also leases office space in Monaco pursuant to a lease that expires in June 2018.The Company also leases office space in Antwerp, Belgium pursuant to a lease that expires in 2019.Navios Logistics’ subsidiaries lease various premises in Argentina and Paraguay that expire on various dates through 2021. The above tableincorporates the lease commitments on all offices as disclosed above. F-49Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Chartered-out vessels, barges and pushboats:The future minimum revenue, net of commissions, (i) for dry bulk vessels, expected to be earned on non-cancelable time charters and (ii) for theCompany’s logistics business, expected to be earned on non-cancelable time charters, COA’s with minimum guaranteed volumes and contracts withminimum guaranteed throughput in Navios Logistics’ ports, are as follows: Dry bulkvessels Logisticsbusiness 2018 $35,420 $138,384 2019 2,458 104,721 2020 — 77,209 2021 — 62,290 2022 — 55,450 2023 and thereafter — 699,388 Total minimum revenue, net of commissions $37,878 $1,137,442 Revenues from time charters are not generally received when a vessel is off-hire, which includes time required for scheduled maintenance of thevessel.Navios Logistics’ future minimum revenue, as presented in the table above, expected to be earned on non-cancelable contracts under timecharter after the successful completion of the construction of a river and estuary tanker, is $41,380 for a period of five years, based on current contract rates.NOTE 15: TRANSACTIONS WITH RELATED PARTIESOffice rent: The Company has entered into lease agreements with Goldland Ktimatiki-Ikodomiki-Touristiki Xenodohiaki Anonimos Eteria andEmerald Ktimatiki-Ikodomiki Touristiki Xenodohiaki Anonimos Eteria, both of which are Greek corporations that are currently majority-owned by AngelikiFrangou, Navios Holdings’ Chairman and Chief Executive Officer. The lease agreements provide for the leasing of facilities located in Piraeus, Greece tohouse the operations of most of the Company’s subsidiaries. The total annual lease payments are in aggregate €943 (approximately $1,065) and the leaseagreements continue to be effective until either party terminates the agreement or until they expire in 2019. These payments are subject to annualadjustments, which are based on the inflation rate prevailing in Greece as reported by the Greek State at the end of each year.Purchase of services: The Company utilizes its affiliate company, Acropolis, as a broker. Commissions charged from Acropolis for each of theyears ended December 31, 2017, 2016 and 2015 were $0, $0 and $6, respectively. Included in the trade accounts payable at both December 31, 2017 and2016 was an amount due to Acropolis of $76 and $76, respectively.Vessels charter hire: From 2012, Navios Holdings has entered into charter-in contracts for certain of Navios Partners’ vessels, all of which havebeen redelivered by April 2016.In May 2012 and 2013, the Company entered into two charters with Navios Partners for the Navios Aldebaran and the Navios Prosperity. OnFebruary 11, 2015, the Company and Navios Partners entered into a novation agreement whereby the rights to the time charter contract of the NaviosAldebaran and the Navios Prosperity were transferred to Navios Holdings on February 28 and March 5, 2015, respectively.In 2012 and 2013, the Company entered into various charters with Navios Partners for the Navios Apollon, Navios Libra, Navios Felicity andNavios Hope. In April 2015, these charters were further extended for approximately one year at a net daily rate of $12.5, $12.0, $12.0, $10.0 plus 50/50 profitsharing based on actual earnings at the end of the period.In 2015, the Company entered into various charters with Navios Partners for the Navios Gemini, Navios Hyperion, Navios Soleil, NaviosHarmony, Navios Orbiter, Navios Fantastiks, Navios Alegria, Navios Pollux and Navios Sun. The terms of these charters were approximately nine to twelvemonths, at a net daily rate of $7.6, $12.0, $12.0, $12.0, $12.0, $12.5, $12.0, $11.4 and $12.0, respectively plus 50/50 profit sharing based on actual earningsat the end of the period.In November 2016 the Company entered into a charter with Navios Partners for the Navios Fulvia, a 2010-built Capesize vessel. The term of thischarter was approximately three months from November 2016, at a net daily rate of $11.5. F-50Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Total charter hire expense for all vessels for the years ended December 31, 2017, 2016 and 2015 was $651, $1,711 and $39,727, respectively,and was included in the consolidated statements of comprehensive (loss)/income under “Time charter, voyage and logistics business expenses”.Management fees: Navios Holdings provides commercial and technical management services to Navios Partners’ vessels for a daily fixed fee.This daily fee covers all of the vessels’ operating expenses, including the cost of drydock and special surveys. In each of October 2013, August 2014, andFebruary 2015, the Company amended its existing management agreement with Navios Partners to fix the fees for ship management services of its ownedfleet at: (i) $4.0 daily rate per Ultra-Handymax vessel; (ii) $4.1 daily rate per Panamax vessel; (iii) $5.1 daily rate per Capesize vessel; (iv) $6.5 daily rate percontainer vessel of TEU 6,800; (v) $7.2 daily rate per container vessel of more than TEU 8,000; and (vi) $8.5 daily rate per very large container vessel of morethan TEU 13,000 through December 31, 2015. In February 2016, the Company further amended its existing management agreement to fix the fees for shipmanagement services of its owned fleet at: (i) $4.1 daily rate per Ultra-Handymax vessel; (ii) $4.2 daily rate per Panamax vessel; (iii) $5.25 daily rate perCapesize vessel; (iv) $6.7 daily rate per container vessel of TEU 6,800; (v) $7.4 daily rate per container vessel of more than TEU 8,000; and (vi) $8.75 dailyrate per very large container vessel of more than TEU 13,000 through December 31, 2017. In November 2017, the Company further amended its existingmanagement agreement to fix the fees for ship management services of its owned fleet at: (i) $4.2 daily rate per Ultra-Handymax vessel; (ii) $4.3 daily rate perPanamax vessel; (iii) $5.25 daily rate per Capesize vessel; (iv) $6.7 daily rate per container vessel of TEU 6,800; (v) $7.4 daily rate per container vessel ofmore than TEU 8,000; and (vi) $8.75 daily rate per very large container vessel of more than TEU 13,000 through December 31, 2019. Drydocking expenseswill be reimbursed by Navios Partners at cost at occurrence.Total management fees for the years ended December 31, 2017, 2016 and 2015 amounted to $62,157, $59,209 and $56,504, respectively, andare presented net under the caption “Direct vessel expenses”.Effective August 31, 2016, Navios Partners could, upon request to Navios Holdings, partially or fully defer the reimbursement of dry dockingand other extraordinary fees and expenses under the management agreement to a later date, but not later than January 5, 2018, and if reimbursed on a laterdate, such amounts would bear interest at a rate of 1% per annum over LIBOR. Total amount due from Navios Partners as of December 31, 2017 amounted to$0 (December 31, 2016: $11,105) and is presented under the caption “Long-term receivable from affiliate company”.Navios Holdings provides commercial and technical management services to Navios Acquisition’s vessels for a daily fee that was fixed. Thisdaily fee covers all of the vessels’ operating expenses, other than certain fees and costs. Actual operating costs and expenses would be determined in amanner consistent with how the initial fixed fees were determined. In May 2014, Navios Holdings extended the duration of its existing managementagreement with Navios Acquisition until May 2020 and fixed the fees for ship management services of Navios Acquisition owned fleet for two additionalyears through May 2016 at $6.0 per owned MR2 product tanker and chemical tanker vessel, $7.0 per owned LR1 product tanker vessel and reduced the dailyrate to $9.5 per VLCC vessel. In May 2016, Navios Holdings amended its agreement with Navios Acquisition to fix the fees for ship management services ofNavios Acquisition owned fleet at a daily fee of (i) $6.35 per MR2 product tanker and chemical tanker vessel; (ii) $7.15 per LR1 product tanker vessel; and(iii) $9.5 per VLCC through May 2018. Drydocking expenses under this agreement will be reimbursed at cost at occurrence for all vessels.Total management fees for the years ended December 31, 2017, 2016 and 2015 amounted to $94,973, $97,866 and $95,336, respectively, andare presented net under the caption “Direct vessel expenses”.Pursuant to a management agreement dated December 13, 2013, Navios Holdings provides commercial and technical management services toNavios Europe I’s tanker and container vessels. The term of this agreement is for a period of six years. Management fees under this agreement will bereimbursed at cost at occurrence. Total management fees for the years ended December 31, 2017, 2016 and 2015 amounted to $21,472, $20,855 and $20,383,respectively, and are presented net under the caption “Direct vessel expenses”.Pursuant to a management agreement dated November 18, 2014, as further amended in October 2016, Navios Holdings provides commercial andtechnical management services to Navios Midstream’s vessels for a daily fixed fee of $9.5 per owned VLCC vessel, effective through December 31, 2018.Drydocking expenses under this agreement will be reimbursed at cost at occurrence for all vessels. The term of this agreement is for a period of five years.Total management fees for the years ended December 31, 2017, 2016 and 2015 amounted to $20,805, $20,862 and $17,613, respectively, and are presentednet under the caption “Direct vessel expenses”. F-51Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Pursuant to a management agreement dated June 5, 2015, Navios Holdings provides commercial and technical management services to NaviosEurope II’s dry bulk and container vessels. The term of this agreement is for a period of six years. Management fees under this agreement will be reimbursed atcost at occurrence. Total management fees for the year ended December 31, 2017, 2016 and 2015 amounted to $22,055, $23,527 and $9,581, respectively,and are presented net under the caption “Direct vessel expenses”.Pursuant to a management agreement dated June 7, 2017, as amended in November 2017, Navios Holdings, provides commercial and technicalmanagement services to Navios Containers’ vessels. The term of this agreement is for an initial period of five years with an automatic extension for period offive years thereafter unless a notice for termination is received by either party. The fee for the ship management services provided by Navios Holdings is adaily fee of $6.1 per day for 4,250 TEU, 3,450 TEU and 5,500 TEU container vessels. Drydocking expenses under this agreement are reimbursed by NaviosContainers at cost. Total management fees for the period ended December 31, 2017 amounted to $16,702 and are presented net under the caption “Directvessel expenses”.Navios Partners Guarantee: In November 2012 (as amended in March 2014), the Company entered into an agreement with Navios Partners (the“Navios Partners Guarantee”) to provide Navios Partners with guarantees against counterparty default on certain existing charters, which had previously beencovered by the charter insurance for the same vessels, same periods and same amounts. The Navios Partners Guarantee provides for a maximum possiblepayout of $20,000 by the Company to Navios Partners. Premiums that are calculated on the same basis as the restructured charter insurance are included inthe management fee that is paid by Navios Partners to Navios Holdings pursuant to the management agreement. As of December 31, 2017, Navios Partnershas submitted one claim under this agreement to the Company. As at December 31, 2017 and December 31, 2016, the fair value of the claim was estimated at$20,000 and $19,739, respectively and included in “Other long-term liabilities and deferred income” in the consolidated balance sheet. The final settlementof the amount due will take place at anytime but in no case later than December 31, 2019, in accordance with a letter of agreement effective as ofDecember 29, 2017. During the year ended December 31, 2015, the Company initially recognized this claim as “Other expense” in the consolidatedstatement of comprehensive (loss)/income.General and administrative expenses incurred on behalf of affiliates/Administrative fee revenue from affiliates: Navios Holdings providesadministrative services to Navios Partners. Navios Holdings is reimbursed for reasonable costs and expenses incurred in connection with the provision ofthese services. Navios Holdings extended the duration of its existing administrative services agreement with Navios Partners until December 31, 2022,pursuant to its existing terms. Total general and administrative fees for the years ended December 31, 2017, 2016 and 2015 amounted to $8,347, $7,751 and$6,205, respectively.Navios Holdings provides administrative services to Navios Acquisition. Navios Holdings extended the duration of its existing administrativeservices agreement with Navios Acquisition until May 2020 pursuant to its existing terms. Navios Holdings is reimbursed for reasonable costs and expensesincurred in connection with the provision of these services. Total general and administrative fees for the years ended December 31, 2017, 2016 and 2015amounted to $9,000, $9,427 and $7,608, respectively.Navios Holdings provides administrative services to Navios Logistics. In April 2016, Navios Holdings extended the duration of its existingadministrative services agreement with Navios Logistics until December 2021 pursuant to its existing terms. Navios Holdings is reimbursed for reasonablecosts and expenses incurred in connection with the provision of these services. Total general and administrative fees for the years ended December 31, 2017,2016 and 2015 amounted to $1,000, $1,000 and $760, respectively. The general and administrative fees have been eliminated upon consolidation.Pursuant to an administrative services agreement dated December 13, 2013, Navios Holdings provides administrative services to Navios EuropeI’s tanker and container vessels. The term of this agreement is for a period of six years. Navios Holdings is reimbursed for reasonable costs and expensesincurred in connection with the provision of these services. Total general and administrative fees for the years ended December 31, 2017, 2016 and 2015amounted to $1,187, $1,300 and $800, respectively.Pursuant to an administrative services agreement dated November 18, 2014, Navios Holdings provides administrative services to NaviosMidstream. The term of this agreement is for a period of five years. Navios Holdings is reimbursed for reasonable costs and expenses incurred in connectionwith the provision of these services. Total general and administrative fees for the years ended December 31, 2017, 2016 and 2015 amounted to $1,500,$1,500 and $1,014, respectively.Pursuant to an administrative services agreement dated June 5, 2015, Navios Holdings provides administrative services to Navios Europe II’s drybulk and container vessels. The term of this agreement is for a period of six years. Navios Holdings is reimbursed for reasonable costs and expenses incurredin connection with the provision of these services. Total general and administrative fees charged for the year ended December 31, 2017, 2016 and 2015,amounted to $1,766, $1,820 and $550, respectively. F-52Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Pursuant to the administrative services agreement dated June 7, 2017, Navios Holdings provides administrative services to Navios Containers.Navios Holdings is reimbursed for reasonable costs and expenses incurred in connection with the provision of these services. The term of this agreement is foran initial period of five years with an automatic extension for a period of five years thereafter unless a notice of termination is received by either party. Totalgeneral and administrative fees attributable to this agreement for the period ended December 31, 2017, amounted to $1,868.Administrative services under these agreements include bookkeeping, audit and accounting services, legal and insurance services,administrative and clerical services, banking and financial services, advisory services, investor relations and other services.Balance due from/to affiliates (excluding Navios Europe I and Navios Europe II): Balance due to Navios Partners as of December 31, 2017amounted to $8,315 (December 31, 2016: $8,664), and the Long-term payable to Navios Partners amounted to $14,891 (December 31, 2016: $0). Balancedue to Navios Acquisition as of December 31, 2017 amounted to $2,800 (December 31, 2016: $19,383), and the Long-term payable to Navios Acquisitionamounted to $15,236 (December 31, 2016: $6,399). Balance due to Navios Midstream as of December 31, 2017 amounted to $990 (December 31, 2016:$4,800), and the Long-term payable to Navios Midstream amounted to $4,554 (December 31, 2016: $0). Balance due to Navios Containers as ofDecember 31, 2017 amounted to $3,334 (December 31, 2016: $0), and the Long-term payable to Navios Containers amounted to $7,965 (December 31,2016: $0)The balances mainly consisted of management fees, administrative fees, drydocking and other expenses prepaid by the affiliates according to ourmanagement agreements and other amounts payable to affiliates.Omnibus agreements: Navios Holdings has entered into an omnibus agreement with Navios Partners (the “Partners Omnibus Agreement”) inconnection with the closing of Navios Partners’ IPO governing, among other things, when Navios Holdings and Navios Partners may compete against eachother as well as rights of first offer on certain dry bulk carriers. Pursuant to the Partners Omnibus Agreement, Navios Partners generally agreed not to acquireor own Panamax or Capesize dry bulk carriers under time charters of three or more years without the consent of an independent committee of Navios Partners.In addition, Navios Holdings has agreed to offer to Navios Partners the opportunity to purchase vessels from Navios Holdings when such vessels are fixedunder time charters of three or more years.Navios Holdings entered into an omnibus agreement with Navios Acquisition and Navios Partners (the “Acquisition Omnibus Agreement”) inconnection with the closing of Navios Acquisition’s initial vessel acquisition, pursuant to which, among other things, Navios Holdings and Navios Partnersagreed not to acquire, charter-in or own liquid shipment vessels, except for container vessels and vessels that are primarily employed in operations in SouthAmerica, without the consent of an independent committee of Navios Acquisition. In addition, Navios Acquisition, under the Acquisition OmnibusAgreement, agreed to cause its subsidiaries not to acquire, own, operate or charter dry bulk carriers subject to specific exceptions. Under the AcquisitionOmnibus Agreement, Navios Acquisition and its subsidiaries granted to Navios Holdings and Navios Partners, a right of first offer on any proposed sale,transfer or other disposition of any of its dry bulk carriers and related charters owned or acquired by Navios Acquisition. Likewise, Navios Holdings andNavios Partners agreed to grant a similar right of first offer to Navios Acquisition for any liquid shipment vessels it might own. These rights of first offer willnot apply to a (i) sale, transfer or other disposition of vessels between any affiliated subsidiaries, or pursuant to the terms of any charter or other agreementwith a counterparty, or (ii) merger with or into, or sale of substantially all of the assets to, an unaffiliated third party.Navios Holdings entered into an omnibus agreement with Navios Midstream, Navios Acquisition and Navios Partners in connection with theNavios Midstream IPO, pursuant to which Navios Acquisition, Navios Holdings, Navios Partners and their controlled affiliates generally have agreed not toacquire or own any VLCCs, crude oil tankers, refined petroleum product tankers, LPG tankers or chemical tankers under time charters of five or more yearswithout the consent of Navios Midstream. The omnibus agreement contains significant exceptions that will allow Navios Acquisition, Navios Holdings,Navios Partners or any of their controlled affiliates to compete with Navios Midstream under specified circumstances.Navios Holdings entered into an omnibus agreement with Navios Containers, Navios Acquisition, Navios Partners and Navios Midstream,pursuant to which Navios Acquisition, Navios Holdings, Navios Partners, Navios Midstream and their controlled affiliates generally have granted a right offirst refusal to Navios Containers over any container vessels to be sold or acquired in the future, subject to significant exceptions that would allow NaviosAcquisition, Navios Holdings, Navios Partners and Navios Midstream or any of their controlled affiliates to compete with Navios Containers under specifiedcircumstances. F-53Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Midstream General Partner Option Agreement: Navios Holdings entered into an option agreement, with Navios Acquisition under whichNavios Acquisition, which owns and controls Navios Maritime Midstream Partners GP LLC (“Midstream General Partner”), granted Navios Holdings theoption to acquire a minimum of 25% of the outstanding membership interests in Midstream General Partner and the incentive distribution rights in NaviosMidstream representing the right to receive an increasing percentage of the quarterly distributions when certain conditions are met. The option shall expireon November 18, 2024. The purchase price for the acquisition for all or part of the option interest shall be an amount equal to its fair market value. As ofDecember 31, 2017, Navios Holdings had not exercised any part of that option.Sale of Vessels and Sale of Rights to Navios Partners: Upon the sale of vessels to Navios Partners, Navios Holdings recognizes the gainimmediately in earnings only to the extent of the interest in Navios Partners owned by third parties and defers recognition of the gain to the extent of its ownownership interest in Navios Partners (the “deferred gain”). Subsequently, the deferred gain is amortized to income over the remaining useful life of thevessel. The recognition of the deferred gain is accelerated in the event that (i) the vessel is subsequently sold or otherwise disposed of by Navios Partners or(ii) the Company’s ownership interest in Navios Partners is reduced. In connection with the public offerings of common units by Navios Partners, a pro rataportion of the deferred gain is released to income upon dilution of the Company’s ownership interest in Navios Partners. As of December 31, 2017 and 2016,the unamortized deferred gain for all vessels and rights sold totaled $9,955 and $11,846, respectively. For the years ended December 31, 2017, 2016 and2015, Navios Holdings recognized $1,892, $1,833 and $2,621 of the deferred gain, respectively, in “Equity/(loss) in net earnings of affiliated companies”.Participation in offerings of affiliates: Refer to Note 8 for Navios Holdings’ participation in Navios Acquisition’s and Navios Partners’offerings. On February 4, 2015, Navios Holdings entered into a share purchase agreement with Navios Partners pursuant to which Navios Holdings made aninvestment in Navios Partners by purchasing common units, and general partnership interests, in order to maintain its 20.0% partnership interest in NaviosPartners following its equity offering in February 2015. In connection with this agreement, Navios Holdings entered into a registration rights agreement withNavios Partners pursuant to which Navios Partners provided Navios Holdings with certain rights relating to the registration of the common units. NaviosHoldings has entered into additional share purchase agreements on December 30, 2016, March 3, 2017, and March 23, 2017, and March 31, 2017 for thepurchase up to a total of 1,313,399 general partnership interests.The Navios Acquisition Credit Facilities: On September 19, 2016, Navios Holdings entered into a secured credit facility of up to $70,000 withNavios Acquisition. This credit facility was secured by all of the Company’s’ interest in Navios Acquisition and 78.5% of the Company’s interest in NaviosLogistics, representing a majority of the shares outstanding of Navios Logistics. This facility was provided for an arrangement fee of $700. On November 3,2017, Navios Holdings prepaid in full the outstanding amount under this credit facility with Navios Acquisition and all collateral was released.In 2010, Navios Acquisition entered into a $40,000 credit facility with Navios Holdings, which matured in December 2015. The facility wasavailable for multiple drawings up to a limit of $40,000 and had a margin of LIBOR plus 300 basis points. The final maturity date was January 2, 2017. As ofDecember 31, 2017 and 2016, there was no outstanding amount under this facility.The Navios Partners Credit Facility: In May 2015, Navios Partners entered into a credit facility with Navios Holdings of up to $60,000. TheNavios Partners Credit Facility bears an interest of LIBOR plus 300 bps. The final maturity date was January 2, 2017. As of December 31, 2017 and 2016,there was no outstanding amount under this facility. In April 2016, Navios Partners has drawn $21,000 from the Navios Partners Credit Facility, which wasfully repaid during April 2016.Balance due from Navios Europe I: Balance due from Navios Europe I as of December 31, 2017 amounted to $7,176 (December 31, 2016:$2,376) which included the net current amount receivable of $4,002 (December 31, 2016: $145) mainly consisting of management fees, accrued interestincome earned under the Navios Revolving Loans I (as defined in Note 8) and other expenses and the non-current amount of $3,174 (December 31, 2016:$2,231) related to the accrued interest income earned under the Navios Term Loans I (as defined in Note 8).The Navios Revolving Loans I and the Navios Term Loans I earn interest and an annual preferred return, respectively, at 1,270 basis points perannum, on a quarterly compounding basis and are repaid from free cash flow (as defined in the loan agreement) to the fullest extent possible at the end ofeach quarter. There are no covenant requirements or stated maturity dates.As of December 31, 2017 and 2016, the outstanding amount relating to Navios Holdings’ portion under the Navios Revolving Loans I was$11,125 and $7,125, respectively, under the caption “Loan receivable from affiliate companies”. As of December 31, 2017, the amount undrawn under theRevolving Loans I was $0. F-54Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) On March 17, 2017, Navios Holdings transferred to Navios Partners its rights to the Navios Revolving Loans I and the Navios Term Loans I(including the respective accrued receivable interest), with a total carrying value of $21,384 for a total consideration of $33,473, comprised of $4,050 in cashand 13,076,923 newly issued common units of Navios Partners with a fair value of $29,423 (based on Navios Partners’ trading price as of the closing of thetransaction). The Company evaluated this transaction in accordance with ASC 860, classifying it as a secured borrowing arrangement. At the date of thistransaction, the Company recognized a long-term liability of $33,473, including a premium of $12,089 which will be amortized through “Interest income”over the term of the loans until 2023, and is included within “Long-term payable to affiliate companies”. Navios Holdings may be required from NaviosPartners, under certain conditions, to repurchase the loans after the third anniversary of the date of the transaction based on the then-outstanding balance ofthe loans. See also Note 8. As of December 31, 2017, the balance payable to Navios Partners amounted to $34,227, including the unamortized premium of$10,390.Balance due from Navios Europe II: Balance due from Navios Europe II as of December 31, 2017, amounted to $2,440 (December 31, 2016:$10,453), which included the net current payable amount of $1,310 (December 31, 2016: $8,402), mainly consisting of management fees and accrued interestincome earned under the Navios Revolving Loans II (as defined in Note 8) and other expenses and the non-current amount receivable of $3,750 (December31, 2016: $2,051) related to the accrued interest income earned under the Navios Term Loans II (as defined in Note 8).The Navios Revolving Loans II and the Navios Term Loans II earn interest and an annual preferred return, respectively, at 1,800 basis points perannum, on a quarterly compounding basis and are repaid from free cash flow (as defined in the loan agreement) to the fullest extent possible at the end ofeach quarter. There are no covenant requirements or stated maturity dates.As of December 31, 2017, the outstanding amount relating to Navios Holdings’ portion under the Navios Revolving Loans II was $12,063(December 31, 2016: $11,602), under the caption “Loan receivable from affiliate companies.” In March 2017, the amount undrawn from the NaviosRevolving Loans II increased by $14,000. As of December 31, 2017, the amount undrawn from the Navios Revolving Loans II was $15,003, of which NaviosHoldings may be required to fund an amount ranging from $0 to $15,003.NOTE 16: PREFERRED AND COMMON STOCKVested, Surrendered and ForfeitedDuring 2017, 843,332 restricted stock units, issued to the Company’s employees in 2016, vested.During 2016, 24,970 restricted stock units, issued to the Company’s employees in 2014 and 2013, vested.During 2015, 16,960 restricted stock units, issued to the Company’s employees in 2013 and 2012, vested.During the year ended December 31, 2017 and 2016, 4,232 and 2,908 restricted shares of common stock, respectively, were forfeited upontermination of employment.Conversion of Preferred StockDuring the year ended December 31, 2017, 2,436 shares of convertible preferred stock were converted into 1,740,000 shares of common stock.The shares of convertible preferred stock were converted pursuant to their original terms, which provided the option to the holders of these shares to convertall or any such then-outstanding shares of preferred stock into a number of fully paid and non-assessable shares of common stock determined by dividing theamount of the liquidation preference ($10,000 per share) by a conversion price equal to $14.00 per share of common stock. Following this conversion, theCompany cancelled the undeclared preferred dividend of the converted shares of $702, and issued 50,150 shares of common stock with a fair value of $84 atthe date of issuance (See also note 19).During the year ended December 31, 2016, there were no conversions of preferred stock. F-55Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Issuance of Cumulative Perpetual Preferred StockThe Company’s 2,000,000 American Depositary Shares, Series G and the 4,800,000 American Depositary Shares, Series H are recorded at fairmarket value on issuance. Each of the shares represents 1/100th of a share of the Series G and Series H, with a liquidation preference of $2,500 per share($25.00 per American Depositary Share). Dividends are payable quarterly in arrears on the Series G at a rate of 8.75% per annum and on the Series H at a rateof 8.625% per annum of the stated liquidation preference. The Company has accounted for these shares as equity.Series G and Series H American Depositary Shares Exchange Offer On November 8, 2016, the Company announced the completion of the offer to exchange cash and/or newly issued shares of common stock forany and all outstanding of its Series G and Series H. A total number of 5,449 Series G and 18,982 Series H were validly tendered in the exchange offer,representing an aggregate book value of $61,078. The Company paid an aggregate of $9,323 in cash, which includes tender offer expenses, and issued a totalof 7,589,176 shares of common stock, with a fair value of $7,893 at the date of the issuance.On April 19, 2017, Navios Holdings announced the completion of the offer commenced on March 21, 2017, to exchange newly issued shares ofthe Company’s common stock for any and all outstanding American Depositary Shares, each representing 1/100th of a share of either Series G or Series H.360 Series G and 406 Series H shares were validly tendered, representing an aggregate nominal value of approximately $1,843. Navios Holdings paid fortender offer expenses $571, and issued a total of 625,815 shares of common stock with a fair value of $1,127. Following the completion of the offer, theCompany cancelled the undeclared preferred dividend of Series G and Series H of $270 (See also note 19).In February 2016, Navios Holdings announced the suspension of payment of quarterly dividends on its preferred stock, including the Series Gand Series H. Total undeclared preferred dividends as of December 31, 2017 were $19,693 (net of cancelled dividends).On July 15, 2017, the Company reached six quarterly dividend payments in arrears relating to its Series G and Series H and as a result therespective dividend rate increased by 0.25%.Issuances to Employees, Officers and DirectorsOn December 11, 2017, pursuant to the stock plan approved by the Board of Directors, 4,320,975 common stock was granted to Navios Holdingsemployees, officers and directors and issued on January 16, 2018.On December 11, 2015, pursuant to the stock plan approved by the Board of Directors, Navios Holdings granted to its employees, officers anddirectors 2,540,000 shares of restricted common stock and 1,000,000 stock options.Acquisition of Treasury StockIn November 2015, the Board of Directors approved a share repurchase program for up to $25,000 of the Navios Holdings’ common stock. Sharerepurchases were made pursuant to a program adopted under Rule 10b5-1 under the Securities Exchange Act. Repurchases were subject to restrictions underthe terms of the Company’s credit facilities and indenture. The program did not require any minimum purchase or any specific number or amount of sharesand may be suspended or reinstated at any time in the Company’s discretion and without notice. In particular, Navios Holdings, pursuant to the terms of itsSeries G and Series H, may not redeem, repurchase or otherwise acquire its common stock or preferred shares, including the Series G and Series H (other thanthrough an offer made to all holders of Series G and Series H) unless full cumulative dividends on Series G and Series H, when payable, have been paid. As ofDecember 31, 2016, 948,584 shares, were repurchased under this program, for a total consideration of $818. In total, up until February 2016, 1,147,908 shareswere repurchased under this program, for a total consideration of $1,070. Since that time, this program has been suspended by the Company.Navios Holdings had outstanding as of December 31, 2017 and 2016, 120,386,472 and 117,131,407 shares of common stock, respectively, andpreferred stock 46,302 (14,191 Series G, 28,612 Series H and 3,499 shares of convertible preferred stock) and 49,504 (14,551 Series G, 29,018 Series H and5,935 shares of convertible preferred stock), respectively. F-56Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) NOTE 17: INTEREST EXPENSE AND FINANCE COSTInterest expense and finance cost consisted of the following: For the YearEndedDecember 31,2017 For the YearEndedDecember 31,2016 For the YearEndedDecember 31,2015 Interest expense $115,099 $107,787 $108,488 Amortization and write-off of deferred financing costs 6,391 5,653 4,524 Other 121 199 139 Interest expense and finance cost $121,611 $113,639 $113,151 NOTE 18: SEGMENT INFORMATIONThe Company currently has two reportable segments from which it derives its revenues: Dry Bulk Vessel Operations and Logistics Business. Thereportable segments reflect the internal organization of the Company and are strategic businesses that offer different products and services. The Dry BulkVessel Operations consists of the transportation and handling of bulk cargoes through the ownership, operation, and trading of vessels, freight and FFAs. TheLogistics Business consists of operating ports and transfer station terminals, handling of vessels, barges and pushboats as well as upriver transport facilities inthe Hidrovia region.The Company measures segment performance based on net income/ (loss) attributable to Navios Holdings common stockholders. Inter-segmentsales and transfers are not significant and have been eliminated and are not included in the following tables. Summarized financial information concerningeach of the Company’s reportable segments is as follows: Dry Bulk VesselOperationsfor theYear EndedDecember 31,2017 Logistics Businessfor theYear EndedDecember 31,2017 Totalfor theYear EndedDecember 31,2017 Revenue $250,433 $212,616 $463,049 Administrative fee revenue from affiliates 23,667 — 23,667 Interest income 6,593 238 6,831 Interest expense and finance cost (93,264) (28,347) (121,611) Depreciation and amortization (77,245) (26,867) (104,112) Equity/ (Loss) in net earnings of affiliated companies 4,399 — 4,399 Net (loss)/ income attributable to Navios Holdings commonstockholders (167,892) 1,982 (165,910) Total assets 1,947,777 682,204 2,629,981 Goodwill 56,240 104,096 160,336 Capital expenditures (347) (46,521) (46,868) Investment in affiliates 183,160 — 183,160 Cash and cash equivalents 47,744 79,888 127,632 Restricted cash 6,558 — 6,558 Long-term debt, net (including current and noncurrent portion) $1,149,742 $532,746 $1,682,488 F-57Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Dry Bulk VesselOperationsfor theYear EndedDecember 31,2016 Logistics Businessfor theYear EndedDecember 31,2016 Totalfor theYear EndedDecember 31,2016 Revenue $199,446 $220,336 $419,782 Administrative fee revenue from affiliates 21,799 — 21,799 Interest income 4,132 815 4,947 Interest expense and finance cost (89,399) (24,240) (113,639) Depreciation and amortization (87,197) (26,628) (113,825) Equity/ (Loss) in net earnings of affiliated companies (202,779) — (202,779) Net (loss)/ income attributable to Navios Holdings commonstockholders (310,306) 6,483 (303,823) Total assets 2,083,526 669,369 2,752,895 Goodwill 56,240 104,096 160,336 Capital expenditures (60,420) (91,173) (151,593) Investment in affiliates 160,071 — 160,071 Cash and cash equivalents 70,810 65,182 135,992 Restricted cash 2,486 2,900 5,386 Long-term debt, net (including current and noncurrent portion) $1,223,146 $427,949 $1,651,095 Dry Bulk VesselOperationsfor theYear EndedDecember 31,2015 Logistics Businessfor theYear EndedDecember 31,2015 Totalfor theYear EndedDecember 31,2015 Revenue $229,772 $251,048 $480,820 Administrative fee revenue from affiliates 16,177 — 16,177 Interest income 1,801 569 2,370 Interest expense and finance cost (86,069) (27,082) (113,151) Depreciation and amortization (92,341) (27,969) (120,310) Equity in net earnings of affiliated companies 61,484 — 61,484 Net (loss)/ income attributable to Navios Holdings commonstockholders (148,306) 14,194 (134,112) Total assets 2,359,299 599,514 2,958,813 Goodwill 56,240 104,096 160,336 Capital expenditures (7,882) (27,039) (34,921) Investment in affiliates 381,746 — 381,746 Cash and cash equivalents 81,905 81,507 163,412 Restricted cash 13,480 — 13,480 Long-term debt, net (including current and noncurrent portion) $1,213,740 $367,568 $1,581,308 The following table sets out the Company’s revenue by geographic region. Dry bulk Vessel Operations (excluding administrative fee revenuefrom affiliates) and Logistics Business revenue are allocated on the basis of the geographic region in which the customer is located. Dry bulk vessels operateworldwide. Logistics business operates different types of tanker vessels, pushboats, and wet and dry barges for delivering a wide range of products betweenports in the Paraná, Paraguay and Uruguay River systems in South America (commonly known as the “Hidrovia” or the “waterway”).Revenues from specific geographic regions which contribute over 10% of revenue are disclosed separately. F-58Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Revenue by Geographic Region Year endedDecember 31,2017 Year endedDecember 31,2016 Year endedDecember 31,2015 North America $5,513 $6,218 $22,317 Europe 124,857 109,267 109,347 Asia 91,552 73,073 87,658 South America 212,616 220,336 253,746 Other 28,511 10,888 7,752 Total $463,049 $419,782 $480,820 Vessels 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. The total net book value of long-lived assets for dry bulk vessels amounted to $1,278,447 and $1,409,415 at December 31, 2017 and2016, respectively. For Logistics Business, all long-lived assets are located in South America. The total net book value of long-lived assets for the LogisticsBusiness amounted to $563,887 and $544,065 at December 31, 2017 and 2016, respectively.NOTE 19: LOSS PER COMMON SHARELoss per share is calculated by dividing net loss attributable to Navios Holdings common stockholders by the weighted average number ofshares of Navios Holdings outstanding during the periods presented. Net (loss)/income attributable to Navios Holdings common stockholders is calculatedby adding to (if a discount) or deducting from (if a premium) net (loss)/ income attributable to Navios Holdings common stockholders the difference betweenthe fair value of the consideration paid upon redemption and the carrying value of the preferred stock, including the unamortized issuance costs of thepreferred stock, and the amount of any undeclared dividend cancelled.For the year ended December 31, 2017, 5,033,156 potential common shares and 4,566,836 potential shares of convertible preferred stock havean anti-dilutive effect (i.e. those that increase income per share or decrease loss per share) and are therefore excluded from the calculation of diluted net lossper share.For the year ended December 31, 2016, 3,411,270 potential common shares and 5,935,000 potential shares of convertible preferred stock havean anti-dilutive effect (i.e. those that increase income per share or decrease loss per share) and are therefore excluded from the calculation of diluted net lossper share.For the year ended December 31, 2015, 1,698,569 potential common shares and 6,522,556 potential shares of convertible preferred stock havean anti-dilutive effect (i.e. those that increase income per share or decrease loss per share) and are therefore excluded from the calculation of diluted net lossper share. F-59Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Year endedDecember 31,2017 Year endedDecember 31,2016 Year endedDecember 31,2015 Numerator: Net loss attributable to Navios Holdings common stockholders $(165,910) $(303,823) $(134,112) Declared and undeclared dividend on preferred stock and onunvested restricted shares (10,421) (15,909) (16,202) Tender Offer – Redemption of preferred stock Series G and Hincluding $972 and $5,063 of undeclared preferred dividendcancelled for the year ended December 31, 2017 andDecember 31, 2016, respectively 1,033 46,627 — Loss available to Navios Holdings common stockholders, basicand diluted $(175,298) $(273,105) $(150,314) Denominator: Denominator for basic and diluted net loss per shareattributable to Navios Holdings stockholders — adjustedweighted shares 116,673,459 107,366,783 105,896,235 Basic and diluted net loss per share attributable to NaviosHoldings stockholders $(1.50) $(2.54) $(1.42) NOTE 20: INCOME TAXESMarshall Islands, Liberia, Panama and Malta do not impose a tax on international shipping income. Under the laws of Marshall Islands, Malta,Liberia and Panama, the countries of incorporation of the Company and its subsidiaries and the vessels’ registration, the companies are subject to registrationand tonnage taxes which have been included in direct vessel expenses in the accompanying consolidated statements of comprehensive (loss)/income.Certain of the Company’s subsidiaries have registered offices in Greece under Greek Law 27/75 as amended and in force (former law 89/67).These companies are allowed to conduct the specific business activities provided in their license and the provisions of the above legislation. Same law(27/75) provides that these companies are exempted in Greece from any tax, duty, levy, contribution or deduction in respect of income.In accordance with the currently applicable Greek law, ship owning companies of foreign flagged vessels that are managed by Greek or foreignship management companies having established an office/branch in Greece under law 27/75 are subject to duties towards the Greek state which are calculatedon the basis of the relevant vessel’s tonnage. In case that tonnage tax and/or similar taxes/duties are paid by the shipowning companies to the vessel’s flagstate, these are deducted from the amount of the duty to be paid in Greece by the ship owner. The payment of said duties exhausts the tax liability of theforeign ship owning company against any tax, duty, charge or contribution payable on income from the exploitation of the foreign flagged vessel.In Belgium, taxation on ocean shipping is based on the tonnage of the sea-going vessels from which the profit is obtained (“tonnage tax”). F-60Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Pursuant to Section 883 of the Internal Revenue Code of the United States (the “Code”), U.S. source income from the international operation ofships is generally exempt from U.S. federal income tax if the company that is treated for U.S. federal income tax purposes as earning such income meetscertain requirements set forth in Section 883 of the Code and the U.S. Treasury regulations thereunder. Among other things, in order to qualify for thisexemption, each relevant company must be incorporated in a country outside the United States which grants an “equivalent exemption” from income taxes toU.S. corporations. In addition, either (i) the stock of each relevant company must be treated under Section 883 of the Code and the U.S. Treasury regulationsthereunder as “primarily traded” and “regularly traded” on an “established securities market” in the United States or in another country that grants an“equivalent exemption” or (ii) more than 50% of the value of the stock of each relevant company must be owned, directly or indirectly, by (a) individualswho are residents in countries that grant an “equivalent exemption,” (b) foreign corporations organized in countries that grant an “equivalent exemption”and that meet the test described in (i) and/or (c) certain other shareholders described in Section 883 of the Code and the U.S. Treasury regulations thereunder.The management of the Company believes that the Company and each of its relevant subsidiaries qualifies for the tax exemption under Section 883 of theCode, provided that the Company’s common stock continues to be listed on the NYSE and represents more than 50% of the total combined voting power ofall classes of the Company’s stock entitled to vote and of the total value of the Company’s stock, and less than 50% of the Company’s common stock isowned, actually or constructively under specified stock attribution rules, on more than half the number of days in the relevant year by persons who each own5% or more of the vote and value of the Company’s common stock, but no assurance can be given that the Company will satisfy these requirements or qualifyfor this exemption.The income tax benefit / (expense) reflected in the Company’s consolidated financial statements for the years ended December 31, 2017, 2016and 2015 is mainly attributable to Navios Holdings’ subsidiaries in South America, which are subject to the Argentinean, Brazilian and Paraguayan incometax regime.CNSA is located in a tax free zone and is not liable to income tax. Navios Logistics’ operations in Uruguay are exempted from income taxes.Income tax liabilities of the Argentinean companies for the current and prior periods are measured at the amount expected to be paid to thetaxation authorities, using a tax rate of 35% on the taxable net income. As a result of the tax reforms voted by the Argentinean Parliament in December 2017,the corporate income tax rate will decrease to 30% for the year 2018, and to 25% from 2019 onwards. Tax rates and tax laws used to assess the income taxliability are those that are effective on the close of the fiscal period. Additionally, at the end of the fiscal year, local companies in Argentina have to calculatean assets tax, the Minimum Presumed Income Tax). This tax is supplementary to income tax and is calculated by applying the effective tax rate of 1% overthe gross value of the corporate assets (based on tax law criteria). The subsidiaries’ tax liabilities will be the higher of income tax or Minimum PresumedIncome Tax. However, if the Minimum Presumed Income Tax exceeds income tax during any fiscal year, such excess may be computed as a prepayment ofany income tax excess over the Minimum Presumed Income Tax that may arise in the next ten fiscal years.Under the tax laws of Argentina, the subsidiaries of the Company in that country are subject to taxes levied on gross revenues. Rates differdepending on the jurisdiction where revenues are earned for tax purposes. Average rates were approximately 5.0% for the year ended December 31, 2017(5.0% for both 2016 and 2015, respectively). As a result of the tax reform voted by the Argentinean Parliament in December 2017, this rate will be reduced asof January 2018, from 5.0% to 3.0%.There are two possible options to determine the income tax liability of Paraguayan companies. Under the first option income tax liabilities forthe current and prior periods are measured at the amount expected to be paid to the taxation authorities, by applying the tax rate of 10% on the fiscal profitand loss. 50% of revenues derived from international freights are considered Paraguayan sourced (and therefore taxed) if carried between Paraguay andArgentina, Bolivia, Brazil or Uruguay. Alternatively, only 30% of revenues derived from international freights are considered Paraguayan sourced.Companies whose operations are considered international freights can choose to pay income taxes on their revenues at an effective tax rate of 1% on suchrevenues, without considering any other kind of adjustments. Fiscal losses, if any, are neither deducted nor carried forward.The corporate income tax rate in Brazil and Paraguay is 34% and 10%, respectively, for the year ended December 31, 2017.The Company’s deferred taxes as of December 31, 2017 and 2016, relate primarily to deferred tax liabilities on acquired intangible assetsrecognized in connection with Navios Logistics. F-61Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) As of January 1, 2007, the Company adopted the provisions of FASB for Accounting for Uncertainty in Income Taxes. This guidance requiresapplication of a more likely than not threshold to the recognition and derecognition of uncertain tax positions. This guidance permits the Company torecognize the amount of tax benefit that has a greater that 50% likelihood of being ultimately realized upon settlement. It further requires that a change injudgment related to the expected ultimate resolution of uncertain tax positions be recognized in earnings in the quarter of such change. Kleimar’s open taxyears are 2014 and onwards. Argentinean companies have open tax years ranging from 2010 and onwards and Paraguayan and Brazilian companies haveopen tax years ranging from 2011 and onwards. In relation to these open tax years, the Company believes that there are no material uncertain tax positions.NOTE 21: OTHER INCOME – OTHER EXPENSEDuring the years ended December 31, 2017, 2016 and 2015, taxes other-than-income taxes of Navios Logistics amounted to $9,018, $9,740, and$11,976, respectively, and were included in the statements of comprehensive (loss)/income within the caption “Other expense”.In March 2016, the Company agreed with a charterer for the early redelivery of one of its vessels in exchange for $13,000 in cash and settlementof outstanding claims payable to the charterer amounting to $1,871. The total amount of $14,871 was included in the statement of comprehensive(loss)/income within the caption “Other income”.NOTE 22: SUBSEQUENT EVENTS a)In January 2018, Navios Holdings agreed to charter-in, under two ten-year bareboat contracts, from an unrelated third party two newbuildingbulk carriers of about 82,000 dwt per vessel, expected to be delivered in the fourth quarter of 2019 and the first quarter of 2020 respectively.Navios Holdings has agreed to pay in total $11,140, representing a deposit for the option to acquire these vessels, of which $5,570 was paidupon signing of the contracts. The average charter-in rate per day amounts to $5,700 and $5,564 respectively. b)In February 2018, Navios Holdings acquired from an unrelated third party, a previously chartered-in vessel, Navios Equator Prosper, a 2000built, 171,191 dwt vessel, for a total acquisition price of $10,000 which was paid in cash. c)On February 21, 2018, Navios Partners announced that it has closed an offering of 18,422,000 common units which includes the sale of $5,000of common units to Navios Holdings, at $1.90 per common unit. In addition, Navios Holdings paid $714 to retain its 2% general partnershipinterest. Following the closing of this offering, Navios Holdings owns a 20.2% interest in Navios Partners, including the 2% general partnershipinterest. d)In March 2018, Navios Holdings completed the sale to an unrelated third party the Navios Herakles, a 2000 built, 52,061 dwt vessel, for a totalnet sale price of $7,682 paid in cash. The impairment loss due to the sale amounted to $6,715. d)On March 13, 2018, Navios Containers announced that it has closed a private placement of 5,454,546 common shares at a subscription price of$5.50 per common share. Navios Holdings invested $500 in the private placement and currently owns 3.2% of the outstanding share capital ofNavios Containers. In addition, Navios Holdings received warrants, with a five-year term, for 1.7% of the newly issued equity. F-62Exhibit 8.1List of Subsidiaries Navios Maritime Holdings Inc.Subsidiaries included in the consolidation: Company Name Nature OwnershipInterest Country ofIncorporationNavios Maritime Holdings Inc. Holding Company Marshall Is.Navios Corporation Sub-Holding Company 100% Marshall Is.Navios International Inc. Operating Company 100% Marshall Is.Navimax Corporation Operating Company 100% Marshall Is.Navios Handybulk Inc. Operating Company 100% Marshall Is.Hestia Shipping Ltd Operating Company 100% MaltaAnemos Maritime Holdings Inc. Sub-Holding Company 100% Marshall Is.Navios ShipManagement Inc. Management Company 100% Marshall Is.NAV Holdings Limited Sub-Holding Company 100% MaltaKleimar N.V. Operating Company/Vessel Owning Company/Management Company 100% BelgiumKleimar Ltd. Operating Company 100% Marshall Is.Bulkinvest S.A. Operating Company 100% LuxembourgPrimavera Shipping Corporation Operating Company 100% Marshall Is.Ginger Services Co. Operating Company 100% Marshall Is.Aquis Marine Corp. Sub-Holding Company 100% Marshall Is.Navios Tankers Management Inc. Management Company 100% Marshall Is.Astra Maritime Corporation Vessel Owning Company 100% Marshall Is.Achilles Shipping Corporation Operating Company 100% Marshall Is.Apollon Shipping Corporation Operating Company 100% Marshall Is.Herakles Shipping Corporation Operating Company 100% Marshall Is.Hios Shipping Corporation Operating Company 100% Marshall Is.Ionian Shipping Corporation Operating Company 100% Marshall Is.Kypros Shipping Corporation Operating Company 100% Marshall Is.Meridian Shipping Enterprises Inc. Vessel Owning Company 100% Marshall Is.Mercator Shipping Corporation Vessel Owning Company 100% Marshall Is.Arc Shipping Corporation Vessel Owning Company 100% Marshall Is.Horizon Shipping Enterprises Corporation Vessel Owning Company 100% Marshall Is.Magellan Shipping Corporation Vessel Owning Company 100% Marshall Is.Aegean Shipping Corporation Operating Company 100% Marshall Is.Star Maritime Enterprises Corporation Vessel Owning Company 100% Marshall Is.Corsair Shipping Ltd. Vessel Owning Company 100% Marshall IsRowboat Marine Inc. Operating Company 100% Marshall IsBeaufiks Shipping Corporation Operating Company 100% Marshall IsNostos Shipmanagement Corp. Vessel Owning Company 100% Marshall Is.Portorosa Marine Corp. Operating Company 100% Marshall Is.Shikhar Ventures S.A. Vessel Owning Company 100% LiberiaSizzling Ventures Inc. Operating Company 100% LiberiaRheia Associates Co. Operating Company 100% Marshall Is.Taharqa Spirit Corp. Operating Company 100% Marshall Is.Rumer Holding Ltd. Vessel Owning Company 100% Marshall Is.Pharos Navigation S.A. Vessel Owning Company 100% Marshall Is.Pueblo Holdings Ltd Vessel Owning Company 100% Marshall Is.Quena Shipmanagement Inc. Operating Company 100% Marshall Is.Aramis Navigation Inc. Vessel Owning Company 100% Marshall Is.White Narcissus Marine S.A. Vessel Owning Company 100% PanamaNavios GP L.L.C. Operating Company 100% Marshall Is.Red Rose Shipping Corp. Vessel Owning Company 100% Marshall Is.Highbird Management Inc. Vessel Owning Company 100% Marshall Is.Ducale Marine Inc. Vessel Owning Company 100% Marshall Is.Vector Shipping Corporation Vessel Owning Company 100% Marshall Is.Faith Marine Ltd. Vessel Owning Company 100% LiberiaNavios Maritime Finance (US) Inc. Operating Company 100% DelawareNavios Maritime Finance II (US) Inc. Operating Company 100% DelawareTulsi Shipmanagement Co. Operating Company 100% Marshall Is.Cinthara Shipping Ltd. Operating Company 100% Marshall Is.Rawlin Services Co. Operating Company 100% Marshall Is.Mauve International S.A. Operating Company 100% Marshall Is.Serenity Shipping Enterprises Inc. Vessel Owning Company 100% Marshall Is.Mandora Shipping Ltd Vessel Owning Company 100% Marshall Is.Solange Shipping Ltd. Vessel Owning Company 100% Marshall Is.Diesis Ship Management Ltd Operating Company 100% Marshall Is.Navios Holdings Europe Finance Inc. Sub-Holding Company 100% Marshall Is.Navios Asia LLC Sub-Holding Company 100% Marshall Is.Iris Shipping Corporation Vessel Owning Company 100% Marshall Is.Jasmine Shipping Corporation Vessel Owning Company 100% Marshall Is.Emery Shipping Corporation Vessel Owning Company 100% Marshall Is.Lavender Shipping Corporation Vessel Owning Company 100% Marshall Is.Esmeralda Shipping Corporation Vessel Owning Company 100% Marshall Is.Triangle Shipping Corporation Vessel Owning Company 100% Marshall Is.Roselite Shipping Corporation Operating Company 100% Marshall Is.Smaltite Shipping Corporation Operating Company 100% Marshall Is.Motiva Trading Ltd Operating Company 100% Marshall Is.Alpha Merit Corporation Sub-Holding Company 100% Marshall Is.Thalassa Marine S.A. Operating Company 100% Marshall Is.All subsidiaries included in the consolidated financial statements are 100% owned, except for Navios Logistics and its subsidiaries, which is 63.8% owned.Affiliates included in the financial statements accounted for under the equity methodIn the consolidated financial statements of Navios Holdings, the following entities are included as affiliates and are accounted for under the equity methodfor such periods: (i) Navios Partners and its subsidiaries (ownership interest as of December 31, 2017 was 20.8%, which includes a 2.0% general partnerinterest); (ii) Navios Acquisition and its subsidiaries (economic interest as of December 31, 2017 was 46.2%); (iii) Acropolis Chartering and Shipping Inc.(“Acropolis”) (economic interest as of December 31, 2017 was 35.0%); (iv) Navios Europe I and its subsidiaries (economic interest as of December 31, 2017was 47.5%); (v) Navios Europe II and its subsidiaries (economic interest as of December 31, 2017 was 47.5%); and (vi) Navios Containers and its subsidiaries(economic interest as of December 31, 2017 was 3.4%).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 of Navios Maritime Holdings Inc.;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularlyduring the period in which this report is being prepared;b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles;c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report on such evaluation; andd) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the period covered by the annualreport that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’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 registrant’s internal control overfinancial reporting.Date: April 13, 2018 /s/ Angeliki FrangouAngeliki FrangouChief Executive Officer(Principal Executive Officer)Exhibit 12.2CERTIFICATION OF CHIEF FINANCIAL OFFICERPURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I, George Achniotis, certify that:1. I have reviewed this annual report on Form 20-F of Navios Maritime Holdings Inc.;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularlyduring the period in which this report is being prepared;b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles;c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report on such evaluation; andd) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the period covered by the annualreport that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’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 registrant’s internal control overfinancial reporting.Date: April 13, 2018 /s/ George AchniotisGeorge AchniotisChief Financial Officer(Principal Financial Officer)Exhibit 13.1CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICERPURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each ofthe undersigned officers of Navios Maritime Holdings Inc. (the “Company”) does hereby certify, to such officers’ knowledge, that:(i) the Annual Report on Form 20-F for the year ended December 31, 2017 (the “Report”) of the Company fully complies with the requirements ofSection 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: April 13, 2018 /s/ Angeliki Frangou Angeliki Frangou Chief Executive OfficerDate: April 13, 2018 /s/ George Achniotis George Achniotis Chief Financial OfficerExhibit 15.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-147186, 333-202141 and 333-222002) ofNavios Maritime Holdings Inc. of our report dated April 13, 2018 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, GreeceApril 13, 2018Exhibit 15.2CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-147186, 333-202141 and 333-222002) ofNavios Maritime Holdings Inc. of our report dated April 5, 2018 related to the financial statements of Navios Maritime Acquisition Corporation, whichappears in this Form 20-F./s/ PricewaterhouseCoopers S.A.Athens, GreeceApril 13, 2018Exhibit 15.3NAVIOS MARITIME ACQUISITION CORPORATION REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM F-2 CONSOLIDATED BALANCE SHEETS AT DECEMBER 31, 2017 AND 2016 F-3 CONSOLIDATED STATEMENTS OF OPERATIONS FOR EACH OF THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015 F-4 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR EACH OF THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015 F-5 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR EACH OF THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015 F-6 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS F-7 F-1Report of Independent Registered Public Accounting FirmTo the Stockholders and Board of Directors ofNavios Maritime Acquisition Corporation:Opinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of Navios Maritime Acquisition Corporation and its subsidiaries (the “Company”) as ofDecember 31, 2017 and 2016, and the related consolidated statements of operations, changes in equity, and cash flows for each of the three years in theperiod ended December 31, 2017, including the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, theconsolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and theresults of its operations and its cash flows for each of the three years in the period ended December 31, 2017 in conformity with accounting principlesgenerally accepted in the United States of America.Basis for OpinionThese consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’sconsolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board(United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and theapplicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan andperform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error orfraud.Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud,and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosuresin the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management,as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion./s/ PricewaterhouseCoopers S.A.Athens, GreeceApril 5, 2018We have served as the Company’s auditor since 2010. F-2NAVIOS MARITIME ACQUISITION CORPORATIONCONSOLIDATED BALANCE SHEETS(Expressed in thousands of U.S. Dollars except share data) Notes December 31,2017 December 31,2016 ASSETS Current assets Cash and cash equivalents 3 $81,151 $49,292 Restricted cash 3 5,307 7,366 Accounts receivable, net 4 12,810 20,933 Due from related parties, short term 15 13,931 25,047 Prepaid expenses and other current assets 6,534 4,644 Total current assets 119,733 107,282 Vessels, net 5 1,250,043 1,306,923 Goodwill 7 1,579 1,579 Other long-term assets 900 900 Deferred dry dock and special survey costs, net 20,871 10,172 Investment in affiliates 8,15 125,062 196,695 Due from related parties, long-term 8,15 54,593 80,068 Total non-current assets 1,453,048 1,596,337 Total assets $1,572,781 $1,703,619 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable 9 $3,862 $4,855 Accrued expenses 11 12,211 11,047 Due to related parties, short-term 8,15 17,107 — Deferred revenue 5,028 8,519 Current portion of long-term debt, net of deferred finance costs 12 36,410 55,000 Total current liabilities 74,618 79,421 Long-term debt, net of current portion, premium and net of deferred finance costs 12 1,028,959 1,040,938 Deferred gain on sale of assets 5,15 6,729 7,829 Total non-current liabilities 1,035,688 1,048,767 Total liabilities $1,110,306 $1,128,188 Commitments and contingencies 16 — — Puttable common stock 0 and 250,000 shares issued and outstanding with $0 and $2,500 redemptionamount as of December 31, 2017 and December 31, 2016, respectively 17 — 2,500 Stockholders’ equity Preferred stock, $0.0001 par value; 10,000,000 shares authorized; 1,000 series C shares issued and outstandingas of December 31, 2017 and December 31, 2016 17 — — Common stock, $0.0001 par value; 250,000,000 shares authorized; 152,107,905 and 150,582,990 issued andoutstanding as of December 31, 2017 and December 31, 2016, respectively 17 15 15 Additional paid-in capital 17 518,071 541,720 (Accumulated deficit)/ Retained earnings (55,611) 31,196 Total stockholders’ equity 462,475 572,931 Total liabilities and stockholders’ equity $1,572,781 $1,703,619 See notes to consolidated financial statements. F-3NAVIOS MARITIME ACQUISITION CORPORATIONCONSOLIDATED STATEMENTS OF OPERATIONS(Expressed in thousands of U.S. dollars- except share and per share data) Notes Year endedDecember 31,2017 Year endedDecember 31,2016 Year endedDecember 31,2015 Revenue 18 $227,288 $290,245 $313,396 Time charter and voyage expenses 15 (21,919) (4,980) (4,492) Direct vessel expenses 15 (4,198) (3,567) (1,532) Management fees (entirely through related party transactions) 15 (94,973) (97,866) (95,336) General and administrative expenses 15,17 (13,969) (17,057) (15,532) Depreciation and amortization 5,6 (56,880) (57,617) (57,623) Interest income 8,15 10,042 4,767 1,683 Interest expenses and finance cost 12 (76,438) (75,987) (73,561) Gain on sale of vessels 5,15 — 11,749 5,771 Equity/ (loss) in net earnings of affiliated companies 8 (46,657) 15,499 18,436 Other income 82 377 41 Other expense (1,277) (2,685) (1,514) Net (loss)/ income $(78,899) $62,878 $89,737 Dividend on preferred shares Series B — — (78) Dividend on preferred shares Series D — — (281) Dividend on restricted shares (89) (105) (245) Undistributed loss/ (income) attributable to Series C participating preferredshares 3,835 (3,058) (4,337) Net (loss)/ income attributable to common stockholders, basic 19 $(75,153) $59,715 $84,796 Plus: Dividend on preferred shares Series B — — 78 Dividend on preferred shares Series D — — 281 Dividend on restricted shares — 105 245 Net (loss)/ income attributable to common stockholders, diluted 19 (75,153) 59,820 $85,400 Net (loss)/ income per share, basic 19 $(0.50) $0.40 $0.57 Weighted average number of shares, basic 150,412,031 149,932,713 150,025,086 Net (loss)/ income per share, diluted 19 $(0.50) $0.40 $0.56 Weighted average number of shares, diluted 150,412,031 150,736,156 153,300,395 See notes to consolidated financial statements. F-4NAVIOS MARITIME ACQUISITION CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS(Expressed in thousands of U.S. dollars) Notes Year endedDecember 31,2017 Year endedDecember 31,2016 Year endedDecember 31,2015 Operating Activities Net (loss)/ income $(78,899) $62,878 $89,737 Adjustments to reconcile net (loss)/ income to net cash provided by operatingactivities: Depreciation and amortization 5,6 56,880 57,617 57,623 Amortization and write-off of deferred finance costs and bond premium 12 3,784 3,656 3,495 Gain on debt repayment — (350) — Amortization of dry dock and special survey costs 4,198 2,837 1,532 Stock based compensation 17 57 864 2,362 Gain on sale of vessels 5 — (11,749) (5,771) Equity/ (loss) in earnings of affiliates, net of dividends received 8 56,923 (1,438) (3,821) Changes in operating assets and liabilities: (Increase)/ decrease in prepaid expenses and other current assets (2,390) (479) 5,067 Decrease/ (increase) in accounts receivable 8,123 (6,731) 4,367 Decrease/ (increase) in due from related parties short-term 11,116 (7,210) — (Increase)/ decrease in restricted cash (26) 224 (41) Decrease/ (increase) in other long term assets — 1,020 (1,230) (Decrease)/ increase in accounts payable (993) 2,102 1,246 Increase/ (decrease) in accrued expenses 1,164 1,245 (293) Payments for dry dock and special survey costs (14,897) (3,828) (6,598) Increase/ (decrease) in due to related parties 17,107 — (17,763) Increase in due from related parties long-term (12,730) (7,638) (16,476) (Decrease)/ increase in deferred revenue (3,475) (75) 6,200 Net cash provided by operating activities $45,942 $92,945 $119,636 Investing Activities Loan repayment from affiliated companies 15 55,132 — — Acquisition of vessels 5 — — (163,791) Net cash proceeds from sale of vessels 5,8 — 89,988 71,224 Investment in affiliates (84) (89) (7,201) Loans receivable from affiliates (13,706) (4,275) (7,327) Loan receivable from affiliate, net of issuance fee and costs 15 — (49,342) — Dividends received from affiliates 11,036 7,223 2,585 Net cash provided by/ (used in) investing activities $52,378 $43,505 $(104,510) Financing Activities Loan proceeds, net of deferred finance costs 12 49,764 — 192,930 Loan repayments 12 (84,196) (105,531) (140,861) Dividend paid 10 (31,614) (31,682) (40,084) Decrease/ (increase) in restricted cash 2,085 (750) (130) Payment to related party 15 — — (11,265) Redemption of Convertible shares and puttable common stock 17 (2,500) (4,000) (5,500) Acquisition of treasury stock 17 — — (9,904) Net cash used in financing activities $(66,461) $(141,963) $(14,814) Net increase/ (decrease) in cash and cash equivalents 31,859 (5,513) 312 Cash and cash equivalents, beginning of year 49,292 54,805 54,493 Cash and cash equivalents, end of year $81,151 $49,292 $54,805 Supplemental disclosures of cash flow information Cash interest paid, net of capitalized interest $71,966 $72,478 $70,130 Non-cash investing activities Capitalized financing costs $— $— $19 Investment in affiliates received upon sale of vessels $— $— $27,111 Accrued interest on loan to affiliates $2,643 $3,498 $1,357 Deferred gain on sale of assets $— $8,823 $8,971 Non-cash financing activities Acquisition of vessels $— $— $(914) Due to related party $— $— $(914) Stock based compensation $57 $864 $2,362 See notes to consolidated financial statements. F-5NAVIOS MARITIME ACQUISITION CORPORATIONCONSOLIDATED STATEMENTS OF CHANGES IN EQUITY(Expressed in thousands of U.S. dollars, except share data) Preferred Stock Common Stock Notes Number ofPreferredShares Amount Number ofCommonShares Amount AdditionalPaid-inCapital (AccumulatedDeficit)/RetainedEarnings TotalStockholders’Equity Balance, December 31, 2014(Revised) 4,540 $— 151,664,942 $15 $557,125 $(66,347) $490,793 Conversion of preferred stock intoputtable common stock 17 — — 800,000 — — — — Redemption of puttable commonstock 17 — — (150,000) — — — — Conversion of preferred stock intocommon stock 17 (540) — 172,800 — — — — Acquisition of treasury stock 17 — — (2,704,752) — (9,904) — (9,904) Stock based compensation 17 — — — — 2,362 — 2,362 Dividend paid/ declared 10 — — — — (8,727) (23,390) (32,117) Net income — — — — — 89,737 89,737 Balance, December 31, 2015 4,000 $— 149,782,990 $15 $540,856 $— $540,871 Redemption of puttable commonstock 17 — — (400,000) — — — — Conversion of Series A preferredstock into common stock 17 (3,000) — 1,200,000 — — — — Stock based compensation 17 — — — — 864 — 864 Dividend paid/ declared 10 — — — — — (31,682) (31,682) Net income — — — — — 62,878 62,878 Balance, December 31, 2016 1,000 $— 150,582,990 $15 $541,720 $31,196 $572,931 Redemption of puttable commonstock 17 — — (250,000) — — — — Stock based compensation 17 — — 1,774,915 — 57 — 57 Dividend paid/ declared 10 — — — — (23,706) (7,908) (31,614) Net (loss) — — — — — (78,899) (78,899) Balance, December 31, 2017 1,000 $— 152,107,905 $15 $518,071 $(55,611) $462,475 See notes to consolidated financial statements. F-6NAVIOS 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, refinedpetroleum product and chemical tankers providing world-wide marine transportation services. The Company’s strategy is to charter its vessels tointernational oil companies, refiners and large vessel operators under long, medium and short-term contracts. The Company is committed to providingquality transportation services and developing and maintaining long-term relationships with its customers. The operations of Navios Acquisition aremanaged by a subsidiary of Navios Maritime Holdings 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 itsinitial public offering (“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.In November 2014, Navios Maritime Midstream Partners L.P. (“Navios Midstream”), a company formed as a subsidiary of Navios Acquisition,completed an IPO of its units in the United States and is listed on the NYSE under the symbol “NAP”. (Refer to Note 8, “Investment in affiliates”). NaviosMidstream is a publicly traded master limited partnership which owns, operates and acquires crude oil tankers, refined petroleum product tankers, chemicaltankers and liquefied petroleum gas tankers under long-term employment contracts.On November 16, 2017, in accordance with the terms of the Navios Midstream Partnership Agreement all of the issued and outstanding 9,342,692subordinated units of Navios Midstream converted into common units on a one-for-one basis. Following their conversion into common units, these units willhave the same distribution rights as all other common units.As of December 31, 2017, Navios Acquisition owned a 59.0% limited partner interest in Navios Midstream, which included a 2.0% general partnerinterest.As of December 31, 2017, Navios Holdings had 42.9% of the voting power and 46.2% of the economic interest in Navios Acquisition.As of December 31, 2017, Navios Acquisition had outstanding: 152,107,905 shares of common stock and 1,000 shares of Series C ConvertiblePreferred Stock held by Navios Holdings.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 (“VIEs”) as defined in the accounting guidance, if itdetermines that it is the primary beneficiary. A variable interest entity is defined as a legal entity where either (a) equity interest holders as a group lack thecharacteristics of a controlling financial interest, including decision making ability and an interest in the entity’s residual risks and rewards, or (b) the equityholders have not provided sufficient equity investment to permit the entity to finance its activities without additional subordinated financial support, or(c) the voting rights of some investors are not proportional to their obligations to absorb the expected losses of the entity, their rights to receive the expectedresidual returns of the entity, or both and substantially all of the entity’s activities either involve or are conducted on behalf of an investor that hasdisproportionately few voting rights. F-7NAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) Based on internal forecasts and projections that take into account reasonably possible changes in our trading performance, management believes thatthe Company has adequate financial resources to continue in operation and meet its financial commitments, including but not limited to capital expendituresand debt service obligations, for a period of at least twelve months from the date of issuance of these consolidated financial statements. Accordingly, theCompany continues to adopt the going concern basis in preparing its financial statements.(c) Equity method investments: Affiliates are entities over which the Company generally has between 20% and 50% of the voting rights, or over whichthe Company has significant influence, but it does not exercise control. Investments in these entities are accounted for under the equity method ofaccounting. Under this method, the Company records an investment in the stock of an affiliate at cost, and adjusts the carrying amount for its share of theearnings or losses of the affiliate subsequent to the date of investment and reports the recognized earnings or losses in income. Dividends received from anaffiliate reduce the carrying amount of the investment. The Company recognizes gains and losses in earnings for the issuance of shares by its affiliates,provided that the issuance of such shares qualifies as a sale of such shares. When the Company’s share of losses in an affiliate equals or exceeds its interest inthe affiliate, the Company does not recognize further losses, unless the Company has incurred obligations or made payments on behalf of the affiliate.Navios Acquisition evaluates its equity method investments, for other than temporary impairment, on a quarterly basis. Consideration is given 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 prospects and(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, 2017, the entities included in these consolidated financial statements were: Navios Maritime AcquisitionCorporation and Subsidiaries: Nature Country ofIncorporation 2017 2016 2015Company 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 Navigation 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 - 12/31Navios 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(3) Hong Kong — — 1/1 - 6/17Shinyo Loyalty Limited Former Vessel-Owning Company(1) Hong Kong 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Shinyo Navigator Limited Former Vessel-Owning Company(2) Hong Kong 1/1 - 12/31 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 - 12/31 F-8NAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) Skopelos 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 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 1/1 - 12/31 1/1 - 12/31Thasos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Limnos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Skyros Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Alonnisos Shipping Corporation Former Vessel-Owning Company(4) Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Makronisos Shipping Corporation Former Vessel-Owning Company(4) Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Iraklia Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Paxos Shipping Corporation Former Vessel-Owning Company(5) Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Antipaxos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Donoussa Shipping Corporation Former Vessel-Owning Company(6) Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Schinousa Shipping Corporation Former Vessel-Owning Company(7) Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Navios Acquisition Europe Finance Inc Sub-Holding Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Sikinos Shipping Corporation Vessel-Owning Company(3) Marshall Is. — — 1/1 - 6/17Kerkyra Shipping Corporation Vessel-Owning Company(8) Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Lefkada Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Zakynthos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Leros Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Kimolos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Samos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Tilos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 10/9 - 12/31Delos Shipping Corporation Vessel-Owning Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 10/9 - 12/31Navios Maritime Midstream Partners GP LLC Holding Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 (1)Former vessel-owner of the Shinyo Splendor which was sold to an unaffiliated third party on May 6, 2014.(2)Former vessel-owner of the Shinyo Navigator which was sold to an unaffiliated third party on December 6, 2013.(3)Navios Midstream acquired all of the outstanding shares of capital stock of the vessel-owning subsidiary.(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.(5)Former vessel-owner of the Nave Lucida which was sold to an unaffiliated third party on January 27, 2016.(6)Former vessel-owner of the Nave Universe which was sold to an unaffiliated third party on October 4, 2016.(7)Former vessel-owner of the Nave Constellation which was sold to an unaffiliated third party on November 15, 2016.(8)The vessel Nave Galactic was sold to Navios Midstream on March 29, 2018 (see Note 22).(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. F-9NAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) (g) Restricted Cash: As of December 31, 2017 and 2016, restricted cash consisted of $5,307 and $7,366, respectively, which related to amounts held inretention account in order to service debt and interest payments, as required by certain of Navios Acquisition’s credit facilities.(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, 2017 and 2016, the amounts shown as other long term assets reflected the advances of $900 and $900,respectively, to certain unrelated counterparties for working capital purposes as per charters entered with them.(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. The management after considering currentmarket trends for scrap rates and 10-year average historical scrap rates of the residual values of the Company’s vessels, estimates scrap value at a rate of $360per 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.(k) Vessels held for sale: Vessels are classified as “Vessels held for sale” when all of the following criteria are met: management has committed to aplan to sell the vessel; the vessel is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of vessels;an active program to locate a buyer and other actions required to complete the plan to sell the vessel have been initiated; the sale of the vessel is probableand transfer of the vessel is expected to qualify for recognition as a completed sale within one year; the asset is being actively marketed for sale at a price thatis reasonable in relation to its current fair value and actions required to complete the plan indicate that it is unlikely that significant changes to the plan willbe made or that the plan will be withdrawn. Vessels classified as held for sale are measured at the lower of their carrying amount or fair value less cost to sell.These vessels are not depreciated once they meet the criteria to be held for sale.(l) 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 $0, $0 and $104 as of December 31, 2017, 2016 and 2015, respectively.(m) 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. F-10NAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) Undiscounted projected net operating cash flows are determined for each asset group (consisting of the individual vessel and the intangible, if any,with respect to the time charter agreement attached to that vessel) and compared to the vessel carrying value and related carrying value of the intangible withrespect to the time charter agreement attached to that vessel or the carrying value of deposits for newbuildings, if any. Within the shipping industry, vesselsare often bought and sold with a charter attached. The value of the charter may be favorable or unfavorable when comparing the charter rate to then currentmarket rates. 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 2017, management concluded that, market rates decreased during the year and events occurred and circumstanceshad changed, over previous years, which indicated the potential impairment of Navios Acquisition’s long-lived assets may exist. These indicators includedcontinued volatility in the charter market and the related impact of the tanker sector has on management’s expectation for future revenues. As a result, animpairment assessment of long-lived assets or identified asset groups was performed.The Company determined undiscounted projected net operating cash flows for each vessel and compared it to the vessel’s carrying value together withthe carrying value of the related intangible. The significant factors and assumptions used in the undiscounted projected net operating cash flow analysisincluded: determining the projected net operating cash flows by considering the charter revenues from existing time charters for the fixed fleet days(Company’s remaining charter agreement rates) and an estimated daily time charter equivalent for the unfixed days (based on the 10-year average historicalone year time charter rates) over the remaining economic life of each vessel, net of brokerage and address commissions, excluding days of scheduled off-hires,management fees fixed until May 2018 and thereafter assuming an annual increase of 3.0% and utilization rate of 99.6% based on the fleet historicalperformance.The assessment concluded that step two of the impairment analysis was not required and no impairment of vessels, existed as of December 31, 2017, asthe 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 statements ofoperations calculated by comparing the asset’s carrying value to its fair value. Fair value is estimated primarily through the use of third-party valuationsperformed on an individual vessel basis.Although management believes the underlying assumptions supporting this assessment are reasonable, if charter rate trends and the length of thecurrent market downturn vary significantly from our forecasts, management may be required to perform step two of the impairment analysis in the future thatcould expose Navios Acquisition to material impairment charges in the future.There was no impairment loss was recognized for the years ended December 31, 2017, 2016 and 2015, respectively.(n) Deferred Finance Costs: Deferred finance costs include fees, commissions and legal expenses associated with obtaining loan facilities and arepresented as a deduction from the corresponding liability, consistent with debt discount. These costs are amortized over the life of the related debt using theeffective interest rate method, and are included in interest expense. Amortization of deferred finance costs for each of the years ended December 31, 2017,2016 and 2015 was $3,905, $3,501 and $3,183, respectively.(o) 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 statements of operations 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.Navios Acquisition has one reporting unit. No impairment loss was recognized for any of the periods presented. F-11NAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) (p) Intangibles other than goodwill: Navios Acquisition’s intangible assets and liabilities consisted of favorable lease terms and unfavorable leaseterms. When intangible assets or liabilities associated with the acquisition of a vessel are identified, they are recorded at fair value. Fair value is determinedby reference to market data and the discounted amount of expected future cash flows. Where charter rates are higher than market charter rates, an asset isrecorded, being the difference between the acquired charter rate and the market charter rate for an equivalent vessel. Where charter rates are less than marketcharter rates, a liability is recorded, being the difference between the assumed charter rate and the market charter rate for an equivalent vessel. Thedetermination of the fair value of acquired assets and assumed liabilities requires us to make significant assumptions and estimates of many variablesincluding market charter rates, expected future charter rates, the level of utilization of 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 statements of operations in the depreciation and amortization line item. The amortizable value of favorable leases would be consideredimpaired if their fair market values could not be recovered from the future undiscounted cash flows associated with the asset. If a vessel purchase option isexercised 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 the vessel. As ofDecember 31, 2017 and 2016, Navios Acquisition did not have any intangible assets or liabilities.Management, after considering various indicators performed impairment tests on asset groups which included intangible assets and liabilities asdescribed in paragraph (m) above. As of December 31, 2017 and 2016, there was no impairment of intangible assets.(q) Preferred shares Series D: Navios Acquisition issued 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 mandatorily converted into shares of common stock 30 months after issuance at a price pershare of common stock equal to $10.00. The holder of the preferred stock had the right to convert the shares of preferred stock into common stock prior to thescheduled maturity dates at a price of $7.00 per share of common stock. The preferred stock did not have any voting rights. Navios Acquisition was obligatedto redeem the Series D Preferred Stock (or converted common shares) at holder’s option exercisable beginning on 18 months after issuance, at par payable atup 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 took 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 was 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.(r) Investments in Equity Securities: Affiliates are entities over which the Company generally has between 20% and 50% of the voting rights, or overwhich the Company has significant influence, but it does not exercise control. Investments in these entities are accounted for under the equity method ofaccounting. Under this method, the Company records an investment in the stock of an affiliate at cost, and adjusts the carrying amount for its share of theearnings or losses of the affiliate subsequent to the date of investment and reports the recognized earnings or losses in income. Dividends received from anaffiliate reduce the carrying amount of the investment. The Company recognizes gains and losses in earnings for the issuance of shares by its affiliates,provided that the issuance of such shares qualifies as a sale of such shares. When the Company’s share of losses in an affiliate equals or exceeds its interest inthe affiliate, the Company does not recognize further losses, unless the Company has incurred obligations or made payments on behalf of the affiliate.Navios Acquisition evaluates its investments in Navios Midstream, Navios Europe I Inc. (“Navios Europe I”) and Navios Europe II Inc. (“NaviosEurope II”) for “other-than-temporary impairment” (“OTTI”) on a quarterly basis. Consideration is given to (i) the length of time and the extent to which thefair value has been less than the carrying value, (ii) the financial condition and near-term prospects of Navios Midstream, Navios Europe I and Navios EuropeII, and (iii) the intent and ability of the Company to retain its investment in Navios Midstream, Navios Europe I and Navios Europe II for a period of timesufficient to allow for any anticipated recovery in fair value.As of June 30, 2017, the Company considered the decline in fair value of its investment in Navios Midstream as “other-than- temporary” and therefore,recognized a non-cash loss of $59,104 based on its quoted unit price of $9.36, as of June 30, 2017. The respective loss was included in “Equity/ (loss) in netearnings of affiliated companies” in the accompanying consolidated statement of Operations. F-12NAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) (s) Deferred Dry dock and Special Survey Costs: Navios Acquisition’s vessels are subject to regularly scheduled drydocking and special surveys whichare carried 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, 2017, 2016 and 2015, theamortization expense was $4,198, $2,837 and $1,532, respectively. Accumulated amortization as of December 31, 2017 and 2016 amounted to $8,360 and$4,995, respectively.(t) 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 statements of operations.(u) 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 recently amended in May 2016, and are included as part of the daily fee of $6.35 for each MR2 product tanker andchemical tanker vessel, $7.15 per LR1 product tanker vessel and $9.5 per VLCC vessel. (See Note 15).(v) Segment Reporting: Navios Acquisition reports financial information and evaluates its operations by charter revenues and not by the length of shipemployment for its customers or vessel type. Navios Acquisition does not use discrete financial information to evaluate operating results for each type ofcharter. Management does not identify expenses, profitability or other financial information by charter type. As a result, management reviews operatingresults solely by revenue per day and operating results of the fleet and thus Navios Acquisition has determined that it operates under one reportable segment.(w) 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. F-13NAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) 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, 2017, December 31, 2016 and December 31, 2015 amounted to $918, $7,603 and $32,060, 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 the margins 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 $46,626, $50,832and $43,406, for the years ended December 31, 2017, 2016 and 2015, 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.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, brokerage commissions and the reasonable estimate of the loss forbackstop agreements. Time charter expenses are expensed over the period 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 the Management Agreement dated May 28, 2010 and as previously amended in May 2012 and May 2014, the Managerprovided commercial and technical management services to Navios Acquisition’s vessels for a fixed daily fee of: (a) $6.0 per MR2 product tanker andchemical tanker vessel; (b) $7.0 per LR1 product tanker vessel; and (c) $9.5 per VLCC, through May 2016.Pursuant to an amendment to the Management Agreement dated as of May 19, 2016, Navios Acquisition fixed the fees for commercial and technicalship management services of its fleet for two additional years from May 29, 2016, through May 2018, at a daily fee of: (a) $6.35 per MR2 product tanker andchemical tanker vessel; (b) $7.15 per LR1 product tanker vessel; and (c) $9.5 per VLCC.Dry docking expenses are reimbursed by Navios Acquisition at cost.General and administrative expenses: On May 28, 2010, Navios Acquisition entered into an Administrative Services Agreement with NaviosHoldings, 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, 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 2020.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.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.(x) 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. F-14NAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) 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, 2017, Navios Acquisition’s customers representing 10% ormore of total revenue were Navig8 Group of Companies (“Navig8”), Mansel LTD (“Mansel”) and Shell Tankers Singapore Private LTD (“Shell”), whichaccounted for 31.9%, 14.3% and 13.7%, respectively. For the year ended December 31, 2016, Navios Acquisition’s customers representing 10% or more oftotal revenue were Navig8, Shell and Mansel, which accounted for 33.0%, 20.0% and 14.7%, respectively. For the year ended December 31, 2015, NaviosAcquisition’s customers representing 10% or more of total revenue were Navig8, Shell and Mansel, which accounted for 35.2%, 13.6% and 10.8%,respectively.No other customers accounted for 10% or more of total revenue for any of the years presented.Foreign exchange risk: Foreign currency transactions are translated into the measurement currency rates prevailing at the dates of transactions.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 statements of operations.(y) Earnings per Share: Basic earnings per share is computed by dividing net income attributable to Navios Acquisition’s common stockholders by theweighted average number of common shares outstanding during the periods presented. Diluted earnings per share reflect the potential dilution that wouldoccur if securities or other contracts to issue common stock were exercised. Dilution has been computed by the treasury stock method whereby all of theCompany’s dilutive securities (the warrants and preferred shares and the stock options) are assumed to be exercised and the proceeds used to repurchaseshares of common stock at the weighted average market price of the Company’s common stock during the relevant periods. Convertible shares are includedin the diluted earnings per share, based on the weighted average number of convertible shares assumed to be outstanding during the period. The incrementalshares (the difference between the number of shares assumed issued and the number of shares assumed purchased) shall be included in the denominator of thediluted earnings per share computation. Restricted stock and restricted stock units (vested and unvested) are included in the calculation of the dilutedearnings per share, based on the weighted average number of restricted stock and restricted stock units assumed to be outstanding during the period.Net (loss)/ income for the years ended December 31, 2017, 2016 and 2015 was adjusted for the purposes of earnings per share calculation, for thedividends on the Series B Preferred Shares, the Series D Preferred Shares, the restricted common stock and for the undistributed income that is attributable tothe Series C Convertible Preferred Stock.(z) Dividends: Dividends are recorded in the Company’s financial statements in the period in which they are declared.(za) 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 $0, $864 and $2,362 as ofDecember 31, 2017, 2016 and 2015, respectively, and it is reflected in general and administrative expenses on the statements of operations.There were no shares of restricted stock or stock options exercised, forfeited or expired during the year ended December 31, 2017. F-15NAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) On October 24, 2016, 2015 and 2014, 700,005, 700,001 and 699,994 shares of restricted stock that had been granted in October 2013, respectively,were vested. Accordingly, there were no unvested restricted shares outstanding as of December 31, 2017 and as of December 31, 2016.On each of October 24, 2016, 2015 and 2014, 500,000 stock options were vested. Accordingly, there were no unvested stock options outstandingand non-vested as of December 31, 2017 and as of December 31, 2016.The weighted average contractual life of stock options outstanding as of December 31, 2017 was 5.8 years.In December 2017, Navios Acquisition authorized and issued in the aggregate 1,774,915 restricted shares of common stock to its directors and officers.These awards of restricted common stock are based on service conditions only and vest over four years.The holders of restricted stock are entitled to dividends paid on the same schedule as paid to the stock holders of the company. The fair value ofrestricted stock is determined by reference to the quoted stock price on the date of grant of $1.18 per share (or total fair value of $2,094).Compensation expense is recognized based on a graded expense model over the vesting period.The effect of compensation expense arising from the stock-based arrangements described above amounts to $57, as of December 31, 2017, and it isreflected in general and administrative expenses on the statement of operations. The recognized compensation expense for the year is presented as adjustmentto reconcile net (loss)/ income to net cash provided by operating activities on the statements of cash flows.There were no shares of restricted stock or stock options exercised, forfeited or expired during the year ended December 31, 2017.Restricted Stock outstanding and not vested amounted to 1,774,915 shares as of December 31, 2017.The estimated compensation cost relating to service conditions of non-vested restricted stock, not yet recognized was $2,038 as of December 31, 2017and is expected to be recognized over the weighted average period of 4.0 years.NOTE 3: CASH AND CASH EQUIVALENTS AND RESTRICTED CASHCash and cash equivalents consisted of the following: December 31, 2017 December 31, 2016 Cash on hand and at banks $60,088 $39,286 Short-term deposits 21,063 10,006 Total cash and cash equivalents $81,151 $49,292 Short-term deposits and highly liquid funds relate to amounts held in banks for general financing purposes and represent deposits with an originalmaturity of less than three months.Cash deposits and cash equivalents in excess of amounts covered by government-provided insurance are exposed to loss in the event ofnon-performance by financial institutions. The Company does maintain cash deposits and equivalents in excess of government-provided insurance limits.The Company also minimizes exposure to credit risk by dealing with a diversified group of major financial institutions.In restricted cash there was an amount of $5,307 for 2017 and $7,366 for 2016 held in retention accounts in order to service debt and interest payments,as required by certain of Navios Acquisition’s credit facilities. F-16NAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) NOTE 4: ACCOUNTS RECEIVABLE, NETAccounts receivable consisted of the following: December 31, 2017 December 31, 2016 Accounts receivable $12,810 $20,933 Less: Provision for doubtful accounts — — Accounts receivable, net $12,810 $20,933 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, 2015 $1,590,332 $(148,697) $1,441,635 Additions — (57,617) (57,617) Disposals (including vessels held for sale) (85,319) 8,224 (77,095) Balance at December 31, 2016 $1,505,013 $(198,090) $1,306,923 Additions — (56,880) (56,880) Balance at December 31, 2017 $1,505,013 $(254,970) $1,250,043 Acquisition of vessels2015On January 8, 2015, Navios Acquisition took delivery of the Nave Sextans, a newbuilding, 49,999 dwt, MR2 product tanker, from an unaffiliated thirdparty for a total cost of $33,373. Cash paid was $17,750 and $15,623 was transferred from vessel deposits.On February 11, 2015, Navios Acquisition took delivery of the Nave Velocity, a newbuilding, 49,999 dwt, MR2 product tanker, from an unaffiliatedthird party for a total cost of $39,233. Cash paid was $12,591 and $26,642 was transferred from vessel deposits.On November 6, 2015, Navios Acquisition took delivery of the Nave Spherical, a 2009-built, 297,188 dwt VLCC, from an unaffiliated third party for atotal cost of $69,198.On December 2, 2015, Navios Acquisition took delivery of the Nave Photon, a 2008-built, 297,395 dwt VLCC from an unaffiliated third party for atotal cost of $65,196.Disposal of vessels2016On January 27, 2016, Navios Acquisition sold the Nave Lucida to an unaffiliated third party for net cash proceeds of $18,449. The gain on sale of thevessel, upon write-off of the unamortized dry-docking, was $2,282.On October 4, 2016, Navios Acquisition sold the Nave Universe to an unaffiliated third party for net cash proceeds of $35,768 and prepaid $16,372being the respective tranche of the HSH Nordbank AG facility that was drawn to finance its acquisition. As of June 30, 2016, the vessel was classified as heldfor sale as the relevant criteria for the classification were met. The gain on sale of the vessel was $4,847.On November 15, 2016, Navios Acquisition sold the Nave Constellation to an unaffiliated third party for net cash proceeds of $35,771 and prepaid$16,372 being the respective tranche of the HSH Nordbank AG facility that was drawn to finance its acquisition. As of June 30, 2016, the vessel wasclassified as held for sale as the relevant criteria for the classification were met. The gain on sale of the vessel was $4,620. F-17NAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) 2015On June 18, 2015, Navios Midstream exercised its option to acquire the shares of the vessel-owning subsidiaries of the Nave Celeste, a 2003-built of298,717 dwt VLCC, and the C. Dream, a 2000 built VLCC of 298,570 dwt, from Navios Acquisition for an aggregate sale price of $100,000. The sale priceconsisted of $73,000 cash consideration and the issuance of 1,592,920 Subordinated Series A Units to Navios Acquisition. Refer to Note 15. The gain on saleof vessels amounted to $5,771 and was calculated as follows: Proceeds received: Net Cash proceeds received from sale of assets $71,224 Subordinated Series A Units 27,111 98,335 Carrying Value of assets sold: Vessels and deferred dry dock and special survey costs, net (84,184) Favorable & unfavorable leases 37 Working capital 554 (83,593) 14,742 Deferred gain on sale of assets 8,971 Gain on sale of vessels $5,771 This gain is included in “Gain on sale of vessels” in the consolidated statements of operations. Navios Midstream was deconsolidated from the date ofits IPO. Refer to Note 8, “Investment in affiliates”.For the years ended December 31, 2017, 2016 and 2015, capitalized interest amounted to $0, $0 and $104, respectively.NOTE 6: INTANGIBLE ASSETS OTHER THAN GOODWILLAs of December 31, 2017 and 2016, Navios Acquisition did not have any intangible assets or liabilities.Amortization (expense) /income of favorable and unfavorable lease terms for the years ended December 31, 2017, 2016 and 2015 is presented in thefollowing table: December 31,2017 December 31,2016 December 31,2015 Unfavorable lease terms $— $— $317 Favorable lease terms charter-out — — (776) Total $— $— $(459) NOTE 7: GOODWILLGoodwill as of December 31, 2017 and December 31, 2016 amounted to: Balance at January 1, 2016 $1,579 Balance at December 31, 2016 $1,579 Balance at December 31, 2017 $1,579 F-18NAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) NOTE 8: INVESTMENT IN AFFILIATESNavios Europe IOn October 9, 2013, Navios Holdings, Navios Acquisition and Navios Maritime Partners L.P. (“Navios Partners”) established Navios Europe I and hadeconomic interests of 47.5%, 47.5% and 5.0%, respectively. On December 18, 2013, Navios Europe I acquired ten vessels for aggregate considerationconsisting of (i) cash which was funded with the proceeds of senior loan facility (the “Senior Loan I”) and loans aggregating $10,000 from Navios Holdings,Navios Acquisition and Navios Partners (collectively, the “Navios Term Loans I”) and (ii) the assumption of a junior participating loan facility (the “JuniorLoan I”). In addition to the Navios Term Loans I, Navios Holdings, Navios Acquisition and Navios Partners will also make available to Navios Europe Irevolving loans up to $24,100 to fund working capital requirements (collectively, the “Navios Revolving Loans I”). Effective November 2014 and as ofDecember 31, 2017, Navios Holdings, Navios Acquisition and Navios Partners had a voting interest of 50%, 50% and 0%, respectively.On an ongoing basis, Navios Europe I is required to distribute cash flows (after payment of operating expenses, amounts due pursuant to the terms ofthe Senior Loan I and repayments of the Navios Revolving Loans I) according to a defined waterfall calculation.The Navios Term Loans I will be repaid from the future sale of vessels owned by Navios Europe I and is deemed to be the initial investment by NaviosAcquisition. Navios Acquisition evaluated its investment in Navios Europe I under ASC 810 and concluded that Navios Europe I is a VIE and that theCompany is not the party most closely associated with Navios Europe I and, accordingly, is not the primary beneficiary of Navios Europe I.Navios Acquisition further evaluated its investment in the common stock of Navios Europe I under ASC 323 and concluded that it has the ability toexercise significant influence over the operating and financial policies of Navios Europe I and, therefore, its investment in Navios Europe I is accounted forunder the equity method.The fleet of Navios Europe I is managed by subsidiaries of Navios Holdings.As of December 31, 2017 and December 31, 2016, the estimated maximum potential loss by Navios Acquisition in Navios Europe I would have been$24,147 and $18,268, respectively, which represented the Company’s carrying value of its investment of $4,750 (December 31, 2016: $5,967) theCompany’s portion of the carrying balance of the Navios Revolving Loans I including accrued interest on the Navios Term Loans I of $14,944 (December 31,2016: $9,356), which is included under “Due from related parties, long- term” and the accrued interest income on the Navios Revolving Loans I in theamount of $4,453 (December 31, 2016: $2,945) which is included under “Due from related parties, short-term”. Refer to Note 15 for the terms of the NaviosRevolving Loans I.Loss of $274, and income of $1,302 and $1,294 was recognized in “Equity/ (loss) in net earnings of affiliated companies” for the years endedDecember 31, 2017, 2016 and 2015, respectively.Accounting for basis differenceThe initial investment in Navios Europe I recorded under the equity method of $4,750, at the inception included the Company’s share of the basisdifference between the fair value and the underlying book value of the assets of Navios Europe I, which amounted to $6,763. This difference is amortizedthrough “Equity/ (loss) in net earnings of affiliated companies” over the remaining life of Navios Europe I. As of December 31, 2017 and December 31, 2016,the unamortized difference between the carrying amount of the investment in Navios Europe I and the amount of the Company’s underlying equity in netassets of Navios Europe I was $4,034, and $4,710, respectively.Navios Europe IIOn February 18, 2015, Navios Holdings, Navios Acquisition and Navios Partners established Navios Europe II Inc. and had in such entity economicinterests of 47.5%, 47.5% and 5.0%, respectively, and voting interests of 50.0%, 50.0 and 0%, respectively. From June 8, 2015 through December 31, 2015,Navios Europe II acquired fourteen vessels for: (i) cash consideration of $145,550 (which was funded with the proceeds of $131,550 of senior loan facilities(the “Senior Loans II”) and loans aggregating $14,000 from Navios Holdings, Navios Acquisition and Navios Partners (collectively, the “Navios Term LoansII”) and (ii) the assumption of a junior participating loan facility (the “Junior Loan II”) with a face amount of $182,150 and fair value of $99,147. In additionto the Navios Term Loans II, Navios Holdings, Navios Acquisition and Navios Partners will also make available to Navios Europe II revolving loans up to$57,500 to fund working capital requirements (collectively, the “Navios Revolving Loans II”). F-19NAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) On an ongoing basis, Navios Europe II is required to distribute cash flows (after payment of operating expenses, amounts due pursuant to the terms ofthe Senior Loans and repayments of the Navios Revolving Loans II) according to a defined waterfall calculation.The Navios Term Loans II will be repaid from the future sale of vessels owned by Navios Europe II and is deemed to be the initial investment by NaviosAcquisition. Navios Acquisition evaluated its investment in Navios Europe II under ASC 810 and concluded that Navios Europe II is a “VIE” and that theCompany is not the party most closely associated with Navios Europe II and, accordingly, is not the primary beneficiary of Navios Europe II.Navios Acquisition further evaluated its investment in the common stock of Navios Europe II under ASC 323 and concluded that it has the ability toexercise significant influence over the operating and financial policies of Navios Europe II and, therefore, its investment in Navios Europe II is accounted forunder the equity method.The fleet of Navios Europe II is managed by subsidiaries of Navios Holdings.As of December 31, 2017, the estimated maximum potential loss by Navios Acquisition in Navios Europe II would have been $37,741 (December 31,2016: $22,287), which represented the Company’s carrying value of the investment of $6,650 (December 31, 2016: $5,894), the Company’s balance of theNavios Revolving Loans II including accrued interest on the Navios Term Loans II of $24,412 (December 31, 2016: $13,652), which is included under “Duefrom related parties, long-term”, and the accrued interest income on the Navios Revolving Loans II in the amount of $6,679 (December 31, 2016: $2,741),which is included under “Due from related parties, short-term”. Refer to Note 15 for the terms of the Navios Revolving Loans II.Income recognized in “Equity/ (loss) in net earnings of affiliated companies” for the year ended December 31, 2017 was $2,456. Loss of $22 in totaland a total income of $1,317 were recognized in “Equity/ (loss) in net earnings of affiliated companies” for the years ended December 31, 2016 and 2015,respectively.Accounting for basis differenceThe initial investment in Navios Europe II recorded under the equity method of $6,650, at the inception included the Company’s share of the basisdifference between the fair value and the underlying book value of the assets of Navios Europe II, which amounted to $9,419. This difference is amortizedthrough “Equity/ (loss) in net earnings of affiliated companies” over the remaining life of Navios Europe II. As of December 31, 2017, and December 31,2016 the unamortized difference between the carrying amount of the investment in Navios Europe II and the amount of the Company’s underlying equity innet assets of Navios Europe II was $7,011 and $7,953, respectively.Navios MidstreamOn October 13, 2014, the Company formed Navios Midstream under the laws of Marshall Islands. Navios Maritime Midstream Partners GP L.L.C. (the“Navios Midstream General Partner”), a wholly owned subsidiary of Navios Acquisition, was also formed on that date to act as the general partner of NaviosMidstream and received a 2.0% general partner interest.In connection with the IPO of Navios Midstream in November 2014, Navios Acquisition sold all of the outstanding shares of capital stock of four ofNavios Acquisition’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 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 Navios Midstream General Partner.The Company evaluated its investment in Navios Midstream (NYSE: NAP) under ASC 810 and concluded that Navios Midstream is not a “VIE”. TheCompany further evaluated the power to control the board of directors of Navios Midstream under the voting interest model. As of the IPO date, NaviosAcquisition, as the general partner, delegated all its powers to the board of directors of Navios Midstream and does not have the right to remove or replace theelected directors from 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 elected directors represent the majority of the board of directors of Midstream and therefore, the Company concluded that it does not hold a controllingfinancial interest in Navios Midstream but concluded that it does maintain significant influence and deconsolidated the vessels sold as of the IPO date. F-20NAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) Following the deconsolidation of Navios Midstream, the Company accounts for all of its interest in the general partner and in each of the common andsubordinated units under the equity method of accounting.In connection with the sale of the Nave Celeste and the C. Dream to Navios Midstream in June 2015, Navios Acquisition received 1,592,920Subordinated Series A Units of Navios Midstream, as part of the sales price. In conjunction with the transaction, Navios Midstream also issued 32,509 generalpartner units to the General Partner for $551, in order for the General Partner to maintain its 2.0% general partnership interest. The Company analyzed itsinvestment in the subordinated Series A units and concluded that this is to be accounted for under the equity method on the basis that the Company hassignificant influence over Navios Midstream. The Company’s investment in the subordinated Series A units was fair valued at $17.02 per unit, in total$27,111 on the date of the sale of the vessels to Navios Midstream.On July 29, 2016, Navios Midstream launched a continuous offering sales program of its common units for an aggregate offering of up to $25,000.On September 30, 2016, December 30, 2016, February 16, 2017 and May 5, 2017 Navios Acquisition entered into securities purchase agreements withNavios Midstream pursuant to which Navios Acquisition made an investment in Navios Midstream by purchasing 5,655, 1,143, 6,446 and 412 generalpartnership interests, respectively, for a consideration of $75, $14, $79 and $5, respectively, in order to maintain its 2.0% partnership interest in NaviosMidstream in light of such continuous offering sales program.The Company determined, under the equity method, that the issuance of common units of Navios Midstream qualified as a sale of shares by theinvestee. As a result, a net loss of $54 and $246 was recognized in “Equity/ (loss) in net earnings of affiliated companies” for the years ended December 31,2017 and December 31, 2016, respectively.On November 16, 2017, in accordance with the terms of the Navios Midstream Partnership Agreement all of the 9,342,692 subordinated units of NaviosMidstream converted into common units on a one-for-one basis. Following their conversion into common units, these units will have the same distributionrights as all other common units.As of December 31, 2017, the Company owned a 2.0% general partner interest in Navios Midstream through the Navios Midstream General Partner anda 57.0% limited partnership interest through the ownership of common units (49.5%) and subordinated series A units (7.5%), based on all of the outstandingcommon, subordinated and general partner units.For the year ended December 31, 2017, 2016 and 2015, total equity method income from Navios Midstream recognized in “Equity/ (loss) in netearnings of affiliated companies” was $10,265, $14,219 and $15,825, respectively. Dividends received during the year ended December 31, 2017, 2016 and2015 were $21,301, $21,283 and $17,202, respectively.As of December 31, 2017 and December 31, 2016, the carrying amount of the investment in Navios Midstream was $113,662 and $184,834,respectively. As of June 30, 2017 the fair value of our investment in Navios Midstream has been below its carrying value for a period over twelve months, dueto the decline in the quoted price of the common units of Navios Midstream. During the year ended December 31, 2017, the Company recognizeda non-cash OTTI loss of $59,104 relating to its investment in Navios Acquisition and the amount was included in “Equity/ (loss) in net earnings of affiliatedcompanies”.As of December 31, 2017 the market value of the investment in Navios Midstream was $120,007.Accounting for basis differenceThe initial investment in Navios Midstream following the completion of the IPO recorded under the equity method of $183,141, as of thedeconsolidation date included the Company’s share of the basis difference between the fair value and the underlying book value of Navios Midstream’sassets, which amounted to $20,169. Of this difference, an amount of $(332) was allocated on the intangibles assets and $20,501 was allocated on the tangibleassets. This difference is amortized through “Equity / (loss) in net earnings of affiliated companies” over the remaining life of Navios Midstream’s tangibleand intangible assets. F-21NAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) In connection with the sale of the Nave Celeste and the C. Dream, the Company recognized its incremental investment upon the receipt of theSubordinated series A units in Navios Midstream, which amounted to $27,665 under “Investment in affiliates”. The investment was recognized at fair valueat $17.02 per unit. The incremental investment included the Company’s share of the basis difference between the fair value and the underlying book value ofNavios Midstream’s assets at the transaction date, which amounted to $2,554. Of this difference an amount of $(72) was allocated to the intangible assets and$2,626 was allocated to the tangible assets. This difference is amortized through “Equity/ (loss) in net earnings of affiliated companies” over the remaininglife of Navios Midstream’s tangible and intangible assets.As of December 31, 2017 and December 31, 2016, the unamortized difference between the carrying amount of the investment in Navios Midstream andthe amount of the Company’s underlying equity in net assets of Navios Midstream was $37,158 and $21,221, respectively. As a result of the other-than-temporary-impairment loss recorded as at June 30, 2017, the Company has recomputed a negative difference which is amortized through “Equity/ (loss) innet earnings of affiliated companies” over the remaining life of Navios Midstream’s tangible and intangible assets.Summarized financial information of the affiliated companies is presented below: December 31, 2017 December 31, 2016 Balance Sheet NaviosMidstream NaviosEurope I NaviosEurope II NaviosMidstream NaviosEurope I NaviosEurope II Cash and cash equivalents, including restricted cash $37,086 $19,185 $16,882 $52,791 $10,785 $16,916 Current assets $62,551 $22,417 $28,403 $61,087 $15,980 $19,487 Non-current assets $393,996 $145,940 $195,784 $414,694 $169,925 $232,363 Current liabilities $4,977 $21,284 $25,805 $6,143 $18,490 $24,126 Long-term debt including current portion, net of deferred finance costs anddiscount $196,514 $75,472 $109,223 $197,176 $86,060 $119,234 Non-current liabilities $195,839 $125,283 $164,276 $196,515 $155,387 $184,530 Year EndedDecember 31, 2017 Year EndedDecember 31, 2016 Year EndedDecember 31, 2015 Income Statement NaviosMidstream NaviosEurope I NaviosEurope II NaviosMidstream NaviosEurope I NaviosEurope II NaviosMidstream NaviosEurope I NaviosEurope II Revenue $83,052 $37,468 $38,633 $91,834 $40,589 $30,893 $83,362 $41,437 $20,767 Net income/ (loss) before non-cash changein fair value of Junior Loan $14,631 $(20,778) $(40,921) $24,890 $(2,174) $(25,062) $27,072 $(1,347) $1,673 Net income/ (loss) $14,631 $9,762 $(9,086) $24,890 $16,137 $(34,059) $27,072 $(1,118) $77,252 NOTE 9: ACCOUNTS PAYABLEAccounts payable as of December 31, 2017 and 2016 consisted of the following: December 31,2017 December 31,2016 Creditors $1,503 $1,625 Brokers 2,005 2,031 Professional and legal fees 354 1,199 Total accounts payable $3,862 $4,855 NOTE 10: DIVIDENDS PAYABLEOn 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 $7,967 was paid on January 6,2015 out 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 1,000shares of the Series C Preferred Stock. F-22NAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) 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. A dividend in the aggregate amount of $7,977 was paid on April 2, 2015 outof which $7,593 was paid to the stockholders of record as of March 18, 2015 and $384 was paid to Navios Holdings, the holder of the 1,000 shares of theSeries C Preferred Stock.On May 11, 2015, the Board of Directors declared a quarterly cash dividend in respect of the first quarter of 2015 of $0.05 per share of common stockpayable on July 2, 2015 to stockholders of record as of June 18, 2015. A dividend in the aggregate amount of $7,986 was paid on July 2, 2015 out of which$7,602 was paid to the stockholders of record as of June 18, 2015 and $384 was paid to Navios Holdings, the holder of the 1,000 shares of the Series CPreferred Stock.On August 13, 2015, the Board of Directors declared a quarterly cash dividend for the second quarter of 2015 of $0.05 per share of common stockpayable on September 24, 2015 to stockholders of record as of September 18, 2015. A dividend in the aggregate amount of $7,922 was paid on September 24,2015 out of which $7,538 was paid to the stockholders of record as of September 18, 2015 and $384 was paid to Navios Holdings, the holder of the 1,000shares of the Series C Preferred Stock.On November 6, 2015, the Board of Directors declared a quarterly cash dividend for the third quarter of 2015 of $0.05 per share of common stockpayable on December 23, 2015 to stockholders of record as of December 17, 2015. A dividend in the aggregate amount of $7,873 was paid on December 23,2015 out of which $7,489 was paid to the stockholders of record as of December 17, 2015 and $384 was paid to Navios Holdings, the holder of the 1,000shares of the Series C Preferred Stock.On February 4, 2016, the Board of Directors declared a quarterly cash dividend in respect of the fourth quarter of 2015 of $0.05 per share of commonstock payable on March 23, 2016 to stockholders of record as of March 17, 2016. A dividend in the aggregate amount of $7,928 was paid on March 23, 2016out of which $7,544 was paid to the stockholders of record as of March 17, 2016 and $384 was paid to Navios Holdings, the holder of the 1,000 shares ofSeries C Preferred Stock.On May 11, 2016, the Board of Directors declared a quarterly cash dividend in respect of the first quarter of 2016 of $0.05 per share of common stockpayable on June 22, 2016 to stockholders of record as of June 17, 2016. A dividend in the aggregate amount of $7,923 was paid on June 22, 2016 out ofwhich $7,539 was paid to the stockholders of record as of June 17, 2016 and $384 was paid to Navios Holdings, the holder of the 1,000 shares of Series CPreferred Stock.On August 10, 2016, the Board of Directors declared a quarterly cash dividend in respect of the second quarter of 2016 of $0.05 per share of commonstock payable on September 21, 2016 to stockholders of record as of September 14, 2016. A dividend in the aggregate amount of $7,918 was paid onSeptember 21, 2016 out of which $7,534 was paid to the stockholders of record as of September 14, 2016 and $384 was paid to Navios Holdings, the holderof the 1,000 shares of Series C Preferred Stock.On November 4, 2016, the Board of Directors declared a quarterly cash dividend in respect of the third quarter of 2016 of $0.05 per share of commonstock payable on December 21, 2016 to stockholders of record as of December 14, 2016. A dividend in the aggregate amount of $7,913 was paid onDecember 21, 2016 out of which $7,529 was paid to the stockholders of record as of December 14, 2016 and $384 was paid to Navios Holdings, the holder ofthe 1,000 shares of Series C Preferred Stock.On February 3, 2017, the Board of Directors declared a quarterly cash dividend in respect of the fourth quarter of 2016 of $0.05 per share of commonstock payable on March 14, 2017 to stockholders of record as of March 7, 2017. A dividend in the aggregate amount of $7,908 was paid on March 14, 2017out of which $7,524 was paid to the stockholders of record as of March 7, 2017 and $384 was paid to Navios Holdings, the holder of the 1,000 shares ofSeries C Preferred Stock.On May 12, 2017, the Board of Directors declared a quarterly cash dividend in respect of the first quarter of 2017 of $0.05 per share of common stockpayable on June 14, 2017 to stockholders of record as of June 7, 2017. A dividend in the aggregate amount of $7,904 was paid on June 14, 2017 out of which$7,520 was paid to the stockholders of record as of June 7, 2017 and $384 was paid to Navios Holdings, the holder of the 1,000 shares of Series C PreferredStock.On August 9, 2017, the Board of Directors declared a quarterly cash dividend in respect of the second quarter of 2017 of $0.05 per share of commonstock payable on September 14, 2017 to stockholders of record as of September 7, 2017. A dividend in the aggregate amount of $7,902 was paid onSeptember 14, 2017 out of which $7,518 was paid to the stockholders of record as of September 7, 2017 and $384 was paid to Navios Holdings, the holder ofthe 1,000 shares of Series C Preferred Stock. F-23NAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) On October 25, 2017, the Board of Directors declared a quarterly cash dividend in respect of the third quarter of 2017 of $0.05 per share of commonstock payable on December 12, 2017 to stockholders of record as of December 6, 2017. A dividend in the aggregate amount of $7,900 was paid onDecember 12, 2017 out of which $7,516 was paid to the stockholders of record as of December 6, 2017 and $384 was paid to Navios Holdings, the holder ofthe 1,000 shares of Series C Preferred Stock.For the years ended December 31, 2017 and December 31, 2016, Navios Acquisition had no outstanding Series B and Series D Preferred Stock. For theyear ended December 31, 2015, Navios Acquisition paid dividend in the aggregate of $359 to the holders of the Series B and Series D 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 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.NOTE 11: ACCRUED EXPENSESAccrued expenses as of December 31, 2017 and December 31, 2016 consisted of the following: December 31,2017 December 31,2016 Accrued voyage expenses $1,437 $1,369 Accrued loan interest 8,910 8,800 Accrued legal and professional fees 1,864 878 Total accrued expenses $12,211 $11,047 In December 2016 and during 2017, the Compensation Committee of Navios Acquisition authorized and approved an aggregate cash payment of$2,805 subject to fulfillment of certain service conditions that were provided and completed during 2017 and an additional $1,805 to the directors and/orofficers of the Company subject to fulfillment of certain service conditions in 2018. As of December 31, 2017 and 2016 an accrued amount of $1,675 and$750 is included in accrued legal and professional fees. The total amount of $2,805, $4,010 and $2,750 was recorded in general and administrative expenseson the statements of income for the years ended December 31, 2017, 2016 and 2015, respectively.NOTE 12: BORROWINGS December 31,2017 December 31,2016 Commerzbank AG, Alpha Bank AE, Credit Agricole Corporate and InvestmentBank $71,500 $94,250 BNP Paribas S.A. and DVB Bank S.E. 56,250 60,750 Eurobank Ergasias S.A. $52,200 35,569 38,297 Eurobank Ergasias S.A. $52,000 33,654 36,102 Norddeutsche Landesbank Girozentrale 23,828 25,391 DVB Bank S.E. and Credit Agricole Corporate and Investment Bank 45,703 48,828 Ship Mortgage Notes $670,000 670,000 670,000 Deutsche Bank AG Filiale Deutschlandgeschäft and Skandinaviska EnskildaBanken AB 82,327 97,615 BNP Paribas $44,000 36,000 40,000 HSH $24,000 22,856 — 1,077,687 1,111,233 Less: Deferred finance costs, net (13,470) (16,685) Add: bond premium 1,152 1,390 Total borrowings $1,065,369 $1,095,938 Less: current portion, net of deferred finance costs (36,410) (55,000) Total long-term borrowings, net of current portion, bond premium anddeferred finance costs $1,028,959 $1,040,938 F-24NAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) 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 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 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 currently have the option to redeem the 2021 Notes in whole or in part, at a fixed price of 106.094% of the principal amount,which price declines ratably until it reaches par in 2019, plus accrued and unpaid interest, if any.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, 2017.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 theexception of Navios Acquisition Finance (a co-issuer of the 2021 Notes). The Company’s 2021 Notes are unregistered. The guarantees of our subsidiaries thatown mortgaged vessels are senior secured guarantees and the guarantees of our subsidiaries that do not own mortgaged vessels are senior unsecuredguarantees. All subsidiaries, including Navios Acquisition Finance, are 100% owned. Navios Acquisition does not have any independent assets oroperations. Except as provided above, Navios Acquisition 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$25,000 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 $750 each with a final balloon payment of $16,000 to be repaid on the last repayment date. The repayment of each tranchestarted 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. The loan alsorequires compliance with certain financial covenants. On October 27, 2016, Navios Acquisition reduced the facility by $16,000 through payment of $15,650in cash being the balloon instalment for one of the six tranches, achieving a nominal benefit amount of $350. On January 27, 2017, Navios Acquisitionrepaid $16,000 being the balloon instalment for another of the remaining five tranches. As of December 31, 2017, an amount of $71,500 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 threeequal tranches 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, 2017, an amount of $56,250 was outstanding. F-25NAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) 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, ofwhich $51,600 has been drawn (divided into two tranches of $26,100 and $25,500, respectively) to partially finance the acquisition costs of two LR1 producttanker vessels. Each tranche of the facility is repayable in 32 quarterly installments of $345 and $337, respectively, with a final balloon payment of $15,060and $14,716, respectively, to be repaid on the last repayment date. The repayment of each tranche started three months after the delivery date of therespective vessel. 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 amount of $35,569 was outstanding as of December 31,2017, under this facility.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 ofwhich $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 amount of $33,654 was outstanding as of December 31, 2017, under thisfacility.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 started three months after the delivery of thevessel and 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 compliance with certain financial covenants.During the first quarter of 2015, the facility was fully drawn and as of December 31, 2017, an amount of $23,828 was outstanding under this loan agreement.DVB Bank S.E. and Credit Agricole Corporate and Investment Bank: On December 29, 2011, Navios Acquisition entered into a loan agreement withDVB Bank SE and Credit Agricole Corporate and Investment Bank of up to $56,250 (divided into two tranches of $28,125 each) to partially finance thepurchase price of two MR2 product tanker vessels. Each tranche of the facility is repayable in 32 quarterly installments of $391 each with a final balloonpayment of $15,625 to be repaid on the last repayment date. The repayment started three months after the delivery of the respective vessel and bears interestat 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 repaymentdate, 250 bps per annum; and (c) thereafter 300 bps per annum. The loan also requires compliance with certain financial covenants. As of December 31, 2017,an amount of $45,703 was outstanding.ABN AMRO Bank N.V.: In February 2017, the Company drew $26,650 under this credit facility with ABN AMRO Bank N.V., which was secured withits two chemical tankers, following the full repayment of the previous financing arrangements. The facility was repayable in four equal consecutive quarterlyinstallments of $650 each, with a final balloon payment of the balance to be repaid on the last repayment date. The maturity date of the loan was in February2018. The loan bore interest at LIBOR plus 400 bps per annum. In June, 2017, the Company prepaid the outstanding balance of $26,000 and an amount of$697 was written-off from the deferred finance costs. As of December 31, 2017, there was no outstanding amount under this facility and the loan matured inFebruary 2018.Deutsche Bank AG Filiale Deutschlandgeschäft and Skandinaviska Enskilda Banken AB: In November 2015, Navios Acquisition, entered into a termloan facility of up to $125,000 (divided into five tranches) with Deutsche Bank AG Filiale Deutschlandgeschäft and Skandinaviska Enskilda Banken AB forthe: (i) financing of the purchase price of the Nave Spherical; and (ii) the refinancing of the existing facility with Deutsche Bank AG FilialeDeutschlandgescäft and Skandinaviska Enskilda Banken AB, dated July 18, 2014. Four of the five tranches of the facility are repayable in 20 quarterlyinstallments of between approximately $435 and $1,896, each with a final balloon repayment to be made on the last repayment date. The fifth tranche isrepayable in 16 quarterly installments of between approximately $709 and $803, each. The maturity date of the loan is in the fourth quarter of 2020. Thecredit facility bears interest at LIBOR plus 295 bps per annum. F-26NAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) On January 27, 2016, Navios Acquisition sold the Nave Lucida to an unaffiliated third party for net cash proceeds of $18,449. Navios Acquisitionprepaid $12,097 being the respective tranche of the Deutsche Bank AG Filiale Deutschlandgeschäft and Skandinaviska Enskilda Banken AB facility that wasdrawn to finance the Nave Lucida. Following the prepayment in January 2016, an amount of $214 was written-off from the deferred financing cost. As ofDecember 31, 2017, an amount of $82,327 was outstanding under this facility.On March 23, 2018, Navios Acquisition prepaid $26,770, being the respective tranche of the facility that was drawn to finance the Nave Equinox andthe Nave Pyxis.HSH Nordbank: In June 2017, Navios Acquisition entered into a loan facility for an amount of $24,000 to refinance the credit facility with ABNAMRO Bank N.V. of its two chemical tankers. The facility is repayable in 17 equal consecutive quarterly installments of $572 each, with a final balloonpayment of the balance to be repaid on the last repayment date. The facility matures in September 2021 and bears interest at LIBOR plus 300 bps per annum.As of December 31, 2017, the outstanding balance was $22,856.BNP Paribas S.A. Bank: On December 18, 2015, Navios Acquisition, through certain of its wholly owned subsidiaries, entered into a term loan facilityagreement of up to $44,000 with BNP Paribas, as agent and the lenders named therein, for the partial post-delivery financing of a LR1 product tanker and aMR2 product tanker. The facility is repayable in 12 equal consecutive semi-annual installments in the amount of $2,000 in aggregate, with a final balloonpayment of $20,000 to be repaid on the last repayment date. The maturity date of the loan is in December 2021. The loan bears interest at LIBOR plus 230bps per annum. As of December 31, 2017, an amount of $36,000 was outstanding under this facility.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 was repayable in 28 quarterlyinstallments of $315 with a final balloon payment of $11,334 to be paid on the last repayment date. The facility bore interest at a rate of LIBOR plus 320 bps.The loan also required compliance with certain financial covenants. On October 4, 2016, Navios Acquisition sold the Nave Universe to an unaffiliated thirdparty for net cash proceeds of $35,768. Navios Acquisition prepaid $16,372 being the respective tranche of the HSH Nordbank AG facility that was drawn tofinance the acquisition of the Nave Universe. On November 15, 2016, Navios Acquisition sold the Nave Constellation to an unaffiliated third party for netcash proceeds of $35,771. Navios Acquisition prepaid $16,372 being the respective tranche of the HSH Nordbank AG facility that was drawn to finance theacquisition of the Nave Constellation. Following these prepayments in 2016, an amount of $240 was written-off from the deferred financing cost. As of eachDecember 31, 2017 and 2016, no amount was outstanding.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; (ii) net worth ranging from $50,000 to $135,000; and (iii) total liabilities divided by total assets, adjusted for market values tobe lower than 75%. It is an event of default under the credit facilities if such covenants are not complied with, including the loan to value ratios for which theCompany may provide sufficient additional security to prevent such an event.As of December 31, 2017, 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.The maturity table below reflects the principal payments of all notes and credit facilities outstanding as of December 31, 2017 for the next five yearsand thereafter and is based on the repayment schedule of the respective loan facilities (as described above) and the outstanding amount due under the 2021Notes. F-27NAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) December 31,2017 Long-Term Debt Obligations: Year December 31, 2018 37,712 December 31, 2019 100,751 December 31, 2020 119,410 December 31, 2021 720,637 December 31, 2022 56,740 December 31, 2023 and thereafter 42,437 Total $1,077,687 Sale and Leaseback AgreementOn March 31, 2018, Navios Acquisition entered into a sale and leaseback agreement in order to refinance $71,500 outstanding on the existing facilityon four product tankers. Navios Acquisition has a purchase obligation at the end of the lease term and under ASC 842-40, the transaction is expected to beaccounted for as a failed sale and leaseback transaction and result in a finance lease. As a result of the refinancing, as of December 31, 2017, an amount of$32,771 was reclassified from “Current portion of long-term debt, net of deferred finance cost” to “Long term debt, net of current portion, premium and net ofdeferred finance cost”. The facility will be repayable in 24 equal consecutive quarterly installments of $1,490 each, with a final balloon payment of $35,750to be repaid on the last repayment date. The facility matures in March 2024 and bears interest at LIBOR plus 305 bps per annum.The agreement includes, among other things, compliance with loan to value ratios and certain financial covenants: (i) minimum liquidity higher of$1,000 per vessel; (ii) net worth higher from $125,000; and (iii) total liabilities divided by total assets, adjusted for market values to be lower than 80%. It isan event of default under the credit facilities if such covenants are not complied with, including the loan to value ratios for which the Company may providesufficient additional security to prevent such an event.NOTE 13: 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 instruments:Cash and cash equivalents: The carrying amounts reported in the consolidated balance sheets for interest bearing deposits approximate their fair valuebecause of the short maturity of these investments.Restricted Cash: The carrying amounts reported in the consolidated balance sheets for interest bearing deposits approximate their fair value because ofthe short maturity of these investments.Due from related parties, long-term: The carrying amount of due from related parties, long-term reported in the balance sheet approximates its fairvalue.Other long-term debt, net of deferred finance costs: As a result of the adoption of ASU 2015-03, the book value has been adjusted to reflect the netpresentation of deferred financing costs. The outstanding balance of the floating rate loans continues to approximate its fair value, excluding the effect of anydeferred finance costs.Ship Mortgage Notes and premiums: The fair value of the 2021 Notes, which has a fixed rate, was determined based on quoted market prices, asindicated in the table below. December 31, 2017 December 31, 2016 Book Value Fair Value Book Value Fair Value Cash and cash equivalents $81,151 $81,151 $49,292 $49,292 Restricted cash $5,307 $5,307 $7,366 $7,366 Ship mortgage notes and premium $661,463 $572,214 $659,684 $571,597 Other long-term debt, net of deferred finance costs $403,906 $407,687 $436,254 $441,233 Due from related parties, long-term $54,593 $54,593 $80,068 $80,646 F-28NAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) The Company’s assets measured at fair value on a non-recurring basis were: Fair Value Measurements as of December 31, 2017 Total Quoted Prices inActive Markets forIdentical Assets(Level I) Significant OtherObservableInputs(Level II) SignificantUnobservableInputs(Level III) Investment in affiliates $120,007 $120,007 $— $— The Company recorded a non-cash OTTI loss of $59,104 on its investment in Navios Midstream during the year ended December 31, 2017. (Refer toNote 8, “Investment in affiliates”).As of December 31, 2017 the carrying amount of the investment in Navios Midstream was $113,662.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 valuehierarchy, is 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 theseitems does 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, 2017. Fair Value Measurements at December 31, 2017 Using Total Level I Level II Level III Cash and cash equivalents $81,151 $81,151 $— $— Restricted cash $5,307 $5,307 $— $— Ship mortgage notes and premium $572,214 $572,214 $— $— Other long-term debt(1) $407,687 $— $407,687 $— Due from related parties, long-term(2) $54,593 $— $54,593 $— Fair Value Measurements at December 31, 2016 Using Total Level I Level II Level III Cash and cash equivalents $49,292 $49,292 $— $— Restricted cash $7,366 $7,366 $— $— Ship mortgage notes and premium $571,597 $571,597 $— $— Other long-term debt(1) $441,233 $— $441,233 $— Due from related parties, long-term(2) $80,646 $— $80,646 $— (1)The fair value of the Company’s other long-term debt is estimated based on currently available debt with similar contract terms, interest rate andremaining maturities as well as taking into account the Company’s creditworthiness.(2)The fair value of the Company’s long term amounts due from related parties is estimated based on currently available debt with similar contract terms,interest rate and remaining maturities as well as taking into account the counterparty’s creditworthiness. F-29NAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) NOTE 14: LEASESChartered-out:The future minimum contractual lease income (charter-out rates is presented net of commissions) is as follows: Amount 2018 $75,535 2019 10,837 2020 — 2021 — 2022 — Thereafter — Total minimum lease revenue, net of commissions $86,372 Revenues from time charters are not generally received when a vessel is off-hire, including time required for scheduled maintenance of the vessel.NOTE 15: TRANSACTIONS WITH RELATED PARTIESThe Navios Holdings Credit Facilities: On September 19, 2016, Navios Acquisition entered into a $70,000 secured loan facility with NaviosHoldings. The loan facility is secured by all of Navios Holdings’ interest in Navios Acquisition and 78.5% of Navios Holdings’ interest in Navios SouthAmerican Logistics Inc. “Navios Logistics”, representing a majority of the shares outstanding of Navios Logistics. The secured loan facility provided for anarrangement fee of $700, is available for up to five drawings and has a fixed interest rate of 8.75% with a maturity date of November 15, 2018. OnNovember 3, 2017, Navios Holdings prepaid in full the outstanding amount with a payment of $55,132. The prepayment amount consisted of the $50,000drawn under the facility and $5,132 of accrued interest. As of December 31, 2017 and December 31, 2016, the outstanding receivable balance of $0 and$50,661, respectively, consisted of the drawdown of $50,000 on September 20, 2016 net of the arrangement fee, upon deduction of the applicable expensesfor the origination of the loan facility and the accrued interest of $1,240, respectively, included in the consolidated balance sheets under “Due from relatedparties, long-term”. The arrangement fee was deferred and amortized using the effective interest rate method. Total interest income, including amortization ofdeferred fees, for the year ended December 31, 2017 and December 31, 2016 amounted to $4,471 and $1,319, respectively.In March 2016, Navios Acquisition entered into the $50,000 Revolver with Navios Holdings, which was available for multiple drawings up to a limitof $50,000. The Revolver had a margin of LIBOR plus 300bps and a maturity until December 2018. On April 14, 2016, Navios Acquisition and NaviosHoldings announced that the Revolver was terminated. No borrowings had been made under the Revolver.On November 11, 2014, Navios Acquisition entered into a short term credit facility with Navios Holdings pursuant to which Navios Acquisition mayborrow up to $200,000 for general corporate purposes. The loan provided for an arrangement fee of $4,000 and bore a fixed interest of 600 bps. OnNovember 13, 2014, the Company drew an amount of $169,650 from the facility. The facility matured and was fully repaid by December 29, 2014.In 2010, Navios Acquisition entered into a $40,000 credit facility with Navios Holdings, which matured in December 2015. The facility was availablefor multiple drawings up to a limit of $40,000 and had a margin of LIBOR plus 300 basis points. As of its maturity date, December 31, 2015, all amountsdrawn had been fully repaid.Management fees: Pursuant to the Management Agreement dated May 28, 2010 and as amended in May 2012 and May 2014, the Manager providedcommercial and technical management services to Navios Acquisition’s vessels for a fixed daily fee of: (a) $6.0 per MR2 product tanker and chemical tankervessel; (b) $7.0 per LR1 product tanker vessel; and (c) $9.5 per VLCC, through May 2016.Pursuant to an amendment to the Management Agreement dated as of May 19, 2016, Navios Acquisition fixed the fees for commercial and technicalship management services of its fleet for two additional years from May 29, 2016, through May 2018, at a daily fee of: (a) $6.35 per MR2 product tanker andchemical tanker vessel; (b) $7.15 per LR1 product tanker vessel; and (c) $9.5 per VLCC.Dry docking expenses are reimbursed by Navios Acquisition at cost. F-30NAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) Total management fees for each of the years ended December 31, 2017, 2016 and 2015 amounted to $94,973, $97,866 and $95,336, respectively.Included in direct vessel expenses is an amount of $730 for the year ended December 31, 2016, that was incurred for specialized work performed inconnection with certain vessels of our fleet.General and administrative expenses: On May 28, 2010, Navios Acquisition entered into an Administrative Services Agreement with NaviosHoldings, 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, 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 2020.For each of the years ended December 31, 2017, 2016 and 2015 the expense arising from administrative services rendered by Navios Holdingsamounted to $9,000, $9,427 and $7,608, respectively.Balance due from related parties (excluding Navios Europe I, Navios Europe II and Navios Holdings Credit Facility): Balance due from relatedparties as of December 31, 2017 and December 31, 2016 was $18,036 and $25,760, respectively, and included the short-term and long-term amounts duefrom Navios Holdings and Navios Midstream. The balances mainly consisted of administrative expenses and special survey and dry docking expenses forcertain vessels of our fleet, as well as management fees, in accordance with the Management Agreement.Balance due to related parties, short-term: Amounts due to related parties, short-term as of December 31, 2017 and December 31, 2016 was $17,107and $0, respectively, and mainly consisted of backstop commitments and other payables to Navios Midstream. In the first quarter of 2018, NaviosAcquisition paid to Navios Midstream the amount of $16,391 concerning the backstop commitment.Omnibus AgreementsAcquisition Omnibus Agreement: Navios Acquisition entered into an omnibus agreement (the “Acquisition Omnibus Agreement”) with NaviosHoldings and Navios Partners in connection with the closing of Navios Acquisition’s initial vessel acquisition, pursuant to which, among other things,Navios Holdings and Navios Partners agreed not to acquire, charter-in or own liquid shipment vessels, except for container vessels and vessels that areprimarily employed in operations in South America without the consent of an independent committee of Navios Acquisition. In addition, NaviosAcquisition, under the Acquisition Omnibus Agreement, agreed to cause its subsidiaries not to acquire, own, operate or charter-in drybulk carriers underspecific exceptions. Under the Acquisition Omnibus Agreement, Navios Acquisition and its subsidiaries grant to Navios Holdings and Navios Partners a rightof first offer on any proposed sale, transfer or other disposition of any of its drybulk carriers and related charters owned or acquired by Navios Acquisition.Likewise, Navios Holdings and Navios Partners agreed to grant a similar right of first offer to Navios Acquisition for any liquid shipment vessels they mightown. 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 theexisting terms 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 thirdparty.Midstream Omnibus Agreement: Navios Acquisition entered into an omnibus agreement (the “Midstream Omnibus Agreement”), with NaviosMidstream, Navios Holdings and Navios Partners in connection with the Navios Midstream IPO, pursuant to which Navios Acquisition, Navios Midstream,Navios Holdings, Navios Partners and their controlled affiliates generally have agreed not to acquire or own any VLCCs, crude oil tankers, refined petroleumproduct tankers, LPG tankers or chemical tankers under time charters of five or more years without the consent of 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, F-31NAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) crude oil tankers, refined petroleum product tankers, LPG tankers or chemical tankers under charter for five or more years it might own. These rights of firstoffer will not apply to a: (a) sale, transfer or other disposition of vessels between any affiliated subsidiaries, or pursuant to the terms of any charter or otheragreement with a charter party, or (b) merger with or into, or sale of substantially all of the assets to, an unaffiliated third-party.Navios Containers Omnibus Agreement: In connection with the Navios Maritime Containers Inc. (“Navios Containers”) private placement and listingon the Norwegian over-the-counter market effective June 8, 2017, Navios Acquisition entered into an omnibus agreement with Navios Containers, NaviosMidstream, Navios Holdings and Navios Partners, pursuant to which Navios Acquisition, Navios Holdings, Navios Partners and Navios Midstream havegranted to Navios Containers a right of first refusal over any container vessels to be sold or acquired in the future. The omnibus agreement containssignificant exceptions that will allow Navios Acquisition, Navios Holdings, Navios Partners and Navios Midstream to compete with Navios Containers underspecified circumstances.Backstop Agreement: On November 18, 2014, Navios Acquisition entered into backstop agreements with Navios Midstream. In accordance with theterms of the backstop agreements, Navios Acquisition has provided backstop commitments for a two-year period as of the redelivery of each of the NaveCeleste, the Shinyo Ocean and the Shinyo Kannika from their original charters, at a net rate of $35, $38.4 and $38, respectively. Navios Midstream hascurrently entered into new charter contracts for the above vessels with third parties upon their redelivery in the first quarter of 2017. Those contracts providefor index linked charter rates or pool earnings, as the case may be. Backstop commitments will be triggered if the actual rates achieved are below the backstoprates. The Company has recognized a liability of $16,391 ($0 for the same period in 2016), under “Time charter and voyage expenses” in the consolidatedstatements of operations for the year ended December 31, 2017, which the Company believes represents a reasonable estimate of the loss for the backstopagreements. In 2018 the Company paid to Navios Midstream the amount of $11,489. The backstop commitment for Shinyo Kannika terminated following thesale of this vessel in March 2018. Navios Acquisition agreed to extend the backstop commitment of the Shinyo Kannika to the Nave Galactic, following thesale of the latter to Navios Midstream in March 2018.Navios Midstream General Partner Option Agreement with Navios Holdings: Navios Acquisition entered into an option agreement, datedNovember 18, 2014, with Navios Holdings under which Navios Acquisition grants Navios Holdings the option to acquire any or all of the outstandingmembership interests in Navios Midstream General Partner and all of the incentive distribution rights in Navios Midstream representing the right to receivean increasing percentage of the quarterly distributions when certain conditions are met. The option shall expire on November 18, 2024. Any such exerciseshall relate to not less than twenty-five percent of the option interest and the purchase price for the acquisition of all or part of the option interest shall be anamount equal to its fair market value.Option Vessels: In connection with the IPO of Navios Midstream, Navios Acquisition granted options to Navios Midstream, exercisable untilNovember 18, 2016, to purchase seven VLCCs (two of which, the Nave Celeste and the C. Dream were sold to Navios Midstream in June 2015 pursuant tosuch option) from Navios Acquisition at fair market value. On October 25, 2016, Navios Acquisition extended the option periods on three of the fiveremaining VLCCs, the Nave Buena Suerte, the Nave Neutrino and the Nave Electron, for an additional two-year period expiring on November 18, 2018. Thepurchase options pursuant to the extended period do not include any backstop commitments from Navios Acquisition.Sale of C. Dream and Nave Celeste: On June 18, 2015, Navios Acquisition sold the vessel-owning subsidiaries of the C. Dream and the Nave Celesteto Navios Midstream for a sale price of $100,000 in total. Out of the $100,000 purchase price, $73,000 was paid in cash and the remaining amount was paidthrough the issuance of 1,592,920 subordinated Series A Units of Navios Midstream. In conjunction with the transaction, Navios Midstream also issued32,509 general partner units to the General Partner, in order for the General Partner to maintain its 2.0% general partnership interest, for $551.The Company recognized its incremental investment in Navios Midstream, which amounted to $27,665 under “Investment in affiliates”. Theinvestment was recognized at fair value at $17.02 per unit. The incremental investment included the Company’s share of the basis difference between the fairvalue and the underlying book value of Navios Midstream’s assets at the transaction date, which amounted to $2,554. Of this difference an amount of $(72)was allocated to the intangibles assets and $2,626 was allocated to the tangible assets. This difference is amortized through “Equity/ (loss) in net earnings ofaffiliated companies” over the remaining life of Navios Midstream’s tangible and intangible assets. F-32NAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) The transaction resulted in a gain on sale of $14,742, of which $5,771 was recognized at the time of sale in the statements of operations under “Gain onsale of vessels” and the remaining $8,971 representing profit of Navios Acquisition’s 60.9% interest in Navios Midstream has been deferred under “Deferredgain on sale of assets” and is being amortized over the vessels’ remaining useful life or until the vessels are sold. Subsequently, the deferred gain is amortizedto income over the remaining useful life of the vessel. The recognition of the deferred gain is accelerated in the event that (i) the vessel is subsequently soldor otherwise disposed of by Navios Midstream or (ii) the Company’s ownership interest in Navios Midstream is reduced.In connection with the public offerings of common units by Navios Midstream, a pro rata portion of the deferred gain is released to income upondilution of the Company’s ownership interest in Navios Midstream. As of December 31, 2017 and 2016, the unamortized deferred gain for all vessels andrights sold totaled $7,708 and $8,823, respectively, of which an amount of $979 and $994, respectively, was included in “Deferred revenue”. For the yearsended December 31, 2017, 2016 and 2015 Navios Acquisition recognized $1,116, $159 and $11 of the deferred gain, respectively, in “Equity/ (loss) in netearnings of affiliated companies”.Participation in offerings of affiliates: On July 29, 2016, Navios Midstream launched a continuous offering sales program of its common units for anaggregate offering of up to $25,000. (Refer also to Note 8 “Investment in affiliates”).On September 30, 2016, December 30, 2016, February 16, 2017 and May 5, 2017 Navios Acquisition entered into securities purchase agreements withNavios Midstream pursuant to which Navios Acquisition made an investment in Navios Midstream by purchasing 5,655, 1,143, 6,446 and 412 generalpartnership interests, respectively, for a consideration of $75, $14, $79 and $5, respectively, in order to maintain its 2.0% partnership interest in NaviosMidstream in light of such continuous offering sales program.The Company determined, under the equity method, that the issuance of common units of Navios Midstream qualified as a sale of shares by theinvestee. As a result, a net loss of $54 and $246 was recognized in “Equity/ (loss) in net earnings of affiliated companies” for the years ended December 31,2017 and December 31, 2016, respectively.Balance due from Navios Europe I: Navios Holdings, Navios Acquisition and Navios Partners have made available to Navios Europe I revolvingloans up to $24,100 to fund working capital requirements. See Note 8 for the Investment in Navios Europe I.Balance due from Navios Europe I as of December 31, 2017 amounted to $19,397 (December 31, 2016: $12,301) which included the NaviosRevolving Loans I of $11,770 (December 31, 2016: $7,125), the non-current amount of $3,174 (December 31, 2016: $2,231) related to the accrued interestincome earned under the Navios Term Loans I under the caption “Due from related parties, long-term” and the accrued interest income earned under theNavios Revolving Loans I of $4,453 (December 31, 2016: $2,945) under the caption “Due from related parties, short-term.”The Navios Revolving Loans I and the Navios Term Loans I earn interest and an annual preferred return, respectively, at 12.7% per annum, on aquarterly compounding basis and are repaid from free cash flow (as defined in the loan agreement) to the fullest extent possible at the end of each quarter.There are no covenant requirements or stated maturity dates. As of December 31, 2017, there was no amount undrawn under the Navios Revolving Loans I.Balance due from Navios Europe II: Navios Holdings, Navios Acquisition and Navios Partners have made available to Navios Europe II revolvingloans up to $43,500 to fund working capital requirements. In March 2017, the availability under the Navios Revolving Loans II was increased by $14,000.See Note 8 for the Investment in Navios Europe II.Balance due from Navios Europe II as of December 31, 2017 amounted to $31,091 (December 31, 2016: $16,393) which included the NaviosRevolving Loans II of $20,662 (December 31, 2016: $11,602), the non-current amount of $3,750 (December 31, 2016: $2,050) related to the accrued interestincome earned under the Navios Term Loans II under the caption “Due from related parties, long-term” and the accrued interest income earned under theNavios Revolving Loans II of $6,679 (December 31, 2016: $2,741) under the caption “Due from related parties, short-term.”The Navios Revolving Loans II and the Navios Term Loans II earn interest and an annual preferred return, respectively, at 18% per annum, on aquarterly compounding basis and are repaid from free cash flow (as defined in the loan agreement) to the fullest extent possible at the end of each quarter.There are no covenant requirements or stated maturity dates. As of December 31, 2017, the amount undrawn under the Navios Revolving Loans II was$15,003, of which Navios Acquisition may be required to fund an amount ranging from $0 to $15,003. F-33NAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) NOTE 16: COMMITMENTS AND CONTINGENCIESOn November 18, 2014, Navios Acquisition entered into backstop agreements with Navios Midstream. In accordance with the terms of the backstopagreements, Navios Acquisition has provided backstop commitments for a two-year period as of the redelivery of each of the Nave Celeste, the Shinyo Oceanand the Shinyo Kannika from their original charters, at a net rate of $35, $38.4 and $38, respectively. Navios Midstream has currently entered into newcharter contracts for the above vessels with third parties upon their redelivery in first quarter of 2017. Those contracts provide for index linked charter rates orpool earnings as the case may be. Backstop commitments will be triggered if the actual rates achieved are below the backstop rates. The backstopcommitment for Shinyo Kannika terminated following the sale of this vessel in March 2018. Navios Acquisition agreed to extend the backstop commitmentof the Shinyo Kannika to the Nave Galactic, following the sale of the latter to Navios Midstream in March 2018.The Company is involved in various disputes and arbitration proceedings arising in the ordinary course of business. Provisions have been recognizedin the financial statements for all such proceedings where the Company believes that a liability may be probable, and for which the amounts are reasonablyestimable, based upon facts known at the date of the financial statements were prepared. In the opinion of the management, the ultimate disposition of thesematters individually and in aggregate will not materially affect the Company’s financial position, results of operations or liquidity.NOTE 17: PREFERRED AND COMMON STOCKPreferred StockSeries A Convertible Preferred StockOn September 17, 2010, Navios Acquisition issued 3,000 shares of the Company’s authorized Series A Convertible Preferred Stock to an independentthird party as a consideration for certain consulting and advisory fees related to the VLCC acquisition. The preferred stock has no voting rights, is onlyconvertible into shares of common stock and does not participate in dividends until such time as the shares are converted into common stock. On January 6,2016, Navios Acquisition redeemed, through the holder’s put option, 100,000 shares of puttable common stock and paid cash of $1,000 to the holder uponredemption. The Series A shares of preferred stock were fully converted into 1,200,000 common stock that was issued on March 11, 2016.Series B Convertible Preferred StockOn October 29, 2010, Navios Acquisition issued 540 shares of the Company’s authorized Series B Convertible Preferred Stock to the seller of the twoLR1 product tankers. The preferred stock contained a 2% per annum dividend payable quarterly starting on January 1, 2011 and upon declaration by theCompany’s Board commenced payment on March 31, 2011. The preferred stock did not have any voting rights. On June 30, 2015, 162 shares of Series BConvertible Preferred Stock (being 30% of the 540 shares originally issued), with nominal value of $10 per share, were mandatorily converted into 64,800shares of common stock at a conversion ratio of 1:25. On October 27, 2015, the remaining 378 shares of Series B Convertible Preferred Stock (being 70% ofthe 540 shares originally issued), with nominal value of $10 per share, were converted into 108,000 shares of common stock at a conversion ratio of 1:35.Series C Convertible Preferred StockOn March 30, 2011, pursuant to an Exchange Agreement Navios Holdings exchanged 7,676,000 shares of Navios Acquisition’s common stock it heldfor 1,000 non-voting Series C Convertible Preferred Stock of Navios Acquisition. Each holder of shares of Series C Convertible Preferred Stock shall beentitled at their option at any time, after March 31, 2013 to convert all or any of the outstanding shares of Series C Convertible Preferred Stock into a numberof fully paid and non-assessable shares of Common Stock determined by multiplying each share of Series C Convertible Preferred Stock to be converted by7,676, subject to certain limitations. Upon the declaration of a common stock dividend, the holders of the Series C Convertible Preferred Stock are entitled toreceive dividends on the Series C Convertible Preferred Stock in an amount equal to the amount that would have been received in the number of shares ofCommon Stock into which the Shares of Series C Convertible Preferred Stock held by each holder thereof could be converted. For the purpose of calculatingearnings / (loss) per share this preferred stock is treated as in-substance common stock and is allocated income / (losses) and considered in the dilutedcalculation.The Company was authorized to issue up to 10,000,000 shares of $0.0001 par value preferred stock in total with such designations, voting and otherrights and preferences as may be determined from time to time by the Board of Directors. F-34NAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) As of each of December 31, 2017 and December 31, 2016 the Company’s issued and outstanding preferred stock consisted of the 1,000 Series CConvertible Preferred Stock.Series D 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 DConvertible Preferred Stock (nominal and fair value $3,000) to a shipyard, in partial settlement of the purchase price of each of the newbuilding LR1 producttankers, Nave Cassiopeia, Nave Cetus, Nave Atropos and Nave Rigel. The preferred stock includes a 6% per annum dividend payable quarterly, starting oneyear after delivery of each vessel. The Series D Convertible Preferred Stock mandatorily converted into shares of common stock 30 months after issuance at aprice per share of common stock equal to $10.00. During 2015, Navios Acquisition redeemed, at certain dates through the holder’s put option, 400 shares ofthe Series D Convertible Preferred Stock and paid cash of $4,000 in total to the holder upon redemption. As a result of the redemptions, no shares of series DConvertible Preferred Stock are outstanding.In addition at certain dates in 2015, 800 shares of Series D Convertible Preferred Stock were mandatorily converted into 800,000 shares of commonstock. In conjunction with these conversions, the 800,000 shares of common stock were reclassified to puttable common stock within temporary equity, as aresult of an embedded put option of the holder for up to 30 months after the conversion date.As of each of December 31, 2017 and December 31, 2016, no shares of Series D Convertible Preferred Stock were outstandingCommon Stock and puttable common stockAs of December 31, 2017 and December 31, 2016, the following shares of puttable common stock were outstanding: Puttable Common Stock Number ofcommon shares Amount Balance at December 31, 2015 650,000 $6,500 Redemption of 400,000 shares of the puttable common stock (400,000) (4,000) Balance at December 31, 2016 250,000 $2,500 Redemption of 250,000 shares of the puttable common stock (250,000) (2,500) Balance at December 31, 2017 — — Pursuant to an Exchange Agreement entered into on March 30, 2011, Navios Holdings exchanged 7,676,000 shares of Navios Acquisition’s commonstock it held for 1,000 non-voting shares of Series C Convertible Preferred Stock of Navios Acquisition.On March 2, 2015, 200 shares of the Series D Convertible Preferred Stock were mandatorily converted into 200,000 shares of puttable common stockand on April 24, 2015, 25,000 shares of such puttable common stock were redeemed for $250.On April 30, 2015, 200 shares of the Series D Convertible Preferred Stock were mandatorily converted into 200,000 shares of puttable common stock.On June 30, 2015, 162 shares of Series B Convertible Preferred Stock were converted into 64,800 shares of common stock.On July 15, 2015, Navios Acquisition redeemed, through the holder’s put option, 50,000 shares of the puttable common stock and paid $500 to theholder upon redemption.On August 13, 2015, 200 shares of the Series D Convertible Preferred Stock were mandatorily converted into 200,000 shares of puttable common stock.On October 2, 2015, Navios Acquisition redeemed, through the holder’s put option, 75,000 shares of the puttable common stock and paid $750 to theholder upon redemption. F-35NAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) On October 26, 2015, 200 shares of the Series D Convertible Preferred Stock were converted into 200,000 shares of puttable common stock.On October 27, 2015, 378 shares of Series B Convertible Preferred Stock were mandatorily converted into 108,000 shares of common stock.Under the share repurchase program, for up to $50,000, approved and authorized by the Board of Directors, Navios Acquisition has repurchased2,704,752 shares for a total cost of approximately $9,904, as of December 31, 2015. The share repurchase program expired in December 2016.On January 6, 2016, Navios Acquisition redeemed, through the holder’s put option, 100,000 shares of the puttable common stock and paid cash of$1,000 to the holder upon redemption.On March 11, 2016, 1,200,000 shares of common stock were issued as a result of the conversion of 3,000 shares of Series A Convertible PreferredStock.On April 1, 2016, Navios Acquisition redeemed, through the holder’s put option, 100,000 shares of the puttable common stock and paid cash of $1,000to the holder upon redemption.On July 1, 2016, Navios Acquisition redeemed, through the holder’s put option, 100,000 shares of the puttable common stock and paid cash of $1,000to the holder upon redemption.On October 3, 2016, Navios Acquisition redeemed, through the holder’s put option, 100,000 shares of the puttable common stock and paid cash of$1,000 to the holder upon redemption.On January 17, 2017, Navios Acquisition redeemed, through the holder’s put option, 100,000 shares of puttable common stock and paid cash of$1,000 to the holder upon redemption.On May 8, 2017, Navios Acquisition redeemed, through the holder’s put option, 75,000 shares of puttable common stock and paid cash of $750 to theholder upon redemption.On August 8, 2017, Navios Acquisition redeemed, through the holder’s put option, 50,000 shares of puttable common stock and paid cash of $500 tothe holder upon redemption.On October 2, 2017, Navios Acquisition redeemed, through the holder’s put option, 25,000 shares of puttable common stock and paid cash of $250 tothe holder upon redemption. After this redemption there are no shares of puttable common stock outstanding.In December 2017, Navios Acquisition authorized and issued in the aggregate 1,774,915 restricted shares of common stock to its directors and officers.These awards of restricted common stock are based on service conditions only and vest over four years.As of December 31, 2017, the Company was authorized to issue 250,000,000 shares of $0.0001 par value common stock of which 152,107,905 wereissued and outstanding.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 optionsto purchase 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). F-36NAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) 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 $0, $864 and $2,362 for the years endedDecember 31, 2017, 2016 and 2015, respectively, and was reflected in general and administrative expenses on the statements of operations. The recognizedcompensation expense for the year was presented as an adjustment to reconcile net (loss)/ income to net cash provided by operating activities on thestatements of cash flows.With respect to the October 2013 grants, there were no restricted stock or stock options exercised, forfeited or expired during the year endedDecember 31, 2017.On October 24, 2016, 2015 and 2014, 700,005, 700,001 and 699,994 shares of restricted stock, respectively, were vested. Accordingly, there were nounvested restricted shares outstanding as of December 31, 2017 and December 31, 2016.On each of October 24, 2016, 2015 and 2014, 500,000 stock options were vested. Accordingly, there were no unvested stock options outstanding andnon-vested as of December 31, 2017 and December 31, 2016.The weighted average contractual life of stock options outstanding as of December 31, 2017 was 5.8 years.In December 2017, Navios Acquisition authorized and issued in the aggregate 1,774,915 restricted shares of common stock to its directors and officers.These awards of restricted common stock are based on service conditions only and vest over four years.The holders of restricted stock are entitled to dividends paid on the same schedule as paid to the stock holders of the company. The fair value ofrestricted stock is determined by reference to the quoted stock price on the date of grant of $1.18 per share (or total fair value of $2,094).Compensation expense is recognized based on a graded expense model over the vesting period.The effect of compensation expense arising from the stock-based arrangements described above amounts to $57, as of December 31, 2017, and it isreflected in general and administrative expenses on the statement of operations. The recognized compensation expense for the year is presented as adjustmentto reconcile net (loss)/ income to net cash provided by operating activities on the statements of cash flows.There were no restricted stock or stock options exercised, forfeited or expired during the year ended December 31, 2017.Restricted Shares outstanding and not vested amounted to 1,774,915 shares as of December 31, 2017.The estimated compensation cost relating to service conditions of non-vested restricted stock, not yet recognized was $2,038 as of December 31, 2017and is expected to be recognized over the weighted average contractual life of stock options of 4.0 years.NOTE 18: SEGMENT INFORMATIONNavios Acquisition reports financial information and evaluates its operations by charter revenues. Navios Acquisition does not use discrete financialinformation to evaluate operating results for each type of charter. As a result, management reviews operating results solely by revenue per day and operatingresults of the fleet and thus Navios Acquisition has determined that it operates under one reportable segment.The following table sets out operating revenue by geographic region for Navios Acquisition’s reportable segment. Revenue is allocated on the basis ofthe geographic region in which the customer is located. Tanker vessels operate worldwide. Revenues from specific geographic regions which contribute over10% of total revenue are disclosed separately. F-37NAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) Revenue by Geographic RegionVessels operate on a worldwide basis and are not restricted to specific locations. Accordingly, it is not possible to allocate the assets of these operationsto specific countries. Year EndedDecember 31,2017 Year EndedDecember 31,2016 Year EndedDecember 31,2015 Asia $140,177 $179,256 $208,690 Europe 34,653 40,237 40,147 United States 52,458 70,752 64,559 Total Revenue $227,288 $290,245 $313,396 NOTE 19: EARNINGS/ (LOSS) PER COMMON SHAREEarnings/ (loss) per share is calculated by dividing net income attributable to common stockholders by the weighted average number of shares ofcommon stock of Navios Acquisition outstanding during the period.Net (loss)/ income for the years ended December 31, 2017, 2016 and 2015 was adjusted for the purposes of earnings/(loss) per share calculation, for thedividends on Series B Preferred Shares, Series D preferred shares, restricted shares and for the undistributed loss/ (income) that is attributable to Series Cpreferred stock. Year endedDecember 31,2017 Year endedDecember 31,2016 Year endedDecember 31,2015 Numerator: Net (loss)/ income $(78,899) $62,878 $89,737 Less: Dividend declared on preferred shares Series B — — (78) Dividend declared on preferred shares Series D — — (281) Dividend declared on restricted shares (89) (105) (245) Undistributed loss/ (income) attributable to Series Cparticipating preferred shares 3,835 (3,058) (4,337) Net (loss)/ income attributable to common stockholders,basic $(75,153) $59,715 $84,796 Plus: Dividend declared on preferred shares Series B — — 78 Dividend declared on preferred shares Series D — — 281 Dividend declared on restricted shares — 105 245 Net (loss)/ income attributable to common stockholders,diluted $(75,153) $59,820 $85,400 Denominator: Denominator for basic net (loss)/ income per share —weighted average shares 150,412,031 149,932,713 150,025,086 Series A preferred stock — 232,787 1,200,000 Series B preferred stock — — 156,893 Series D preferred stock — — 647,758 Restricted shares — 570,656 1,270,658 Denominator for diluted net (loss)/ income per share —adjusted weighted average shares 150,412,031 150,736,156 153,300,395 Net (loss)/ income per share, basic $(0.50) $0.40 $0.57 Net (loss)/ income per share, diluted $(0.50) $0.40 $0.56 Potential common shares of 9,267,640, for the year ended December 31, 2017 (which includes Series C Preferred Stock, stock options and restrictedshares), 9,176,000, for the years ended December 31, 2016 (which includes Series C Preferred Stock and stock options) and December 31, 2015 (whichincludes Series S Preferred Stock and stock options) have an anti-dilutive effect (i.e., those that increase earnings per share or decrease loss per share) and aretherefore excluded from the calculation of diluted earnings per share. F-38NAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) NOTE 20: INCOME TAXESMarshall Islands, Cayman Islands, British Virgin Islands, and Hong Kong, do not impose a tax on international shipping income. Under the laws ofthese countries, the countries of incorporation of the Company and its subsidiaries and /or vessels’ registration, the companies are subject to registration andtonnage taxes which have been included in the daily management fee.In 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 Greek state which are calculated on the basis of the relevant vessels’ tonnage. Thepayment of said duties exhausts the tax liability of the foreign ship owning company and the relevant manager against any tax, duty, charge or contributionpayable on income from the exploitation of the foreign flagged vessel. In case that tonnage tax and/or similar taxes/duties are paid to the vessel’s flag state,these are deducted from the amount of the duty to be paid in Greece. The amount included in Navios Acquisition’s statements of operations for each of theyears ended December 31, 2017 and 2016, related to the Greek Tonnage tax was $616 and $612, 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 21: RECENT ACCOUNTING PRONOUNCEMENTSIn May 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2017-09, “Compensation — StockCompensation (Topic 718)”. This update provides clarity and reduces both diversity in practice and cost and complexity when applying the guidance inTopic 718 to a change to the terms or conditions of a share-based payment award. The amendments in this update affect any entity that changes the terms orconditions of a share-based payment award and are effective for all entities for annual periods, and interim periods within those annual periods, beginningafter December 15, 2017. Early adoption is permitted, including adoption in any interim period, for public business entities for reporting periods for whichfinancial statements have not yet been issued and all other entities for reporting periods for which financial statements have not yet been made available forissuance. The amendments in this update should be applied prospectively to an award modified on or after the adoption date. The adoption of this newaccounting standard is not expected to have material impact on the Company’s results of operations, financial position or cash flows.In February 2017, FASB issued ASU 2017-05, “Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20)”.This update clarifies the scope of Subtopic 610-20 “Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets” and provides guidancefor partial sales of nonfinancial assets. Subtopic 610-20, which was issued in May 2014 as a part of ASU 2014-09, “Revenue from Contracts with Customers(Topic 606)”, provides guidance for recognizing gains and losses from the transfer of nonfinancial assets in contracts with noncustomers. The amendments inASU 2017-05 are effective at the same time as the amendments in ASU 2014-09. Therefore, for public entities, the amendments are effective for annualreporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. The adoption of this new standard isnot expected to have material impact on the Company’s results of operations, financial position or cash flows.In January 2017, the FASB issued ASU 2017-03 “Accounting Changes and Error Corrections (Topic 250) and Investments-Equity Method and JointVentures (Topic 323)”. The ASU amends the Codification for SEC staff announcements made at recent Emerging Issues Task Force (EITF) meetings. The SECguidance that specifically relates to our consolidated financial statement was from the September 2016 meeting, where the SEC staff expressed theirexpectations about the extent of disclosures registrants should make about the effects of the new FASB guidance as well as any amendments issued prior toadoption, on revenue (ASU 2014-09), leases (ASU 2016-02) and credit losses on financial instruments (ASU 2016-13) in accordance with SAB Topic 11.M.Registrants are F-39NAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) required to disclose the effect that recently issued accounting standards will have on their financial statements when adopted in a future period. In caseswhere a registrant cannot reasonably estimate the impact of the adoption, then additional qualitative disclosures should be considered. The ASU incorporatesthese SEC staff views into ASC 250 and adds references to that guidance in the transition paragraphs of each of the three new standards. The adoption of thisASU did not have a material effect on the Company’s consolidated financial statements.In December 2016, FASB issued ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers”. Theamendments in this ASU affect narrow aspects of the guidance issued in ASU 2014-09, which is not yet effective, and are of a similar nature to the itemstypically addressed in the Technical Corrections and Improvements project. The effective date and transition requirements for the amendments are the sameas the effective date and transition requirements for Topic 606 (and any other Topic amended by Update 2014-09). ASU 2015-14, “Revenue from Contractswith Customers (Topic 606): Deferral of the Effective Date”, defers the effective date of Update 2014-09 by one year, as noted below.In November 2016, FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash”. This update addresses the classification andpresentation of changes in restricted cash on the statement of cash flows under Topic 230, Statement of Cash Flows. The amendments are effective for publicbusiness entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Retrospective transition method isrequired. Early adoption is permitted for all entities. The Company currently presents changes in restricted cash and cash equivalents depending on thenature of the cash flow within the consolidated statement of cash flows. The new guidance will not impact financial results, but will result in a change in thepresentation of restricted cash and cash equivalents within the statement of cash flows. The Company currently plans to adopt this guidance from January 1,2018.In August 2016, FASB issued ASU 2016-15, “Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments”. This updateaddresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The amendments are effective for public businessentities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted for all entities. Thisupdate was adopted as from January 1, 2018 and applied on a retrospective basis. The Company has assessed each of the eight specific presentation issuesand the adoption of this ASU does not have a material impact on the Company’s consolidated financial statements.In June 2016, FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.”This standard requires entities to measure all expected credit losses of financial assets held at a reporting date based on historical experience, currentconditions, and reasonable and supportable forecasts in order to record credit losses in a more timely matter. ASU 2016-13 also amends the accounting forcredit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The standard is effective for interim and annualreporting periods beginning after December 15, 2019, although early adoption is permitted for interim and annual periods beginning after December 15,2018. The Company is currently assessing the impact that adopting this new accounting guidance will have on its consolidated financial statements.In February 2016, FASB issued ASU 2016-02, “Leases (Topic 842)”. ASU 2016-02 will apply to both capital (or finance) leases and operating leases.According to ASU 2016-02, lessees will be required to recognize assets (right of use) and liabilities (lease liabilities) on the balance sheet for both types ofleases, capital (or finance) leases and operating leases, with terms greater than 12 months. ASU 2016 – 02 is effective for fiscal years beginning afterDecember 15, 2018, including interim periods within those fiscal years. Early application is permitted. This guidance requires companies to identify leaseand non-lease components of a lease agreement. Lease components relate to the right to use the leased asset and non-lease components relate to payments forgoods or services that are transferred separately from the right to use the underlying asset. Total lease consideration is allocated to lease and non-leasecomponents on a relative standalone basis. The recognition of revenues related to lease components will be governed by ASC 842 while revenue related tonon-lease components will be subject to ASC 606.In January 2018, the FASB issued a proposed amendment to ASU 842, Leases, that would provide an entity the optional transition method to initiallyaccount for the impact of the adoption with a cumulative adjustment to accumulated deficit on the effective date of the ASU, January 1, 2019 rather thanJanuary 1, 2017, which would eliminate the need to restate amounts presented prior to January 1, 2019. In addition, this proposed amendment, lessors canelect, as a practical expedient, not to allocate the total consideration to lease and non-lease components based on their relative standalone selling prices. Ifadopted, this practical expedient will allow lessors to elect a combined single lease component presentation if (i) the timing and pattern of the revenuerecognition of the combined single lease component is the same, and (ii) the related lease component and, the combined single lease component would beclassified as an operating lease. ASC 842 provides practical expedients that allow entities to not (i) reassess whether any expired or existing contracts areconsidered or contain leases; (ii) reassess the lease classification for any expired or existing leases; and (iii) reassess initial direct costs for any existing leases.On March 28, the FASB tentatively approved the new practical expedient for lessors adopting the new leases standard. F-40NAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) The Company plans to early adopt the requirements of ASU 842, Leases, effective from January 1, 2018 and will elect the use of the practicalexpedients. Also, the Company plans to elect the transition method for adoption as described above.The Company is continuing its assessment of this ASU. Based on a preliminary assessment, the Company is expecting that the adoption will not have amaterial effect on its financial statements since the Company is primarily a lessor and the changes are fairly minor. If the proposed practical expedientmentioned above will be adopted and elected, and therefore good and services embedded in the charter contract that qualify as non-lease components will becombined under a single lease component presentation. However, without the proposed practical expedient, the Company expects that it will continue torecognize the lease revenue component using an approach that is substantially equivalent to existing guidance. The components of the charter hire that arecategorized as lease components will generally be a fixed rate per day with revenue recognized straight line over the lease contract. Other goods and servicesthat are categorized as non-lease components will be recognized at either a point in time or over time based on the pattern of transfer of the underlying goodsor services to our charterers.The Company is continuing its assessment of other miscellaneous leases and may identify additional impacts this guidance will have on itsconsolidated financial statements and disclosures. The Company currently does not have any other miscellaneous leases that are greater than 12 months andthe Company is the lessee that would be impacted by the adoption of this standard.In January 2016, FASB issued ASU 2016-01, “Financial Instruments—Overall (Subtopic 825-10)—Recognition and Measurement of Financial Assetsand Financial Liabilities”. The amendments in this ASU require an entity (i) to measure equity investments (except those accounted for under the equitymethod of accounting or those that result in consolidation of the investee) at fair value with changes in fair value recognized in net income; (ii) to perform aqualitative assessment to identify impairment in equity investments without readily determinable fair values; (iii) to present separately in othercomprehensive income the fair value of a liability resulting from a change in the instrument-specific credit risk; and (iv) to present separately financial assetsand financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet. Theamendments also eliminate the requirement, for public business entities, to disclose the methods and significant assumptions used to estimate the fair valueof financial instruments measured at amortized cost on the balance sheet and clarify that an entity should evaluate the need for a valuation allowance on adeferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. For public business entities, ASU 2016-01is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The adoption of this new standard is notexpected to have a material impact on the Company’s results of operations, financial position or cash flows.In May 2014, FASB issued ASU 2014-09, “Revenue from Contracts with Customers”, clarifying 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. In August 2015, the FASB issued ASU 2015-14 which deferred the effective date of ASU 2014-09 for all entities by one year. Thestandard will be effective for public entities for annual reporting periods beginning after December 15, 2017 and interim periods therein. The Company willadopt the standard as of January 1, 2018 utilizing the modified retrospective approach and is expecting that the adoption will not have an effect on itsfinancial statements since the Company has chartered its vessels since inception in time charter agreements and in this respect revenue is accounted underASC 840 Leases. The Company also operates certain of its vessels under voyage contracts, contracts for which currently revenue is recognized ratably fromwhen a vessel becomes available for loading to the completion of the discharge of the current cargo, provided an agreed non-cancelable charter between theCompany and the charterer is in existence. Upon adoption, the Company will recognize revenue ratably from the vessel’s arrival at the loading port, asapplicable under the contract, to when the charterer’s cargo is discharged as well as defer costs that meet the definition of “costs to fulfill a contract” andrelate directly to the contract. The estimated impact of the adoption of this standard is expected to be a minimal change in operating revenues and expensesand net income/ (loss).NOTE 22: SUBSEQUENT EVENTSOn January 26, 2018, the Board of Directors declared a quarterly cash dividend in respect of the fourth quarter of 2017 of $0.02 per share of commonstock which was paid on March 27, 2018 to stockholders of record as of March 22, 2018. The declaration and payment of any further dividends remainsubject to the discretion of the Board of Directors and will depend on, among other things, Navios Acquisition’s cash requirements as measured by marketopportunities and restrictions under its credit agreements and other debt obligations and such other factors as the Board of Directors may deem advisable. F-41NAVIOS MARITIME ACQUISITION CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars except share and per share data) In February 2018, the Board of Directors of Navios Acquisition authorized a stock repurchase program for up to $25,000 of Navios Acquisition’scommon stock, for two years. Stock repurchases will be made from time to time for cash in open market transactions at prevailing market prices or in privatelynegotiated transactions. The timing and amount of repurchases under the program will be determined by management based upon market conditions andother factors. Repurchases may be made pursuant to a program adopted under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. Theprogram does not require any minimum repurchase or any specific number or amount of shares of common stock and may be suspended or reinstated at anytime in Navios Acquisition’s discretion and without notice. The Board of Directors will review the program periodically. Repurchases will be subject torestrictions under Navios Acquisition’s credit facilities and indenture. As of March 31, 2018, the Company has repurchased 5,166,544 shares of commonstock, for a total cost of approximately $4,242, out of which 5,021,764 shares of common stock have been cancelled.On March 15, 2018, Navios Acquisition agreed to sell to Navios Midstream the Nave Galactic, a 2009 built VLCC vessel of 297,168 dwt, for a totalsale price of $44,500 the delivery of which completed on March 29, 2018. As of March 31, 2018, the estimated loss due to the sale is expected to beapproximately $340. In March 2018, Navios Acquisition agreed to extend the charter rate backstop of the Shinyo Kannika to the Nave Galactic. F-42

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