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Eagle Bulk ShippingTable 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 SECURITIESEXCHANGE ACT OF 1934OR ☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934For the fiscal year ended December 31, 2018OR ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934OR ☐SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACT OF 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)Mark HayekFried, 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 registeredCommon Stock, par value $0.0001 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 ofSeries G 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 ofSeries H 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 andExchange CommissionSecurities 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 theannual report:12,843,414 shares of common stock, 14,191 shares of Series G and 28,612 shares of Series H as of December 31, 2018Indicate 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) of the Securities Exchange Act of 1934. Yes ☐ No ☒Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submitsuch 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 of1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to suchfiling requirements 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 growthcompany. 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 toSection 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 itsAccounting Standards Codification after April 5, 2012.Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing: U.S. GAAP ☒ International Financial Reporting Standards as 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 haselected to follow. Item 17 ☐ Item 18 ☐If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the 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 2 Item 4. Information on the Company 50 Item 4A. Unresolved Staff Comments 77 Item 5. Operating and Financial Review and Prospects 77 Item 6. Directors, Senior Management and Employees 119 Item 7. Major Shareholders and Related Party Transactions 124 Item 8. Financial Information 129 Item 9. The Offer and Listing 130 Item 10. Additional Information 131 Item 11. Quantitative and Qualitative Disclosures about Market Risk 139 Item 12. Description of Securities Other than Equity Securities 139 PART II Item 13. Defaults, Dividend Arrearages and Delinquencies 139 Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds 139 Item 15. Controls and Procedures 140 Item 16A. Audit Committee Financial Expert 140 Item 16B. Code of Ethics 140 Item 16C. Principal Accountant Fees and Services 141 Item 16D. Exemptions from the Listing Standards for Audit Committees 141 Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers 141 Item 16F. Changes in Registrant’s Certifying Accountant 141 Item 16G. Corporate Governance 141 Item 16H. Mine Safety Disclosures 142 PART III Item 17. Financial Statements 142 Item 18. Financial Statements 142 Item 19. Exhibits 143 EX-8.1 EX-12.1 EX-12.2 EX-13.1 EX-15.1 Table of ContentsPlease note in this Annual Report, “we”, “us”, “our”, the “Company” and “Navios Holdings” all refer to Navios Maritime Holdings Inc. andits consolidated 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 thisreport.Navios Maritime Holdings Inc. desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of1995 and is including this cautionary statement in connection with this safe harbor legislation. This document and any other written or oral statementsmade by us or on our behalf may include forward-looking statements, which reflect our current views with respect to future events and financialperformance. 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 historicaloperating trends, data contained in our records, and other data available from third parties. Although we believe that these assumptions were reasonablewhen made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predictand are beyond our 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 resultsto differ materially from those discussed in the forward-looking statements include, but are not limited to, the strength of world economies, fluctuationsin currencies and interest rates, general market conditions, including fluctuations in charter hire rates and vessel values, changes in demand in the drycargo shipping industry, changes in the Company’s operating expenses, including bunker prices, drydocking and insurance costs, expectations ofdividends and distributions from affiliates, the Company’s ability to maintain compliance with the continued listing standards of the New York StockExchange (the “NYSE”), changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending orfuture litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events,the value of our publicly traded subsidiaries, and other important factors described from time to time in the reports we file with the Securities andExchange Commission (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 onwhich such statement is made or to reflect the occurrence of unanticipated events, except as required by law. New factors emerge from time to time, andit is not possible 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 anyfactor, or combination 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. 1 Table of ContentsItem 3. Key InformationA. Selected Financial DataNavios Holdings’ selected historical financial information and operating results for the years ended December 31, 2018, 2017, 2016, 2015and 2014 are derived from the consolidated financial statements of Navios Holdings. The selected consolidated statement of comprehensive(loss)/income data for the years ended December 31, 2018, 2017 and 2016 and the selected consolidated balance sheet data as of December 31, 2018and 2017 have been derived from our audited consolidated financial statements included elsewhere in this Annual Report, adjusted to reflect theReverse Stock Split (as defined herein) and the adoption of ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. The selectedconsolidated financial data should be read in conjunction with “Item 5. Operating and Financial Review and Prospects”, the consolidated financialstatements, related notes and other financial information included elsewhere in this Annual Report. The historical data included below and elsewherein this Annual Report is not necessarily indicative of our future performance. Year EndedDecember 31,2018 Year EndedDecember 31,2017 Year EndedDecember 31,2016 Year EndedDecember 31,2015 Year EndedDecember 31,2014 (Expressed in thousands of U.S. dollars — except share and per share data) Statement of Comprehensive (Loss)/income Data Revenue $517,739 $463,049 $419,782 $480,820 $569,016 Administrative fee revenue from affiliates 28,393 23,667 21,799 16,177 14,300 Time charter, voyage and logistics business expenses (206,333) (213,929) (175,072) (247,882) (263,304) Direct vessel expenses (101,543) (116,713) (127,396) (128,168) (130,064) General and administrative expenses incurred on behalf ofaffiliates (28,393) (23,667) (21,799) (16,177) (14,300) General and administrative expenses (27,513) (27,521) (25,295) (34,183) (45,590) Depreciation and amortization (102,839) (104,112) (113,825) (120,310) (104,690) Provision for losses on accounts receivable (575) (269) (1,304) (59) (792) Interest income 8,748 6,831 4,947 2,370 5,515 Interest expense and finance cost (139,120) (121,611) (113,639) (113,151) (113,660) Impairment losses (200,657) (50,565) — — — Bargain gain upon obtaining control 58,313 — — — — Gain/(loss) on bond and debt extinguishment 6,464 (981) 29,187 — (27,281) Gain on sale of assets 28 1,064 — — — Other income 14,582 6,140 18,175 4,840 15,639 Other expense (13,708) (13,761) (11,665) (34,982) (24,520) Loss before equity in net earnings of affiliated companies $(186,414) $(172,378) $(96,105) $(190,705) $(119,731) Equity in net (losses)/earnings of affiliated companies (80,205) 4,399 (202,779) 61,484 57,751 Loss before taxes $(266,619) $(167,979) $(298,884) $(129,221) $(61,980) Income tax benefit/(expense) 1,108 3,192 (1,265) 3,154 (84) Net loss $(265,511) $(164,787) $(300,149) $(126,067) $(62,064) Less: Net (income)/loss attributable to the noncontrollinginterest (3,207) (1,123) (3,674) (8,045) 5,861 Net loss attributable to Navios Holdings commonstockholders $(268,718) $(165,910) $(303,823) $(134,112) $(56,203) Loss attributable to Navios Holdings common stockholders,basic and diluted $(278,959) $(175,298) $(273,105) $(150,314) $(66,976) Basic and diluted net loss per share attributable to NaviosHoldings common stockholders $(23.33) $(15.02) $(25.44) $(14.19) $(6.47) Weighted average number of shares, basic and diluted 11,958,959 11,667,346 10,736,678 10,589,623 10,347,661 2 Table of ContentsBalance Sheet Data (at period end) Current assets, including cash and restricted cash $298,710 $256,076 $273,140 $302,959 $417,131 Total assets 2,682,496 2,629,981 2,752,895 2,958,813 3,127,697 Total long-term debt, net including current portion 1,816,007 1,682,488 1,651,095 1,581,308 1,612,890 Navios Holdings’ stockholders’ equity $251,933 $516,098 $678,287 $988,960 $1,152,963 Year EndedDecember 31,2018 Year EndedDecember 31,2017 Year EndedDecember 31,2016 Year EndedDecember 31,2015 Year EndedDecember 31,2014 (Expressed in thousands of U.S. dollars — except per share data) Other Financial Data Net cash provided by operating activities $55,637 $48,117 $39,826 $43,280 $56,491 Net cash provided by/ (used in) investing activities 27,863 (42,365) (150,565) (36,499) (244,888) Net cash (used in)/ provided by financing activities (66,916) (12,940) 75,225 (80,009) 248,645 Book value per common share 19.62 42.87 57.91 89. 52 108.94 Cash dividends per common share — — — 1.75 2.38 Cash dividends per preferred share — — 74.4 216.7 99.9 Cash paid for common stock dividend declared — — — 19,325 25,228 Cash paid for preferred stock dividend declared — — 3,681 16,025 7,502 Adjusted EBITDA(1) $(18,231) $68,813 $(62,827) $112,756 $176,698 (1)EBITDA represents net (loss)/income attributable to Navios Holdings’ common stockholders before interest and finance costs, beforedepreciation 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.GAAP liquidity measure. Adjusted EBITDA is calculated as follows: net cash provided by operating activities adding back, when applicable andas the case may be, the effect of (i) net increase/(decrease) in operating assets, (ii) net (increase)/decrease in operating liabilities, (iii) net interestcost, (iv) deferred finance charges and gains/(losses) on bond and debt extinguishment, (v) (provision)/recovery for losses on accounts receivable,(vi) equity in affiliates, net of dividends received, (vii) payments for drydock and special survey costs, (viii) noncontrolling interest, (ix) gain/(loss) on sale of assets/ subsidiaries and bargain gain, (x) unrealized (loss)/gain on derivatives, and (xi) loss on sale and reclassification toearnings of available-for-sale securities and impairment charges. Navios Holdings believes that Adjusted EBITDA is a basis upon which liquiditycan be assessed and represents useful information to investors regarding Navios Holdings’ ability to service and/or incur indebtedness, paycapital expenditures, meet working capital requirements and pay dividends. Navios Holdings also believes that Adjusted EBITDA is used (i) byprospective and current lessors as well as potential lenders to evaluate potential transactions; (ii) to evaluate and price potential acquisitioncandidates; and (iii) by securities analysts, investors and other interested parties in the evaluation of companies in our industry. 3 Table of ContentsAdjusted 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 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 tobe replaced in the future. Adjusted EBITDA does not reflect any cash requirements for such capital expenditures. Because of these limitations, amongothers, Adjusted EBITDA should not be considered as a principal indicator of Navios Holdings’ performance. Furthermore, our calculation of AdjustedEBITDA may not be comparable to that reported by other companies due to differences in methods of calculation.The following table reconciles net cash provided by operating activities, as reflected in the consolidated statements of cash flows, toAdjusted EBITDA:Adjusted EBITDA Reconciliation from Cash from Operations Year EndedDecember 31,2018 Year EndedDecember 31,2017 Year EndedDecember 31,2016 Year EndedDecember 31,2015 Year EndedDecember 31,2014 (Expressed in thousands of U.S. dollars — except per share data) Net cash provided by operating activities $55,637 $48,117 $39,826 $43,280 $56,491 Net increase/ (decrease) in operating assets 25,632 (22,385) 17,693 (42,844) 17,857 Net increase in operating liabilities (6,662) (20,814) (38,928) (39,288) (23,613) Payments for drydock and special survey costs 7,755 10,824 11,096 24,840 10,970 Net interest cost 122,492 108,389 103,039 106,257 104,084 Provision for losses on accounts receivable (575) (269) (1,304) (59) (792) Impairment losses (200,657) (50,565) — — — Gain on sale of assets 894 1,064 — — — Gain/ (Loss) on bond and debt extinguishment 6,464 185 29,187 — (4,786) (Losses)/earnings in affiliates and joint ventures, net of dividendsreceived (84,317) (4,610) (219,417) 30,398 22,179 Bargain gain upon obtaining control 58,313 — — — — Reclassification to earnings of available-for-sale securities — — (345) (1,783) (11,553) Noncontrolling interest (3,207) (1,123) (3,674) (8,045) 5,861 Adjusted EBITDA $(18,231) $68,813 $(62,827) $112,756 $176,698 4 Table of ContentsB. 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 principallyto the securities market and ownership of our common stock. You should carefully consider each of the following risks together with the otherinformation incorporated into this Annual Report when evaluating the Company’s business and its prospects. The risks and uncertainties describedbelow are not the only ones the Company faces. Additional risks and uncertainties not presently known to the Company or that the Company currentlyconsiders immaterial may also impair the Company’s business operations. If any of the following risks relating to our business and operations actuallyoccur, our business, financial condition and results of operations could be materially and adversely affected and in that case, the trading price of ourcommon stock could decline, and you could lose all or part of your investment.Risks 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 have recently been near historical lowsand certain of 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, 2017 to December 31, 2018, the Baltic Exchange’sPanamax time charter average daily rates experienced a low of $6,281 and a high of $14,385. Additionally, during the period from January 1, 2017 toDecember 31, 2018, the Baltic Exchange’s Capesize time charter average (BCI-5TCA) daily rates experienced a low of $4,630 and a high of $30,475and the Baltic Dry Index (BDI) experienced a low of 685 points and a high of 1,774 points. Those ranges are above the recent all-time lows set inFebruary and March 2016 of $2,260 for the Baltic Exchange’s Panamax time charter average, $1,985 for the Baltic Exchange’s Capesize time charteraverage and 290 for the BDI. There can be no assurance that the dry bulk charter market will not fluctuate or hit new lows. We anticipate that the futuredemand for our dry bulk carriers and dry bulk charter rates will be dependent upon demand for imported commodities, economic growth in theemerging markets, including the Asia Pacific region, of which China is particularly important, India, Brazil and Russia and the rest of the world,seasonal and regional changes in demand and changes to the capacity of the world fleet. Adverse economic, political, social or other developments candecrease demand and prospects for growth in the shipping industry and thereby could reduce revenue significantly. A decline in demand forcommodities transported in dry bulk carriers (including disruptions due to trade or tariff actions) or an increase in supply of dry bulk vessels couldcause a further decline in charter rates, which could materially adversely affect our results of operations and financial condition. If we sell a vessel at atime when the market value of our vessels has fallen, the sale may be at less than the 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 increasedeach year from 2009 to 2017. In 2017, total container trade grew by 5.8%, influenced by strong trade growth worldwide. In 2018, total container tradeis estimated to have gained 4.2%, led by strong volumes going to the U.S. in spite of increased tariffs as well as increases in intra-regional trade.Containership supply growth was more than demand growth during 2018 as scrapping was significantly reduced due to trade growth and a markedimprovement in time charter rates. For example, short term (6—12 month) time charter rates for 4,400 TEU container ships rose 44% to an average of$11,096 for all of 2018, but have declined during 2019 so far through March due to normal season weakness, trade or tariff actions. Additional ordersfor large and very large containerships continue to be placed during 2018 and through March 2019, both increasing the expected future supply oflarger vessels and having a spillover effect on the market segment for smaller vessels. Ordering of container ships slowed significantly in 2016 and2017 while scrapping increased to a record volume in 2016 and was the third highest on record in 2017. The recent global economic slowdown anddisruptions in the trade and credit markets significantly reduced demand for products shipped in containers and, in turn, containership capacity, whichhas had an adverse effect on our and our affiliates’ results of operations and financial condition. The ongoing trade war and rising tariffs may have asimilar effect.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. 5 Table of ContentsHistorically, the tanker markets have been volatile as a result of the many conditions and factors that can affect the price, supply anddemand for tanker capacity. Demand for crude oil and product tankers is historically well correlated with the growth or contraction of the worldeconomy. The past several years were marked by a major economic slowdown, which has had, and continues to have, a significant impact on worldtrade, including the oil trade. Global economic conditions remain unsettled with significant uncertainty with respect to both short and long-termeconomic growth. Energy prices sharply declined from mid-2014 to the end of March 2016 primarily as a result of increased oil production worldwide.In response to this increased production, demand for tankers to move oil and refined petroleum products increased significantly and average spot andperiod charter rates for product and crude tankers rose, but have since then declined as more tankers have been delivered. Keys to this demand growthhave been steady increases in Chinese and Indian crude oil imports since 2001 and a steady increase in U.S. oil production, which has led to a steadydecline in U.S. crude oil imports since 2005. Oil products shipments have increased due to refinery closures in Europe, Japan and Australia with oilproducts being shipped to those regions from India, the Middle East and the U.S. With the increase in U.S. crude oil production, the U.S. became a netexporter of oil products since 2011 adding to the seaborne movement of oil products. For most of 2018, large inventories of products reduced arbitragepossibilities and resulted in lowered spot rates for product tankers. As inventory levels moderated, rates rose in the last few months of 2018 and into2019 as fuel suppliers adjust inventories worldwide in advance of the coming IMO 2020 conversion of all shipping fuel to a maximum of 0.5% sulphurcontent. The additional U.S. oil production is being exported, particularly on long haul voyages, which has helped raise VLCC rates earlier in 2019,although they have declined since the refinery maintenance season started in March as the refiners gear up for IMO 2020. The Organization ofPetroleum Exporting Countries (“OPEC”) is currently producing and shipping oil at very high levels, even after it announced the continuedproduction cuts. Should OPEC significantly reduce oil production or should there be significant declines in non-OPEC oil production or should Chinaor other emerging market countries suffer significant economic slowdowns or raise trade barriers, 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 10% at thebeginning of April 2019. An over-supply of tanker capacity may result in a reduction of charter hire rates. If a reduction in charter rates occurs, ouraffiliates may only be able to charter their tanker vessels at unprofitable rates or may not be able to charter these vessels at all, which could lead to amaterial adverse effect on our results of operations.The 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 liquidcargoes, including petroleum and petroleum products; • changes in the exploration or production of energy resources, commodities, semi-finished and finished consumer and industrialproducts; • 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 policychanges, import- export restrictions (including trade wars), central bank policies and pollution conventions or protocols; • embargoes and strikes; • technical advances in ship design and construction; 6 Table of Contents • 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 togeographic changes 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 bulkcargo and the reverse conversion; • 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 obsolescenceof tonnage; 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 inworldwide and regional demand for dry bulk commodities and the shipping of dry bulk cargoes, which could be negatively affected by a number offactors, such as declines 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 growthand could harm our business, results of operations and financial condition. In particular, Asian 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 changein economic conditions in any Asian 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. 7 Table of ContentsWeak 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 resultsof operations.The global economy remains relatively weak, especially when compared to the period prior to the 2008-2009 financial crisis. The currentglobal recovery is proceeding at varying speeds across regions and is still subject to downside economic risks stemming from factors like fiscalfragility in advanced economies, high sovereign and private debt levels, highly accommodative macroeconomic policies, the significant fall in theprice of crude oil and other commodities and persistent difficulties in access to credit and equity financing as well as political risks such as thecontinuing war in Syria, renewed terrorist attacks around the world and the emergence of populist and protectionist political movements in advancedeconomies.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 theEU, 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 asignificant impact on shipping demand. However, if China’s growth in gross domestic product declines and other countries in the Asia Pacific regionexperience slower or 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 negatively impact shipping demand. For example, the possibility of the introduction of impediments to trade within the EU membercountries in response to increasing terrorist activities, and the possibility of market reforms to float the Chinese renminbi, either of which developmentcould weaken the Euro against the Chinese renminbi, could adversely affect consumer demand in the EU. Moreover, the revaluation of the renminbimay negatively impact the U.S.’ demand for imported goods, many of which are shipped from China. Any moves by either the U.S. or the EU to levyadditional tariffs on imported goods carried in containers as part of protectionist measures or otherwise could decrease shipping demand. Such weakeconomic conditions or protectionist measures could have a material adverse effect on our business, results of operations and financial condition, aswell as our cash flows.Disruptions in global financial markets from terrorist attacks, regional armed conflicts, general political unrest and the resulting governmentalaction could have a material adverse impact our ability to obtain financing required to acquire vessels or new businesses. Furthermore, such adisruption would adversely affect our results of operations, financial condition and cash flows and could cause the market price of our shares todecline.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,and the continuing response of the U.S. and other countries to these attacks, as well as the threat of future terrorist attacks, continue to causeuncertainty and volatility in the world financial markets and may affect our business, results of operations and financial condition. In addition, globalfinancial markets and economic conditions have been severely disrupted and volatile in recent years and remain subject to significant vulnerabilities,such as the deterioration of fiscal balances and the rapid accumulation of public debt, continued deleveraging in the banking sector and a limitedsupply of credit. Credit markets as well as the debt and equity capital markets were exceedingly distressed during 2008 and 2009 and have beenvolatile since that time. The continuing refugee crisis in the EU, the continuing war in Syria and advances of ISIS and other terrorist organizations inthe Middle East, conflicts in Iraq, general political unrest in Ukraine, and political tension or conflicts in the Asia Pacific Region such as in the SouthChina Sea and North Korea have led to increased volatility in global credit and equity markets. The resulting uncertainty and volatility in the globalfinancial markets may accordingly affect our business, results of operations and financial condition. These uncertainties, as well as future hostilities orother political instability in regions where our vessels trade, could also affect trade volumes and patterns and adversely affect our operations, andotherwise have a material adverse effect on our business, results of operations 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 relatedausterity measures implemented by the Greek government, the operations of our managers located in Greece may be subjected to new regulations andpotential shift in government policies that may require us to incur new or additional compliance or other administrative costs and may require thepayment of new taxes or other fees. We also face the risk that strikes, work stoppages, civil unrest and violence within Greece may disrupt the shoresideoperations of our managers located in Greece. 8 Table of ContentsSpecifically, these issues, along with the re-pricing of credit risk and the difficulties currently experienced by financial institutions, havemade, and will likely continue to make, it difficult to obtain financing. As a result of the disruptions in the credit markets and higher capitalrequirements, many lenders have increased margins on lending rates, enacted tighter lending standards, required more restrictive terms (includinghigher collateral ratios for advances, shorter maturities and smaller loan amounts), or have refused to refinance existing debt at all. Furthermore, certainbanks that have historically been significant lenders to the shipping industry have reduced or ceased lending activities in the shipping industry.Additional tightening of capital requirements and the resulting policies adopted by lenders, could further reduce lending activities. We mayexperience difficulties obtaining financing commitments or be unable to fully draw on the capacity under our committed term loans in the future, if ourlenders are unwilling to extend financing to us or unable to meet their funding obligations due to their own liquidity, capital or solvency issues. Wecannot be certain that financing will be available on acceptable terms or at all. If financing is not available when needed, or is available only onunfavorable terms, we may be unable to meet our future obligations as they come due. Our failure to obtain such funds could have a material adverseeffect on our business, results of operations and financial condition, as well as our cash flows. In the absence of available financing, we also may beunable to take advantage of business opportunities or respond to competitive pressures.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 2018, China imported 1.047 billion tons of iron out of a total of1.476 billion tons shipped globally accounting for about 71% of the global seaborne iron ore trade. While it only accounted for about 19% of seabornecoal movements of coal in 2018 according to current estimates (236 million tons imported compared to 1.262 billion tons of seaborne coal tradedglobally), that is a decline from over 22% in 2013 (264 million tons imported compared to 1.182 billion tons of seaborne coal traded globally). Our drybulk vessels are deployed by our charterers on routes involving dry bulk trade in and out of emerging markets, and our charterers’ dry bulk shippingand business revenue may be derived from the shipment of goods within and to the Asia Pacific region from various overseas export markets. Anyreduction in or hindrance to China-based importers could have a material adverse effect on the growth rate of China’s imports and on our charterers’business. For instance, the government of China has implemented economic policies aimed at reducing pollution, increasing consumption ofdomestically produced Chinese coal, promoting the export of such coal or raising tariffs on imported bulk cargoes from certain countries including theUnited States. This may have the effect of reducing the demand for imported raw materials and may, in turn, result in a decrease in demand for dry bulkshipping. Additionally, though in China there is an increasing level of autonomy and a gradual shift in emphasis to a “market economy” and enterprisereform, many of the reforms, particularly some limited price reforms that result in the prices for certain commodities being principally determined bymarket forces, are unprecedented or experimental and may be subject to revision, change or abolition. The level of imports to and exports from Chinacould 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 ofpassengers or cargo, among other items, in and out of China using their own, chartered or leased vessels, including any stevedore, warehousing andother services connected with the transportation. The regulation broadens the range of international transportation companies who may findthemselves liable for Chinese enterprise income tax on profits generated from international transportation services passing through Chinese ports. Thistax or similar regulations, such as the recently promoted environmental taxes on coal or tariffs on imports of U.S. soybeans, by China may result in anincrease in the cost of raw materials imported to China and the risks associated with importing raw materials to China, as well as a decrease in thequantity of raw materials to be shipped from our charterers to China or a decrease in the distance bulk materials travel to get to China. This could havean adverse impact on our charterers’ business, operating results and financial condition and could thereby affect their ability to make timely charterhire payments 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 theirdomestic industries against foreign imports, thereby depressing the demand for shipping. Specifically, increasing trade protectionism in the marketsthat our charterers serve may cause (i) a decrease in cargoes available to our charterers in favor of local charterers and local owned ships and (ii) anincrease in the risks associated with importing goods to China. Any increased trade barriers or restrictions on trade, especially trade with China, wouldhave an adverse impact on our charterers’ business, operating results and financial condition and could thereby affect their ability to make timelycharter hire payments to us and to renew and increase the number of their time charters with us. This could have a material adverse effect on ourbusiness, results of operations, financial condition 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 areat or below operating costs.The process for concluding contracts and longer term time charters generally involves a lengthy and intensive screening and vettingprocess and the submission of competitive bids. In addition to the quality and suitability of the vessel, medium and longer term shipping contractstend to be awarded based upon a variety of other factors relating to the vessel operator, including: • environmental, health and safety record; • compliance with the IMO standards and the heightened industry standards that have been set by some energy companies; • 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.It is likely that we will face substantial competition for long-term charter business from a number of experienced companies. We may notbe able to compete profitably as we expand our business into new geographic regions or provide new services. New markets may require differentskills, knowledge or strategies than we use in our current markets. Many of these competitors have significantly greater financial resources than we do.It is also likely that we will face increased numbers of competitors entering into our transportation sectors, including in the containership and drybulksector. Many of these competitors have strong reputations and extensive resources and experience. Increased competition may cause greater pricecompetition, especially for long-term charters.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 replacethem promptly or at all or at rates sufficient to allow us to operate our business profitably, to meet our obligations, including payment of debt service toour lenders, or to pay dividends. Our ability to renew the charter contracts on our vessels on the expiration or termination of our current charters, or, onvessels that we may acquire in the future, the charter rates payable under any replacement charter contracts, will depend upon, among other things,economic conditions in the sectors in which our vessels operate at that time, changes in the supply and demand for vessel capacity and changes in thesupply and demand for the transportation of commodities. During periods of market distress when long-term charters may be renewed at rates at orbelow operating costs, we may not choose to charter our vessels for longer terms particularly if doing so would create an ongoing negative cash flowduring 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 conditionsand outlook at the time those vessels become 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 thespot market during an upturn in the market cycle, when spot trading may be more profitable. If we cannot successfully employ our vessels in profitablecharter contracts, our results of operations and operating cash flow could be materially adversely affected. 10 Table of ContentsWe 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 thismarket are highly volatile, while longer-term charter contracts provide income at pre-determined rates over more extended periods of time. We cannotassure you that we will be successful in keeping our vessels fully employed in these short-term markets, or that future spot rates will be sufficient toenable such vessels to be operated profitably. A significant decrease in spot market rates or our inability to fully employ our vessels by takingadvantage of the spot market would result in a reduction of the incremental revenue received from spot chartering and adversely affect our results ofoperations, including our profitability and cash 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 thatsome of our charterers are obligated to pay us under our existing charters, the charterers may have incentive to default under that charter or attempt torenegotiate the charter. If our charterers fail to pay their obligations, we would have to attempt to re-charter our vessels at lower charter rates, whichwould affect our ability to comply with our loan covenants and operate our vessels profitably. If we are not able to comply with our loan covenants andour lenders choose to accelerate our indebtedness and foreclose their liens, we could be required to sell vessels in our fleet and our ability to continueto conduct our business would be impaired.We 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 ofour customers 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, 2018, 2017 and 2016,we derived approximately 35.9%, 31.1%, and 41.1%, respectively, of our gross revenues from four customers. For the year ended December 31, 2018,two customers accounted for 12.8% and 11.4%, respectively, of the Company’s revenue. 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.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 isincreasing due 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 atlower rates. Additionally, our charterers from time to time have sought to renegotiate their charter rates with us. We no longer maintain insuranceagainst the risk of default 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, orif a charterer 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 aloss of revenues 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 obligationscould cause 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”) pursuantto which we agree to carry cargoes, typically for industrial customers, who export or import dry bulk cargoes. We also enter into spot market voyagecontracts, where we are paid a rate per ton to carry a specified cargo on a specified route. These contracts and arrangements subject us to counterpartycredit risks at various levels. If the counterparties fail to meet their obligations, we could suffer losses on such contracts, which could materiallyadversely affect our financial condition and results of operations. In addition, if a charterer defaults on a time charter, we may only be able to enter intonew contracts at lower rates. It is also possible that we 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 be materially adversely affected. 11 Table of ContentsTrading and complementary hedging activities in freight and tonnage 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 betweenchartering-out vessels 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 profitableor unprofitable situation depending on the direction of freight rates over the term of the contract. We may seek to manage and mitigate that riskthrough trading and complementary hedging activities in freight and tonnage. There can be no assurance that we will be able at all times tosuccessfully 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-invessels and which 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 corefleet is chartered-in under time charters and, as a result, most operating risks relating to these time chartered vessels remain with their owners. If we payhire on a chartered-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 breakdownor loss of the vessel due to an operating risk suffered by the owner will, in all likelihood, result in our loss of the positive spread between the two ratesof hire. Although we maintain insurance policies (subject to deductibles and exclusions) to cover us against the loss of such spread through the sinkingor other loss of a chartered-in vessel, we cannot assure you that we will be covered under all circumstances or that such policies will be available in thefuture on commercially reasonable terms. Breakdowns or accidents involving our vessels and losses relating to chartered vessels, which are not coveredby insurance, would result in a loss of revenue from the affected vessels adversely affecting our financial 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, netincome, 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,political action 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, lossof revenues from or termination of charter contracts, governmental fines, penalties or restrictions on conducting business, litigation with ouremployees, customers or third parties, higher insurance rates, and damage to our reputation and customer relationships generally. Although wemaintain hull and machinery and war risks insurance, as well as protection and indemnity insurance, which may cover certain risks of loss resultingfrom such occurrences, our insurance coverage may be subject to caps or not cover such losses and any of these circumstances or events could increaseour costs or lower our revenues. The involvement of our vessels in an environmental disaster may harm our reputation as a safe and reliable vesselowner and operator. Any of these results could have a material adverse effect on business, results of operations and financial condition, as well as ourcash flows. 12 Table of ContentsWe are subject to various laws, regulations and conventions, including environmental and safety laws that could require significant expendituresboth to maintain compliance with such laws and to pay for any uninsured environmental liabilities including any resulting from a spill or otherenvironmental incident.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 theirregistration, such as the International Convention for the Prevention of Pollution from Ships, the International Convention for the Control andManagement of Ships’ Ballast Water and Sediments, the International Convention for Civil Liability for Oil Pollution Damage, the InternationalConvention on Civil Liability for Bunker Oil Pollution Damage, the Comprehensive Environmental Response, Compensation, and Liability Act, andThe Offshore Petroleum Licensing (Offshore Safety Directive) Regulations 2015. Governmental regulations, safety or other equipment standards, aswell as compliance with standards imposed by maritime self-regulatory organizations and customer requirements or competition, may require us tomake capital and other expenditures. Because such conventions, laws and regulations are often revised, we cannot predict the ultimate cost ofcomplying with such conventions, laws and regulations, or the impact thereof on the fair market price or useful life of our vessels. In order to satisfyany such requirements, we may be required to take any of our vessels out of service for extended periods of time, with corresponding losses of revenues.In the future, market conditions may not justify these expenditures or enable us to operate our vessels, particularly older vessels, profitably during theremainder of their economic lives. This could lead to significant asset write downs. In addition, violations of environmental and safety regulations canresult 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. Invarious jurisdictions legislation has been enacted, or is under consideration, that would impose more stringent requirements on air pollution andeffluent discharges from our vessels.Certain jurisdictions have adopted more stringent requirements. For instance, California has adopted more stringent low sulfur fuelrequirements within California regulated waters. Compliance with new emissions standards could require modifications to vessels or the use of moreexpensive fuel. While it is unclear how new emissions standards will affect the employment of our vessels, over time it is possible that ships notretrofitted to comply with new standards 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 ballastwater to prevent the harmful effects of foreign invasive species. These ballast water proposals and requirements are discussed below in the risk factorrelating to ballast water.The operation of vessels is also affected by the requirements set forth in the International Safety Management (“ISM”) Code. The ISMCode requires shipowners and bareboat charterers to develop and maintain an extensive Safety Management System (the “SMS”) that includes theadoption of a safety and environmental protection policy setting forth instructions and procedures for safe vessel operation and describing proceduresfor dealing with emergencies. Further to this, the IMO has introduced the first ever mandatory measures for an international greenhouse gas reductionregime for a global industry sector. These energy efficiency measures took effect on January 1, 2013 and apply to all ships of 400 gross tonnage andabove. They include the development of a ship energy efficiency management plan (“SEEMP”) which is akin to a safety management plan, with whichthe industry will have to comply. The failure of a ship owner or bareboat charterer to comply with the ISM Code and IMO measures may subject suchparty to withdrawal of the permit to operate or manage the vessels, increased liability, decreased available insurance coverage for the affected vessels,and may result in a denial of access to, or detention 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 theInternational Convention for Civil Liability for Oil Pollution Damage (the “CLC”) is subject under the convention to strict liability for any pollutiondamage caused in a contracting state by an escape or discharge from cargo or bunker tanks. This liability is subject to a financial limit calculated byreference to the tonnage of the ship, and the right to limit liability may be lost if the spill is caused by the shipowner’s intentional or reckless conduct.Liability may also be incurred under the CLC for a bunker spill from the vessel even when she is not carrying such cargo, but is in ballast.When a tanker is carrying clean oil products that do not constitute “persistent oil” that would be covered under the CLC, liability for anypollution damage will generally fall outside the CLC and will depend on other international conventions or domestic laws in the jurisdiction where thespillage occurs. The same principle applies to any pollution from the vessel in a jurisdiction, which is not a party to the CLC. The CLC applies in over100 jurisdictions 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. 13 Table of ContentsFor vessel operations not covered by the CLC, including those operated under our fleet, international liability for oil pollution is governedby the International Convention on Civil Liability for Bunker Oil Pollution Damage (the “Bunker Convention”). In 2001, the IMO adopted the BunkerConvention, which imposes strict liability on shipowners for pollution damage and response costs incurred in contracting states caused by discharges,or threatened discharges, of bunker oil from all classes of ships not covered by the CLC. The Bunker Convention also requires registered owners ofships over a certain size to maintain insurance to cover their liability for pollution damage in an amount equal to the limits of liability under theapplicable national or international limitation regime, including liability limits calculated in accordance with the Convention on Limitation ofLiability for Maritime Claims 1976, as amended (the “1976 Convention”), discussed in more detail in the following paragraph. The BunkerConvention became effective in contracting states on November 21, 2008 and as of February 7, 2017, had 83 contracting states. In non-contractingstates, liability for such bunker oil pollution typically is determined by the national or other domestic laws in the jurisdiction where the spillageoccurs.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 limitingmaritime pollution liability. Rights to limit liability under the 1976 Convention are forfeited where a spill is caused by a shipowner’s intentional orreckless conduct. Certain jurisdictions have ratified the IMO’s Protocol of 1996 to the 1976 Convention, referred to herein as the “Protocol of 1996.”The Protocol of 1996 provides for substantially higher liability limits in those jurisdictions than the limits set forth in the 1976 Convention. Finally,some jurisdictions, such as the U.S., are not a party to either the 1976 Convention or the Protocol of 1996, and, therefore, a shipowner’s rights to limitliability for maritime pollution in such jurisdictions may be uncertain.Environmental legislation in the U.S. merits particular mention as it is in many respects more onerous than international laws, representinga high-water mark of regulation with which ship owners and operators must comply, and of liability likely to be incurred in the event ofnon-compliance or an incident 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 anextensive regulatory and liability regime for the protection and cleanup of the environment from cargo and bunker oil spills from vessels, includingtankers. The OPA 90 covers all owners and operators whose 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 200 nautical mile exclusive economic zone. Under the OPA 90, vessel owners, operators andbareboat charterers are “responsible parties” and are jointly, severally and strictly liable (unless the spill results solely from the act or omission of athird party, an act of God or an act of war) for all containment and clean-up costs and other damages arising from discharges or substantial threats ofdischarges, of oil from their vessels. The U.S. Congress has in the past considered bills to strengthen certain requirements of the OPA 90; similarlegislation may be introduced in the future. Further, under the federal Comprehensive Environmental Response, Compensation and Liability Act(“CERCLA”) and similar state laws, investigation and cleanup requirements for threatened or actual releases of hazardous substances may be imposedupon owners and operators of vessels, on a joint and several basis, regardless of fault or the legality of the original activity that resulted in the release ofhazardous substances.In addition to potential liability under the federal OPA 90, vessel owners may in some instances incur liability on an even more stringentbasis under state law in the particular state where the spillage occurred. For example, California regulations prohibit the discharge of oil, require an oilcontingency plan be filed with the state, require that the ship owner contract with an oil response organization and require a valid certificate offinancial responsibility, all prior 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. Insome areas of regulation, the EU has introduced new laws without attempting to procure a corresponding amendment to international law. Notably, theEU adopted in 2005 a directive, as amended in 2009, on ship-source pollution, imposing criminal sanctions for pollution not only where pollution iscaused by intent or recklessness (which would be an offence under MARPOL), but also where it is caused by “serious negligence.” The concept of“serious negligence” may be interpreted in practice to be little more than ordinary negligence. The directive could therefore result in criminal liabilitybeing incurred in circumstances where 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 andgas operations. The objective of this Directive is to reduce as much as possible the occurrence of major accidents relating to offshore oil and gasoperations and to limit their consequences, thus increasing the protection of the marine environment and coastal economies against pollution,establishing minimum conditions for safe offshore exploration and exploitation of oil and gas and limiting possible disruptions to EU indigenousenergy production, and to improve the response mechanisms in case of an accident. The Directive was implemented on July 19, 2015. As far as theenvironment 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 andCooperation Convention) Regulations 1998 (OPRC 1998) and other environmental Directive requirements, specifically the EnvironmentalManagement System. The Offshore Petroleum Licensing (Offshore Safety Directive) Regulations 2015 will implement the licensing Directiverequirements. 14 Table of ContentsCriminal liability for a pollution incident could not only result in us incurring substantial penalties or fines, but may also, in somejurisdictions, 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 theaggregate for any one event. The insured risks include penalties and fines as well as civil liabilities and expenses resulting from accidental pollution.However, this insurance coverage is subject to exclusions, deductibles and other terms and conditions. If any liabilities or expenses fall within anexclusion 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 position would be adversely impacted.We may be required to make significant investments in ballast water management, which may have a material adverse effect on our futureperformance, 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, byestablishing standards and procedures for the management and control of ships’ ballast water and sediments. The BWM Convention’s implementingregulations call for a phased introduction of mandatory ballast water exchange requirements, to be replaced in time with mandatory concentrationlimits, as well as other obligations, including recordkeeping requirements and implementation of a Ballast Water and Sediments Management Plan.The BWM Convention stipulates that it will enter into force twelve months after it has been adopted by at least 30 states, the combined merchant fleetsof 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 entered into force on September 8, 2017. Thereafter, on October 19, 2016, Panamaalso acceded to the BWM Convention, adding its 18.02% of world gross tonnage. As of September 8, 2017, the BWM Convention had 69 contractingstates for 75.11% of world gross tonnage. Although new ships constructed after September 8, 2017 must comply on delivery with the BWMConvention, implementation of the BWM Convention has been delayed for existing vessels (constructed prior to September 8, 2017) for a further twoyears. For such existing vessels, installation of ballast water management systems must take place at the first renewal survey following September 8,2017 (the date the BWM Convention entered into force). The BWM Convention requires ships to manage ballast water in a manner that removes,renders harmless or avoids the update or discharge of aquatic organisms and pathogens within ballast water and sediment. Recently updated BallastWater and Sediment Management Plan guidance includes more robust testing and performance specifications. The entry of the BWM Convention andrevised guidance, as well as similar ballast water treatment requirements in certain jurisdictions (such as the U.S. and states within the U.S.), will likelyresult in compliance costs relating to the installation of equipment on our vessels to treat ballast water before it is discharged and other additionalballast water management and reporting requirements. Investments in ballast water treatment may have a material adverse effect on our futureperformance, results of operations, cash flows and financial 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 bygovernment laws and regulations related to climate change. A number of countries have adopted or are considering the adoption of, regulatoryframeworks to reduce greenhouse gas emissions. In the U.S., the United States Environmental Protection Agency (“EPA”) has declared greenhousegases to be dangerous pollutants and has issued greenhouse gas reporting requirements for emissions sources in certain industries (which does notinclude the shipping industry). EPA does require owners of vessels subject to MARPOL Annex VI to maintain records for nitrogen oxides standardsand in-use fuel specifications. In addition, while the emissions of greenhouse gases from international shipping are not subject to the Kyoto Protocol tothe United Nations Framework Convention on Climate Change(the “UNFCCC”), which requires adopting countries to implement national programs toreduce greenhouse gas emissions, the IMO intends to develop limits on greenhouse gases from international shipping. It has responded to the globalfocus on climate change and greenhouse gas emissions by developing specific technical and operational efficiency measures and a work plan formarket-based mechanisms in 2011. These include the mandatory measures of under the ISM Code, and an energy efficiency design index (“EEDI”) fornew ships. The IMO is also considering its position on market-based measures through an expert working group. Among the numerous proposals beingconsidered by the working group are the following: a port state levy based on the amount of fuel consumed by the vessel on its voyage to the port inquestion; a global emissions trading scheme which would allocate emissions allowances and set an emissions cap; and an international fundestablishing a global reduction target for international shipping, to be set either by the UNFCCC or the IMO.At the 68th session (2015) of the IMO’s Marine Environment Protection Committee (the “MEPC”), the MEPC amended the 2014Guidelines on EEDI survey and certification as well as the method of calculating of EEDI for new ships, the latter of which was again amended at the70th session (2016). At its 70th session, the MEPC also 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. At the 72nd MEPC session (April2018), the committee adopted the goal of reducing annual greenhouse gas emissions from ships by at least 50% by 2050 as compared to 2008 levels,which if implemented could significantly increase operational costs associated with equipment upgrades and fuel costs. 15 Table of ContentsAlthough regulation of greenhouse gas emissions in the shipping industry was discussed during the 2015 UN Climate Change Conferencein Paris (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 emissionreduction commitments in 2018. In April 2018, the initial strategy to reduce greenhouse gas emissions from shipping by at least 50% by 2050compared to 2008 levels, while pursuing efforts towards phasing them out entirely, as a pathway towards greenhouse gas emissions reductionconsistent with the Paris Agreement’s temperature goals. The initial strategy is due to be revised and adopted by 2023.On August 3, 2017, the U.S. formally submitted a notice of withdrawal from the Paris Agreement. Thus far, no other nations have withdrawnfrom the Paris Agreement, so it remains to be seen whether the withdrawal will significantly impact greenhouse gas developments moving forward. TheEU United Nations’ Katowice Climate Change Conference occurred December 2-14, 2018. The key objective of the meeting was to begin adopting theimplementation guidelines of the Paris Climate Change Agreement.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 EuropeanCommission was expected if no global regime for reduction of seaborne emissions had been agreed to by the end of 2011. On October 1, 2012, theEuropean Commission announced that it would propose measures to monitor, verify and report on greenhouse-gas emissions from the shipping sector.On June 28, 2013, the European Commission adopted a communication setting out a strategy for progressively including greenhouse gas emissionsfrom maritime transport in the EU’s policy for reducing its overall greenhouse emissions. The first step proposed by the European Commission was anEU Regulation to an EU-wide system for the monitoring, reporting and verification of carbon dioxide emissions from large ships starting in 2018. TheEU Regulation (2015/757) was adopted on April 29, 2015 and took effect on July 1, 2015, with monitoring, reporting and verification requirementsbeginning on January 1, 2018. This Regulation appears to be indicative of an intent to maintain pressure on the international negotiating process. TheEuropean Commission also adopted an Implementing Regulation, which entered into force in November 2016, setting templates for monitoring plans,emissions reports and compliance documents pursuant to Regulation 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 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 2023if the IMO fails to deliver effective global measures. Last year, IMO’s urgent call to action to bring about shipping greenhouse gas emissionsreductions before 2023 was met with industry push-back in many countries. Depending on how fast IMO and the EU move on this issue, the ETS mayresult in additional compliance costs 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 insevere weather events resulting from climate change, and government laws and regulations related to climate change may affect, directly or indirectly,(i) the cost of the vessels we may acquire in the future, (ii) our ability to continue to operate as we have in the past, (iii) the cost of operating ourvessels, and (iv) insurance premiums, deductibles and the availability of coverage. As a result, our financial condition could be negatively impacted bysignificant climate change and related 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 tocomply with 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. OnNovember 25, 2002, the Maritime Transportation Security Act of 2002 (the “MTSA”), came into effect. To implement certain portions of the MTSA, inJuly 2003, the U.S. Coast Guard issued regulations requiring the implementation of certain security requirements aboard vessels operating in waterssubject to the jurisdiction of the U.S. Similarly, in December 2002, amendments to the International Convention for the Safety of Life at Sea, (the“SOLAS”), created a new chapter of the convention dealing specifically with maritime security. The new chapter went into effect in July 2004, andimposes various detailed security obligations on vessels and port authorities, most of which are contained in the International Ship and Port FacilitiesSecurity Code (the “ISPS Code”). Among the various requirements are: 16 Table of Contents • 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.The U.S. Coast Guard regulations, intended to be aligned with international maritime security standards, exempt non-U.S. vessels fromMTSA vessel security measures, provided such vessels have on board a valid International Ship Security Certificate, or ISSC, that attests to the vessel’scompliance with SOLAS security requirements and the ISPS Code. Starting January 1, 2016, the IMDG Code also included updates to the provisionsfor radioactive material, reflecting the latest provisions from the International Atomic Energy Agency, or the IAEA, new marking requirements for“overpack” and “salvage” and updates to various individual packing requirements. We will implement the various security measures addressed by theMTSA, SOLAS and the ISPS Code and take measures for our vessels or vessels that we charter to attain compliance with all applicable securityrequirements within the prescribed time periods. Although management does not believe these additional requirements will have a material financialimpact on our operations, there can be no assurance that there will not be an interruption in operations to bring vessels into compliance with theapplicable requirements and any such interruption could cause a decrease in charter revenues. Furthermore, additional security measures could berequired in the future, that 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 othercosts may be incurred as a result of such detention. Although we insure against these losses to the extent practicable, the risk remains of uninsuredlosses, which could significantly affect our business. Costs are incurred in taking additional security measures in accordance with Best ManagementPractices to Deter Piracy, notably those contained in the BMP3 industry standard. A number of flag states have signed the 2009 New York Declaration,which expresses commitment to Best Management Practices in relation to piracy and calls for compliance with them as an essential part of compliancewith the ISPS Code.Acts 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 theGulf of Aden 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 both the frequency and success of attacks have diminished recently, we still consider potential acts of piracy to be a material risk to theinternational container shipping industry, and protection against this risk requires vigilance. Our vessels regularly travel through regions where piratesare active. Crew costs, including those due to employing onboard security guards, could increase in such circumstances. While the use of securityguards is intended to deter and prevent the hijacking of our vessels, it could also increase our risk of liability for death or injury to persons or damageto personal property. In addition, while we believe the charterer remains liable for charter payments when a vessel is seized by pirates, the charterer maydispute this and withhold charter hire until the vessel is released. A charterer may also claim that a vessel seized by pirates was not “on-hire” for acertain number of days and it is therefore entitled to cancel the charter party, a claim that we would dispute. We may not be adequately insured to coverlosses from these incidents, which could have a material adverse effect on our results of operations, financial condition and ability to makedistributions. Crew costs could also increase in such circumstances. We may not be adequately insured to cover losses from acts of terrorism, piracy,regional conflicts and other armed actions.Costs are incurred in taking additional security measures in accordance with Best Management Practices to Deter Piracy, notably thosecontained in the BMP3 industry standard. A number of flag states have signed the 2009 New York Declaration, which expresses commitment to BestManagement Practices in relation to piracy and calls for compliance with them as an essential part of compliance with the ISPS Code. 17 Table of ContentsPolitical and government instability, terrorist attacks, increased hostilities or war could lead to further economic instability, increased costs anddisruption of our business.We 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 inthe 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, thebombings in Spain on 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, Ukraine and other current and future conflicts, and the continuing response of the U.S. to these attacks, as well as the threat of futureterrorist attacks, continue to cause uncertainty in the world financial markets, including the energy markets. Continuing hostilities in the Middle Eastmay lead to additional armed conflicts or to further acts of terrorism and civil disturbance in the U.S. or elsewhere, which could result in increasedvolatility and turmoil in the financial markets and may contribute further to economic instability. Current and future conflicts and terrorist attacks mayadversely affect our business, operating results, financial condition, ability to raise capital and future growth. Terrorist attacks on vessels, such as theOctober 2002 attack on the M/V Limburg, a VLCC not related to us, may in the future also negatively affect our operations and financial condition anddirectly impact our vessels or our customers.Furthermore, our operations may be adversely affected by changing or adverse political and governmental conditions in the countrieswhere our vessels are flagged or registered and in the regions where we otherwise engage in business. Any disruption caused by these factors mayinterfere with the operation of our vessels, which could harm our business, financial condition and results of operations. Our operations may also beadversely affected by expropriation of vessels, taxes, regulation, tariffs, trade embargoes, economic sanctions or a disruption of or limit to tradingactivities, or other adverse events or 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 could requisition one or more of our vessels for title or for hire. Requisition for title occurs when a government takes controlof a vessel and becomes its owner, while requisition for hire occurs when a government takes control of a vessel and effectively becomes its charterer atdictated charter rates. Generally, requisitions occur during periods of war or emergency, although governments may elect to requisition vessels in othercircumstances. Although we may be entitled to compensation in the event of a requisition of one or more of our vessels, the amount and timing ofpayment would be uncertain. Government requisition of one or more of our vessels could have a material adverse effect on our business, financialcondition, cash flows, and results of operations.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 ofthe vessel and with SOLAS. Our owned fleet is currently enrolled with Nippon Kaiji Kiokai, Bureau Veritas, Lloyd’s Register, DNV GL and AmericanBureau of Shipping.A vessel must undergo an annual survey, an intermediate survey and a special survey. In lieu of a special survey, a vessel’s machinery maybe on a continuous survey cycle, under which the machinery would be surveyed periodically over a five-year period. Our vessels are on special surveycycles for hull inspection and continuous survey cycles for machinery inspection. Every vessel is also required to be drydocked every two to threeyears for inspection of the underwater parts of such vessel.If any vessel fails any annual survey, intermediate survey or special survey, the vessel may be unable to trade between ports and, therefore,would be unemployable, potentially causing a negative impact on our revenues due to the loss of revenues from such vessel until she is able to tradeagain.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 destinationand trans-shipment points. Inspection procedures may result in the seizure of contents of our vessels, delays in the loading, offloading, trans-shipmentor delivery and the levying of customs duties, fines or other penalties against us. 18 Table of ContentsIt 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 lossor damage and business interruption due to political circumstances in foreign countries, hostilities and labor strikes. In addition, there is always aninherent possibility of a marine disaster, including oil spills and other environmental mishaps. There are also liabilities arising from owning andoperating vessels in international trade. We procure insurance for our fleet in relation to risks commonly insured against by vessel owners andoperators. Our current insurance includes (i) hull and machinery and war risk insurance covering damage to our vessels’ hulls and machinery from,among other things, collisions and contact with fixed and floating objects, (ii) war risks insurance covering losses associated with the outbreak orescalation of hostilities and (iii) protection and indemnity insurance (which includes environmental damage) covering, among other things, third-partyand crew liabilities such as expenses resulting from the injury or death of crew members, passengers and other third parties, the loss or damage to cargo,third-party claims arising from collisions with other vessels, damage to other third-party property and pollution arising from oil or other substances,and salvage, towing and other related costs, including wreck removal. For a full description of the insurances we maintain please review section “Riskof Loss and Liability Insurance”.We can give no assurance that we are adequately insured against all risks or that our insurers will pay a particular claim. Even if ourinsurance coverage 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 stringentenvironmental 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 theclaim records of all other members of the protection and indemnity associations through which we receive indemnity insurance coverage. There is nocap on our liability exposure for such calls or premiums payable to our protection and indemnity association. Our insurance policies also containdeductibles, limitations and exclusions, which, although we believe are standard in the shipping industry, may nevertheless increase our costs. Acatastrophic oil spill or marine disaster could exceed our insurance coverage, which could have a material adverse effect on our business, results ofoperations and financial condition. Any uninsured or underinsured loss could harm our business and financial condition. In addition, the insurancemay be voidable by the insurers as a result of certain actions, such as vessels failing to maintain required certification.Our charterers may engage in legally permitted trading in locations, which may still be subject to sanctions or boycott, such as Iran, Syriaand Sudan. Our insurers may be contractually or by operation of law prohibited from honoring our insurance contract for such trading, which couldresult in reduced insurance coverage for losses incurred by the related vessels. Furthermore, our insurers and we may be prohibited from posting orotherwise be unable to post security in respect of any incident in such locations, resulting in the loss of use of the relevant vessel and negativepublicity for our Company which could negatively impact our business, results of operations and financial condition.Maritime claimants could arrest or attach one or more of 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 maritimelien against a vessel for unsatisfied debts, claims or damages, including, in some jurisdictions, for debts incurred by previous owners. In manyjurisdictions, a maritime lien-holder may enforce its lien by arresting a vessel. The arrest or attachment of one or more of our vessels, if such arrest orattachment is not timely discharged, could interrupt our cash flows and could require us to pay large sums of money to have the arrest or attachmentlifted. Any of these occurrences could have a material adverse effect on our business, results of operations and financial condition as well as our cashflows. We are not currently aware of the existence of any such maritime lien on our vessels.In addition, in some jurisdictions, such as South Africa, under the “sister ship” theory of liability, a claimant may arrest both the vesselwhich is subject to the claimant’s maritime lien and any “associated” vessel, which is any vessel owned or controlled by the same owner. Claimantscould try to assert “sister ship” liability against one vessel in our fleet for claims relating to another ship in the fleet. 19 Table of ContentsThe risks and costs associated with vessels increase as the vessels age or the aging of our vessels may result in increased operating costs in the future,which could adversely affect our earnings.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 7.8years, basis fully delivered fleet, and most dry bulk vessels have an expected life of approximately 25 years. In some instances, charterers prefer newervessels that are more fuel efficient than older vessels. Cargo insurance rates also increase with the age of a vessel, making older vessels less desirable tocharterers as well. Governmental regulations, safety or other equipment standards related to the age of the vessels may require expenditures foralterations or the addition of new equipment to our vessels and may restrict the type of activities in which these vessels may engage. We cannot assureyou that, as our vessels age, market conditions will justify those expenditures or enable us to operate our vessels profitably during the remainder oftheir useful lives. If we sell vessels, we may have to sell them at a loss, and if charterers no longer charter-out vessels due to their age, our earningscould 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. Flexibilityincludes the ability to enter harbors, utilize related docking facilities and pass through canals and straits. The length of a vessel’s physical life is relatedto its original design and construction, its maintenance and the impact of the stress of operations. If new vessels are built that are more efficient or moreflexible or have longer physical lives than our vessels, competition from these more technologically advanced vessels could adversely affect theamount of charter hire payments we receive for our vessels and the resale value of our vessels could significantly decrease. As a result, our results ofoperations and financial condition 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 overallfinancial position.We intend to seek to grow our fleet, either through purchases, the increase of the number of chartered-in vessels or through the acquisitionsof businesses. The addition of vessels to our fleet or the acquisition of new businesses will impose significant additional responsibilities on ourmanagement. We will also have to increase our customer base to provide continued employment for the new vessels. 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.Growing any business by acquisition presents numerous risks such as undisclosed liabilities and obligations, difficulty in obtainingadditional qualified personnel, and managing relationships with customers and suppliers and integrating newly acquired operations into existinginfrastructures, and we may not be successful in executing our growth plans. We may incur significant expenses and losses in connection therewith orthat our acquisitions will perform as expected, which could materially adversely affect our results of operations and financial condition.We may be unable to make or realize expected benefits from acquisitions, and implementing our growth strategy through acquisitions may harm ourbusiness, financial condition and operating results.Our growth strategy focuses on a gradual expansion of our fleet. Any acquisition of a vessel may not be profitable to us at or after the timewe acquire it and may not generate cash flow sufficient to justify our investment. We may also fail to realize anticipated benefits of our growth, such asnew customer relationships, cost-savings or cash flow enhancements, or we may be unable to hire, train or retain qualified shore and seafaringpersonnel to manage and operate our growing business and fleet. 20 Table of ContentsOur growth strategy could decrease our liquidity by using a significant portion of our available cash or borrowing capacity to financeacquisitions. To the extent that we incur additional debt to finance acquisitions, it could significantly increase our interest expense or financialleverage. We may also incur other significant charges, such as impairment of goodwill or other intangible assets, asset devaluation or restructuringcharges.Additionally, the marine transportation and logistics industries are capital intensive, traditionally using substantial amounts ofindebtedness to finance vessel acquisitions, capital expenditures and working capital needs. If we finance the purchase of our vessels through theissuance 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 topay our debt obligations; • acceleration of our obligations to repay the indebtedness even if we have made all principal and interest payments when due if thedebt security contained covenants that required the maintenance of certain financial ratios or reserves and any such covenant wasbreached without 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 • 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 bean upswing in shipping costs or vessel asset values in the near-term or at all, in which case our business plan and strategy may not succeed in the near-term or at all. Growing any business by acquisition presents numerous risks such as undisclosed liabilities and obligations, difficulty experienced inobtaining additional qualified personnel and managing relationships with customers and suppliers and integrating newly acquired operations intoexisting infrastructures. We may not be successful in growing and may incur significant expenses and losses.Delays in deliveries of secondhand vessels, our decision to cancel an order for purchase of a vessel or our inability to otherwise complete theacquisitions of additional vessels for our fleet, could harm our business, financial condition and results of operations.We expect to purchase secondhand vessels from time to time. The delivery of these vessels could be delayed, not completed or cancelled,which would delay or eliminate our expected receipt of revenues from the employment of these vessels. The seller could fail to deliver these vessels tous as agreed, or we could cancel a purchase contract because the seller has not met its obligations.If the delivery of any vessel is materially delayed or cancelled, especially if we have committed the vessel to a charter for which we becomeresponsible for substantial liquidated damages to the customer as a result of the delay or cancellation, our business, financial condition and results ofoperations could be adversely affected.If we purchase any newbuilding vessels, delays, cancellations or non-completion of deliveries of newbuilding vessels could harm our operatingresults.If we purchase any newbuilding vessels, the shipbuilder could fail to deliver the newbuilding vessel as agreed or their counterparty couldcancel the purchase contract if the shipbuilder fails to meet its obligations. In addition, under charters we may enter into that are related to anewbuilding, if our delivery of the newbuilding to our customer is delayed, we may be required to pay liquidated damages during such delay. Forprolonged delays, the customer may terminate the charter and, in addition to the resulting loss of revenues, we may be responsible for additional,substantial liquidated damages. We do not derive any revenue from a vessel until after its delivery and are required to pay substantial sums as progresspayments during construction of a newbuilding. While we expect to have refund guarantees from financial institutions with respect to such progresspayments in the event the vessel is not delivered by the shipyard or is otherwise not accepted by us, there is the potential that we may not be able tocollect all portions of such refund guarantees, in which case we would lose the amounts we have advanced to the shipyards for such progress payments. 21 Table of ContentsThe 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 ourability to make cash distributions.Although we have long-standing relationships with certain Japanese shipowners that provide us access to competitive contracts, we cannot assureyou that we 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, insome cases, include options to purchase the vessels at favorable prices relative to the current market. We cannot assure you that we will have suchrelationships indefinitely. In addition, there is no assurance that Japanese shipowners will generally make contracts available on the same orsubstantially similar terms in the future.The smuggling of drugs or other contraband onto our vessels may lead to governmental claims against us.We expect that our vessels will call in ports in South America and other areas where smugglers attempt to hide drugs and other contrabandon vessels, with or without the knowledge of crew members. Under some jurisdictions, vessels used for the conveyance of illegal drugs could subjectthe vessels to forfeiture to the government of such jurisdiction. To the extent our vessels are found with contraband, whether inside or attached to thehull of our vessel and whether with or without the knowledge of any of our crew, we may face reputational damage and governmental or otherregulatory claims or penalties which could have an adverse effect on our business, results of operations, cash flows and financial condition, as well asour ability to maintain cash flows, including cash available for distributions to pay dividends to our unitholders. Under some jurisdictions, vesselsused for the conveyance of illegal drugs could subject result in forfeiture of the vessel to forfeiture to the government of such jurisdiction.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 avessel is “off-hire,” or not available for service or otherwise deficient in its condition or performance, the charterer generally is not required to pay thehire rate, and we will be responsible for all costs (including the cost of bunker fuel) unless the charterer is responsible for the circumstances giving riseto the lack of availability. A vessel generally will be deemed to be off-hire if there is an occurrence preventing the full working of the vessel due to,among other things: 22 Table of Contents • 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 thecharterer to terminate 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 anyextended off-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. Undereconomic and trade sanctions laws, governments may seek to impose modifications to, prohibitions/restrictions on business practices and activities,and modifications to compliance programs, which may increase compliance costs, and, in the event of a violation, may subject us to fines and otherpenalties.IranPrior to January 2016, the scope of sanctions imposed against Iran, the government of Iran and persons engaging in certain activities ordoing certain business with and relating to Iran was expanded by a number of jurisdictions, including the U.S., the EU and Canada. In 2010, the U.S.enacted the Comprehensive Iran Sanctions Accountability and Divestment Act (“CISADA”), which expanded the scope of the former Iran SanctionsAct. The scope of U.S. sanctions against Iran were expanded subsequent to CISADA by, among other U.S. laws, the National Defense Authorization Actof 2012 (the “2012 NDAA”), the Iran Threat Reduction and Syria Human Rights Act of 2012 (“ITRA”), Executive Order 13662, and the Iran Freedomand Counter-Proliferation Act of 2012 (“IFCA”). The foregoing laws, among other things, expanded the application of prohibitions to non-U.S.companies such as our company and to transactions with no U.S. nexus, 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 relate to specific activities such as investment in Iran, the supply or export of refinedpetroleum or refined petroleum products to Iran, the supply and delivery of goods to Iran which could enhance Iran’s petroleum or energy sectors, andthe transportation of crude oil from Iran to countries which do not enjoy Iran crude oil sanctions waivers (our tankers called in Iran but did not engagein the prohibited activities specifically identified by these sanctions).U.S. economic sanctions on Iran fall into two general categories: “Primary” sanctions, which prohibit U.S. persons or U.S. companies andtheir foreign branches, U.S. citizens, foreign owned or controlled subsidiaries, U.S. permanent residents, persons within the territory of the U.S. fromengaging in all direct and indirect trade and other transactions with Iran without U.S. government authorization, and “secondary” sanctions, which aremainly nuclear-related sanctions. While most of the U.S. nuclear-related sanctions with respect to Iran (including, inter alia, CISADA, ITRA, and IFCA)and the EU sanctions on Iran were initially lifted on January 16, 2016 through the implementation of the Joint Comprehensive Plan of Action (the“JCPOA”) entered into between the permanent members of the United Nations Security Council (China, France, Russia, the U.K. and the U.S.) andGermany, there are still certain limitations under that sanctions framework in place with which we need to comply. The primary sanctions with whichU.S. persons or transactions with a U.S. nexus must comply are still in force and have not been lifted or relaxed. However, the following sanctionswhich were lifted under the JCPOA were reimposed (“snapped back”) on May 8, 2018 as a result of the U.S. withdrawal from the JCPOA. 23 Table of Contents • Sanctions on the purchase or acquisition of U.S. dollar banknotes by the Government of Iran; • Sanctions on Iran’s trade in gold or precious metals; • Sanctions on the direct or indirect sale, supply, or transfer to or from Iran of graphite, raw, or semi-finished metals such as aluminum andsteel, coal, and software for integrating industrial processes; • Sanctions on significant transactions related to the purchase or sale of Iranian rials, or the maintenance of significant funds or accountsoutside the territory of Iran denominated in the Iranian rial; • Sanctions on the purchase, subscription to, or facilitation of the issuance of Iranian sovereign debt; and • Sanctions on Iran’s automotive sector.Following a 180-day wind-down period ending on November 4, 2018, the U.S. government will re-impose the following sanctions thatwere lifted pursuant to the JCPOA, including sanctions on associated services related to the activities below: • Sanctions on Iran’s port operators, and shipping and shipbuilding sectors, including on the Islamic Republic of Iran Shipping Lines(IRISL), South Shipping Line Iran, or their affiliates; • Sanctions on petroleum-related transactions with, among others, the National Iranian Oil Company (NIOC), Naftiran Intertrade Company(NICO), and National Iranian Tanker Company (NITC), including the purchase of petroleum, petroleum products, or petrochemicalproducts from Iran; • Sanctions on transactions by foreign financial institutions with the Central Bank of Iran and designated Iranian financial institutions underSection 1245 of the National Defense Authorization Act for Fiscal Year 2012 (NDAA); • Sanctions on the provision of specialized financial messaging services to the Central Bank of Iran and Iranian financial institutionsdescribed in Section 104(c)(2)(E)(ii) of the Comprehensive Iran Sanctions and Divestment Act of 2010 (CISADA); • Sanctions on the provision of underwriting services, insurance, or reinsurance; and • Sanctions on Iran’s energy sector.U.S. Iran sanctions also prohibit significant transactions with any individual or entity that the U.S. Government has designated as an Iransanctions target.EU sanctions remain in place in relation to the export of arms and military goods listed in the EU common military list, missiles-relatedgoods and items that might be used for internal repression. The main nuclear-related EU sanctions which remain in place include restrictions on: • Graphite and certain raw or semi-finished metals such as corrosion-resistant high-grade steel, iron, aluminum and alloys, titanium andalloys and nickel and alloys (as listed in Annex VIIB to EU Regulation 267/2012 as updated by EU Regulation 2015/1861 (the “EURegulation”); • Goods listed in the Nuclear Suppliers Group list (listed in Annex I to the EU Regulation); • Goods that could contribute to nuclear-related or other activities inconsistent with the JCPOA (as listed in Annex II to the EU Regulation);and • Software designed for use in nuclear/military industries (as listed in Annex VIIA to the EU Regulation).The above EU sanctions activities can only be engaged if prior authorization (granted on a case-by-case basis) is obtained. The remainingrestrictions apply to the sale, supply, transfer or export, directly or indirectly to any Iranian person/for use in Iran, as well as the provision of technicalassistance, financing or financial assistance in relation to the restricted activity. Certain individuals and entities remain sanctioned and the prohibitionto 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) directlyor indirectly benefits. It is therefore still necessary to carry out due diligence on the parties and cargoes involved in fixtures involving Iran. 24 Table of ContentsRussia/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 Russian individuals and entities.The EU has imposed travel bans and asset freezes on certain Russian persons and entities pursuant to which it is prohibited to makeavailable, directly or indirectly, economic resources or assets to or for the benefit of the sanctioned parties. Certain Russian ports including KerchCommercial Seaport; Sevastopol Commercial Seaport and Port Feodosia are subject to the above restrictions. Other entities are subject to sectoralsanctions, which limit the provision of equity financing and loans to the listed entities. In addition, various restrictions on trade have beenimplemented which, amongst others, include a prohibition on the import into the EU of goods originating in Crimea or Sevastopol as well asrestrictions on trade in certain dual-use and military items and restrictions in relation to various items of technology associated with the oil industry foruse in deep water exploration and production, Arctic oil exploration and production or shale oil projects in Russia. As such, it is important to carry outdue 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”). Thesesanctions block the property and all interests in property of the U.S. Russian Sanctions Targets. This effectively prohibits U.S. persons from engagingin any economic or 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 of equity and debt financing to designated Russian entities. While the prohibitions of these sanctions are not directlyapplicable to us, we have compliance measures in place to guard against transactions with U.S. Russian Sanctions Targets, which may involve the U.S.or U.S. persons and thus implicate prohibitions. The U.S. also maintains prohibitions on trade with Crimea.The U.S. has also taken a number of steps toward implementing aspects of the Countering America’s Adversaries Through Sanctions Act(“CAATSA”), a major piece of sanctions legislation.Under CAATSA, the U.S. has imposed secondary sanctions relating to Russia’s energy export pipelines, investments in special Russiancrude oil projects. CAATSA has a provision that requires the U.S. President to sanction persons who knowingly engage in significant transactions withparties affiliated with Russia’s defense and intelligence sectors.Venezuela-Related SanctionsThe U.S. sanctions with respect to Venezuela prohibit various financial and other transactions and activities, dealings with designatedVenezuelan government officials and entities, and curtail the provision of financing to Petroleos de Venezuela, S.A. (“PdVSA”) and other governmententities. EU sanctions against Venezuela are primarily governed by EU Council Regulation 2017/2063 of 13 November 2017 concerning restrictivemeasures in view of the situation in Venezuela. This includes financial sanctions and restrictions on listed persons and an, arms embargo, and relatedprohibitions and restrictions including restrictions related to internal repression.US Executive OrdersThe following Executive Orders govern the U.S. sanctions with respect to Venezuela that U.S. persons must comply with. • 13857—Taking Additional Steps to Address the National Emergency with Respect to Venezuela (January 28, 2019)—Expanded thedefinition of “Government of Venezuela” to include PdVSA. • 13850—Blocking Property of Additional Persons Contributing to the Situation in Venezuela (November 1, 2018). • 13835—Prohibiting Certain Additional Transactions with Respect to Venezuela (May 21, 2018). • 13827—Taking Additional Steps to Deal with the Situation in Venezuela (March 19, 2018) – prohibits all transactions related to,provision of financing for, and other dealings in, by a United States person or within the United States, in any digital currency, digital coin,or digital token, (the Petro) that was issued by, for, or on behalf of the Government of Venezuela on or after January 9, 2018. 25 Table of Contents • 13808—Imposing Additional Sanctions with Respect to the Situation in Venezuela (August 24, 2017) – This executive Order prohibitstransactions involving, dealings in, and the provision of financing for (by (US persons) of: • New debt with a maturity of greater than 90 days of PdVSA; • New debt with a maturity of greater than 30 days or new equity of the Government of Venezuela, other than debt of PdVSA; • Bonds issued by the Government of Venezuela prior to August 25, 2017, the EO’s effective date; • Dividend payments or other distributions of profits to the Government of Venezuela from any entity directly or indirectly owned orcontrolled by the Government of Venezuela; or • Direct or indirect purchase by U.S. persons or persons within the U.S. of securities from the Government of Venezuela, other thansecurities qualifying as new debt with a maturity of less than or equal to 90 or 30 days as covered by the EO (Section 1). • 13692—Blocking Property and Suspending Entry of Certain Persons Contributing to the Situation in Venezuela (March 8, 2015) – blocksdesignated Venezuelan government officials.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, designatedterrorists, narcotics traffickers) whose names appear on the List of SDNs and Blocked Persons maintained by the U.S. Treasury Department(collectively, the “Sanctions Targets”). We are subject to the prohibitions of these sanctions to the extent that any transaction or activity we engage ininvolves Sanctions Targets and a U.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 usdue to the worldwide trade of our vessels, which we seek to minimize by the implementation of our corporate Sanctions and our compliance with allapplicable sanctions and embargo laws and regulations. Although we intend to maintain such Economic Sanctions Compliance Policy and Procedures,there can be no assurance that we will be in compliance in the future, particularly as the scope of certain laws may be unclear and may be subject tochanging interpretations, and the law may change. Moreover, despite, for example, relevant provisions in charter parties forbidding the use of ourvessels in trade that would violate economic sanctions, our charterers may nevertheless violate applicable sanctions and embargo laws and regulationsand those violations could in turn negatively affect our reputation and be imputed to us. In addition, given our relationship with Navios Acquisition,Navios Partners and Navios Containers, we cannot give any assurance that an adverse finding against Navios Acquisition, Navios Partners or NaviosContainers by a governmental or legal authority or others with respect to the matters discussed herein or any future matter related to regulatorycompliance by Navios Acquisition, Navios Partners or Navios Containers will not have a material adverse impact on our business, reputation or themarket 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,other countries, and other sanctions targets, including developments in implementation and enforcement of such sanctions programs. Expansion ofsanctions programs, embargoes and other restrictions in the future (including additional designations of countries and persons subject to sanctions), ormodifications in how existing sanctions are interpreted or enforced, could prevent our vessels from calling in ports in sanctioned countries or couldlimit their cargoes. If any of 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. 26 Table of ContentsSecurity breaches and disruptions to our information technology infrastructure could interfere with our operations and expose us to liability whichcould have a material adverse effect on our business, financial condition, cash flows and results of operations.In the ordinary course of business, we rely on information technology networks and systems to process, transmit, and store electronicinformation, and to manage or support a variety of business processes and activities. Additionally, we collect and store certain data, includingproprietary business information and customer and employee data, and may have access to other confidential information in the ordinary course of ourbusiness. Despite our cybersecurity measures designed to protect and secure our data, our information technology networks and infrastructure may bevulnerable to damage, disruptions, or shutdowns due to attack by hackers or breaches, employee error or malfeasance, data leakage, power outages,computer viruses and malware, telecommunication or utility failures, systems failures, natural disasters, or other catastrophic events. Any such eventscould result in legal claims or proceedings, liability or penalties under privacy or other laws, disruption in operations, and damage to our reputation,which could have a material adverse effect on our business, financial condition, cash flows and results of operations.Changing 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 ProtectionRegulation (“GDPR”), may create additional compliance requirements for us. To maintain high standards of corporate governance and publicdisclosure, we have invested 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 ondata breaches within 72 hours and be bound by more stringent rules for obtaining the consent of individuals on how their data can be used. GDPR hasbecome enforceable on May 25, 2018 and non-compliance may expose entities to significant fines or other regulatory claims, which could have anadverse effect on our business, financial conditions, results of operations and cash flows. Our Company is compliant with applicable GDPRRegulations.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 inother applicable 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 registeredwith the 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 othercountries 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 anexception for facilitation payments. We and our customers may be subject to these and similar anti-corruption laws in other applicable jurisdictions.Failure to comply with legal requirements could expose us to civil and/or criminal penalties, including fines, prosecution and significant reputationaldamage, all of which could materially and adversely affect our business and the 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 andpolicies imposes potentially significant costs and operational burdens on us. Moreover, the compliance and monitoring mechanisms that we have inplace including our Code of Ethics and our anti-bribery and anti-corruption policy, may not adequately prevent or detect all possible violations underapplicable anti-bribery and anti-corruption legislation. However, we believe that the procedures we have in place to prevent bribery are adequate andthat they should provide a defense in most circumstances to a violation or a mitigation of applicable 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 substantiallyincreased costs 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,we require technically skilled employees with specialized training who can perform physically demanding work. Competition to attract, hire, train andretain qualified crew members is intense. In addition, recently, the limited supply of, and increased demand for, well-qualified crew members, due to theincrease in the size of global shipping fleet, has created upward pressure on crewing costs, which we generally bear under our period, time and spotcharters. If we are not able to increase our hire rates to compensate for any crew cost increases, our business, financial condition and results ofoperations may be adversely affected. Any inability we experience in the future to attract, hire, train and retain a sufficient number of qualifiedemployees could impair our ability to manage, maintain and grow our business. 27 Table of ContentsOur Chairman and Chief Executive Officer holds approximately 29.4% of our common stock and will be able to exert considerable influence overour actions; her failure to own a significant amount of our common stock or to be our Chief Executive Officer would constitute a default under oursecured credit facilities.Ms. Angeliki Frangou owns approximately 29.4% 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 commonstock (as of April 22, 2019, she had purchased approximately $10.0 million of the total $20.0 million in value of our common stock). As the Chairman,Chief Executive Officer and a significant stockholder, she has the power to exert considerable influence over our actions and the outcome of matters onwhich our stockholders are entitled to vote including the election of directors and other significant corporate actions. The interests of Ms. Frangou maybe different from your interests. Furthermore, if Ms. Frangou ceases to hold a minimum of 20% of our common stock, does not remain actively involvedin the business, or ceases to be our Chief Executive Officer, then we will be in default under our secured credit facilities.The loss of key members of our senior management team could disrupt the management of our business.We believe that our success depends on the continued contributions of the members of our senior management team, includingMs. Angeliki Frangou, our Chairman, Chief Executive Officer and principal stockholder. The loss of the services of Ms. Frangou or one of our otherexecutive officers or senior management members could impair our ability to identify and secure new charter contracts, to maintain good customerrelations and to otherwise manage 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 byus, 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 thoseconducted by us. Certain of our directors are also directors of other shipping companies and they may enter similar businesses in the future. These otheraffiliations and business activities may give rise to certain conflicts of interest in the course of such individuals’ affiliation with us. Although we do notprevent our directors, officers and principal stockholders from having such affiliations, we use our best efforts to cause such individuals to comply withall applicable laws and regulations in addressing such conflicts of interest. Our officers and employee directors devote their full time and attention toour ongoing operations, and our non-employee directors devote such time as is necessary and required to satisfy their duties as directors of a publiccompany.Because we generate substantially all of our revenues in U.S. dollars but incur a portion of our expenses in other currencies, exchange ratefluctuations could cause us to suffer exchange rate losses, thereby increasing expenses and reducing income.We engage in worldwide commerce with a variety of entities. Although our operations may expose us to certain levels of foreign currencyrisk, our transactions are predominantly U.S. dollar-denominated at the present. Additionally, our South American subsidiaries transact a nominalamount of their operations in Uruguayan pesos, Paraguayan Guaranies, Argentinean pesos and Brazilian Reales, whereas our wholly-owned vesselsubsidiaries and the vessel management subsidiaries transact a nominal amount of their operations in Euros; however, all of the subsidiaries’ primarycash flows are U.S. dollar-denominated. In 2018, approximately 58.8% of our 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 our income. A change in exchange rates between the U.S. dollarand each of the foreign currencies listed above of 1.00% would change our net loss for the year ended December 31, 2018 by $1.4 million.For example, as of December 31, 2018, the value of the U.S. dollar as compared to the Euro increased by approximately 4.7% comparedwith the respective value as of December 31, 2017. A greater percentage of our transactions and expenses in the future may be denominated incurrencies other than U.S. dollar. As part of our overall risk management policy, we attempt to hedge these risks in exchange rate fluctuations from timeto time. We may not always be successful in such hedging activities and, as a result, our operating results could suffer as a result of non-hedged lossesincurred as a result of exchange rate fluctuations. 28 Table of ContentsWe 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 ofdirectors under the law of the Republic of the Marshall Islands are not as clearly established as the rights and fiduciary responsibilities of directorsunder statutes or judicial precedent in existence in certain U.S. jurisdictions. Stockholder rights may differ as well. The BCA does specificallyincorporate the non-statutory law, or judicial case law, of the State of Delaware and other states with substantially similar legislative provisions, andthe BCA is interpreted and construed by Delaware laws and the laws of other States with substantially similar legislative provisions. Accordingly, youmay have more difficulty protecting your interests in the face of actions by management, directors or controlling stockholders than you would in thecase of a corporation incorporated in 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 Islandsand such persons 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, the majority of our directors and officers are residents of non-U.S. jurisdictions. Substantial portions of the assets of these persons arelocated in Greece or other non-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 any judgment 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. courts against these persons in a non-U.S. jurisdiction.Being 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“Exchange Act”). 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 onForm 8-K; • the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registeredunder the Exchange Act; • the provisions of Regulation FD aimed at preventing issuers from making selective disclosures of material information; • the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities andestablishing insider liability for profits realized from any “short-swing” trading transaction (i.e., a purchase and sale, or sale andpurchase, of the issuer’s equity securities within less than six months); and • the obligation to obtain shareholder approval in connection with the approval of, and material revisions to, equity compensationplans.Because of these exemptions, investors are not afforded the same protections or information generally available to investors holding sharesin public companies organized in the U.S. 29 Table of ContentsRisks 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;an investor 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 andoperating results.The New York Stock Exchange may delist our securities from quotation on its exchange, which could limit your ability to trade our securities andsubject us to additional trading restrictions.Our securities are listed on the New York Stock Exchange (the “NYSE”), a national securities exchange. The NYSE minimum listingstandards require that we meet certain requirements relating to stockholders’ equity, number of round-lot holders, market capitalization, aggregatemarket value of publicly held shares and distribution requirements.Although we currently satisfy the NYSE minimum listing standards, we cannot assure you that our securities will continue to be listed onNYSE in the future. If NYSE delists our securities from trading on its exchange, we could face significant material adverse consequences, including: • a limited availability of market quotations for our securities; • a limited amount of news and analyst coverage for us; • a decreased ability for us to issue additional securities or obtain additional financing in the future; • limited liquidity for our stockholders due to thin trading; and • loss of our tax exemption under Section 883 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), loss ofpreferential capital gain tax rates for 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 as a passive foreign investment company (“PFIC”).Risks 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(the Series G and the Series H together referred to as the “Series G and H”), both represented by American Depositary Shares (the “Depositary Shares”),are subordinated to all of our existing and future indebtedness. As of December 31, 2018, our total debt was $1,843.9 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 February2016, we announced the suspension of payment of quarterly dividends on our common stock and on the Series G and Series H. The payment ofprincipal and interest on our debt reduces cash available for distribution to us and on our shares, including the Series G and H and the DepositaryShares, should such dividends be reinstated. We currently have no plans or intention to pay dividends on the Series G or Series H. 30 Table of ContentsThe 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 ourSeries G and H, and any issuance of any preferred stock senior to or on parity with our Series G and H or additional indebtedness could affect ourability to pay dividends on, redeem or pay the liquidation preference on our Series G and H. No provisions relating to our Series G and H protect theholders of our Series G and H in the event of a highly leveraged or other transaction, including a merger or the sale, lease or conveyance of all orsubstantially all our assets or business, 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 theSeries G and H that is not expressly subordinated or senior to the Series G and H (“Parity Securities”) as to the payment of dividends and amountspayable upon liquidation or reorganization. If less than all dividends payable with respect to the Series G and H and any Parity Securities are paid, anypartial payment shall 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 inproportion to the aggregate 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 theDepositary Shares, 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, and have not paid aquarterly dividend payments on the Series G or Series H since then, and as a result the respective dividend rates increased by 0.25%. We will reinstateand pay quarterly dividends on the Series G and H, and accordingly the Depositary Shares, only from funds legally available for such purpose when, asand if declared by our board of directors. We may not have sufficient cash available to reinstate such dividend or to pay dividends each quarter if andwhen reinstated. We currently have no plans or intention to pay dividends on the Series G or Series H. In addition, we may have insufficient cashavailable to redeem the Series G and H, and accordingly the Depositary Shares. The amount of cash we can use to pay dividends or redeem our Series Gand H and the Depositary Shares depends upon the amount of cash we generate from our operations, which may fluctuate significantly, and otherfactors, 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, includingrestrictions under our existing credit facilities and indentures governing our debt securities (other than the indenture governing thenewly issued 9.75% Senior Notes due 2024 (the “2024 Notes”)) on our ability to pay dividends if an event of default has occurredand 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 andto the risks associated with the shipping industry, our dry bulk operations and the other factors described herein, many of which arebeyond our control.The amount of cash we generate from our operations may differ materially from our net income or loss for the period, which will be affectedby noncash items, and our board of directors in its discretion may elect not to declare any dividends. We may incur other expenses or liabilities thatcould reduce or eliminate the cash available for distribution as dividends. As a result of these and the other factors mentioned above, we may paydividends during periods when we record losses and may not pay dividends during periods when we record net income.Our ability to pay dividends on and to redeem our Series G and H, and therefore holders’ ability to receive payments on the Depositary Shares, islimited by the 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 onlyto the extent that assets are legally available for such purposes. Legally available assets generally are limited to our surplus, which essentiallyrepresents our retained 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 Islands law we may not pay dividends on or redeem Series G and H if we are insolvent or would be rendered insolvent by the paymentof such a dividend or the making of such redemption. 31 Table of ContentsThe 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 aprincipal amount at a particular date. As a result, holders of the Series G and H (and accordingly the Depositary Shares) may be required to bear thefinancial risks of an investment in the Series G and H (and accordingly the Depositary Shares) for an indefinite period of time. In addition, the Series Gand H will rank junior to all our indebtedness and other liabilities, and any other senior securities we may issue in the future with respect to assetsavailable 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 votingrights. Holders of the Series G and H, and accordingly holders of the Depositary Shares, generally have no voting rights. In February 2016, weannounced the suspension of payment of quarterly dividends on the Series G and Series H. As such, (i) we have used commercially reasonable efforts toobtain an amendment to our articles of incorporation to effectuate any and all such changes thereto as may be necessary to permit either the Series GPreferred Shareholders 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 and when 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, whetheror not consecutive (and whether or not such dividends shall have been declared and whether or not there are profits, surplus, or other funds legallyavailable for the payment of dividends), then (x) if our articles of incorporation have been amended as described in the preceding clause (i), the holdersof Series G or the holders of Series G, as the case may be, will have the right (voting together as a class with all other classes or series of parity securitiesupon which like voting rights have been conferred and are exercisable), to elect one additional director to serve on our board of directors, and the sizeof our board of directors will be increased as needed to accommodate such change (unless the size of our board of directors already has been increasedby reason of the election of a director by holders of securities on parity with either the Series G or Series H, as the case may be, upon which like votingrights have been conferred and with which the Series G and H voted as a class for the election of such director), and (y) if our articles of incorporationhave not been amended as described in the preceding clause (i), then, until such amendment is fully approved and effective, the dividend rate on theSeries G or the Series H, as the case may be, shall increase by 25 basis points. At our respective Annual Meeting of stockholders held on December 15,2016, December 15, 2017 and December 21, 2018, the Company proposed an amendment to our articles of incorporation to effectuate any and all suchchanges as were necessary to permit the Series G and/or Series H holders the ability to exercise the certain voting rights described above. Theseproposals failed to receive the affirmative vote of holders of two-thirds of the Company’s issued and outstanding common stock entitled to vote at therespective Annual Meeting, which was required to approve the proposal. Therefore, since the proposals failed and the dividends for the Series G andSeries H are in arrears for six or more quarterly periods the dividend rate on the Series G and Series H have increased by 25 basis points respectively.There can be no assurance that any such further proposal to our stockholders to amend our articles of incorporation will be approved by our commonstockholders.Furthermore, holders of the Depositary Shares may encounter difficulties in exercising any voting rights acquired by the Series G or theSeries H for 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 beentitled to vote 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 timelyinstructions to The 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 be the holder of the Series G or the Series H underlying the Depositary Shares and holders may exercise voting rights with respectto the Series G or the Series H represented by the Depositary Shares only in accordance with the deposit agreement (the “Deposit Agreement”) relatingto the Depositary Shares. To the limited extent permitted by the Deposit Agreement, the holders of the Depositary Shares should be able to direct theDepositary to vote the underlying Series G or the Series H, as the case may be, in accordance with their individual instructions. Nevertheless, holders ofDepositary Shares may not receive voting materials 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, the Depositary and its agents are not responsible for failing to carry out voting instructions of theholders of Depositary Shares or for the manner of carrying out such instructions. Accordingly, holders of Depositary Shares may not be able to exercisevoting rights, and they will have little, if any, recourse if the underlying Series G or the Series H, as the case may be, is not voted as requested. 32 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 whichcase the trading price of the Depositary Shares could be adversely affected and a holder’s ability to transfer its securities will be limited. The DepositaryShares may trade at prices lower than the offering price and the secondary market may not provide sufficient liquidity. In addition, since the Series Gand Series H do not have a stated maturity date, investors seeking liquidity in the Depositary Shares will be limited to selling their Depositary Shares inthe secondary market absent redemption by us. We do not expect that there will be any other trading market for the Series G and Series H except asrepresented by the Depositary Shares.Other factors, some of which are beyond our control, will also influence the market prices of the Depositary Shares. Factors that mightinfluence the 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.Depositary Shares that you continue to hold after the Exchange Offer (as defined herein) are expected to become less liquid following the ExchangeOffer.The Company recently offered to exchange for (1) cash; and/or (2) newly issued newly issued 9.75% Senior Notes due 2024 of theCompany, on the terms and conditions set forth in the Company’s prospectus. On March and April 2019, Navios Holdings exchanged cash and/or 2024Notes for 10,930 Series H and 8,841 Series G, respectively. Following consummation of the Exchange Offer, the number of Depositary Shares that arepublicly traded has been reduced and the trading market for the remaining outstanding Depositary Shares may be less liquid and market prices mayfluctuate significantly depending on the volume of trading in the Depositary Shares. Therefore, holders whose Depositary Shares are not repurchasedwill own a greater percentage interest in the remaining outstanding Depositary Shares following consummation of the Exchange Offer. This may reducethe volume of trading and make it more difficult to buy or sell significant amounts of Depositary Shares without affecting the market price. Decreasedliquidity may make it more difficult for holders of Depositary Shares to sell their Depositary Shares.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 priceof the Depositary 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 morerating agencies 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 eitherour Series G or the Series H in the future. In addition, we have issued securities that are rated and may elect to issue other securities for which we mayseek 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 orthat may be issued on our other securities, if they are lower than market expectations or are subsequently lowered or withdrawn, could imply a lowerrelative value for the Series G or the Series H and could adversely affect the market for or the market value of the Depositary Shares of the Series G andH Preferred Shares respectively. Ratings only reflect the views of the issuing rating agency or agencies and such ratings could at any time be reviseddownward or withdrawn entirely at the discretion of the issuing rating agency. A rating is not a recommendation to purchase, sell or hold any particularsecurity, including the Series G and H and the Depositary Shares. Ratings do not reflect market prices or suitability of a security for a particular investorand any future rating of the Series G and H and the Depositary Shares may not reflect all risks related to us and our business, or the structure or marketvalue of the Series G and H and the Depositary Shares. 33 Table of ContentsThe 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 ofthe circumstances.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$25.00 per Depositary Share) plus accumulated and unpaid dividends to the date of liquidation (whether or not declared). If in the case of ourliquidation, there are remaining assets to be distributed after payment of this amount, holders will have no right to receive or to participate in theseamounts. Furthermore, if the market price for the Series G or the Series H, as the case may be, is greater than the liquidation preference, holders willhave no right to receive the market price 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 datesthey respectively 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,holders of 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) plusaccumulated and unpaid dividends to the date of redemption (whether or not declared). Any decision we may make at any time to propose redemptionof either the Series G or the Series H will depend upon, among other things, our evaluation of our capital position, the composition of our shareholders’equity and general market conditions at that time. In addition, investors might not be able to reinvest the money they receive upon redemption of theSeries G or the Series H, as the case may be, in a similar security or at similar rates. We may elect to exercise our partial redemption right on multipleoccasions.Holders 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 shareholderrights; • distributions on the Series G and H represented by the Depositary Shares will be paid to the Depositary, and before the Depositarymakes a distribution to holder on behalf of the Depositary Shares, withholding taxes or other governmental charges, if any, thatmust be paid will 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, amongothers; 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 andour ability to obtain financing in the future, react to changes in our business and make payments under the notes.As of December 31, 2018, we had $1,843.9 million in aggregate principal amount of debt outstanding, of which $401.9 million wasunsecured.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 ourindebtedness, 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; 34 Table of Contents • 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 interestrates and, 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 maybe prevented from carrying out capital expenditures that are necessary or important to our growth strategy and efforts to improveoperating margins 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 Notesdue 2022 (the “2022 Notes”) do not fully prohibit us or our subsidiaries from doing so. The terms of the indenture governing the 7.25% Senior Notesdue 2022 (the “2022 Logistics Senior Notes”) of Navios South American Logistics (“Navios Logistics”), the agreements governing the terms of TermLoan B Facility (the “Term Loan B Facility”) and the agreements governing the terms of the other indebtedness of Navios Logistics also permit NaviosLogistics to incur substantial additional indebtedness in accordance with the terms of such agreements. The agreements of Navios Containers alsopermit Navios Containers to incur substantial additional indebtedness in accordance with the terms of such agreements. If new debt is added to ourcurrent debt levels, the related risks that we now face would increase and we may not be able to meet all of our debt obligations.The agreements and instruments governing our debt, other than the 2024 Notes, contain restrictions and limitations that could significantly impactour ability to operate our business.Our secured credit facilities and our indentures, other than the indenture governing the 2024 Notes, impose certain operating and financialrestrictions 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; • 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.The agreements governing the terms of Navios Containers’ indebtedness impose similar restrictions upon Navios Containers.Therefore, we, Navios Logistics and Navios Containers will need to seek permission from our respective lenders in order to engage in somecorporate and commercial actions that believe would be in the best interest of our respective business, and a denial of permission may make it difficultfor us or Navios Logistics to successfully execute our business strategy or effectively compete with companies that are not similarly restricted. Theinterests of our, Navios Logistics’ and Navios Containers’ lenders may be different from our respective interests or those of our holders of commonstock, and we cannot guarantee that we, Navios Logistics or Navios Containers will be able to obtain the permission of lenders when needed. This mayprevent us, Navios Logistics or Navios Containers from taking actions that are in best interests of us, Navios Logistics, Navios Containers or ourstockholders. Any future debt agreements may include similar or more restrictive restrictions. 35 Table of ContentsOur ability to generate the significant amount of cash needed to pay interest and principal and otherwise service our debt and our ability torefinance all or 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, Navios Logistics and Navios Containers to make scheduled payments on or to refinance our respective debt obligationswill depend on our respective financial and operating performance, which, in turn, will be subject to prevailing economic and competitive conditionsand to the financial and business factors, many of which may be beyond the control of us, Navios Logistics and Navios Containers.The principal and interest on such debt will be paid in cash. The payments under our, Navios Logistics’ and Navios Containers’ debt willlimit funds otherwise available for our respective working capital, capital expenditures, vessel acquisitions and other purposes. As a result of theseobligations, the current liabilities us, Navios Logistics or Navios Containers may exceed our respective current assets. We, Navios Logistics or NaviosContainers may need to take on additional debt as we expand our respective fleets or other operations, which could increase our respective ratio of debtto equity. The need to service our respective debt may limit funds available for other purposes, and our, Navios Logistics’ or Navios Containers’inability to service debt in the future could lead to acceleration of such debt, the foreclosure on assets such as owned vessels or otherwise negativelyaffect us.We may be unable to raise funds necessary to finance the change of control repurchase offer required by the indentures governing our outstandingnotes, other than the 2024 Notes, and our secured credit facilities.The indenture governing the 2022 Senior Secured Notes, the indenture governing the 2022 Notes, the indentures governing the 2022Logistics Senior Notes and our, Navios Logistics’ and Navios Containers’ secured credit facilities contain certain change of control provisions. If we,Navios Logistics or Navios Containers experience specified changes of control under our respective notes, we, Navios Logistics or Navios Containers,as the case may be, will be required to make an offer to repurchase all of our respective outstanding notes (unless otherwise redeemed), other than the2024 Notes, at a price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the repurchase date. The occurrence ofspecified events that would constitute a change of control may constitute a default under our, Navios Logistics’ and Navios Containers’ secured creditfacilities. 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 creditfacilities or repurchasing the applicable notes.If volatility in the London InterBank Offered Rate, or LIBOR, occurs, or if LIBOR is replaced as the reference rate under our debt obligations, itcould affect our profitability, earnings and cash flow.LIBOR has historically been volatile, with the spread between LIBOR and the prime lending rate widening significantly at times. Theseconditions are the result of the disruptions in the international credit markets. Because the interest rates borne by our outstanding indebtednessfluctuate with changes in LIBOR, if this volatility were to occur, it would affect the amount of interest payable on our debt, which in turn, could havean adverse effect on our profitability, 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, there isuncertainty relating to the LIBOR calculation process, which may result in the phasing out of LIBOR in the future. As a result, lenders have insisted onprovisions that entitle the lenders, in their discretion, to replace published LIBOR as the base for the interest calculation with their cost-of-funds rate.Such provisions could significantly increase our lending costs, which would have an adverse effect on our profitability, earnings and cash flow.In addition, the banks currently reporting information used to set LIBOR will likely stop such reporting after 2021, when their commitmentto reporting information ends. The Alternative Reference Rate Committee, or “Committee”, a committee convened by the United States FederalReserve that includes major market participants, has proposed an alternative rate to replace U.S. Dollar LIBOR: the Secured Overnight Financing Rate,or “SOFR.” The impact of such a transition away from LIBOR would be significant for us because of our substantial indebtedness. 36 Table of ContentsThe market values of our vessels, which have declined from historically high levels, may fluctuate significantly, which could cause us to breachcovenants in 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 loss of vessels would significantly decrease our ability to generate positive cash flow from operations and, therefore, service our debt. In addition,if the book value 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 Logistics and Navios Containers may be subject to similar ramifications under its credit facilities if the market values of its owned vesselsdecrease.In addition, as vessels grow older, they generally decline in value. We will review our vessels for impairment whenever events or changesin circumstances indicate that the carrying amount of the assets may not be recoverable. We review certain indicators of potential impairment, such asundiscounted projected operating cash flows expected from the future operation of the vessels, which can be volatile for vessels employed on short-term charters or in the spot market. Any impairment charges incurred as a result of declines in charter rates would negatively affect our financialcondition and results of operations. In addition, if we sell any vessel at a time when vessel prices have fallen and before we have recorded animpairment adjustment to our financial statements, the sale may be at less than the vessel’s carrying amount on our financial statements, resulting in aloss and a reduction in earnings.We 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 needadditional financing to cover all or a portion of the purchase prices. We intend to cover the cost of such items with new debt collateralized by thevessels 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 our senior secured credit facility, the indentures or other debt, may make it more difficult to obtain such financing byimposing restrictions on what we can offer as collateral.We have substantial equity investments in six companies, four 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, 2018, we had a 63.8% ownership interest in Navios Logistics, and, as a result, Navios Logistics is a consolidatedsubsidiary. As such, the income and losses relating to Navios Logistics and the indebtedness and other liabilities of Navios Logistics are shown in ourconsolidated financial statements. 37 Table of ContentsOn June 8, 2017, Navios Maritime Containers Inc. completed a private placement in which Navios Holdings invested $5.0 million. NaviosMaritime Containers Inc. registered its shares on the Norwegian Over-The-Counter Market (N-OTC) on June 12, 2017 under the ticker “NMCI”. OnNovember 30, 2018, Navios Maritime Containers Inc. was converted into a limited partnership. In connection with the conversion, Navios MaritimeContainers GP LLC, a Republic of the Marshall Islands limited liability company and wholly-owned subsidiary of Navios Holdings, was admitted asNavios Containers’ general partner and holds a non-economic interest that does not provide the holder with any rights to profits or losses of, ordistribution by, the partnership. As a result of holding the general partner interest, control was obtained by Navios Holdings. As of that date, NaviosHoldings obtained control over Navios Containers and consequently the results of operations of Navios Containers are consolidated under NaviosHoldings. As such, the income and losses relating to Navios Containers for the period from November 30, 2018 (date of obtaining control) toDecember 31, 2018 and the indebtedness and other liabilities of Navios Containers for the year ended December 31, 2018 are shown in ourconsolidated financial statements. As of December 31, 2018, Navios Holdings had a 3.7% ownership interest in Navios Containers.We also have substantial equity investments in two public companies that are accounted for under the equity method — NaviosAcquisition and Navios Partners. As of December 31, 2018, we held 32.8% of the voting stock and 35.8% of the economic interest of NaviosAcquisition and 20.0% of the equity interest in Navios Partners (including a 2.0% general partner interest). As of such date, the carrying value of ourinvestments in these two affiliated companies amounted to $79.7 million.In addition to the value of our investment, we receive dividend payments relating to our investments. As a result of our investment, infiscal year 2018, we received $5.8 million in dividends from Navios Acquisition and $2.1 million dividends from Navios Partners. Furthermore, wereceive management and general and administrative fees from Navios Acquisition and Navios Partners, which amounted to $101.8 million and$78.2 million, respectively, in fiscal year 2018.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, 2018, NaviosHoldings portion 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”)and had economic interests of 47.5%, 47.5% and 5.0%, respectively and voting interests of 50%, 50% and 0%, respectively. As of December 31, 2018,Navios Holdings portion of the Navios Term Loans II (as defined herein) relating to Navios Europe II was $6.7 million.Our ownership interest in Navios Logistics, Navios Containers, Navios Acquisition, Navios Partners, Navios Europe I, Navios Europe II,and the reflection of such companies (or the investment relating thereto) on our balance sheets and any income generated from or related to suchcompanies are subject to a variety of risks, including risks relating to the respective business of Navios Logistics, Navios Containers, NaviosAcquisition, Navios Partners, 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 risks may negatively affect our financial condition.We evaluate our investments in Navios Acquisition, Navios Partners, Navios Europe I and Navios Europe II for “other-than-temporaryimpairment” (“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 thecarrying 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, 2018, the Company considered the decline in fair value of its investment in Navios Partners as “other-than-temporary”and therefore recognized a loss of $55.5 million in the accompanying consolidated statement of comprehensive (loss)/income.As of December 31, 2018 and 2017, management considers the decline in the market value of its investment in Navios Acquisition to betemporary. However, there is the potential for future impairment changes relative to this security if its respective fair value does not recover and anOTTI analysis indicates such write down is necessary, which may have a material adverse impact on our results of operations in the period recognized.During the year ended December 31, 2017, we did not recognize any impairment loss in earnings.During the year ended December 31, 2016, the Company considered the decline in fair value of its investment in Navios Partners andNavios Acquisition as “other-than-temporary” and therefore, recognized a loss of $228.0 million in the accompanying consolidated statement ofcomprehensive (loss)/income. 38 Table of ContentsDuring each of the years ended December 31, 2016 and 2015, the Company considered the decline in fair value of the shares of Korea LineCorporation (“KLC”) 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. The respective loss was included within the caption “Other expense” in the accompanying consolidatedstatement 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 capacityof its grain port, including the loading and unloading operations, as well as the space in silos is exceeded, which could materially adversely affect itsoperations and revenues.A significant portion of Navios Logistics’ grain port business is derived from handling and storage of soybeans and other agriculturalproducts produced in the Hidrovia, mainly during the season between April and September. This seasonal effect could, in turn, increase the inflow andoutflow of barges 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 abilityto satisfy the increased demand. Inability to provide services in a timely manner may have a negative impact on its clients’ satisfaction and result inloss of existing contracts 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 couldmaterially and adversely affect its revenues.In each of Navios Logistics’ businesses, a significant part of its revenues from a small number of customers. Navios Logistics expects that asmall number of customers will continue to generate a substantial portion of its revenues for the foreseeable future. For the year ended December 31,2018, its three largest customers, Vale International S.A. (“Vale”), Cammesa S.A. (“Cammesa”) and Axion Energy Paraguay S.A. (“Axion Energy”),accounted for 32.0%, 10.8% and 10.2% of its revenues, respectively, and its five largest customers accounted for approximately 65.4% of our revenues.For the year ended December 31, 2017, Navios Logistics’ three largest customers, Vale, YPF S.A. (“YPF”) and Axion Energy, accounted for 20.3%,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’ three largest customers, Vale, Axion Energy and Cammesa, accounted for 28.0%, 13.8% and 11.5% of itsrevenues, respectively, and its five largest customers accounted for approximately 67.4% of its revenues. In addition, some of Navios Logistics’customers, including many of its most significant customers, operate their own vessels and/or barges as well as port terminals. These customers maydecide to cease or reduce the use of its services for various reasons, including employment of their own vessels or port terminals as applicable. The lossof any of its significant customers, including its large take-or-pay customers or the change of the contractual terms of any one of its most significanttake-or-pay contracts or any significant dispute with one of these customers could materially adversely affect its financial condition and our results ofoperations.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 finda replacement contract, or if a customer exercises certain rights to terminate the contract, Navios Logistics could suffer a loss of revenues that couldmaterially adversely 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, disagreementswith Navios 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 islost or damaged 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. 39 Table of ContentsNavios Logistics could also become involved in legal disputes with customers, including but not limited to Navios Logistics’ long-termtake-or pay customers, relating to its contracts, be it through litigation, arbitration or otherwise, which could lead to delays in, or suspension ortermination of its take-or-pay contracts or others and result in time-consuming, disruptive and expensive litigation or arbitration. If such contracts aresuspended for an extended period of time, or if a number of Navios Logistics’ material contracts are terminated or renegotiated, its financial conditionand results of operations could be materially adversely affected. Even if Navios Logistics prevail in legal disputes relating to its customer contracts,which could entitle it to compensation, Navios Logistics cannot assure you that it would receive such compensation on a timely basis or in an amountthat would fully compensate Navios Logistics for its losses.Vale represents a significant portion of Navios Logistics’ revenue, and the fulfilment of their obligations under the in-force agreements with NaviosLogistics, and their inability or unwillingness to honor these obligations could significantly reduce Navios Logistics’ revenues and cash flow.Vale’s payments to Navios Logistics represent a significant source of its revenue for Navios Logistics. Reductions in the demand for or theoversupply of iron ore would place Vale under financial pressure and may increase the likelihood of Vale being unable or unwilling to pay NaviosLogistics contracted rates or renew contracts upon termination.If Vale were to terminate or not renew one of their contracts, Navios Logistics may be unable to enter into new contracts under similarlyfavorable terms or at all. Also, Navios Logistics will not receive any revenues from such vessels while they are un-chartered, but will still be required topay expenses necessary to maintain and insure the pushboat and barges.The loss of any of Navios Logistics’ charterers, time charters or vessels, or a decline in payments under its time charters, could have amaterial adverse effect on Navios Logistics business, results of operations and financial condition, as well as its cash flows, including cash available fordistributions to Navios Logistics’ shareholders, or its ability to continue to service Navios Logistics’ indebtedness.In addition, the ability and willingness of Vale to perform its obligations under the agreements with charter parties and the iron ore portservice contract will depend upon a number of factors that are beyond Navios Logistics’ control and may include, among other things, generaleconomic conditions, the state of the capital markets, the condition of the commodities industry and charter hire rates. Should Vale fail to honor itsobligations under the agreements with Navios Logistics, we could sustain significant losses, which in turn could have a material adverse effect onNavios Logistics’ business, results of operations and financial condition, as well as its cash flows. Notwithstanding the foregoing, Navios Logistics’contracts have dispute resolution clauses and protections that it may seek to enforce in such events. For example, on June 10, 2016, Navios Logisticsinitiated arbitration proceedings against Vale pursuant to the dispute resolution provisions of the service contract relating to the iron ore port facilityin Nueva Palmira. On December 20, 2016, the arbitration tribunal ruled that the Vale port contract remains in full force and effect, and if Vale were tofurther repudiate or renounce the contract, Navios Logistics may elect to terminate the contract and be entitled to damages calculated by reference toguaranteed volumes and agreed tariffs for the remaining period of the contract. As of the date hereof, no further claim has been made or received fromVale. Any litigation or arbitration proceeding would be costly and time consuming and may result in the deterioration of Navios Logistics’ commercialrelationships with Vale.Navios Logistics’ business can be affected by adverse weather conditions, effects of climate change and other factors beyond its control, that canaffect production 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 adverselyaffecting navigability 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 limit its ability to effectively transport cargo on the rivers. The possible effects of climate change, such as floods, droughts or increased stormactivity, could similarly affect the demand for its services or its operations. 40 Table of ContentsFor 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 areduction in the market value of its ports, barges and pushboats that operate in the region. These barges and pushboats are designed to operate in wideand relatively calm rivers, of which there are only a few in the world. If it becomes difficult or impossible to operate profitably Navios Logistics’ bargesand pushboats in the Hidrovia and Navios Logistics is forced to sell them to a third party located outside of the region, there is a limited market inwhich it would be able to sell these 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 affectits results of operations and financial condition.Navios Logistics’ capital expenditures during 2016, 2017 and 2018 were $91.2 million, $46.5 million and $19.6 million, respectively,mainly used to acquire and/or pay installments for among others one newbuilding estuary tanker vessel, three pushboats and to expand NaviosLogistics’ port terminal operations through the construction of an iron ore port terminal facility and the development of a new upriver terminal. Inorder to follow its current strategy for growth, Navios Logistics will need to fund future asset or business acquisitions, increase working capital levelsand increase capital expenditures.In the future, Navios Logistics will also need to make capital expenditures required to maintain its current ports, fleet and infrastructure.Cash generated from its earnings may not be sufficient to fund all of these measures. Accordingly, Navios Logistics may need to raise capital throughborrowings or the sale of debt or equity securities. Navios Logistics’ ability to obtain bank financing or to access the capital markets for futureofferings may be limited by its financial condition at the time of any such financing or offering, as well as by adverse market conditions resulting from,among other things, general economic conditions and contingencies and uncertainties that are beyond its control. If Navios Logistics fails to obtainthe funds necessary for capital expenditures required to maintain its ports, fleet and infrastructure, it may be forced to take vessels out of service orcurtail operations, which could materially harm its revenues and profitability. If Navios Logistics fails to obtain the funds that might be necessary toacquire new vessels, expand its existing infrastructure, or increase its working capital or capital expenditures, Navios Logistics might not be able togrow its business and its earnings could suffer. Furthermore, despite covenants under the indenture governing the 2022 Logistics Senior Notes andTerm Loan B Facility and the agreements governing its other indebtedness, Navios Logistics will be permitted to incur additional indebtedness, whichwould limit cash available for working capital, and to service its indebtedness.Navios Logistics owns and operates an up-river port terminal in San Antonio, Paraguay that it believes is well-positioned to become a hub forindustrial development based upon the depth of the river in the area and the convergence between land and river transportation. If the port does notbecome a hub for 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 convergencebetween land and river transportation make this port well-positioned to become a hub for industrial development. However, if the location is notdeemed to be advantageous, or the use of the river or its convergence with the land is not fully utilized for transportation, then the port would notbecome a hub for industrial 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 or other equipment standards related to the age of the operational port equipment or vessels may require expenditures for alterations or theaddition of new equipment to Navios Logistics’ port equipment or vessels and may restrict the type of activities in which these ports or vessels mayengage. The failure to make capital expenditures to alter or add new equipment to our barges, pushboats or, vessels and/or ports may restrict the type ofactivities in which these barges, pushboats and, vessels and/or ports may engage and may decrease their operational efficiency and increase our costs.As charterers prefer newer vessels that are more fuel efficient than older vessels, the age of some of Navios Logistics’ vessels, barges and pushboats maymake them less attractive to charterers. Cargo insurance rates also increase with the age of a vessel, making older vessels less desirable to charterers aswell.Navios Logistics cannot assure you that, as its operational port equipment and vessels barges and pushboats age, market conditions willjustify those expenditures or enable Navios Logistics to operate them profitably during the remainder of their useful lives. If Navios Logistics sellssuch assets, it may 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, itsresults of operations could be materially adversely affected. 41 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, itmay face substantial delays, which could result in loss of revenues while waiting for those spare parts to be produced and delivered to NaviosLogistics.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 NaviosLogistics’ vessels and its ports (such as engine makers, propulsion systems makers, control system makers and others) may not have the spare partsneeded available immediately (or off the shelf) and may have to produce them when required. If this was the case, Navios Logistics vessels and portsmay be unable to operate while waiting for such spare parts to be produced, delivered, installed and tested, resulting in a substantial loss of revenuesfor Navios Logistics.As Navios Logistics expands its business, it may have difficulty managing its growth, including the need to improve its operations and financialsystems, staff and crew or to receive required approvals to implement its expansion projects. If Navios Logistics cannot improve these systems,recruit suitable employees 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 complementarybusinesses. The expansion and acquisition of new land or addition of vessels to its fleet will impose significant additional responsibilities on itsmanagement and staff, and may require Navios Logistics to increase the number of its personnel. Navios Logistics will also have to increase itscustomer base to provide continued activity 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 in Brazil, and Uruguay where it plans to develop or expand its port facilities. In order to complete theseprojects, however, Navios Logistics needs to receive required authorization from several authorities. If these authorities deny its request forauthorization, or if existing authorizations are revoked, Navios Logistics will not be able to proceed with these projects.Growing any business by acquisition presents numerous risks. Acquisitions expose Navios Logistics to the risk of successor liabilityrelating to actions involving an acquired company, its management or contingent liabilities incurred before the acquisition. The due diligence NaviosLogistics conducts in connection with an acquisition, and any contractual guarantees or indemnities that it receives from the sellers of acquiredcompanies or assets may not be sufficient to protect it from, or compensate it for, actual liabilities. Any material liability associated with an acquisitioncould adversely affect Navios Logistics’ reputation and results of operations and reduce the benefits of the acquisition. Other risks presented includedifficulty in obtaining additional qualified personnel, managing relationships with customers and suppliers and integrating newly acquired assets oroperations into existing infrastructures.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 its ability to identify acquisitions or access capital markets at an acceptable cost and negotiate favorable transaction terms. Navios Logisticscannot give any assurance that it will be successful in executing its growth plans or that it will not incur significant expenses and losses in connectiontherewith or that its acquisitions will perform as expected, which could materially adversely affect its results of operations and financial condition.Furthermore, because the volume 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 volumes shipped 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 NaviosLogistics implements its plan to expand, and its attempts to improve these systems may be ineffective. If Navios Logistics is unable to operate itsfinancial and operations systems effectively or to recruit suitable employees as it expands its operations, it may be unable to effectively control andmanage the substantially larger operation. Although it is impossible to predict what errors might occur as the result of inadequate controls, it isgenerally harder to manage a larger operation than a smaller one and, accordingly, more likely that errors will occur as operations grow. Additionalmanagement infrastructure and systems will be required in connection with such growth to attempt to avoid such errors. 42 Table of ContentsRising crew costs, fuel prices and other cost increases may adversely affect Navios Logistics’ profits.At December 31, 2018, Navios Logistics employed 384 land-based employees and 572 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 sizeof the global 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 isone of the largest operating expenses in Navios Logistics’ barge and cabotage businesses, when the revenue is contracted mainly by ton per cargoshipped. The prices for and availability of fuel may be subject to rapid change or curtailment, respectively, due to, among other things, new laws orregulations, interruptions in production by suppliers, imposition of restrictions on energy supply by government, worldwide price levels and marketconditions. Currently, most of Navios Logistics’ long-term contracts provide for the adjustment of freight rates based on changes in the fuel prices andcrew costs. Navios Logistics may be unable to include similar provisions in these contracts when they are renewed or in future contracts with newcustomers. To the extent Navios Logistics’ contracts do not pass-through changes in fuel prices to its clients, Navios Logistics will be forced to bear thecost of fuel price increases. Navios Logistics may hedge in the futures market all or part of its exposure to fuel price variations. Navios Logistics cannotassure you that it will be successful in hedging its exposure. In the event of a default by Navios Logistics’ contractual counterparties or othercircumstance affecting their performance under a contract, Navios Logistics may be subject to exposure under, and may incur losses in connectionwith, its hedging instruments, if any. In certain jurisdictions, the price of fuel is affected by high local taxes and may become more expensive thanprevailing international prices. Navios Logistics may not be able to pass onto its customers the additional cost of such taxes and may suffer losses as aconsequence of such inability. Such increases in crew and fuel costs may materially adversely 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 greaterresources.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 the case of transits there are other companies operating in the river system that are able to offer services similar to Navios Logistics. With respect toexports, its competitors are Montevideo Port in Montevideo and Ontur and TGU in Nueva Palmira. The main competitor of its liquid port terminal inParaguay is Petropar, a Paraguayan state-owned entity. Other competitors include Copetrol, TLP, Petrobras and Trafigura Pte Ltd.Navios Logistics faces competition in its barge and cabotage businesses with transportation of oil and refined petroleum products fromother independent ship owners and from vessel operators. The charter markets in which its vessels compete are highly competitive. Key competitorsinclude the successor of Ultrapetrol Bahamas Ltd., Hidrovias do Brasil, Interbarge, P&O, Imperial Shipping and Fluviomar. In addition, some of itscustomers, including ADM, International S.A. (“Cargill”), Louis Dreyfus Holding B.V. (“Louis Dreyfus”) and Vale, have some of their own dedicatedbarge capacity, which they can 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 truck and rail. These companies and other smaller entities are regular competitors of Navios Logistics in its primarytrading areas. Competition is primarily based on prevailing market contract rates, vessel location and vessel manager know-how, reputation andcredibility.Navios Logistics’ competitors may be able to offer their customers lower prices, higher quality service and greater name recognition thanNavios Logistics 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 spotand period 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,have developed and are implementing two basic tools: (a) the Ship Inspection Report Program (“SIRE”) and (b) the Tanker Management and SelfAssessment (“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 oilmajor when a commercial need exists. 43 Table of ContentsBased upon commercial needs, there are three levels of assessment used by the oil majors: (a) terminal use, which will clear a vessel to callat one of 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 foruse for an extended period of time. While for terminal use and voyage charter relationships, a ship inspection and the operator’s TMSA will besufficient for the evaluation to be undertaken, a term charter relationship also requires a thorough office audit. An operator’s request for such an audit isby no means a guarantee one will be performed; it will take a long record of proven excellent safety and environmental protection on the operator’spart as well as high commercial interest on the part of the oil major to have an office audit performed. If Navios Logistics fails to clear the vettingprocesses of the oil majors, it could 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, 2018, 60% of its cabotage fleet and 26% of itsbarge fleet on a dwt tons basis was employed under time charter or COA contracts. The remaining percentage of its barge fleet and cabotage fleet wereemployed in the spot market. The spot charter market can be competitive and freight rates within this market may be volatile with the timing andamount of fluctuations in spot rates being difficult to determine. Longer-term contracts provide income at pre-determined rates over more extendedperiods of time. The cycles in its target markets have not yet been clearly determined but Navios Logistics expects them to exhibit significantvolatility as the South American markets mature. Navios Logistics cannot assure you that it will be successful in keeping its fleet fully employed inthese short-term markets, or that future spot rates will be sufficient to enable such fleet to be operated profitably, as spot rates may decline below theoperating cost of vessels. A significant decrease in spot market rates or its inability to fully employ its fleet by taking advantage of the spot marketwould result in a reduction of the incremental revenue received from spot chartering and could materially adversely affect its results of operations, andoperating cash flow.Certain 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 activitiesto those conducted by Navios Logistics. In addition, certain of Navios Logistics’ directors are also directors of shipping companies and they may entersimilar businesses in the future. These other affiliations and business activities may give rise to certain conflicts of interest in the course of suchindividuals’ affiliation with Navios Logistics. Although Navios Logistics does not prevent its directors, officers and principal stockholders fromhaving such affiliations, Navios Logistics uses its best efforts to cause such individuals to comply with all applicable laws and regulations inaddressing 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 such time 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 managementpersonnel and other 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 retainthem. In particular, many members of its senior management team, including its Chairman, its Chief Executive Officer, its Chief Financial Officer, itsChief Operating Officers and its Chief Commercial Officer, have extensive experience in the logistics and shipping industries. If Navios Logistics wasto lose their services for any reason, it is not clear whether any available replacements would be able to manage its operations as effectively. The loss ofany of the members of its management team could impair Navios Logistics’ ability to identify and secure vessel contracts, to maintain good customerrelations and to otherwise manage its business, which could have a material adverse effect on its financial performance and its ability to compete.Navios Logistics does not maintain key man insurance on any of its officers. Further, the efficient and safe operation of its fleet and ports requiresskilled and experienced crew members and employees. Difficulty in hiring and retaining such crew members and employees could adversely affect itsresults of operations. 44 Table of ContentsRisks 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 onNavios Logistics. Navios Logistics cannot provide any assurance that future economic, social and political developments in Argentina, over which ithas no control, will not impair its business, financial condition or results of operations, the guarantees or the market price of the 2022 Logistics SeniorNotes.The future economic and political environment of Argentina is uncertain.Since assuming office on December 10, 2015, the Macri administration has announced several economic and policy reforms, including,foreign exchange, foreign trade and infrastructure. The Macri Administration has further settled claims with substantially all of the holdoutbondholders who had not previously participated in Argentina’s sovereign debt restructurings (in terms of claims) and regained access to theinternational capital markets, issuing several new series of sovereign bonds. On May 7, 2018, the Argentine government subscribed a stand-byagreement with the International Monetary Fund (“IMF”), whereby the IMF granted a Stand-By Loan to Argentina for an amount of up to 50.0 billionfor a term of up to 36 months. The total Stand-By Loan was increased for an amount of up to approximately $56.3 billion.As of the date hereof, the impact that these measures and any future measures taken by the current administration will have on theArgentine economy cannot be predicted. In particular, Navios Logistics has no control over the implementation of the reforms to the regulatoryframework that governs its operations and cannot guarantee that these reforms will be implemented or implemented in a manner that will benefitNavios Logistics’ business. The failure of these measures to achieve their intended goals could adversely affect the Argentine economy, which, in turnmay have an adverse effect on Navios Logistics’ financial condition and results of operations.The continuing inflation may have material adverse effects on the Argentine economy.Over the last few years, the Argentine government has implemented certain programs aimed at controlling inflation and monitoring theprices of many goods and services, including price agreements between the Argentine government and private sector companies.On December 27, 2017, the Central Bank updated its inflation target regime by adopting the inflation targets set by the Ministry of theTreasury for the next three years, including targets of 15% for 2018, 10% for 2019 and 5% by the end of 2020. However, such forecasts revealed to beinaccurate: inflation reached a rate of 47.6% for the year 2018.A high inflation economy could undermine Argentina’s cost competitiveness abroad if not offset by a devaluation of the Argentine peso,which could also negatively affect economic activity and employment levels. While most of the client contracts of Navios Logistics’ Argentinesubsidiaries are denominated in U.S. dollars, freight under those contracts is collected in Argentine pesos at the prevailing exchange rate. Thesecontracts also include crew cost adjustment terms. Uncertainty about future inflation may contribute to slowdown or contraction in economic growth.Argentine inflation rate volatility makes it impossible to estimate with reasonable certainty the extent to which activity levels and results of operationsof Navios Logistics’ Argentine subsidiaries 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 maydo so in the future, which could prevent Navios Logistics’ Argentine subsidiaries from transferring funds for the payment of the 2022 LogisticsSenior Notes or the related guarantees.Controls and restrictions may be imposed in the future, and could impair our ability to transfer funds generated by Navios Logistics’Argentine operations in U.S. dollars outside Argentina to Navios Logistics for the payment of its indebtedness. In addition, any other restrictions orrequirements that may be imposed in the future, expose Navios Logistics to the risk of losses arising from fluctuations in the exchange rate of theArgentine peso. 45 Table of ContentsThe Argentine government has made certain changes to its tax rules that affected Navios Logistics’ operations in Argentina in the past, and couldfurther increase the fiscal burden on its operations in Argentina in the future.If the Argentine government decides to alter the tax regime in Argentina, its results of operations and financial condition could bematerially 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 tradingpartners. A significant decline in the economic growth of any of Argentina’s major trading partners (including Brazil, the European Union, China andthe United States) could have a material adverse impact on Argentina’s balance of trade and could adversely affect Argentina’s economic growth.Argentina may also be affected by other countries that have influence over world economic cycles. If interest rates rise significantly in developedeconomies, including the United States, emerging market economies, including Argentina, could find it increasingly challenging and expensive toborrow capital and refinance 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 governmentmade an offer to compensate Repsol YPF for around $5.0 billion, which was accepted by the Board of Directors and shareholders of Repsol YPF andconfirmed by the Argentine Congress. Although the current administration has not implemented or advocated any nationalization or expropriationmeasures, similar measures, such as mandatory renegotiation or modification of existing contracts, new taxation policies, changes in laws, regulationsand policies affecting foreign trade, investment, among others, that may be adopted by the Argentine government in the future could adversely affectNavios 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 ZoneDivision of the Uruguayan Department of Trade 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-AddedTax and Wealth Tax. Other benefits that Navios Logistics’ subsidiaries enjoy are simplified corporate law provisions, the ability to negotiatepreferential public utility rates with government agencies and government guarantees of maintenance of such benefits and tax exemptions. Free tradezone users do not need to pay import and export tariffs to introduce goods from abroad to the free trade zone, to transfer or send such goods to otherfree trade zones in Uruguay or send them abroad. However, Navios Logistics’ subsidiaries may lose all the tax benefits granted to them if they breach orfail to comply with the free trade zone contracts or framework. The right of the Uruguay Department of Trade—Free Zones Division to early terminatethe Free Zone User Agreement is subject to an explanation on the specific factual and legal reasons in which such decision is based. Generic decisionswill not be admissible, just like not all breaches by the Free Zone User will entitle the Uruguayan Department of Trade—Free Zones Division to earlyterminate the Free Zone User Agreement. Such a decision must therefore be proportional to the noncompliance’s nature. Under the Free ZoneAgreement, the following are some of the causes under which the Uruguay Department of Trade—Free Zones Division may terminate the Free ZoneUser Agreement: the non fulfilment of the obligations to improve the land, as per the terms of each Free Zone User Agreement; material breaches theterms of the Free Zone User Agreement; violation of labor laws; failure to pay agreed fees to the Uruguayan authorities; failure to make required socialsecurity contributions requirements; or the commission of illegal acts or acts expressly forbidden by the Free Zone User Agreement. Should CNSA orCorporacion Navios Granos S.A. (“Granos”) lose their Free Zone User status, they will not be able to operate their terminal facilities. 46 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 forthe foreseeable 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,including currency 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 authoritiesassociated with 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 areheadquartered in South America, and a general decline in the economies of South America, or the instability of certain South American countries andeconomies, could materially adversely affect Navios Logistics.Navios Logistics’ business in emerging markets requires it to respond to rapid changes in market conditions in these countries. NaviosLogistics’ overall success in international markets depends, in part, upon its ability to succeed in different legal, regulatory, economic, social andpolitical conditions. Navios Logistics may not continue to succeed in developing and implementing policies and strategies that will be effective ineach location where it does business. Furthermore, the occurrence of any of the foregoing factors may have a material adverse effect on its business andresults 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. There is no guarantee that such an initiative will be successful or that each of thegovernments involved in the initiative will follow through on its intentions to participate and if such regional initiative is unsuccessful, it could havea material adverse impact on Navios Logistics’ results of operations.The governments of Argentina, Bolivia, Brazil, Paraguay and Uruguay have entered into a treaty that commits each of them to participatein a regional initiative to integrate the region’s economies, a central component of which is water transportation in the Hidrovia. Although NaviosLogistics believes that this regional initiative of expanding navigation on the Hidrovia river system will result in significant economic benefits, thereis no guarantee that such an initiative will ultimately be successful, that each country will follow through on its intention to participate, or that thebenefits of this initiative will match Navios Logistics’ expectations of continuing growth in the Hidrovia or reducing transportation costs. If theregional initiative is unsuccessful, Navios Logistics’ results of operations could be materially and adversely affected. 47 Table of ContentsChanges in rules and regulations with respect to cabotage or their interpretation in the markets in which Navios Logistics’ operate could have amaterial adverse 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 regulationson a region by region basis. Its operations currently benefit from these rules and regulations or their interpretation. For instance, preferential treatmentis extended in Argentine cabotage for Argentine flagged vessels or foreign flagged vessels operated by local established operators with sufficientArgentine tonnage under one to three years’ licenses, including its Argentine cabotage vessels. Changes in cabotage rules and regulations or in theirinterpretation may have an adverse effect on Navios Logistics’ current or future cabotage operations, either by becoming more restrictive (which couldresult in limitations to the utilization of some of its vessels in those trades) or less restrictive (which could result in increased competition in thesemarkets).Because Navios Logistics generates the majority of its revenues in U.S. dollars but incurs a significant portion of its expenses in other currencies,exchange rate 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 levelsof foreign currency risk, its revenues are predominantly U.S. dollar-denominated at the present. Additionally, Navios Logistics’ South Americansubsidiaries transact certain operations in Uruguayan pesos, Paraguayan guaranies, Argentinean pesos and Brazilian reals; however, all of thesubsidiaries’ primary cash flows are U.S. dollar-denominated. Currencies in Argentina and Brazil have fluctuated significantly against the U.S. dollar inthe past. As of December 31, 2018, 2017 and 2016 approximately 48.6%, 60.3% and 61.1%, respectively, of its expenses were incurred in currenciesother than U.S. dollars. Transactions in currencies other than the functional currency are translated at the exchange rate in effect at the date of eachtransaction. Expenses incurred in foreign currencies 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. Aspart of its overall risk management policy, Navios Logistics may attempt to hedge these risks in exchange rate fluctuations from time to time butcannot guarantee it will be successful in these hedging activities. Future fluctuations in the value of local currencies relative to the U.S. dollar in thecountries in which it operates may occur, and if such fluctuations were to occur in one or a combination of the countries in which it operates, its resultsof operations or financial condition could be materially adversely 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 Internal Revenue Code, or the Code, 50.0% of the gross shipping income of a vessel owning or chartering corporation that isattributable to transportation that either begins or ends, but that does not both begin and end, in the U.S. is characterized as U.S.-source shippingincome. U.S.-source shipping income generally is subject to a 4.0% U.S. federal income tax without allowance for deduction or, if such U.S.-sourceshipping income is effectively connected with the conduct of a trade or business in the U.S., U.S. federal corporate income tax (the statutory ratepresently is 21.0%) as well as a branch profits tax (presently imposed at a 30.0% rate on effectively connected earnings), unless that corporationqualifies for exemption from tax under Section 883 of the Code. We believe that we and each of our subsidiaries qualifies and will continue to qualifyfor the foreseeable future for this statutory tax exemption under Section 883 with respect to our U.S.-source shipping income, provided that ourcommon stock continues to be listed on the NYSE and represents more than 50.0% of the total combined voting power of all classes of our stockentitled to vote and of the total value of our stock, and less than 50.0% of our common stock is owned, actually or constructively under specified stockattribution rules, on more than half the number of days in the relevant year by persons who each own 5.0% or more of the vote and value of ourcommon stock. Our ability to qualify for the exemption at any given time will depend upon circumstances related to the ownership of our commonstock at such time and thus are beyond our control. Furthermore, our board of directors could determine that it is in our best interests to take an actionthat would result in this tax exemption not applying to us in the future. Accordingly, we can give no assurance that we would qualify for the exemptionunder Section 883 with respect to any such income we earn. If we were not entitled to the Section 883 exemption for any taxable year, we generallywould be subject to a 4.0% U.S. federal gross income tax with respect to our U.S.-source shipping income or, if such U.S. source shipping income wereeffectively connected with the conduct of a trade or business in the U.S., U.S. federal corporate income tax as well as a branch 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 cash flow could be adverselyaffected. Please see the discussion under “Taxation—Material U.S. Federal Income Tax Considerations—U.S. Federal Income Taxation of theCompany—Taxation of Our Shipping Income.” 48 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 ofNavios Holdings, and the subsequent downstream merger of ISE with and into Navios Holdings took place on August 25, 2005. Navios Holdings isincorporated under the laws of the Republic of the Marshall Islands. ISE received an opinion from its counsel for the merger transaction that, whilethere is no direct authority that governs the tax treatment of the transaction, it was more likely than not that Navios Holdings would be taxed by theU.S. as a foreign corporation. Accordingly, we take the position that Navios Holdings will be taxed as a foreign corporation by the U.S. If NaviosHoldings were to be taxed as a 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 rateon our worldwide 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 incometax expense 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 taxlaws, treaties or regulations, or in the interpretation thereof, or in the valuation of our deferred tax assets, could result in a materially higher tax expenseor a higher effective tax rate on our worldwide earnings, and such change could be significant to our financial results. If any tax authority successfullychallenges our operational structure, intercompany pricing policies or the taxable presence of our key subsidiaries in certain countries, or if the terms ofcertain income tax treaties are interpreted in a manner that is adverse to our structure, or if we lose a material tax dispute in any country, our effectivetax rate on our worldwide earnings from our operations could increase substantially and our earnings and cash flows from these operations could bematerially adversely affected. For example, in accordance with the currently applicable Greek law, foreign flagged vessels that are managed by Greekor foreign ship management companies having established an office in Greece are subject to duties towards the Greek state, which are calculated on thebasis of the relevant vessel’s tonnage. The payment of said duties exhausts the tax liability of the foreign ship owning company and the relevantmanager against any tax, duty, charge or contribution payable 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 taxationwould result 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 toU.S. holders.A foreign corporation will be treated as a passive foreign investment company, or PFIC, for U.S. federal income tax purposes if either (1) atleast 75% of its gross income for any taxable year consists of certain types of “passive income” or (2) at least 50% of the quarterly average value of thecorporation’s assets produce or are held for the production of those types of “passive income.” For purposes of these tests, “passive income” includesdividends, interest, capital gains and rents (other than rents derived other than in the active conduct of a rental business). For purposes of these tests,income derived from the performance of services does not constitute “passive income.” U.S. stockholders of a PFIC are subject to a disadvantageousU.S. federal income tax regime with respect to the income derived by the PFIC, the distributions they receive from the PFIC and the gain, if any, theyderive from the sale or other disposition of their shares in the PFIC and additional 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, 2018 or for subsequent taxable years. Based upon our operations as described herein, our income from time charters should not be treatedas passive income for purposes of determining whether we are a PFIC. Accordingly, our income from our time chartering activities should notconstitute “passive income,” and the assets that we own and operate in connection with the production of that income should not constitute passiveassets. 49 Table of ContentsThere is substantial legal authority supporting this position consisting of case law and U.S. Internal Revenue Service, or IRS,pronouncements concerning the characterization of income derived from time charters and voyage charters as services income for other tax purposes.However, it should be noted that there is also authority, which characterizes time charter income as rental income rather than services income for othertax 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 oflaw could determine that we are a PFIC. In addition, no assurance can be given as to our current and future PFIC status, because such status requires anannual factual determination based upon the composition of our income and assets for the entire taxable year. The PFIC determination also depends onthe application of complex U.S. federal income tax rules concerning the classification of our income and assets for this purpose, and there are legaluncertainties involved in determining whether the income derived from our chartering activities and from our logistics activities constitutes rentalincome or income derived from the performance of 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. In addition, 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, we cannot assure you that the nature of our operations, or the nature or composition of ourincome or assets, will not change in the future, or that we can avoid PFIC 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 incometax consequences and certain information reporting requirements. Under the PFIC rules, unless those stockholders make an election available under theCode (which election could itself have adverse consequences for such stockholders, and which election may not be available if our common stock wereto cease to be 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, upon excess distributions and upon any gain from the disposition of their shares of common stock, as if the excess distribution or gainhad been recognized ratably over the stockholder’s holding period of the common stock. In addition, for each year during which we are treated as aPFIC and you actually or constructively own our common stock you generally will be required to file IRS Form 8621 with your U.S. federal income taxreturn to report certain information concerning your ownership of our common stock. Please see the discussion under “Taxation—Material U.S. FederalIncome 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, isTrust Company 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 all the shareholders of Navios Holdings, ISE acquired Navios Holdings through the purchase of all of the outstanding shares of common stock ofNavios Holdings. As a result of this acquisition, Navios Holdings became a wholly-owned subsidiary of ISE. In addition, on August 25, 2005,simultaneously with the acquisition of Navios Holdings, ISE effected a reincorporation from the State of Delaware to the Republic of the MarshallIslands through a downstream merger with and into its newly acquired wholly-owned subsidiary, whose name was and continued to be NaviosMaritime 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 aglobal, vertically integrated seaborne shipping, logistics company focused on the transport and transshipment of dry bulk commodities including ironore, coal and grain as well as containerships. For over 60 years, Navios Holdings has had in-house technical ship management expertise that hasworked 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,the main navigable river system in the region, and on cabotage trades along the eastern coast of South America. Navios Logistics is focused onproviding its customers integrated transportation, storage and related services through its port facilities, its large, versatile fleet of dry and liquid cargobarges and its product tankers. Navios Logistics serves the needs of a number of growing South American industries, including mineral and graincommodity providers as well as users of refined petroleum products. 50 Table of ContentsOn January 1, 2008, pursuant to a share purchase agreement, Navios Holdings contributed cash, and the authorized capital stock of itswholly-owned subsidiary Corporacion Navios Sociedad Anonima (“CNSA”) in exchange for the issuance and delivery of 63.8% of Navios Logistics’outstanding stock. Navios Logistics acquired all ownership interests in the Horamar Group (“Horamar”) in exchange for cash, and the issuance of36.2% of Navios Logistics’ outstanding stock. As of December 31, 2018, Navios Holdings owned 63.8% of Navios Logistics.Navios ContainersNavios Containers is a growth vehicle dedicated to the container sector of the maritime industry. On June 8, 2017, Navios MaritimeContainers Inc. completed a private placement and Navios Holdings invested $5.0 million. Navios Maritime Containers Inc. registered its shares on theNorwegian Over-The-Counter Market (N-OTC) on June 12, 2017 under the ticker “NMCI”. On November 30, 2018, Navios Maritime Containers Inc.was converted into a limited partnership. In connection with the conversion, Navios Maritime Containers GP LLC, a Republic of the Marshall Islandslimited liability company and wholly-owned subsidiary of Navios Holdings, was admitted as Navios Containers’ general partner and holds anon-economic interest that does not provide the holder with any rights to profits or losses of, or distribution by, the partnership. As a result of holdingthe general partner interest, control was obtained by Navios Holdings. As of that date, Navios Holdings obtained control over Navios Containers andconsequently the results of operations of Navios Containers are consolidated under Navios Holdings.On December 3, 2018, Navios Partners distributed approximately 2.5% of the outstanding equity of Navios Containers to the unitholdersof Navios Partners in connection with the listing of Navios Containers on the NASDAQ. As of December 31, 2018, Navios Holdings had a 3.7%ownership interest in Navios Containers.Affiliates (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 transportationservices of a wide range of dry cargo commodities including iron ore, coal, grain, fertilizer and also containers, chartering its vessels under medium tolong-term charters.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 certainagreements with Navios Partners: (a) a management agreement with Navios Partners pursuant to which Navios Shipmanagement Inc. (the “Manager”) ,a wholly-owned subsidiary of Navios Holdings, provides Navios Partners with commercial and technical management services; (b) an administrativeservices agreement with the Manager pursuant to which the Manager provides Navios Partners administrative services; and (c) an omnibus agreementwith Navios Partners, governing, among other things, when Navios Partners and Navios Holdings may compete against each other as well as rights offirst offer on certain dry bulk carriers.Since the formation of Navios Partners, Navios Holdings sold in total 12 vessels to Navios Partners (the Navios Hope, the Navios Apollon,the Navios Hyperion, the Navios Aurora II, the Navios Fulvia, the Navios Melodia, the Navios Pollux, the Navios Luz, the Navios Orbiter, the NaviosBuena Ventura, the Navios Sphera and the Navios Mars) and also sold the rights of Navios Sagittarius to Navios Partners. All vessels were sold inexchange of cash and 5,601,920 common units of Navios Partners in total.As of December 31, 2018, Navios Holdings’ interest in Navios Partners was 20.0% (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 (cleanand dirty) 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. Onthat date, Navios Holdings acquired control over Navios Acquisition, and consequently concluded a business combination had occurred andconsolidated the results of Navios Acquisition from that date until March 30, 2011. 51 Table of ContentsOn 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 turnreimbursed for reasonable costs and expenses; and (c) an omnibus agreement with Navios Acquisition and Navios Partners (the “Acquisition OmnibusAgreement”) in connection with the closing of Navios Acquisition’s vessel acquisition, governing, among other things, competition and rights of firstoffer on certain types of 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 ofnon-voting Series C Convertible Preferred Stock of Navios Acquisition and had 45.0% of the voting power and 53.7% of the economic interest inNavios Acquisition, since the preferred stock is considered, in substance, common stock for accounting purposes. From March 30, 2011, NaviosAcquisition has been considered as 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 of94,097,529 shares were issued. As part of these offerings, Navios Holdings purchased in private placements an aggregate of 46,969,669 shares ofNavios Acquisition common stock for $160.0 million. In February 2014, Navios Acquisition completed a public offering of 14,950,000 shares of itscommon stock.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 marketprices or in privately negotiated transactions. As of December 31, 2018, Navios Acquisition has repurchased its shares of common stock for a total costof approximately $7.1 million.On November 9, 2018, the Stockholders of Navios Acquisition approved a one-for-15 reverse stock split of all outstanding common stockshares of Navios Acquisition, which was effected on November 14, 2018.On December 13, 2018, Navios Acquisition completed the merger (the “Merger”) contemplated by the previously announced Agreementand Plan of Merger (the “Merger Agreement”), dated as of October 7, 2018, by and among Navios Acquisition, its direct wholly-owned subsidiaryNMA Sub LLC (“Merger Sub”), Navios Midstream and Navios Midstream Partners GP LLC (the “NAP General Partner”). Pursuant to the MergerAgreement, Merger Sub merged with and into Navios Midstream, with Navios Midstream surviving as a wholly-owned subsidiary of NaviosAcquisition.As of December 31, 2018, Navios Holdings’ ownership of the outstanding voting stock of Navios Acquisition was 32.8% and its economicinterest in Navios Acquisition was 35.8%.Navios 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 MarshallIslands and 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 withthe proceeds of senior loan facilities (the “Senior Loans I”) and loans aggregating to $10.0 million from Navios Holdings, Navios Acquisition andNavios Partners (in each case, in proportion to their economic interests in Navios Europe I) (collectively, the “Navios Term Loans I”) and (ii) theassumption of a junior participating loan facility (the “Junior Loan I”). In addition to the Navios Term Loans I, Navios Holdings, Navios Acquisitionand Navios Partners also made available to Navios Europe I revolving loans of up to $24.1 million to fund working capital requirements (collectively,the “Navios Revolving Loans I”). In December 2018, the amount of the Navios Revolving Loans I increased by $30.0 million.Refer also to “Item 5. Operating and Financial Review and Prospects” in “Recent Developments”. 52 Table of ContentsNavios 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 MarshallIslands and 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 through December 31, 2015, Navios Europe II acquired 14 vessels for aggregate consideration consisting of: (i) cash (which was funded with theproceeds of a senior loan facility (the “Senior Loans II”) and loans aggregating to $14.0 million from Navios Holdings, Navios Acquisition and NaviosPartners (in each case, in proportion to their economic interests in Navios Europe II) (collectively, the “Navios Term Loans II”) and (ii) the assumptionof a junior participating loan facility (the “Junior Loan II”). In addition to the Navios Term Loans II, Navios Holdings, Navios Acquisition and NaviosPartners will also make available to Navios 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.B. Business overviewIntroductionNavios Holdings is a global, vertically integrated seaborne shipping, logistics company focused on the transport and transshipment of drybulk commodities including iron ore, coal and grain as well as containerships. For over 60 years, Navios Holdings has had an in-house commercial shipmanagement expertise that has worked with producers of raw materials, agricultural traders and exporters, industrial end-users, ship owners, andcharterers. Navios Holdings’ current core fleet (excluding the Navios Logistics fleet and the Navios Containers fleet), the average age of which isapproximately 7.8 years, basis fully delivered fleet, consists of a total of 61 vessels, aggregating approximately 6.4 million dwt. Navios Holdings owns13 Capesize vessels (169,000-182,000 dwt), ten modern Ultra Handymax vessels (50,000-59,000 dwt), ten Panamax vessels (74,000-85,000 dwt) andone Handysize vessel. It also time charters-in and operates a fleet of two Ultra Handymax, one Handysize, 18 Panamax, and six Capesize vessels underlong-term time charters. Navios Holdings has options to acquire 22 time chartered-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, NaviosEurope I, Navios Europe II and Navios Containers.As of December 31, 2018, Navios Partners’ fleet was comprised of 33 drybulk vessels and five Container vessels. In each of October 2013,August 2014, February 2015, February 2016 and November 2017, the Company amended its existing management agreement with Navios Partners tofix 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 Panamaxvessel; (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 ofmore than TEU 8,000; and (vi) $8,750 daily rate per very large container vessel of more than TEU 13,000 through December 31, 2019. Drydockingexpenses under this agreement will be reimbursed by Navios Partners at cost at occurrence.As of December 31, 2018, Navios Acquisition’s fleet was comprised of 28 product and chemical tankers and 13 VLCC vessels. In each ofMay 2016 and May 2018, Navios Holdings amended its agreement with Navios Acquisition to fix the fees for ship management services of NaviosAcquisition owned fleet at a daily fee of (i) $6,500 per MR2 product tanker and chemical tanker vessel; (ii) $7,150 per LR1 product tanker vessel; and(iii) $9,500 per VLCC through May 2020. Drydocking expenses under this agreement will be reimbursed at cost at occurrence for all vessels.Following, the merger of Navios Midstream with Navios Acquisition completed on December 13, 2018, the management agreement also covers vesselsacquired.Navios Europe I’s fleet was comprised of five product tankers and five container vessels and management fees and drydocking expensesunder the management agreement will be reimbursed at cost at occurrence. Navios Europe II’s fleet was comprised of seven dry bulker and sevencontainer vessels and management fees and drydocking expenses under the management agreement will be reimbursed at cost at occurrence.As of December 31, 2018, Navios Containers’ fleet was comprised of 28 container vessels. The fee for the ship management servicesprovided by Navios Holdings is a daily fee of $6,100 per day for up to 5,500 TEU container vessels, $6,700 per day for above 5,500 TEU and up to8,000 TEU container vessels and $7,400 per day for above 8,000 TEU and up to 10,000 TEU container vessels. Drydocking expenses under thisagreement are reimbursed by Navios Containers at cost. 53 Table of ContentsNavios 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 averageage of approximately 7.8 years, basis fully delivered fleet that provides numerous operational advantages including more efficientcargo operations, lower insurance and vessel maintenance costs, higher levels of fleet productivity, and an efficient operating coststructure. • Pursuing an appropriate balance between vessel ownership and a long-term chartered-in fleet. Navios Holdings controls, througha combination of vessel ownership and long-term time chartered vessels, approximately 6.4 million dwt in tonnage, which, webelieve, makes Navios Holdings one of the largest independent dry bulk operators in the world. Navios Holdings’ ability, throughits long-standing relationships with various shipyards and trading houses, to charter-in vessels allows it to control additionalshipping capacity without the capital expenditures required by new vessel acquisition. In addition, having purchase options on 22time chartered vessels (including the purchase options of the vessels under bareboat contracts, expected to be delivered through2020) permits Navios Holdings to determine when is the most commercially opportune time to own or charter-in vessels. NaviosHoldings intends to monitor developments in the sales and purchase market to maintain the appropriate balance between ownedand long-term time chartered vessels. • Capitalize on Navios Holdings’ established reputation. Navios Holdings believes its reputation and commercial relationshipsenable it to obtain favorable long-term time charters, enter into the freight market and increase its short-term tonnage capacity tocomplement the capacity of its core fleet, as well as to obtain access to cargo freight opportunities through COA arrangements notreadily available to other industry participants. This reputation has also enabled Navios Holdings to obtain vessel acquisition termsas reflected in the purchase 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. NaviosHoldings uses its experience in the industry, sensitivity to trends, and knowledge and expertise in risk management to hedgeagainst, and in some 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 qualityof its service and safety record. Navios Holdings’ high standards for performance, reliability, and safety provide Navios Holdingswith an advantageous 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 (whether with a fixed rate or a floating rate based on a Baltic index or other commonlypublished index), whereby the vessel is hired out for a predetermined period but without any specification as to voyages to beperformed, 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 anddischarge ports within a stipulated time frame, but does not specify in advance which vessels will be used to perform thevoyages; and • The shipping industry uses fleet utilization to measure a company’s efficiency in finding suitable employment for its vesselsand minimizing the days its vessels are off-hire. At 99.6% as of December 31, 2018, Navios Holdings believes that it has oneof the highest fleet utilization rates in the industry. 54 Table of ContentsCompetitive AdvantagesControlling approximately 6.4 million dwt (excluding Navios Logistics and Navios Containers) in dry bulk tonnage, Navios Holdings isone of the largest independent dry bulk operators in the world. Management believes that Navios Holdings occupies a competitive position within theindustry in that its reputation in the global dry bulk markets permits it to enter into at any time, and take on spot, medium or long-term freightcommitments, depending on its view of future market trends. In addition, many of the long-term charter deals may be brought to the attention of NaviosHoldings prior to even being quoted in the open market. Even in the open market, Navios Holdings’ solid reputation allows it to take in large amountsof tonnage on a short, medium, or long-term basis on very short notice. This ability is possessed by relatively few ship owners and operators, and is adirect consequence of Navios Holdings’ market reputation for reliability in the performance of its obligations in each of its roles as a ship owner, COAoperator, and charterer. Navios Holdings, therefore, has much greater flexibility 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 institutionalrelationships, Navios Holdings has obtained long-term charter-in deals, with options to extend time charters and options to purchase the majority of thevessels. Through its established reputation and relationships, Navios Holdings has had access to opportunities not readily available to most otherindustry participants who lack Navios 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 inthe dry bulk 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, higherlevels of productivity, and efficient operating cost structures, as well as a competitive advantage over owners of older fleets,especially in the time charter market, where age, fuel economy and quality of a vessel are of significant importance in competing forbusiness; • A core fleet which has been chartered-in (some through 2030, assuming minimum available charter extension periods are exercised)on terms generally that allow Navios Holdings to charter-out the vessels at an attractive spread during strong markets and toweather down cycles in the market while maintaining low costs; • Strong commercial relationships with both freight customers and Japanese trading houses and ship owners, providing NaviosHoldings with 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 vesselsto subsequent shipping operations throughout the life of a vessel, including the superintendence of maintenance, repairs anddrydocking, 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 SouthAmerica; 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 NaviosHoldings’ reputation. 55 Table of ContentsShipping OperationsNavios Holdings’ Fleet. Navios Holdings controls a core fleet of 34 owned vessels and 27 chartered-in vessels (22 of which have purchaseoptions, including the purchase options of the vessels under bareboat contracts, expected to be delivered through 2020). The average age of the fleet is7.8 years, basis fully delivered fleet.Owned Fleet. Navios Holdings owns and operates a fleet comprised of ten modern Ultra Handymax vessels, 13 Capesize vessels, tenPanamax vessels and one Handysize vessel.Owned Vessels Vessel Name Vessel Type Year Built Deadweight(in metric tons) Navios Serenity Handysize 2011 34,690 Navios Vector Ultra Handymax 2002 50,296 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 Primavera Ultra Handymax 2007 53,464 Navios Ulysses Ultra Handymax 2007 55,728 Navios Celestial Ultra Handymax 2009 58,063 Navios Vega Ultra Handymax 2009 58,792 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 Equator Prosper Capesize 2000 171,191 Navios 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 Long-Term Fleet. In addition to the 34 owned vessels, Navios Holdings controls a fleet of six Capesize, 18 Panamax, two Ultra Handymax,and one Handysize vessels under long-term time charters (including five Panamax vessels to be delivered through the second quarter of 2020), havingan average age of approximately 3.3 years, basis fully delivered fleet. 56 Table of ContentsLong-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 Mercury Ultra Handymax 2013 61,393 Yes Navios Venus Ultra Handymax 2015 61,339 Yes Navios Marco Polo Panamax 2011 80,647 Yes Navios Southern Star Panamax 2013 82,224 Yes Sea Victory Panamax 2014 77,095 Yes Elsa S Panamax 2015 80,954 No Navios Amber Panamax 2015 80,994 Yes Navios Sky Panamax 2015 82,056 Yes Navios Coral Panamax 2016 84,904 Yes Navios Citrine Panamax 2017 81,626 Yes Navios Dolphin Panamax 2017 81,630 Yes Mont Blanc Hawk Panamax 2017 81,638 No Cassiopeia Ocean Panamax 2018 82,069 No Navios Gemini Panamax 2018 81,704 No(3) Navios Horizon I Panamax 2019 81,692 No(3) King Ore Capesize 2010 176,800 Yes Navios Koyo Capesize 2011 181,415 Yes Navios Obeliks Capesize 2012 181,415 Yes Dream Canary Capesize 2015 180,528 Yes Dream Coral Capesize 2015 181,249 Yes Navios Felix Capesize 2016 181,221 Yes Long-term Bareboat Chartered-in Fleet to be delivered Vessel Name Vessel Type DeliveryDate Deadweight(in metric tons) PurchaseOption (1) Navios Herakles I Panamax Q3 2019 81,000 Yes Navios Felicity I Panamax Q4 2019 81,000 Yes Navios Uranus Panamax Q4 2019 81,600 Yes Navios Galaxy II Panamax Q1 2020 81,600 Yes Navios Magellan II Panamax Q2 2020 81,000 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-standing relationships. Navios Holdings pays these ship owners daily rates of hire for such vessels, and then charters out these vessels to other parties,who pay Navios Holdings a daily rate of hire. Navios Holdings also enters into COAs pursuant to which Navios Holdings has agreed to carry cargoes,typically for industrial customers, who export or import dry bulk cargoes. Further, Navios Holdings enters into spot market voyage contracts, whereNavios Holdings is paid a rate per 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 forduration of less than 12 months. The number of short-term vessels varies from time to time. These vessels are not included in the “core fleet” of theCompany.Exercise of Vessel Purchase OptionsNavios Holdings has executed several purchase options comprising of seven Ultra Handymax, six Panamax and one Capesize vessels,which were delivered on various dates from November 30, 2005 until November 7, 2018. Navios Holdings currently has options to acquire 22chartered-in vessels currently in operation (including the purchase options of the vessels under bareboat contracts, expected to be delivered through2020). 57 Table of ContentsCommercial Ship Management: Commercial management of Navios Holdings’, Navios Partners, Navios Acquisition’s, Navios Europe I’s,Navios Europe II’s and Navios Containers’ fleet involves identifying and negotiating charter party employment for the vessels. In addition to itsinternal commercial ship management capabilities, Navios Holdings used the services of a former related party, Acropolis Chartering & Shipping Inc.(“Acropolis”), based in Piraeus, until the sale of its investment on December 6, 2018, as well as numerous third-party charter brokers, to solicit,research, and propose charters for its vessels. Charter brokers research and negotiate with different charterers, and propose charters to Navios Holdingsfor cargoes suitable for carriage by Navios Holdings’, Navios Partners, Navios Acquisition’s, Navios Europe I’s, Navios Europe II’s and NaviosContainers’ vessels. Navios Holdings then evaluates the employment opportunities available for each type of vessel and arranges cargo and countryexclusions, bunkers, loading and discharging conditions, and demurrage.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 alsoprovided such services to Navios Partners’, Navios Acquisition’s, Navios Europe I’s, Navios Europe II’s and Navios Containers’ vessels under the termsof the management agreements between the parties. Based in Piraeus, Greece, Monaco and Singapore, this operation is run by experiencedprofessionals who oversee every step of technical management, from the construction of the vessels to subsequent shipping operations throughout thelife 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 Europe I’s, Navios Europe II’s and Navios Containers’ fleet (i.e., once the vessel is chartered and being employed) bymonitoring their daily positions to ensure that the terms and conditions of the charters are being fulfilled.Financial Risk Management: Navios Holdings actively engages in assessing financial risks associated with fluctuating future freight rates,daily time charter hire rates, fuel prices, credit risks, interest rates and foreign exchange rates. Financial risk management is carried out under policiesapproved and guidelines established by the Company’s executive management. • Credit Risk. Navios Holdings closely monitors its credit exposure to charterers. Navios Holdings has established policies to ensurethat contracts are entered into with counterparties that have appropriate credit history. Counterparties and cash transactions arelimited to high quality credit collateralized corporations and financial institutions. Most importantly, Navios Holdings hasguidelines and policies that are designed to limit the amount of credit exposure. • Foreign Exchange Risk. Although Navios Holdings’ revenues are U.S. dollar-based, 18.9% of its expenses, related to its NaviosLogistics segment, are in Uruguayan pesos, Argentinean pesos, Paraguayan Guaranies and Brazilian Reales , 0.1% of its expensesrelated to its Navios Containers segment, are in Euros and 18.6% of its expenses related to operation of its Greek, Belgian andMonaco offices, are in Euros. Navios Holdings monitors its Euro, Argentinean Peso, Uruguayan Peso, Paraguayan Guarani andBrazilian Real exposure against long-term currency forecasts and enters into foreign currency contracts when consideredappropriate.CustomersDry bulk Vessel OperationsThe international dry bulk shipping industry is highly fragmented and, as a result, there are numerous charterers. Navios Holdings’assessment of a charterer’s financial condition and reliability is an important factor in negotiating employment of its vessels. Navios Holdingsgenerally charters its vessels to major trading houses (including commodities traders), major producers and government-owned entities. NaviosHoldings’ customers under charter parties, COAs, and other counterparties, include national, regional and international companies, such as CargillInternational S.A., GIIC, Louis Dreyfus Commodities, Oldendorff Carriers, Swiss Marine, Rio Tinto and Mansel Ltd. (See also Item 3.D. “Risk Factors—We 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.”). 58 Table of ContentsLogistics 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 beenable to generate and maintain longstanding relationships with its customers. In its grain port facilities in Uruguay, Navios Logistics has been servingthree of its key customers, ADM, Cargill and Louis Dreyfus, for more than 20 years on average. In its liquid port facility, liquid barge transportationand cabotage business, Navios Logistics has had long-term relationships with its global petroleum customers for more than 17 years on average (suchas Axion Energy, Petrobras Group, YPF and Shell or their successors). In its dry barge business, Navios Logistics started its relationship with Vale in2008 for iron ore transportation and has signed new contracts since then. Navios Logistics is committed to providing quality logistics services for itscustomers and further developing and maintaining 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,beyond amounts provided for collection losses, is inherent in its trade receivables. (See also Item 3.D. “Risk Factors—Navios Logistics depends on afew significant customers for a large part of its revenues and the loss of one or more of these customers could materially and adversely affect itsrevenues.”).Container Vessel OperationsCustomers of Navios Containers in the containership sector consist of a limited number of liner companies. The tough economicconditions faced by liner companies and the intense competition among them has caused, and may in the future cause, certain liner companies todefault resulting in consolidation among liner companies. The number of leading liner companies which are Navios Containers’ client base maycontinue to shrink and Navios Containers may depend on an even more limited number of customers to generate a substantial portion of its revenues.The cessation of business with these liner companies or their failure to fulfill their obligations under the time charters for Navios Containers’containerships could have a material adverse effect on Navios Containers’ business, financial condition and results of operations, as well as its cashflows, including cash available for distributions to Navios Containers’ unit holders and repurchases of common units. In addition to consolidations,alliances involving Navios Containers’ customers could further increase the concentration of Navios Containers’ business and reduce its bargainingpower.For the period from November 30, 2018 (date of obtaining control) to December 31, 2018, Navios Containers’ one largest customer, NOLLiner PTE Ltd accounted for 37.9% of its revenues. Other than its largest customer mentioned above, no other customer accounted for more than 10%of Navios Containers’ revenues during the period from November 30, 2018 (date of obtaining control) to December 31, 2018.CompetitionThe dry bulk shipping markets are extensive, diversified, competitive and highly fragmented, divided among 1,938 independent dry bulkcarrier owners. The world’s active dry bulk fleet consists of approximately 11,400 vessels, aggregating approximately 846.7 million dwt as of April 1,2019. As a general principle, the smaller the cargo carrying capacity of a dry bulk carrier, the more fragmented is its market, both with regard tocharterers and vessel owner/operators. Even among the larger dry bulk owners and operators, whose vessels are mainly in the larger sizes, only tencompanies are known to have fleets of 100 vessels or more: China Ocean Shipping and China Shipping Group into China COSCO Shipping, NipponYusen Kaisha, the Fredriksen Group, Wisdom Marine, China Merchants, Kawasaki Kisen, Pacific Basin, Mitsui O.S.K. Lines, plus Oldendorff Carriersand Star Bulk Carriers. There are about 40 owners known to have fleets of between 30 and 100 vessels. However, vessel ownership is not the onlydeterminant of fleet control. Many owners of bulk carriers charter their vessels out for extended periods, not just to end users (owners of cargo), but alsoto other owner/operators and to tonnage pools. Such operators may, at any given time, control a fleet many 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 enteringinto our transportation sectors, including in the dry bulk sector. Many of these competitors have strong reputations and extensive resources andexperience. Increased competition may cause greater price competition, especially for long-term charters. 59 Table of ContentsNavios LogisticsNavios Logistics is one of the largest logistics providers in the Hidrovia region of South America. Navios Logistics believes its ownershipof river ports, including its port terminals in Uruguay that provides access to the ocean, allows it to offer a logistics solution superior to its competitorsthat also operate 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 the case of transits, there are other companies operating in the river system that are able to offer services similar to Navios Logistics. However, mostof these companies are proprietary service providers that are focused on servicing their own cargo. Unlike these companies, Navios Logistics is anindependent service provider in the market for transits. With respect to exports, its competitors are Montevideo Port in Montevideo, Ontur in NuevaPalmira, and TGU in Nueva Palmira. The main competitor of its liquid port terminal in Paraguay is Petropar, a Paraguayan state-owned entity. Othercompetitors include Copetrol, TLP, Trafigura Pte Ltd and Petrobras.Navios Logistics faces competition in its barge and cabotage businesses with transportation of oil and refined petroleum products fromother independent ship owners and from vessel operators who primarily charter vessels to meet their cargo carrying needs. The charter markets in whichNavios Logistics’ 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 own dedicated barge capacity, which they can use to transport cargo in lieu of hiring a third party. Navios Logistics also competesindirectly with other forms of land-based transportation such as truck and rail. Competition is primarily based on prevailing market contract rates,vessel location and vessel manager know-how, reputation and credibility. These companies and other smaller entities are regular competitors of NaviosLogistics in its primary tanker trading areas.Navios Logistics believes that its ability to combine its ports in Uruguay and Paraguay with its versatile fleet of barges, pushboats andtankers to offer integrated, end-to-end logistics solutions for both its dry and liquid customers seeking to transport mineral and grain commodities andliquid cargoes through the Hidrovia region has allowed Navios Logistics to differentiate its business and offer superior services compared to itscompetitors.Navios ContainersThe global container shipping market is extensive, diversified, competitive and fragmented, divided among approximately 635 lineroperators and independent owners. The world’s active containership fleet consists of approximately 5,270 vessels, aggregating approximately22.1 million TEU as of February 1, 2019. As a general principle, the smaller the cargo carrying capacity of a containership, the more fragmented is itsmarket, both with regard to charterers and vessel owner/operators. Even among the larger liner companies and independent containership owners andoperators, whose vessels are mainly in the larger sizes, only ten companies are known to control, through vessel ownership and/or time charters, fleetsof 97 vessels or more: AP Moller, Mediterranean Shipping Co. (MSC), China COSCO Shipping, CMA CGM, Evergreen, Pacific International Lines,Hapag Lloyd, Seaspan, Imabari Shipbuilding and Wan Hai Lines. There are about 40 owners known to control, through vessel ownership and/or timecharters, fleets of between 26 and 83 vessels. Liner companies, who control the movement of containers on land and at sea, own vessels directly andalso charter-in vessels on short- and long-term charters. Many owners/managers of containerships charter their vessels out for extended periods butunlike the liner companies, do not control the movement of any containers. These owners/managers are often called tonnage providers. Linercompanies may, at any given time, control a fleet many times the size of their owned tonnage. AP Moller and MSC are such liner operators; whereasSeaspan, Costamare and others, including us, are tonnage providers.It is likely that Navios Containers will face substantial competition for long-term charter business from a number of experiencedcompanies. Many of these competitors will have significantly greater financial resources than we do. It is also likely that Navios Containers will faceincreased numbers of competitors entering into the container transportation sector. Many of these competitors have strong reputations and extensiveresources and experience. Increased competition may cause greater price competition, especially for long-term charters. 60 Table of ContentsNavios Containers believe that the containership sector of the international shipping industry is characterized by the significant timerequired to develop the operating expertise and professional reputation necessary to obtain and retain customers. Navios Containers believe that itsdevelopment of an intermediate-size containerships fleet has enhanced our relationship with its principal charterers by enabling them to serve the East-West, North-South and Intra-regional trade routes efficiently, while enabling us to operate in the different rate environments prevailing for those routes.Navios Containers also believe that its focus on customer service and reliability enhances its relationships with its charterers.Intellectual PropertyWe consider NAVIOS to be our proprietary trademark, service mark and trade name. We hold several trademark registrations in the U.S.,E.U. and Monaco trademark registrations for our proprietary 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 issubject to many industry standards. Government regulation significantly affects the ownership and operation of vessels. These regulations consistmainly of rules and standards established by international conventions, but they also include national, state, and local laws and regulations in force injurisdictions where vessels may operate or are registered, and which are commonly more stringent than international rules and standards such as theInternational Convention for the Prevention of Pollution from Ships, the International Convention for the Control and Management of Ships’ BallastWater and Sediments, the International Convention for Civil Liability for Oil Pollution Damage, the International Convention on Civil Liability forBunker Oil Pollution Damage, the Comprehensive Environmental Response, Compensation, and Liability Act, and The Offshore Petroleum Licensing(Offshore Safety Directive) Regulations 2015. 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 localport authorities (the U.S. Coast Guard, harbor masters or equivalent entities), classification societies, flag state administration (country vessel ofregistry), and charterers, particularly terminal operators. Certain of these entities require vessel owners to obtain permits, licenses, and certificates forthe operation of their vessels. Failure to maintain necessary permits or approvals could require a vessel owner to incur substantial costs or temporarilysuspend operation of one or more of its vessels.Heightened levels of environmental and quality concerns among insurance underwriters, regulators, and charterers continue to lead togreater inspection and safety requirements on all vessels and may accelerate the scrapping of older vessels throughout the industry. Increasingenvironmental concerns have created a demand for vessels that conform to stricter environmental standards. Vessel owners are required to maintainoperating standards for all vessels that will emphasize operational safety, quality maintenance, continuous training of officers and crews andcompliance with U.S. and international regulations.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,consisting firstly of those concerned generally with ship safety standards, and secondly of those specifically concerned with measures to preventpollution.Ship Safety Regulation: In the former category the primary international instrument is the SOLAS, as amended, together with theregulations and codes of practice that form part of its regime. Much of SOLAS is not directly concerned with preventing pollution, but some of itssafety provisions are intended to prevent pollution as well as promote safety of life and preservation of property. These regulations have been andcontinue to be regularly amended as new and higher safety standards are introduced with which we are required to comply. 61 Table of ContentsAn amendment of SOLAS introduced the International Safety Management Code (the “ISM Code”), which has been effective since July1998. Under the ISM Code, the party with operational control of a vessel is required to develop an extensive safety management system that includes,among other things, the adoption of a safety and environmental protection policy setting forth instructions and procedures for operating its vesselssafely and describing procedures for responding to emergencies. The ISM Code requires that vessel operators obtain a safety management certificate foreach vessel they operate. This certificate evidences compliance by a vessel’s management with code requirements for a safety management system. Novessel can obtain a certificate unless its manager has been awarded a document of compliance, issued by the flag state for the vessel, under the ISMCode. Noncompliance with the ISM Code and other IMO regulations, such as the mandatory ship energy efficiency management plan (“SEEMP”)which is akin to a safety management plan and came into effect on January 1, 2013, may subject a ship owner to increased liability, may invalidate orlead to decreases in available insurance coverage for affected vessels, and may result in the denial of access to, or detention in, some ports. Forexample, the U.S. Coast Guard and EU authorities have indicated that vessels not in compliance with the ISM Code will be prohibited from trading inports 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 ISPS Code.Our owned fleet maintains ISM Code and ISPS Code certifications for safety and security of operations. Each vessel’s certificate must beperiodically renewed and compliance must be periodically verified. In addition, the Manager voluntarily implements and maintains certificationspursuant to the International Organization for Standardization (“ISO”), for its office and ships covering both quality of services and environmentalprotection (ISO 9001 and ISO 14001, respectively).International Regulations to Prevent Pollution from Ships: In the second main category of international regulation, the primaryinstrument is the International Convention for the Prevention of Pollution from Ships (“MARPOL”), which imposes environmental standards on theshipping industry set out in Annexes I-VI of MARPOL. These contain regulations for the prevention of pollution by oil (Annex I), by noxious liquidsubstances in bulk (Annex II), by harmful substances in packaged forms within the scope of the International Maritime Dangerous Goods Code (AnnexIII), by sewage (Annex IV), by garbage (Annex V), and by air emissions (Annex VI).These regulations have been and continue to be regularly amended as new and more stringent standards of pollution prevention areintroduced with 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 aglobal cap on the sulphur content of fuel oil and allows for special areas to be established with more stringent controls on emissions. Originallyadopted in September 1997, Annex VI came into force in May 2005 and was amended in October 2008 (as was the NOx Technical Code) to provide forprogressively more stringent limits on such emissions from 2010 onwards. The new standards seek to reduce air pollution from vessels by, among otherthings, establishing a series of progressive requirements to further limit the sulfur content of fuel oil that will be phased in through 2020 and byestablishing new tiers of nitrogen oxide emission standards for new marine diesel engines, depending on their date of installation. Additionally, morestringent emission standards apply in the coastal areas designated emission control areas (“ECAs”). Thus far, ECAs have been formally adopted for theBaltic Sea area (limits SOx emissions only); the North Sea area including the English Channel (limiting SOx emissions only) and the North AmericanECA (which came into effect on August 1, 2012 limiting SOx, NOx and particulate matter emissions). In October 2016, the IMO approved thedesignation of the North Sea and the Baltic Sea as ECAs for NOx under Annex VI, which would take effect in January 2021. The U.S. Caribbean SeaECA entered into force on January 1, 2013 and has been effective since January 1, 2014, limiting SOx, NOx and particulate matter emissions. InJanuary 2015, the limit for fuel oil sulfur levels fell to 0.10% m/m in ECAs established to limit SOx and particulate matter emissions. 62 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 in marine fuel (down from current levels of 3.5%) outside the ECAs starting on January 1, 2020. Under Annex VI, the 2020 date wassubject to review as to the availability of the required fuel oil. Annex VI required the fuel availability review to be completed by 2018 but wasultimately completed in 2016. Therefore, by 2020, ships will be required to remove sulfur from emissions through the use of emission controlequipment, or purchase marine fuel with 0.5% sulfur content, which may see increased demand and higher prices due to supply constraints. Installingpollution control equipment or using lower sulfur fuel could result in significantly increased costs to our company. Similarly, Annex VI requires TierIII standards for NOx emissions to be applied to ships constructed and engines installed in ships operating in NOx ECAs from January 1, 2016. TheIMO’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 on ships which operate in the North American ECA or the U.S. Caribbean SeaECA and to installed marine diesel engines which operate in other ECAs which might be designated in the future for Tier III NOx control. At the 69 thsession (2016), Annex VI was also amended to require recordkeeping requirements to demonstrate 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 implementingmeasures such as fuel switching, vessel modification adding distillate fuel storage capacity, or addition of exhaust gas cleaning scrubbers, and mayrequire installation and operation of further control equipment at significantly increased cost. While it is unclear how the new emissions standard willaffect the employment of our vessels, 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 industrysector. These energy efficiency measures apply to all ships of 400 gross tonnage and above. They include the development of a ship energy efficiencymanagement plan (“SEEMP”) which is akin to a safety management plan. At its 66th session (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 efficiencymeasures on January 1, 2013. It adopted the 2014 Guidelines on the Method of Calculation of the Attained EEDI, applicable to new ships. It furtheradopted amendments to MARPOL Annex 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 passenger ships and cruise passengers ships with nonconventional propulsion. At its 67th session(2014), the MEPC adopted the 2014 Guidelines on survey and certification of the EEDI, updating the previous version to reference ships fitted withdual-fuel engines using LNG and liquid fuel oil. The MEPC also adopted amendments to the 2013 Interim Guidelines for determining minimumpropulsion power to maintain the maneuverability of ships in adverse conditions, to make the guidelines applicable to phase 1 (starting January 1,2015) of the EEDI requirements. At its 68th session (2015), the MEPC amended the 2014 Guidelines on EEDI survey and certification as well as themethod of calculating of EEDI for new ships. At its 70th session (2016), the MEPC again amended the method of calculating EEDI, and adoptedmandatory requirements for ships of 5,000 gross tonnage or greater to collect fuel consumption data for each type of fuel used, and report the data tothe flag State after the end of each calendar year.The 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 (anamendment to Annex I) came into force imposing performance standards for accidental oil fuel outflow and requiring oil fuel tanks to be located insidethe double-hull in all 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 the building contract is entered into on or after August 1, 2007 or, in the absence of a contract, for which keel is laid on orafter February 1, 2008. We intend that all 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 ClimateChange (the “Kyoto Protcol”) entered into force. Pursuant to the Kyoto Protocol, adopting countries are required to implement national programs toreduce emissions of certain gases, generally referred to as greenhouse gases, which are suspected of contributing to global warming. Currently, thegreenhouse gas emissions from 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 ICScalled on the participants in the Durban Conference to give the IMO a clear mandate to deliver emissions reductions through market-based measures,for example a shipping industry environmental compensation fund. Notwithstanding the ICS’ request for global regulation of the shipping industry,the Durban Conference did not result in any proposals specifically addressing the shipping industry’s role in climate change. 63 Table of ContentsAlthough 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 notexpressly reference the shipping industry. Following the Paris Conference, the IMO announced it would continue its efforts on this issue at the MEPC,and at its 70th session, the MEPC approved a Roadmap for developing a comprehensive GHG emissions reduction strategy for ships, which includesthe goal of adopting an initial strategy and emission reduction commitments in 2018 with a goal of adopting a revised strategy in 2023 to includeshort-, mid- and long-term reduction measures and schedules for implementation. In April 2018, the committee charged with creating the reductionstrategy must finalize the initial draft of the strategy and submit a report to MEPC. The EU, Canada, the U.S. and other individual countries, states andprovinces also have or are evaluating various measures to reduce greenhouse gas emissions from international shipping, which may include somecombination of market-based instruments, a carbon tax or other mandatory reduction measures. The EU recently adopted Regulation (EU) 2015/757concerning the monitoring, reporting and verification of carbon dioxide emissions from vessels (the “MRV Regulation”) which entered into force onJuly 1, 2015 (as amended by Regulation (EU) 2016/2071). The MRV Regulation applies to all vessels over 5,000 gross tonnage (except for a fewtypes, including, but not limited to, warships and fish-catching or fish-processing vessels), irrespective of flag, in respect of carbon dioxide emissionsreleased during voyages within the EU as well as voyages coming into and going out of the EU. The first reporting period will commence on January 1,2018. The monitoring, reporting and verification system adopted by the MRV Regulation may be the precursor to a market-based mechanism to beadopted in the future. This EU Regulation may be seen as indicative of an intention to maintain pressure on the international negotiating process. AnImplementing Regulation, which entered into force in November 2016, was also adopted setting templates for monitoring plans, emissions reports andcompliance documents pursuant to Regulation 2015/757.Further, in February 2017, EU member states met to consider independently regulating the shipping industry under the ETS. OnFebruary 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 acomparable system by 2021. In November 2017, the Council of Ministers, the EU’s main decision making body, agreed that the EU should act onshipping emissions by 2023 if the IMO fails to deliver effective global measures. Last year, IMO’s urgent call to action to bring about shippinggreenhouse gas emissions reductions before 2023 was met with industry push-back in many countries. Depending on how fast IMO and the EU moveon this issue, the ETS may result in additional compliance 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.Other International Regulations to Prevent Pollution: In addition to MARPOL, other more specialized international instruments havebeen adopted to prevent different types of pollution or environmental harm from ships. In February 2004, the IMO adopted an InternationalConvention for the Control and Management of Ships’ Ballast Water and Sediments Convention (the “BWM Convention”). The BWM Convention’simplementing regulations call for a phased introduction of mandatory ballast water exchange requirements, to be replaced in time with mandatoryconcentration limits, as well as other obligations including recordkeeping requirements and implementation of a Ballast Water and SedimentsManagement Plan.The BWM Convention entered into force on September 8, 2017. As of February 11, 2019, the BWM Convention had 79 contracting statesfor 80.94% of world gross tonnage. New ships constructed after September 8, 2017 must comply on delivery with the BWM Convention. For vesselsconstructed prior to September 8, 2017, installation of ballast water management systems must take place at the first renewal survey followingSeptember 8, 2017 (the date the BWM Convention entered into force). Ships built before September 8, 2017 must comply with IMO dischargestandards by the due date for their IOPPC renewal survey under MARPOL Annex 1. All ships must meet the IMO ballast water discharge standard bySeptember 8, 2024. The BWM Convention requires ships to manage ballast water in a manner that removes, renders harmless or avoids the update ordischarge 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 similarballast water treatment requirements in certain jurisdictions (such as the United States and states within the United States), will likely result insubstantial compliance costs relating to the installation of equipment on our vessels to treat ballast water before it is discharged and other additionalballast water management and reporting requirements. In the United States, the Vessel Incidental Discharge Act (“VIDA”) was signed into law onDecember 4, 2018, which requires the U.S. Coast Guard to address the regulation of discharges incidental to the normal operation of commercialvessels into navigable waters, including management of ballast water. This change is expected to result in a simplification of the current patch-workstate of ballast water regulation in the United States, which is currently variably regulated by the U.S. Environmental Protection Agency and thevarious states 64 Table of ContentsEuropean RegulationsEuropean regulations in the maritime sector are in general based on international law. However, since the Erika incident in 1999, the EUhas become increasingly active in the field of regulation of maritime safety and protection of the environment. It has been the driving force behind anumber of amendments of MARPOL (including, for example, changes to accelerate the time-table for the phase-out of single hull tankers, and toprohibit the carriage in such tankers of heavy grades of oil), and if dissatisfied either with the extent of such amendments or with the time-table for theirintroduction it has been prepared to legislate on a unilateral basis. It should be noted, for instance, that the EU has its own regime as far as shipemissions are concerned and while it does in some respects align with the IMO regime, this is not always the case. As far as sulfur dioxide emissions areconcerned, for example, the EU regulation has not just caught up with the IMO limits for sulfur in ECAs, but it continues to have certain elements thatexceed 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 areusing gas oils with a sulfur content of no more than 0.10%). The EU has adopted legislation that (1) requires member states to refuse access to theirports to certain sub-standard vessels, according to vessel type, flag and number of previous detentions, (2) obliges member states to inspect at least25% of vessels using their ports annually and provides for increased surveillance of vessels posing a high risk to maritime safety or the marineenvironment, (3) provides the EU with greater authority and control over classification societies, including the ability to seek to suspend or revoke theauthority of negligent societies, and (4) requires member states to impose criminal sanctions for certain pollution events, such as the unauthorizeddischarge of tank washings. It has also considered legislation that could affect the operation of vessels and the liability of owners for oil pollution. Insome instances where it has done so, international regulations have subsequently been amended to the same level of stringency as that introduced inEurope, but the risk is well established that EU regulations may from time to time impose burdens and costs on ship owners and operators which areadditional to those involved in complying with international rules and standards. In December 2016, the EU signed into law the National EmissionsCeiling (“NEC”) Directive, which entered into force on December 31, 2016. The NEC must be implemented by individual members states throughparticular laws in each state by June 30, 2018. The NEC aims to set stricter emissions limits on SO2, ammonia, non-methane volatile organiccompounds, NOx and fine particulate (PM2.5) by setting new upper limits for emissions of these pollutants, starting in 2020. While the NEC is notspecifically directed toward the shipping industry, the EU specifically mentions the shipping industry in its announcement of the NEC as a contributorto emissions of PM2.5, SO2 and NOx. Implementation of new laws by member states to reduce emissions may ultimately result in increased costs to usto 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 notonly where this is caused by intent or recklessness (which would be an offense under MARPOL), but also where it is caused by “serious negligence”.The concept of “serious negligence” may be interpreted in practice to be little more than ordinary negligence. The directive could therefore result incriminal liability being incurred in circumstances where it would not be incurred under international law. Criminal liability for a pollution incidentcould not only result in us incurring substantial penalties or fines but may also, in some jurisdictions, facilitate civil liability claims for greatercompensation than would otherwise have been payable.The 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 theenvironment. The new regulation also contains rules for the control and proper management of hazardous materials on vessels and prohibits or restrictsthe installation or use of certain hazardous materials on vessels. The new regulation applies to vessels flying the flag of a member state and certain ofits provisions apply to vessels flying the flag of a third country calling at a port or anchorage of a member state. For example, when calling at a port oranchorage 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 ofhazardous materials that complies with the requirements of the new regulation and the vessel must be able to submit to the relevant authorities of thatmember state a copy of a statement of compliance issued by the relevant authorities of the country of the vessel’s flag verifying the inventory. The newregulation is to apply no later than December 31, 2018, although certain of its provisions are to apply at different stages, with certain of themapplicable from December 31, 2020. Pursuant to this regulation, the EU has recently published the first version of a European List of approved shiprecycling facilities meeting the requirements of the regulation, as well as four further implementing decisions dealing with certification and otheradministrative requirements set out in the regulation. 65 Table of ContentsIn response to the 2010 Deepwater Horizon incident, the EU has issued Directive 2013/30/EU of the European Parliament and of theCouncil of June 12, 2013 on safety of offshore oil and gas operations. The objective of this Directive is to reduce as much as possible the occurrence ofmajor accidents relating to offshore oil and gas operations and to limit their consequences, thus increasing the protection of the marine environmentand coastal economies against pollution, establishing minimum conditions for safe offshore exploration and exploitation of oil and gas limitingpossible disruptions to EU indigenous energy production, and to improve the response mechanisms in case of an accident. Member states mustimplement the Directive by July 19, 2015. The U.K. has various new or amended regulations such as: the Offshore Petroleum Activities (OffshoreSafety 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 theEnvironmental Management System. The Offshore Petroleum Licensing (Offshore Safety Directive) Regulations 2015 will implement the licensingDirective requirements.U.S. Environmental Regulations and Laws Governing Civil Liability for Pollution: Environmental legislation in the U.S. meritsparticular mention as it is in many respects more onerous than international laws, representing a high-water mark of regulation with which ship-ownersand operators must 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 liabilityregime for the protection and cleanup of the environment from oil spills, including cargo or bunker oil spills from tankers. OPA 90 affects all ownersand operators whose vessels trade in the U.S., its territories and possessions or whose vessels operate in U.S. waters, which includes the U.S.’ territorialsea and its 200 nautical mile exclusive economic zone. Under OPA 90, vessel owners, operators and bareboat charterers are “responsible parties” andare 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 allcontainment and clean-up costs and other damages arising from discharges or substantial threats of discharges, of oil from their vessels. OPA 90 definesthese other damages broadly to include: • 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 ofsubsistence use of natural resources.OPA 90 preserves the right to recover damages under other existing laws, including maritime tort law. In addition to potential liabilityunder OPA as the relevant federal legislation, vessel owners may in some instances incur liability on an even more stringent basis under state law in theparticular state where the spillage occurred.Title VII of the Coast Guard and Maritime Transportation Act of 2004 (the “CGMTA”), amended OPA 90 to require the owner or operatorof any non 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 aresponse plan for each vessel on or before August 8, 2005. The implementing regulations took effect on October 30, 2013. The vessel response plansmust include detailed information on actions to be taken by vessel personnel to prevent or mitigate any discharge or substantial threat of such adischarge of ore from the vessel due to operational activities or casualties.OPA 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 over3,000 gross 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 grosstons). For tank 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 millionfor a vessel less than 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. federalsafety, construction or operating regulations or by a responsible party’s gross negligence or willful misconduct, or if the responsible party fails orrefuses to report the incident or to cooperate and assist in connection with oil removal activities. 66 Table of ContentsIn response to the Deepwater Horizon incident in the Gulf of Mexico, in 2010 the U.S. Congress proposed, but did not formally adopt,legislation to amend OPA 90 to mandate stronger safety standards and increased liability and financial responsibility for offshore drilling operations.While Congressional activity on this topic is expected to continue to focus on offshore facilities rather than on vessels generally, it cannot be knownwith certainty what form any such new legislative initiatives may take.In addition, the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), which applies to the dischargeof hazardous substances (other than oil) whether on land or at sea, contains a similar liability regime and provides for cleanup, removal and naturalresource damages. CERCLA, as well as certain U.S. state laws that may also apply to petroleum or petroleum products, imposes joint and severalliability, without regard to fault, on the owner or operator of a vessel, vehicle or facility from which there has been a release, along with other specifiedparties. Liability under CERCLA is limited to the greater of $300 per gross ton or $0.5 million for vessels not carrying hazardous substances as cargo orresidue, unless the incident is caused by gross negligence, willful misconduct, or a violation of certain regulations, in which case liability is unlimited.We currently maintain, for each of our owned vessels, insurance coverage against pollution liability risks in the amount of $1.0 billion perincident. 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 fromcoverage, or if damages from a catastrophic incident exceed the $1.0 billion limitation of coverage per incident, our cash flow, profitability andfinancial position could be adversely impacted.All owners and operators of vessels over 300 gross tons are required to establish and maintain with the U.S. Coast Guard evidence offinancial responsibility sufficient to meet their potential liabilities under OPA 90 and CERCLA. Under OPA 90, an owner or operator of a fleet ofvessels is required only to demonstrate evidence of financial responsibility in an amount sufficient to cover the vessel in the fleet having the greatestmaximum liability under OPA. Under the self-insurance provisions, the ship owner or operator must have a net worth and working capital, measured inassets located in the U.S. against liabilities located anywhere in the world, that exceeds the applicable amount of financial responsibility. We havecomplied with the U.S. Coast Guard regulations 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 claimantsmay bring suit directly against an insurer or guarantor that furnishes certificates of financial responsibility. In the event that such insurer or guarantor issued directly, it is prohibited from asserting any contractual defense that it may have had against the responsible party and is limited to asserting thosedefenses available to the responsible party and the defense that the incident was caused by the willful misconduct of the responsible party. Certainorganizations, which had typically provided certificates of financial responsibility under pre-OPA 90 laws, including the major protection andindemnity organizations have declined to furnish evidence of insurance for vessel owners and operators if they are subject to direct actions or requiredto waive insurance policy defenses. This requirement may have the effect of limiting the availability of the type of coverage required by the CoastGuard and could increase our costs of obtaining 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 withintheir boundaries, and some states’ environmental laws impose unlimited liability for oil spills. For example, California regulations prohibit thedischarge of oil, require an oil contingency plan be filed with the state, require that the ship owner contract with an oil response organization andrequire a valid certificate of financial responsibility, all prior to the vessel entering state waters. In some cases, states, which have enacted suchlegislation, have not yet issued implementing regulations defining vessels owners’ responsibilities under these laws. We intend to comply with allapplicable state regulations in the ports where our vessels call.The U.S. Clean Water Act (“CWA”) prohibits the discharge of oil or hazardous substances in U.S. navigable waters and imposes strictliability in the form of penalties for unauthorized discharges. The CWA also imposes substantial liability for the costs of removal, remediation anddamages and complements the remedies available under CERCLA. The U.S. Environmental Protection Agency (“EPA”) regulates the discharge ofballast water and other substances incidental to the normal operation of vessels in U.S. waters using a Vessel General Permit (“VGP”), system pursuantto the CWA, in order to combat the risk of harmful organisms that can travel in ballast water carried from foreign ports and to minimize the risk of waterpollution through numerous specified effluent streams incidental to the normal operation of vessels. Compliance with the conditions of the VGP isrequired for commercial vessels 79 feet in length or longer (other than commercial fishing vessels). On March 28, 2013, the EPA adopted the 2013VGP, which took effect on December 19, 2013. The 2013 VGP is valid for five years. 67 Table of ContentsThis 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 ofthe VGP, finding that the EPA failed to adequately explain why stricter technology-based effluent standards should not be applied. The courtinstructed the EPA to reconsider these issues but held the 2013 VCP remains in effect until the EPA addresses the issues. If the EPA establishes morestringent numeric standards for ballast water discharges, we may incur costs to modify our vessels to comply with new standards. In addition, throughthe CWA certification provisions, that allow U.S. states to place additional conditions on the use of the VGP within state waters, a number of stateshave proposed or implemented a variety of stricter ballast water requirements including, in some states, specific treatment standards. Because the VGPexpires at the end of this year, there may be new U.S. federal and state requirements that could require the installation of equipment on our vessels totreat ballast water before it is discharged or the implementation of other port facility disposal arrangements or procedures at potentially substantialcost, and/or otherwise restrict our vessels from entering U.S. waters.Compliance with new U.S. federal and state requirements could require the installation of equipment on our vessels to treat ballast waterbefore it is discharged or the implementation of other port facility disposal arrangements or procedures at potentially substantial cost, and/or otherwiserestrict our vessels from entering U.S. waters. Coast Guard regulations require commercial ships operating in U.S. waters to manage ballast water bymeeting certain requirements, which include using a U.S. type-approved Ballast Water Management System (“BWMS”), temporarily using a foreign-type BWMS that has been accepted by the Coast Guard, using ballast water obtained from a U.S. Public Water System, discharging ballast water into ashore-side facility or not discharging ballast water within 12 nautical miles. As of January 1, 2014, vessels are technically subject to the phasing-in ofthese standards. As a result, the U.S. Coast Guard in the past provided waivers to vessels which could not install the then unapproved ballast watertreatment technology, but has begun to deny requests for waivers in light of its recent approval of a handful of technologies. The EPA, on the otherhand, has taken a different approach to enforcing ballast discharge standards under the VGP. On December 27, 2013, the EPA issued an enforcementresponse policy in connection with the new VGP in which the EPA indicated that it would take into account the reasons why vessels do not have therequisite 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, ifany, will be enacted. Several states, including Michigan and California, have adopted legislation or regulations relating to the permitting andmanagement of ballast water discharges. California has extended its ballast water management program to the regulation of “hull fouling” organismsattached to vessels and adopted regulations limiting the number of organisms in ballast water discharges. Other states could adopt similar requirementsthat could increase the costs of operation in state waters.The Federal Clean Air Act (“CAA”) requires the EPA to promulgate standards applicable to emissions of volatile organic compounds andother air contaminants. Our vessels are subject to CAA vapor control and recovery standards (“VCS”) for cleaning fuel tanks and conducting otheroperations in regulated port areas, and to CAA emissions standards for so-called “Category 3” marine diesel engines operating in U.S. waters. In April2010, EPA adopted regulations implementing the provision of MARPOL Annex VI regarding emissions from Category 3 marine diesel engines. Underthese regulations, both U.S. and foreign-flagged ships must comply with the applicable engine and fuel standards of Annex VI, including the stricterNorth 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 GreatLakes. Annex VI requirements are discussed in greater detail above under “International regulations to prevent pollution from ships.” We may incurcosts to install control equipment on our vessels 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. Ourvessels operating 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. Coast Guard adopted regulations that made its VCS requirements more compatible with new EPA and State regulations, reflected changes inVCS technology, and codified existing U.S. Coast Guard guidelines. We intend to comply with all applicable state and U.S. federal regulations in theports where our vessels call.International 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 theInternational Convention for Civil Liability for Oil Pollution Damage (the “CLC”) is subject under the convention to strict liability for any pollutiondamage caused in a contracting state by an escape or discharge from cargo or bunker tanks. This liability is subject to a financial limit calculated byreference to the tonnage of the ship, and the right to limit liability may be lost if the spill is caused by the shipowner’s intentional or reckless conduct.Liability may also be incurred under the CLC for a bunker spill from the vessel even when she is not carrying such cargo, but is in ballast. 68 Table of ContentsWhen 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 over100 jurisdictions around the world, but it does not apply in the U.S., where the corresponding liability laws such as the OPA 90 discussed above, areparticularly stringent.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 ratifyingstates caused by discharges of “bunker oil.” The Bunker Convention defines “bunker oil” as “any hydrocarbon mineral oil, including lubricating oil,used or intended to be used for the operation or propulsion of the ship, and any residues of such oil.” The Bunker Convention also requires registeredowners of ships over a certain size to maintain insurance for pollution damage in an amount equal to the limits of liability under the applicablenational or international limitation regime. The Bunker Convention entered into force on November 21, 2008, and as of February 7, 2019, had 91contracting states, representing 92.85% of the gross tonnage of the world’s merchant fleet. In other jurisdictions, liability for spills or releases of oilfrom ships’ bunkers continues to be determined by the national or other domestic laws in the jurisdiction where the events or damages occur.Outside the 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 pollutionliability is the Convention on Limitation of Liability for Maritime Claims of 1976 (the “1976 Convention”). Rights to limit liability under the 1976Convention are forfeited where a spill is caused by a shipowners’ intentional or reckless conduct. Some states have ratified the 1996 LLMC Protocol tothe 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 not a party to either the 1976 Convention or the 1996 LLMC Protocol, and, therefore, shipowners’ rights to limitliability for maritime pollution in such jurisdictions 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 theterritorial waters of such countries or enter their ports, our vessels would typically be subject to the requirements and liabilities imposed in suchcountries. Other regions of the world also have the ability to adopt requirements or regulations that may impose additional obligations on our vesselsand may entail significant expenditures on our part and may increase the costs of our operations. These requirements, however, would apply to theindustry operating in those regions as a whole and would also affect our competitors. However, it is difficult to predict what legislation, if any, may bepromulgated by the U.S., the EU or any other country or authority.Security RegulationsA number of initiatives have been introduced in recent years intended to enhance vessel security. On November 25, 2002, MTSA wassigned into law. To implement certain portions of the MTSA, the U.S. Coast Guard issued regulations in July 2003 requiring the implementation ofcertain security requirements aboard vessels operating in waters subject to the jurisdiction of the United States. Similarly, in December 2002,amendments to SOLAS created a new chapter of the convention dealing specifically with maritime security. This new chapter came into effect in July2004 and imposes various detailed security 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 MTSAvessel security measures, provided such vessels have on board a valid “International Ship Security Certificate” that attests to the vessel’s compliancewith SOLAS security requirements and the ISPS Code. We have implemented the various security measures required by the IMO, SOLAS and the ISPSCode and have approved ISPS certificates and plans certified by the applicable flag state on board all our vessels. Starting January 1, 2016, the IMDGCode also included updates to the provisions for radioactive material, reflecting the latest provisions from the International Atomic Energy Agency, orthe IAEA, new marking requirements for “overpack” and “salvage” and updates to various individual packing requirement 69 Table of ContentsThe cost of vessel security measures has also been affected by the escalation in recent years in the frequency and seriousness of acts ofpiracy against ships, notably off the coast of Somalia, including the Gulf of Aden and Arabian Sea area. 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 othercosts may be incurred as a result of such detention. Although we insure against these losses to the extent practicable, the risk remains of uninsuredlosses which could significantly affect our business. Costs are incurred in taking additional security measures in accordance with Best ManagementPractices to Deter Piracy, notably those contained in the BMP3 industry standard. A number of flag states have signed the 2009 New York Declaration,which expresses commitment to Best Management Practices in relation to piracy and calls for compliance with them as an essential part of compliancewith the ISPS Code.Classification, Inspection and Maintenance: Every sea going vessel must be “classed” by a classification society. The classificationsociety certifies that the vessel is “in class,” signifying that the vessel has been built and maintained in accordance with the rules of the classificationsociety and complies with applicable rules and regulations of the vessel’s country of registry and the international conventions of which that country isa member. In addition, where surveys are required by international conventions and corresponding laws and ordinances of a flag state, the classificationsociety will undertake 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 theflag state. These surveys are subject to agreements made in each individual case or to the regulations of the country concerned. For maintenance of theclass, regular and extraordinary surveys of hull, machinery (including the electrical plant) and any special equipment classed are required to beperformed as follows: • Annual Surveys: For seagoing ships, annual surveys are conducted for the hull and the machinery (including the electrical plant) and, whereapplicable, for special equipment classed, at intervals of 12 months from the date of commencement of the class period indicated in thecertificate. • Intermediate Surveys: Extended annual surveys are referred to as intermediate surveys and typically are conducted two and a half years aftercommissioning and each class renewal. Intermediate surveys may be carried out on the occasion of the second or third annual survey. • Class Renewal Surveys: Class renewal surveys, also known as special surveys, are carried out for the ship’s hull, machinery (including theelectrical plant), and for any special equipment classed, at the intervals indicated by the character of classification for the hull. At the specialsurvey, the vessel is thoroughly examined, including audio-gauging, to determine the thickness of its steel structure. Should the thickness befound to be less than class requirements, the classification society would prescribe steel renewals. The classification society may grant a one-yeargrace period for completion of the special survey. Substantial amounts of money may have to be spent for steel renewals to pass a special surveyif the vessel experiences excessive wear and tear. In lieu of the special survey every four or five years, depending on whether a grace period wasgranted, a ship owner has the option of arranging with the classification society for the vessel’s integrated hull or machinery to be on acontinuous survey cycle, in which every part of the vessel would be surveyed within a five-year cycle.Risk of Loss and Liability 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 charterersof any vessel trading in the U.S. exclusive economic zone for certain oil pollution accidents in the United States, has made liability insurance moreexpensive for ship owners and operators trading in the U.S. market. While we believe that our present insurance coverage is adequate, not all risks canbe insured, and there can be no guarantee that any specific claim will be paid, or that we will always be able to obtain adequate insurance coverage atreasonable rates. Our current insurance includes the following:Hull and Machinery and War Risk Insurance: We have marine hull and machinery and war risk insurance, which include coverage of therisk of 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 adeductible 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 also extended our war risk insurance to include war loss of hire for any loss of time to the vessel, including for physical repairs, caused by awarlike incident and piracy seizure for up to 270 days of detention / loss of time. There are no deductibles for the war risk insurance or the war loss ofhire cover. 70 Table of ContentsWe have arranged, as necessary, increased value insurance for our vessels. With the increased value insurance, in case of total loss of thevessel, 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.Increased value insurance also covers excess liabilities that are not recoverable in full by the hull and machinery policies by reason of underinsurance.We do not expect to maintain loss of hire insurance for our vessels. Loss of hire insurance covers business interruptions that result in the loss of use of avessel.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 liabilitiesarising from the operation of an entered ship. Such liabilities include but are not limited to third-party liability and other related expenses from injuryor death of crew, passengers and other third parties, loss or damage to cargo, claims arising from collisions with other vessels, damage to other third-party property, pollution arising from oil or other substances, and salvage, towing and other related costs, including wreck removal. Protection andindemnity insurance is a form of mutual indemnity insurance, extended by protection and indemnity mutual associations and always provided inaccordance with the applicable associations’ 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 allInternational Group Clubs, coverage for oil pollution is limited to $1.0 billion per event. The 13 P&I Associations that comprise the InternationalGroup insure approximately 95% of the world’s commercial tonnage and have entered into a pooling agreement to collectively reinsure eachassociation’s liabilities. Each vessel that we acquire will be entered with P&I Associations of the International Group. Under the International Groupreinsurance program for the current policy year, each P&I club in the International Group is responsible for the first $10.0 million of every claim. Inevery 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 the International Group in the international reinsurance market under the General Excess of Loss Reinsurance Contract.This policy currently provides an additional $2.0 billion of coverage for non-oil pollution claims. Further to this, an additional reinsurance layer hasbeen placed by the International Group for 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 one event 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 claim exceed Group reinsurance limits, the provisions of all International Group Club’s overspill claimrules will operate and members of any International Group Club will be liable for additional contributions in accordance with such rules. To date, therehas 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 associationsbased on our individual fleet record, the associations’ overall its claim records as well as the claim records of all other members of the individualassociations, and members of the pool of P&I Associations comprising the International Group. The P&I Associations’ policy year commences onFebruary 20th. Calls are levied by means of Estimated Total Premiums (“ETP”) and the amount of the final installment of the ETP varies according tothe actual total premium ultimately required by the club for a particular policy year. Members have a liability to pay supplementary calls, which mightbe levied by the board of directors of the club if the ETP is insufficient to cover amounts paid out by the club. Should a member leave or entry ceasewith any of the associations, at the Club’s Managers discretion, they may be also be liable to pay release calls or provide adequate security for the sameamount. Such calls are levied in respect of potential outstanding Club/Member liabilities on open policy years and include but are not limited toliabilities 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 or due to presence of contraband on board,“defense,” and “credit risk. Specifically, we do not insure these risks because the costs are regarded as disproportionate. These insurances 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 vesselon time charter, where the vessel is paid a fixed hire day by day, suffer a serious mechanical breakdown, the daily hire will no longer be payable by thecharterer. 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 is beingpaid 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 coverup to 270 days of detention/loss of time. When our charterers engage in legally permitted trading in locations which may still be subject to sanctions orboycott, such as Iran, Syria and Sudan, our insurers may be contractually or by operation of law prohibited from honoring our insurance contract forsuch trading, which could result in reduced insurance coverage for losses incurred by the related vessels. Furthermore, our insurers and we may beprohibited from posting or otherwise be unable to post security in respect of any incident in such locations, resulting in the loss of use of the relevantvessel and negative publicity for our Company which could negatively impact our business, results of operations, cash flows and share price. 71 Table of ContentsThere are no deductibles for the war loss of hire cover in case of piracy and contraband cover. We maintain strike and business interruptioninsurance 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 timelyreplacement for 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, more stringent environmental regulations have led to increased 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 be subject to calls, or premiums, in amounts based not only on our ownclaim records but also on the claim records of all other members of the protection and indemnity associations through which we receive indemnityinsurance coverage. A catastrophic oil spill or marine disaster could exceed our insurance coverage, which could have a material adverse effect on ourbusiness, results of operations and financial condition. Any uninsured or underinsured loss could harm our business and financial condition. Inaddition, the insurance may be voidable by the insurers as a 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 aview of the 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 asopposed to owning the entire fleet to maximize risk management and economic results. This is coupled with the challenge posed by the complexlogistics of ensuring that 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) andfreight carriage. 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 to certain 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, financialposition, 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 thatthese claims would be covered by insurance if they involved liabilities such as those that arise from a collision, other marine casualty, damage tocargoes, oil pollution and death or personal injuries to crew, subject to customary deductibles. Those claims, even if lacking merit, could result in theexpenditure of significant financial and managerial resources.Refer to “Item 8. Financial Information” in “Legal Proceedings”.Crewing 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.Other nationalities are referred to Navios Holdings’ fleet manager by local crewing agencies. Navios Holdings is also responsible for travel and payrollof the crew. The crewing agencies handle each seaman’s training. Navios Holdings requires that all of its seamen have the qualifications and licensesrequired to comply with international regulations and shipping conventions. Navios Logistics crews its fleet with Argentinean, Brazilian andParaguayan officers and seamen. Navios Logistics’ fleet managers are responsible for selecting the crew. Employees of the Navios Holdings provideassistance to Navios Containers and its operating subsidiaries pursuant to the Management Agreement and the Administrative Services Agreement;therefore Navios Containers does not employ additional staff.As of December 31, 2018, with respect to shore-side employees, Navios Holdings and its subsidiaries employed 250 employees in itsPiraeus, Greece office, 11 employees in its New York office, seven employees in its Antwerp, Belgium office, three employees in its Monaco office andone employee in its Singapore office. Navios Logistics employs 50 employees in the Asuncion, Paraguay office, 21 employees at the port facility inSan Antonio, Paraguay, 99 employees in the Buenos Aires, Argentina office, eight employees in the Montevideo, Uruguay office, 196 employees at theport facility in Nueva Palmira, Uruguay and 10 employees in the Corumba, Brazil office. 72 Table of ContentsFacilitiesNavios Holdings and its affiliates currently lease the following properties: • Navios Shipmanagement Inc. and Navios Corporation lease approximately1,650.9 square meters of space at 85 Akti Miaouli, Piraeus, Greece,pursuant to several lease agreements that continue to be effective until either party terminates the agreement and other lease agreements thatexpire in 2019. • Kleimar N.V. leases approximately 632 square meters for its offices, in Antwerp, Belgium, pursuant to a lease that expires in June 2019. • Navios Corporation leases approximately 16,703 square feet of space at 825 Third Avenue, New York, New York, pursuant to a lease that expiresin April 2019 and 17,627 square feet of space at 599 Lexington Avenue, New York, New York, pursuant to a lease that expires in 2029. NaviosHoldings sublets a portion of the 34th floor in the building located at 825 Third Avenue, New York, New York, which premises comprise aportion of the premises under the main lease, to a third party pursuant a sub-lease that expires in 2019. Navios Holdings sublets a portion of the35th floor in the building located at 599 Lexington Avenue, New York, New York, which premises comprise a portion of the premises under themain lease, to a third party pursuant a sub-lease that expires in 2029. • Navios Tankers Management Inc. leases approximately 2,954 square meters for its offices in Piraeus, Greece, pursuant to a lease that expires in2019 and other lease agreements that expire in 2025 and 2034. • Navios Containers Management Inc. leases approximately 373 square meters for its offices in Piraeus, Greece, pursuant to a lease that expires in2030. • Kleimar LTD. leases approximately 30 square meters for its offices in Piraeus, Greece, pursuant to a lease that expires in 2030. • Navios Holdings and Navios Tankers Management Inc. leases office space in Monaco pursuant to a lease that expires in June 2023.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 transferfacilities, located at Zona Franca, Nueva Palmira, Uruguay. CNSA has been authorized to operate as a free zone user on November 29, 1955 by aresolution of the Executive, who on September 27, 1956 approved an agreement, as required by applicable law at the time. On December 4, 1995,CNSA’s rights as a direct user were renewed in a single free zone user agreement. On March 4, 2016, the extension of the agreement has beenmodified, allowing CNSA to install and operate a transfer station to handle and store goods, and to build and operate a plant to receive, prepareand dry grain, iron ore, minerals and all types of liquid cargo on land in the Nueva Palmira Free Zone. As a part of a restructuring process, onNovember 13, 2018, CNSA has modified its user agreement with the Free Zone of Nueva Palmira, returning to the Free Trade Zone the area inwhich the facilities of the grain terminal were located, so that such area was subsequently assigned to Granos, another Navios Logistics’subsidiary. By the means of the restructuring process, CNSA currently performs all activities related to transshipment and deposit of minerals,whereas Granos performs activities related to the transshipment and deposit of agro-commodities and grains. Under the aforementionedagreement, CNSA has the right of use of approximately 37 acres and pays a total fixed annual fee that amounts to $0.1 million, payable overeight consecutive months beginning in January of each year and increasing yearly in proportion to the variation in the U.S. Consumer PriceIndex corresponding to the previous year. There is also a transshipment fee of $0.25 per ton transshipped. CNSA has also assumed certainobligations with respect to improving the land subject to the agreement, and the agreement is terminable by the Free Zone Division if it breachesthe terms of the agreement, or labor laws and social security contributions, and if it commits illegal acts or acts expressly forbidden by theagreement. The agreement entered into between CNSA and the Free Zone expires on March 3, 2046, with a 20-year extension at our option, until2066. 73 Table of Contents • As a consequence of the above-mentioned restructuring process, on November 13, 2018, Granos has entered into a user agreement with the FreeZone of Nueva Palmira, having been authorized to operate as a direct free zone user, therefore being allowed to install and operate a transferstation to handle and store goods, and to build and operate a plant to receive, prepare and dry grain and all types of liquid cargo on land in theNueva Palmira Free Zone. By the means of the said agreement, Granos currently has the right of use of approximately 46 acres and pays a totalfixed annual fee that amounts to $0.2 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 transshipment fee of $ 0.25 perton transshipped. The agreement with the Free Zone expires on March 3, 2046, with a 20-year extension at our option, until 2066. • CNSA also leases approximately 400 square meters of space at Paraguay 2141, Montevideo, Uruguay, pursuant to a lease that expires inNovember 2020. • Compania Naviera Horamar S.A. leases approximately 409 square meters at Cepeda 429 Street, San Nicolás, Buenos Aires, Argentina, pursuant toa lease agreement that expires in November 2020. • Compania Naviera Horamar S.A. leases approximately 277 square meters at 874 California Street, Buenos Aires, Argentina. The lease agreementexpires in August 31, 2021. • Compania Naviera Horamar S.A. leases a piece of land called “La Misteriosa” in an Island in the Province of Entre Rios, Argentina, Departmentof Islands of Ibicuy and Paranacito. As per an amendment dated December 13, 2018, the lease agreement has been suspended until April 30,2019. • Compania Naviera Horamar S.A. leases approximately 1,370 square meters of office space at Av. Juana Manso 205, Buenos Aires, Argentina,pursuant to 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 Ocrober 2023. • Hidronave South American Logistics leases an office space at 688, 15 de novembro street, Corumbá, Brazil, pursuant to a lease agreement thatexpires in May 2020. • Docas Fluvial de Porto Murtinho Ltda. owns plots of land in Porto Murtinho, Brazil. This land is approximately 58,876 square meters and it islocated on the shoreline of the Paraguay River.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 squaremeters and 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 791/795Calle General Daniel Cerri, Ciudad Autonoma de Buenos Aires, Argentina of approximately 259 and 825 square meters, respectively. CompaniaNaviera Horamar S.A. also owns approximately 1,139 square meters of office space located in 846 Avenida Santa Fe, Ciudad Autonoma de BuenosAires, 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.Navios Containers and its subsidiaries currently lease the following premises: • Navios Containers leases office space in Monaco pursuant to a lease that expires in June 2023. 74 Table of ContentsC. Organizational structureNavios Holdings and/or its subsidiaries maintain offices in Monaco, Piraeus, Greece, Antwerp, Belgium, New York and Singapore.Commercial ship management, risk management, operation and technical management of Navios Holdings’ owned vessels are conducted throughwholly-owned subsidiaries 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 itswholly-owned subsidiaries. Navios Logistics holds the rights to operate the ports and transfer facilities in Nueva Palmira indirectly through itsUruguayan subsidiary, CNSA, and Granos and owns the San Antonio port facility through its Paraguayan subsidiary, Petrosan.As of December 31, 2018, all subsidiaries included in the consolidated financial statements are 100% owned, except for Navios Logisticsand its subsidiaries, which is 63.8% owned by Navios Holdings and Navios Containers and its subsidiaries, which is 3.7% owned by Navios Holdings.The table below sets forth Navios Holdings’ corporate structure as of December 31, 2018.Subsidiaries included in the consolidation: Ownership Country of Statement of OperationsCompany Name Nature Interest Incorporation 2018 2017 2016Navios Maritime Holdings Inc. Holding Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Navios South American LogisticsInc. Sub-Holding Company 63.8% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Navios Maritime Containers L.P. Holding Company 3.7% Marshall Is. 11/30 - 12/31 — — Navios 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 EnterprisesCorporation 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 EnterprisesCorporation 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 - 12/31 75 Table of ContentsBeaufiks 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 - 12/31Mauve International S.A. Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Serenity Shipping Enterprises Inc. Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Mandora Shipping Ltd Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Solange Shipping Ltd. Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Diesis Ship Management Ltd Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Navios Holdings Europe Finance Inc. Sub-Holding Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Navios Asia LLC Sub-Holding Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Iris Shipping Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Jasmine Shipping Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Emery Shipping Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Lavender Shipping Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Esmeralda Shipping Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 8/30 1/1 - 12/31 1/1 - 12/31Triangle Shipping Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 8/30 1/1 - 12/31 1/1 - 12/31Roselite Shipping Corporation Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Smaltite Shipping Corporation Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31Motiva Trading Ltd Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 11/2 - 12/31Alpha Merit Corporation Sub-Holding Company 100% Marshall Is. 1/1 - 12/31 11/3 - 12/31 — Thalassa Marine S.A. Operating Company 100% Marshall Is. 1/1 - 12/31 12/15 - 12/31 — Asteroid Shipping S.A. Operating Company 100% Marshall Is. 1/1 - 12/31 — — Cloud Atlas Marine S.A. Operating Company 100% Marshall Is. 1/15 - 12/31 — — Heodor Shipping Inc. Vessel Owning Company 100% Marshall Is. 2/13 - 12/31 — — Navios Maritime Containers GP LLC Operating Company 100% Marshall Is. 9/11 - 12/31 — — Navios Containers Management Inc. Management Company 100% Marshall Is. 1/1 - 12/31 — — Pacifico Navigation Corp. Vessel Owning Company 100% Marshall Is. 11/7 - 12/31 — — Rider Shipmanagement Inc. Operating Company 100% Marshall Is. 12/4 - 12/31 — — Talia Shiptrade S.A. Operating Company 100% Marshall Is. 10/11 - 12/31 — — 76 Table of ContentsAffiliates 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 underthe equity method for such periods: (i) Navios Partners and its subsidiaries (ownership interest as of December 31, 2018 was 20.0%, which includes a2.0% general partner interest); (ii) Navios Acquisition and its subsidiaries (economic interest as of December 31, 2018 was 35.8%); (iii) Navios EuropeI and its subsidiaries (economic interest as of December 31, 2018 was 47.5%); (iv) Navios Europe II and its subsidiaries (economic interest as ofDecember 31, 2018 was 47.5%); and (v) Navios Containers and its subsidiaries (economic interest as of November 30, 2018, date of obtaining control,was 3.7%).D. Property, plants and equipmentOur only material property is the owned vessels, tanker vessels, barges and pushboats and the port terminal facilities in Paraguay andUruguay. 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 endedDecember 31, 2018, 2017 and 2016. Navios Holdings’ financial statements have been prepared in accordance with U.S. GAAP. You should read thissection together with the consolidated financial statements and the accompanying notes to those financial statements, which are included in thisdocument.This report contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Reform Act of 1995.These forward-looking statements are based on Navios Holdings’ current expectations and observations. Included among the factors that, in our view,could cause actual 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, logistics company focused on the transport and transshipment of drybulk commodities, including iron ore, coal and grain as well as containerships. Navios Holdings technically and commercially manages its ownedfleet, Navios Acquisition’s fleet, Navios Partners’ fleet, Navios Europe I’s fleet Navios Europe II’s fleet and Navios Containers’ fleet, and commerciallymanages its chartered-in fleet.Navios Logistics, a consolidated subsidiary of Navios Holdings, is one of the largest logistics companies in the Hidrovia region riversystem, the main navigable river system in the region, and on the cabotage trades along the eastern coast of South America, serving its customers in theHidrovia region through three port storage and transfer facilities, one for agricultural, forest-related exports, one for mineral-related exports and theother for refined petroleum products. Navios Logistics complements its three port terminals with a diverse fleet of 336 barges and pushboats and eightvessels, including six oceangoing tankers, one bunker vessel and one river and estuary tanker to be delivered which operate in its cabotage business.Navios Holdings currently owns 63.8% of Navios Logistics.Navios Containers, a consolidated subsidiary of Navios Holdings since November 30, 2018 (date of obtaining control), is a growth-oriented international owner and operator of containerships. Navios Containers was formed in April 2017 to take advantage of acquisition andchartering opportunities in the container shipping sector. As of December 31, 2018, Navios Holdings had a 3.7% ownership interest in NaviosContainers.On August 7, 2007, Navios Holdings formed Navios Partners under the laws of Marshall Islands. Navios G.P. L.L.C. (“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. 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 businesscombination had occurred and consolidated the results of Navios Acquisition from that date until March 30, 2011. From March 30, 2011, NaviosAcquisition has been considered as an affiliate entity of Navios Holdings. 77 Table of ContentsOn December 13, 2018, Navios Acquisition completed the Merger contemplated by the previously announced Merger Agreement, dated asof October 7, 2018, by and among Navios Acquisition, its Merger Sub, Navios Midstream and NAP General Partner. Pursuant to the Merger Agreement,Merger Sub merged with and into Navios Midstream, with Navios Midstream surviving as a wholly-owned subsidiary of Navios Acquisition. As ofDecember 31, 2018, Navios Holdings’ ownership of the outstanding voting stock of Navios Acquisition was 32.8% and its economic interest in NaviosAcquisition was 35.8%.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 February 18, 2015, Navios Holdings, Navios Acquisition and Navios Partners established Navios Europe II and have economic interestsof 47.5%, 47.5% and 5.0%, respectively and voting interests of 50%, 50% and 0%, respectively.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 undercharters having a duration of more than 12 months) for long-term periods at fixed or floating rates to various shipping industry counterpartiesconsidered by Navios Holdings to have appropriate credit profiles. By doing this, Navios Holdings aims to lock in, subject to credit and operatingrisks, favorable forward revenue and cash flows, which it believes, will cushion it against unfavorable market conditions, when the Company deemsnecessary. In addition, Navios Holdings trades additional vessels taken in on shorter term charters of less than 12 months duration as well as voyagecharters or COAs.Generally, this chartering policy may have the effect of generating Time Charter Equivalents (“TCE”) that are higher than spotemployment. The average daily charter-in vessel cost for the Navios Holdings long-term charter-in fleet (excluding vessels, which are utilized to servevoyage charters or COAs) was $12,700 per day for the year ended December 31, 2018. The average long-term charter-in hire rate per vessel wasincluded 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 eachvessel by (ii) the number of days each vessel is in operation for the year; (b) summing those individual multiplications; and (c) dividing such total bythe total number of charter-in vessel days for the year. Furthermore, Navios Holdings has the ability to increase its owned fleet through purchaseoptions exercisable in the future at favorable prices relative to the then-current market. Navios Holdings holds 22 purchase options, including thepurchase options of the vessels under bareboat contracts, expected to be delivered through 2020.Navios Holdings believes that a decrease in global commodity demand from its current level, and the delivery of dry bulk carrier newbuildings into the world fleet, could have an adverse impact on future revenue and profitability. However, Navios Holdings believes that the operatingcost advantage of its owned vessels and long-term chartered fleet will continue to help mitigate the impact of any declines in freight rates. A reducedfreight rate environment also has an adverse impact on the value of Navios Holdings’ owned fleet. In reaction to a decline in freight rates, availableship financing can also be negatively impacted.Navios 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) South American iron ore production and export, mainly from Brazil; and (iii) sales (and logistic services) of petroleum products in the Argentineand Paraguayan markets. Navios Holdings believes that the continuing development of these businesses will foster throughput growth and thereforeincrease revenues at Navios Logistics. Should this development be delayed, grain harvests be reduced, or the market experience an overall decrease inthe demand for grain or iron ore, the operations in Navios Logistics could be adversely affected.Navios Containers’ policy has been to take a portfolio approach to managing operating risks. This policy may lead Navios Containers totime charter-out many or all of the vessels that it is operating (i.e., vessels owned by Navios Containers or which Navios Containers controls) forperiods at fixed rates to various shipping industry counterparties considered by Navios Containers to have appropriate credit profiles. By doing this,Navios Containers aims to lock in, subject to credit and operating risks, favorable forward revenue and cash flows, which it believes, will cushion itagainst unfavorable market conditions, when Navios Containers deems necessary.Navios Containers believes that a decrease in the global finished and semi-finished goods trades from its current level, and the delivery ofcontainership new buildings into the world fleet, could have an adverse impact on future revenue and profitability. However, Navios Containersbelieves that the operating cost advantage of its owned vessels will continue to help mitigate the impact of any declines in time charter rates. Areduced time charter rate environment also has an adverse impact on the value of Navios Containers’ owned fleet. In reaction to a decline in timecharter rates, available ship financing can also be negatively impacted. 78 Table of ContentsFleetThe following is the current “core fleet” employment profile (excluding Navios Logistics and Navios Containers). The current “core fleet”consists of 61 vessels totaling 6.4 million deadweight tons and has an average age of 7.8 years, assuming basis delivered fleet. The employment profileof the fleet as of April 19, 2019 is reflected in the tables below. Navios Holdings has currently chartered-out 80.1% of available days for 2019, out ofwhich 46.0% on fixed rate and 34.1% on index. Although the fees as presented below are based on contractual charter rates, any contract is subject toperformance by the counterparties and us. Additionally, the level of these fees would decrease depending on the vessels’ off-hire days to performperiodic maintenance.Owned Vessels Vessels Type Built DWT Charter-outRate (1) Profit Share ExpirationDate (2) Navios Serenity Handysize 2011 34,690 9,263 No 08/2019 Navios Vector Ultra Handymax 2002 50,296 9,738 No 04/2019 Navios Mercator Ultra Handymax 2002 53,553 5,700 No 05/2019 Navios Arc Ultra Handymax 2003 53,514 10,450 No 06/2019 Navios Hios Ultra Handymax 2003 55,180 10,450 No 04/2019 Navios Kypros Ultra Handymax 2003 55,222 8,281— No100% of average Baltic Supramax58 10 TC Index Routes 04/201909/2019 Navios Astra Ultra Handymax 2006 53,468 10,213 No 09/2019 Navios Primavera Ultra Handymax 2007 53,464 7,030 No 04/2019 Navios Ulysses Ultra Handymax 2007 55,728 8,449— No100% of average Baltic Supramax58 10 TC Index Routes 04/201908/2019 Navios Celestial Ultra Handymax 2009 58,063 8,315— No100% of average Baltic Supramax58 10 TC Index Routes 04/201908/2019 Navios Vega Ultra Handymax 2009 58,792 10,688 No 04/2019 Navios Star Panamax 2002 76,662 9,529— No99% of average Baltic PanamaxIndex 4TC Routes 06/201904/2020 Navios Northern Star Panamax 2005 75,395 — 100% of average Baltic PanamaxIndex 4TC Routes 03/2021 Navios Amitie Panamax 2005 75,395 8,951— No100% of average Baltic PanamaxIndex 4TC Routes 06/201912/2020 Navios Taurus Panamax 2005 76,596 9,38410,34711,309— NoNoNo100% of average Baltic PanamaxIndex 4TC Routes 06/201909/201912/201907/2020 Navios Asteriks Panamax 2005 76,801 9,14410,010— NoNo100% of average Baltic PanamaxIndex 4TC Routes 06/201909/201912/2020 N Amalthia Panamax 2006 75,318 9,62510,636— NoNo100% of average Baltic PanamaxIndex 4TC Routes 06/201909/201901/2021 Navios Galileo Panamax 2006 76,596 8,951— No100% of average Baltic PanamaxIndex 4TC Routes 06/201901/2021 N Bonanza Panamax 2006 76,596 9,62510,684— NoNo100% of average Baltic PanamaxIndex 4TC Routes 06/201909/201912/2020 Navios Avior Panamax 2012 81,355 12,113 No 06/2019 Navios Centaurus Panamax 2012 81,472 9,92810,973— NoNo111% of average Baltic PanamaxIndex 4TC Routes 06/201909/201912/2019 79 Table of ContentsVessels Type Built DWT Charter-outRate (1) Profit Share ExpirationDate (2) Navios Equator Prosper Capesize 2000 171,191 4,057 No 04/2019 Navios Stellar Capesize 2009 169,001 — 102% Weighted Average BalticCapesize 5TC Index Routes 01/2020 Navios Bonavis Capesize 2009 180,022 4,666— No102% Weighted Average BalticCapesize 5TC Index Routes 05/201908/2019 Navios Happiness Capesize 2009 180,022 — — 102% Weighted Average BalticCapesize 5TC Index Routes100.5% Weighted Average BalticCapesize 5TC Index Routes 05/201903/2021 Navios Phoenix Capesize 2009 180,242 16,424 No 12/2019 Navios Lumen Capesize 2009 180,661 — 12,58815,913 100% Weighted Average BalticCapesize 5TC Index RoutesNoNo 06/201909/201912/2019 Navios Antares Capesize 2010 169,059 — 102% Weighted Average BalticCapesize 5TC Index Routes 01/2020 Navios Etoile Capesize 2010 179,234 — 100.25% Weighted Average BalticCapesize 5TC Index Routes 12/2019 Navios Bonheur Capesize 2010 179,259 4,598— No101.5% Weighted Average BalticCapesize 5TC Index Routes 05/201908/2019 Navios Altamira Capesize 2011 179,165 14,825 No 12/2019 Navios Azimuth Capesize 2011 179,169 15,628 No 10/2019 Navios Ray Capesize 2012 179,515 19,570 No 06/2019 Navios Gem Capesize 2014 181,336 17,480 No 12/2019 Long-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 2019 isestimated at $13,811/day. We estimate the days of the long-term charter-in vessels (excluding vessels which are utilized to fulfill COAs) for 2019 are7,485 days. Vessels Type Built DWT PurchaseOption (3) Charter-outRate (1) ExpirationDate (2) Navios Lyra Handysize 2012 34,718 Yes(4) 8,788 07/2019 Navios Mercury Ultra Handymax 2013 61,393 Yes 9,275— (5) 04/201909/2019 Navios Venus Ultra Handymax 2015 61,339 Yes 9,094— (6) 05/201909/2019 Navios Marco Polo Panamax 2011 80,647 Yes 9,013— (7) 04/201908/2020 Navios Southern Star Panamax 2013 82,224 Yes 11,171— (8) 04/201902/2020 Sea Victory Panamax 2014 77,095 Yes 10,780 05/2019 80 Table of ContentsElsa S Panamax 2015 80,954 No 9,048— (9) 06/201901/2021 Navios Amber Panamax 2015 80,994 Yes 8,831— (9) 05/201903/2021 Navios Sky Panamax 2015 82,056 Yes 8,447— (10) 04/201903/2021 Navios Coral Panamax 2016 84,904 Yes 9,193— (11) 04/201909/2020 Navios Citrine Panamax 2017 81,626 Yes 9,500— — (12)(11) 04/201904/202012/2020 Navios Dolphin Panamax 2017 81,630 Yes 10,132— — (12)(11) 04/201905/202011/2020 Mont Blanc Hawk Panamax 2017 81,638 No 9,324— (9) 04/201904/2021 Cassiopeia Ocean Panamax 2018 82,069 No 10,40511,069— (9) 06/201909/201907/2021 Navios Gemini Panamax 2018 81,704 No(17) 14,393 09/2020 Navios Horizon I Panamax 2019 81,692 No(17) 8,55011,40012,198— (11) 06/201909/201912/201909/2021 King Ore Capesize 2010 176,800 Yes — Navios Koyo Capesize 2011 181,415 Yes — (13) 12/2019 Navios Obeliks Capesize 2012 181,415 Yes — Dream Canary Capesize 2015 180,528 Yes — (14) 12/2020 Dream Coral Capesize 2015 181,249 Yes 5,581— 16,625— (15)(15) 05/201906/201912/201910/2020 Navios Felix Capesize 2016 181,221 Yes — (16) 12/2019 Long-term Bareboat Chartered-in Fleet to be delivered Vessels Type DeliveryDate DWT PurchaseOption (3) ExpirationDate Navios Herakles I Panamax Q3 2019 81,000 Yes Q2 2029 Navios Felicity I Panamax Q4 2019 81,000 Yes Q4 2029 Navios Uranus Panamax Q4 2019 81,600 Yes Q4 2029 Navios Galaxy II Panamax Q1 2020 81,600 Yes Q4 2029 Navios Magellan II Panamax Q2 2020 81,000 Yes Q1 2030 81 Table of Contents(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)110% to 112% of average Baltic Supramax 58 10TC Index Routes.(6)110% of average Baltic Supramax 58 10TC Index Routes.(7)112% of average Baltic Panamax 4TC Index Routes.(8)133.75% of average Baltic Panamax 4TC Index Routes.(9)115% of average Baltic Panamax 4TC Index Routes.(10)113% of average Baltic Panamax 4TC Index Routes.(11)120% of average Baltic Panamax 4TC Index Routes.(12)134% of average Baltic Panamax 4TC Index Routes.(13)110% of average Baltic Capesize 5TC Index Routes.(14)120% of average Baltic Capesize 5TC Index Routes.(15)122% of average Baltic Capesize 5TC Index Routes.(16)118% of average Baltic Capesize 5TC Index Routes.(17)Navios Holdings has the right of first refusal and profit sharing on sale of vessel.Recent DevelopmentsNavios Logistics Credit FacilityOn April 25, 2019, Navios Holdings entered into a secured credit facility of $50.0 million with Navios Logistics to be used for generalcorporate purposes, including the repurchase of 2022 Notes. This credit facility is secured by (i) any 2022 Notes purchased by Navios Holdings withthese funds and (ii) equity interests in five subsidiaries of the Company that have entered into certain bareboat contracts. Each such bareboat contracthas a ten-year term for a newbuilding bulk carrier and an option to acquire the related vessel. The credit facility is available in multiple drawings, hasan arrangement fee of $0.5 million, a fixed interest rate of 12.75% for the first year and a fixed interest rate of 14.75% for the second year, payableannually. The secured credit facility includes negative covenants substantially similar to the 2022 Notes and customary events of default. The creditfacility matures in April 2021. As of April 25, 2019, $19.0 million was drawn under this facility of which $18.7 million was used to acquire the 2022Notes from Navios Logistics. During March 2019 and as of April 15, 2019, Navios Logistics purchased $35.5 million of the 2022 Notes fromunaffiliated third parties in open market transactions for $17.6 million plus accrued interest.Fleet UpdateOn April 23, 2019, Navios Containers took delivery of a 2011-built 10,000 TEU containership from an unrelated third party for a purchaseprice of $52.5 million. The acquisition of the containership was financed with a: (i) loan of up to $31.1 million from a commercial bank; (ii)$15.0 million credit by the seller; and (iii) cash on balance sheet.In March 2019, Navios Holdings completed the sale to an unrelated third party of the Navios Meridian, a 2002-built Ultra Handymaxvessel of 50,316 dwt, for a total net sale price of $6.8 million, paid in cash. The loss due to sale amounted to $5.5 million.In February 2019, Navios Containers announced the exercise of an option to acquire a 2011-built 10,000 TEU containership from anunrelated third party for a purchase price of $52.5 million. The acquisition of the containership will be financed with a: (i) loan of up to $31.8 millionfrom a commercial bank; (ii) $5.0 million credit by the seller; and (iii) cash on balance sheet. The containership is expected to be delivered to NaviosContainers’ owned fleet in the third quarter of 2019.Series G and Series H Exchange OfferOn December 21, 2018, Navios Holdings announced that it commenced an offer to exchange cash and/or newly issued 2024 Notes forapproximately 66 2/3% of each of the outstanding Series G Depositary Shares and Series H Depositary Shares (the “Exchange Offer”). As of March 21,2019, a total of 10,930 Series H were validly tendered in exchange for a total of approximately $4.2 million cash consideration and a total ofapproximately $4.7 million in aggregate principal amount of 2024 Notes. As of April 18, 2019, a total of 8,841 Series G were validly tendered inexchange for a total of approximately $4.4 million cash consideration and a total of approximately $3.9 million in aggregate principal amount of 2024Notes. 82 Table of ContentsNavios Revolving Loans IIn February 2019, Navios Holdings funded with $4.0 million Navios Europe I under Navios Revolving Loans I.Reverse Stock SplitOn December 21, 2018, the Navios Holdings’ common stockholders approved a one-for-ten reverse stock split of the Company’soutstanding shares of common stock (the “Reverse Stock Split”), in order to achieve compliance with the NYSE’s continued listing standards. TheReverse Stock Split was effective since January 3, 2019 and the common stock commenced trading on that date on a split-adjusted basis. As a result ofthe Reverse Stock Split, every ten shares of issued and outstanding common stock were combined into one issued and outstanding share of commonstock, without any change in authorized shares or the par value per share. All issued and outstanding shares of common stock, redemption andconversion terms of preferred stock, options to purchase common stock and per share amounts contained in the consolidated financial statements havebeen retroactively adjusted to reflect the Reverse Stock Split for all periods presented.Navios Containers Repurchase ProgramIn March 2019, the Board of Directors of Navios Containers authorized a unit repurchase program for up to $10.0 million of NaviosContainers’ common units over a one-year period. Common unit repurchases will be made from time to time for cash in open market transactions atprevailing market prices or in privately negotiated transactions. The timing and amount of repurchases under the program will be determined byNavios Containers’ management based upon market conditions and other factors. Repurchases may be made pursuant to a program adopted under Rule10b5-1 under the Securities Exchange Act of 1934, as amended. The program does not require any minimum repurchase or any specific number of unitsof common equity and may be suspended or reinstated at any time in Navios Containers’ discretion and without notice. The Board of Directors ofNavios Containers will review the program periodically. As of the date of this report, Navios Containers has not yet purchased any units under thisprogram.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-term charters complemented by spot charters (time charters for short-term employment) and COAs; (iii) monitoring the financial impact of corporateexposure from physical transactions; (iv) monitoring market and counterparty credit risk limits; (v) adhering to risk management and operation policiesand procedures; 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 vesselsin order to adjust to anticipated changes in market rates. Navios Holdings aims to achieve an appropriate balance between owned vesselsand long and short-term chartered-in vessels and controls approximately 6.4 million dwt in dry bulk tonnage. Navios Holdings’ options toextend the charter duration of vessels it has under long-term time charter (durations of over 12 months) and its purchase options onchartered vessels permit Navios 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 thevessel is off-hire due to scheduled repairs or repairs under guarantee, vessel upgrades or special surveys and ballast days relating tovoyages. The shipping industry uses available days to measure the number of days in a period during which vessels should be capable ofgenerating 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-hiredue to any reason, including lack of demand or unforeseen circumstances. The shipping industry uses operating days to measure theaggregate number of 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 daysduring the period. The shipping industry uses fleet utilization to measure a company’s efficiency in finding suitable employment for itsvessels and minimizing 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. 83 Table of Contents • TCE rates: TCE rates are defined as voyage and time charter revenues less voyage expenses during a period divided by the number ofavailable days during the period. The TCE rate is a standard shipping industry performance measure used primarily to compare dailyearnings generated by vessels on time charters with daily earnings generated by vessels on voyage charters, because charter hire rates forvessels on voyage charters are generally not expressed in per day amounts, while charter hire rates for vessels on time charters generally areexpressed 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 theperiod.Voyage 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 a time charter, owners assume no risk for finding business and obtaining and paying for fuel or other expenses related to the voyage, such as portentry fees. In general, a long-term time charter assures the vessel owner of a consistent stream of revenue. Operating the vessel in the spot market affordsthe owner greater spot market opportunity, which may result in high rates when vessels are in high demand or low rates when vessel availabilityexceeds demand. Vessel charter rates are affected by world economics, international events, weather conditions, labor strikes, governmental policies,supply and demand, and many other 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 asa method 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 amongcompetitors.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 andrequire upgrades from time to time to comply with new regulations. The average age of Navios Holdings’ owned core fleet is 7.8 years, basis fullydelivered fleet. However, as such fleet ages or if Navios Holdings expands its fleet by acquiring previously owned and older vessels, the cost per vesselwould be expected to rise and, assuming all else, including rates, remains constant, vessel profitability would be expected to decrease. 84 Table of ContentsStatement 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 suchtype of charter. Although revenue can be identified for each type of charters, management does not identify expenses, profitability or other financialinformation on a charter-by-charter or type of charter basis. The reportable segments reflect the internal organization of the Company and are strategicbusinesses that offer different products and services. The Company currently has three reportable segments: the Dry Bulk Vessel Operations, theLogistics Business and the Containers Business. The Dry Bulk Vessel Operations segment consists of the transportation and handling of bulk cargoesthrough the ownership, operation, and trading of vessels and freight. The Logistics Business segment consists of port terminal business, barge businessand cabotage business in the Hidrovia region of South America. Navios Holdings measures segment performance based on net income attributable toNavios Holdings’ common stockholders. The Containers Business is a new reportable segment for the year ended December 31, 2018 as a result of theconsolidation of Navios Containers since November 30, 2018 (date of obtaining control).For further segment information, please see Note 19 to the Consolidated Financial Statements included elswhere in this Annual Report.Period over Period ComparisonsFor the year ended December 31, 2018 compared to the year ended December 31, 2017The following table presents consolidated revenue and expense information for each of the years ended December 31, 2018 and 2017,respectively. This information was derived from the audited consolidated revenue and expense accounts of Navios Holdings for each of the yearsended December 31, 2018 and 2017. (In thousands of U.S. dollars) Year EndedDecember 31,2018 Year EndedDecember 31,2017 Revenue $517,739 $463,049 Administrative fee revenue from affiliates 28,393 23,667 Time charter, voyage and logistics business expenses (206,333) (213,929) Direct vessel expenses (101,543) (116,713) General and administrative expenses incurred on behalf of affiliates (28,393) (23,667) General and administrative expenses (27,513) (27,521) Depreciation and amortization (102,839) (104,112) Provision for losses on accounts receivable (575) (269) Interest income 8,748 6,831 Interest expense and finance cost (139,120) (121,611) Impairment losses (200,657) (50,565) Bargain gain upon obtaining control 58,313 — Gain/(loss) on bond and debt extinguishment 6,464 (981) Gain on sale of assets 28 1,064 Other income 14,582 6,140 Other expense (13,708) (13,761) Loss before equity in net earnings of affiliated companies $(186,414) $(172,378) Equity in net (losses)/earnings of affiliated companies (80,205) 4,399 Loss before taxes $(266,619) $(167,979) Income tax benefit/(expense) 1,108 3,192 Net loss $(265,511) $(164,787) Less: Net income attributable to the noncontrolling interest (3,207) (1,123) Net loss attributable to Navios Holdings common stockholders $(268,718) $(165,910) Set forth below are selected historical and statistical data for the dry bulk vessel operations segment for each of the years endedDecember 31, 2018 and 2017 that the Company believes may be useful in better understanding the Company’s financial position and results ofoperations. 85 Table of Contents Year EndedDecember 31, 2018 2017 FLEET DATA Available days 22,938 23,433 Operating days 22,855 23,359 Fleet utilization 99.6% 99.7% Equivalent vessels 63 64 AVERAGE DAILY RESULTS TCE $12,534 $9,705 During the year ended December 31, 2018, there were 495 less available days as compared to 2017, mainly due to (i) a decrease inavailable days for owned vessels by 864 days following the sale of Navios Magellan, Navios Mars, Navios Sphera, Navios Achilles, Navios Herakles,Navios Horizon and Navios Ionian; and (ii) a decrease in short-term charter-in fleet available days by 57 days. This overall decrease was partiallymitigated by an increase in long-term charter-in fleet available days by 426 days.The average TCE rate for the year ended December 31, 2018 was $12,534 per day, $2,829 per day higher than the rate achieved in 2017,mainly due to the improved freight and time charter market.Revenue: Revenue from dry bulk vessel operations for the year ended December 31, 2018 was $298.1 million as compared to$250.4 million for the same period during 2017. The increase in dry bulk revenue was mainly attributable to the increase in TCE per day by 29.1% or$2,829 to $12,534 per day in the year ended December 31, 2018, as compared to $9,705 per day in the same period in 2017.Revenue from the Logistics Business was $207.6 million for the year ended December 31, 2018 as compared to $212.6 million for the yearended December 31, 2017. The decrease of $5.0 million was mainly attributable to (i) a $13.2 million decrease in the barge business, mainly due tolower liquid cargo transportation; (ii) a $5.0 million decrease in the cabotage business mainly attributable to lower rates achieved; and (iii) a$0.1 million decrease in sales of products mainly due to a decrease in volume of the products sold at the Paraguayan liquid port terminal. The overalldecrease was partially mitigated by (i) a $13.3 million increase in the port terminal business mainly attributable to the operations of the iron oreterminal, servicing the Vale contract, for the full year in 2018, compared to partial year in 2017; and (ii) a $2.5 million increase in sales of products,mainly attributable to the commencement of operations at the new iron ore terminal.Revenue from the Containers Business was $12.1 million for the period from November 30, 2018 (date of obtaining control) toDecember 31, 2018.Administrative Fee Revenue from Affiliates: Administrative fee revenue from affiliates increased by $4.7 million, or 19.8%, to$28.4 million for the year ended December 31, 2018, as compared to $23.7 million for the year ended December 31, 2017. See general andadministrative expenses incurred on 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 $7.6 millionor 3.6% to $206.3 million for the year ended December 31, 2018, as compared to $213.9 million for the year ended December 31, 2017.Time charter and voyage expenses from dry bulk operations decreased by $7.0 million, or 4.7%, to $142.6 million for the year endedDecember 31, 2018, as compared to $149.6 million for the year ended December 31, 2017. This was primarily due to (i) a decrease in off hire and fuelexpenses by $7.7 million; (ii) a decrease in port expenses by $3.1 million; and (iii) a decrease in other voyage expenses by $1.6 million. The overalldecrease was partially mitigated by an increase in charter-in expenses by $5.4 million, mainly due to an increase in charter-in available days in 2018,as compared to the same period in 2017.Of the total expenses for the years ended December 31, 2018 and 2017, $63.2 million and $64.3 million, respectively, related to NaviosLogistics. The decrease of $1.1 million in time charter, voyage and Logistics Business was mainly due to (i) a $1.8 million decrease in barge businessmainly attributable to the reduced number of voyages; and (ii) a $0.3 million decrease in cabotage business mainly attributable to the decreasedvoyage expenses. The overall decrease was partially mitigated by (i) a $0.4 million increase in the port terminal business mainly attributable to theoperations of the iron ore terminal, servicing the Vale contract, for the full year in 2018, compared to partial year in 2017; and (ii) a $0.6 millionincrease in cost of products sold mainly attributable to an increase in the price of the products sold at the Paraguayan liquid port terminal. 86 Table of ContentsTime charter and voyage expenses from Containers Business was $0.5 million for the period from November 30, 2018 (date of obtainingcontrol) to December 31, 2018.Direct Vessel Expenses: Direct vessel expenses decreased by $15.2 million, or 13.0%, to $101.5 million for the year ended December 31,2018, as compared to $116.7 million for the year ended December 31, 2017. Direct vessel expenses include crew costs, provisions, deck and enginestores, lubricating oils, insurance premiums and costs for maintenance and repairs.Direct vessel expenses from dry bulk operations decreased by $6.1 million, or 13.2%, to $40.1 million for the year ended December 31,2018, as compared to $46.2 million for the year ended December 31, 2017. This decrease was mainly attributable to (i) a decrease in operating days ofthe owned vessels mainly due to the sale of the Navios Magellan, Navios Mars, Navios Sphera, Navios Achilles, Navios Herakles, Navios Horizon andNavios Ionian; (ii) a decrease in crew related costs; (iii) a decrease in sundry general expenses; and (iv) a decrease in insurance costs.Of the total amounts of direct vessel expenses for the years ended December 31, 2018 and 2017, $56.2 million and $70.5 million,respectively, related to the Logistics Business. The decrease of $14.3 million in direct vessel expenses was mainly due to (i) a $8.9 million decrease incabotage business mainly attributable to a decrease in the Argentinean crew costs; (ii) a $4.7 million decrease in barge business mainly attributable todecreased crew costs; and (iii) a $0.7 million decrease in amortization of deferred drydock and special survey costs of Navios Logistics’ fleet.Direct vessel expenses from Containers Business was $5.3 million for the period from November 30, 2018 (date of obtaining control) toDecember 31, 2018.General and Administrative Expenses Incurred on Behalf of Affiliates: General and administrative expenses incurred on behalf ofaffiliates increased by $4.7 million, or 19.8%, to $28.4 million for the year ended December 31, 2018, as compared to $23.7 million for the year endedDecember 31, 2017. 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 31,2018 Year EndedDecember 31,2017 Administrative fee revenue from affiliates $(28,393) $(23,667) General and administrative expenses incurred on behalf of affiliates 28,393 23,667 General and administrative expenses 27,513 27,521 (in thousands of U.S. dollars) Year EndedDecember 31,2018 Year EndedDecember 31,2017 Dry bulk Vessel Operations $11,576 $10,856 Logistics Business 15,064 16,665 Containers Business 873 — General and administrative expenses $27,513 $27,521 General and administrative expenses remained stable at $27.5 million for the years ended December 31, 2018 and December 31, 2017.Depreciation and Amortization: For the year ended December 31, 2018, depreciation and amortization decreased by $1.3 million to$102.8 million, as compared to $104.1 million for the year ended December 31, 2017.Depreciation expenses related to Dry Bulk Vessel Operations decreased by $6.1 million, or 8.3 %, to $67.7 million for the year endedDecember 31, 2018, as compared to $73.8 million for the year ended December 31, 2017. This decrease was primarily due to (i) the sale of NaviosMagellan, Navios Mars, Navios Sphera, Navios Achilles, Navios Herakles, Navios Horizon and Navios Ionian; and (ii) the impairment loss recognizedin the fourth quarter of 2017 for one of the Company’s vessels; partially mitigated by the acquisition of Navios Primavera and Navios Equator Prosper.Amortization expenses related to dry bulk operations decreased by $0.6 million, or 17.6%, to $2.8 million for the year ended December 31, 2018, ascompared to $3.4 million for the year ended December 31, 2017. This decrease was mainly due to early redelivery of one vessel in the third quarter of2016, resulting in the subsequent write-off of the related purchase option and the favorable lease balance. 87 Table of ContentsOf the total amount of depreciation and amortization for the year ended December 31, 2018 and 2017, $29.3 million and $26.9 million,respectively, related to Navios Logistics. The increase in depreciation and amortization of the Logistics Business was mainly due to (i) a $2.1 millionincrease in the depreciation of port terminal business mainly due to the operations of the iron ore terminal, servicing the Vale contract, for the full yearin 2018, compared to partial year in 2017; (ii) a $1.2 million increase in the depreciation of barge business mainly due to the commencement ofoperations of the three new pushboats; and (iii) a $0.3 million increase in the amortization of intangibles assets in the port terminal business. Theoverall increase was partially mitigated by a $1.1 million decrease in the amortization of intangibles assets in the barge business.Depreciation and amortization expenses related to Containers Business was $3.1 million for the period from November 30, 2018 (date ofobtaining control) to December 31, 2018.Provision for Losses on Accounts Receivable: For the year ended December 31, 2018, provision for losses on accounts receivableincreased by $0.3 million to $0.6 million, as compared to $0.3 million for the year ended December 31, 2017. The increase was mainly attributable to$0.8 million decrease in recovery of bad debt provisions in the Dry Bulk Vessel Operations. This overall increase was partially mitigated by a$0.5 million decrease in the provision for losses in the Logistics Business.Interest Income: Interest income increased by $1.9 million to $8.7 million for the year ended December 31, 2018, as compared to$6.8 million for the same period in 2017, mainly due to (i) a $1.6 million increase in interest income of the Dry Bulk Vessel Operations, mainly due tohigher interest income from loans provided to Navios Europe I and Navios Europe II and the amortization of the premium from the transfer of NaviosHoldings’ participation in the Navios Revolving Loans I (as defined herein) to Navios Partners in March 2017; and (ii) a $0.3 million increase ininterest income of 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, 2018 increased by $17.5 million, or14.4%, to $139.1 million, as compared to $121.6 million in the same period of 2017. This increase was due to (i) a $11.4 million increase in interestexpense and finance cost of the Logistics Business mainly attributable to the increased amount of debt drawn during the period and the reducedamount of capitalized interest, following the completion of the new iron ore terminal, during the year ended December 31, 2017 and the delivery of thethree new pushboats in the first quarter of 2018; (ii) a $4.9 million increase in interest expense and finance cost of the Dry Bulk Vessel Operations,mainly attributable to increase in interest expense and finance costs related to 2022 Senior Secured Notes entered into in November 2017, the fullrepayment of the Navios Acquisition Loan, 2019 Notes (as defined herein) and the repurchase of the 2022 Notes (as defined herein); and (iii)$1.2 million interest expense and finance cost of Containers Business for the period from November 30, 2018 (date of obtaining control) toDecember 31, 2018.Impairment Losses: For the year ended December 31, 2018, impairment losses recognized increased by $150.1 million to $200.7 million,as compared to $50.6 million for the year ended December 31, 2017. During the year ended December 31, 2018, the Company recognized(i) impairment losses of $179.2 million for four of the Company’s vessels; and (ii) impairment losses of $21.5 million relating to the sale of NaviosMagellan, Navios Mars, Navios Sphera, Navios Achilles and Navios Herakles. During the year ended December 31, 2017, the Company recognized(i) an impairment loss of $32.9 million for one of the Company’s vessels; (ii) impairment losses of $14.2 million relating to the sale of Navios Ionianand Navios Horizon; and (iii) an impairment loss of $3.4 million relating to a favorable lease term considered as impaired and written off.Gain on Bond and Debt Extinguishment: During year ended December 31, 2018, the Company repurchased $35.7 million of its 2022Notes (as defined herein) for a cash consideration of $28.8 million resulting in a gain on bond extinguishment of $6.5 million, net of deferred feeswritten-off. During year ended December 31, 2017, the Company refinanced one of its secured credit facilities and a benefit to nominal value of$1.7 million was achieved. During November 2017, the Company refinanced its 2019 Notes resulting in a loss on bond extinguishment 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 thesale of two self-propelled barges of the Logistics Business.Bargain Gain upon Obtaining Control: The excess of the fair value of Navios Containers’ identifiable net assets upon obtaining control of$229.9 million over the total fair value of Navios Containers’ total shares outstanding as of November 30, 2018 (date of obtaining control) of$171.7 million, resulted in a bargain gain upon obtaining control in the amount of $58.1 million as of December 31, 2018. Please refer to Note 3 to theConsolidated Financial Statements included herein. 88 Table of ContentsOther Income: Other income increased by $8.5 million to $14.6 million for the year ended December 31, 2018, as compared to$6.1 million for the year ended December 31, 2017. The increase was due to (i) a $8.0 million increase in other income of the Logistics Business; (ii) a$0.4 million increase in other income of Dry Bulk Vessels Operations; and (iii) $0.1 million other income of Containers Business for the period fromNovember 30, 2018 (date of obtaining control) to December 31, 2018.The increase in other income of the Dry Bulk Vessels Operations is mainly due to a $0.9 million gain from sale of our investment inAcropolis on December 6, 2018; partially mitigated by $0.5 million decrease in miscellaneous other income.The increase in other income of the Logistics Business was mainly due to (i) a $9.2 million increase in other income mainly due to theinsurance claim related to the fire incident at the iron ore port terminal; and (ii) a $2.0 million decrease in taxes other than income taxes, partiallymitigated by (i) a 2.1 million decrease in other income; and (ii) a $1.1 million decrease due to the income recorded from an arbitration award in 2017.Other Expense: Other expense decreased by $0.1 million to $13.7 million for the year ended December 31, 2018, as compared to$13.8 million for the year ended December 31, 2017. This decrease was due to a $0.7 million decrease in other expense of Dry Bulk Vessels Operations,partially mitigated by (i) $0.4 million other expense of the Containers Business for the period from November 30, 2018 (date of obtaining control) toDecember 31, 2018; and (ii) a $0.2 million increase in other expense of the Logistics Business.The increase in other expense of Dry Bulk Vessels Operations is mainly due to (i) a $2.5 million increase in other miscellaneous expenses;and (ii) a $0.3 million increase in taxes other than income tax. This increase was partially mitigated by (i) a $2.0 million decrease in loss from foreignexchange differences; and (ii) a $1.5 million decrease in miscellaneous voyage expensesThe increase in other expense of the Logistics Business is mainly due to an increase in loss from foreign exchange differences.Equity in Net (Losses)/Earnings of Affiliated Companies: Equity in net earnings of affiliated companies decreased by $84.6 million to$80.2 million loss for the year ended December 31, 2018, as compared to $4.4 million income for the same period in 2017. This decrease was mainlydue to (i) a $55.5 million OTTI loss relating to the investment in Navios Partners recognized in the fourth quarter of 2018; and (ii) a $29.1 milliondecrease in equity method income. The $29.1 million decrease in equity method income was mainly due to (i) $33.5 million decrease in equity methodincome from Navios Acquisition; (ii) a $0.1 million decrease in equity method income from Acropolis; partially mitigated by (i) a $3.7 million increasein equity method income from Navios Partners; (ii) a $0.5 million increase in equity method income from Navios Europe I and Navios Europe II; and(iii) a $0.3 million increase in equity method income from Navios Containers until November 30, 2018 (date of obtaining control).Income Tax Benefit: Income tax benefit decreased by $2.1 million to a $1.1 million for the year ended December 31, 2018, as compared toa $3.2 million for the year ended December 31, 2017. The change in income tax was mainly attributable to Navios Logistics due to a $2.4 milliondecrease in tax benefit in barge business mainly due to a reduction of deferred tax liability due to the decrease in future Argentinean income tax ratesfrom 2018 onwards, following the tax reforms voted by the Argentinean Parliament in December 31, 2017; partially mitigated by a $0.3 milliondecrease in income tax expense in cabotage business.Net Income Attributable to the Noncontrolling Interest: Net income attributable to the noncontrolling interest increased by $2.1 millionto $3.2 million income for the year ended December 31, 2018, as compared to $1.1 million for the same period in 2017. This decrease was mainlyattributable to Logistics Business net income for the year ended December 31, 2018 compared to the same period in 2017 and to Containers Businessnet income for the period from November 30, 2018 (date of obtaining control) to December 31, 2018. 89 Table of ContentsFor 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 yearsended December 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 endedDecember 31, 2017 and 2016 that the Company believes may be useful in better understanding the Company’s financial position and results ofoperations. 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-term and short-term charter-in fleet available days by 2,003 days. This increase was partially mitigated by a decrease in available days for ownedvessels by 478 days, mainly due to the sale of Navios Ionian and Navios Horizon. Navios Holdings can increase or decrease its fleet’s size bychartering-in vessels for long or short-term periods (less than one year). 90 Table of ContentsThe 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,mainly due to the improved freight market.Revenue: Revenue from dry bulk vessel operations for the year ended December 31, 2017 was $250.4 million as compared to$199.5 million for the same period during 2016. The increase in dry bulk revenue was mainly attributable to (i) the increase in TCE per day; and (ii) anincrease in available days 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 yearended December 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 theexpiration of certain iron ore transportation contracts in the second half of 2016; and (ii) a $4.5 million decrease in the cabotage business mainlyattributable to a decrease in the cabotage fleet’s operating days. The overall decrease was partially mitigated by (i) a $17.2 million increase in the portterminal business mainly attributable to the commencement of operations at the new iron ore terminal; and (ii) a $2.5 million increase in sales ofproducts, mainly attributable to an increase 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 for the year ended December 31, 2017, as compared to $21.8 million for the year ended December 31, 2016. See general andadministrative expenses incurred on behalf 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 or 22.2% 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-inexpenses 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 increasein 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 productssold mainly attributable to the increase in the volume and price of the products sold at the Paraguayan liquid port terminal; and (ii) a $2.1 millionincrease in the port terminal business mainly attributable to the commencement of operations in the second quarter of 2017 at the new iron oreterminal. The overall increase was partially mitigated by (i) a $0.4 million decrease in barge business mainly attributable to the reduced number ofvoyages; and (ii) a $0.2 million decrease in 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, as compared to $127.4 million for the year ended December 31, 2016. Direct vessel expenses include crew costs, provisions, deck and enginestores, lubricating oils, 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, as compared to $51.4 million for the year ended December 31, 2016. This decrease was mainly attributable to (i) a decrease in operating days ofthe owned vessels mainly due to the sale of the Navios Ionian and the Navios Horizon; (ii) a decrease in crew related costs; (iii) a decrease in insurancecosts; and (iv) a decrease 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 inbarge business mainly attributable to decreased repairs and maintenance and crew costs; and (ii) a $1.6 million decrease in cabotage business mainlyattributable to a decrease in the cabotage fleet’s operating days. The overall decrease was partially mitigated by a $1.0 million increase in amortizationof deferred drydock and special survey costs of Navios Logistics’ fleet.General and Administrative Expenses Incurred on Behalf of Affiliates: General and administrative expenses incurred on behalf ofaffiliates increased 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 endedDecember 31, 2016. See general and administrative expenses discussion below. 91 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 administrativeexpenses of 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 theNavios Horizon. Amortization expenses related to dry bulk operations decreased by $9.2 million, or 72.2%, to $3.4 million for the year endedDecember 31, 2017, as compared to $12.6 million for the year ended December 31, 2016. This decrease was mainly due to early redelivery of onevessel 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 millionincrease in the port terminal business mainly due to the commencement of operations at the new iron ore terminal; and (ii) a $0.2 million increase inthe cabotage business. The overall increase was partially mitigated by $1.7 million decrease in the barge business mainly due to the accelerateddepreciation of certain barges, recorded in 2016.Provision for Losses on Accounts Receivable: For the year ended December 31, 2017, provision for losses on accounts receivabledecreased 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 million decrease in the provision for losses in the Logistics Business and (ii) $0.3 million recovery of bad debt provisions in the dry bulk vesseloperations.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 million for the same period in 2016, mainly due to a $2.5 million increase in interest income of the dry bulk vessel operations, mainly due tohigher interest income from loans provided to Navios Europe I and Navios Europe II and the amortization of the premium from the transfer of NaviosHoldings’ participation in the Navios Revolving Loans I (as defined herein) to Navios Partners in March 2017. The overall increase was partiallymitigated by a $0.6 million decrease in interest 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, or7.0%, 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 interestexpense and finance cost of the dry bulk vessel operations, mainly attributable to increase in interest expense and finance costs related to the NaviosAcquisition Loan, and its full repayment in November 2017; and (ii) a $4.1 million increase in interest expense and finance cost of the LogisticsBusiness mainly attributable to the increased amount of debt, and the reduced amount of capitalized interest, following the completion of the new ironore terminal, during the year ended December 31, 2017. 92 Table of ContentsImpairment Losses: During the year ended December 31, 2017, the Company recognized (i) an impairment loss of $32.9 million for one ofthe Company’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) animpairment loss 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 millionrelating to a favorable 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 creditfacilities and a benefit to nominal value of $1.7 million was achieved. During November 2017, the Company refinanced its 2019 Notes resulting in aloss on bond extinguishment 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 thesale of two 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 for the year ended December 31, 2016. The decrease was due to a $14.2 million decrease in other income of dry bulk vessels operationsand a $2.1 million increase 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,partially mitigated 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 mainlydue to the income recorded from an arbitration award; and (ii) a $0.3 million increase in other income, partially mitigated by a $0.7 million decrease intaxes other than 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 million for 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 increase in 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 exchangedifferences, 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 mainlydue 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 OTTIloss relating to the investment in Navios Acquisition recognized in the fourth quarter of 2016; and (iii) a $20.9 million decrease in equity methodincome, partially mitigated by a $0.1 million increase in amortization of deferred gain from the vessels of Navios Partners (as more fully describedbelow). The $20.9 million decrease in equity method income was mainly due to a $39.7 million decrease in equity method income from NaviosAcquisition, partially mitigated by (i) a $18.5 million increase in equity method income from Navios Partners; (ii) a $0.2 million increase in equitymethod income from Navios Containers; (iii) a $0.2 million increase in equity method income from Acropolis; and (iv) a $0.1 million increase inequity method income from Navios Europe I and 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 inNavios Partners owned by third parties and defers recognition of the gain to the extent of its own ownership interest in Navios Partners (see also “Item7.B. Related Party 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, as compared to a $1.3 million loss for the year ended December 31, 2016. The change in income tax was mainly attributable to Navios Logisticsdue 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 futureArgentinean income tax rates from 2018 onwards; and (ii) a $0.3 million decrease in income tax expense in cabotage business mainly due to lowerpretax profit.Net Income Attributable to the Noncontrolling Interest: Net income attributable to the noncontrolling interest decreased by $2.6 millionto $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 mainlyattributable to Logistics Business net income for the year ended December 31, 2017 compared to the same period in 2016. 93 Table of ContentsNon-Guarantor SubsidiariesOur non-guarantor subsidiaries accounted for $219.7 million, or 42.4%, of our revenue, $62.3 million net income of our total net loss,$140.8 million of our Adjusted EBITDA, $1,394.5 million, or 52.0%, of our total assets and $799.4 million, or 37.0%, of our total liabilities, in eachcase, for the year ended and as of December 31, 2018. Our 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 each case, for the year ended and as of December 31, 2017. Our non-guarantor subsidiariesaccounted for $220.3 million, or 52.5%, of our revenue, $5.4 million net 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 total liabilities for the year ended December 31, 2016.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 internationaland regulatory standards, repayments of debt and payments of dividends. Navios Holdings may from time to time, subject to restrictions under its debtand equity instruments, including limitations on dividends and repurchases under its preferred stock, depending upon market conditions and financingneeds, use funds to refinance or repurchase its debt in privately negotiated or open transactions, by tender offer or otherwise, in compliance withapplicable laws, rules and regulations, at prices and on terms Navios Holdings deems appropriate and subject to Navios Holdings cash requirements forother purposes, compliance with the covenants under Navios Holdings’ debt agreements, and other factors management deems relevant. Generally, oursources of funds may be from cash from operations, long-term borrowings and other debt or equity financings, proceeds from asset sales and proceedsfrom sale of our stake in our investments. We cannot assure you that we will be able to secure adequate financing or obtain additional funds onfavorable terms, to meet our liquidity needs.See “Item 4.B Business Overview — Exercise of Vessel Purchase Options”, “Working Capital Position” and “Long-Term Debt Obligationsand Credit Arrangements” for further discussion of Navios Holdings’ working capital position.The following table presents cash flow information for each of the years ended December 31, 2018, 2017 and 2016 and were adjusted toreflect the adoption of ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. See also Note 2 to the Consolidated Financial Statementsincluded elswere in this Annual Report. (in thousands of U.S. dollars) Year EndedDecember 31,2018 Year EndedDecember 31,2017 Year EndedDecember 31,2016 Net cash provided by operating activities $55,637 $48,117 $39,826 Net cash provided by/(used in) investing activities 27,863 (42,365) (150,565) Net cash (used in)/ provided by financing activities (66,916) (12,940) 75,225 Increase/ (decrease) in cash and cash equivalents and restrictedcash 16,584 (7,188) (35,514) Cash and cash equivalents and restricted cash, beginning of year 134,190 141,378 176,892 Cash and cash equivalents and restricted cash, end of year $150,774 $134,190 $141,378 94 Table of ContentsCash provided by operating activities for the year ended December 31, 2018 as compared to the year ended December 31, 2017:Net cash provided by operating activities increased by $7.5 million to $55.6 million for the year ended December 31, 2018, as compared to$48.1 million for the year ended December 31, 2017. In determining net cash provided by operating activities, net loss is adjusted for the effects ofcertain non-cash items, which may be analyzed in detail as follows: (in thousands of U.S. dollars) Year EndedDecember 31,2018 Year EndedDecember 31,2017 Net loss $(265,511) $(164,787) Adjustments to reconcile net loss to net cash provided by operatingactivities: Depreciation and amortization 102,839 104,112 Amortization and write-off of deferred financing costs 7,880 6,391 Amortization of deferred drydock and special survey costs 13,828 14,727 Provision for losses on accounts receivable 575 269 Share based compensation 4,556 4,296 Gain on bond and debt extinguishment (6,464) (185) Bargain gain upon obtaining control (58,313) — Income tax benefit (1,108) (3,192) Impairment losses 200,657 50,565 Gain on sale of assets (894) (1,064) Loss/(equity) in affiliates, net of dividends received 84,317 4,610 Net income adjusted for non-cash items $82,362 $15,742 Accounts receivable, net, remained stable to $60.3 million at December 31, 2018. The movement of the year was primarily due to (i) a$2.5 million increase in accounts receivable of Navios Logistics; and (ii) $2.6 million accounts receivable, net of Navios Containers. The overallincrease was mitigated by (i) a $3.7 million decrease in accounts receivable from charterers and other receivables in Dry Bulk Vessel Operations; and(ii) a $1.4 million decrease in accrued voyage income in Dry Bulk Vessel Operations.Amounts due from/(to) affiliate companies, including current and non-current portion, decreased by $9.9 million from $82.7 millionpayable for the year ended December 31, 2017 to $74.5 million payable for the year ended December 31, 2018. This decrease was due to (i) a$7.7 million increase in balances relating to Navios Europe I and Navios Europe II; and (ii) a $1.7 million net decrease in payable of management andadministrative fees, drydocking and other expenses prepaid by the affiliates according to our management agreements; partially mitigated by a$1.2 million increase in balances following the transfer to Navios Partners, the Company’s rights to the Navios Revolving Loans I and Navios TermLoans I (as defined herein).Inventories decreased by $2.5 million, from $30.2 million at December 31, 2017 to $27.7 million at December 31, 2018. The decrease wasprimarily due to a $3.7 million decrease in inventories of Navios Logistics mainly attributable to a decrease in inventories in the liquid port inParaguay; partially mitigated by (i) a $0.6 million increase in inventories on board of our dry bulk vessels; and (ii) $0.6 million inventories of NaviosContainers.Prepaid expenses and other current assets increased by $12.9 million, from $27.1 million at December 31, 2017 to $40.0 million atDecember 31, 2018. The increase was primarily due to (i) a $11.3 million increase in prepaid expenses and other current assets of Navios Logistics;(ii) a $4.0 million increase in other assets; and (iii) $3.0 million prepaid expenses and other current assets of Navios Containers. This increase waspartially mitigated by (i) a $3.7 million decrease in claims receivables; (ii) a $1.5 million decrease in advances to agents and prepaid taxes; and (iii) a$0.2 million decrease in prepaid voyage and operating costs.Other long-term assets increased by $18.8 million, from $4.9 million at December 31, 2017 to $23.7 million at December 31, 2018. Theincrease was primarily due to (i) a $14.9 million increase in long-term assets from dry bulk operations mainly due to $15.0 million deposits for optionsto acquire vessels under bareboat contracts; (ii) a $2.8 million increase in other long-term assets of Navios Logistics; and (iii) $1.1 million long-termassets of Navios Containers. 95 Table of ContentsAccounts payable decreased by $0.7 million, from $79.7 million at December 31, 2017 to $78.9 million at December 31, 2018. Thedecrease was primarily due to (i) a $5.2 million decrease in accounts payable of Navios Logistics; (ii) a $4.1 million decrease in port agents payable;and (iii) a $0.4 million decrease in accounts payable relating to utilities and other service providers, legal and audit services. The overall decrease waspartially mitigated by (i) a $4.2 million increase in accounts payable to bunkers, lubricants and other suppliers; (ii) $3.6 million accounts payable ofNavios Containers; (iii) a $0.8 million increase in accounts payable relating to brokers and other accounts payable; and (iv) a $0.4 million increase inaccounts payable to headowners.Accrued expenses and other liabilities increased by $28.8 million to $123.7 million at December 31, 2018 from $94.9 million atDecember 31, 2017. The increase was primarily due to (i) a $18.0 million increase in accrued direct vessel expenses and drydocking expenses; (ii) a$7.5 million increase in accrued interest; (iii) a $6.8 million increase in other accrued expenses and other liabilities; and (iv) $2.3 million accruedexpenses of Navios Containers. The overall increase was partially mitigated by (i) a $1.8 million decrease in accrued payroll and related expenses; (ii) a$1.6 million decrease in accrued voyage expenses; (iii) a $1.4 million decrease in accrued expenses of Navios Logistics; and (iv) a $1.0 milliondecrease in accrued estimated losses on uncompleted voyages.Deferred income and cash received in advance increased by $0.8 million to $11.8 million at December 31, 2018 from $11.0 million atDecember 31, 2017. Deferred income primarily reflects freight and charter-out amounts collected on voyages that have not been completed and thecurrent portion of the deferred gain from the sale of various vessels to Navios Partners to be amortized over the next year. The increase was primarilydue to (i) $2.1 million deferred income and cash received in advance of Navios Containers; and (ii) a $0.1 million increase in deferred freight. Theoverall increase was partially mitigated by (i) a $0.9 million decrease in deferred income of Navios Logistics; and (ii) $0.5 million decrease in thecurrent portion of deferred gain from the sale of assets to Navios Partners.Other long-term liabilities and deferred income decreased by $24.3 million to $19.1 million at December 31, 2018 from $43.4 million atDecember 31, 2017. The decrease was primarily due to (i) $20.0 million related to the Navios Partners Guarantee (as defined herein) which as ofDecember 31, 2018, was included in “Due to affiliate companies”; (ii) a $2.4 million decrease in other long-term payables; (iii) a $1.3 million decreasein the non-current portion of deferred gain from the sale of vessels to Navios Partners; and (iv) a $0.6 million decrease in other long-term liabilities ofNavios Logistics.Cash provided by/(used in) investing activities for the year ended December 31, 2018 as compared to the year ended December 31, 2017:Cash provided by investing activities was $27.9 million for the year ended December 31, 2018, as compared to $42.4 million used in forthe same period of 2017.Cash provided by investing activities for the year ended December 31, 2018 was the result of: (i) $24.8 million payments made fromNavios Containers for the period from November 30, 2018 (date of obtaining control) to December 31, 2018 for the purchase of Bahamas and Bermuda;(ii) $21.6 million in payments for the purchase of Navios Primavera and Navios Equator Prosper; (iii) $15.2 million payments as deposits for options toacquire vessels under bareboat contracts; (iv) a $12.9 million loan to Navios Europe I and Navios Europe II; (v) $12.4 million in payments for theconstruction of Navios Logistics’ river and estuary tanker; (vi) $5.8 million in payments for the acquisition of common units and general partner unitsin Navios Partners; (vii) $4.1 million in payments made by the Company for the purchase of other fixed assets; (viii) $2.4 million in payments for theconstruction of Navios Logistics’ three new pushboats; (ix) $1.9 million in payments for the purchase of Navios Logistics’ other fixed assets; (x)$1.5 million in payments for the expansion of Navios Logistics’ dry port terminal; (xi) $1.1 million in payments made by Navios Logistics for theacquisition of land; (xii) $0.5 million payment for the investment in common shares in Navios Containers; (xiii) $0.5 million in payments made byNavios Logistics for the purchase of covers for dry barges; (xiv) $101.7 million of proceeds from sale of Navios Magellan, Navios Mars, Navios Sphera,Navios Achilles, Navios Herakles; (xv) $24.4 million cash acquired through obtaining control in Navios Containers; (xvi) $5.8 million dividendsreceived from Navios Acquisition; (xvii) $0.5 million of proceeds from sale of the Company’s investment in Acropolis; and (xviii) $0.2 million incollections of Navios Logistics’ Note receivable.Cash used in investing activities for the year ended December 31, 2017 was the result of: (i) $5.0 million payment for the investment incommon shares 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 foroption to acquire a vessel 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 in other fixed assets; (vi) $19.0 million in payments for the expansion of Navios Logistics’ dry port terminal; (vii)$14.6 million in payments for the construction of Navios Logistics’ three new pushboats delivered in February 2018, (viii) $6.1 million in paymentsfor the construction of a river and estuary tanker; (ix) $5.5 million in payments for the improvement of barges, pushboats and vessels; (x) $0.7 millionin payments for the purchase of other fixed assets; (xi) $0.6 million in payments for the purchase of covers for dry barges; (xii) $11.8 million ofproceeds from sale of Navios Ionian and Navios Horizon; (xiii) $7.3 million dividends received from Navios Acquisition; and (xiv) $0.2 million incollections of Navios Logistics’ Note receivable. 96 Table of ContentsCash used in by financing activities for the year ended December 31, 2018 as compared to the year ended December 31, 2017:Cash used in financing activities was $66.9 million for the year ended December 31, 2018, as compared to $12.9 million used in financingactivities for the same period of 2017.Cash used in financing activities for the year ended December 31, 2018 was the result of (i) $40.0 million related to scheduled repaymentinstallments; (ii) $31.8 million related to prepayment of indebtedness; (iii) ) $28.8 million of payments for the repurchase of the 2022 Notes; (iv)$22.5 million related to prepayment and refinance of indebtedness of Navios Containers for the period from November 30, 2018 (date of obtainingcontrol) to December 31, 2018; (v) $49.4 million proceeds from Navios Containers’ long term debt (net of deferred financing costs of $0.6 million);and (vi) $6.9 million of proceeds from Navios Logistics’ long term debt (net of deferred financing costs of $0.2 million).Cash used in financing activities for the year ended December 31, 2017 was the result of (i) a $291.1 million repayment related to therefinancing of one of the Company’s secured notes; (ii) $55.1 million related to prepayment of Navios Acquisition loan ; (iii) $25.7 million related toscheduled repayment installments; (iv) $25.3 million payments related to the dividend paid to the noncontrolling shareholders; (v) $15.6 millionrepayment related to the refinancing of one of the Company’s secured credit facilities; (vi) $12.4 million of payments for the termination of obligationsunder capital leases; (vii) $7.3 million related to prepayment of indebtedness originally set to mature in the third quarter of 2018; and (viii)$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 financingcost and discount of $13.8 million) related to the refinancing of 2019 Notes; (ii) $95.5 million of proceeds from the Term Loan B Facility (net ofdeferred financing cost and discount of $4.5 million); (iii) $14.7 million of loan proceeds (net of $0.5 million finance fees); (iv) $13.9 million ofproceeds from Navios Logistics’ long-term debt (net of deferred financing cost of $0.1 million); (v) $4.1 million proceeds from the transfer of theCompany’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 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 $8.3 million to $48.1 million for the year ended December 31, 2017, as compared to$39.8 million for the year ended December 31, 2016. In determining net cash provided by operating activities, net loss is adjusted for the effects ofcertain non-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 97 Table of ContentsAccounts 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 inMarch 2017 following the favorable resolution of the arbitration proceedings in New York (see also “Item 5E. Off-Balance Sheet Arrangements”),partially mitigated by (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 in accrued 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 millionpayable for the 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 increase in payable of management and administrative fees, drydocking and other expenses prepaid by the affiliates according to ourmanagement 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 inbalances following the transfer to Navios 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 NaviosLogistics mainly attributable to an increase in inventories in the liquid port in Paraguay.Prepaid expenses and other current assets decreased by $1.8 million, from $28.9 million at December 31, 2016 to $27.1 million atDecember 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 million decrease in prepaid expenses and other current assets of Navios Logistics. This increase was partially mitigated by (i) a $3.2 millionincrease in claims receivables; (ii) a $1.5 million increase in prepaid voyage and operating costs; (iii) a $1.2 million increase in advances to agents andprepaid 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. Theincrease was 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 toacquire a vessel under a bareboat contract; and (ii) a $0.2 increase in available-for-sale investments, partially mitigated by $0.6 million decrease inother long-term assets of Navios Logistics.Accounts payable decreased by $5.8 million, from $85.5 million at December 31, 2016 to $79.7 million at December 31, 2017. Thedecrease was primarily due to (i) a $7.6 million decrease in accounts payable of Navios Logistics; (ii) a $0.8 million decrease in accounts payablerelating to brokers and other accounts payable; (iii) a $0.7 million decrease in accounts payable relating to utilities and other service providers, legaland audit services. The overall decrease was partially mitigated by (i) a $1.4 million increase in port agents payable; (ii) a $1.3 million increase inaccounts payable to bunkers, lubricants and 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 atDecember 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 inaccrued voyage expenses; (iii) a $2.4 million increase in accrued direct vessel expenses; and (iii) a $2.5 million increase in accrued expenses of NaviosLogistics. The overall increase was partially mitigated by (i) a $4.8 million decrease in accrued interest; (ii) a $2.7 million decrease in other accruedexpenses 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 thecurrent portion of the deferred gain from the sale of various vessels to Navios Partners to be amortized over the next year. The increase was primarilydue 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 decrease in 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 wasprimarily due 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 thenon-current portion of deferred gain from the sale of vessels to Navios Partners. 98 Table of ContentsCash 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 sameperiod of 2016.Cash used in investing activities for the year ended December 31, 2017 was the result of: (i) $5.0 million payment for the investment incommon shares 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 foroption to acquire a vessel 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 in other fixed assets; (vi) $19.0 million in payments for the expansion of Navios Logistics’ dry port terminal; (vii)$14.6 million in payments for the construction of Navios Logistics’ three new pushboats delivered in February 2018, (viii) $6.1 million in paymentsfor the construction of a river and estuary tanker; (ix) $5.5 million in payments for the improvement of barges, pushboats and vessels; (x) $0.7 millionin payments for the purchase of other fixed assets; (xi) $0.6 million in payments for the purchase of covers for dry barges; (xii) $11.8 million ofproceeds from sale of Navios Ionian and Navios Horizon; (xiii) $7.3 million dividends received from Navios Acquisition; and (xiv) $0.2 million incollections 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 theacquisition of 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 otherfixed assets; (iv) $5.3 million proceeds from the sale of available-for-sale securities; and (v) $91.2 million in payments made by Navios Logisticsdescribed 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 threenew pushboats; and (c) $4.3 million in payments for improvements and purchase of other fixed assets.Cash (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 $12.9 million for the year ended December 31, 2017, as compared to $75.2 million provided byfinancing activities 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 therefinancing of one of the Company’s secured notes; (ii) $55.1 million related to prepayment of Navios Acquisition loan ; (iii) $25.7 million related toscheduled repayment installments; (iv) $25.3 million payments related to the dividend paid to the noncontrolling shareholders; (v) $15.6 millionrepayment related to the refinancing of one of the Company’s secured credit facilities; (vi) $12.4 million of payments for the termination of obligationsunder capital leases; (vii) $7.3 million related to prepayment of indebtedness originally set to mature in the third quarter of 2018; and (viii)$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 financingcost and discount of $13.8 million) related to the refinancing of 2019 Notes; (ii) $95.5 million of proceeds from the Term Loan B Facility (net ofdeferred financing cost and discount of $4.5 million); (iii) $14.7 million of loan proceeds (net of $0.5 million finance fees); (iv) $13.9 million ofproceeds from Navios Logistics’ long-term debt (net of deferred financing cost of $0.1 million); (v) $4.1 million proceeds from the transfer of theCompany’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 theNavios Acquisition Loan; and (iii) $60.3 million loan proceeds from Navios Logistics. Cash provided by financing activities was partially mitigatedby (i) $30.7 million of payments for the repurchase of 2019 Notes; (ii) $9.3 million payment related to the Tender Offer for the redemption of preferredstock; (iii) $40.7 million of payments performed in connection with the Company’s outstanding indebtedness, of which $21.6 million related toscheduled repayment installments for the year 2016, $13.8 million related to the refinancing of one of our secured credit facilities and $5.3 millionrelated to the balloon payments originally due in 2019 and 2020; (iv) $3.7 million of dividends paid to the Company’s stockholders; (v) $0.8 millionin payments for the acquisition of treasury stock; and (vi) $3.0 million relating to payments for capital lease obligations. 99 Table of ContentsAdjusted EBITDA: EBITDA represents net (loss)/income attributable to Navios Holdings’ common stockholders before interest andfinance costs, before depreciation and amortization and before income taxes. Adjusted EBITDA represents EBITDA before stock based compensation.We use Adjusted EBITDA as liquidity measure and reconcile Adjusted EBITDA to net cash provided by operating activities, the most comparable U.S.GAAP liquidity measure. Adjusted EBITDA is calculated as follows: net cash provided by operating activities adding back, when applicable and as thecase 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 finance charges and gains/(losses) on bond and debt extinguishment, (v) (provision)/recovery for losses on accounts receivable, (vi) equityin affiliates, net of dividends received, (vii) payments for drydock and special survey costs, (viii) noncontrolling interest, (ix) gain/ (loss) on sale ofassets/ subsidiaries, (x) unrealized (loss)/gain on derivatives, and (xi) loss on sale and reclassification to earnings of available-for-sale securities andimpairment charges. Navios Holdings believes that Adjusted EBITDA is a basis upon which liquidity can be assessed and represents useful informationto investors regarding Navios Holdings’ ability to service and/or incur indebtedness, pay capital expenditures, meet working capital requirements andpay dividends. Navios Holdings also believes that Adjusted EBITDA is used (i) by prospective and current lessors as well as potential lenders toevaluate potential transactions; (ii) to evaluate and price potential acquisition candidates; and (iii) by securities analysts, investors and other interestedparties in 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 theanalysis of Navios Holdings’ results as reported under U.S. GAAP. Some of these limitations are: (i) Adjusted EBITDA does not reflect changes in, orcash requirements for, working capital needs; (ii) Adjusted EBITDA does not reflect the amounts necessary to service interest or principal payments onour debt and other financing arrangements; and (iii) although depreciation and amortization are non-cash charges, the assets being depreciated andamortized may have to be replaced in the future. Adjusted EBITDA does not reflect any cash requirements for such capital expenditures. Because ofthese limitations, among others, Adjusted EBITDA should not be considered as a principal indicator of Navios Holdings’ performance. Furthermore,our calculation of Adjusted EBITDA may not be comparable to that reported by other companies due to differences in methods of calculation.For a reconciliation of cash flows from operating activities to Adjusted EBITDA refer to “Item 3. Key Information- A. Selected FinancialData.”Adjusted EBITDA for the years ended December 31, 2018 and 2017 was $(18.2) million and $68.8 million, respectively. The $87.0 milliondecrease in Adjusted EBITDA was primarily due to (i) a $150.1 million increase in impairment losses; (ii) a $84.6 million decrease in equity in netearnings from affiliated companies; (iii) a $2.1 million increase in net income attributable to the noncontrolling interest; (iv) a $1.1 million decrease ingain on sale of assets; and (v) a $0.3 million increase in provision for losses on accounts receivable. This overall decrease of $238.2 million waspartially mitigated by (i) $58.3 million bargain gain upon obtaining control in Navios Containers; (ii) a $54.7 million increase in revenue; (iii) a$14.2 million decrease in direct vessel expenses (excluding the amortization of deferred drydock and special survey costs); (iv) a $8.5 million increasein other income; (v) a $7.6 million decrease in time charter, voyage and logistics business expenses; (vi) a $7.5 million increase in gain on bond/debtextinguishment; (vii) a $0.3 million increase in general and administrative expenses (excluding share-based compensation expenses); and (viii) a$0.1 million increase in other expenses.Adjusted EBITDA for the years ended December 31, 2017 and 2016 was $68.8 million and $(62.8) million, respectively. The$131.6 million increase in Adjusted EBITDA was primarily due to (i) a $207.2 million movement in equity in net earnings from affiliated companiesfollowing the OTTI loss recognized during 2016; (ii) a $43.2 million increase in revenue; (iii) a $11.6 million decrease in direct vessel expenses(excluding the amortization of deferred drydock and special survey costs); (iv) a $2.6 million decrease in net income attributable to the noncontrollinginterest; (v) a $1.1 million gain on sale 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 mitigated by (i) a $50.6 million impairment losses (ii) a $38.8 million increase in time charter, voyage and logisticsbusiness expenses; (iii) a $30.2 million decrease in gain on bond/debt extinguishment; (iv) a $12.1 million decrease in other income; (v) a $2.1 millionincrease in other expenses; and (vi) a $1.3 million increase in general and administrative expenses (excluding share-based compensation expenses). 100 Table of ContentsLong-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 ofNavios Holdings in each of Navios Maritime Partners L.P., Navios GP L.L.C., Navios Maritime Acquisition Corporation, Navios South AmericanLogistics Inc. and Navios Maritime Containers Inc. The 2022 Senior Secured Notes are unregistered and guaranteed by all of the Company’s direct andindirect subsidiaries, except for certain subsidiaries designated as unrestricted subsidiaries, including Navios South American Logistics Inc. Thesubsidiary 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 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 orupon legal or covenant defeasance or satisfaction and discharge of the 2022 Senior Secured Notes. The net proceeds of the offering were used tocomplete a cash tender offer for its outstanding 8.125% Senior Notes due 2019 described below (the “2019 Notes”) and to redeem notes not purchasedin the tender offer, including the payment of related fees and expenses and any redemption premium,. The effect of this transaction was the recognitionof a $2.7 million extinguishment loss in the consolidated statements of comprehensive (loss)/income under “Gain/(loss) on bond and debtextinguishment”.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 afixed price 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 theCo-Issuers’ properties and assets and creation or designation of restricted subsidiaries. The Co-Issuers were in compliance with the covenants as ofDecember 31, 2018.Senior NotesOn January 28, 2011, the Company and its wholly owned subsidiary, Navios Maritime Finance II (US) Inc. completed the sale of$350.0 million of 2019 Notes. During July, August and October 2016, the Company repurchased $58.9 million of its 2019 Notes for a cashconsideration of $30.7 million resulting 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 2022 Senior Secured Notes. The net proceeds of the offering of the 2022 Senior Secured Notes have been used: (i) torepay, in full, the outstanding amount of the 2019 Notes; and (ii) for general corporate purposes.Ship Mortgage NotesOn November 29, 2013, the Co-Issuers completed the sale of $650.0 million of its 2022 Notes. During September 2018, the Companyrepurchased $35.7 million of its 2022 Notes for a cash consideration of $28.8 million resulting in a gain on bond extinguishment of $6.5 million net ofdeferred fees written-off.The 2022 Notes are senior obligations of Navios Holdings and Navios Maritime Finance II (US) Inc. (the “2022 Co- Issuers”) and wereoriginally secured by first priority ship mortgages on 23 dry bulk vessels owned by certain subsidiary guarantors and certain other associated propertyand contract rights. In June 2017, Navios Ionian and Navios Horizon were released from the 2022 Notes and replaced by the Navios Galileo. In March2018, Navios Herakles was released from the 2022 Notes and replaced by the Navios Equator Prosper. In July 2018, Navios Achilles was released fromthe 2022 Notes and replaced by the Navios Primavera. In December 2018, Navios Magellan was released from the 2022 Notes and the proceeds of$7,000 was restricted in an escrow account and considered as a cash collateral. 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 FinanceII (US) Inc. The guarantees of the Company’s subsidiaries that own mortgaged vessels are senior secured guarantees and the guarantees of theCompany’s subsidiaries that do not own mortgaged vessels are senior unsecured guarantees. In addition, the 2022 Co-Issuers have the option to redeemthe 2022 Notes in whole 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 reachespar in January 2020. 101 Table of ContentsUpon occurrence of certain change of control events, the holders of the 2022 Notes may require the 2022 Co-Issuers to repurchase some orall 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 paymentsand investments, creation of certain liens, transfer or sale of assets, entering into certain transactions with affiliates, merging or consolidating or sellingall or substantially all of the 2022 Co-Issuers’ properties and assets and creation or designation of restricted subsidiaries. The indenture governing the2022 Notes includes customary events of default. The 2022 Co-Issuers were in compliance with the covenants as of December 31, 2018.Secured Credit FacilitiesCredit Agricole (formerly Emporiki) Facilities: In December 2012, the Emporiki Bank of Greece’s facilities were transferred to CreditAgricole Corporate 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 millionin order to partially finance the construction of one newbuilding Capesize vessel. In December 2017, the Company agreed to extend the last paymentdate to August 2021. The loan bears interest at a rate of LIBOR plus 275 basis points. The loan facility requires compliance with certain financialcovenants. As of December 31, 2018, the facility was refinanced and repaid in full and there was no outstanding amount.In August 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 Panamax vessel. As of December 31, 2018, the facility is repayable in one quarterly installment of$0.7 million, followed by six semi-annual equal installments of $0.7 million, with a final balloon payment of $7.3 million on the last payment date.The loan bears interest at a rate of LIBOR plus 275 basis points. The loan facility requires compliance with certain covenants. As of December 31,2018, the outstanding amount under this facility was $12.0 million.In December 2011, Navios Holdings entered into a facility agreement with Emporiki Bank of Greece for an amount of up to $23.0 millionin order to partially finance the construction of one newbuilding bulk carrier. As of December 31, 2018, the outstanding amount under the loan facilitywas repayable in one quarterly installment of $0.7 million after the drawdown date, followed by six semi-annual equal installments of $0.7 million,with a final balloon payment of $7.5 million on the last payment date. The loan bears interest at a rate of LIBOR plus 325 basis points. The loanfacility requires compliance with certain covenants. As of December 31, 2018, the outstanding amount under this facility was $12.4 million.On December 20, 2013, Navios Holdings entered into a facility with Credit Agricole Corporate and Investment Bank for an amount of upto $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 LIBORplus 300 basis points. In December 2017, the Company agreed to extend the last payment date to August 2021. The loan facility requires compliancewith certain financial covenants. As of December 31, 2018, the facility was refinanced and repaid in full and there was no outstanding amount.On February 14, 2018, Navios Holdings entered into a facility with Credit Agricole Corporate and Investment Bank for an amount of up to$28.7 million in three advances to be drawn simultaneously for the purpose of a) to repay all amounts outstanding under the facility agreement datedSeptember 2010 and b) to repay all amounts outstanding under the facility agreement dated December 20, 2013. The loan bears interest at a rate ofLIBOR plus 280 basis points. The loan facility requires compliance with certain covenants. As of December 31, 2018, the first tranche drawn amount is$15.2 million and is repayable in six semi-annual installments of $1.2 million with a final balloon payment of $6.8 million on the last payment date,the second tranche drawn amount is $6.8 million and is repayable in six semi-annual installments of $0.6 million with a final balloon payment of$2.8 million on the last payment date and the third tranche drawn amount is $6.8 million and is repayable in six semi-annual installments of$0.6 million with a final balloon payment of $2.8 million on the last payment date. As of December 31, 2018, the total outstanding amount under thisfacility was $26.4 million. The loan bears interest at a rate of LIBOR plus 280 basis points. The loan facility requires compliance with certain financialcovenants.Commerzbank Facility: In June 2009, Navios Holdings entered into a facility agreement for an amount of up to $240.0 million (dividedinto four tranches of $60.0 million) with Commerzbank AG in order to partially finance the acquisition of a Capesize vessel and the construction ofthree Capesize vessels. Following the delivery of two Capesize vessels, Navios Holdings cancelled two of the four tranches and in October 2010 fullyrepaid their outstanding loan balances of $53.6 million and $54.5 million, respectively. During October 2016, the Company fully prepaid the thirdtranche 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 tonominal 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, thus achieving a $1.7 million benefit to nominal value. 102 Table of ContentsHSH Nordbank Facility: On May 23, 2017, Navios Holdings entered into a facility agreement with HSH Nordbank AG for an amount of upto $15.3 million in order to partially refinance the fourth tranche of the Commerzbank facility. As of December 31, 2018, the facility is repayable in 11quarterly equal 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 ofLIBOR plus 300 basis points. The loan facility requires compliance with certain covenants. As of December 31, 2018, the outstanding amount underthis facility was $13.0 million.DVB Bank SE Facilities: On March 23, 2012, Navios Holdings entered into a facility agreement with a syndicate of banks led by DVBBank SE for 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 theacquisition of a Handysize 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 two tranches bear interest at a rate of LIBOR plus 285 and 360 basis points, respectively. On June 27, 2014, Navios Holdingsrefinanced 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 wasdelivered in June 2014. The new tranche bears interest at a rate of LIBOR plus 275 basis points. As of December 31, 2018, the first tranche is repayablein five quarterly installments of $0.4 million, with a final balloon payment of $14.4 million on the last repayment date, the second tranche is repayablein six 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 repayablein six quarterly installments of $0.5 million, with a final balloon payment of $18.8 million on the last repayment date. The loan facility requirescompliance with certain financial covenants. As of December 31, 2018, the total outstanding amount was $45.7 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 basispoints. During 2017, Navios Holdings prepaid the indebtedness originally maturing in the third quarter of 2018 and released from collateral onePanamax vessel. In December 2017, Navios Holdings entered into a facility agreement with DVB Bank SE in order to extend the maturity of theoutstanding balance originally due by September 2018 for three years, to September 2021. As of December 31, 2018, the facility is repayable in 11quarterly installments of $0.7 million, with a final balloon payment of $7.3 million payable on the last repayment date. The loan facility requirescompliance with certain financial covenants. In December 2015, one newbuilding Panamax vessel and one newbuilding Capesize vessel were added ascollateral to this facility. As of December 31, 2018, the outstanding amount was $15.3 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 drawnin two tranches, to finance the acquisition of one newbuilding Panamax vessel and one newbuilding Capesize vessel. The facility bears interest at arate of LIBOR plus 255 basis points. The total amount drawn under the facility was $39.9 million. During August 2018, the Company completed thesale of the two vessels and fully prepaid the two tranches of the facility, which had a total outstanding balance of $31.8 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, 2018, the facility is repayable in 16 quarterly installments of $0.5 million, with a final balloon payment of $16.6 million on the lastrepayment date. The loan facility requires compliance with certain financial covenants. As of December 31, 2018, the outstanding amount was$23.8 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 inorder to refinance one Capesize vessel. The facility bears interest at a rate of LIBOR plus 300 basis points. The facility is repayable in 16 quarterlyinstallments of $0.3 million each, with a final balloon payment of $10.7 million payable on the last repayment date. The loan facility requirescompliance with certain financial covenants. As of December 31, 2018, the outstanding amount was $15.1 million.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, amongother things: incurring or guaranteeing indebtedness; entering into affiliate transactions; charging, pledging or encumbering the vessels securing suchfacilities; changing the flag, class, management or ownership of certain Navios Holdings’ vessels; changing the commercial and technical managementof certain Navios Holdings’ vessels; selling or changing the ownership of certain Navios Holdings’ vessels; and subordinating the obligations underthe credit facilities to any general and administrative costs relating to the vessels. The credit facilities also require the vessels to comply with the ISMCode and ISPS Code and to maintain valid safety management certificates and documents of compliance at all times. Additionally, the credit facilitiesrequire compliance with the covenants contained in the indentures governing the 2022 Senior Secured Notes and the 2022 Notes. Among other events,it will be an event of default under the credit facilities if the financial covenants are not complied with or if Angeliki Frangou and her affiliates,together, own less than 20% of the outstanding share capital of Navios Holdings. 103 Table of ContentsThe majority of the Company’s senior secured credit facilities require compliance with maintenance covenants, including (i) value-to-loanratio covenants, based on charter-free valuations, ranging from over 120% to 135%, (ii) minimum liquidity up to a maximum of $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 covenantsin our senior secured credit facilities have been amended for a specific period to increase the covenant levels for the applicable net total debt dividedby total assets, as defined in each senior secured credit facility, to a maximum of 90%.As of December 31, 2018, 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 thefacility 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 with Navios Logistics (the “Logistics Co-Issuers”) issued $375.0 million in aggregate principal amount of its 2022 Logistics Senior Notes dueon May 1, 2022, at a fixed rate of 7.25%. The 2022 Logistics Senior Notes are unregistered are fully and unconditionally guaranteed, jointly andseverally, 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 are deemed to be immaterial, and Logistics Finance, which isthe co-issuer of the 2022 Logistics Senior Notes. The subsidiary guarantees are “full and unconditional”, except that the indenture provides for anindividual subsidiary’s guarantee to be automatically released in certain customary circumstances, such as in connection with a sale or otherdisposition of all or substantially all of the assets of the subsidiary, in connection with the sale of a majority of the capital stock of the subsidiary, if thesubsidiary is designated as an “unrestricted subsidiary” in accordance with the indenture, upon liquidation or dissolution of the subsidiary or uponlegal 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 orafter May 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 certainchange of control events, the holders of the 2022 Logistics Senior Notes will have the right to require the Logistics Co-Issuers to repurchase some or allof the 2022 Logistics 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, redemption or repurchase of capital stock or making restricted paymentsand investments, creation of certain liens, transfer or sale of assets, entering into transactions with affiliates, merging or consolidating or selling all orsubstantially 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.In addition, there are no significant restrictions on (i) the ability of the parent company, any issuer (or co-issuer) or any guarantorsubsidiaries of the 2022 Logistics Senior Notes to obtain funds by dividend or loan from any of their subsidiaries or (ii) the ability of any subsidiariesto transfer funds to the issuer (or co-issuer) or any guarantor subsidiaries.The Logistics Co-Issuers were in compliance with the covenants as of December 31, 2018. 104 Table of ContentsNavios Logistics Notes PayableIn connection with the purchase of mechanical equipment for the expansion of its dry port terminal, Corporacion Navios S.A. (“CNSA”)entered into 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 in multiple drawings upon the completion of certain milestones (“Drawdown Events”). CNSA incurs the obligation for the respective amountdrawn by signing promissory notes (“Navios Logistics Notes Payable”). Each drawdown is repayable in 16 consecutive semi-annual installments,starting six months after the completion of each Drawdown Event. Together with each Note Payable, CNSA shall pay interest equal to six-monthLIBOR. The unsecured export financing line is fully and unconditionally guaranteed by Ponte Rio S.A. As of December 31, 2018, Navios Logisticshad drawn the total available amount and the outstanding balance of Notes Payable was $26.9 million.Navios Logistics BBVA Loan FacilityOn December 15, 2016, Navios Logistics entered into a $25.0 million facility with Banco Bilbao Vizcaya Argentaria Uruguay S.A.(“BBVA”), 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, the first payment of which was due on June 19, 2017, and secured by assignments of certain receivables. As of December 31,2018, the outstanding amount of the loan was $19.3 million.Navios Logistics was in compliance with the covenants set forth in the Navios Logistics BBVA Loan Facility as of December 31, 2018.Navios Logistics Alpha Bank LoanOn May 18, 2017, Navios Logistics entered into a $14.0 million term loan facility in order to finance the acquisition of two producttankers (“Navios Logistics Alpha Bank Loan”). The Navios Logistics Alpha Bank Loan bears interest at a rate of LIBOR (90 days) plus 315 basispoints and is repayable in 20 quarterly installments with a final balloon payment of $7.0 million on the last repayment date. As of December 31, 2018,the outstanding amount of the loan was $11.9 million.Navios Logistics was in compliance with the covenants set forth in the Navios Logistics Alpha Bank Loan as of December 31, 2018.Navios Logistics Credit AgreementOn August 17, 2018, Navios Logistics entered into a $7.1 million (€6.2 million) credit agreement in order to finance the 50% of thepurchase price of a river and estuary tanker. The credit agreement bears interest at a fixed rate of 675 basis points and is repayable in 24 monthlyinstallments with the final repayment in August 17, 2020. As of December 31, 2018, the outstanding amount of the credit agreement was $5.9 million.Navios Logistics was in compliance with the covenants set forth in the Navios Logistics Credit Agreement as of December 31, 2018.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 with1.0% amortization per annum. The Term Loan B Facility is fully and unconditionally guaranteed jointly and severally, by all of Navios Logistics’direct and indirect subsidiaries except for Horamar do Brasil, Naviera Alto Parana and Terra Norte, which are deemed to be immaterial, and LogisticsFinance, which is the co-borrower of the Term Loan B Facility. The subsidiary guarantees are “full and unconditional,” except that the creditagreement governing the Term Loan B Facility provides for an individual subsidiary’s guarantee to be automatically released in certain circumstances.The Term Loan B Facility is secured by first priority mortgages on five tanker vessels servicing our cabotage business as well as by assignments of therevenues arising from certain time charter contracts, and an iron ore port contract.The Term Loan B Facility contains restrictive covenants including restrictions on indebtedness, liens, acquisitions and investments,restricted payments and dispositions. The Term Loan B Facility also provides for customary events of default, including change of control.As of December 31, 2018, a balance of $99.0 million 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, 2018. 105 Table of ContentsNavios Logistics 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, 2018, the outstanding loanbalance was $0.2 million. The loan facility bears interest at a fixed rate of 600 basis points. The loan is repayable in monthly installments and the finalrepayment must occur prior to August 10, 2021.Navios Containers loansABN AMRO Bank N.V.On July 27, 2017, Navios Containers entered into a facility agreement with ABN AMRO for an amount of up to $21.0 million to financepart of the purchase price of seven containerships. This loan bears interest at a rate of LIBOR plus 400 basis points. Navios Containers has drawn theentire amount. On December 1, 2017, Navios Containers extended the facility dated July 27, 2017, for an additional amount of $50.0 million tofinance part of the purchase price of four containerships. Pursuant to the supplemental agreement dated June 29, 2018, the additional loan bearsinterest at a rate of LIBOR plus 400 basis points. Navios Containers had drawn the entire amount under the additional loan. On December 6, 2018,Navios Containers fully prepaid the July 27, 2017 credit facility. As of December 31, 2018, there was no outstanding amount under this facility.On December 3, 2018, Navios Containers entered into a facility agreement with ABN AMRO BANK N.V. for an amount of up to$50.0 million divided in two tranches: (i) the first tranche is for an amount of up to $41.2 million in order to refinance the outstanding debt of fourcontainerships and to partially finance the acquisition of one containership and (ii) the second tranche is for an amount of $8.8 million in order topartially finance the acquisition of one containership. This loan bears interest at a rate of LIBOR plus 350 basis points. Navios Containers drew theentire amount under this facility, net of the loan’s discount of $0.5 million, in the fourth quarter of 2018. The facility is repayable in 16 consecutivequarterly installments, the first four in the amount of $4.0 million, the fifth in the amount of $3.4 million and the subsequent 11 installments each inthe amount of $1.7 million along with a final balloon payment of $12.5 million payable together with the last installment falling due in December2022. The outstanding loan amount under this facility as of December 31, 2018 was $50.0 million.BNP ParibasOn May 25, 2018, Navios Containers entered into a facility agreement with BNP Paribas for an amount of up to $25.0 million, to financepart of the purchase price of one containership. This loan bears interest at a rate of LIBOR plus 300 basis points. As of December 31, 2018, theCompany had drawn $25.0 million under this facility. As of December 31, 2018, the outstanding loan amount under this facility was $23.6 million andis repayable in 18 equal consecutive quarterly installments, each in the amount of $0.7 million along with a final balloon payment of $11.1 millionpayable together with the last installment, falling due in May 2023.On December 20, 2017, Navios Containers entered into a facility agreement with BNP Paribas for an amount of up to $24.0 million(divided in four tranches of up to $6.0 million each) to finance part of the purchase price of four containerships. This loan bears interest at a rate ofLIBOR plus 300 basis points. Navios Containers drew the entire amount under this facility. As of December 31, 2018, the outstanding loan amount ofthe three tranches under this facility was $15.4 million and is repayable in 16 equal consecutive quarterly installments, each in the amount of$0.6 million along with a final balloon payment of $5.1 million payable together with the last installment, falling due on December 22, 2022. Theoutstanding loan amount of the fourth tranche is $5.4 million and is repayable in 17 equal consecutive quarterly installments each in the amount of$0.2 million along with a final balloon payment of $1.7 million payable together with the last installment due on February 28, 2023.In September 2018, Navios Containers entered into a facility agreement with BNP Paribas to extend the facility dated December 20, 2017,for an additional amount of $9.0 million to partially finance the purchase price of one containership. This loan bears interest at a rate of LIBOR plus300 basis points. Navios Containers drew the entire amount. As of December 31, 2018, the outstanding loan amount of the additional tranche is$8.7 million and is repayable in 19 quarterly consecutive installments of $0.3 million each plus a balloon installment of $2.6 million payable togetherwith the last installment. The additional tranche matures in September 2023. 106 Table of ContentsHSHOn June 28, 2018, Navios Containers entered into a facility agreement with HSH Nordbank AG and Alpha Bank A.E. for an amount of upto $36.0 million (divided in two tranches of $18.0 million each) to finance part of the purchase price of two containerships. Navios Containers drew theentire amount. The facility bears interest at a rate of LIBOR plus 325 basis points per annum. The facility is repayable in 14 consecutive quarterlyinstallments each in an amount of $1.2 million plus a final balloon payment of $15.2 million payable together with the last installment. The facilitymatures on June 30, 2022. As of December 31, 2018, the outstanding loan amount under the facility was $32.0 million.On November 9, 2018, Navios Containers entered into a facility agreement with HSH Nordbank AG divided into four tranches of up to$31.8 million each to finance part of the purchase price of up to four 10,000 TEU containerships. This loan bears interest at a rate of LIBOR plus 325basis points and commitment fee of 0.75% per annum on the undrawn loan amount. Each tranche of the facility is repayable in 19 consecutivequarterly installments each in an amount of $0.7 million together with a final balloon payment of $18.9 million payable together with the lastinstallment falling due in July 2023. No amount had been drawn under this facility as of December 31, 2018.Navios Containers Financial liabilityOn May 25, 2018, Navios Containers entered into a $119.0 million sale and leaseback transaction with Minsheng Financial Leasing Co.Ltd in order to refinance the outstanding balance of the existing facilities of 18 containerships. Navios Containers has a purchase obligation to acquirethe vessels at the end of the lease term and under ASC 842-40, the transfer of the vessels was determined to be a failed sale. In accordance with ASC842-40, Navios Containers did not derecognize the respective vessels from its balance sheet and accounted for the amounts received under the sale andleaseback transaction as a financial liability. From June 29, 2018 until November 9, 2018, Navios Containers completed the sale and leaseback of 14vessels for $90.2 million. Navios Containers does not intend to proceed with the sale and leaseback transaction of the four remaining vessels. NaviosContainers is obligated to make 60 monthly payments in respect of all 14 vessels of approximately $1.1 million each. Navios Containers also has anobligation to purchase the vessels at the end of the fifth year for $45.1 million. As of December 31, 2018, the outstanding balance under the sale andleaseback transaction was $87.5 million.As of December 31, 2018, Navios Containers was in compliance with all of the covenants under all of its credit facilities and financialliability.During the year ended December 31, 2018, the Company paid $94.3 million, of which $40.0 million related to scheduled repaymentinstallments for the year 2018, $54.3 million related to prepayments of indebtedness originally maturing the first quarter of 2022 and the fourth quarterof 2019.The annual weighted average interest rates of the Company’s total borrowings were 7.78%, 7.11% and 6.87% for the year endedDecember 31, 2018, 2017 and 2016, respectively.The maturity table below reflects the principal payments for the next five years and thereafter of all borrowings of Navios Holdings(including Navios Logistics and Navios Containers) outstanding as of December 31, 2018, based on the repayment schedules of the respective loanfacilities and the outstanding amount due under the debt securities. Year Amount inmillions ofU.S. dollars 2019 $71.4 2020 100.7 2021 180.5 2022 1,413.9 2023 74.8 2024 and thereafter 2.6 Total $1,843.9 107 Table of ContentsWorking Capital Position: On December 31, 2018, Navios Holdings’ current assets totaled $298.7 million, while current liabilities totaled$320.5 million, resulting in a negative working capital position of $21.8 million. Negative working capital position was due to the consolidation ofNavios Containers from November 30, 2018 (date of obtaining control). Navios Holdings’ positive working capital, excluding Navios Containers,amounts to $1.2 million as of December 31, 2018. Navios Holdings’ cash forecast indicates that it will generate sufficient cash during the next 12months from April 26, 2019 to make the required principal and interest payments on its indebtedness, provide for the normal working capitalrequirements of the business and remain in a positive working capital position through April 26, 2020. Navios Containers’ cash forecast indicates thatit will generate sufficient cash to make the required principal and interest payments on its indebtedness and provide for the normal working capitalrequirements of the business through April 26, 2020. Navios Containers expects to be in a position to meet its loan obligations through its contractedrevenue of $112.7 million as of December 31, 2018.While projections indicate that existing cash balances and operating cash flows will be sufficient to service the existing indebtedness,Navios Holdings 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 84,872dwt Panamax 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 balancewith available cash.In December 2017, the Company agreed to charter-in, under a ten year bareboat contract, from an unrelated third party the Navios GalaxyII, a newbuilding bulk carrier vessel of about 81,600 dwt, expected to be delivered in the first quarter of 2020. The Company has agreed to pay in total$5.4 million representing a deposit for the option to acquire the vessel, of which $2.7 million was paid during the year ended December 31, 2017 andthe remaining $2.7 million was paid during April 2019. As of December 31, 2018, the total amount of $3.0 million, including expenses and interest, ispresented under the caption “Other long-term assets”.In January 2018, Navios Holdings agreed to charter-in, under two ten-year bareboat contracts, from an unrelated third party the NaviosHerakles I and the Navios Uranus, two newbuilding bulk carriers of about 81,000 dwt and 81,600 dwt, respectively, expected to be delivered in thethird and fourth quarter of 2019, respectively. Navios Holdings has agreed to pay in total $11.1 million, representing a deposit for the option to acquirethese vessels, of which $8.3 million was paid during the period ended December 31, 2018 and the remaining $2.8 million was paid during January2019. As of December 31, 2018, the total amount of $9.0 million, including expenses and interest, is presented under the caption “Other long-termassets”.In April 2018, Navios Holdings agreed to charter-in, under one ten-year bareboat contract, from an unrelated third party the Navios FelicityI, a newbuilding bulk carrier of about 81,000 dwt, expected to be delivered in the fourth quarter of 2019. Navios Holdings has agreed to pay in total$5.6 million, representing a deposit for the option to acquire this vessel, of which $2.8 million was paid during the period ended December 31, 2018and the remaining $2.8 million was paid during February 2019. As of December 31, 2018, the total amount of $3.0 million, including expenses andinterest, is presented under the caption “Other long-term assets”.Navios Holdings agreed to charter-in, under one ten-year bareboat contract, from an unrelated third party the Navios Magellan II, anewbuilding bulk carrier of about 81,000 dwt, expected to be delivered in the second quarter of 2020. Navios Holdings has agreed to pay in total$5.8 million, representing a deposit for the option to acquire this vessel, of which $2.9 million was paid upon signing of the contract in October 2018.As of December 31, 2018, the total amount of $3.0 million, including expenses and interest, is presented under the caption “Other long-term assets”.Navios LogisticsOn September 4, 2017, Navios Logistics has signed an agreement for the construction of covers for dry barges for a total consideration of$1.1 million. As of December 31, 2018, Navios Logistics had paid the whole amount.During the second quarter of 2017, Navios Logistics substantially completed the expansion of its dry port in Uruguay. As of December 31,2018, Navios Logistics had paid $159.7 million related to the iron ore terminal expansion.During the first quarter of 2018, three new pushboats were delivered to Navios Logistics. As of December 31, 2018, Navios Logistics hadpaid $33.0 million for the construction of the three new pushboats.During the third quarter of 2018, a new river and estuary tanker was delivered to Navios Logistics. As of December 31, 2018, NaviosLogistics had paid $18.5 million for the construction of the river and estuary tanker. 108 Table of ContentsNavios ContainersDuring the period from November 30, 2018 (date of obtaining control) to December 31, 2018, expansion capital expenditures of$24.8 million related to the acquisition of two containerships which Navios Containers took delivery of during the above mentioned period.Refer also to “Item 5F. Contractual Obligations as at December 31, 2018”.Dividend PolicyIn November 2015, due to the prolonged weakness in the dry bulk industry, Navios Holdings announced that the Board of Directorsdecided to suspend the quarterly dividend to its common stockholders in order to conserve cash and improve its liquidity. In February 2016, infurtherance of its efforts to reduce its cash requirements, Navios Holdings announced the suspension of payment of quarterly dividends on its preferredstock, including the Series G and Series H, until market conditions improve. The Board of Directors and Navios Holdings’ management believe such adecision is in the best long-term interests of the Company and its stakeholders. The Board of Directors will reassess the Company’s distribution policyas the environment changes. The reinstatement, declaration and payment of any further dividend remains subject to the discretion of the Board ofDirectors and will depend on, among other things, market conditions, Navios Holdings’ cash requirements after taking into account marketopportunities, restrictions under its equity instruments, credit agreements, indentures and other debt obligations and such other factors as the Board ofDirectors 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, 2018, two customersaccounted for 12.8% and 11.4%, respectively and are the same customers who accounted for 14.7% and 13.1%, respectively, of the Company’s revenuein the year ended December 31, 2016. For the year ended December 31, 2017, no customers 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.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 byfinancial institutions. Navios Holdings does maintain cash deposits in excess of government-provided insurance limits. Navios Holdings also reducesexposure to credit 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 demandand supply dynamics characterizing the dry bulk market at any given time. For other trends affecting our business, please see other discussions inItem 5. “Operating and Financial Review and Prospects”. 109 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 rentalpayments under Navios Holdings’ non-cancelable operating leases are included in the contractual obligations schedule below. As of December 31,2018, Navios Holdings was contingently liable for letters of guarantee and letters of credit amounting to $1.6 million issued by various banks in favorof various organizations 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 PartnersGuarantee”) to provide Navios Partners with guarantees against counterparty default on certain existing charters, which had previously been coveredby the charter insurance for the same vessels, same periods and same amounts. The Navios Partners Guarantee provides for a maximum possible payoutof $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, 2018, NaviosPartners has submitted one claim under this agreement to the Company. As at December 31, 2018 and December 31, 2017, the fair value of the claimwas estimated at $18.0 million and $20.0 million and included in “Other long-term liabilities and deferred income” in the consolidated balance sheet.As of December 31, 2018 the amount of $2.0 million was included in “Oher income” within the consolidated statements of comprehensive(loss)/income. The final settlement of the amount due will take place at anytime but in no case later than December 31, 2019, in accordance with aletter of agreement effective as of December 29, 2017. During the year 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 theamounts can be reasonably estimated, based upon facts known on the date the financial statements were prepared. Although the Company cannotpredict with certainty the ultimate resolutions of these matters, in the opinion of management, the ultimate disposition of these matters is not expectedto have a material adverse effect on the Company’s financial position, results of operations or liquidity. 110 Table of ContentsNavios Logistics had a dispute with Vale regarding the termination date of a COA contract, which was under arbitration proceedings inNew York. 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 amounthad been received in March 2017.On August 16, 2018, there was a fire incident at the iron ore port terminal in Nueva Palmira, Uruguay, for which Navios Logistics maintainsproperty and loss of earnings insurance coverage for such types of events (subject to applicable deductibles and other customary limitations). As ofDecember 31, 2018, an insurance claim receivable of $11.6 million was recorded in the Navios Logistics’ prepaid expenses and other current assets, ofwhich $9.2 million was recorded in the consolidated statements of comprehensive (loss)/income under “Other income”.Navios Logistics currently has no chartered-in barges or pushboats.Navios Logistics has issued a guarantee and indemnity letter that guarantees the performance by Petrolera San Antonio S.A. (aconsolidated subsidiary) of all its obligations to Vitol S.A. up to $12.0 million. This guarantee expires on March 1, 2020.Refer also to Item 5F. “Contractual Obligation as at December 31, 2018” below.F. Contractual Obligations as at December 31, 2018:Payment due by period ($ in millions) (unaudited) Contractual Obligations Total Less than1 year 1-3 years 3-5 years More than5 years Long-term debt(1) $1,843.9 $71.4 $281.2 $1,488.7 $2.6 Operating Lease Obligations (Time Charters) for vessels in operation (2) 417.7 114.7 173.6 86.7 42.7 Operating Lease Obligations (Time Charters) for vessels to be delivered 122.6 5.2 29.7 29.4 58.3 Deposit for option to acquire vessels (3) 11.2 11.2 — — — Rent Obligations(4) 17.0 2.7 3.6 3.4 7.3 Total $2,412.4 $205.2 $488.1 $1,608.2 $110.9 (1)The amount identified does not include interest costs associated with the outstanding credit facilities, which are based on LIBOR rates, plus thecosts of complying with any applicable regulatory requirements and a margin ranging from 2.75% to 3.60% per annum. The amount does notinclude interest costs for the 2022 Senior Secured Notes, the 2022 Notes, the 2022 Logistics Senior Notes, the Term Loan B Facility, the NaviosLogistics Credit Agreement and the Navios Logistics Notes Payable. The expected interest payments are: $134.2 million (less than 1 year),$252.6 million (1-3 years), $43.4 million (3-5 years) and $0.1 million (more than 5 years). Expected interest payments are based on outstandingprincipal amounts, currently applicable effective interest rates and margins as of December 31, 2018, timing of scheduled payments and the termof the debt obligations.(2)Approximately 43% 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)The table above incorporates the lease obligations of the offices of Navios Holdings, of Navios Logistics and of Navios Containers. See alsoItem 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.Navios Holdings, Navios Acquisition and Navios Partners will make available to Navios Europe I revolving loans of up to $24.1 million tofund working capital requirements (collectively, the “Navios Revolving Loans I”). In December 2018, the amount of the Navios Revolving Loans Iincreased by $30.0 million. As of December 31, 2018, the amount undrawn under the Revolving Loans I was $12.0 million, of which Navios Holdingsmay be required to fund an amount ranging from $0 to $12.0 million. 111 Table of ContentsNavios Holdings, Navios Acquisition and Navios Partners will make available to Navios Europe II revolving loans of up to $43.5 millionto fund working capital requirements (collectively, the “Navios Revolving Loans II”). In March 2017, the amount undrawn from the Navios RevolvingLoans II increased by $14.0 million. As of December 31, 2018, the amount undrawn from the Navios Revolving Loans II was $4.5 million, of whichNavios Holdings may be required to fund an amount ranging from $0 to $4.5 million.Refer also to “Item 5. Operating and Financial Review and Prospects” in “Recent Developments” for the acquisition of a 2011-built 10,000TEU containership and the exercise of an option to acquire a 2011-built 10,000 TEU containership, 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 andopinions of management. Following is a discussion of the accounting policies that involve a higher degree of judgment and the methods of theirapplication that affect the reported amount of assets and liabilities, revenues and expenses and related disclosure of contingent assets and liabilities atthe date of its financial statements. Actual results may differ from these estimates under different assumptions or conditions.Critical accounting policies are those that reflect significant judgments or uncertainties, and potentially result in materially differentresults under different assumptions and conditions. Navios Holdings has described below what it believes are its most critical accounting policies thatinvolve a high degree of judgment and the methods of their application. For a description of all of Navios Holdings’ significant accounting policies,see Note 2 to the Consolidated Financial Statements, included herein.Use of Estimates: The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to makeestimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the dates ofthe financial statements and the reported amounts of revenues and expenses during the reporting periods. On an on-going basis, management evaluatesthe estimates and judgments, including those related to uncompleted voyages, future drydock dates, the assessment of other-than-temporaryimpairment related to the carrying value of investments in affiliates, the selection of useful lives for tangible and intangible assets, expected future cashflows from long-lived assets to support impairment 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 experienceand on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments aboutthe carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates underdifferent assumptions and/or conditions.Stock-based Compensation: In December 2018, the Company authorized the grant of restricted common stock. In December 2017, theCompany authorized the grant of restricted common stock and restricted common units. In December 2016, the Company authorized the grant ofrestricted share units and share appreciation rights. In December 2015 and 2014, the Company authorized the issuance of shares of restricted commonstock, restricted stock units and stock options in accordance with the Company’s stock option plan for its employees, officers and directors. Theseawards of restricted share units, share appreciation rights, restricted common stock, restricted stock units and stock options are based on serviceconditions only and vest over three and four years.The fair value of share appreciation rights and stock option grants is determined with reference to option pricing model and principallyadjusted Black-Scholes models. The fair value of restricted share units, restricted stock and restricted stock units is determined by reference to thequoted stock price on the date of grant. Compensation expense, net of estimated forfeitures, is recognized based on a graded expense model over thevesting period. Compensation expense for the awards that vest upon achievement of the performance criteria is recognized when it is probable that theperformance criteria will be met and are being accounted for as equity. 112 Table of ContentsImpairment 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 befully recoverable. Navios Holdings’ management evaluates the carrying amounts and periods over which long-lived assets are depreciated to determineif events 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, theunamortized portion of deferred drydock and special survey costs related to the vessel and the related carrying value of the intangible assets withrespect to the time charter agreement attached to that vessel or the carrying value of deposits for newbuildings. Within the shipping industry, vesselsare customarily bought and sold with a charter attached. The value of the charter may be favorable or unfavorable when comparing the charter rate tothen-current market rates. The loss recognized either on impairment (or on disposition) will reflect the excess of carrying value over fair value (sellingprice) for the vessel asset group.During the fourth quarter of fiscal year 2018, management concluded that events occurred and circumstances had changed, whichindicated that potential impairment of Navios Holdings’ long-lived assets might exist. These indicators included continued volatility in the spotmarket, and the related impact of the current dry bulk sector has on management’s expectation for future revenues. As a result, an impairmentassessment of long-lived assets (step one) 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 intangibleassets, if applicable. The significant factors and assumptions used in the undiscounted projected net operating cash flow analysis included:determining the projected net operating cash flows by considering the charter revenues from existing time charters for the fixed fleet days (theCompany’s remaining charter agreement rates) and an estimated daily time charter equivalent for the unfixed days (based on a combination of one-yearaverage historical time charter rates and 10-year average historical one-year time charter rates, adjusted for outliers) over the remaining economic life ofeach vessel, net of brokerage and address commissions excluding days of scheduled off-hires, running cost based on current year actuals, assuming anannual increase of 0.68% after 2019 and a utilization rate of 99.5% based on the fleet’s historical performance.In connection with its impairment testing on its vessels as of December 31, 2018, the Company performs a sensitivity analysis on the mostsensitive and/or subjective assumptions that have the potential to affect the outcome of the test, principally the projected charter rate used to forecastfuture cash flows for unfixed days. In that regard, there would continue to be no impairment required to be recognized on any of the Company’s vesselswhen assuming a decline in the 10-year average (of the one-year charter rate for similar vessels), which is the rate that the Company uses to forecastfuture cash flows for unfixed days, ranging from 3.6% to 75.5% (depending on the vessel).As of December 31, 2018, our assessment concluded that step two of the impairment analysis was required for four of our dry bulk vesselsheld and used, as the undiscounted projected net operating cash flows did not exceed the carrying value. As a result, the Company recorded animpairment loss of $179.2 million for these vessels, being the difference between the fair value and the vessel’s carrying value together with thecarrying value of deferred drydock and special survey costs related to these vessels, presented within the caption “Impairment losses” in theconsolidated statements of comprehensive (loss)/income.As of December 31, 2017, our assessment concluded that step two of the impairment analysis was required for one of our dry bulk vesselsheld and used, as the undiscounted projected net operating cash flows did not exceed the carrying value. As a result, the Company recorded animpairment loss of $32.9 million for this vessel, being the difference between the fair value and the vessel’s carrying value together with the carryingvalue of deferred drydock and special survey costs related to this vessel, presented within the caption “Impairment losses” in the consolidatedstatements of comprehensive (loss)/income. The assessment performed for 2016 and 2015 did not indicate a step two was necessary for the Company’sother vessels held and used.As of December 31, 2018, 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 8.5% higher than the daily time charter equivalent rate of the owned fleetachieved in the fiscal year 2018 of $12,534 per day. 113 Table of ContentsIn addition, the Company compared the 10-year historical average (of the one-year charter rate for similar vessels) with the five-year, three-year and one-year historical averages (of the one-year charter rate for similar vessels). A comparison of the 10-year historical average (of the one-yearcharter 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 ofDecember 31, 2018): 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 (12.1%) (11.5%) (13.5%) Ultra-Handymax (16.0%) (16.7%) (10.1%) Panamax (16.4%) (14.3%) (13.4%) Capesize (17.0%) (22.7%) (4.7%) If testing for impairment using the five-year, three-year and one-year historical averages (of the one-year charter rate for similar vessels) inlieu of the 10-year historical average (of the one-year charter rate for similar vessels), the Company estimates that 4, 4 and 0 of its vessels, respectively,and 5, 5 and 0 of its bareboat charter-in vessels to be delivered, respectively would have carrying values in excess of their projected undiscountedfuture cash flows.As of December 31, 2018 and 2017, the Company owns and operates a fleet of 35 and 38, respectively, with an aggregate carrying value of$946 million as of December 31, 2018, including the carrying value of existing time charters on its fleet of vessels. On a vessel-by-vessel basis, as ofDecember 31, 2018 and 2017, the carrying value of 29 and 37 of the Company’s vessels, respectively, (including the carrying value of the time charter,if any, on the specified vessel) exceeds the estimated fair value of those same vessels (including the estimated fair value of the time charter, if any, onthe specified vessel) by approximately $317.9 million and $591.1 million, respectively, in the aggregate (the unrealized loss).A vessel-by-vessel summary as of December 31, 2018 and 2017 follows (with an * indicating those individual vessels whose carryingvalue exceeds its estimated fair value, including the related time charter): Vessel YearBuilt Purchase Price(in millions) (1) Carrying Value(as of December 31, 2018)(in millions) (1) Carrying Value(as of December 31, 2017)(in millions) (1) Navios Serenity 2011 $26.8 $20.0* $21.1*Navios Celestial 2009 34.7 22.8* 24.1*Navios Vector 2002 32.1 17.7* 18.6*Navios Herakles 2001 — — 14.8*Navios Achilles 2001 — — 15.5*Navios Meridian 2002 26.8 12.6* 13.9*Navios Mercator 2002 26.1 12.2* 13.5*Navios Arc 2003 26.6 13.0* 13.2*Navios Hios 2003 35.8 16.6* 17.4*Navios Kypros 2003 35.7 16.5* 17.4*Navios Ulysses 2007 16.5 15.4* 16.5 Navios Vega 2009 15.3 14.8 47.7*Navios Astra 2006 23.9 15.7* 16.9*Navios Magellan 2000 — — 13.4*Navios Star 2002 29.4 14.1* 15.5*Navios Asteriks 2005 54.0 28.3* 30.7*Navios Centaurus 2012 37.8 28.7* 30.2*Navios Avior 2012 39.9 30.4* 32.0*Navios Bonavis 2009 29.1 28.5 82.7*Navios Happiness 2009 29.1 28.5 83.3*Navios Lumen 2009 113.5 74.8* 79.2*Navios Stellar 2009 96.0 64.1* 67.6*Navios Phoenix 2009 106.8 70.6* 74.7*Navios Antares 2010 29.1 28.5 82.0*Navios Etoile 2010 66.9 47.8* 50.3*Navios Bonheur 2010 69.6 49.7* 52.3* 114 Table of ContentsNavios Altamira 2011 56.2 40.9* 42.9*Navios Azimuth 2011 56.6 41.2* 43.2*Navios Galileo 2006 18.7 13.6* 14.7*Navios Northern Star 2005 17.7 12.8* 13.8*Navios Amitie 2005 17.7 12.9* 13.9*Navios Taurus 2005 17.8 12.6* 13.7*N Amalthia 2006 19.1 14.6* 15.6*N Bonanza 2006 18.8 14.0* 15.0*Navios Gem 2014 54.4 46.0* 47.8*Navios Ray 2012 52.2 44.2* 46.2*Navios Sphera 2016 — — 32.0*Navios Mars 2016 — — 51.8*Navios Primavera 2007 12.1 12.0 — Navios Equator Prosper 2000 10.3 9.9 — $1,353.1 $946.0 $1,295.1 (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 ona hypothetical disposition of those vessels as of December 31, 2018 and 2017, the recognition of the unrealized loss absent a disposition (i.e. as animpairment) would require, among other things, that a triggering event had occurred and that the undiscounted cash flows attributable to the vessel arealso less than the carrying value of the vessel (including the carrying value of the time charter, if any, on the specified vessel).Vessels, 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 anasset acquisition, are recorded at cost (including transaction costs). Vessels constructed by the company would be stated at historical cost, whichconsists of the contract price, capitalized interest and any material expenses incurred upon acquisition (improvements and delivery expenses).Subsequent expenditures for major improvements and upgrades are capitalized, provided they appreciably extend the life, increase the earningscapability or improve the efficiency or safety of the vessels. The cost and related accumulated depreciation of assets retired or sold are removed fromthe accounts at the time of sale or retirement 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, pushboatsand other fixed assets, after considering the estimated residual value.Annual depreciation rates used, which approximate the useful life of the assets are: Dry Bulk Vessels 25 yearsContainer Vessels 30 yearsPort terminals 5 to 49 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 theship noted in lightweight tons (“LWT”). Residual values are periodically reviewed and revised to recognize changes in conditions, new regulations orother reasons. Revisions of residual values affect the depreciable amount of the vessels and the depreciation expense in the period of the revision andfuture periods. Management estimates the residual values of the Company’s vessels based on a scrap rate of $340 per LWT after considering currentmarket trends for scrap rates and ten-year average historical scrap rates of the residual values of the Company’s vessels. 115 Table of ContentsManagement estimates the useful life of its dry bulk vessels and container vessels to be 25 years and 30 years, respectively from thevessel’s original construction. However, when regulations place limitations on the ability of a vessel to trade on a worldwide basis, its useful life isre-estimated to end at the date such regulations become effective. An increase in the useful life of a vessel or in its residual value would have the effectof 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 wouldhave 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 drydockingand special surveys which are carried out every 30 and 60 months, respectively, for ocean-going vessels, and up to every 96 months for pushboats andbarges, to coincide with the renewal of the related certificates issued by the classification societies, unless a further extension is obtained in rare casesand under certain conditions. The costs of drydocking and special surveys are deferred and amortized over the above periods or to the next drydockingor special survey date if such date has been determined. Unamortized drydocking or special survey costs of vessels, barges and pushboats sold arewritten-off to income 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 expensesrelating to spare 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 comparedto its carrying amount, including goodwill (step one). The Company determines the fair value of the reporting unit based on a combination of theincome approach (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, 2018, the Company performed its impairments test for its reporting units within: the Dry Bulk Vessel Operations andthe Logistics Business. The Company additionally considered that its market capitalization continued to remain at a level well below the carryingvalue of its total net assets.As of December 31, 2018, the Company performed step one of the impairment test for the Dry Bulk Vessel Operations reporting unit, whichis allocated goodwill of $56.2 million. Step one impairment test revealed that the fair value of the Dry Bulk Vessel Operations reporting unitsubstantially exceeded 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. Forthe income approach, the expected present value of future cash flows used judgments and assumptions that management believes were appropriate inthe circumstances. 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 revenues from existing time charters for the fixed fleet days (the Company’s remaining charter agreement rates) and an estimated daily timecharter equivalent for the non-fixed days (based on a combination of one-year average historical time charter rates and the 10-year average historicalone-year time charter rates adjusted for outliers), which the Company believes is an objective approach for forecasting charter rates over an extendedtime period for long-lived assets and consistent with the cyclicality of the industry. In addition, a weighted average cost of capital (“WACC”) was usedto discount future estimated cash flows to 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 fairvalue of the Company’s business based on comparable publicly-traded companies in its industry. In assessing the fair value, the Company utilized theresults of the valuations and considered the range of fair values determined under all methods, which indicated that the fair value exceeded thecarrying value of net assets. 116 Table of ContentsAs of December 31, 2018, the Company performed step one of the impairment test for the Logistics Business, which is allocated goodwillof $104.1 million. Step one of the impairment test used the income method and revealed that the fair value substantially exceeded the carrying amountof its net assets. Accordingly, no step two analysis was required. The future cash flows from the Logistics Business were determined principally bycombining revenues from existing contracts and estimated revenues based on the historical performance of the segment, including utilization rates andactual storage capacity. The Logistics Business reporting unit has not been affected by the same volatile industry and market conditions asexperienced in the Dry Bulk Vessel Operations reporting unit. In addition, the cash flows of the long-lived assets in the Logistics Business have notexperienced 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 leaseterms, 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, and was fully amortized as of December 31, 2018.The fair value of customer relationships of Navios Logistics was determined based on the “excess earnings” method, which relies upon thefuture cash 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 consideredimpaired if their 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 charterrates, an asset is recorded, being the difference between the acquired charter rate and the market charter rate for an equivalent vessel. Where charter ratesare less than market charter rates, a liability is recorded, being the difference between the assumed charter rate and the market charter rate for anequivalent vessel. The determination of the fair value of acquired assets and assumed liabilities requires the Company to make significant assumptionsand estimates of many variables including market charter rates, expected future charter rates, the level of utilization of the Company’s vessels and theCompany’s weighted average cost of capital. The use of different assumptions could result in a material change in the fair value of these items, whichcould have a material 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 amortizationexpense is included 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,would be 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 iscapitalized as part of the cost of the vessel and depreciated over the remaining useful life of the vessel and if not exercised, the intangible asset iswritten off. Vessel purchase options that are included in unfavorable lease terms are not amortized and when the purchase option is exercised by thecharterer and the underlying 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 expirationdate, it is written-off in the consolidated statements of comprehensive (loss)/income.During the fourth quarter of fiscal year 2018, management concluded that there were no circumstances which indicated that potentialimpairment of Navios Holdings’ intangible assets other than goodwill might exist. As of December 31, 2018, there were no impairment lossesrecognized for the Company’s intangible assets. As of December 31, 2017, the Company performed an assessment which indicated that the amortizablevalue of one of its favorable leases would not be recoverable from the future undiscounted cash flows associated with the asset. As a result, theCompany recognized an impairment loss of $3,397 in the caption “Impairment losses” in the consolidated statements of comprehensive (loss)/income.There were no other impairment losses recognized for the Company’s intangible assets other than goodwill for the year ended December 31, 2016. 117 Table of ContentsThe weighted average amortization periods for intangibles are: Intangible Assets/Liabilities Years Trade name 32.0 Favorable lease terms 1.0 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 andNavios Europe II 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 less thanthe carrying value, (ii) the financial condition and near-term prospects of Navios Partners, Navios Acquisition, Navios Europe I and Navios Europe II,and (iii) the intent and ability of the Company to retain its investment in Navios Acquisition, Navios Partners, Navios Europe I and Navios Europe II,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 wheneveradverse events 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 tradingperformance and the overall health of the affiliate’s industry), then we would write down the carrying amount of the investment to its estimated fairvalue.As of December 31, 2018, the Company considered the decline in fair value of its investment in Navios Partners as “other-than-temporary”and therefore recognized a loss of $55.5 million in the accompanying consolidated statement of comprehensive (loss)/income.As of December 31, 2018 and 2017, management considers the decline in the market value of its investment in Navios Acquisition to betemporary. However, there is the potential for future impairment changes relative to this security if its respective fair value does not recover and anOTTI analysis indicates such write down is necessary, which may have a material adverse impact on our results of operations in the period recognized.During the year ended 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.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. The respective loss was included within the caption “Other expense” in the accompanying 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. 118 Table of ContentsItem 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 54 Chairman of the Board and Chief Executive OfficerGeorgios Akhniotis 54 Chief Financial OfficerTed C. Petrone* 64 Vice Chairman of Navios CorporationVasiliki Papaefthymiou 50 Executive Vice President—Legal and DirectorAnna Kalathakis 49 Chief Legal Risk OfficerShunji Sasada* 61 President of Navios Corporation and DirectorLeonidas Korres 43 Senior Vice President—Business DevelopmentEfstratios Desypris 46 Chief Financial ControllerIoannis Karyotis 43 Senior Vice President—Strategic PlanningErifili Tsironi 45 Senior Vice President – Credit ManagementChris Christopoulos* 41 Senior Vice President of Navios Corporation – Financial Business DevelopmentSpyridon Magoulas 65 DirectorJohn Stratakis 53 DirectorEfstathios Loizos 57 DirectorGeorge Malanga 61 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 ChiefExecutive Officer of Navios Maritime Acquisition Corporation (NYSE: NNA), an affiliated corporation, since March, 2008 and the Chairman and ChiefExecutive Officer of Navios Maritime Containers L.P. (Nasdaq: NMCI), an affiliated limited partnership since April, 2017. Ms. Frangou has been theChairman of the Board of Directors of Navios Logistics since its inception in December 2007. Ms. Frangou is the Chairman of IRF European FinanceInvestments Ltd., listed on the SFM of the London Stock Exchange, and is also a Member of the Board of the United Kingdom Mutual Steam ShipAssurance Association (Bermuda) Limited. Since 2015, she has also been a Board Member of the Union of Greek Shipowners, as well as on the Boardof Trustees of Fairleigh Dickinson University. Since 2013, Ms. Frangou has been a Member of the Board of Visitors of the Columbia University Schoolof Engineering and Applied Science. Ms. Frangou also acts as Vice Chairman of the China Classification Society Mediterranean Committee, and is amember of the International General Committee and of the Hellenic and Black Sea Committee of Bureau Veritas, and is also a member of the GreekCommittee of Nippon Kaiji Kyokai. Ms. Frangou received a bachelor’s degree in Mechanical Engineering, summa cum laude, from FairleighDickinson University and a master’s degree in Mechanical Engineering from Columbia University.Georgios Akhniotis has been Navios Holdings’ Chief Financial Officer since April 12, 2007. Prior to being appointed Chief FinancialOfficer of Navios Holdings, Mr. Achniotis served as Senior Vice President-Business Development of Navios Holdings from August 2006 to April 2007.Before joining Navios Holdings, Mr. Achniotis was a partner at PricewaterhouseCoopers (“PwC”) in Greece, heading the Piraeus office and the firm’sshipping practice. He became a partner at PwC in 1999 when he set up and headed the firm’s internal audit services department from which all SOXimplementation and consultation projects were performed. Mr. Achniotis is currently a Director and Executive Vice President-Business Developmentof Navios Partners; a New York Stock Exchange traded limited partnership, which is an affiliate of Navios Holdings. He has more than 19 years’experience in the accounting profession with work experience in England, Cyprus and Greece. Mr. Achniotis qualified as a Chartered Accountant inEngland and Wales in 1991, and holds a 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 Holdingsfrom May 2007 to January 2015 and President of Navios Corporation from September 2006 to January 2015. Mr. Petrone has served in the maritimeindustry for 41 years, 38 of which he has spent with Navios Holdings. After joining Navios Holdings as an assistant vessel operator, Mr. Petrone workedin various operational and commercial positions. Mr. Petrone was previously responsible for all aspects of the daily commercial activity, encompassingthe trading of tonnage, derivative hedge positions and cargoes. Mr. Petrone is currently also a director of Navios Acquisition, a New York StockExchange listed company, and an affiliate of the Company; and has served in such capacity since June 2008. Mr. Petrone graduated from New YorkMaritime College at Fort Schuyler with a Bachelor of Science degree in maritime transportation. He has served aboard U.S. Navy (Military SealiftCommand) tankers. 119 Table of ContentsVasiliki Papaefthymiou has been Executive Vice President — Legal and a member of Navios Holdings’ board of directors since itsinception, and prior to that was a member of the board of directors of ISE. Ms. Papaefthymiou has served as general counsel for Maritime EnterprisesManagement S.A. since October 2001, where she has advised the Company on shipping, corporate and finance legal matters. Ms. Papaefthymiouprovided similar services as general counsel to Franser Shipping from October 1991 to September 2001. Ms. Papaefthymiou received herundergraduate degree from the Law School of the University of Athens and a master degree in Maritime Law from Southampton University in theUnited Kingdom. Ms. Papaefthymiou is admitted to practice 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 ofNavios Maritime Holdings Inc. from December 2005 until October 2012. Before joining Navios Holdings, Ms. Kalathakis was the General Manager ofthe Greek office of A. Bilbrough & Co. Ltd. and an Associate Director of the Company (Managers of the London Steam-Ship Owners’ Mutual InsuranceAssociation Limited). She has previously worked for a U.S. maritime law firm in New Orleans, was admitted to practice law in the state of Louisiana in1995, and has also worked in a similar capacity at a London maritime law firm. She qualified as a solicitor in England and Wales in 1999 and wasadmitted to practice law before the Bar in Piraeus, Greece in 2003. She has studied International Relations at Georgetown University, Washington D.C.(1991). She holds an MBA from European 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. Previously, as Chief Operating Officer of Navios Corporation and Senior Vice President ofFleet Development, he headed Navios Holdings’ program for the growth and development of the Company’s long-term chartered-in and ownedtonnage. Mr. Sasada started his shipping career in 1981 in Japan with Mitsui’s O.S.K. Lines, Ltd. (“MOSK”). Mr. Sasada’s first position with MOSK wasin steel products in the Tokyo branch as a salesman for exporting steel products to worldwide destinations. Two years later, Mr. Sasada moved to thetramp section in Mitsui’s bulk carrier division and was in charge of operations and then of chartering 20-40 smaller Handysize vessels between 21,000dwt and 35,000 dwt. In 1991, Mr. Sasada moved to Norway to join Trinity Bulk Carriers as its chartering manager as well as subsidiary board member,representing MOSK as one of the shareholders. After an assignment in Norway, Mr. Sasada moved to London and started MOSK’s own Ultra Handymaxoperation as its General Manager. Mr. Sasada joined Navios Holdings in May 1997. Mr. Sasada is the member of the North American Committee ofNippon 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.Leonidas Korres serves as Senior Vice President for Business Development of Navios Holdings from January 2010 and Head of Researchof Navios Group since January 2018. Mr Korres is also Chief Financial Officer of Navios Maritime Acquisition since April 2010 and Co-ChiefFinancial Officer following the completion of the merger between Navios Maritime Acquisition Corporation and Navios Maritime Midstream PartnersL.P. Mr. Korres served as the Special Secretary for Public Private Partnerships in the Ministry of Economy and Finance of the Hellenic Republic fromOctober 2005 until November 2009. Prior to that, from April 2004 to October 2005, Mr. Korres served as Special Financial Advisor to the Minister ofEconomy and Finance of the Hellenic Republic and as liquidator of the Organizational Committee for the Olympic Games Athens 2004 S.A. From2001 to 2004, Mr. Korres worked as a senior financial advisor for KPMG Corporate Finance. From October 2007 until January 2010, Mr. Korres was amember of the board of directors of Navios Partners. From May 2003 to December 2006, Mr. Korres was Chairman of the Center for Employment andEntrepreneurship, a non-profit company. From June 2008 until February 2009, Mr. Korres served as a board member and audit committee member ofHellenic Telecommunications Organization S.A. (trading on the Athens and New York Stock Exchanges). From June 2004 until November 2009,Mr. Korres served on the board of Hellenic Olympic Properties S.A., which was responsible for operating the Olympic venues. Mr. Korres earned hisbachelor’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 FinancialController since May 2006. Mr. Desypris is also the Chief Financial Officer of Navios Maritime Partners since January 2010. In addition, Mr Desypris isa director of Navios Maritime Containers L.P. since 2017. He also serves as Senior Vice President — Strategic Planning and Director of NaviosLogistics, and as director in Navios Europe Inc. Before joining Navios Group, Mr. Desypris worked for 9 years in the accounting profession, mostrecently as manager of the audit department at Ernst & Young in Greece. Mr. Desypris started his career as an auditor with Arthur Andersen & Co. in1997. 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 FinancialOfficer of Navios Logistics since March 2011. Prior to joining the Company, from 2006 until 2011, Mr. Karyotis was Consultant and later ProjectLeader at The Boston Consulting Group (BCG), an international management consulting firm. From 2003 until 2005, Mr. Karyotis was Senior EquityAnalyst at Eurocorp Securities, a Greek brokerage house, and in 2003, he was Senior Analyst in the Corporate Finance Department at HSBC PantelakisSecurities, a subsidiary of HSBC Bank. Mr. Karyotis began his career in 2002 with Marfin Hellenic Securities as Equity Analyst. He received hisbachelor’s degree in Economics from the Athens University of Economics and Business (1998). He holds a master’s of Science in Finance andEconomics from the London School of Economics (1999) and an MBA from INSEAD (2006). 120 Table of ContentsErifili Tsironi has been our Senior Vice President – Credit Management since October 2014. Ms. Tsironi is also Co-Chief Financial Officerof Navios Maritime Acquisition Corporation. Furthermore, she served as Chief Financial Officer of Navios Maritime Midstream Partners L.P since itsinception in 2014 until completion of the merger with Navios Maritime Acquisition Corporation. Ms. Tsironi has over 17 years experience in bankingfocusing on ship finance. Before joining us, she was Global Dry Bulk Sector Coordinator and Senior Vice President at DVB Bank SE. Ms. Tsironijoined the Bank in 2000 serving as Assistant Local Manager and Senior Relationship Manager. Previously, she served as account manager in ANZInvestment Bank / ANZ Grindlays Bank Ltd from May 1997 until December 1999. Ms. Tsironi holds a BSc. in Economics, awarded with Honours, fromthe London School of Economics and Political Science and a MSc in Shipping, Trade and Finance, awarded with Distinction, from Cass BusinessSchool of City University in London.Chris Christopoulos has been the Senior Vice President—Financial Business Development of Navios Corporation since joining theCompany in April 2017. Mr. Christopoulos is also Chief Financial Officer of Navios Maritime Containers, Inc. Mr. Christopoulos has over 15 years ofexperience in financial markets and shipping. Before joining us, he was a Director in the investment banking division of Bank of America MerrillLynch where he led the origination, structuring and execution of advisory and capital markets transactions for companies in the transportation sector.Previously he was part of the transportation investment banking team at Merrill Lynch, and the industrials investment banking team at CIBC WorldMarkets. 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 theboard of directors of ISE. Mr. Magoulas is the co-founder and director of Doric Shipbrokers S.A., a chartering firm based in Athens, Greece, and hasserved as the managing director of Doric Shipbrokers S.A. since its formation in 1994. From 1982 to 1993, Mr. Magoulas was chartering director andshipbroker for Nicholas G. Moundreas Shipping S.A., a company located in Piraeus, Greece, and from 1980 to 1982, Mr. Magoulas served at Orion andGlobal Chartering Inc. in New York. Mr. Magoulas received a bachelor’s degree in Economics (honors) from the City University of New York, NewYork, a master’s degree in Transportation Management from the Maritime College in New York and a master degree in Political Economy from the NewSchool for Social Research in New York. In addition to his role on the Board of Directors, Mr. Magoulas also serves as a member of the AuditCommittee, the Compensation Committee and the Nominating and Governance Committee. Mr. Magoulas is an independent director.John Stratakis 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. Since 1994, Mr. Stratakis has been a partner with the law firm of Poles, Tublin, Stratakis & Gonzalez, LLP, in New York, New York,where he specializes in all aspects of marine finance law and general corporate law. Mr. Stratakis also has been a director and the President of theHellenic-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 fromWashington College of Law at American University. Mr. Stratakis is admitted to practice law in the State of New York and in the courts of the Southernand Eastern Districts of New York. In addition to his role on the Board of Directors, Mr. Stratakis also serves as chairman of the Nominating andGovernance Committee and 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 2007until June 2010. In October 2008, Mr. Loizos joined the Managing Team of ION S.A., a leading Greek chocolate and cocoa group of companies, withthe responsibility of supervising MABEL S.A., one of the affiliated companies of the group. In June 2010, Mr. Loizos was appointed to the Board ofDirectors of ION S.A. and assumed enlarged executive responsibilities within the group. Since March 2014, Mr. Loizos serves as the CEO of theaffiliated company INTERION S.A., which operates in Bulgaria and since 2018 as the Vice President of the ION group of companies. In May 2010,Mr. Loizos was elected as a member of the Board of Directors of IOBE (Foundation of Economic and 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 Greek steel packaging company, and also as the ViceChairman of the Board of Directors of its affiliated company ATLAS S.A. From 2005 to 2007, Mr. Loizos served as the President of the InternationalPackaging Association and as the Vice President of the Greek Association of Steel Packaging Manufacturers. Mr. Loizos received a Maitrise enSciences Economiques from the University of Strasbourg and an M.B.A. in Finance from Stern Business School—New York University. Mr. Loizos alsoserves as Chairman of the Audit Committee 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 32 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 managementover the past 19 years. His credit risk experience includes head of asset recovery, head of domestic corporate credit and currently as Chief Credit Officerof BNY Mellon. Mr. Malanga holds a Bachelor’s Degree in Business Administration from Rutgers College and an M.B.A. in Finance from New YorkUniversity. Mr. Malanga also serves as a member of the Audit Committee and the Nominating and Governance Committee. Mr. Malanga is anindependent director.There are no family relationships between any of our directors, executive officers or significant employees. 121 Table of ContentsB. CompensationThe aggregate annual compensation (salaries and bonus) paid to our current executive officers was approximately $2.3 million for the yearended December 31, 2018. Navios Holdings provides administrative services to Navios Partners, Navios Acquisition, Navios Logistics, NaviosContainers, 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, asamended in December 2018 (the “2015 Equity Incentive Plan”). The amendment was adopted by the Company’s Board of Directors in November 2018and extends the duration of the plan to December 2020. The 2015 Equity Incentive Plan authorizes the issuance of stock grants to our officers,employees, directors and consultants in such amounts and pursuant to such terms as may be determined by the Board of Directors at the time of thegrant.On December 11, 2016, December 13, 2017 and December 10, 2018 the Company authorized the granting of restricted share units andshare appreciation rights and the issuance of shares of restricted common stock, restricted stock units and stock options in accordance with theCompany’s stock option plan for its employees, officers and directors. These awards of restricted share units, share appreciation rights, restrictedcommon stock units, restricted common stock and stock options to its employees, officers and directors, vest over three and four years.Details of options granted (adjusted to reflect the Reverse Stock Split)As of the filing of this Annual Report on Form 20-F, 770,600 stock options to purchase the Company’s common stock and 250,000 shareappreciation rights have been granted of which 578,644 have vested, 299,908 have expired, 83,333 remain unvested and 58,715 have been exercisedin total, of which 41,144 at an exercise price of $31.8 per share, 3,060 at an exercise price of $58.7 per share, 6,317 at an exercise price of $51.5 pershare, 5,955 at an exercise price of $38.1 per share, and 2,240 at an exercise price of $34.40 per share.Out of the 770,600 stock options granted and 250,000 share appreciation rights granted, 28,800 options were granted at an exercise priceof $167.5 per share; 57,127 options were granted at an exercise price of $31.8 per share; 40,537 options were granted at an exercise price of $58.7 pershare; 95,484 options were granted at an exercise price of $51.5 per share; 134,435 options were granted at an exercise price of $38.1 per share;134,436 options were granted at an exercise price of $34.4 per share; 67,481 options were granted at an exercise price of $86.3 per share; 112,300options were granted at an exercise price of $36.4 per share; and 100,000 options were granted at an exercise price of $12.0 per share. Total 250,000share appreciation rights were granted at an exercise price of $12.0 per share.Details of restricted stock and restricted stock units issued (adjusted to reflect the Reverse Stock Split)As of the filing of this Annual Report on Form 20-F, 1,488,931 restricted share units, shares of restricted stock and restricted stock unitshave been granted and 254,000 share appreciation rights have been granted, of which 1,024,482 have vested and in the aggregate 8,738 were forfeitedduring the years from 2007 until 2018. See Note 13 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 theirout-of-pocket expenses. In addition, the non-executive serving as chairman of the Audit Committee receives an annual fee of $20,000, the chairman ofthe Nominating and Governance Committee receives an annual fee of $17,000, and the chairman of the Compensation Committee receives an annualfee of $20,000, plus reimbursement 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 eachclass serving a three-year term. In January 2015, Navios Holdings, following the resignation of Ted Petrone, appointed Shunji Sasada to its Board ofDirectors. The term of office of the first class of directors, consisting of Efstathios Loizos, George Malanga and John Stratakis will expire in 2021. Theterm of office of the second class of directors, consisting of Shunji Sasada and Spyridon Magoulas will expire in 2019. The term of office of the thirdclass of directors, consisting of Angeliki Frangou and Vasiliki Papaefthymiou, will expire in 2020. No directors are entitled to any benefits upontermination of their term.The board of directors has established an audit committee of three independent directors. The audit committee is governed by a writtencharter, which was approved by the board of directors. One of the members of the audit committee is an “audit committee financial expert” for purposesof SEC rules and regulations. The audit committee, among other things, reviews our external financial reporting, engages our external auditors,approves all fees paid to auditors and oversees our internal audit activities and procedures and the adequacy of our internal accounting controls. Ouraudit committee is comprised of Messrs. George Malanga, Efstathios Loizos and Spyridon Magoulas, and our audit committee financial expert isMr. Efstathios Loizos. 122 Table of ContentsThe 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 tothe Company’s stockholders relating to the Company’s nominating procedures and practices for appointing officers and directors as well as theCompany’s oversight, analysis and recommendations with respect to corporate governance and best practices, and the Company’s process formonitoring compliance with 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, forestablishing, reviewing and evaluating, in consultation with senior management, the long-term strategy of employee compensation and approving anymaterial change to existing compensation plans.The board of directors, from time to time, establishes special conflicts committees to review specific matters that the board believes mayinvolve potential conflicts of interest. The conflicts committees determine if the resolution of the conflict of interest is fair and reasonable to us. Themembers of the conflicts committees may not be our officers or employees or directors, officers or employees of our affiliates, and must meet theindependence standards established by the New York Stock Exchange to serve on an audit committee of a board of directors and certain otherrequirements.D. EmployeesSee “Crewing and Shore Employees” under Item 4. B. Business overview.E. Share Ownership (adjusted to reflect the Reverse Stock Split)The following table sets forth information regarding the beneficial ownership of the common stock of Navios Holdings as of April 22,2019, based on 12,993,806 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 thatall persons named in the 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) 3,978,720 29.4 % 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,MC 98000 Monaco.(2)Angeliki Frangou has filed a Schedule 13D amendment indicating that she intends, subject to market conditions, to purchase up to $20.0 millionof common stock and as of April 22, 2019, 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 523,384 options, each for one share,vested but not yet exercised. 123 Table of ContentsItem 7. Major Shareholders and Related Party TransactionsA. Major Shareholders (adjusted to reflect the Reverse Stock Split)The following table sets forth information regarding the beneficial ownership of the common stock of Navios Holdings as of April 22, 2019based 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% ofits outstanding shares of common stock based upon the amounts and percentages as are contained in the public filings of such persons. All suchstockholders have 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 thatall persons 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) 3,978,720 29.4% (1)The amount and nature of beneficial ownership and the percentage of outstanding common stock includes 523,384 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 (beforethe Reverse Stock Split) of the shares of 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 AnonimosEteria and Emerald Ktimatiki-Ikodomiki Touristiki Xenodohiaki Anonimos Eteria, both of which are Greek corporations that are currently majority-owned by Angeliki Frangou, Navios Holdings’ Chairman and Chief Executive Officer. The lease agreements provide for the leasing of facilities locatedin Piraeus, Greece to house the operations of most of the Company’s subsidiaries. The total annual lease payments are in aggregate €0.9 million(approximately $1.1 million) pursuant to one lease agreement that continues to be effective until either party terminates the agreement and other leaseagreements that expire through 2030. These payments are subject to annual adjustments, which are based on the inflation rate prevailing in Greece asreported by the Greek State at the end of each year.Purchase of Services: The Company utilized its former affiliate company, Acropolis, as a broker until the sale of its investment onDecember 6, 2018. Navios Holdings had a 50% interest in Acropolis. Although Navios Holdings owned 50% of Acropolis’ stock, Navios Holdingsagreed with the other shareholder that the earnings and amounts declared by way of dividends would be allocated 35% to the Company with thebalance to the other shareholder. As of December 31, 2018 and 2017, the carrying amount of the investment was $0 million and $0.2 million,respectively. Dividends received for the years ended December 31, 2018, 2017 and 201 were $0.1 million for all periods. Commissions charged fromAcropolis for the years ended December 31, 2018, 2017 and 2016, were $0 million for all periods. Included in the trade accounts payable at bothDecember 31, 2018 and 2017 was an amount due to Acropolis of $0.1 million. 124 Table of ContentsVessels Charter Hire: From 2012, Navios Holdings has entered into charter-in contracts for certain of Navios Partners’ vessels, all of whichhave been redelivered by April 2016.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 totwelve months, 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 50/50profit sharing based 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 termof this charter was approximately three months from November 2016, at a net daily rate of $11,500.Total charter hire expense for all vessels for the years ended December 31, 2018, 2017 and 2016 was $0 million, $0.7 million and$1.7 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 fixedfee. This daily fee covers all of the vessels’ operating expenses, including the cost of drydock and special surveys. In February 2016, the Companyamended its existing management agreement to 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 ofTEU 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 thanTEU 13,000 through December 31, 2017. In November 2017, the Company further amended its existing management agreement to fix the fees for shipmanagement 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 dailyrate 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 through December 31, 2019. Drydocking expenses will bereimbursed by Navios Partners at cost at occurrence.Total management fees for the years ended December 31, 2018, 2017 and 2016, amounted to $68.9 million, $62.2 million and$59.2 million, respectively, and are presented net under the caption “Direct vessel expenses”.Navios Holdings provides commercial and technical management services to Navios Acquisition’s vessels for a daily fee that was fixed.This daily fee covers all of the vessels’ operating expenses, other than certain fees and costs. Actual operating costs and expenses would be determinedin a manner consistent with how the initial fixed fees were determined. In May 2014, Navios Holdings extended the duration of its existingmanagement agreement with Navios Acquisition until May 2020 and fixed the fees for ship management services of Navios Acquisition owned fleetfor two additional years through May 2016 at $6,000 per owned MR2 product tanker and chemical tanker vessel, $7,000 per owned LR1 producttanker vessel and reduced the daily rate to $9,500 per VLCC vessel. 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 tankervessel; (ii) $7,130 per LR1 product tanker vessel; and (iii) $9,500 per VLCC through May 2018. In May 2018, Navios Holdings amended its agreementwith Navios Acquisition to fix the fees for ship management services of Navios Acquisition owned fleet at a daily fee of (i) $6,500 per MR2 producttanker and chemical tanker vessel; (ii) $7,150 per LR1 product tanker vessel; and (iii) $9,500 per VLCC through May 2020. Drydocking expensesunder this agreement will be reimbursed at cost at occurrence for all vessels.Following the merger of Navios Midstream with Navios Acquisition completed on December 13, 2018, the management agreement alsocovers vessels acquired.Total management fees for the years ended December 31, 2018, 2017 and 2016 amounted to $93.0 million, $95.0 million and$97.9 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 servicesto Navios 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, 2018, 2017 and 2016 amounted to $22.4 million,$21.5 million and $20.9 million, respectively, and are presented net under the caption “Direct vessel expenses”. 125 Table of ContentsPursuant to a management agreement dated November 18, 2014, as further amended in October 2016, Navios Holdings providescommercial and technical management services to Navios Midstream’s vessels for a daily fixed fee of $9,500 per owned VLCC vessel, effectivethrough December 31, 2018. Drydocking expenses under this agreement will be reimbursed at cost at occurrence for all vessels. Total management feesfor the years ended December 31, 2018, 2017 and 2016 amounted to $20.7 million, $20.8 million and $20.9 million, respectively, and are presentednet under the caption “Direct vessel expenses”.Pursuant to a management agreement dated June 5, 2015, Navios Holdings provides commercial and technical management services toNavios Europe 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 bereimbursed at cost at occurrence. Total management fees for the years ended December 31, 2018, 2017 and 2016 amounted to $22.2 million,$22.1 million and $23.5 million, 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, in April 2018 and in June 2018, NaviosHoldings, provides commercial and technical management services to Navios Containers’ vessels The term of this agreement is for an initial period offive years with an automatic extension period of five years thereafter unless a notice for termination is received by either party. The fee for the shipmanagement services provided by Navios Holdings is a daily fee of $6,100 per day for up to 5,500 TEU container vessels, $6,700 per day for above5,500 TEU and up to 8,000 TEU container vessels and $7,400 per day for above 8,000 TEU and up to 10,000 TEU container vessels. Drydockingexpenses under this agreement are reimbursed by Navios Containers at cost. Total management fees for the period ended November 30, 2018 (date ofobtaining control) and December 31, 2017 amounted to $48.5 million and $16.7 million, respectively and are presented net under the caption “Directvessel expenses”. From November 30, 2018 (date of obtaining control) until December 31, 2018, Navios Containers’ management fees amounted to$5.3 million and have been eliminated upon consolidation.Navios Partners Guarantee: In November 2012 (as amended in March 2014), the Company entered into an agreement with NaviosPartners (the “Navios Partners Guarantee”) to provide Navios Partners with guarantees against counterparty default on certain existing charters, whichhad previously been covered by the charter insurance for the same vessels, same periods and same amounts. The Navios Partners Guarantee provides fora maximum possible payout of $20.0 million by the Company to Navios Partners. Premiums that are calculated on the same basis as the restructuredcharter insurance are included in the management fee that is paid by Navios Partners to Navios Holdings pursuant to the management agreement. As ofDecember 31, 2018, Navios Partners has submitted one claim under this agreement to the Company. As at December 31, 2018 and December 31, 2017,the fair value of the claim was estimated at $18.0 million and $20.0 million, respectively and was included in “Due to affiliate companies” and “Otherlong-term liabilities and deferred income”, respectively in the consolidated balance sheet. As of December 31, 2018, the amount of $2.0 million wasincluded in “Other income” within the consolidated statements of comprehensive (loss)/income. The final settlement of the amount due will take placeat anytime but in no case later than December 31, 2019, in accordance with a letter of agreement effective as of December 29, 2017.General and Administrative Expenses incurred on behalf of affiliates/Administrative fee revenue from affiliates: Navios Holdingsprovides administrative services to Navios Partners. Navios Holdings is reimbursed for reasonable costs and expenses incurred in connection with theprovision of these services. Navios Holdings extended the duration of its existing administrative services agreement with Navios Partners untilDecember 31, 2022, pursuant to its existing terms. Total general and administrative fees for the years ended December 31, 2018, 2017 and 2016amounted to $9.3 million, $8.4 million and $7.8 million, respectively.Navios Holdings provides administrative services to Navios Acquisition. Navios Holdings extended the duration of its existingadministrative services agreement with Navios Acquisition until May 2020, pursuant to its existing terms. Navios Holdings is reimbursed forreasonable costs and expenses incurred in connection with the provision of these services. Total general and administrative fees for the years endedDecember 31, 2018, 2017 and 2016 amounted to $8.8 million, $9.0 million and $9.4 million, respectively.Following the merger of Navios Midstream with Navios Acquisition completed on December 13, 2018, the administrative servicesagreement also covers vessels acquired.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 forreasonable costs and expenses incurred in connection with the provision of these services. Total general and administrative fees for the years endedDecember 31, 2018, 2017 and 2016 amounted to $1.0 million for all periods. The general and administrative fees have been eliminated uponconsolidation. 126 Table of ContentsPursuant to an administrative services agreement dated December 13, 2013, Navios Holdings provides administrative services to NaviosEurope I’s tanker and container vessels. The term of this agreement is for a period of six years. Navios Holdings is reimbursed for reasonable costs andexpenses incurred in connection with the provision of these services. Total general and administrative fees for the years ended December 31, 2018,2017 and 2016 amounted to $1.3 million, $1.2 million and $1.3 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 inconnection with the provision of these services. Total general and administrative fees for the years ended December 31, 2018, 2017 and 2016amounted to $1.5 million for all periods.Pursuant to an administrative services agreement dated June 5, 2015, Navios Holdings provides administrative services to Navios EuropeII’s dry bulk and container vessels. The term of this agreement is for a period of six years. Navios Holdings is reimbursed for reasonable costs andexpenses incurred in connection with the provision of these services. Total general and administrative fees charged for the year ended December 31,2018, 2017 and 2016 amounted to $2.0, $1.8 and $1.8 million, respectively.Pursuant to the administrative services agreement dated June 7, 2017, Navios Holdings provides administrative services to NaviosContainers. Navios Holdings is reimbursed for reasonable costs and expenses incurred in connection with the provision of these services. The term ofthis agreement is for an initial period of five years with an automatic extension for a period of five years thereafter unless a notice of termination isreceived by either party. Total general and administrative fees attributable to this agreement for the period ended November 30, 2018 (date ofobtaining control) and December 31, 2017, amounted to $5.4 and $1.9 million, respectively.Balance due from/to affiliates (excluding Navios Europe I and Navios Europe II): Balance due to Navios Partners as of December 31,2018 amounted to $34.8 million (December 31, 2017: $8.3 million), and the Long-term payable to Navios Partners amounted to $17.9 million(December 31, 2017: $14.9 million). Balance due from Navios Acquisition as of December 31, 2018 amounted to $11.9 million (December 31, 2017:$2.8 million due to Navios Acquisition), and the Long-term payable to Navios Acquisition amounted to $11.3 million (December 31, 2017:$15.2 million). Balance due to Navios Midstream as of December 31, 2018 amounted to $1.8 million (December 31, 2017: $1.0 million), and the Long-term payable to Navios Midstream amounted to $2.6 million (December 31, 2017: $4.6 million). Balance due to Navios Containers as of December 31,2017 amounted to $3.3 million and the Long-term payable to Navios Containers amounted to $8.0 million. The balances mainly consisted ofmanagement fees, administrative fees, drydocking, ballast water treatment system 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”)in connection with the closing of Navios Partners’ IPO governing, among other things, when Navios Holdings and Navios Partners may competeagainst each other as well as rights of first offer on certain dry bulk carriers. Pursuant to the Partners Omnibus Agreement, Navios Partners generallyagreed not to acquire or own Panamax or Capesize dry bulk carriers under time charters of three or more years without the consent of an independentcommittee of Navios Partners. In addition, Navios Holdings has agreed to offer to Navios Partners the opportunity to purchase vessels from NaviosHoldings when such vessels are fixed under time charters of three or more years.Navios Holdings entered into an omnibus agreement with Navios Acquisition and Navios Partners (the “Acquisition Omnibus Agreement”)in connection with the closing of Navios Acquisition’s initial vessel acquisition, pursuant to which, among other things, Navios Holdings and NaviosPartners agreed not to acquire, charter-in or own liquid shipment vessels, except for container vessels and vessels that are primarily employed inoperations in South America, without the consent of an independent committee of Navios Acquisition. In addition, Navios Acquisition, under theAcquisition Omnibus Agreement, agreed to cause its subsidiaries not to acquire, own, operate or charter dry bulk carriers subject to specific exceptions.Under the Acquisition Omnibus Agreement, Navios Acquisition and its subsidiaries granted to Navios Holdings and Navios Partners, a right of firstoffer 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 and Navios Partners agreed to grant a similar right of first offer to Navios Acquisition for any liquid shipment vessels itmight own. These rights of first offer will not apply to a (i) sale, transfer or other disposition of vessels between any affiliated subsidiaries, or pursuantto the terms of any charter or other agreement with a counterparty, or (ii) merger with or into, or sale of substantially all of the assets to, an unaffiliatedthird party. 127 Table of ContentsNavios Holdings entered into an omnibus agreement with Navios Midstream, Navios Acquisition and Navios Partners in connection withthe Navios Midstream IPO, pursuant to which Navios Acquisition, Navios Holdings, Navios Partners and their controlled affiliates generally haveagreed not to acquire or own any VLCCs, crude oil tankers, refined petroleum product tankers, LPG tankers or chemical tankers under time charters offive or more years without the consent of Navios Midstream. The omnibus agreement contains significant exceptions that will allow NaviosAcquisition, 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 Midstream and Navios Partners,pursuant to which Navios Acquisition, Navios Holdings and Navios Partners and their controlled affiliates generally have granted a right of first refusalto Navios Containers over any container vessels to be sold or acquired in the future, subject to significant exceptions that would allow NaviosAcquisition, Navios Holdings and Navios Partners 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 underwhich Navios Acquisition, which owns and controls Navios Maritime Midstream Partners GP LLC (“Midstream General Partner”), granted NaviosHoldings the option to acquire a minimum of 25% of the outstanding membership interests in Midstream General Partner and the incentive distributionrights in Navios Midstream representing the right to receive an increasing percentage of the quarterly distributions when certain conditions are met.The option shall expire on November 18, 2024. The purchase price for the acquisition for all or part of the option interest shall be an amount equal toits fair market value. As of December 31, 2018, 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 ofits own ownership interest in Navios Partners (the “deferred gain”). Subsequently, the deferred gain is amortized to income over the remaining usefullife of the vessel. The recognition of the deferred gain is accelerated in the event that (i) the vessel is subsequently sold or otherwise disposed of byNavios Partners or (ii) the Company’s ownership interest in Navios Partners is reduced. In connection with the public offerings of common units byNavios Partners, a pro rata portion of the deferred gain is released to income upon dilution of the Company’s ownership interest in Navios Partners. Asof December 31, 2018 and 2017, the unamortized deferred gain for all vessels and rights sold totaled $8.1 million and $10.0 million, respectively. Forthe years ended December 31, 2018, 2017 and 2016, Navios Holdings recognized $1.8 million, $1.9 million and $1.8 million of the deferred gain,respectively, in “Equity in net (losses)/earnings of affiliated companies”.Participation in Offerings of Affiliates: Refer to “Item 4.—Information on the Company” and “Item 5.—Operating and Financial Reviewand Prospects” for Navios Holdings’ participation in Navios Acquisition’s and Navios Partners’ offerings. On February 4, 2015, Navios Holdingsentered into a share purchase agreement with Navios Partners pursuant to which Navios Holdings made an investment in Navios Partners by purchasingcommon units, and general partnership interests, in order to maintain its 20.0% partnership interest in Navios Partners following its equity offering inFebruary 2015. In connection with this agreement, Navios Holdings entered into a registration rights agreement with Navios Partners pursuant to whichNavios Partners provided Navios Holdings with certain rights relating to the registration of the common units. Navios Holdings has entered intoadditional share purchase agreements on December 30, 2016, March 3, 2017, March 23, 2017, March 31, 2017, January 11, 2018, February 21, 2018and December 20, 2018 for the purchase up to a total of 1,747,206 general partnership interests.The Navios Acquisition Credit Facilities: On September 19, 2016, Navios Holdings entered into a secured credit facility of up to$70.0 million with Navios Acquisition. This credit facility is secured by all of the Company’s’ interest in Navios Acquisition and 78.5% of theCompany’s interest in Navios Logistics, representing a majority of the shares outstanding of Navios Logistics. This facility was provided for anarrangement fee of $0.7 million. On November 3, 2017, Navios Holdings prepaid in full the outstanding amount under this credit facility with NaviosAcquisition and all collateral was released.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 ofDecember 31, 2018 and 2017, there was no outstanding amount under this facility. In April 2016, Navios Partners has drawn $21.0 million from theNavios Partners Credit Facility, which was fully repaid during April 2016.Balance due from Navios Europe I: Balance due from Navios Europe as of December 31, 2018 amounted to $12.0 million (December 31,2017: $7.2 million), which included the net current amount receivable of $7.8 million (December 31, 2017: $4.0 million) mainly consisting ofmanagement fees, drydocking, ballast water treatment system and other expenses, accrued interest income earned under the Navios Revolving Loans Iand other expenses and the non-current amount of $4.2 million (December 31, 2017: $3.2 million) related to the accrued interest income earned underthe Navios Term Loans I. 128 Table of ContentsThe Navios Revolving Loans I and the Navios Term Loans I earn interest and an annual preferred return, respectively, at 1,270 basis pointsper annum, on a quarterly compounding basis and are repaid from free cash flow (as defined in the loan agreement) to the fullest extent possible at theend of each quarter. There are no covenant requirements or stated maturity dates.As of December 31, 2018 and 2017, the outstanding amount relating to Navios Holdings’ portion under the Navios Revolving Loans I was$19.1 million and $11.1 million respectively, under the caption “Loan receivable from affiliate companies”. During 2018, Navios Holdings fundedwith $8.0 million Navios Europe I under the Navios Revolving Loans I. As of December 31, 2018, the amount undrawn under the Revolving Loans Iwas $12.0 million, of which Navios Holdings may be required to fund an amount ranging from $0 to $12.0 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, comprisedof $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 price as of the closing of the transaction). The Company evaluated this transaction in accordance with ASC 860, classifying it as a securedborrowing 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 amortized through “Interest income” over the term of the loans, until 2023, and is included within “Long-term payable toaffiliate companies”. Navios Holdings may be required from Navios Partners, under certain conditions, to repurchase the loans after the thirdanniversary of the date of the transaction based on the then-outstanding balance of the loans. As of December 31, 2018 and 2017, the balance payableto Navios Partners amounted to $35.4 million and $34.2 million, respectively, including the unamortized premium of $8.4 million and $10.4 million,respectively.Balance due from Navios Europe II: Balance due from Navios Europe II as of December 31, 2018, amounted to $5.3 million (December31, 2017: $2.4 million), which included the net current payable amount of $0.5 million (December 31, 2017: $1.3 million), mainly consisting ofmanagement fees, drydocking, ballast water treatment system and other expenses and accrued interest income earned under the Navios RevolvingLoans II and other expenses and the non-current receivable amount of $5.8 million (December 31, 2017: $3.8 million) related to the accrued interestincome 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 basispoints per annum, on a quarterly compounding basis and are repaid from free cash flow (as defined in the loan agreement) to the fullest extent possibleat the end of each quarter. There are no covenant requirements or stated maturity dates.As of December 31, 2018, the outstanding amount relating to Navios Holdings’ portion under the Navios Revolving Loans II was$16.9 million (December 31, 2017: $12.1 million), under the caption “Loan receivable from affiliate companies.” During 2018, Navios Holdingsfunded with $4.9 million Navios Europe II under the Navios Revolving Loans II. As of December 31, 2018, the amount undrawn from the NaviosRevolving Loans II was $4.5 million, of which Navios Holdings may be required to fund an amount ranging from $0 to $4.5 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 thatthese claims would be covered by insurance if they involve liabilities such as arise from a collision, other marine casualty, damage to cargoes, oilpollution, 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. 129 Table of ContentsRefer also to Note 14 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 availableearnings generated by operations to conserve cash and improve liquidity. The reinstatement, declaration and payment of any dividend remains subjectto the discretion of the Board of Directors, and will depend on, among other things, Navios Holdings’ cash requirements after taking into accountmarket opportunities, debt obligations, market conditions, and restrictions contained in its equity and debt instruments, including limitations ondividends under its preferred stock. In addition, the terms and provisions of our current secured credit facilities and indentures limit our ability todeclare and pay dividends in excess of certain amounts or if certain covenants are not met. (See also Item 5.B. “Long-term Debt Obligations and CreditArrangements”).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 principaltrading market for our securities has been NYSE under the symbols “NM” for our common stock and “NMWS” for our warrants. On December 9, 2008,our publicly traded warrants expired and ceased to be publicly traded. For the period from November 3, 2005 to February 22, 2007 our common stock,warrants and units were 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 SeriesH issued in January and July 2014, respectively, are trading on the NYSE under the symbols “NMPrG.” and “NMPrH.” 130 Table of ContentsItem 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 referenceand the following 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 onOctober 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 onSeptember 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-Kfiled 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 theCompany hereby incorporates by reference.C. Material ContractsRefer to “Item 4. – Information on the Company” for a discussion of various agreements relating to our business and certain vesseltransactions, including Item 4.B. for a discussion of our option agreements to purchase 20 chartered-in vessels, and to Item 5. – Operating and FinancialReview and Prospects” for a discussion of our long-term debt, including Item 5.F for a discussion of the long-term debt, the operating lease obligationsand the rent obligations. Other than these agreements, there are no material contracts, other than the contracts entered into in the ordinary course ofbusiness, to which the Company 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, HongKong and the British Virgin Islands, the countries of incorporation of the Company and its subsidiaries, there are currently no restrictions on the exportor import of capital, including foreign exchange controls, or restrictions that affect the remittance of dividends, interest or other payments tonon-resident holders of our common stock.In the case of Argentina, however, it should be noted that in 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 Argentiniangovernment implemented certain reforms that provided greater flexibility and easier access to the foreign exchange market. As of the date of this report,almost all of these restrictions have been lifted. However, there can be no assurance that local authorities in Argentina will not modify such regulationsin 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 areimmaterial to 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 subjectto registration and tonnage taxes, which have been included in direct vessel expenses in the accompanying consolidated statements of comprehensive(loss)/income. 131 Table of ContentsCertain of the Company’s subsidiaries have registered offices in Greece under Greek Law 27/75 as amended and in force (former law89/67). 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 orforeign ship management companies having established an office/branch in Greece under law 27/75 are subject to duties towards the Greek state whichare calculated on the basis of the relevant vessel’s tonnage. In case that tonnage tax and/or similar taxes/duties are paid by the shipowning companiesto the vessel’s flag state, these are deducted from the amount of the duty to be paid in Greece by the ship owner. The payment of said duties exhauststhe tax liability of the foreign ship owning company against any tax, duty, charge or contribution payable on income from the exploitation of theforeign flagged vessel.Navios Logistics subsidiaries are incorporated in countries, which impose taxes, such as Argentina, Uruguay, Brazil and Paraguay. Incometax liabilities of the Argentinean subsidiaries for the current periods is measured at the amount expected to be paid to the taxation authorities using atax rate of 30.0% on the taxable net income. As a result of the tax reforms voted by the Argentinean Parliament in December 2017, the corporateincome tax rate has decreased from 35% in 2017 to 30% for the years 2018 and 2019, and will further decrease to 25% from 2020 onwards. Tax ratesand tax laws used to assess the income tax liability are those that are effective on the close of the fiscal period. Additionally, at the end of the fiscalyear local companies in Argentina had to calculate an assets tax (Minimum Presumed Income Tax), applying the effective tax rate of 1.0% over thegross value of the corporate assets (based on tax law criteria). Following the tax reform voted by the Argentinean Parliament in December 2017, and thesubsequent resolution in-force since May 2018, this tax will not longer apply as of the fiscal year 2019. Relating to the Paraguayan subsidiaries thereare two possible options to determine the income tax liability. Under the first option, income tax liabilities for the current and prior periods aremeasured at the amount expected to be paid to the taxation authorities, by applying the tax rate of 10.0% on the fiscal profit and loss. 50.0% ofrevenues derived from international freights 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 international freights can choose to pay income taxes on their revenues at an effective tax rate of 1.0% onsuch revenues, without considering any other kind of adjustments. Fiscal losses, if any, are neither deducted nor carried forward.Material 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 aresubject to change, possibly with retroactive effect. Changes in these authorities may cause the tax consequences to vary substantially from theconsequences described below. 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 tax consequences discussed below. The discussion below is not in any way binding on the IRS or the courts or in any way an assurancethat the U.S. federal income tax consequences discussed herein will be accepted by the IRS or the courts.The U.S. federal income tax consequences to a beneficial owner of our common stock may vary depending on such beneficial owner’sparticular situation or status. This discussion is limited to beneficial owners of our common stock who hold our common stock as capital assets, and itdoes not address aspects of U.S. federal income taxation that may be relevant to persons who are subject to special treatment under U.S. federal incometax laws, including but not limited to: dealers in securities; banks and other financial institutions; insurance companies; tax-exempt entities, plans oraccounts; persons holding our common stock as part of a “hedge,” “straddle” or other risk reduction transaction; partnerships or other pass-throughentities (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 our outstanding stock; U.S. expatriates; persons that are accrual method taxpayers required to accelerate therecognition of any item of gross income for U.S. federal income tax purposes as a result of such income being recognized on an applicable financialstatement; and persons subject to alternative minimum tax. The following discussion is for general information purposes only and does not address anyU.S. state or local tax matters, any non-U.S. tax matters, or any U.S. federal taxes other than income taxes (such as estate and gift taxes or the Medicaretax on certain investment income). 132 Table of ContentsU.S. Holders (as defined below) that use an accrual method of accounting for U.S. federal income tax purposes generally are required toinclude certain amounts in income no later than the time such amounts are reflected on certain applicable financial statements. The application of thisrule may require the accrual of income earlier than would be the case under the general U.S. federal income tax rules described below, although it is notclear to what types of income this rule applies. U.S. Holders that use an accrual method of accounting for U.S. federal income tax purposes shouldconsult with their tax advisors regarding the potential applicability of this rule to their particular situation.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 asa foreign 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— NaviosMaritime Holdings 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 containedin Section 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 taxin respect of its U.S.-source gross shipping income (without allowance for deductions). For this purpose, U.S.-source gross shipping income includes50.0% of the shipping income that is attributable to transportation that begins or ends (but that does not both begin and end) in the U.S. Shippingincome attributable to transportation that both begins and ends in the U.S. is considered to be 100.0% U.S.-source. Shipping income attributable totransportation exclusively between non-U.S. destinations is considered to be 100.0% non-U.S. source and generally is not subject to U.S. federalincome tax. “Shipping income” means income that is derived from the use of vessels, the hiring or leasing of vessels for use on a time, voyage orbareboat charter basis, the participation in a pool, partnership, strategic alliance, joint operating agreement, code sharing agreement or other jointventure it directly or indirectly owns or participates in that generates 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.federal income 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 UnitedStates with 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 oforganization, 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 isowned, directly or indirectly, by (a) individuals who are “residents” of foreign countries that grants an “equivalent exemption,” (b) non-U.S.corporations organized in foreign countries that grant an “equivalent exemption” and that meet the test described in (i), and/or (c) certain otherqualified shareholders described in the Treasury Regulations promulgated under Section 883; and • It meets certain substantiation and reporting requirements.We believe that we and each of our subsidiaries qualifies and will continue to qualify for the foreseeable future for this statutory taxexemption under Section 883 with respect to our U.S.-source shipping income, provided that our common stock continues to be listed on the NYSEand represents more than 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, andless than 50.0% of our common stock is owned, actually or constructively under specified stock attribution rules, on more than half the number of daysin the relevant year by persons who each own 5.0% or more of the vote and value of our common stock. However, no assurance can be given that wewill satisfy these requirements or 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 subjectfor those 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 expectthat the effective rate of U.S. federal income tax on our gross shipping income would be significantly below 1.0%. 133 Table of ContentsTo 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 taxcurrently imposed at a flat rate of 21.0%, but would not be subject to the 4.0% 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 forcertain adjustments, and on 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 torepresent, 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 anyvessel sailing to or from the U.S. on a regularly scheduled basis. Based on the foregoing and on the expected mode of our shipping operations andactivities, we believe 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 a flat rate of 21.0% (and the branch profitstax discussed 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 avessel, 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 officeor other fixed place of business maintained by us in the U.S. under U.S. federal income tax principles.Taxation 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 a beneficial 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 ofits political 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 (asdetermined for U.S. federal income tax purposes) have the authority to control all substantial decisions of that trust, or if the trust has validlyelected to be treated as 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 willgenerally depend upon the status of the partner, upon the activities of the partnership and certain determinations made at the partner level. If you are apartner in a partnership considering an investment in our common stock, you should consult your tax advisor. 134 Table of ContentsDistributions on Our Common StockSubject to the discussion of “passive foreign investment companies” below, any distributions that you receive with respect to our commonstock generally will constitute dividends, which may be taxable as ordinary income or “qualified dividend income” as described below, to the extentof our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Distributions in excess of our earnings andprofits will be treated 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 ofsuch stock. We do not maintain calculations of earnings and profits under U.S. federal income tax principles. Therefore, you should expect that adistribution with respect to your common stock generally will be treated as dividend income, even if that distribution might otherwise be treated as anon-taxable return of capital or as capital gain 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 taxpurposes), you will not be entitled to claim a dividends-received deduction with respect to any distributions you receive from us. Dividends paid withrespect to our common stock will generally be treated as “passive category income” for purposes of computing allowable foreign tax credits for U.S.foreign tax credit purposes.If you are an individual, trust or estate, dividends you receive from us should be treated as “qualified dividend income,” provided that:(i) our common stock is readily tradable on an established securities market in the U.S., which we expect to be the case, provided that our commonstock continues to be listed on the NYSE; (ii) we are not a “passive foreign investment company” for the taxable year during which the dividend ispaid or the immediately preceding taxable year (see the discussion below under “—Passive Foreign Investment Company Status”); (iii) you haveowned our common stock for more than 60 days in the 121-day period beginning 60 days before the date on which the common stock becomeex-dividend (and have not entered into certain risk limiting transactions with respect to such common stock); (iv) you are not under an obligation tomake related payments with respect to positions in substantially similar or related property; and (v) you do not treat the dividends as “investmentincome” 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 thetaxpayer. 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,an extraordinary 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 youradjusted tax basis (or fair market value in certain circumstances) in such share of common stock. In addition, extraordinary dividends includedividends received within a one-year period that, in the aggregate, equal or exceed 20.0% of your adjusted tax basis (or fair market value in certaincircumstances). If we pay an extraordinary dividend on any shares of our common stock that is treated as “qualified dividend income,” and you are anindividual, estate or trust, then any loss you derive from a subsequent sale or exchange of such shares of our common stock will be treated as long-termcapital loss to the extent of such dividend.Sale, 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, yougenerally will recognize capital gain or loss upon a sale, exchange or other disposition of our common stock in an amount equal to the difference, ifany, between the amount realized by you from such sale, exchange or other disposition and your tax basis in such common stock. Any such gain or losswill 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 loss will generally be treated as U.S. source income or loss, as applicable, for U.S. foreign tax credit purposes. If you are anindividual, trust or estate, your long-term capital gains are currently subject to tax at preferential rates. Your ability to deduct capital losses againstordinary 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 foreigninvestment company (“PFIC”) for U.S. federal income tax purposes. In general, we will be a PFIC for any taxable year in which, after applying certainlook-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 derivedother than 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 areheld for the production of, passive income). 135 Table of ContentsFor purposes of determining whether we are a PFIC, we will be treated as earning and owning our proportionate share of the income andassets, respectively, of any of our subsidiary corporations in which we own at least 25.0% of the value of the subsidiary’s stock. Income we earn, or aredeemed to earn, in connection with the performance of services will not constitute passive income. By contrast, rental income will generally constitutepassive 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, 2018 or for subsequent taxable years. However, no assurance can be given as to our current and future PFIC status, because such statusrequires an annual factual determination based upon the composition of our income and assets for the entire taxable year. The PFIC determination alsodepends on the application of complex U.S. federal income tax rules concerning the classification of our income and assets for this purpose, and thereare legal uncertainties involved in determining whether the income derived from our chartering activities and from our logistics activities constitutesrental income or income derived from the performance of services. In Tidewater Inc. v. United States, 565 F.2d 299 (5th Cir. 2009), the Fifth Circuitheld that income derived from certain time chartering activities should be treated as rental income rather than services income for purposes of a foreignsales corporation provision of the Code. The IRS has announced, in an Action on Decision (AOD 2010-001), its nonacquiescence with the court’sholding in the Tidewater case and, at the same time, announced the position of the IRS that the vessel time charter agreements at issue in that caseshould be treated as service contracts. The IRS’ AOD, however, is an administrative action that cannot be relied upon or otherwise cited as precedent bytaxpayers. 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 ourposition. In addition, although we intend to conduct our affairs in a manner to avoid, to the extent possible, being classified as a PFIC with respect toany taxable year, we cannot assure you that the nature of our operations, or the nature or composition of our income or assets, will not change in thefuture, 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 generallywould be subject to one of three different U.S. federal income tax regimes, depending on whether or not you make certain elections. Additionally, foreach year during which we are treated as a PFIC and you actually or constructively own common stock you generally will be required to file IRS Form8621 with your U.S. federal income tax return to report certain information concerning your ownership of our common stock. In the event that a personthat is required to file IRS Form 8621 does not file such form, the statute of limitations on the assessment and collection of U.S. federal income taxes ofsuch person for the related tax 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.Taxation 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 atimely election 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 prorata share of our ordinary earnings (as ordinary income) and our net capital gain (as long-term capital gain), if any, for our taxable year that ends with orwithin your taxable year, regardless of whether we make any distributions to you. Such income inclusions would not be eligible for the preferential taxrates applicable to qualified dividend income. Your adjusted tax basis in our common stock would be increased to reflect such taxed but undistributedearnings and profits. Distributions of earnings and profits that had previously been taxed would result in a corresponding reduction in your adjustedtax basis in our common stock and would not be taxed again once distributed. You would generally recognize capital gain or loss on the sale,exchange or other disposition of our common stock. Even if you make a QEF Election for one of our taxable years, if we were a PFIC for a prior taxableyear during which you held our common stock and for which you did not make a timely QEF Election, you would also be subject to the more adverserules described below under “—Taxation of U.S. Holders That Make No Election.” Additionally, to the extent any of our subsidiaries is a PFIC, yourelection 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 aseparate QEF Election with respect to such subsidiary would 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 whichthe election 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 notifyall 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 theQEF Election described 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 effectwith respect to any subsequent taxable year for which we are a PFIC. It should be noted that the beneficial effect of a QEF Election may besubstantially diminished 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 bepermitted to make a QEF election that is retroactive to the beginning of your holding period if we unexpectedly are treated as a PFIC. 136 Table of ContentsTaxation 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 stockand, our common stock is treated as “marketable stock,” you would be allowed to make a “mark-to-market” election with respect to our common stock,provided you complete and file IRS Form 8621 with your U.S. federal income tax return for the year for which the election is made in accordance withthe relevant instructions. If that election is made, you generally would include as ordinary income in each taxable year the excess, if any, of the fairmarket value of our common stock at the end of the taxable year over your adjusted tax basis in our common stock. You also would be permitted anordinary loss in respect of the excess, if any, of your adjusted tax basis in our common stock over the fair market value of such common stock at the endof the taxable year (but only to the extent of the net amount of gain previously included in income as a result of the mark-to-market election). Your taxbasis in our common stock would be adjusted to reflect any such income or loss amount. Gain realized on the sale, exchange or other disposition of ourcommon stock would be treated as ordinary income, and any loss realized on the sale, exchange or other disposition of the common stock would betreated as ordinary loss to the extent that such loss does not exceed the net mark-to-market gains you previously included. However, to the extent anyof 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 stockof such subsidiary. This may significantly 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 inthe first 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 donot make 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 excessdistribution (that is, the portion of any distributions you receive on our common stock in a taxable year in excess of 125.0% of the average annualdistributions you received in the three preceding taxable years, or, if shorter, your holding period for our common stock) and (b) any gain realized onthe sale, exchange or other disposition of our common stock. Under these special rules: (i) the excess distribution or gain would be allocated ratablyover your aggregate holding period for 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 other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class oftaxpayer for that year; and (iv) an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable to eachsuch other taxable year.If you died while owning our common stock, your successor generally would not receive a step-up in tax basis with respect to such sharesfor U.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 succeedingyears during 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 owntax advisor with respect to any available elections that may be applicable in such a situation, as well as the IRS information and filing obligations thatmay arise as a result 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 partnershipfor U.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, unlessthe income 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 benefitsof an applicable income tax treaty with respect to that income, such income generally is taxable in the U.S. only if it is attributable to a permanentestablishment maintained 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 otherdisposition of our common stock, unless: 137 Table of Contents • 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 inthe U.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 otherconditions are 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 of30.0% (or such 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 lowerrate as 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-corporateU.S. holder: (i) fails to provide an accurate taxpayer identification number; (ii) is notified by the IRS that it has become subject to backup withholdingdue to a prior failure to report all interest or distributions required to be shown on its federal income tax returns; or (iii) fails to comply with applicablecertification requirements.If you are a non-U.S. holder, you may be required to establish your exemption from information reporting and backup withholding bycertifying your 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 backupwithholding rules that exceed your income tax liability by accurately completing and timely filing a refund claim with the IRS.Tax Return Disclosure RequirementsIndividual U.S. holders (and to the extent specified in applicable Treasury Regulations, certain individual non-U.S. holders and certainU.S. holders that are entities) that hold certain specified foreign assets with values in excess of certain dollar thresholds are required to report suchassets on IRS Form 8938 with their U.S. federal income tax return, subject to certain exceptions (including an exception for foreign assets held inaccounts maintained with U.S. financial institutions). Stock in a foreign corporation, including our common stock is a specified foreign asset for thispurpose, unless such stock is held in an account maintained with a U.S. financial institution. Substantial penalties apply for failure to properlycomplete and file Form 8938. You are encouraged to consult your own tax advisor regarding the filing of this form. Additionally, in the event that anindividual U.S. holder (and to the extent specified in applicable Treasury Regulations, an individual non-U.S. holder or a U.S. entity) that is required tofile IRS Form 8938 does not file such form, the statute of limitations on the assessment and collection of U.S. federal income taxes of such person forthe related tax year may not close until three years after the date that the required information is filed. U.S. holders (including U.S. entities) andnon-U.S. holders should consult their own tax advisors regarding their reporting obligations with respect to specified foreign assets.F. Dividends and paying agentsNot applicable.G. Statement by expertsNot applicable.H. Documents on displayWe are subject to the informational requirements of the Exchange Act. Accordingly, we are required to file reports and other informationwith the SEC, including annual reports on Form 20-F and reports on Form 6-K. The SEC maintains an Internet website that contains reports and otherinformation about issuers, like us, that file electronically with the SEC. The address of that website is www.sec.gov. 138 Table of ContentsWe also make available on our website, free of charge, our Annual Report and the text of our reports on Form 6-K, including anyamendments to these reports, as well as certain other SEC filings, as soon as reasonably practicable after they are electronically filed with or furnishedto the SEC. Our website address is www.navios.com. The information contained on our website is not incorporated by reference in this Annual Report.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.Interest Rate Risk:Debt Instruments — On December 31, 2018 and 2017, Navios Holdings had a total of $1,843.9 million and $1,717.8 million, respectively,of long-term indebtedness. All of the Company’s debt is U.S. dollar-denominated and bears interest at a floating rate, except for the 2022 SeniorSecured Notes, the 2022 Notes, the 2022 Logistics Senior Notes and two Navios Logistics’ loans discussed in “Item 5.B Liquidity and CapitalResources” that bear interest at 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 31,2018, the outstanding amount of the Company’s floating rate loan facilities was $543.5 million. The interest rate on the 2022 Senior Secured Notes,the 2022 Notes, the 2022 Logistics Senior Notes, and two Navios Logistics’ loans is fixed and, therefore, changes in interest rates affect their fair value,which as of December 31, 2018 was $972.5 million, but do not affect their related interest expense. A change in the LIBOR rate of 100 basis pointswould increase interest expense for the year ended December 31, 2018, by $3.7 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.Inflation:Inflation has had a minimal impact on vessel operating expenses and general and administrative expenses. Our management does notconsider inflation 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 II Item 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.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 the respectivedividend rate increased by 0.25%. As of the date of this Annual Report, the Company has reached 13 quarterly dividend payments in arrears relating toits Series G and Series H.Item 14. Material Modifications to the Rights of Security Holders and Use of ProceedsNone. 139 Table of ContentsItem 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 31,2018. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures wereeffective as of December 31, 2018.Disclosure controls and procedures means controls and other procedures that are designed to ensure that information required to bedisclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periodsspecified in the SEC’s rules and forms and that such information required to be disclosed by us in the reports that we file or submit under the ExchangeAct is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performingsimilar functions, as appropriate to allow timely decisions regarding required disclosures.B. 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 ofany evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or thatthe degree of 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 31,2018. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) inInternal Control — Integrated Framework (2013). Based on its assessment, management concluded that, as of December 31, 2018, Navios Holdings’internal control over 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 overfinancial reporting. This report appears on Page F-2 of the Consolidated Financial Statements.D. Changes in Internal Control over Financial ReportingThere have been no changes in internal controls over financial reporting (identified in connection with management’s evaluation of suchinternal controls over financial reporting) that occurred during the year covered by this Annual Report that have materially affected, or are reasonablylikely to 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.The Board of Directors has determined that Efstathios Loizos qualifies as “an audit committee financial expert” as defined in the instructions ofItem 16A of Form 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 andemployees of Navios Holdings that complies with applicable guidelines issued by the SEC. The Navios Code of Corporate Conduct and Ethics isavailable for review on Navios Holdings’ website at www.navios.com. 140 Table of ContentsItem 16C. Principal Accountant Fees and ServicesAudit FeesOur principal accountants for fiscal years 2018 and 2017 were PricewaterhouseCoopers S.A. The audit fees for the audit of the years endedDecember 31, 2018 and 2017 were $1.7 million and $1.6 million, respectively.The Audit Committee is responsible for the appointment, replacement, compensation, evaluation and oversight of the work of theindependent auditors. As part of this responsibility, the audit committee pre-approves the audit and non-audit services performed by the independentauditors in order to assure that they do not impair the auditors’ independence from the Company. The Audit Committee may delegate, to one or moreof its designated members, the authority to grant such pre-approvals. The decision of any member to whom such authority is delegated is be presentedto the full Committee at each of its scheduled meetings.All audit services and other services provided by PricewaterhouseCoopers S.A., after the formation of our Audit Committee inOctober 2005 were pre-approved by the Audit Committee.Audit-Related FeesThere were no audit-related fees billed in 2018 and 2017.Tax FeesThere were no tax fees billed in 2018 and 2017.All Other FeesThere were no other fees billed in 2018 and 2017.Item 16D. Exemptions from the Listing Standards for Audit CommitteesNot applicable.Item 16E. Purchases of Equity Securities by the Issuer and Affiliated PurchasersIn March and April of 2019, Navios Holdings repurchased 10,930 Series H for a total of approximately $4.2 million of cash considerationand a total of approximately $4.7 million in aggregate principal amount of 2024 Notes, and 8,841 Series G for a total of approximately $4.4 million ofcash consideration and a total of approximately $3.9 million principal amount of 2024 Notes, pursuant to tender offers. Please refer also to Note 23 tothe Consolidated Financial Statements included herein.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 byU.S. companies under the NYSE listing standards. However, we have voluntarily adopted all of the NYSE required practices, except that, as permittedunder Marshall Islands law, we do not need or intend to obtain prior shareholder approval to adopt or re-use equity compensation plans, including our2015 Equity Incentive Plan. 141 Table of ContentsItem 16H.Mine Safety disclosuresNot applicable. PART III Item 17.Financial StatementsSee Item 18. Item 18.Financial StatementsThe financial information required by this Item is set forth on pages F-1 to F-65 and are filed as part of this annual report. 142 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 theRegistrant’s Registration 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(File No. 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). 1.4 Articles of Amendment of Articles of Incorporation of Navios Maritime Holdings Inc. (Incorporated by reference to Exhibit 1.1 to theRegistrant’s Form 6-K, filed on December 12, 2018). 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 Certificate of Designations of Rights, Preferences and Privileges of Preferred Stock of Navios Maritime Holdings Inc. (Incorporated byreference to Exhibit 99.2 to the Registrant’s Form 6-K, filed on October 6, 2008). 2.4 Certificate of Designation, Preferences and Rights of Series A Convertible Preferred Stock of Navios Maritime Holdings Inc. (Incorporatedby reference to Exhibit 3.1 to the Registrant’s Form 6-K, filed on July 7, 2009). 2.5 Certificate of Designation, Preferences and Rights of Series B Convertible Preferred Stock of Navios Maritime Holdings Inc. (Incorporatedby reference to Exhibit 3.1 to the Registrant’s Form 6-K, filed on September 22, 2009). 2.6 Certificate of Designation, Preferences and Rights of Series C Convertible Preferred Stock of Navios Maritime Holdings Inc. (Incorporatedby reference to Exhibit 3.1 to the Registrant’s Form 6-K, filed on September 24, 2009). 2.7 Certificate of Designation, Preferences and Rights of Series D Convertible Preferred Stock of Navios Maritime Holdings Inc. (Incorporatedby reference to Exhibit 3.1 to the Registrant’s Form 6-K, filed on February 4, 2010). 2.8 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).2.8.1 First Supplemental Indenture relating to the 7.375% First Priority Ship Mortgage Notes due 2022, dated as of February 20, 2014(Incorporated by reference to Exhibit 10.3 to the Registrant’s Form 6-K, filed on March 3, 2014).2.8.2 Second Supplemental Indenture relating to the 7.375% First Priority Ship Mortgage Notes due 2022, dated as of June 24, 2014(Incorporated by reference to Exhibit 10.2 to the Registrant’s Form 6-K, filed on July 23, 2014).2.8.3 Third Supplemental Indenture relating to the 7.375% First Priority Ship Mortgage Notes due 2022, dated as of October 24, 2014(Incorporated by reference to Exhibit 10.2 to the Registrant’s Form 6-K, filed on December 8, 2014).2.8.4 Fourth Supplemental Indenture relating to the 7.375% First Priority Ship Mortgage Notes due 2022, dated as of October 24, 2014(Incorporated by reference to Exhibit 10.3 to the Registrant’s Form 6-K, filed on February 25, 2016).2.8.5 Fifth Supplemental Indenture relating to the 7.375% First Priority Ship Mortgage Notes due 2022, dated as of March 17, 2017 (Incorporatedby reference to Exhibit 10.5 to the Registrant’s Form 6-K, filed on December 20, 2018).2.8.6 Sixth Supplemental Indenture relating to the 7.375% First Priority Ship Mortgage Notes due 2022, dated as of March 12, 2018(Incorporated by reference to Exhibit 10.6 to the Registrant’s Form 6-K, filed on December 20, 2018). 143 Table of Contents2.8.7 Seventh Supplemental Indenture relating to the 7.375% First Priority Ship Mortgage Notes due 2022, dated as of October 31, 2018(Incorporated by reference to Exhibit 10.7 to the Registrant’s Form 6-K, filed on December 20, 2018). 2.9 Indenture relating to the 11.25% Senior Secured Notes due 2022, dated as of November 21, 2017, among Navios Maritime Holdings Inc.,Navios Logistics Finance II (US) Inc., the guarantors party thereto, and Wells Fargo Bank, National Association, as trustee and collateraltrustee (Incorporated by reference to Exhibit 99.2 to the Registrant’s Form 6-K, filed on November 21, 2017).2.9.1 First Supplemental Indenture relating to the 11.25% Senior Secured Notes due 2022, dated as of March 12, 2018 (Incorporated by referenceto Exhibit 10.3 to the Registrant’s Form 6-K, filed on December 20, 2018).2.9.2 Second Supplemental Indenture relating to the 11.25% Senior Secured Notes due 2022, dated as of October 31, 2018 (Incorporated byreference to Exhibit 10.4 to the Registrant’s Form 6-K, filed on December 20, 2018).2.10 Deposit Agreement, dated as of January 21, 2014, by and among Navios Maritime Holdings Inc., The Bank of New York Mellon, and theholders from time to time of the American depositary receipts described therein (incorporated by reference to Exhibit 4.1 to the Registrant’sRegistration Statement on Form 8-A (File No. 001-33311), filed on January 24, 2014).2.11 Certificate of Designation of 8.75% Series G Cumulative Redeemable Perpetual Preferred Stock of Navios Maritime Holdings Inc.(Incorporated by reference to Exhibit 3.3 to the Registrant’s Registration Statement on Form 8-A (File No. 001-33311), filed on January 24,2014).2.12 Form of American Depositary Receipt representing the American Depositary Shares (Incorporated by reference to Exhibit A to Exhibit 4.1 tothe Registrant’s Registration Statement on Form 8-A (File No. 001-33311), filed on January 24, 2014).2.13 Form of Certificate representing the 8.75% Series G Cumulative Redeemable Perpetual Preferred Stock (Incorporated by reference to Exhibit4.3 to the Registrant’s Registration Statement on Form 8-A (File No. 001-33311), filed on January 24, 2014).2.14 Certificate of Designation of 8.625% Series H Cumulative Redeemable Perpetual Preferred Stock of Navios Maritime Holdings Inc.(Incorporated by reference to Exhibit 3.3 to the Registrant’s Registration Statement on Form 8-A (File No. 001-33311), filed on July 7,2014).2.15 Form of Certificate representing the 8.625% Series H Cumulative Redeemable Perpetual Preferred Stock (Incorporated by reference toExhibit 4.3 to the Registrant’s Registration Statement on Form 8-A (File No. 001-33311), filed on July 7, 2014).2.16 Stockholders Rights Agreement dated as of February 19, 2019 by and between Navios Maritime Holdings Inc. and Continental StockTransfer & Trust Company (Incorporated by reference to Exhibit 10.2 to the Registrant’s Registration Statement on Form 8-A (FileNo. 001-33311), filed on February 19, 2019).4.1 Amendment to Omnibus Agreement, dated June 29, 2009, by and among Navios Maritime Holdings Inc., Navios GP L.L.C., NaviosMaritime Operating L.L.C. and Navios Maritime Partners L.P. (Incorporated by reference to Exhibit 10.2 to the Registrant’s Form 6-K, filedon July 7, 2009).4.2 Facility Agreement for a $240.0 million term loan facility, dated June 24, 2009, by and between Floral Marine Ltd., NostosShipmanagement Corp., Pandora Marine Inc., Red Rose Shipping Corp. and Commerzbank AG (Incorporated by reference to Exhibit 10.3to the Registrant’s Form 6-K, filed on July 7, 2009).4.3 Supplemental Agreement in relation to the Facility Agreement dated December 11, 2007 for a loan facility of up to $154.0 million, datedJuly 10, 2009, among 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 August 5, 2009).4.4 Second Supplemental Agreement in relation to the Facility Agreement dated December 11, 2007 for a loan facility of up to $130.0 million,dated August 28, 2009, between Chilali Corp, Rumer Holding Ltd. and Credit Agricole Corporate and Investment Bank (formerly EmporikiBank of Greece S.A.) (Incorporated by reference to Exhibit 99.3 to the Registrant’s Form 6-K, filed on October 8, 2009). 144 Table of Contents4.5 Facility Agreement in respect of a loan of up to $75.0 million, dated August 28, 2009, between Kohylia Shipmanagement S.A., DucaleMarine Inc. and Credit Agricole Corporate and Investment Bank (formerly Emporiki Bank of Greece S.A.) (Incorporated by reference toExhibit 99.5 to the Registrant’s Form 6-K, filed on October 8, 2009).4.6 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 ShippingCorporation, Deutsche Schiffsbank AG, Alpha Bank AE and Credit Agricole Corporate and Investment Bank (Incorporated by reference toExhibit 10.1 to the Registrant’s Form 6-K, filed on April 8, 2010).4.7 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 Form6-K, filed on April 8, 2010).4.8 Facility Agreement in respect of a loan of up to $40.0 million, dated as of September 30, 2010, between Aramis Navigation Inc. and CreditAgricole Corporate and Investment Bank (formerly Emporiki Bank of Greece S.A.) (Incorporated by reference to Exhibit 10.3 to theRegistrant’s Form 6-K, filed on October 14, 2010).4.9 Amended and Restated Loan Agreement relating to a facility of up to $120.0 million, by and between Portorosa Marine Corp., FloralMaritime Ltd., the banks and financial institutions listed therein and Dekabank Deutsche Girozentrale (Incorporated by reference toExhibit 10.1 to the Registrant’s Form 6-K, filed on November 15, 2010).4.10 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 toExhibit 10.1 to the Registrant’s Form 6-K, filed on February 4, 2011).4.11 Supplemental Agreement relating to the Facility Agreement dated as of September 30, 2010 for a term loan facility of up to $40.0 million,dated January 28, 2011, between Aramis Navigation Inc. and Credit Agricole Corporate and Investment Bank (formerly Emporiki Bank ofGreece S.A.) (Incorporated by reference to Exhibit 10.2 to the Registrant’s Form 6-K, filed on February 4, 2011).4.12 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 EmporikiBank of Greece S.A.) (Incorporated by reference to Exhibit 10.3 to the Registrant’s Form 6-K, filed on February 4, 2011).4.13 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 andInvestment Bank (formerly Emporiki Bank of Greece S.A.) (Incorporated by reference to Exhibit 10.4 to the Registrant’s Form 6-K, filed onFebruary 4, 2011).4.14 Supplemental Agreement relating to the Amended and Restated Loan Agreement dated as of October 27, 2010 in respect of a loan facility ofup to $120.0 million, dated January 28, 2011, between Portorosa Marine Corp., Floral Marine Ltd., the banks and financial institutions listedthereto and Dekabank Deutsche Girozentrale (Incorporated by reference to Exhibit 10.5 to the Registrant’s Form 6-K, filed on February 4,2011).4.15 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).4.16 Facility Agreement No. 242 in respect of a loan up to $23.0 million, dated August 19, 2011, between Solange Shipping Ltd. and CreditAgricole Corporate and Investment Bank (formerly Emporiki Bank of Greece S.A.) (Incorporated by reference to Exhibit 10.1 to theRegistrant’s Form 6-K, filed on August 25, 2011).4.17 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 Form6-K, filed on January 26, 2012). 145 Table of Contents4.18 Shareholders’ Agreement, dated as of June 17, 2010, between Navios South American Logistics Inc., Navios Corporation and GrandallInvestment S.A (Incorporated by reference to Exhibit 4.1 to Navios South American Logistics Inc.’s Registration Statement on Form F-4(Registration No. 333-179250), filed on January 31, 2012).4.19 Facility agreement for a $42.0 million term loan facility, dated March 23, 2012, by and between Astra Maritime Corporation, SerenityShipping Enterprises Inc., DVB Bank SE, Credit Agricole Corporate and Investment Bank (formerly Emporiki Bank of Greece S.A.) andNorddeutsche Landesbank Girozentrale (Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 6-K, filed on April 6, 2012).4.20 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 EmporikiBank of Greece S.A.) (Incorporated by reference to Exhibit 10.2 to the Registrant’s Form 6-K, filed on April 6, 2012).4.21 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 by reference to Exhibit 10.3 to the Registrant’s Form 6-K, filed on April 6, 2012).4.22 Facility Agreement for a $40.0 million term loan facility, dated September 19, 2013, between Kleimar NV and DVB Bank SE (Incorporatedby reference to Exhibit 10.1 to the Registrant’s Form 6-K, filed on October 8, 2013).4.23 Loan Agreement, dated December 13, 2013, between Navios Europe Inc., Navios Partners Europe Finance Inc., Navios Acquisition EuropeFinance Inc. and Navios Holdings Europe Finance Inc. (Incorporated by reference to Exhibit 10.2 to the Registrant’s Form 6-K, filed onMarch 3, 2014).4.24 Facility Agreement for a $65.5 million term loan facility, dated June 27, 2014, between Astra Maritime Corporation, Emery ShippingCorporation, Serenity Shipping Enterprises Inc., DVB Bank SE, Credit Agricole Corporate and Investment Bank and NorddeutscheLandesbank Girozentrale (Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 6-K, filed on July 23, 2014).4.25 Loan Agreement in respect of a loan of up to $31.0 million, dated November 6, 2014, between Lavender Shipping Corporation and AlphaBank A.E. (Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 6-K, filed on December 8, 2014).4.26 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 (Incorporatedby reference to Exhibit 10.1 to the Registrant’s Form 6-K, filed on April 14, 2015).4.27 Facility Agreement for a $41.0 million term loan facility, dated January 5, 2016, Triangle Shipping Corporation, Esmeralda ShippingCorporation, Navios Maritime Holdings Inc. and DVB Bank SE. (Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 6-K, filedon February 25, 2016).4.28 Loan Agreement for a Loan of up to $16.125 million, dated as of November 3, 2016, by and between Nostos Shipmanagement Corp. andAlpha Bank A.E (Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 6-K, filed on December 1, 2016).4.29 Facility Agreement relating to a facility of up to $18,253,968.25, dated December 21, 2017, between Kleimar NV. and DVB Bank SE(Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 6-K, filed on January 17, 2018).4.30 Second Amendment to the Navios Maritime Holdings Inc. 2015 Equity Incentive Plan (Incorporated by reference to Exhibit 99.1 to theRegistrant’s Form 6-K, filed on December 4, 2018).4.31 Facility Agreement dated May 23, 2017 for a loan facility of up to $15.3 million, between Red Rose Shipping Corp. and HSH Nordbank AG(Incorporated by reference to Exhibit 10.1 to the Registrant’s Form 6-K, filed on December 20, 2018).4.32 Facility Agreement dated February 14, 2018 for a loan facility of up to $28.745 million, between Aramis Navigation Inc., Iris ShippingCorporation, Jasmine Shipping Corporation and Crédit Agricole Corporate And Investment Bank (Incorporated by reference to Exhibit 10.2to the Registrant’s Form 6-K, filed on December 20, 2018). 146 Table of Contents8.1 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.101 The following materials from the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2018, formatted ineXtensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets at December 31, 2018 and 2017; (ii) ConsolidatedStatements of Comprehensive (Loss)/Income for each of the years ended December 31, 2018, 2017 and 2016; (iii) Consolidated Statements ofCash Flows for each of the years ended December 31, 2018, 2017 and 2016; (iv) Consolidated Statements of Changes in Equity for each of theyears ended December 31, 2018, 2017 and 2016; and (v) the Notes to Consolidated Financial Statements. 147 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 hasduly caused 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 26, 2019 148 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, 2018 AND 2017 F-4 CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME FOR EACH OF THE YEARS ENDED DECEMBER 31, 2018,2017 AND 2016 F-5 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR EACH OF THE YEARS ENDED DECEMBER 31, 2018, 2017 AND 2016 F-6 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR EACH OF THE YEARS ENDED DECEMBER 31, 2018, 2017 AND2016 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 ofDecember 31, 2018 and 2017, and the related consolidated statements of comprehensive (loss)/income, of changes in equity and of cash flows for eachof the three years in the period ended December 31, 2018, including the related notes (collectively referred to as the “consolidated financialstatements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2018, based on criteria established inInternal 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 asof December 31, 2018 and 2017, and the results of their operations and their cash flows for each of the three years in the period ended December 31,2018 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, inall material respects, effective internal control over financial reporting as of December 31, 2018, 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 financialreporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on InternalControl over Financial Reporting, appearing under item 15 (b) of the Company’s 2018 Annual Report on Form 20-F. Our responsibility is to expressopinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. Weare a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to beindependent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securitiesand Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtainreasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whethereffective internal control 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 consolidatedfinancial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on atest basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accountingprinciples used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing therisk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide areasonable 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 financialreporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’sinternal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions arerecorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts andexpenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) providereasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could havea 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 anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that thedegree of compliance with the policies or procedures may deteriorate./s/ PricewaterhouseCoopers S.A.Athens, GreeceApril 26, 2019We 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 31,2018 December 31,2017 ASSETS Current assets Cash and cash equivalents 4, 12 $137,882 $127,632 Restricted cash 4, 11, 12 12,892 6,558 Accounts receivable, net 5 60,290 60,331 Due from affiliate companies 16 19,710 4,002 Inventories 27,746 30,170 Prepaid expenses and other current assets 6 40,190 27,383 Total current assets 298,710 256,076 Deposits for vessels, port terminals and other fixed assets 7 — 36,849 Vessels, port terminals and other fixed assets, net 7 1,898,455 1,809,225 Deferred dry dock and special survey costs, net 25,122 32,945 Loan receivable from affiliate companies 12, 16 46,089 30,112 Investments in affiliates 9, 19 91,111 183,160 Other long-term assets 12, 14, 9 23,736 4,856 Intangible assets other than goodwill 8 138,937 116,422 Goodwill 2, 19 160,336 160,336 Total non-current assets 2,383,786 2,373,905 Total assets $2,682,496 $2,629,981 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable $78,947 $79,671 Accrued expenses and other liabilities 8, 10, 16 123,652 94,859 Deferred income and cash received in advance 16 11,753 11,030 Due to affiliate companies 16 37,063 16,749 Current portion of long-term debt, net 11, 12 69,051 33,885 Total current liabilities 320,466 236,194 Senior and ship mortgage notes, net 11, 12 1,272,108 1,301,999 Long-term debt, net of current portion 11, 12 474,848 346,604 Other long-term liabilities and deferred income 16 19,063 43,382 Long-term payable to affiliate companies 16 67,154 76,872 Deferred tax liability 21 7,177 7,766 Total non-current liabilities 1,840,350 1,776,623 Total liabilities 2,160,816 2,012,817 Commitments and contingencies 14 — — Stockholders’ equity Preferred Stock — $0.0001 par value, authorized 1,000,000 shares, 46,302 issued and outstanding as ofDecember 31, 2018 and 2017. 17 — — Common stock — $0.0001 par value, authorized 250,000,000 shares, 12,843,414 and 12,038,647 issuedand outstanding as of December 31, 2018 and 2017, respectively. 17 1 1 Additional paid-in capital 686,671 682,116 Accumulated other comprehensive income — 2 Accumulated deficit (434,739) (166,021) Total Navios Holdings stockholders’ equity 251,933 516,098 Noncontrolling interest 269,747 101,066 Total stockholders’ equity 521,680 617,164 Total liabilities and stockholders’ equity $2,682,496 $2,629,981 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 31,2018 Year EndedDecember 31,2017 Year EndedDecember 31,2016 Revenue 19 $517,739 $463,049 $419,782 Administrative fee revenue from affiliates 16, 19 28,393 23,667 21,799 Time charter, voyage and logistics business expenses 16 (206,333) (213,929) (175,072) Direct vessel expenses 16 (101,543) (116,713) (127,396) General and administrative expenses incurred on behalf of affiliates 16 (28,393) (23,667) (21,799) General and administrative expenses (27,513) (27,521) (25,295) Depreciation and amortization 7, 8, 19 (102,839) (104,112) (113,825) Provision for losses on accounts receivable 5 (575) (269) (1,304) Interest income 16, 19 8,748 6,831 4,947 Interest expense and finance cost 18, 19 (139,120) (121,611) (113,639) Impairment losses 7 (200,657) (50,565) — Bargain gain upon obtaining control 3 58,313 — — Gain/(loss) on bond and debt extinguishment 11 6,464 (981) 29,187 Gain on sale of assets 7 28 1,064 — Other income 22 14,582 6,140 18,175 Other expense 9, 22 (13,708) (13,761) (11,665) Loss before equity in net earnings of affiliated companies $(186,414) $(172,378) $(96,105) Equity in net (losses)/earnings of affiliated companies 9, 16, 19 (80,205) 4,399 (202,779) Loss before taxes $(266,619) $(167,979) $(298,884) Income tax benefit/(expense) 21 1,108 3,192 (1,265) Net loss $(265,511) $(164,787) $(300,149) Less: Net income attributable to the noncontrolling interest (3,207) (1,123) (3,674) Net loss attributable to Navios Holdings common stockholders $(268,718) $(165,910) $(303,823) Loss attributable to Navios Holdings common stockholders, basic and diluted 20 $(278,959) $(175,298) $(273,105) Basic and diluted loss per share attributable to Navios Holdings commonstockholders $(23.33) $(15.02) $(25.44) Weighted average number of shares, basic and diluted 20 11,958,959 11,667,346 10,736,678 Other comprehensive income/(loss) Unrealized holding gain on investments in-available-for-sale securities 9 — 2 100 Reclassification to earnings 9 — — 345 Total other comprehensive income $— $2 $445 Total comprehensive loss (265,511) (164,785) (299,704) Comprehensive income attributable to noncontrolling interest $(3,207) $(1,123) $(3,674) Total comprehensive loss attributable to Navios Holdings common stockholders $(268,718) $(165,908) $(303,378) 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 31,2018 Year EndedDecember 31,2017 Year EndedDecember 31,2016 OPERATING ACTIVITIES: Net loss $(265,511) $(164,787) $(300,149) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 7, 8 102,839 104,112 113,825 Amortization and write-off of deferred financing costs 18 7,880 6,391 5,653 Amortization of deferred drydock and special survey costs 13,828 14,727 13,768 Provision for losses on accounts receivable 5 575 269 1,304 Share based compensation 13 4,556 4,296 3,446 Gain on bond and debt extinguishment 11 (6,464) (185) (29,187) Income tax (benefit)/expense 21 (1,108) (3,192) 1,265 Realized holding loss on investments in-available-for-sale-securities 9 — — 345 Loss in affiliates, net of dividends received 9, 16 84,317 4,610 219,417 Bargain gain upon obtaining control 3 (58,313) — — Gain on sale of assets 7 (894) (1,064) — Impairment losses 7 200,657 50,565 — Changes in operating assets and liabilities: Decrease/(increase) in accounts receivable 6,575 5,293 (2,350) Decrease/(increase) in inventories 2,672 (1,681) (4,046) (Increase)/decrease in prepaid expenses and other assets (19,171) 3,123 (4,313) (Increase)/decrease in due from affiliate companies (15,708) 15,651 (6,984) (Decrease)/increase in accounts payable (3,023) (7,393) 7,209 Increase/(decrease) in accrued expenses and other liabilities 20,569 2,422 (9,159) (Decrease)/increase in due to affiliate companies (3,031) 23,980 22,694 (Decrease)/increase in deferred income and cash received in advance (1,535) 1,847 (4,309) (Decrease)/increase in other long-term liabilities and deferred income (6,318) (43) 22,493 Payments for drydock and special survey costs (7,755) (10,824) (11,096) Net cash provided by operating activities $55,637 $48,117 $39,826 INVESTING ACTIVITIES: Cash acquired upon obtaining control 3 24,400 — — Loan to affiliate company 16 (12,875) (4,461) (4,275) Dividends from affiliate companies 9 5,838 7,298 — Deposits for vessels, port terminals and other fixed assets 7 (12,572) (36,589) (86,911) Proceeds from lease receivable 233 200 — Proceeds from sale of asset 7 102,217 11,828 — Acquisition of investments in affiliates 9 (6,305) (7,638) — Acquisition of vessels 7 (46,395) — (60,115) Purchase of property, equipment and other fixed assets 7 (11,444) (10,279) (4,567) Disposal of available-for-sale securities 9 — — 5,303 Deposit for option to acquire vessel 14 (15,234) (2,724) — Net cash provided by/(used in) investing activities $27,863 $(42,365) $(150,565) F-6 Table of ContentsNAVIOS MARITIME HOLDINGS INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(Expressed in thousands of U.S. dollars) Notes Year EndedDecember 31,2018 Year EndedDecember 31,2017 Year EndedDecember 31,2016 FINANCING ACTIVITIES: Repurchase of preferred stock 17 $— $(571) $(9,323) (Repayment of)/proceeds from loan payable to affiliate company 16 — (55,132) 50,000 Proceeds from transfer of rights to affiliate company 9, 16 — 4,050 — Proceeds from long-term loans 11 56,919 125,495 116,331 Proceeds from issuance of senior and ship mortgage notes net of discount and debtissuance costs 11 — 291,218 — Repayment of long-term debt and payment of principal 11 (94,298) (48,600) (40,737) Repayment/repurchase of senior notes 11 (28,796) (291,094) (30,671) Payments of obligations under capital leases 7 — (12,374) (3,032) Debt issuance costs (740) (609) (2,844) Acquisition of treasury stock 17 (1) — (818) Dividends paid to noncontrolling shareholders — (25,323) — Dividends paid — — (3,681) Net cash (used in)/provided by financing activities $(66,916) $(12,940) $75,225 Increase/(decrease) in cash and cash equivalents and restricted cash 16,584 (7,188) (35,514) Cash and cash equivalents and restricted cash, beginning of year 134,190 141,378 176,892 Cash and cash equivalents and restricted cash, end of year $150,774 $134,190 $141,378 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid for interest, net of capitalized interest $121,902 $115,898 $108,380 Cash paid for income taxes $485 $393 $92 Non-cash investing and financing activities Purchase of property, equipment and other fixed assets 7 $— $— $(472) Deposits for vessels, port terminals and other fixed assets 7 $— $(726) $(5,726) Revaluation of vessels due to termination/restructuring of capital lease obligations 7 $— $5,243 $— Accrued interest income on loan receivable from affiliate company 16 $(3,103) $(2,643) $(2,259) Accrued interest expense on loan payable to affiliate company 11, 16 $— $— $1,240 Accrued interest expense payable to affiliate company 11, 16 $1,071 $815 $— Acquisition of vessels, port terminals and other fixed assets 7 $(1,662) $(843) $— Long-term payable to affiliate company 9, 16 $— $29,423 $— Transfers from deposits for vessels, port terminals and other fixed assets 7 $49,421 $137,357 $— Transfers to other long-term assets $(26) $— $— 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 Balance December 31, 2015 73,935 $— 11,046,875 $1 $726,801 $262,603 $(445) $988,960 $121,592 $1,110,552 Net loss — — — — — (303,823) — (303,823) 3,674 (300,149) Total other comprehensiveincome — — — — — — 445 445 — 445 Tender Offer - Redemption ofpreferred stock (Note 17) (24,431) — 758,918 — (50,887) 41,564 — (9,323) — (9,323) Stock-based compensationexpenses (Note 17) — — 2,497 — 3,446 — — 3,446 — 3,446 Cancellation of shares (Note17) — — (291) — — — — — — — Acquisition of treasury stock(Note 17) — — (94,858) — (818) — — (818) — (818) Dividends declared/ paid — — — — — (600) — (600) — (600) Balance December 31, 2016 49,504 $— 11,713,141 $1 $678,542 $(256) $— $678,287 $125,266 $803,553 Net loss — — — — — (165,910) — (165,910) 1,123 (164,787) Total other comprehensiveincome — — — — — — 2 2 — 2 Tender Offer - Redemption ofpreferred stock (Note 17) (766) — 62,581 — (716) 145 — (571) — (571) Conversion of convertiblepreferred stock/ undeclaredpreferred dividend tocommon stock (Note 17) (2,436) — 179,015 — — — — — — — Stock-based compensationexpenses (Note 17) — — 84,333 — 4,296 — — 4,296 — 4,296 Cancellation of shares (Note17) — — (423) — (6) — — (6) — (6) Dividends paid toNoncontrolling Shareholders — — — — — — — — (25,323) (25,323) Balance December 31, 2017 46,302 $— 12,038,647 $1 $682,116 $(166,021) $2 $516,098 $101,066 $617, 164 Net loss — — — — — (268,720) — (268,720) 3,207 (265,513) Total other comprehensiveincome — — — — — 2 (2) — — — Cancellation of shares (Note17) — — (656) — (1) — — (1) — (1) Stock-based compensationexpenses (Note 17) — — 805,423 — 4,556 — — 4,556 — 4,556 Noncontrolling interest ofNavios Containers (Note 3) — — — — — — — — 165,474 165,474 Balance December 31, 2018 46,302 $— 12,843,414 $1 $686,671 $(434,739) $— $251,933 $269,747 $521,680 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 andlogistics company 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 companiesin the Hidrovia region of South America, focusing on the Hidrovia river system, the main navigable river system in the region, and on cabotage tradesalong the eastern coast of South America. Navios Logistics is focused on providing its customers integrated transportation, storage and related servicesthrough its port facilities, its large, versatile fleet of dry and liquid cargo barges and its product tankers. Navios Logistics serves the needs of a numberof growing South American industries, including mineral and grain commodity providers as well as users of refined petroleum products. As ofDecember 31, 2018, Navios Holdings owned 63.8% of Navios Logistics.Navios ContainersNavios Maritime Containers L.P. (“Navios Containers”) (NASDAQ: NMCI) is a growth vehicle dedicated to the container sector of the maritimeindustry. Navios Maritime Containers Inc. registered its shares on the Norwegian Over-The-Counter Market (N-OTC) on June 12, 2017 under the ticker“NMCI”.On November 30, 2018, Navios Maritime Containers Inc. was converted into a limited partnership. In connection with the conversion, NaviosMaritime Containers GP LLC, a Republic of the Marshall Islands limited liability company and wholly-owned subsidiary of Navios Holdings, wasadmitted as Navios Containers’ general partner and holds a non-economic interest that does not provide the holder with any rights to profits or lossesof, or distribution by, the partnership. As a result of holding the general partner interest, control was obtained by Navios Holdings due to the fact thatthe general partner has exclusive management authority over Navios Containers’ operations, controls the appointment of three of the seven members ofNavios Containers’ board of directors and has veto rights over certain significant actions of Navios Containers. The limited partners may not removethe general partner without the affirmative vote of at least 75% of the outstanding units (including units held by the general partner and its affiliates),voting as a single class. In addition, limited partners have no right to participate in the operation, management or control of Navios Containers’business or transact any business in Navios Containers’ name. The general partner has the power to oversee and direct the partnership’s operations andto manage and determine the partnership’s strategies and policies on an exclusive basis and therefore, has the power to govern the financial andoperating policies of Navios Containers. As of that date, Navios Holdings obtained control over Navios Containers and consequently the results ofoperations of Navios Containers are consolidated under Navios Holdings. See also Note 3.As of December 31, 2018, Navios Holdings had a 3.7% ownership interest in Navios Containers.Navios PartnersNavios Maritime Partners L.P. (“Navios Partners”) (NYSE:NMM) is an international owner and operator of dry cargo vessels and is engaged inseaborne transportation services of a wide range of dry cargo commodities including iron ore, coal, grain, fertilizer and also containers, chartering itsvessels under medium to long-term charters.As of December 31, 2018, Navios Holdings owned a 20.0% 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, 2018, Navios Holdings’ ownership of the outstanding voting stock of Navios Acquisition was 32.8% and its economicinterest was 35.8%. 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 Europe IOn October 9, 2013, Navios Holdings, Navios Acquisition and Navios Partners established Navios Europe Inc. (“Navios Europe I”) and haveeconomic interests of 47.5%, 47.5% and 5.0%, respectively. Navios Europe I is engaged in the marine transportation industry through the ownership offive tanker and five container vessels. Effective November 2014, Navios Holdings, Navios Acquisition and Navios Partners have voting interests of50%, 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”) andhave economic interests of 47.5%, 47.5% and 5.0%, respectively and voting interests of 50%, 50% and 0%, respectively. Navios Europe II is engagedin the marine transportation industry through the ownership of seven dry bulkers and seven container vessels.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 (U.S. GAAP).Change in accounting principles:ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted CashThe Company historically presented changes in restricted cash and cash equivalents depending on the nature of the cash flow within theconsolidated statements of cash flows. During the first quarter of 2018, the Company adopted ASU 2016-18, Statement of Cash Flows (Topic230): Restricted Cash, which requires that restricted cash and restricted cash equivalents be included as components of total cash and cashequivalents as presented on the statement of cash flows. The recognition and measurement guidance for restricted cash is not affected. TheCompany applied this guidance retrospectively to all prior periods presented in the Company’s financial statements.The effect of the retrospective application of this change in accounting principle on the Company’s consolidated statements of cash flows for theyear ended December 31, 2017 and 2016 resulted in a decrease of cash provided by operating activities in the amount of $2,666 and an increaseof cash provided by operating activities in the amount of $2,906, respectively and a decrease of cash used in financing activities in the amount of$3,839 and a decrease in cash provided by financing activities in the amount of $11,000, respectively with a corresponding change in cash andcash equivalents and restricted cash of $1,172 increase and $8,094 decrease, respectively.The following table provides a reconciliation of cash and cash equivalents and restricted cash to amounts reported within the consolidatedbalance sheets: December 31,2018 December 31,2017 December 31,2016 Reconciliation of cash and cash equivalents and restricted cash: Current assets: Cash and cash equivalents 137,882 127,632 135,992 Restricted cash 12,892 6,558 5,386 Total cash and cash equivalents and restricted cash $150,774 $134,190 $141,378 ASC 606, Revenue from Contracts with Customers (“ASC 606”)On January 1, 2018, the Company adopted the provisions of ASC 606, Revenue from Contracts with Customers. The guidance provides a unifiedmodel to determine how revenue is recognized. In doing so, the Company makes judgments including identifying performance obligations in thecontract, estimating the amount of variable consideration to include in the transaction price, and allocating the transaction price to eachperformance obligation. Revenue is recognized when (or as) the Company transfers promised goods or services to its customers in amounts thatreflect the consideration to which the company expects to be entitled to in exchange for those goods or services, which occurs when (or as) theCompany satisfies its contractual obligations and transfers control of the promised goods or services to its customers. In determining theappropriate amount of revenue to be recognized as it fulfills its obligations under its agreements, the Company performs the following steps: (i) F-10 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performanceobligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constrainton variable consideration; (iv) allocation of the transaction price to the performance obligations based on estimated selling prices; and(v) recognition of revenue when (or as) the Company satisfies each performance obligation.The Company’s contract revenues from time chartering continue to be governed by ASC 840 Leases. Upon adoption of ASC 606, the timing andrecognition of earnings from time charter contracts to which the Company is party did not change from previous practice. See also Note 2(r).Reverse Stock SplitOn December 21, 2018, the Company’s common stockholders approved a one-for-ten reverse stock split of the Company’s outstanding shares ofcommon stock (the “Reverse Stock Split”). The Reverse Stock Split was effective since January 3, 2019 and the common stock commencedtrading on that date on a split-adjusted basis. As a result of the Reverse Stock Split, every ten shares of issued and outstanding common stockwere combined into one issued and outstanding share of common stock, without any change in authorized shares or the par value per share. Allissued and outstanding shares of common stock, redemption and conversion terms of preferred stock, options to purchase common stock and pershare amounts contained in the consolidated financial statements have been retroactively adjusted to reflect the Reverse Stock Split for allperiods presented. The retroactive application of the Reverse Stock Split reduced the number of shares of common stock outstanding from128.4 million shares to 12.8 million shares as of December 31, 2018 and from 120.4 million shares to 12.0 million shares as of December 31,2017. The par value of the common stock remained at $0.0001 per share. Accordingly, Common stock and Additional paid-in capital in theCompany’s consolidated balance sheets as of December 31, 2018 reflect a decrease and increase of $12, respectively, and as of December 31,2017 reflect a decrease and increase of $11, respectively. (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 eliminatedin the consolidated 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 lackthe characteristics of a controlling financial interest, including decision making ability and an interest in the entity’s residual risks and rewards,or (ii) the equity interest holders have not provided sufficient equity investment to permit the entity to finance its activities without additionalsubordinated financial support, or (iii) the voting rights of some investors are not proportional to their obligations to absorb the expected lossesof the entity, their rights to receive the expected residual returns of the entity, or both and substantially all of the entity’s activities either involveor are conducted on behalf 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 believesthat the Company has adequate financial resources to continue in operation and meet its financial commitments, including but not limited tocapital expenditures and debt service obligations, for a period of at least twelve months from the date of issuance of these consolidated financialstatements. 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 haspower to govern the financial and operating policies of the entity. The acquisition method of accounting is used to account for the acquisition ofsubsidiaries. 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. Allsubsidiaries included in the consolidated financial statements are 100% owned, except for Navios Logistics and Navios Containers, which are63.8% and 3.7% owned by Navios Holdings, respectively.Investments in Affiliates: 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 methodof accounting. Under this method, the Company records an investment in the stock of an affiliate at cost, and adjusts the carrying amount for itsshare of the earnings or losses of the affiliate subsequent to the date of investment and reports the recognized earnings or losses in income.Dividends received from an affiliate reduce the carrying amount of the investment. The Company recognizes gains and losses in earnings for theissuance of shares by its affiliates, F-11 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) 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 its interestin the affiliate, the Company does not recognize further losses, unless the Company has incurred obligations or made payments on behalf of theaffiliate.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 theequity method for such periods: (i) Navios Partners and its subsidiaries (ownership interest as of December 31, 2018 was 20.0%, which includes a2.0% general partner interest); (ii) Navios Acquisition and its subsidiaries (economic interest as of December 31, 2018 was 35.8%); (iii) NaviosEurope I and its subsidiaries (economic interest as of December 31, 2018 was 47.5%); (iv) Navios Europe II and its subsidiaries (economicinterest as of December 31, 2018 was 47.5%); and (v) Navios Containers and its subsidiaries (economic interest as of November 30, 2018, date ofobtaining control, was 3.7%).Subsidiaries Included in the Consolidation: Statement of Operations Company Name Nature OwnershipInterest Country ofIncorporation 2018 2017 2016 Navios Maritime Holdings Inc. Holding Company Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Navios South American Logistics Inc. Sub-Holding Company 63.8% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Navios Maritime Containers L.P. Holding Company 3.7% Marshall Is. 11/30 - 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-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 OperationsCompany Name Nature OwnershipInterest Country ofIncorporation 2018 2017 2016Ionian 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 - 12/31 F-13 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Statement of Operations Company Name Nature OwnershipInterest Country ofIncorporation 2018 2017 2016 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 - 8/30 1/1 - 12/31 1/12 - 12/31 Triangle Shipping Corporation Vessel Owning Company 100% Marshall Is. 1/1 - 8/30 1/1 - 12/31 1/12 - 12/31 Roselite Shipping Corporation Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Smaltite Shipping Corporation Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 1/1 - 12/31 Motiva Trading Ltd Operating Company 100% Marshall Is. 1/1 - 12/31 1/1 - 12/31 11/2 - 12/31 Alpha Merit Corporation Sub-Holding Company 100% Marshall Is. 1/1 - 12/31 11/3 - 12/31 — Thalassa Marine S.A. Operating Company 100% Marshall Is. 1/1 - 12/31 12/15 - 12/31 — Asteroid Shipping S.A. Operating Company 100% Marshall Is. 1/12 - 12/31 — — Cloud Atlas Marine S.A. Operating Company 100% Marshall Is. 1/15 - 12/31 — — Heodor Shipping Inc. Vessel Owning Company 100% Marshall Is. 2/13 - 12/31 — — Navios Maritime Containers GP LLC Operating Company 100% Marshall Is. 9/11 - 12/31 — — Navios Containers Management Inc. Management Company 100% Marshall Is. 1/1 - 12/31 — — Pacifico Navigation Corp. Vessel Owning Company 100% Marshall Is. 11/7 - 12/31 — — Rider Shipmanagement Inc. Operating Company 100% Marshall Is. 12/4 - 12/31 — — Talia Shiptrade S.A. Operating Company 100% Marshall Is. 10/11 - 12/31 — — F-14 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 estimatesand assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the dates of thefinancial statements and the reported amounts of revenues and expenses during the reporting periods. On an on-going basis, managementevaluates the estimates and judgments, including those related to uncompleted voyages, future drydock dates, the assessment of other-than-temporary impairment related to the 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 accountsreceivables and demurrages, provisions for legal disputes, pension benefits, contingencies and guarantees. Management bases its estimates andjudgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of whichform the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actualresults could differ from those estimates under different assumptions 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, 2018 and 2017, restricted cash included $4,315 (of which $1,934 related to Navios Containers) and $5,968,respectively, which related to amounts held in retention accounts in order to service debt and interest payments, as required by certain of NaviosHoldings’ credit facilities. Also included in restricted cash as of December 31, 2018 and 2017 are amounts held as security in the form of lettersof guarantee or letters of credit totaling $1,577 and $590, respectively. As of December 31, 2018 restricted cash also included an amount of$7,000 concerning the proceeds from the sale of Navios Magellan held as cash collateral in an escrow account, following the vessel’s disposaland release from the 7.375% First Priority Ship Mortgage Notes due 2022 (the “2022 Notes”). See also Note 11. (f)Insurance Claims: Insurance claims at each balance sheet date consist of claims submitted and/or claims in the process of compilation orsubmission (claims pending). They are recorded on an accrual basis and represent the claimable expenses, net of applicable deductibles, incurredthrough December 31 of each reporting period, which are probable to be recovered from insurance companies. Any remaining costs to completethe claims are included in accrued liabilities. The classification of insurance claims into current and non-current assets is based on management’sexpectations as to their 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)Dry Bulk Vessels, Container Vessels, Port Terminals, Tanker Vessels, Barges, Pushboats and Other Fixed Assets, net: Dry bulk vessels,container vessels, port terminals, tanker vessels, barges, pushboats and other fixed assets acquired as parts of business combinations are recordedat fair value on the date of acquisition, and if acquired as an asset acquisition, are recorded at cost (including transaction costs). Vesselsconstructed by the company would be stated at historical cost, which consists of the contract price, capitalized interest and any material expensesincurred upon acquisition (improvements and delivery expenses). Subsequent expenditures for ballast water treatment system, majorimprovements 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 saleor retirement 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. F-15 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) 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: Dry bulk vessels 25 yearsContainer vessels 30 yearsPort terminals 5 to 49 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 and container vessels based on a scrap value cost of steel times theweight of the ship noted in lightweight 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 theperiod of the revision and future periods. Management estimates the residual values of the Company’s vessels based on a scrap rate of $340 perLWT after considering current market trends for scrap rates and ten-year average historical scrap rates of the residual values of the Company’svessels.Management estimates the useful life of its dry bulk vessels and container vessels to be 25 years and 30 years, respectively from the vessel’soriginal construction. However, when regulations place limitations on the ability of a vessel to trade on a worldwide basis, its useful life isre-estimated to end at the date such regulations become effective. An increase in the useful life of a vessel or in its residual value would have theeffect of decreasing the annual depreciation charge and extending it into later periods. A decrease in the useful life of a vessel or in its residualvalue 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 otherfixed assets also include pre-delivery expenses. Pre-delivery expenses represent any direct costs to bring the asset to the location and conditionnecessary for it to be capable of operating in the manner intended by management. Interest costs incurred during the construction (until the assetis substantially complete and ready for its intended use) are capitalized. Capitalized interest for the years ended December 31, 2018, 2017 and2016 amounted to $1,908, $4,764 and $5,843, 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 notnecessarily to keep them until the end of their useful life. The Company classifies assets and disposal groups as being held for sale when thefollowing criteria are met: management has committed to a plan to sell the asset (disposal group); the asset (disposal group) is available forimmediate sale in its present condition; an active program to locate a buyer and other actions required to complete the plan to sell the asset(disposal group) have been initiated; the sale of the asset (disposal group) is probable, and transfer of the asset (disposal group) is expected toqualify for recognition as a completed sale within one year; the asset (disposal group) is being actively marketed for sale at a price that isreasonable in relation to its current fair value; and actions required to complete the plan indicate that it is unlikely that significant changes to theplan 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 oftheir carrying amount or fair value less cost to sell. These assets are not depreciated once they meet the criteria to be held for sale. No assets wereclassified 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 reviewedperiodically for potential impairment whenever events or changes in circumstances indicate that the carrying amount of a particular asset maynot be fully recoverable. Navios Holdings’ management evaluates the carrying amounts and periods over which long-lived assets are depreciatedto determine if events or changes in circumstances have occurred that would require modification to their carrying values or useful lives.Measurement of the impairment loss is based on the fair value of the asset. Navios Holdings determines the fair value of its assets on the basis ofmanagement estimates and assumptions by making use of available market data and taking into consideration third party valuations performedon an individual vessel basis. In evaluating useful lives and carrying values of long-lived assets, certain indicators of potential impairment arereviewed, such as undiscounted projected operating cash flows, vessel sales and purchases, business plans and overall market conditions. F-16 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Undiscounted 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 withrespect to the time charter agreement attached to that vessel or the carrying value of deposits for newbuildings. Within the shipping industry,vessels are customarily bought and sold with a charter attached. The value of the charter may be favorable or unfavorable when comparing thecharter rate to then-current market rates. The loss recognized either on impairment (or on disposition) will reflect the excess of carrying valueover fair value (selling price) for the vessel asset group.During the fourth quarter of fiscal year 2018, 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, andthe related impact of the current dry bulk sector has on management’s expectation for future revenues. As a result, an impairment assessment oflong-lived assets (step one) 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 intangibleassets, if applicable. The significant factors and assumptions used in the undiscounted projected net operating cash flow analysis included:determining the projected net operating cash flows by considering the charter revenues from existing time charters for the fixed fleet days (theCompany’s remaining charter agreement rates) and an estimated daily time charter equivalent for the unfixed days (based on a combination ofone-year average historical time charter rates and 10-year average historical one-year time charter rates, adjusted for outliers) over the remainingeconomic life of each vessel, net of brokerage and address commissions excluding days of scheduled off-hires, running cost based on current yearactuals, assuming an annual increase of 0.68% after 2019 and a utilization rate of 99.5% based on the fleet’s historical performance.As of December 31, 2018, our assessment concluded that step two of the impairment analysis was required for four of our dry bulk vessels heldand used, as the undiscounted projected net operating cash flows did not exceed the carrying value. As a result, the Company recorded animpairment loss of $179,186 for these vessels, being the difference between the fair value and the vessel’s carrying value together with thecarrying value of deferred drydock and special survey costs related to these vessels, presented within the caption “Impairment losses” in theconsolidated statements of comprehensive (loss)/income.As of December 31, 2017, the Company recorded an impairment loss of $32,930 for one dry bulk vessel, being the difference between the fairvalue and the vessel’s carrying value together with the carrying value of deferred drydock and special survey costs related to this vessel,presented within the caption “Impairment losses” in the consolidated statements of comprehensive (loss)/income. The assessment performed for2016 did not indicate a step two was necessary for the Company’s other vessels held and used. See also Note 7. (l)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 pushboatsand barges, to coincide with the renewal of the related certificates issued by the classification societies, unless a further extension is obtained inrare cases and under certain conditions. The costs of drydocking and special surveys are deferred and amortized over the above periods or to thenext drydocking or special survey date if such date has been determined. Unamortized drydocking or special survey costs of vessels, barges andpushboats sold are written-off to income 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 tospare parts, paints, lubricants and services incurred solely during the drydocking or special survey period. For each of the years endedDecember 31, 2018, 2017 and 2016, the amortization of deferred drydock and special survey costs was $13,828, $14,727, and $13,768,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 therelated debt using the effective interest rate method, and are included in interest expense. Amortization and write-off of deferred financing costsfor each of the years ended December 31, 2018, 2017 and 2016 were $7,880, $6,391 and $5,653, respectively. See also Note 18. (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 theincome approach (i.e. discounted cash flows) and market approach (i.e. comparative market multiples) and believes that the combination of thesetwo approaches is the best indicator of fair value for its individual reporting F-17 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) units. If the fair value of a reporting unit exceeds the carrying amount, no impairment exists. If the carrying amount of the reporting unit exceedsthe fair value, then the Company must perform the second step (step two) to determine the implied fair value of the reporting unit’s goodwill andcompare it with its carrying amount. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit to all theassets and liabilities of that reporting unit, as if the reporting unit had been acquired in a business combination and the fair value of the reportingunit 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.As of December 31, 2018, 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 carryingvalue of its total net assets.As of December 31, 2018, the Company performed step one of the impairment test for the Dry Bulk Vessel Operations reporting unit, which isallocated goodwill of $56,240. Step one impairment test revealed that the fair value of the Dry Bulk Vessel Operations reporting unitsubstantially exceeded 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 inthe circumstances. The significant factors and assumptions the Company used in its discounted cash flow analysis included: EBITDA, thediscount rate used to calculate the present value of future cash flows and future capital expenditures. EBITDA assumptions included revenueassumptions, general and administrative expense growth assumptions and direct vessel expense growth assumptions. The future cash flows weredetermined 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 non-fixed days (based on a combination of one-year average historical time charterrates and the 10-year average historical one-year time charter rates adjusted for outliers), which the Company believes is an objective approachfor forecasting charter rates over an extended time period for long-lived assets and consistent with the cyclicality of the industry. In addition, aweighted average cost of capital (“WACC”) was used to discount future estimated cash flows to their present values. The WACC was based onexternally observable data considering market participants’ and the Company’s cost of equity and debt, optimal capital structure and risk factorsspecific to the Company. The market approach estimated the fair value of the Company’s business based on comparable publicly-tradedcompanies in its industry. In assessing the fair value, the Company utilized the results of the valuations and considered the range of fair valuesdetermined under all methods which indicated that the fair value exceeded the carrying value of net assets.As of December 31, 2018, 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 ofits net assets. Accordingly, no step two analysis was required. The future cash flows from the Logistics Business were determined principally bycombining revenues from existing contracts and estimated revenues based on the historical performance of the segment, including utilizationrates and actual storage capacity.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 touse that trade name. The asset is being amortized under the straight line method over 32 years. Navios Logistics’ trade name is being amortizedunder the straight line method over 10 years, and was fully amortized as of December 31, 2018.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 marketcharter rates, an asset is recorded, being the difference between the acquired charter rate and the market charter rate for an equivalent vessel.Where charter rates are less than market charter rates, a liability is recorded, being the difference between the assumed charter rate and the marketcharter rate for an equivalent vessel. The determination of the fair value of acquired assets and assumed liabilities requires the Company to makesignificant assumptions and estimates of many F-18 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) 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 couldhave a material 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 futureundiscounted cash flows associated with the asset. Vessel purchase options that have not been exercised, which are included in favorable leaseterms, would be considered impaired if the carrying value of an option, when added to the option price of the vessel, exceeded the fair value ofthe 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.Vessel purchase options that are included in unfavorable lease terms are not amortized and when the purchase option is exercised by the chartererand the underlying 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 itis written-off in the consolidated statements of comprehensive (loss)/income.During the fourth quarter of fiscal year 2018, management concluded that there were no circumstances which indicated that potential impairmentof Navios Holdings’ intangible assets other than goodwill might exist. For the year ended December 31, 2018 and 2016, there were noimpairment losses recognized for the Company’s intangible assets. As of December 31, 2017, the Company performed an assessment whichindicated that the amortizable value of one of its favorable leases would not be recoverable from the future undiscounted cash flows associatedwith the asset. As a result, the Company recognized an impairment loss of $3,397 in the caption “Impairment losses” in the consolidatedstatements of comprehensive (loss)/income.The weighted average amortization periods for intangibles are: Intangible assets Years Trade name 32 Favorable lease terms 1 Port terminal operating rights 47 Customer relationships 20 See also Note 3 and Note 8. (o)Foreign Currency Translation: The Company’s functional and reporting currency is the U.S. dollar. The Company engages in worldwidecommerce with a variety of entities. Although its operations may expose it to certain levels of foreign currency risk, its transactions arepredominantly U.S. dollar denominated. The Company’s subsidiaries in Uruguay, Argentina, Brazil and Paraguay transact a nominal amount oftheir operations in Uruguayan pesos, Argentinean pesos, Brazilian reales and Paraguayan guaranies, whereas the Company’s wholly-ownedvessel subsidiaries and the vessel management subsidiaries transact a nominal amount of their operations in Euros; however, all of thesubsidiaries’ primary cash flows are U.S. dollar denominated. The financial statements of the foreign operations are translated using the exchangerate at the balance sheet date except for property and equipment and equity, which are translated at historical rates. Transactions in currenciesother than the functional currency are translated at the exchange rate in effect at the date of each transaction. Differences in exchange rates duringthe period between the date a transaction denominated in a foreign currency is consummated and the date on which it is either settled ortranslated, are recognized in the statements of comprehensive (loss)/income. The foreign currency (losses)/gains recognized under the caption“Other expense” or “Other income” in the consolidated statements of comprehensive (loss)/income for each of the years ended December 31,2018, 2017 and 2016, were $(1,207), $(3,000) and $1,600, respectively. (p)Provisions: The Company, in the ordinary course of business, is subject to various claims, suits and complaints. Management, in consultationwith internal and external advisers, will provide for a contingent loss in the financial statements if the contingency had occurred at the date of thefinancial statements and the likelihood of loss was probable and the amount can be reasonably estimated. If the Company has determined that thereasonable estimate of the loss is a range and there is no best estimate within the range, the Company will provide for the lower amount withinthe range. See also Note 14.The Company participates in Protection and Indemnity (“P&I”) insurance plans provided by mutual insurance associations known as P&I clubs.Under the terms of these plans, participants may be required to pay additional premiums (supplementary calls) to fund operating deficits incurredby the clubs (“back calls”). Obligations for back calls are accrued annually based on information provided by the P&I clubs. F-19 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Provisions for estimated losses on vessels under time charter are provided for in the period in which such losses are determined. As ofDecember 31, 2018 and 2017, the balance for this provision was $1,604 and $2,631, respectively. (q)Segment Reporting: Operating segments, as defined, are components of an enterprise about which separate financial information is available thatis evaluated 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 three reportable segments: the Dry Bulk VesselOperations segment, the Logistics Business segment and the Containers Business segment. (r)Revenue and Expense Recognition:Revenue Recognition: On January 1, 2018, the Company adopted the provisions of ASC 606, Revenue from Contracts with Customers (ASC606). The guidance provides a unified model to determine how revenue is recognized. In doing so, the Company makes judgments includingidentifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price, andallocating the transaction price to each performance obligation. Revenue is recognized when (or as) the Company transfers promised goods orservices to its customers in amounts that reflect the consideration to which the company expects to be entitled to in exchange for those goods orservices, which occurs when (or as) the Company satisfies its contractual obligations and transfers control of the promised goods or services to itscustomers. Revenues are recognized to depict the transfer of promised goods or services to customers in an amount that reflects the considerationto which the entity expects to be entitled in exchange for those goods or services. In determining the appropriate amount of revenue to berecognized as it fulfills its obligations under its agreements, the Company performs the following steps: (i) identification of the promised goodsor services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they aredistinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration;(iv) allocation of the transaction price to the performance obligations based on estimated selling prices; and (v) recognition of revenue when (oras) the Company satisfies each performance obligation.The Company’s contract revenues from time chartering and pooling arrangements are governed by ASC 840 “Leases”. Upon adoption of ASC606, the timing and recognition of earnings from the pool arrangements and time charter contracts to which the Company is party did not changefrom previous practice. The Company has determined to recognize lease revenue as a combined single lease component for all time charters(operating leases) as the related lease component and non-lease component will have the same timing and pattern of the revenue recognition ofthe combined single lease component. The performance obligations in a time charter contract are satisfied over the term of the contract beginningwhen the vessel is delivered to the charterer until it is redelivered back to the Company. As a result of the adoption of these standards, there wasno effect on the Company’s opening retained earnings, consolidated balance sheets and consolidated statements of comprehensive (loss)/income.Revenue is recorded when services are rendered, the Company has a signed charter agreement or other evidence of an arrangement, the price isfixed 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 dry or liquid portterminal operations.Voyage revenues for the transportation of cargo are recognized ratably over the estimated relative transit time of each voyage. A voyage isdeemed to commence when a vessel arrives at the loading port, as applicable under the contract, and is deemed to end upon the completion of thedischarge of the current cargo. Under a voyage charter, a vessel is provided for the transportation of specific goods between specific ports inreturn for payment of an agreed upon freight 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 theCompany and no identifiable benefit is received in exchange for the consideration provided to the charterer, these commissions are presented asa reduction of revenue.Revenue from contracts of affreightment (“COA”)/voyage contracts relating to our barges are recognized ratably over the estimated relativetransit time of each voyage. A voyage is deemed to commence upon the barge’s arrival at the loading port, as applicable under the contract, andis deemed to end upon the completion of discharge under the current voyage. The percentage of transit time is based on the days traveled as ofthe balance sheet date divided by the total days expected for the voyage. The position of the barge at the balance sheet date is determined by thedays traveled as of the balance sheet date over the total voyage of the pushboat having the barge in tow. Revenue arising from contracts thatprovide our customers with continuous access to convoy capacity is recognized ratably over the period of the contracts. F-20 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Demurrage income represents payments made by the charterer to the vessel owner when loading or discharging time exceeds the stipulated timein the voyage charter and is recognized as it is earned.Upon adoption of ASC 606, the Company is recognizing revenue ratably from the vessel’s/barge’s arrival at the loading port, as applicable underthe contract, to when the charterer’s cargo is discharged as well as defer costs that meet the definition of “costs to fulfill a contract” and relatedirectly to the contract. The adoption of this standard had no material effect on the Company’s opening retained earnings, consolidated balancesheets and consolidated statements of comprehensive (loss)/income.Revenues earned under contracts of affreightment (“COA”)/voyage contracts within the Dry Bulk Vessel Operations, amounted to $19,121,$38,273 and $29,857 for the years ended December 31, 2018, 2017 and 2016, respectively. Revenues earned under contracts of affreightment(“COA”)/voyage contracts within the Logistics business, amounted to $35,623, $42,455 and $62,603 for the years ended December 31, 2018,2017 and 2016, respectively.Revenues from time chartering and bareboat chartering of vessels and barges are accounted for as operating leases and are thus recognized on astraight line basis as the average revenue over the rental periods of such charter agreements as service is performed, except for loss generatingtime charters, in which case the loss is recognized in the period when such loss is determined. A time charter involves placing a vessel or barge atthe charterer’s disposal for a period of time during which the charterer uses the vessel in return for the payment of a specified daily hire rate. Shortperiod charters for less than three months are referred to as spot-charters. Charters extending three months to a year are generally referred to asmedium-term charters. All other charters are considered long-term. Under time charters, operating costs such as for crews, maintenance andinsurance are typically paid by the owner of the vessel. Revenues from time chartering of vessels in the Dry Bulk Vessel Operations amounted to$278,591, $199,945 and $153,858 for the years ended December 31, 2018, 2017 and 2016, respectively. Revenues from time chartering andbareboat chartering of vessels and barges in the Logistics business amounted to $72,689, $84,063 and $153,858 for the years endedDecember 31, 2018, 2017 and 2016, respectively. Revenues from time chartering and bareboat chartering of vessels in the Containers businessamounted to $12,053 for the period from November 30, 2018 (date of obtaining control) to December 31, 2018.For vessels operating in pooling arrangements, the Company earns a portion of total revenues generated by the pool, net of expenses incurred bythe pool. The amount allocated to each pool participant vessel, including the Company’s vessels, is determined in accordance with an agreed-upon formula, which is determined by 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 in the period in which the variabilityis resolved. The allocation of such net revenue may be subject to future adjustments by the pool, however, such changes are not expected to bematerial. Revenue for vessels operating in pooling arrangements in the Dry Bulk Vessel Operations amounted to $0, $8,025 and $15,007 for theyears ended December 31, 2018, 2017 and 2016, respectively.Profit-sharing revenues are calculated at an agreed percentage of the excess of the charterer’s average daily income (calculated on a quarterly orhalf-yearly basis) or the Baltic Dry Index over an agreed amount and accounted for on an accrual basis based on provisional amounts and forthose contracts that provisional accruals cannot be made due to the nature of the profit sharing elements, these are accounted for on the actualcash settlement. Profit sharing results from the Dry Bulk Vessel Operations for the years ended December 31, 2018, 2017 and 2016 amounted to$(52), $3,205 and $(2,530), respectively.Revenues from dry port terminal operations consist of an agreed flat fee per ton and cover the services performed to unload barges (or trucks),transfer the product into silos or the stockpiles for temporary storage and then loading the ocean-going vessels. Revenues are recognized uponcompletion of loading the ocean-going vessels. Revenue arising from contracts that provide our customers with continuous access to portterminal storage and transshipment capacity is recognized ratably over the period of the contracts. Additionally, fees are charged for vesseldockage and for storage time in excess of contractually specified terms. Dockage revenues are recognized ratably up to completion of loading asthe performance obligation is met evenly over the loading period. Storage fees are assessed and recognized at the point when the product remainsin the silo storage beyond the contractually agreed time allowed. Storage fee revenue is recognized ratably over the storage period and endswhen the product is loaded onto the ocean-going vessel. Revenues from port terminal operations of the Logistics business amounted to $58,552,$43,984 and $29,056 for the years ended December 31, 2018, 2017 and 2016, respectively. Revenues from storage fees (dry port) of the Logisticsbusiness amounted to $882, $1,974 and $446 for the years ended December 31, 2018, 2017 and 2016, respectively. Dockage revenues from theLogistics business in the dry port terminal operations amounted to $3,136, $4,497 and $3,373 for the years ended December 31, 2018, 2017 and2016, respectively.Revenues from liquid port terminal operations consist mainly of sales of petroleum products in the Paraguayan market and revenues from liquidport operations. Revenues from liquid port terminal operations consist of an agreed flat fee per cubic meter or a fixed rate over a specific period tocover the services performed to unload barges, transfer the products into the tanks for temporary storage and then loading the trucks. Revenuesthat consist of an agreed flat fee per cubic meter are recognized upon completion of loading the trucks. Revenues from liquid port terminaloperations that consist of a fixed rate over a specific period F-21 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) are recognized ratably over the storage period as the performance obligation is met evenly over time, ending when the product is loaded onto thetrucks. Revenues from sale of products by the Logistics business amounted to $32,508, $32,572 and $30,118 for the years ended December 31,2018, 2017 and 2016, respectively. Revenues from liquid port terminal operations from the Logistics business amounted to $3,739, $2,841 and$3,059 for the years ended December 31, 2018, 2017 and 2016, respectively.Additionally, revenues consist of an agreed flat fee per cubic meter to cover the services performed to unload barges, transfer the products intothe tanks for temporary storage and then loading the trucks. Revenues are recognized upon completion of loading the trucks. Additionally, feesare charged for storage time in excess of contractually specified terms. Storage fee revenue is recognized ratably over the storage period and endswhen the product is loaded onto the trucks.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 16). Administrative services include: bookkeeping,audit and accounting services, legal and insurance services, administrative and clerical services, banking and financial services, advisoryservices, client and investor relations and other general and administrative services. These revenues are recognized as the services are provided toaffiliates.The general and administrative expenses incurred on behalf of affiliates are determined based on a combination of actual expenses incurred onbehalf of the affiliates as well as a reasonable allocation of expenses that are not affiliate specific but incurred on behalf of all affiliates.Deferred Income and Cash Received In Advance: Deferred voyage revenue primarily relates to cash received from charterers prior to it beingearned. 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 toeach particular voyage, including time charter hire paid and voyage freight paid, bunkers, port charges, canal tolls, cargo handling, agency feesand brokerage commissions. Also included in time charter, voyage and logistics business expenses are charterers’ liability insurances, provisionfor losses on time charters and voyages in progress at year-end, direct port terminal expenses and other miscellaneous expenses. In the transitionto ASC 842, the right of use asset will be adjusted for the carrying amount of the liability regarding the provision for losses on time charters andvoyages in progress on that date.Direct Vessel Expenses: Direct vessel expenses consist of all expenses relating to the operation of vessels, including crewing, repairs andmaintenance, insurance, stores and lubricants and miscellaneous expenses such as communications and amortization of drydocking and specialsurvey costs net of related party management fees.Prepaid Voyage Costs: Prepaid voyage costs relate to cash paid in advance for expenses associated with voyages. These amounts are recognizedas expenses 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(usually up to nine months) and, accordingly, 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 Greeklabor law. According to the law, the Company is required to pay retirement indemnities to employees upon dismissal or upon leaving with anentitlement to a full security retirement pension. The amount of compensation is based on the number of years of service and the amount ofremuneration at the date of dismissal or retirement up to a maximum of two years’ salary. If the employees remain in the employment of theCompany until normal retirement age, they are entitled to retirement compensation which is equal to 40% of the compensation amount thatwould be payable if they were dismissed at that time. The number of employees that will remain with the Company until retirement age is notknown. The Company considers this plan equivalent to a lump sum defined benefit pension plan and accounts for it under relevant guidance onemployer’s accounting for pensions. The Company is required to annually value the statutory terminations indemnities liability. Managementobtains a valuation from independent actuaries to assist in the calculation of the benefits. The Company provides, in full, for the employees’termination indemnities liability. This liability amounted to $1,550 and $1,336 at December 31, 2018 and 2017, respectively.U.S. Retirement Savings Plan: The Company sponsors a 401(k) retirement savings plan, which is categorized as a defined contribution plan. Theplan is available to full time employees who meet the plan’s eligibility requirements. The plan permits employees to make contributions up to15% of their annual salary with the Company matching up to the first 6%. The Company makes monthly contributions (matching contributions)to the plan based on amounts contributed by employees. Subsequent to making the matching contributions, the Company has no furtherobligations. The Company may make an additional discretionary contribution annually if such a contribution is authorized by the Board ofDirectors. The plan is administered by an independent professional firm that specializes in providing such services. See also Note 13. F-22 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) 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 accruedeach year, using an accounting methodology similar to that for defined benefit pension plans.Stock-Based Compensation: In December 2018, the Company authorized the grant of restricted common stock. In December 2017, the Companyauthorized the grant of restricted common stock and restricted stock units. In December 2016, the Company authorized the grant of restrictedshare units and share appreciation rights. These awards of restricted share units, share appreciation rights, restricted common stock, restrictedstock units and stock options are based on service conditions only and vest over three and four years. See also Note 13.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 quotedstock price on the date of grant. Compensation expense, net of estimated forfeitures, is recognized based on a graded expense model over thevesting period. Compensation expense for the awards that vest upon achievement of the performance criteria is recognized when it is probablethat the performance criteria 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 receivablesand payables, other receivables and other liabilities, long-term debt, capital leases and available-for-sale securities. The particular recognitionmethods applicable to each class of financial instrument are disclosed in the applicable significant policy description of each item, or includedbelow as applicable.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 inplace to ensure that it trades with customers and counterparties with an appropriate credit history.Liquidity Risk: Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of fundingthrough an adequate amount of committed credit facilities and the ability to close out market positions. The Company monitors cash balancesappropriately to meet working capital needs.Foreign Exchange Risk: Foreign currency transactions are translated into the measurement currency at rates prevailing on the dates of therelevant transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetaryassets and liabilities denominated in foreign currencies are recognized in the consolidated statements of comprehensive (loss)/income. (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)/incomeattributable to Navios Holdings common stockholders is calculated by adding to (if a discount) or deducting from (if a premium) net (loss)/income attributable to Navios Holdings common stockholders the difference between the fair value of the consideration paid upon redemptionand the carrying value of the preferred stock, including the unamortized issuance costs of the preferred stock, and the amount of any undeclareddividend cancelled. Diluted (loss)/earnings per share reflect the potential dilution that would occur if securities or other contracts to issuecommon stock were exercised or converted. Dilution has been computed by the treasury stock method whereby all of the Company’s dilutivesecurities (stock options and warrants) are assumed to be exercised and the proceeds are used to repurchase common shares at the weightedaverage market price of the Company’s common stock during the relevant periods. The incremental shares (the difference between the number ofshares assumed issued and the number of shares assumed purchased) are included in the denominator of the diluted (loss)/earnings per sharecomputation. Restricted share units, restricted stock and restricted stock units (vested and unvested) are included in the calculation of the diluted(loss)/earnings per share, based on the weighted average number of restricted share units, restricted stock and restricted stock units assumed to beoutstanding during the period. Convertible shares are included in the calculation of the diluted (loss)/earnings per share, based on the weightedaverage number of convertible shares assumed to be outstanding during the period. See also Note 20. F-23 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) (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 tax expense reflected in the Company’s consolidated financial statements for the years ended December 31, 2018, 2017 and 2016 wasmainly attributable to 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 arerecognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts and the taxbases of assets and liabilities. Future income tax assets and liabilities are measured using enacted tax rates in effect for the year in which thosetemporary differences are expected to be recovered or settled. The effect on future income tax assets and liabilities of a change in tax rates isrecognized in income in the period that includes the enactment date. A deferred tax asset is recognized for temporary differences that will resultin deductible amounts in future years. A valuation allowance is recognized if, based on the weight of available evidence, it is more likely thannot that some portion or all of the deferred tax asset will not be realized.On December 29, 2017, the Argentine government enacted the Law 27,430 that made changes to the income tax law in Argentina. The new lawmodifies the rates for income taxes applicable in beginning on January 1, 2018. In measuring its income tax assets and liabilities, the Companyused the rate that is expected to be enacted at the time of the reversal of the asset or liability in the calculation of the deferred tax for the itemsrelated to Argentina. An income tax rate of 30% was applied on temporary differences whose reversal is expected to occur in the years before2020, and a rate of 25% on temporary differences remaining thereafter. During the year ended December 31, 2017, the Company has recorded anincome tax benefit of $2,837 within the caption “Income tax benefit/(expense)” in the consolidated statements of comprehensive (loss)/incomerelated to the change in the rate of the 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 toits common stockholders during each year ended December 31, 2018, 2017 and 2016, and $0, $0 and $3,681 ($0, $0 and $74.4 per share) to itspreferred stockholders during the years ended December 31, 2018, 2017 and 2016, respectively. In November 2015, Navios Holdings announcedthat the Board of Directors decided to suspend the dividend to its common stockholders. In February 2016, Navios Holdings announced thesuspension of payment of quarterly dividends on its preferred stock, including the Series G Cumulative Redeemable Perpetual Preferred Stock(the “Series G”) and Series H Cumulative Redeemable Perpetual Preferred Stock (the “Series H”). All inter-company dividends are eliminatedupon 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 oftheir terms are made.On November 15, 2012, the Company agreed to provide Navios Partners with guarantees against counterparty default on certain existing charters(see also Note 16). (y)Leases: Vessel leases where Navios Holdings or/and Navios Containers is regarded as the lessor are classified as either finance leases or operatingleases based on an assessment of the terms of the lease.For charters classified as finance leases the minimum lease payments are recorded as the gross investment in the lease. The difference between thegross investment in the lease and the sum of the present values of the two components of the gross investment is recorded as unearned incomewhich is amortized to income over the lease term as finance lease interest income to produce a constant periodic rate of return on the netinvestment in the lease.For charters classified as operating leases where Navios Holdings or/and Navios Containers is regarded as the lessor, refer to Note 2(r).For charters classified as operating leases where Navios Holdings or/and Navios Containers is regarded as the lessee, the expense is recognized ona straight line basis over the rental periods of such charter agreements. The expense is included under the line item “Time charter, voyage andlogistics business expenses”. In the transition to ASC 842, the right of use asset will be adjusted for the carrying amount of the straight lineliability on that date. (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. F-24 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) (aa)Trade Accounts Receivable: The amount shown as accounts receivable, trade, at each balance sheet date, includes receivables from charterers forhire, freight and demurrage billings, net of a provision for doubtful accounts. At each balance sheet date, all potentially uncollectible accountsare 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 onthe date of issuance. The fair market value is determined using a binomial valuation model. The model which is used takes into account thecredit spread of 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 valueof $0.0001. Each holder of Preferred Stock is entitled to receive an annual dividend equal to 2.0% on the nominal value of the Preferred Stock,payable quarterly, until such time as the Preferred Stock converts into common stock. Five years after the issuance date, 30.0% of the then-outstanding shares of Preferred Stock shall automatically convert into shares of common stock at a conversion price equal to $10.00 per share ofcommon stock with the remaining balance of the then-outstanding shares of Preferred Stock being converted into shares of common stock underthe same terms 10 years after their issuance date. At any time following the third anniversary from their issuance date, if the closing price of thecommon stock has been at least $20.00 per share, for 10 consecutive business days, the remaining balance of the then-outstanding preferredshares shall automatically convert at a conversion price equal to $14.00 per share of common stock. The holders of Preferred Stock are entitled, attheir option, at any time following their issuance date and prior to their final conversion date, to convert all or any such then-outstandingpreferred shares into common stock at a conversion price equal to $14.00 per common stock. See also Note 17. (ac)Cumulative Redeemable Perpetual Preferred Stock: The Company’s 2,000,000 American Depositary Shares, Series G and the 4,800,000American Depositary Shares, Series H are recorded at fair market value on issuance. Each of the shares represents 1/100th of a share of the SeriesG, with a liquidation preference of $2,500.00 per share ($25.00 per American Depositary Share). Dividends are payable quarterly in arrears on theSeries G at a rate 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 orafter 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 beredeemed at the Company’s option (and the American Depositary Shares can be caused to be redeemed), in whole or in part, out of amountslegally available therefore, at a redemption price of $2,500.00 per share (equivalent to $25.00 per American Depositary Share) plus an amountequal to all accumulated and unpaid dividends thereon to the date of redemption, whether or not declared. The Company has accounted for theseshares as equity. See also Note 17. (ad)Investment in Available-for-Sale Securities: The Company classifies its existing marketable equity securities as available-for-sale. Thesesecurities are carried at fair value, with unrealized gains and losses reflected directly in the consolidated statements of comprehensive(loss)/income at each reporting period. 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-term prospects of the investee, and (iii) the intent and ability of the Company to retain its investment in the investee for a period of timesufficient to allow for any anticipated recovery in fair value.Investment in Equity Securities: Navios Holdings evaluates its investments in Navios Acquisition, Navios Partners, Navios Europe I and NaviosEurope II 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 less thanthe carrying value, (ii) the financial condition and near-term prospects of Navios Partners, Navios Acquisition, Navios Europe I and NaviosEurope II, and (iii) the intent and ability of the Company to retain its investment in Navios Acquisition, Navios Partners, Navios Europe I andNavios Europe II, for a period of time sufficient to allow for any anticipated recovery in fair value. If the Company considers any decline to be“other-than-temporary”, then the Company would write down the carrying amount of the investment to its estimated fair value. (ae)Financial Instruments and Fair Value: Guidance on Fair Value Measurements provides a fair value hierarchy that prioritizes the inputs tovaluation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets foridentical assets or liabilities (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 valuemeasurement. In determining the appropriate levels, the Company performs a detailed analysis of the assets and liabilities that are subject toguidance on Fair Value Measurements. F-25 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) (af)Recent Accounting Pronouncements:In October 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-17, Consolidation (Topic 810): “TargetedImprovements to Related Party Guidance for Variable Interest Entities” (“ASU 2018-17”). ASU 2018-17 provides that indirect interests heldthrough related parties in common control arrangements should be considered on a proportional basis for determining whether fees paid todecision makers and service providers are variable interests. This is consistent with how indirect interests held through related parties undercommon control are considered for determining whether a reporting entity must consolidate a VIE. For Public business entities the amendmentsare effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted. TheCompany is currently assessing the impact that adopting this new accounting guidance will have on its disclosures to the consolidated financialstatements.In August 2018, FASB issued ASU 2018-14, “Compensation-Retirement Benefits-Defined Benefit Plans (Topic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans”. This update modifies the disclosure requirements for defined benefit pensionplans and other postretirement plans. ASU 2018-14 is effective for public business entities that are SEC filers beginning in the first quarter offiscal year 2021, and earlier adoption is permitted. The Company is currently assessing the impact that adopting this new accounting guidancewill have on its disclosures to the consolidated financial statements.In August 2018, FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the DisclosureRequirements for Fair Value Measurement”. This update modifies the disclosure requirements on fair value measurements. ASU 2018-13 iseffective for fiscal years beginning after December 15, 2019, and earlier adoption is permitted. The Company is currently assessing the impactthat adopting this new accounting guidance will have on its disclosures to the consolidated financial statements.In January 2017, FASB issued ASU 2017-04, “Intangibles-Goodwill and Other (Topic 350)”. This update addresses concerns expressed about thecost and complexity of the goodwill impairment test and simplifies how an entity is required to test goodwill for impairment by eliminating Step2 from the goodwill impairment test. The amendments in this ASU are required for public business entities and other entities that have goodwillreported in their financial statements and have not elected the private company alternative for the subsequent measurement of goodwill. Theamendments are effective for public business entities that are SEC filers for fiscal years beginning after December 15, 2019. Early adoption ispermitted for all entities. The Company is currently assessing the impact that adopting this new accounting guidance will have on itsconsolidated 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 statements was from the September 2016 meeting, where theSEC staff expressed their expectations about the extent of disclosures registrants should make about the effects of the new FASB guidance as wellas any amendments issued prior to adoption, on revenue (ASU 2014-09), leases (ASU 2016-02) and credit losses on financial instruments (ASU2016-13) in accordance with SAB Topic 11.M. Registrants are required to disclose the effect that recently issued accounting standards will haveon their financial statements when adopted in a future period. In cases where a registrant cannot reasonably estimate the impact of the adoption,then additional qualitative disclosures should be considered. The ASU incorporates these SEC staff views into ASC 250 and adds references tothat guidance in the transition paragraphs of each of the three new standards. The adoption of this ASU did not have a material effect on theCompany’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 manner. ASU 2016-13also amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. Thestandard is effective for interim and annual reporting periods beginning after December 15, 2019, although early adoption is permitted forinterim and annual periods beginning after December 15, 2018. In November 2018, FASB issued ASU 2018-19 “Codification Improvements totopic 326, Financial Instruments-Credit Losses”. The amendments in this update clarify that operating lease receivables are not within the scopeof ASC 326-20 and should instead be accounted for under the new leasing standard, ASC 842. The Company is currently assessing the impactthat 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 operatingleases. According to ASU 2016-02, lessees will be required to recognize assets (right of use asset) and liabilities (lease liabilities) on the balancesheet for both types of leases, capital (or finance) leases and operating leases, with terms greater than 12 months. ASU 2016 – 02 is effective forfiscal years beginning after 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 usethe leased asset and non-lease components relate to payments for goods or services that are transferred separately from the right to use theunderlying asset. Total lease consideration is allocated to lease and non-lease components on a relative standalone basis. The recognition ofrevenues related to lease components will be governed by ASC 842 while revenue related to non-lease components will be subject to ASC 606. F-26 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) In July 2018, FASB issued ASU 2018-10, Codification Improvements to Topic 842 Leases (“ASU 2018-10”). The amendments in ASU 2018-10affect narrow aspects of the guidance issued in the amendments in ASU 2016-02. The amendments in this update affect the amendments inUpdate 2016-02, which are not yet effective but for which early adoption upon issuance is permitted. For entities that early adopted Topic 842,the amendments are effective upon issuance of this update, and the transition requirements are the same as those in Topic 842. For entities thathave not adopted Topic 842, the effective date and transition requirements will be the same as the effective date and transition requirements inTopic 842.In addition, in July 2018, FASB issued ASU 2018-11, Targeted Improvements to Topic 842 Leases (“ASU 2018-11). The improvements in ASU2018-11 provide for (a) an optional new transition method for adoption that results in initial recognition of a cumulative effect adjustment toretained earnings in the year of adoption and (b) a practical expedient for lessors, under certain circumstances, to combine the lease and non-leasecomponents of revenues for presentation purposes.In December 2018, FASB issued ASU 2018-20, Narrow-Scope Improvements to Topic 842 for Lessors (“ASU 2018-20”). The improvements inASU 2018-20 are to clarify guidance for lessors on sales taxes and other similar taxes collected from lessees, certain lessor costs and recognitionof variable payments for contracts with lease and non-lease components.In January 2019, FASB issued ASU 2019-01, Codification Improvements to Topic 842 Leases (“ASU 2019-01”). The amendments in ASU2019-01 address (i) the determination of the fair value of the underlying asset by lessors that are not manufacturers or dealers, (ii) the presentationon the Statement of Cash Flows—Sales Type and Direct Financing Leases; and (iii) the transition disclosures related to the accounting changesand error corrections (Topic 250).ASC 842 provides practical expedients that allow entities to not (i) reassess whether any expired or existing contracts are considered or containleases; (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. The Company intends to applythe alternative transition method for adoption as described above. Based on a preliminary assessment, the Company expects the adoption of thisguidance to have a material impact on its assets and liabilities due to its charter-in contracts and office rent agreements and the recognition ofright-of-use assets and lease liabilities on its consolidated balance sheets although adoption is not expected to significantly change therecognition, measurement or presentation of lease expenses within the statements of comprehensive (loss)/income or cash flows.In the transition to ASC 842, the Company will measure the right of use asset at an amount equal to the operating liability adjusted for thecarrying amount of the straight line liability and the carrying amount of the liability regarding the provision for losses on time charters andvoyages in progress on that date. Following the adoption of the new standard, the Company expects to recognize for its charter-in contracts andfor its office rent agreements, operating liabilities of $356,537 and $12,453, respectively, based on the net present value of the remainingminimum charter-in and rental payments for existing operating leases. Additionally, the Company expects to recognize for its charter-in contractsrelating to charter-in vessels in operation on January 1, 2019 and for its office rent agreements, right of use assets of $342,353 and $12,453,respectively.With regards to the Company’s charter-out contracts, the Company is not expecting that the adoption will have a material effect on itsconsolidated financial statements since the Company is a lessor for these charter-out contracts and the changes are fairly minor. The Companyexpects to elect the use of practical expedient available to lessors which allows good and services embedded in the charter-out contract thatqualify as non-lease components to be combined under a single lease component presentation.NOTE 3: CONSOLIDATION OF NAVIOS CONTAINERSNavios Maritime Containers Inc. was incorporated in the Republic of the Marshall Islands on April 28, 2017 (date of inception) and onNovember 30, 2018, was converted into a limited partnership. In connection with the conversion, Navios Maritime Containers GP LLC, a Republic ofthe Marshall Islands limited liability company and wholly-owned subsidiary of Navios Holdings, was admitted as Navios Containers’ general partnerand holds a non-economic interest that does not provide the holder with any rights to profits or losses of, or distribution by, the partnership. As a resultof holding the general partner interest, control was obtained by Navios Holdings due to the fact that the general partner has exclusive managementauthority over Navios Containers’ operations, controls the appointment of three of the seven members of Navios Containers’ board of directors and hasveto rights over certain significant actions of Navios Containers. The limited partners may not remove the general partner without the affirmative voteof at least 75% of the outstanding units (including units held by the general partner and its affiliates), voting as a single class. In addition, limitedpartners have no right to participate in the operation, management or control of Navios Containers’ business or transact any business in NaviosContainers’ name. The general partner has the power to oversee and direct the partnership’s operations and to manage and determine the partnership’sstrategies and policies on an exclusive basis and therefore, has the power to govern the financial and operating policies of Navios Containers. As ofthat date, the results of operations of Navios Containers are consolidated under Navios Holdings. F-27 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Navios Containers accounted for the control obtained as a business combination which resulted in the application of the “acquisition method”,as defined under ASC 805 Business Combinations, as well as the recalculation of Navios Holdings’ equity interest in Navios Containers to its fairvalue at the date of obtaining control and the recognition of a gain in the consolidated statements of comprehensive (loss)/income. The excess of thefair value of Navios Containers’ identifiable net assets of $229,865 over the total fair value of Navios Containers’ total shares outstanding as ofNovember 30, 2018 of $171,743, resulted in a bargain gain upon obtaining control in the amount of $58,122. The fair value of the 34,603,100 totalNavios Container’s shares outstanding as of November 30, 2018 was determined by using the closing share price of $4.96, as of that date.As of November 30, 2018, Navios Holdings’ interest in Navios Containers with a carrying value of $6,078 was remeasured to fair value of $6,269,resulting in a gain on obtaining control in the amount of $191 and is presented within “Bargain gain upon obtaining control” in the consolidatedstatements of comprehensive (loss)/income.The results of operations of Navios Containers are included in Navios Holdings’ consolidated statements of comprehensive (loss)/incomefollowing the completion of the conversion of Navios Maritime Containers Inc. into a limited partnership on November 30, 2018.If the acquisition had been consummated as of April 28, 2017 (date of inception), Navios Holdings’ pro-forma revenues and net loss for the yearended December 31, 2018 would have been $639,607 and $(313,971), respectively, and for the year ended December 31, 2017 would have been$502,237 and $(107,210), respectively. These pro-forma results include non-recurring items directly related to the business acquisition as follows:(a) the gain on obtaining control in the amount of $191 and (b) the bargain gain upon obtaining control in the amount of $58,122.The unaudited pro forma results are for comparative purposes only and do not purport to be indicative of the results that would have actuallybeen obtained if the control was obtained at the date of inception. The Navios Containers consolidation contributed revenues of $12,053 and netincome of $752 to Navios Holdings for the year ended December 31, 2018.The following table summarizes the fair value of Navios Containers outstanding shares, the fair value of assets and liabilities and the fair value ofthe noncontrolling interest in Navios Containers assumed on November 30, 2018: Fair value of Navios Containers’ outstanding shares: Fair value of Navios Holdings’ interest (3.7%) 6,269 Fair value of noncontrolling interest (96.3%) $165,474 Total fair value of Navios Containers’ outstanding shares 171,743 Fair value of Navios Containers’ assets and liabilities: Current assets (including cash and restricted cash of $24,400) 27,705 Vessels 376,133 Favorable lease terms 31,342 Long term receivable from affiliate companies 7,313 Other long term assets 1,099 Long term debt assumed (including current portion) (199,000) Current liabilities (14,727) Fair value of Navios Containers’ net assets 229,865 Bargain gain upon obtaining control $58,122 The intangible assets listed below as determined at the date of obtaining control are amortized under the straight line method over the periodindicated below: Weighted AverageAmortization(years) Amortizationper Year Favorable lease terms 1.4 $(22,391) F-28 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) NOTE 4: CASH AND CASH EQUIVALENTS AND RESTRICTED CASHCash and cash equivalents and restricted cash consisted of the following: December 31,2018 December 31,2017 Cash on hand and at banks $131,432 $127,625 Short-term deposits and highly liquid funds 6,450 7 Restricted cash 12,892 6,558Cash and cash equivalents and restricted cash $150,774 $134,190 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 insurancelimits. Navios Holdings reduces exposure to credit risk by dealing with a diversified group of major financial institutions.See also Note 2(e).NOTE 5: ACCOUNTS RECEIVABLE, NETAccounts receivable consisted of the following: December 31,2018 December 31,2017 Accounts receivable $76,376 $80,037 Less: provision for doubtful receivables (16,086) (19,706) Accounts receivable, net $60,290 $60,331 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, 2016 $(18,278) $(1,304) $145 $(19,437) Year ended December 31, 2017 $(19,437) $(269) $— $(19,706) Year ended December 31, 2018 $(19,706) $(575) $4,195 $(16,086) 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, 2018, two customersaccounted for 12.8% and 11.4%, respectively, of the Company’s revenue and are the same customers who accounted for 14.7% and 13.1%,respectively, of the Company’s revenue in the year ended December 31, 2016. For the year ended December 31, 2017, no customers accounted for morethan 10% of the Company’s revenue. For the year ended December 31, 2016, two customers accounted for 14.7% and 13.1%, respectively, of theCompany’s revenue. F-29 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) NOTE 6: PREPAID EXPENSES AND OTHER CURRENT ASSETSPrepaid expenses and other current assets consisted of the following: December 31,2018 December 31,2017 Prepaid voyage and operating costs $9,261 $8,022 Claims receivable 22,224 12,307 Prepaid other taxes 2,682 4,520 Advances for working capital purposes 18 18 Other 6,005 2,516 Total prepaid expenses and other current assets $40,190 $27,383 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, suchclaims may not all be recovered within one year due to the attendant process of settlement. Nonetheless, amounts are classified as current as theyrepresent amounts currently due to the Company. All amounts are shown net of applicable deductibles.As of December 31, 2018, claims receivable include an insurance claim of $11,571 related to the fire incident at the iron ore port terminal inNueva Palmira, Uruguay.NOTE 7: VESSELS, PORT TERMINALS AND OTHER FIXED ASSETS, NET Vessels Cost AccumulatedDepreciation Net BookValue 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 Additions 398 (66,405) (66,007) Vessel impairment (411,265) 212,399 (198,866) Disposals (101,717) — (101,717) Vessel acquisition 22,385 (458) 21,927 Balance December 31, 2018 $1,324,766 $(390,982) $933,784 Port Terminals (Navios Logistics) Cost AccumulatedDepreciation Net BookValue 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 Additions 2,530 (7,284) (4,754) Transfers from oil storage plant and port facilities for liquid cargoes (629) — (629) Transfers to other long-term assets (26) — (26) Disposals (156) 137 (19) Balance December 31, 2018 $253,360 $(39,775) $213,585 F-30 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Tanker vessels, barges and pushboats (Navios Logistics) Cost AccumulatedDepreciation Net BookValue 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 Additions 3,581 (18,528) (14,947) Transfers 629 — 629 Transfers from deposits for vessels, port terminal and other fixed assets, net 49,421 — 49,421 Balance December 31, 2018 $525,712 $(182,584) $343,128 Containerships (Navios Containers) Cost AccumulatedDepreciation Net BookValue Balance December 31, 2017 $— $— $— Vessels upon obtaining control 376,133 (882) 375,251 Vessel acquisition 24,763 (35) 24,728 Balance December 31, 2018 $400,896 $(917) $399,979 Other fixed assets Cost AccumulatedDepreciation Net BookValue 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 Additions 5,845 (1,572) 4,273 Write offs (329) 295 (34) Balance December 31, 2018 $19,876 $(11,897) $7,979 Total Cost AccumulatedDepreciation Net BookValue 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 F-31 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Total Cost AccumulatedDepreciation Net BookValue Vessels upon obtaining control 376,133 (882) 375,251 Additions 12,354 (93,789) (81,435) Vessel acquisition 47,148 (493) 46,655 Vessel impairment (411,265) 212,399 (198,866) Vessel disposals (101,717) — (101,717) Disposals (156) 137 (19) Write offs (329) 295 (34) Transfers from deposits for vessels, port terminals and other fixed assets 49,421 — 49,421 Transfers to other long-term assets (26) — (26) Balance December 31, 2018 $2,524,610 $(626,155) $1,898,455 Deposits for Vessels and Port Terminals AcquisitionsDuring the third quarter of 2018, a river and estuary tanker was delivered to Navios Logistics. As of December 31, 2018, a total of $17,389 hadbeen transferred to “Vessels, port terminals and other fixed assets, net” in the consolidated balance sheets of which capitalized interest amounted to$628. As of December 31, 2017, Navios Logistics had paid $6,141 for the construction of the river and estuary tanker (including supervision cost).During the first quarter of 2018, three new pushboats were delivered to Navios Logistics. As of December 31, 2018, a total of $32,032 had beentransferred to “Vessels, port terminals and other fixed assets, net” in the consolidated balance sheets of which capitalized interest amounted to $3,874.As of December 31, 2017, Navios Logistics had paid $30,708 for the construction of the three new pushboats.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.Impairment lossesDuring the year ended December 31, 2018, Navios Holdings recorded an impairment loss of $179,186 for four of its dry bulk vessels.In December 2018, Navios Holdings completed the sale to an unrelated third party, of the Navios Magellan, a 2000-built Panamax vessel of74,333 dwt, for a total net sale price of $6,950 paid in cash. The loss due to the sale amounted to $5,402 (including $726 remaining carrying balance ofdry dock and special survey costs) and is included in the consolidated statements of comprehensive (loss)/income under “Impairment losses”.In August 2018, Navios Holdings completed the sale to its affiliate, Navios Partners, of the Navios Mars, a 2016-built, 181,259 dwt vessel, and ofthe Navios Sphera, a 2016-built, 84,872 dwt vessel, for a total sale price of $79,000. The loss due to the sale amounted to $2,759 and is included in theconsolidated statements of comprehensive (loss)/income under “Impairment losses”.In July 2018, Navios Holdings completed the sale to an unrelated third party of the Navios Achilles, a 2001-built, 52,063 dwt vessel, for a totalnet sale price of $8,085 paid in cash. The impairment loss recognized due to the sale amounted to $6,595 (including $584 remaining carrying balanceof dry dock and special survey costs).In March 2018, Navios Holdings completed the sale to an unrelated third party of the Navios Herakles, a 2001-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 (including $481 remaining carrying balance of dry dockand special survey costs).During the year ended December 31, 2017, Navios Holdings recorded an impairment loss of $32,930 for one of its dry bulk 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). F-32 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Vessel AcquisitionsIn November 2018, Navios Holdings took delivery of the Navios Primavera, a 2007-built, 53,464 dwt, a previously chartered-in vessel, for a totalacquisition cost of $12,130, of which $10,980 was paid in cash.In February 2018, Navios Holdings acquired from an unrelated third party, a previously chartered-in vessel, Navios Equator Prosper, a 2000-built,171,191 dwt vessel, for a total acquisition cost of $10,255 which was paid in cash.On 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 cashand $39,900 was financed through a loan. As of December 31, 2016, deposits of $29,695, relating to the acquisition of Navios Sphera and Navios Mars,had been transferred to vessels’ cost.Navios LogisticsOn November 12, 2018, Navios Logistics acquired approximately 3.5 hectares of undeveloped land located in Port Murtinho region, Brazil.Navios Logistics plans to develop this land for its port operations. As of December 31, 2018, Navios Logistics had paid $1,097 for the land acquisition.On September 4, 2017, Navios Logistics signed an agreement for the construction of covers for dry barges for a total consideration of $1,115. Asof December 31, 2018, Navios Logistics had paid the whole amount (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 obligationwas terminated and the carrying value of the tankers was adjusted for the difference between the purchase price and the carrying value.In February 2017, two self-propelled barges of the Navios Logistics’ fleet, Formosa and San Lorenzo, were sold for a total amount of $1,109, to bepaid in cash. Sale price will be received in installments in the form of lease payments through 2023. The barges may be transferred at the lessee’soption, at no cost, at the end of the lease period. As of December 31, 2018 and 2017, the current portion of the outstanding receivable amounted to$174 and $318, respectively and is included in “Prepaid expenses and other current assets” and the non-current portion of the outstanding receivableamounted to $428 and $500, respectively and is included in “Other long-term assets” in the consolidated balance sheets. During the year endedDecember 31, 2017 gain on sale of assets of $1,075 was included in the statement of comprehensive (loss)/income within the caption of “Gain on saleof assets”.Navios ContainersOn December 17, 2018, Navios Containers purchased from an unrelated third party the Bermuda, a 2010-built 4,360 TEU containership, for anacquisition cost of approximately $11,098 (including $398 capitalized expenses).On December 7, 2018, Navios Containers purchased from an unrelated third party the Bahamas, a 2010-built 4,360 TEU containership, for anacquisition cost of approximately $13,422 (including $522 capitalized expenses).NOTE 8: INTANGIBLE ASSETS/LIABILITIES OTHER THAN GOODWILLNet Book Value of Intangible Assets other than Goodwill as at December 31, 2018 AcquisitionCost AccumulatedAmortization Transfer/Writeoff Net Book ValueDecember 31,2018 Trade name $100,420 $(47,966) $— $52,454 Port terminal operating rights 53,152 (11,838) — 41,314 Customer relationships 35,490 (19,520) — 15,970 Favorable lease terms(*) 32,492 (2,143) (1,150) 29,199 Total Intangible assets $221,554 $(81,467) $(1,150) $138,937 F-33 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 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 (*)During the year ended December 31, 2018, acquisition costs of $1,150 of favorable lease terms were capitalized as part of the cost of one vesseldue to the exercise of the purchase option (See also Note 2(n)). As of December 31, 2018, intangible assets associated with the favorable leaseterms included an amount of $31,342 associated with the favorable lease terms of certain charter out contracts of Navios Containers which wererecognized as of November 30, 2018 (see Note 3). As of December 31, 2017, intangible assets associated with the favorable lease terms includedan amount of $1,150 related to purchase option for a vessel. During the year ended December 31, 2017, acquisition costs of $10,398 andaccumulated amortization of $7,001 of favorable lease terms were considered impaired and were written off resulting in a loss of $3,397 includedin the statement of comprehensive (loss)/income within the caption of “Impairment losses”. AmortizationExpense andWrite OffsYear EndedDecember 31,2018 AmortizationExpense andWrite OffsYear EndedDecember 31,2017 AmortizationExpense andWrite OffsYear EndedDecember 31,2016 Trade name $2,811 $3,853 $3,902 Port terminal operating rights 950 727 706 Customer relationships 1,774 1,775 1,775 Favorable lease terms 2,143 4,038 17,260 Unfavorable lease terms — — (7,526) Total $7,678 $10,393 $16,117 The remaining aggregate amortization of acquired intangibles as of December 31, 2018 was as follows: Description Within oneyear Year Two Year Three Year Four Year Five Thereafter Total Trade name $2,811 $2,818 $2,811 $2,811 $2,811 $38,392 $52,454 Port terminal operating rights 995 995 995 995 995 36,339 41,314 Customer relationships 1,775 1,775 1,775 1,775 1,775 7,095 15,970 Favorable lease terms 21,923 7,276 — — — — 29,199 Total amortization $27,504 $12,864 $5,581 $5,581 $5,581 $81,826 $138,937 NOTE 9: 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. F-34 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 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 issuedcommon units of Navios Partners with a fair value of $29,423 (based on Navios Partners’ trading price as of the closing of the transaction).Concurrently, Navios Holdings acquired 266,876 common units in Navios Partners in order to maintain its 2% general partner interest for a cashconsideration of $468. See also Note 16.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.During the first quarter of 2018, Navios Partners also issued 1,370,044 of common units to Navios Partners’ directors and/or officers.Concurrently, Navios Holdings acquired 27,960 common units in Navios Partners in order to maintain its 2.0% general partner interest for a cashconsideration of $64.On February 21, 2018, Navios Partners closed an offering of 18,422,000 common units which includes the sale of $5,000 of common units toNavios Holdings. In addition, Navios Holdings paid $714 to retain its 2.0% general partnership interest.In December 2018, Navios Partners also issued 1,464,494 of restricted common units to Navios Partners’ directors and/or officers. Concurrently,Navios Holdings acquired 29,888 common units in Navios Partners in order to maintain its 2.0% general partner interest for a cash consideration of$27.As of December 31, 2018, Navios Holdings held a total of 31,053,233 common units and 3,450,091 general partners units, representing a 20.0%interest in Navios Partners, including the 2.0% general partner interest, and the entire investment in Navios Partners is accounted for under the equitymethod.As of December 31, 2018 and 2017, the pre-OTTI unamortized difference between the carrying amount of the investment in Navios Partners andthe amount of the Company’s underlying equity in net assets of Navios Partners was $80,484 and $98,608, respectively. The Company will need torecompute this difference which is amortized through “Equity in net (losses)/earnings of affiliated companies” over the remaining life of NaviosPartners’ tangible and intangible assets.As of December 31, 2018 and 2017, the carrying amount of the investment in Navios Partners was $29,328 and $66,773, respectively. During theyears ended December 31, 2018, 2017 and 2016, the Company recognized an OTTI loss of $55,524, $0 and $83,596, respectively relating to itsinvestment in Navios Partners and the amounts were included in “Equity in net (losses)/earnings of affiliated companies”.Total pre-OTTI equity method income/(loss) and amortization of deferred gain of $16,171, $12,570 and $(5,979) were recognized in “Equity innet (losses)/earnings of affiliated companies” for the years ended December 31, 2018, 2017 and 2016, respectively.Dividends received during the years ended December 31, 2018, 2017 and 2016 were $2,068, $0 and $0, respectively.As of December 31, 2018, the market value of the investment in Navios Partners was $29,328.Acropolis Chartering & Shipping Inc. (“Acropolis”)On December 6, 2018, Navios Holdings completed the sale of its investment in Acropolis for a cash consideration of $1,000 resulting in a gain of$866 which is included in “Other income”. The amount of $500 of the cash consideration was received in December 2018 and the remaining amount isscheduled to be received within one year from the date of the sale. Navios Holdings, until the sale of its investment, had a 50% interest in Acropolis, abrokerage firm for freight and shipping charters. Although Navios F-35 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Holdings owned 50% of Acropolis’ stock, Navios Holdings agreed with the other shareholder that the earnings and amounts declared by way ofdividends would be allocated 35% to the Company with the balance to the other shareholder. As of December 31, 2018 and 2017, the carrying amountof the investment was $0 and $228, respectively. Dividends received for each of the years ended December 31, 2018, 2017 and 2016 were $170, $55and $85, respectively.Navios AcquisitionIn 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 inprivately negotiated transactions. As of December 31, 2018, Navios Acquisition has repurchased 670,962 shares of common stock.On November 9, 2018, the Stockholders of Navios Acquisition approved a one-for-15 reverse stock split of all outstanding common stock sharesof Navios Acquisition, which was effected on November 14, 2018.On December 13, 2018, Navios Acquisition completed the merger contemplated by the previously announced Agreement and Plan of Merger(the “Merger Agreement”), dated as of October 7, 2018, by and among Navios Acquisition, its direct wholly-owned subsidiary NMA Sub LLC (“MergerSub”), Navios Maritime Midstream Partners L.P. (“Navios Midstream”) and Navios Midstream Partners GP LLC. Pursuant to the Merger Agreement,Merger Sub merged with and into Navios Midstream, with Navios Midstream surviving as a wholly-owned subsidiary of Navios Acquisition.As of December 31, 2018, Navios Holdings had a 32.8% voting and a 35.8% economic interest in Navios Acquisition.As of December 31, 2018 and 2017, 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 $87,500 and $113,597, respectively, and is amortized through“Equity in net (losses)/earnings of affiliated companies” over the remaining life of Navios Acquisition tangible and intangible assets.As of December 31, 2018 and 2017, the carrying amount of the investment in Navios Acquisition was $50,374 and $99,590, respectively. As ofDecember 31, 2018, the market value of the investment in Navios Acquisition was $15,812.Based on Company’s evaluation of the duration and magnitude of the fair value decline, Navios Acquisition’s financial condition and near-termprospects, and Company’s intent and ability to hold its investment in Navios Acquisition until recovery, the Company concluded that the decline infair value of its investment in Navios Acquisition below its carrying value is temporary and, therefore, no impairment was recorded. During the yearended December 31, 2016, the Company recognized an OTTI loss of $144,430 relating to its investment in Navios Acquisition and the amount wasincluded in “Equity in net (losses)/earnings of affiliated companies”.Total pre-OTTI equity method (loss)/income of $(43,378), $(9,875) and $29,801 were recognized in “Equity in net (losses)/earnings of affiliatedcompanies” for the years ended December 31, 2018, 2017 and 2016, respectively.Dividends received for each of the years ended December 31, 2018, 2017 and 2016 were $5,838, $14,595 and $14,595, respectively.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 NaviosPartners (in each case, in proportion to their economic interests in Navios Europe I) (collectively, the “Navios Term Loans I”) and (ii) the assumption ofa junior participating loan facility (the “Junior Loan I”). In addition to the Navios Term Loans I, Navios Holdings, Navios Acquisition and NaviosPartners will also make available to Navios Europe I revolving loans up to $24,100 to fund working capital requirements (collectively, the “NaviosRevolving Loans I”). The Navios Term Loans I will be repaid from the future sale of vessels owned by Navios Europe I. In December 2018, the amountof the Navios Revolving Loans I increased by $30,000. F-36 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) 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 ability toexercise significant influence over the operating and financial policies of Navios Europe I and, therefore, its investment in Navios Europe I isaccounted for 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 innet (losses)/earnings of affiliated companies” over the remaining life of Navios Europe I. As of December 31, 2018 and December 31, 2017, theunamortized basis difference of Navios Europe I was $3,357, and $4,034, respectively.As of December 31, 2018 and 2017, the estimated maximum potential loss by Navios Holdings in Navios Europe I would have been $35,069 and$23,838, respectively, which represents the Company’s carrying value of its investment and balance of Navios Term Loans I of $8,994 and $7,924,respectively, including accrued interest, plus the Company’s balance of the Navios Revolving Loans I of $26,075 and $15,914, respectively, includingaccrued interest, and does not include the undrawn portion of the Navios Revolving Loans I.(Loss)/income of $0, $(1,089) and $1,303 was recognized in “Equity in net (losses)/earnings of affiliated companies” for the years endedDecember 31, 2018, 2017 and 2016, respectively.As of December 31, 2018 and 2017, the carrying amount of the investment in Navios Europe I and the balance of Navios Term Loans I was$4,750 for both periods.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 asenior loan facility (the “Senior Loans II”) and loans aggregating to $14,000 from Navios Holdings, Navios Acquisition and Navios Partners (in eachcase, in proportion to their economic interests in Navios Europe II) (collectively, the “Navios Term Loans II”) and (ii) the assumption of a juniorparticipating loan facility (the “Junior Loan II”). In addition to the Navios Term Loans II, Navios Holdings, Navios Acquisition and Navios Partnerswill also make available to Navios Europe II revolving loans up to $43,500 to fund working capital requirements (collectively, the “Navios RevolvingLoans II”). The Navios Term Loans II will be repaid from the future sale of vessels owned by Navios Europe II. In March 2017, the amount of theNavios 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 isaccounted for 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 innet (losses)/earnings of affiliated companies” over the remaining life of Navios Europe II. As of December 31, 2018 and December 31, 2017, theunamortized basis difference of Navios Europe II was $6,069 and $7,011, respectively. F-37 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, 2018 and 2017, the estimated maximum potential loss by Navios Holdings in Navios Europe II would have been $29,370and $22,463, respectively, which represents the Company’s carrying value of its investment and balance of Navios Term Loans II of $12,432 and$10,400, respectively, plus the Company’s balance of the Navios Revolving Loans II of $16,938 and $12,063, respectively, including accrued interest,and does not include the undrawn portion of the Navios Revolving Loans II.Income/(loss) of $2,032, $2,456 and $(14) was recognized in “Equity in net (losses)/earnings of affiliated companies” for the years endedDecember 31, 2018, 2017 and 2016, respectively.As of December 31, 2018 and December 31, 2017, the carrying amount of the investment in Navios Europe II and the balance of Navios TermsLoans II was $6,650 for both periods.Navios Containers (Consolidated since November 30, 2018)On June 8, 2017, Navios Maritime Containers Inc. closed a private placement of 10,057,645 shares of its common stock at a subscription price of$5.00 per share resulting in gross proceeds of $50,288. Navios Holdings invested $5,000, and Navios Partners invested $30,000 in Navios MaritimeContainers Inc. Each of Navios Holdings and Navios Partners also received warrants for the purchase of an additional 1.7% and 6.8%, respectively, ofthe equity of Navios Maritime Containers Inc.On March 13, 2018, Navios Maritime Containers Inc. closed an additional private placement in which Navios Holdings invested $500.On November 30, 2018, Navios Maritime Containers Inc. was converted into a limited partnership. All of the warrants described above issued toNavios Partners and Navios Holdings expired. On December 3, 2018, Navios Partners distributed approximately 2.5% of the outstanding equity ofNavios Containers to the unitholders of Navios Partners in connection with the listing of Navios Containers on the Nasdaq Global Select Market.Navios Holdings until November 30, 2018 evaluated its investment in the common stock of Navios Containers under ASC 323 and concludedthat it had the ability to exercise significant influence over the operating and financial policies of Navios Maritime Containers Inc. and, therefore, itsinvestment in Navios Maritime Containers Inc. was accounted for under the equity method.As of December 31, 2018, and following the above mentioned placements and the conversion of Navios Maritime Containers Inc. into a limitedpartnership, Navios Holdings owned 3.7% of the equity of Navios Containers.Total equity method income of $417 and $161 were recognized in “Equity in net (losses)/earnings of affiliated companies” for the period fromJanuary 1, 2018 to November 30, 2018 (date of obtaining control) and for the year ended December 31, 2017, respectively.As of December 31, 2017, the carrying amount of the investment in Navios Containers was $5,161.Following the results of the significant tests performed by the Company, it was concluded that two affiliates met the significant thresholdrequiring summarized financial information of all affiliated companies being presented.Summarized financial information of the affiliated companies is presented below: December 31, 2018 December 31, 2017 Balance Sheet NaviosPartners NaviosAcquisition NaviosEurope I NaviosEurope II NaviosPartners NaviosAcquisition NaviosEurope I NaviosEurope II NaviosContainers Cash and cash equivalents, including restrictedcash $61,455 $46,609 $19,160 $27,544 $29,933 $86,458 $19,185 $16,882 $14,501 Current assets 111,112 103,978 22,732 33,479 60,306 119,733 22,417 28,403 21,371 Non-current assets 1,203,021 1,523,406 139,955 195,805 1,244,996 1,453,048 145,940 195,784 245,440 Current liabilities 52,333 92,159 83,059 39,150 54,247 74,618 21,284 25,805 49,559 Long- term debt including current portion, net 507,485 1,205,837 64,818 99,153 493,463 1,065,369 75,472 109,223 119,033 Non-current liabilities 485,047 1,154,873 61,035 168,195 483,345 1,035,688 125,283 164,276 76,534 F-38 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) December 31, 2018 December 31, 2017 December 31, 2016 IncomeStatement NaviosPartners NaviosAcquisition NaviosEurope I NaviosEurope II NaviosPartners NaviosAcquisition NaviosEurope I NaviosEurope II NaviosContainers NaviosPartners NaviosAcquisition NaviosEurope I NaviosEurope II Revenue $231,361 $187,946 $34,885 $49,870 $211,652 $227,288 $37,468 $38,633 $39,188 $190,524 $290,245 $40,589 $30,893 Net (loss)/incomebeforenon-cashchange infair value ofJunior LoanI and JuniorLoan II $(13,081) $(82,233) $(22,881) $(12,899) $(15,090) $(75,153) $(20,778) $22,749 $2,638 $(52,549) $59,715 $(2,174) $(25,062) Net(loss)/income $(13,081) $(82,233) $(3,197) $(12,169) $(15,090) $(75,153) $9,762 $(9,086) $2,638 $(52,549) $59,715 $16,137 $(34,059) 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 upontheir issuance and subsequent changes in market value are recognized within accumulated other comprehensive income/(loss) or since January 1, 2018,when the Company adopted ASU 2016-01, “Financial Instruments – Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assetsand Financial Liabilities”, within consolidated statement of comprehensive (loss)/income. The unrealized holding gain was $2 as of December 31,2017.The shares received from STX were accounted for under the guidance for AFS Securities. The Company has no other types of AFS Securities.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 atthe time for a total consideration of $5,303.As of December 31, 2018 and 2017, the carrying amount of the AFS Securities related to STX was $192 and $238, respectively and was recordedunder “Other long-term assets” in the consolidated balance sheet. During the year ended December 31, 2018, the unrealized holding losses related tothese AFS Securities included in “Other (expense)/income, net” was $46. During the year ended December 31, 2016, the Company considered thedecline in fair value of the KLC shares as “other-than-temporary” and therefore, recognized a loss out of accumulated other comprehensive income/(loss) of $345. The respective losses were included within the caption “Other expense” in the accompanying consolidated statement of comprehensive(loss)/income.NOTE 10: ACCRUED EXPENSES AND OTHER LIABILITIESAccrued expenses and other liabilities as of December 31, 2018 and 2017 consisted of the following: December 31,2018 December 31,2017 Payroll $15,264 $18,889 Accrued interest 40,903 32,555 Accrued voyage expenses 3,643 4,843 Accrued running costs 42,212 23,812 Provision for estimated losses on vessels under time charter 1,604 2,631 Audit fees and related services 292 364 Accrued taxes 6,268 5,376 Professional fees 1,251 2,236 Other accrued expenses 12,215 4,153 Total accrued expenses $123,652 $94,859 F-39 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) NOTE 11: BORROWINGSBorrowings as of December 31, 2018 and 2017 consisted of the following: Navios Holdings borrowings December 31,2018 December 31,2017 HSH Nordbank ($15,300) 13,005 14,535 Loan Facility Credit Agricole ($28,745) 26,415 — Loan Facility Credit Agricole ($40,000) — 17,674 Loan Facility Credit Agricole ($23,000) 12,031 14,074 Loan Facility Credit Agricole ($23,000) 12,350 14,450 Loan Facility DVB Bank SE ($72,000) 45,741 50,140 Loan Facility DVB Bank SE ($41,000) — 33,816 Loan Facility Credit Agricole ($22,500) — 15,188 Loan Facility DVB Bank SE ($40,000) 15,333 18,254 Loan Facility Alpha Bank ($31,000) 23,800 25,600 Loan Facility Alpha Bank ($16,125) 15,125 16,125 2022 Senior Secured Notes 305,000 305,000 2022 Notes 614,339 650,000 Total Navios Holdings borrowings $1,083,139 $1,174,856 Navios Logistics borrowings December 31,2018 December 31,2017 2022 Logistics Senior Notes $375,000 $375,000 Navios Logistics Notes Payable 26,875 31,109 Navios Logistics BBVA Loan Facility 19,300 23,250 Navios Logistics Alpha Bank Loan 11,900 13,300 Navios Logistics Term Loan B Facility 99,000 100,000 Navios Logistics Credit Agreement 5,909 — Other long-term loans 184 253 Total Navios Logistics borrowings $ 538,168 $542,912 Navios Containers borrowings December 31,2018 December 31,2017 ABN AMRO Bank N.V. ($50,000) $50,000 $— BNP Paribas ($25,000) 23,611 — BNP Paribas ($24,000) 29,464 — HSH ($36,000) 32,000 — Navios Containers Financial liability ($119,000) 87,530 — Total Navios Containers borrowings $ 222,605 $— Total December 31,2018 December 31,2017 Total borrowings $1,843,912 $1,717,768 Less: current portion, net (69,051) (33,885) Less: deferred finance costs and discount, net (27,905) (35,280) Total long-term borrowings $1,746,956 $1,648,603 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.and Navios Maritime Containers Inc. The 2022 Senior Secured Notes are unregistered and guaranteed by all of the Company’s direct and indirectsubsidiaries, except for certain subsidiaries designated as unrestricted subsidiaries, including Navios South American Logistics Inc. The subsidiaryguarantees are “full and unconditional”, except that the indenture provides for an individual subsidiary’s guarantee to be automatically released incertain customary circumstances, such as when a subsidiary is sold or all of the assets of the subsidiary are sold, the capital stock is sold, when the F-40 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) subsidiary is designated as an “unrestricted subsidiary” for purposes of the indenture, upon liquidation or dissolution of the subsidiary or upon legal orcovenant defeasance or satisfaction and discharge of the 2022 Senior Secured Notes. The net proceeds of the offering were used to complete a cashtender offer for its outstanding 8.125% Senior Notes due 2019 described below (the “2019 Notes”) and to redeem notes not purchased in the tenderoffer, including the payment of related fees and expenses and any redemption premium. The effect of this transaction was the recognition of a $2,695extinguishment loss in the consolidated statements of comprehensive (loss)/income under “Gain/(loss) 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 of certainpreferred stock, the payment of dividends, redemption or repurchase of capital stock or making restricted payments and investments, creation of certainliens, 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 31,2018.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 resultingin a gain on bond extinguishment of $27,670, net of deferred fees written-off. On November 21, 2017, Co-Issuers completed the sale of 2022 SeniorSecured 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.Ship Mortgage NotesOn November 29, 2013, the Co-Issuers completed the sale of $650,000 of its 2022 Notes. During September 2018, the Company repurchased$35,661 of its 2022 Notes for a cash consideration of $28,796 resulting in a gain on bond extinguishment of $6,464, net of deferred fees written-off.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 andcontract rights. In June 2017, Navios Ionian and Navios Horizon were released from the 2022 Notes and replaced by the Navios Galileo. In March2018, Navios Herakles was released from the 2022 Notes and replaced by the Navios Equator Prosper. In July 2018, Navios Achilles was released fromthe 2022 Notes and replaced by the Navios Primavera. In December 2018, Navios Magellan was released from the 2022 Notes and the proceeds of$7,000 was restricted in an escrow account and considered as a cash collateral. 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 FinanceII (US) Inc. The guarantees of the Company’s subsidiaries that own mortgaged vessels are senior secured guarantees and the guarantees of theCompany’s subsidiaries that do not own mortgaged vessels are senior unsecured guarantees. In addition, the 2022 Co-Issuers have the option to redeemthe 2022 Notes in whole 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 reachespar in January 2020.Upon occurrence of certain change of control events, the holders of the 2022 Notes may require the 2022 Co-Issuers to repurchase some or all ofthe 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 paymentsand investments, creation of certain liens, transfer or sale of assets, entering into certain transactions with affiliates, merging or consolidating or sellingall or substantially all of the 2022 Co-Issuers’ properties and assets and creation or designation of restricted subsidiaries. The indenture governing the2022 Notes includes customary events of default. The 2022 Co-Issuers were in compliance with the covenants as of December 31, 2018.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. F-41 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) 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 toAugust 2021. The loan bears interest at a rate of LIBOR plus 275 basis points. The loan facility requires compliance with certain financial covenants.As of December 31, 2018 the facility was refinanced and repaid in full and there was no outstanding amount.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, 2018, the facility is repayable in one quarterly installment of $681,followed by six semi-annual equal installments of $681, with a final balloon payment of $7,264 on the last payment date. The loan bears interest at arate of LIBOR plus 275 basis points. The loan facility requires compliance with certain covenants. As of December 31, 2018, the outstanding amountunder this facility was $12,031.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, 2018, the outstanding amount under the loan facility wasrepayable in one quarterly installment of $700 after the drawdown date, followed by six semi-annual equal installments of $700, with a final balloonpayment of $7,450 on the last payment date. The loan bears interest at a rate of LIBOR plus 325 basis points. The loan facility requires compliancewith certain covenants. As of December 31, 2018, the outstanding amount under this facility was $12,350.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 300basis points. In December 2017, the Company agreed to extend the last payment date to August 2021. The loan facility requires compliance withcertain financial covenants. As of December 31, 2018 the facility was refinanced and repaid in full and there was no outstanding amount.On February 14, 2018, Navios Holdings entered into a facility with Credit Agricole Corporate and Investment Bank for an amount of up to$28,745 in three advances to be drawn simultaneously for the purpose of a) to repay all amounts outstanding under the facility agreement datedSeptember 2010 and b) to repay all amounts outstanding under the facility agreement dated December 20, 2013. The loan bears interest at a rate ofLIBOR plus 280 basis points. The loan facility requires compliance with certain covenants. As of December 31, 2018, the first tranche drawn amount is$15,245 and is repayable in six semi-annual installments of $1,205 with a final balloon payment of $6,810 on the last payment date, the secondtranche drawn amount is $6,750 and is repayable in six semi-annual installments of $563 with a final balloon payment of $2,813 on the last paymentdate and the third tranche drawn amount is $6,750 and is repayable in six semi-annual installments of $563 with a final balloon payment of $2,813 onthe last payment date. As of December 31, 2018, the total outstanding amount under this facility was $26,415. The loan bears interest at a rate ofLIBOR plus 280 basis points. The loan facility requires compliance with certain financial covenants.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 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 $53,600 and $54,500, respectively. During October 2016, the Company fully prepaid the third tranche of the facility,which had an outstanding balance of $15,319, using $13,802 of cash, thus achieving a $1,517 benefit to nominal value. During May 2017, theCompany fully repaid the fourth tranche of 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, 2018, the facility is repayable in 11quarterly equal 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 plus300 basis points. The loan facility requires compliance with certain covenants. As of December 31, 2018, the outstanding amount under this facilitywas $13,005.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 tranchesbear interest at a rate of LIBOR plus 285 and 360 basis points, respectively. On June 27, 2014, Navios Holdings refinanced the existing facility, addinga new tranche for an amount of $30,000 in order to finance the acquisition of a Capesize vessel, which was delivered in June 2014. The new tranchebears interest at a rate of LIBOR plus 275 basis points. As of December 31, 2018, the first tranche is repayable in five quarterly installments of $363,with a F-42 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) final balloon payment of $14,400 on the last repayment date, the second tranche is repayable in six quarterly installments of $269, with a final balloonpayment of $6,354 on the last repayment date and the third tranche is repayable in six quarterly installments of $469, with a final balloon payment of$18,750 on the last repayment date. The loan facility requires compliance with certain financial covenants. As of December 31, 2018, the totaloutstanding amount was $45,741.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.During 2017, Navios Holdings prepaid the indebtedness originally maturing in the third quarter of 2018 and released from collateral one Panamaxvessel. In December 2017, Navios Holdings entered into a facility agreement with DVB Bank SE in order to extend the maturity of the outstandingbalance originally due by September 2018 for three years, to September 2021. As of December 31, 2018, the facility is repayable in 11 quarterlyinstallments of $730, with a final balloon payment of $7,302 payable on the last repayment date. The loan facility requires compliance with certainfinancial covenants. In December 2015, one newbuilding Panamax vessel and one newbuilding Capesize vessel were added as collateral to thisfacility. As of December 31, 2018, the outstanding amount was $15,333.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 ofLIBOR plus 255 basis points. The total amount drawn under the facility was $39,900. During August 2018, the Company completed the sale of the twovessels and fully prepaid the two tranches of the facility, which had a total outstanding balance of $31,769.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 31,2018, the facility is repayable in 16 quarterly installments of $450, with a final balloon payment of $16,600 on the last repayment date. The loanfacility requires compliance with certain financial covenants. As of December 31, 2018, the outstanding amount was $23,800.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 16 quarterly installmentsof $275 each, with a final balloon payment of $10,725 payable on the last repayment date. The loan facility requires compliance with certain financialcovenants. As of December 31, 2018, the outstanding amount was $15,125.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 suchfacilities; changing the flag, class, management or ownership of certain Navios Holdings’ vessels; changing the commercial and technical managementof certain Navios Holdings’ vessels; selling or changing the ownership of certain Navios Holdings’ vessels; and subordinating the obligations underthe credit facilities to any general and administrative costs relating to the vessels. The credit facilities also require the vessels to comply with the ISMCode and ISPS Code and to maintain valid safety management certificates and documents of compliance at all times. Additionally, the credit facilitiesrequire compliance with the covenants contained in the indentures governing the 2022 Senior Secured Notes and the 2022 Notes. Among other events,it will be an event of default under the credit facilities if the financial covenants are not complied with or if Angeliki Frangou and her affiliates,together, own less than 20% of the outstanding share 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 charter-free valuations, ranging from over 120% to 135%, (ii) minimum liquidity up to a maximum of $30,000, and (iii) net totaldebt divided by total assets, as defined in each senior secured credit facility, ranging from a maximum of 75% to 80%. Certain covenants in our seniorsecured credit facilities have been amended for a specific period to increase the covenant levels for the applicable net total debt divided by total assetsmaintenance covenants, as defined in each senior secured credit facility, to a maximum of 90%.As of December 31, 2018, the Company was in compliance with all of the covenants under each of its credit facilities. F-43 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) 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 16.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”) issued $375,000 in aggregate principal amount of its Senior Notes due on May 1, 2022 (the “2022Logistics 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”), NavieraAlto Parana S.A. (“Naviera Alto Parana”) and Terra Norte Group S.A. (“Terra Norte”), which are deemed to be immaterial, and Logistics Finance, whichis the co-issuer of the 2022 Logistics Senior Notes. The subsidiary guarantees are “full and unconditional” except that the indenture provides for anindividual subsidiary’s guarantee to be automatically released in certain customary circumstances, such as in connection with a sale or otherdisposition of all or substantially all of the assets of the subsidiary, in connection with the sale of a majority of the capital stock of the subsidiary, if thesubsidiary is designated as an “unrestricted subsidiary” in accordance with the indenture, upon liquidation or dissolution of the subsidiary or uponlegal 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 changeof control 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 the2022 Logistics 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, redemption or repurchase of capital stock or making restricted paymentsand investments, creation of certain liens, transfer or sale of assets, entering into transactions with affiliates, merging or consolidating or selling all orsubstantially 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.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 fundsto the issuer (or co-issuer) or any guarantor subsidiaries.The Logistics Co-Issuers were in compliance with the covenants as of December 31, 2018.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 inmultiple drawings upon the completion of certain milestones (“Drawdown Events”). CNSA incurs the obligation for the respective amount drawn bysigning promissory notes (“Navios Logistics Notes Payable”). Each drawdown is repayable in 16 consecutive semi-annual installments, starting sixmonths after the completion of each Drawdown Event. Together with each Note Payable, CNSA shall pay interest equal to six-month LIBOR. Theunsecured export financing line is fully and unconditionally guaranteed by Ponte Rio S.A. As of December 31, 2018, Navios Logistics had drawn thetotal available amount and the outstanding balance of Notes Payable was $26,875.Navios Logistics BBVA Loan FacilityOn December 15, 2016, Navios Logistics entered into a $25,000 facility with Banco Bilbao Vizcaya Argentaria Uruguay S.A. (“BBVA”), forgeneral corporate purposes. The loan bears interest at a rate of LIBOR (180 days) plus 325 basis points. The loan is repayable in 20 quarterlyinstallments, the first payment of which was due on June 19, 2017, and secured by assignments of certain receivables. As of December 31, 2018, theoutstanding amount of the loan was $19,300. F-44 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Navios Logistics was in compliance with the covenants set forth in the Navios Logistics BBVA Loan Facility as of December 31, 2018.Navios Logistics Alpha Bank LoanOn May 18, 2017, Navios Logistics entered 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 repayablein 20 quarterly installments with a final balloon payment of $7,000 on the last repayment date. As of December 31, 2018, the outstanding amount ofthe loan was $11,900.Navios Logistics was in compliance with the covenants set forth in the Navios Logistics Alpha Bank Loan as of December 31, 2018.Navios Logistics Credit AgreementOn August 17, 2018, Navios Logistics entered into a $7,091 (€6,200) credit agreement in order to finance the 50% of the purchase price of a riverand estuary tanker. The credit agreement bears interest at a fixed rate of 675 basis points and is repayable in 24 monthly installments with the finalrepayment in August 17, 2020. As of December 31, 2018, the outstanding amount of the credit agreement was $5,909.Navios Logistics was in compliance with the covenants set forth in the Navios Logistics Credit Agreement as of December 31, 2018.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 $100,000Term 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 yearterm with 1.0% amortization per annum. The Term Loan B Facility is fully and unconditionally guaranteed jointly and severally, by all of NaviosLogistics’ direct and indirect subsidiaries except for Horamar do Brasil, Naviera Alto Parana and Terra Norte, which are deemed to be immaterial, andLogistics Finance, which is the co-borrower of the Term Loan B Facility. The subsidiary guarantees are “full and unconditional,” except that the creditagreement governing the Term Loan B Facility provides for an individual subsidiary’s guarantee to be automatically released in certain circumstances.The Term Loan B Facility is secured by first priority mortgages on five tanker vessels servicing our cabotage business as well as by assignments of therevenues arising from certain time charter contracts, and an iron ore port contract.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, 2018, a balance of $99,000 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, 2018.Navios Logistics 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, 2018, the outstanding loan balance was$184 ($253 as of December 31, 2017). The loan facility bears interest at a fixed rate of 600 basis points. The loan is repayable in monthly installmentsof $6 each and the final repayment must occur prior to August 10, 2021.Navios Containers loansABN AMRO Bank N.V.On July 27, 2017, Navios Containers entered into a facility agreement with ABN AMRO for an amount of up to $21,000 to finance part of thepurchase price of seven containerships. This loan bears interest at a rate of LIBOR plus 400 basis points. Navios Containers has drawn the entireamount. On December 1, 2017, Navios Containers extended the facility dated July 27, 2017, for an F-45 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) additional amount of $50,000 to finance part of the purchase price of four containerships. Pursuant to the supplemental agreement dated June 29, 2018,the additional loan bears interest at a rate of LIBOR plus 400 basis points. Navios Containers had drawn the entire amount under the additional loan.On December 6, 2018, Navios Containers fully prepaid the July 27, 2017 credit facility. As of December 31, 2018, there was no outstanding amountunder this facility.On December 3, 2018, Navios Containers entered into a facility agreement with ABN AMRO BANK N.V. for an amount of up to $50,000 dividedin two tranches: (i) the first tranche is for an amount of up to $41,200 in order to refinance the outstanding debt of four containerships and to partiallyfinance the acquisition of one containership and (ii) the second tranche is for an amount of $8,800 in order to partially finance the acquisition of onecontainership. This loan bears interest at a rate of LIBOR plus 350 basis points. Navios Containers drew the entire amount under this facility, net of theloan’s discount of $500 in the fourth quarter of 2018. The facility is repayable in 16 consecutive quarterly installments, the first four in the amount of$4,000, the fifth in the amount of $3,375 and the subsequent 11 installments each in the amount of $1,650 along with a final balloon payment of$12,475 payable together with the last installment falling due in December 2022. The outstanding loan amount under this facility as of December 31,2018 was $50,000.BNP ParibasOn May 25, 2018, Navios Containers entered into a facility agreement with BNP Paribas for an amount of up to $25,000, to finance part of thepurchase price of one containership. This loan bears interest at a rate of LIBOR plus 300 basis points. As of December 31, 2018, the Company haddrawn $25,000 under this facility. As of December 31, 2018, the outstanding loan amount under this facility was $23,611 and is repayable in 18 equalconsecutive quarterly installments, each in the amount of $695 along with a final balloon payment of $11,110 payable together with the lastinstallment, falling due in May 2023.On December 20, 2017, Navios Containers entered into a facility agreement with BNP Paribas for an amount of up to $24,000 (divided in fourtranches of up to $6,000 each) to finance part of the purchase price of four containerships. This loan bears interest at a rate of LIBOR plus 300 basispoints. Navios Containers drew the entire amount under this facility. As of December 31, 2018, the outstanding loan amount of the three tranches underthis facility was $15,428 and is repayable in 16 equal consecutive quarterly installments, each in the amount of $643 along with a final balloonpayment of $5,142 payable together with the last installment, falling due on December 22, 2022. The outstanding loan amount of the fourth tranche is$5,357 and is repayable in 17 equal consecutive quarterly installments each in the amount of $214 along with a final balloon payment of $1,714payable together with the last installment due on February 28, 2023.In September 2018, Navios Containers entered into a facility agreement with BNP Paribas to extend the facility dated December 20, 2017, for anadditional amount of $9,000 to partially finance the purchase price of one containership. This loan bears interest at a rate of LIBOR plus 300 basispoints. Navios Containers drew the entire amount. As of December 31, 2018, the outstanding loan amount of the additional tranche is $8,679 and isrepayable in 19 quarterly consecutive installments of $322 each plus a balloon installment of $2,570 payable together with the last installment. Theadditional tranche matures in September 2023.HSHOn June 28, 2018, Navios Containers entered into a facility agreement with HSH Nordbank AG and Alpha Bank A.E. for an amount of up to$36,000 to finance part of the purchase price of two containerships. This loan bears interest at a rate of LIBOR plus 325 basis points. Navios Containersdrew the entire amount. The facility bears interest at a rate of LIBOR plus 325 basis points per annum. The facility is repayable in 14 consecutivequarterly installments each in an amount of $1,200 plus a final balloon payment of $15,200 payable together with the last installment falling due inJune 2022. As of December 31, 2018, the outstanding loan amount under the facility was $32,000.On November 9, 2018, Navios Containers entered into a facility agreement with HSH Nordbank AG divided into four tranches of up to $31,800each to finance part of the purchase price of up to four 10,000 TEU containerships. This loan bears interest at a rate of LIBOR plus 325 basis points andcommitment fee of 0.75% per annum on the undrawn loan amount. Each tranche of the facility is repayable in 19 consecutive quarterly installmentseach in an amount of $678 together with a final balloon payment of $18,918 payable together with the last installment falling due in July 2023. Noamount had been drawn under this facility as of December 31, 2018.Navios Containers Financial liabilityOn May 25, 2018, Navios Containers entered into a $119,000 sale and leaseback transaction with Minsheng Financial Leasing Co. Ltd in orderto refinance the outstanding balance of the existing facilities of 18 containerships. Navios Containers has a purchase obligation to acquire the vesselsat the end of the lease term and under ASC 842-40, the transfer of the vessels was F-46 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) determined to be a failed sale. In accordance with ASC 842-40, Navios Containers did not derecognize the respective vessels from its balance sheet andaccounted for the amounts received under the sale and leaseback transaction as a financial liability. From June 29, 2018 until November 9, 2018,Navios Containers completed the sale and leaseback of 14 vessels for $90,200. Navios Containers does not intend to proceed with the sale andleaseback transaction of the four remaining vessels. Navios Containers is obligated to make 60 monthly payments in respect of all 14 vessels ofapproximately $1,097 each. Navios Containers also has an obligation to purchase the vessels at the end of the fifth year for $45,100. As ofDecember 31, 2018, the outstanding balance under the sale and leaseback transaction was $87,530.As of December 31, 2018, Navios Containers was in compliance with all of the covenants under all of its credit facilities and its agreementsgoverning its financial liabilities.During the year ended December 31, 2018, the Company paid $94,298, of which $39,969 related to scheduled repayment installments for theyear 2018, $54,329 related to prepayments of indebtedness originally maturing the first quarter of 2022 and the fourth quarter of 2019.The annual weighted average interest rates of the Company’s total borrowings were 7.78%, 7.11% and 6.87% for the years ended December 31,2018, 2017 and 2016, respectively.The maturity table below reflects the principal payments for the next five years and thereafter of all borrowings of Navios Holdings (includingNavios Logistics and Navios Containers) outstanding as of December 31, 2018, based on the repayment schedules of the respective loan facilities andthe outstanding amount due under the debt securities. Year 2019 $71,424 2020 100,720 2021 180,518 2022 1,413,913 2023 74,812 2024 and thereafter 2,525 Total $1,843,912 NOTE 12: 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 the floatingrate 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 and two Navios Logistics’ loans are fixed rate borrowings and their fair value was determinedbased on quoted market prices.Loan receivable from affiliate companies: The carrying amount of the fixed rate loan approximates its fair value.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 were reflected directly in equity unless an unrealized loss wasconsidered “other-than-temporary”, in which case it was transferred to the consolidated statements of comprehensive (loss)/income. Since January 1,2018 the unrealized gains and losses on these securities are reflected in the consolidated statements of comprehensive (loss)/income.Long-term payable to affiliate companies: The carrying amount of long-term payables to affiliate companies approximates their fair value. 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 estimated fair values of the Company’s financial instruments were as follows: December 31, 2018 December 31, 2017 Book Value Fair Value Book Value Fair Value Cash and cash equivalents $137,882 $137,882 $127,632 $127,632 Restricted cash $12,892 $12,892 $6,558 $6,558 Investments in available-for-sale-securities $192 $192 $238 $238 Loan receivable from affiliate companies $46,089 $46,089 $30,112 $30,112 Senior and ship mortgage notes, net $(1,272,108) $(966,402) $(1,301,999) $(1,181,838) Long-term debt, including current portion $(543,899) $(549,078) $(380,489) $(389,332) Long-term payable to affiliate companies $(67,154) $(67,154) $(76,872) $(76,872) 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. Fair Value Measurements as of December 31, 2018 Total Quoted Prices inActive Markets forIdentical Assets(Level I) Significant OtherObservableInputs(Level II) SignificantUnobservableInputs(Level III) Investments in available-for-sale-securities $192 $192 $— $— Total $192 $192 $— $— 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, 2018 Total Quoted Prices inActive Markets forIdentical Assets(Level I) Significant OtherObservableInputs(Level II) SignificantUnobservableInputs(Level III) Vessels, port terminals and other fixed assets, net $100,250 $— $100,250 $— Investments in affiliates $29,328 $29,328 $— $— The Company recorded an impairment loss of $179,186 during the year ended December 31, 2018 for four of its vessels, thus reducing vessels’net book value to $100,250, as at December 31, 2018.The Company recorded an OTTI loss of $55,524 on its investment in Navios Partners during the year ended December 31, 2018, thus reducing itstotal carrying value to $29,328 as at December 31, 2018. F-48 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, 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 netbook value to $16,500, as at December 31, 2017.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, are as follows:Level I: Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.Valuation of these 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, 2018 Total (Level I) (Level II) (Level III) Cash and cash equivalents $137,882 $137,882 $— $— Restricted cash $12,892 $12,892 $— $— Investments in available-for-sale-securities $192 $192 $— $— Loan receivable from affiliate companies(2) $46,089 $— $46,089 $— Senior and ship mortgage notes $(966,402) $(966,402) $— $— Long-term debt, including current portion(1) $(549,078) $— $(549,078) $— Long-term payable to affiliate companies(2) $(67,154) $— $(67,154) $— 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) $— (1)The fair value of the Company’s long-term debt is estimated based on currently available debt with similar contract terms, interest rates andremaining 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 affiliate companies and long-term payable to affiliate companies is estimated based oncurrently available debt with similar contract terms, interest rate and remaining maturities as well as taking into account the counterparty’screditworthiness. F-49 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) NOTE 13: 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, 2018, 2017 and 2016, were approximately $132, $115 and $69, respectively, whichincluded a discretionary contribution of $36, $22, and $0, 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 isincluded in accrued 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 grantdate. The Company has also awarded share appreciation rights and stock options to its officers and directors only, based on service conditions, whichvest in three equal tranches over the requisite service periods of one, two and three years from the grant date. Each option expires seven years after itsgrant date. Please refer to Note 2(s).During the years ended December 31, 2018, 2017 and 2016, 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 number ofoptions exercised (adjusted to reflect the Reverse Stock Split) during each of the years ended December 31, 2014 (14,319), 2013 (15,356),2012 (2,925), 2011 (13,058) and 2010 (13,058) was small in relation to the total number of options granted. No stock options wereexercised during the years ended December 31, 2018, 2017 and 2016. Therefore, due to limited historical share option exercise experienceto provide for a reasonable basis 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 shareappreciation rights and option awards. The service conditions share appreciation rights and option awards vest over three years at 33.3%, 33.3% and33.4%, respectively, resulting in a weighted average time to vest of approximately 2 years. The contractual term of the award is 7 years. Utilizing thesimplified approach formula, the derived expected term estimate for the Company’s service conditions share appreciation rights and option award is4.5 years. • 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 under the“simplified method”. For the service conditions share appreciation rights and option awards, the 4.5 year yield-to-maturity rate as of thegrant date was 1.81% and 1.46% for 2016 and 2015, respectively. F-50 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) 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,restricted stock and restricted stock units grant is $0 for 2018, 2017 and 2016.The weighted average grant date fair value of restricted stock granted during the year ended December 31, 2018 was $3.0.The weighted average grant date fair value of restricted units and restricted stock granted during the year ended December 31, 2017 was $12.7and $12.7, respectively.The weighted average grant date fair value of stock options and restricted stock granted during the year ended December 31, 2016 was $7.8 and$12.0, respectively.The effect of compensation expense arising from the stock-based arrangements described above amounted to $4,556, $4,296 and $3,446 for theyears ended December 31, 2018, 2017 and 2016, respectively and it was reflected in general and administrative expenses on the consolidatedstatements of comprehensive (loss)/income. The recognized compensation expense for the year is presented as an adjustment to reconcile net income tonet cash provided by operating activities on the consolidated statements of cash flows.The summary of stock-based awards is summarized as follows (in thousands except share and per share data which have been adjusted to reflectthe Reverse Stock Split): Shares Weightedaverageexerciseprice Weightedaverageremainingterm Aggregatefair value Options Outstanding as of December 31, 2015 664,477 $40.9 4.23 $8,769 Vested at December 31, 2015 73,059 — — — Exercisable at December 31, 2015 73,059 — — — Forfeited or expired (34,852) — — (902) Granted 250,000 12.0 — 1,937 Outstanding as of December 31, 2016 879,625 $32.0 4.41 $9,804 Vested at December 31, 2016 121,082 — — — Exercisable at December 31, 2016 121,082 — — — Forfeited or expired (89,167) — — (2,265) Granted — — — — Outstanding as of December 31, 2017 790,458 $29.8 3.80 $7,539 Vested at December 31, 2017 136,011 — — — Exercisable at December 31, 2017 136,011 — — — Forfeited or expired (128,481) — — (1,843) Granted — — — — Outstanding as of December 31, 2018 661,977 $28.2 3.36 $5,696 Restricted stock and restricted stock units Non Vested as of December 31, 2015 372,096 $— 2.45 $8,186 Granted 254,000 — — 3,048 Vested (175,502) — — (5,122) Forfeited or expired (341) — — (12) Non Vested as of December 31, 2016 450,253 $— 2.55 $6,100 Granted 435,398 — — 5,530 Vested (183,920) — — (2,571) Forfeited or expired — — — — Non Vested as of December 31, 2017 701,731 $— 3.09 $9,059 Granted 287,500 — — 863 Vested (279,071) — — (3,425) Forfeited or expired (450) — — (7) Non Vested as of December 31, 2018 709,710 $— 3.11 $6,490 F-51 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) 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 $205 and $4,150, respectively, as of December 31, 2018 and isexpected to be recognized over the weighted average period of 3.13 years.NOTE 14: COMMITMENTS AND CONTINGENCIESAs of December 31, 2018, the Company was contingently liable for letters of guarantee and letters of credit amounting to $1,577 (December 31,2017: $590) issued by various banks in favor of various organizations and the total amount was collateralized by cash deposits, which were includedas a component of restricted cash.In December 2017, the Company agreed to charter-in, under a ten year bareboat contract, from an unrelated third party the Navios Galaxy II, anewbuilding bulk carrier vessel of about 81,600 dwt, expected to be delivered in the first quarter of 2020. The Company has agreed to pay in total$5,410 representing a deposit for the option to acquire the vessel, of which $2,705 was paid during the year ended December 31, 2017 and theremaining $2,705 was paid during April 2019. As of December 31, 2018, the total amount of $2,953, including expenses and interest, is presentedunder the caption “Other long-term assets”.In January 2018, Navios Holdings agreed to charter-in, under two ten-year bareboat contracts, from an unrelated third party the Navios Herakles Iand the Navios Uranus, two newbuilding bulk carriers of about 81,000 dwt and 81,600 dwt, respectively, expected to be delivered in the third andfourth quarter of 2019, respectively. Navios Holdings has agreed to pay in total $11,140, representing a deposit for the option to acquire these vessels,of which $8,340 was paid during the period ended December 31, 2018 and the remaining $2,800 was paid during January 2019. As of December 31,2018, the total amount of $8,969, including expenses and interest, is presented under the caption “Other long-term assets”.In April 2018, Navios Holdings agreed to charter-in, under one ten-year bareboat contract, from an unrelated third party the Navios Felicity I, anewbuilding bulk carrier of about 81,000 dwt, expected to be delivered in the fourth quarter of 2019. Navios Holdings has agreed to pay in total$5,590, representing a deposit for the option to acquire this vessel, of which $2,795 was paid during the period ended December 31, 2018 and theremaining $2,795 was paid during February 2019. As of December 31, 2018, the total amount of $3,004, including expenses and interest, is presentedunder the caption “Other long-term assets”.Navios Holdings agreed to charter-in, under one ten-year bareboat contract, from an unrelated third party the Navios Magellan II, a newbuildingbulk carrier of about 81,000 dwt, expected to be delivered in the second quarter of 2020. Navios Holdings has agreed to pay in total $5,820,representing a deposit for the option to acquire this vessel, of which $2,910 was paid upon signing of the contract in October 2018. As of December 31,2018, the total amount of $3,033, including expenses and interest, 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, 2020.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 theamounts can be reasonably estimated, based upon facts known on the date the financial statements were prepared. Although the Company cannotpredict with certainty the ultimate resolutions of these matters, in the opinion of management, the ultimate disposition of these matters is not expectedto have a material adverse effect on the Company’s financial position, results of operations or liquidity.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 aletter of credit amounting to $2,900 and the total amount was collateralized by a cash deposit, which was presented as restricted cash in theaccompanying balance sheets as of December 31, 2016. On February 10, 2017, the arbitration tribunal ruled in favor of Navios Logistics. Vale has beenordered to pay Navios Logistics $21,500, compensating for all unpaid invoices, late payment of invoices, and legal fees incurred. An amount of $1,157was recorded in the consolidated statements of comprehensive (loss)/income under “Other income” as part of this compensation. The full amount hadbeen received in March 2017, and the collateralized cash amount of $2,900, was released.On August 16, 2018, there was a fire incident at the iron ore port terminal in Nueva Palmira, Uruguay, for which Navios Logistics maintainsproperty and loss of earnings insurance coverage for such types of events (subject to applicable deductibles and other customary limitations). As ofDecember 31, 2018, an insurance claim receivable of $11,571 was recorded in the Navios Logistics’ prepaid expenses and other current assets, of which$9,197 was recorded in the consolidated statements of comprehensive (loss)/income under “Other income”. F-52 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) The Company, in the normal course of business, entered into contracts to time charter-in vessels for various periods through 2030.NOTE 15: LEASESChartered-in vessels, barges, pushboats and office space:As of December 31, 2018, 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 2019 $114,668 $5,165 $2,652 2020 100,829 14,261 1,961 2021 72,826 15,391 1,590 2022 47,695 15,119 1,750 2023 38,986 14,298 1,655 2024 and thereafter 42,685 58,389 7,346 Total $417,689 $122,623 $16,954 Charter hire expense for Navios Holdings chartered-in vessels amounted to $142,968, $122,668 and $84,114, for each of the years endedDecember 31, 2018, 2017 and 2016, respectively. Charter hire expense for logistics business chartered-in vessels amounted to $114, $1,564 and$1,521, for each of the years ended December 31, 2018, 2017 and 2016, respectively. (See also Note 2 (af)).Rent expense for office space amounted to $2,876, $2,648, and $2,748 for each of the years ended December 31, 2018, 2017 and 2016,respectively. The Company leases office space at 599 Lexington Avenue, New York, New York, pursuant to a lease that expires in November 2029. TheCompany also leases office space at 85 Akti Miaouli, Piraeus, Greece, pursuant to one lease agreement that continues to be effective until either partyterminates the agreement and other lease agreements that expire through 2030. The Company also leases office space in Monaco pursuant to a leasethat expires in June 2023. The Company also leases office space in Antwerp, Belgium pursuant to a lease that expires in June 2019. (See also Note 2(af)).Navios Logistics’ subsidiaries lease various premises in Argentina and Paraguay that expire on various dates through 2023. The above tableincorporates the lease commitments on all offices as disclosed above.Navios Containers leases office space in Monaco pursuant to a lease that expires in June 2023.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; (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; and (iii) for the Company’s Containers business, expected to be earned on non-cancelabletime charters, are as follows: Dry bulkvessels Logisticsbusiness Containersbusiness 2019 $45,189 $142,508 $77,359 2020 3,728 98,515 23,050 2021 — 76,825 9,847 2022 — 69,867 2,484 2023 — 58,724 — 2024 and thereafter — 669,615 — Total minimum revenue, net of commissions $48,917 $1,116,054 $112,740 F-53 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Revenues from time charters are not generally received when a vessel is off-hire, which includes time required for scheduled maintenance of thevessel.NOTE 16: 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 byAngeliki Frangou, Navios Holdings’ Chairman and Chief Executive Officer. The lease agreements provide for the leasing of facilities located inPiraeus, Greece to house the operations of most of the Company’s subsidiaries. The total annual lease payments are in aggregate €939 (approximately$1,109) pursuant to one lease agreement that continues to be effective until either party terminates the agreement and other lease agreements thatexpire through 2030. These payments are subject to annual adjustments, which are based on the inflation rate prevailing in Greece as reported by theGreek State at the end of each year.Purchase of Services: The Company utilized its former affiliate company, Acropolis, as a broker until the sale of its investment on December 6,2018. Commissions charged from Acropolis for each of the years ended December 31, 2018, 2017 and 2016 were $0 for all periods. Included in thetrade accounts payable at both December 31, 2018 and 2017 was an amount due to Acropolis of $76 for both periods.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 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 totwelve months, 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 onactual 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 $11.5.Total charter hire expense for all vessels for the years ended December 31, 2018, 2017 and 2016 was $0, $651 and $1,711, respectively, and wasincluded 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 February 2016, the Companyamended its existing management agreement to fix the fees for ship management services of its owned fleet at: (i) $4.1 daily rate per Ultra-Handymaxvessel; (ii) $4.2 daily rate per Panamax vessel; (iii) $5.25 daily rate per Capesize vessel; (iv) $6.7 daily rate per container vessel of TEU 6,800; (v) $7.4daily rate per container vessel of more than TEU 8,000; and (vi) $8.75 daily rate per very large container vessel of more than TEU 13,000 throughDecember 31, 2017. In November 2017, the Company further amended its existing management agreement to fix the fees for ship management servicesof its owned fleet at: (i) $4.2 daily rate per Ultra-Handymax vessel; (ii) $4.3 daily rate per Panamax 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 of more than TEU 8,000; and (vi) $8.75 daily rate per verylarge container vessel of more than TEU 13,000 through December 31, 2019. Drydocking expenses will be reimbursed by Navios Partners at cost atoccurrence.Total management fees for the years ended December 31, 2018, 2017 and 2016 amounted to $68,871, $62,157 and $59,209, respectively, and arepresented net under the caption “Direct vessel expenses”.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 twoadditional years through May 2016 at $6.0 per owned MR2 product tanker and chemical tanker vessel, $7.0 per owned LR1 product tanker vessel andreduced the daily rate to $9.5 per VLCC vessel. In May 2016, Navios Holdings amended its agreement with Navios Acquisition to fix the fees for shipmanagement services of Navios Acquisition owned fleet at a daily fee of (i) $6.35 per MR2 product tanker and chemical tanker vessel; (ii) $7.15 F-54 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) per LR1 product tanker vessel; and (iii) $9.5 per VLCC through May 2018. In May 2018, Navios Holdings amended its agreement with NaviosAcquisition to fix the fees for ship management services of Navios Acquisition owned fleet at a daily fee of (i) $6.5 per MR2 product tanker andchemical tanker vessel; (ii) $7.15 per LR1 product tanker vessel; and (iii) $9.5 per VLCC through May 2020. Drydocking expenses under thisagreement will be reimbursed at cost at occurrence for all vessels.Following the merger of Navios Midstream with Navios Acquisition completed on December 13, 2018, the management agreement also coversvessels acquired.Total management fees for the years ended December 31, 2018, 2017 and 2016 amounted to $92,993, $94,973 and $97,866, respectively, and arepresented 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, 2018, 2017 and 2016 amounted to $22,377, $21,472 and$20,855, 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. Total management fees for the years endedDecember 31, 2018, 2017 and 2016 amounted to $20,739, $20,805 and $20,862, respectively, and are presented net under the caption “Direct vesselexpenses”. From November 30, 2018 (date of obtaining control) until December 31, 2018, Navios Containers’ management fees amounted to $5,281and have been eliminated upon consolidation.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 bereimbursed at cost at occurrence. Total management fees for the years ended December 31, 2018, 2017 and 2016 amounted to $22,186, $22,055 and$23,527, 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, in April 2018 and in June 2018, Navios Holdings,provides commercial and technical management services to Navios Containers’ vessels. The term of this agreement is for an initial period of five yearswith an automatic extension period of five years thereafter unless a notice for termination is received by either party. The fee for the ship managementservices provided by Navios Holdings is a daily fee of $6.1 per day for up to 5,500 TEU container vessels, $6.7 per day for above 5,500 TEU and up to8,000 TEU container vessels and $7.4 per day for above 8,000 TEU and up to 10,000 TEU container vessels. Drydocking expenses under thisagreement are reimbursed by Navios Containers at cost. Total management fees for the period ended November 30, 2018 (date of obtaining control)and December 31, 2017 amounted to $48,490 and $16,702, respectively 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 hadpreviously been covered by the charter insurance for the same vessels, same periods and same amounts. The Navios Partners Guarantee provides for amaximum possible payout of $20,000 by the Company to Navios Partners. Premiums that are calculated on the same basis as the restructured charterinsurance are included in the management fee that is paid by Navios Partners to Navios Holdings pursuant to the management agreement. As ofDecember 31, 2018, Navios Partners has submitted one claim under this agreement to the Company. As at December 31, 2018 and December 31, 2017,the fair value of the claim was estimated at $18,001 and $20,000, respectively and was included in “Due to affiliate companies” and “Other long-termliabilities and deferred income”, respectively in the consolidated balance sheet. As of December 31, 2018, the amount of $1,999 was included in“Other income” within the consolidated statements of comprehensive (loss)/income. The final settlement of the amount due will take place at anytimebut in no case later than December 31, 2019, in accordance with a letter of agreement effective as of December 29, 2017.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 provisionof these 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, 2018, 2017 and 2016 amounted to $9,344,$8,347 and $7,751, respectively. F-55 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) 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 andexpenses incurred in connection with the provision of these services. Total general and administrative fees for the years ended December 31, 2018,2017 and 2016 amounted to $8,810, $9,000 and $9,427, respectively.Following the merger of Navios Midstream with Navios Acquisition completed on December 13, 2018, the administrative services agreementalso covers vessels acquired.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 forreasonable costs and expenses incurred in connection with the provision of these services. Total general and administrative fees for the years endedDecember 31, 2018, 2017 and 2016 amounted to $1,000 for all periods. 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, 2018, 2017 and2016 amounted to $1,330, $1,187 and $1,300, 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 inconnection with the provision of these services. Total general and administrative fees for the years ended December 31, 2018, 2017 and 2016amounted to $1,494, $1,500 and $1,500, 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 expensesincurred in connection with the provision of these services. Total general and administrative fees charged for the year ended December 31, 2018, 2017and 2016, amounted to $2,041, $1,766 and $1,820, 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 thisagreement is for an initial period of five years with an automatic extension for a period of five years thereafter unless a notice of termination is receivedby either party. Total general and administrative fees attributable to this agreement for the period ended November 30, 2018 (date of obtaining control)and December 31, 2017, amounted to $5,373 and $1,868, respectively.Balance due from/to affiliates (excluding Navios Europe I and Navios Europe II): Balance due to Navios Partners as of December 31, 2018amounted to $34,765 (December 31, 2017: $8,315), and the Long-term payable to Navios Partners amounted to $17,891 (December 31, 2017:$14,891). Balance due from Navios Acquisition as of December 31, 2018 amounted to $11,941 (December 31, 2017: $2,800 due to NaviosAcquisition), and the Long-term payable to Navios Acquisition amounted to $11,282 (December 31, 2017: $15,236). Balance due to NaviosMidstream as of December 31, 2018 amounted to $1,828 (December 31, 2017: $990), and the Long-term payable to Navios Midstream amounted to$2,565 (December 31, 2017: $4,554). Balance due to Navios Containers as of December 31, 2017 amounted to $3,334, and the Long-term payable toNavios Containers amounted to $7,965. The balances mainly consisted of management fees, administrative fees, drydocking, ballast water treatmentsystem and other expenses prepaid by the affiliates according to our management 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 againsteach other as well as rights of first offer on certain dry bulk carriers. Pursuant to the Partners Omnibus Agreement, Navios Partners generally agreed notto acquire or own Panamax or Capesize dry bulk carriers under time charters of three or more years without the consent of an independent committee ofNavios Partners. In addition, Navios Holdings has agreed to offer to Navios Partners the opportunity to purchase vessels from Navios Holdings whensuch vessels are fixed under time charters of three or more years. F-56 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) 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 NaviosPartners agreed not to acquire, charter-in or own liquid shipment vessels, except for container vessels and vessels that are primarily employed inoperations in South America, without the consent of an independent committee of Navios Acquisition. In addition, Navios Acquisition, under theAcquisition Omnibus Agreement, agreed to cause its subsidiaries not to acquire, own, operate or charter dry bulk carriers subject to specific exceptions.Under the Acquisition Omnibus Agreement, Navios Acquisition and its subsidiaries granted to Navios Holdings and Navios Partners, a right of firstoffer 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 and Navios Partners agreed to grant a similar right of first offer to Navios Acquisition for any liquid shipment vessels itmight own. These rights of first offer will not apply to a (i) sale, transfer or other disposition of vessels between any affiliated subsidiaries, or pursuantto the terms of any charter or other agreement with a counterparty, or (ii) merger with or into, or sale of substantially all of the assets to, an unaffiliatedthird 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 agreednot to acquire or own any VLCCs, crude oil tankers, refined petroleum product tankers, LPG tankers or chemical tankers under time charters of five ormore years without 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 Midstream and Navios Partners,pursuant to which Navios Acquisition, Navios Holdings and Navios Partners and their controlled affiliates generally have granted a right of first refusalto Navios Containers over any container vessels to be sold or acquired in the future, subject to significant exceptions that would allow NaviosAcquisition, Navios Holdings and Navios Partners 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 Navios Maritime Midstream Partners GP LLC (“Midstream General Partner”), granted Navios Holdingsthe option to acquire a minimum of 25% of the outstanding membership interests in Midstream General Partner and the incentive distribution rights inNavios Midstream representing the right to receive an increasing percentage of the quarterly distributions when certain conditions are met. The optionshall expire on November 18, 2024. The purchase price for the acquisition for all or part of the option interest shall be an amount equal to its fairmarket value. As of December 31, 2018, 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 ofits own ownership interest in Navios Partners (the “deferred gain”). Subsequently, the deferred gain is amortized to income over the remaining usefullife of the vessel. The recognition of the deferred gain is accelerated in the event that (i) the vessel is subsequently sold or otherwise disposed of byNavios Partners or (ii) the Company’s ownership interest in Navios Partners is reduced. In connection with the public offerings of common units byNavios Partners, a pro rata portion of the deferred gain is released to income upon dilution of the Company’s ownership interest in Navios Partners. Asof December 31, 2018 and 2017, the unamortized deferred gain for all vessels and rights sold totaled $8,126 and $9,955, respectively. For the yearsended December 31, 2018, 2017 and 2016, Navios Holdings recognized $1,828, $1,892 and $1,833 of the deferred gain, respectively, in “Equity in net(losses)/earnings of affiliated companies”.Participation in Offerings of Affiliates: Refer to Note 9 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 Holdingsmade an investment in Navios Partners by purchasing common units, and general partnership interests, in order to maintain its 20.0% partnershipinterest in Navios Partners following its equity offering in February 2015. In connection with this agreement, Navios Holdings entered into aregistration rights agreement with Navios Partners pursuant to which Navios Partners provided Navios Holdings with certain rights relating to theregistration of the common units. Navios Holdings has entered into additional share purchase agreements on December 30, 2016, March 3, 2017,March 23, 2017, March 31, 2017, January 11, 2018, February 21, 2018 and December 20, 2018 for the purchase up to a total of 1,747,206 generalpartnership 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 inNavios Logistics, representing a majority of the shares outstanding of Navios Logistics. This facility was provided for an arrangement fee of $700. OnNovember 3, 2017, Navios Holdings prepaid in full the outstanding amount under this credit facility with Navios Acquisition and all collateral wasreleased. F-57 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) 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, 2018 and2017, there was no outstanding amount under this facility. In April 2016, Navios Partners has drawn $21,000 from the Navios Partners Credit Facility,which was fully repaid during April 2016.Balance due from Navios Europe I: Balance due from Navios Europe I as of December 31, 2018 amounted to $12,013 (December 31, 2017:$7,176) which included the net current amount receivable of $7,769 (December 31, 2017: $4,002) mainly consisting of management fees, drydocking,ballast water treatment system and other expenses, accrued interest income earned under the Navios Revolving Loans I (as defined in Note 9) and otherexpenses and the non-current amount of $4,244 (December 31, 2017: $3,174) related to the accrued interest income earned under the Navios TermLoans I (as defined in Note 9).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 endof each quarter. There are no covenant requirements or stated maturity dates.As of December 31, 2018 and 2017, the outstanding amount relating to Navios Holdings’ portion under the Navios Revolving Loans I was$19,125 and $11,125, respectively, under the caption “Loan receivable from affiliate companies”. During 2018, Navios Holdings funded with $8,000Navios Europe I under the Navios Revolving Loans I. As of December 31, 2018, the amount undrawn under the Revolving Loans I was $12,000, ofwhich Navios Holdings may be required to fund an amount ranging from $0 to $12,000.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 $4,050in cash and 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 theclosing of the transaction). The Company evaluated this transaction in accordance with ASC 860, classifying it as a secured borrowing arrangement. Atthe date of this transaction, the Company recognized a long-term liability of $33,473, including a premium of $12,089 which will be amortizedthrough “Interest income” over the term of the loans until 2023, and is included within “Long-term payable to affiliate companies”. Navios Holdingsmay be required from Navios Partners, under certain conditions, to repurchase the loans after the third anniversary of the date of the transaction basedon the then-outstanding balance of the loans. See also Note 9. As of December 31, 2018 and 2017, the balance payable to Navios Partners amounted to$35,417 and $34,227, respectively, including the unamortized premium of $8,359 and $10,390, respectively.Balance due from Navios Europe II: Balance due from Navios Europe II as of December 31, 2018, amounted to $5,312 (December 31, 2017:$2,440), which included the net current payable amount of $470 (December 31, 2017: $1,310), mainly consisting of management fees, drydocking,ballast water treatment system and other expenses and accrued interest income earned under the Navios Revolving Loans II (as defined in Note 9) andother expenses and the non-current receivable amount of $5,782 (December 31, 2017: $3,750) related to the accrued interest income earned under theNavios Term Loans II (as defined in Note 9).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 endof each quarter. There are no covenant requirements or stated maturity dates.As of December 31, 2018, the outstanding amount relating to Navios Holdings’ portion under the Navios Revolving Loans II was $16,938(December 31, 2017: $12,063), under the caption “Loan receivable from affiliate companies.” During 2018, Navios Holdings funded with $4,875Navios Europe II under the Navios Revolving Loans II. As of December 31, 2018, the amount undrawn from the Navios Revolving Loans II was$4,503, of which Navios Holdings may be required to fund an amount ranging from $0 to $4,503.NOTE 17: PREFERRED AND COMMON STOCKAll issued and outstanding shares of common stock, conversion terms of preferred stock, options to purchase common stock and per shareamounts contained in the consolidated financial statements, have been retroactively adjusted to reflect the Reverse Stock Split for all periodspresented. F-58 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Vested, Surrendered and ForfeitedDuring 2018, 85,000 and 825 restricted stock units, issued to the Company’s employees in 2016 and 2017, vested.During 2017, 84,333 restricted stock units, issued to the Company’s employees in 2016, vested.During 2016, 2,497 restricted stock units, issued to the Company’s employees in 2014 and 2013, vested.During the year ended December 31, 2018, 2017 and 2016, 656, 423 and 291 restricted shares of common stock, respectively, were forfeitedupon termination of employment.Conversion of Preferred StockDuring the year ended December 31, 2018, there were no conversions of preferred stock.During the year ended December 31, 2017, 2,436 shares of convertible preferred stock were converted into 174,000 shares of common stock. Theshares 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 bydividing the amount of the liquidation preference ($10,000 per share) by a conversion price equal to $14.00 per share of common stock. Following thisconversion, the Company cancelled the undeclared preferred dividend of the converted shares of $702, and issued 5,015 shares of common stock witha fair value of $84 at the date of issuance (See also Note 20).During the year ended December 31, 2016, there were no conversions of preferred stock.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 ata rate of 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 OfferOn 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 orSeries H. 360 Series G and 406 Series H shares were validly tendered, representing an aggregate nominal value of approximately $1,843. NaviosHoldings paid for tender offer expenses $571, and issued a total of 62,582 shares of common stock with a fair value of $1,127. Following thecompletion of the offer, the Company cancelled the undeclared preferred dividend of Series G and Series H of $270 (See also Note 20).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 issueda total of 758,918 shares of common stock, with a fair value of $7,893 at the date of the issuance.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, 2018 were $29,934 (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%. F-59 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) Issuances to Employees, Officers and DirectorsOn December 10, 2018, pursuant to the stock plan approved by the Board of Directors, 287,500 common stock was granted to Navios Holdingsemployees, officers and directors and issued on December 27, 2018.On December 11, 2017, pursuant to the stock plan approved by the Board of Directors, 432,098 common stock was granted to Navios Holdingsemployees, officers and directors and issued on January 16, 2018.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 restrictionsunder the terms of the Company’s credit facilities and indenture. The program did not require any minimum purchase or any specific number or amountof shares and may be suspended or reinstated at any time in the Company’s discretion and without notice. In particular, Navios Holdings, pursuant tothe terms of its Series G and Series H, may not redeem, repurchase or otherwise acquire its common stock or preferred shares, including the Series G andSeries H (other than through an offer made to all holders of Series G and Series H) unless full cumulative dividends on Series G and Series H, whenpayable, have been paid. As of December 31, 2016, 94,858 shares, were repurchased under this program, for a total consideration of $818. In total, upuntil February 2016, 114,791 shares were repurchased under this program, for a total consideration of $1,070. Since that time, this program has beensuspended by the Company.Navios Holdings had outstanding as of December 31, 2018 and 2017, 12,843,414 and 12,038,647 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) for both periods.NOTE 18: INTEREST EXPENSE AND FINANCE COSTInterest expense and finance cost consisted of the following: For the YearEndedDecember 31,2018 For the YearEndedDecember 31,2017 For the YearEndedDecember 31,2016 Interest expense $131,131 $115,099 $107,787 Amortization and write-off of deferred financing costs 7,880 6,391 5,653 Other 109 121 199 Interest expense and finance cost $139,120 $121,611 $113,639 NOTE 19: SEGMENT INFORMATIONThe Company currently has three reportable segments from which it derives its revenues: Dry Bulk Vessel Operations, Logistics Business andContainers Business. The Containers Business is a new reportable segment for the year ended December 31, 2018 as a result of the consolidation ofNavios Containers since November 30, 2018 (date of obtaining control) (see also Note 3). The reportable segments reflect the internal organization ofthe Company and are strategic businesses that offer different products and services. The Dry Bulk Vessel Operations consists of the transportation andhandling of bulk cargoes through the ownership, operation, and trading of vessels. The Logistics Business consists of operating ports and transferstation terminals, handling of vessels, barges and pushboats as well as upriver transport facilities in the 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 informationconcerning each of the Company’s reportable segments is as follows: F-60 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 31,2018 Logistics Businessfor theYear EndedDecember 31,2018 Containers Businessfor theYear EndedDecember 31,2018 Totalfor theYear EndedDecember 31,2018 Revenue $298,052 $207,634 $12,053 $517,739 Administrative fee revenue from affiliates 28,972 — (579) 28,393 Interest income 8,231 517 — 8,748 Interest expense and finance cost (98,247) (39,669) (1,204) (139,120) Depreciation and amortization (70,472) (29,307) (3,060) (102,839) Equity/ (Loss) in net earnings of affiliatedcompanies (80,205) — — (80,205) Net (loss)/ income attributable to NaviosHoldings common stockholders (273,125) 4,380 27 (268,718) Total assets 1,558,581 677,343 446,572 2,682,496 Goodwill 56,240 104,096 — 160,336 Capital expenditures (25,769) (19,879) (24,763) (70,411) Investment in affiliates 91,111 — — 91,111 Cash and cash equivalents 44,452 76,472 16,958 137,882 Restricted cash 10,958 — 1,934 12,892 Long-term debt, net (including current andnoncurrent portion) $1,063,762 $530,186 $222,059 $1,816,007 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 noncurrentportion) $1,149,742 $532,746 $1,682,488 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 noncurrentportion) $1,223,146 $427,949 $1,651,095 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 December 31, 2018, Navios Containers’ negative working capital position amounted to $22,974.The following table sets out the Company’s revenue by geographic region. Dry Bulk Vessel Operations (excluding administrative fee revenuefrom affiliates), Logistics Business and Containers Business revenue are allocated on the basis of the geographic region in which the customer islocated. Dry bulk vessels and container vessels operate worldwide. Logistics Business operates different types of tanker vessels, pushboats, and wet anddry barges for delivering a wide range of products between ports in the Paraná, Paraguay and Uruguay River systems in South America (commonlyknown as the “Hidrovia” or the “waterway”).Revenues from specific geographic regions which contribute over 10% of revenue are disclosed separately.Revenue by Geographic Region Year endedDecember 31,2018 Year endedDecember 31,2017 Year endedDecember 31,2016 North America $4,248 $5,513 $6,218 Europe 142,688 124,857 109,267 Asia 135,614 91,552 73,073 South America 208,751 212,616 220,336 Other 26,438 28,511 10,888 Total $517,739 $463,049 $419,782 Vessels operate on a worldwide basis and are not restricted to specific locations. Accordingly, it is not possible to allocate the assets of theseoperations to specific countries. The total net book value of long-lived assets for dry bulk vessels amounted to $933,784 and $1,278,447 atDecember 31, 2018 and 2017, respectively. For the Logistics Business, all long-lived assets are located in South America. The total net book value oflong-lived assets for the Logistics Business amounted to $556,713 and $563,887 at December 31, 2018 and 2017, respectively. The total net bookvalue of long-lived assets for the Containers Business amounted to $399,979.NOTE 20: LOSS PER COMMON SHARELoss per share is calculated by dividing net loss attributable to Navios Holdings common stockholders by the weighted average number of sharesof Navios Holdings outstanding during the periods presented. Net (loss)/income attributable to Navios Holdings common stockholders is calculated byadding to (if a discount) or deducting from (if a premium) net (loss)/ income attributable to Navios Holdings common stockholders the differencebetween the fair value of the consideration paid upon redemption and the carrying value of the preferred stock, including the unamortized issuancecosts of the preferred stock, and the amount of any undeclared dividend cancelled.On December 21, 2018 the Company’s common stockholders approved a one-for-ten reverse stock split of the Company’s outstanding shares ofcommon stock. Following the effectiveness of the reverse stock split, as of January 3, 2019, any historical per share information has been adjustedreflect the Reverse Stock Split.For the year ended December 31, 2018, 664,709 potential common shares and 349,900 potential shares of convertible preferred stock have ananti-dilutive effect (i.e. those that increase income per share or decrease loss per share) and are therefore excluded from the calculation of diluted netloss per share.For the year ended December 31, 2017, 503,316 potential common shares and 456,684 potential shares of convertible preferred stock have ananti-dilutive effect (i.e. those that increase income per share or decrease loss per share) and are therefore excluded from the calculation of diluted netloss per share. F-62 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) For the year ended December 31, 2016, 341,127 potential common shares and 593,500 potential shares of convertible preferred stock have ananti-dilutive effect (i.e. those that increase income per share or decrease loss per share) and are therefore excluded from the calculation of diluted netloss per share. Year endedDecember 31,2018 Year endedDecember 31,2017 Year endedDecember 31,2016 Numerator: Net loss attributable to Navios Holdings common stockholders $(268,718) $(165,910) $(303,823) Less: Declared and undeclared dividend on preferred stock and onunvested restricted shares (10,241) (10,421) (15,909) Plus: 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 attributable to Navios Holdings common stockholders,basic and diluted $(278,959) $(175,298) $(273,105) Denominator: Denominator for basic and diluted net loss per share attributableto Navios Holdings common stockholders — adjustedweighted shares 11,958,959 11,667,346 10,736,678 Basic and diluted net loss per share attributable to NaviosHoldings stockholders $(23.33) $(15.02) $(25.44) NOTE 21: 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 toregistration and 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. The samelaw (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 arecalculated on the basis of the relevant vessel’s tonnage. In case that tonnage tax and/or similar taxes/duties are paid by the shipowning companies tothe vessel’s flag state, these are deducted from the amount of the duty to be paid in Greece by the ship owner. The payment of said duties exhausts thetax liability of the foreign ship owning company against any tax, duty, charge or contribution payable on income from the exploitation of the foreignflagged 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”).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 F-63 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) regulations thereunder. Among other things, in order to qualify for this exemption, each relevant company must be incorporated in a country outsidethe United States which grants an “equivalent exemption” from income taxes to U.S. corporations. In addition, either (i) the stock of each relevantcompany must be treated under Section 883 of the Code and the U.S. Treasury regulations thereunder as “primarily traded” and “regularly traded” onan “established securities market” in the United States or in another country that grants an “equivalent exemption” or (ii) more than 50% of the valueof the stock of each relevant company must be owned, directly or indirectly, by (a) individuals who are residents in countries that grant an “equivalentexemption,” (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 Companybelieves that the Company and each of its relevant subsidiaries qualifies for the tax exemption under Section 883 of the Code, provided that theCompany’s common stock continues to be listed on the NYSE and represents more than 50% of the total combined voting power of all classes of theCompany’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 is owned, actuallyor constructively under specified stock attribution rules, on more than half the number of days in the relevant year by persons who each own 5% ormore 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, 2018, 2017and 2016 is mainly attributable to Navios Holdings’ subsidiaries in South America, which are subject to the Argentinean, Brazilian and Paraguayanincome tax regime.CNSA and Corporacion Navios Granos S.A. are located in a tax free zone and are not liable to income tax. Navios Logistics’ operations inUruguay are exempted from income taxes.As a result of the tax reforms voted by the Argentinean Parliament in December 2017, the corporate income tax rate has decreased from 35% in2017 to 30% for the years 2018 and 2019 and will further decrease to 25% from 2020 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, until the fiscal year 2018 inclusive, local companies in Argentinahad to calculate an assets tax, the Minimum Presumed Income Tax, applying the effective tax rate of 1% over the gross value of the corporate assets(based on tax law criteria). Following the tax reform voted by the Argentinean Parliament in December 2017 and the subsequent resolution in-forcesince May 2018, this tax will no longer apply as of the fiscal year 2019.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 3.0% for the year ended December 31,2018 (5.0% for both 2017 and 2016, respectively). As a result of the tax reform voted by the Argentinean Parliament in December 2017, this rate willbe reduced as of January 2019, from 3.0% to 2.0%.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 fiscalprofit and loss. 50% of revenues derived from international freights are considered Paraguayan sourced (and therefore taxed) if carried betweenParaguay and Argentina, Bolivia, Brazil or Uruguay. Alternatively, only 30% of revenues derived from international freights are consideredParaguayan sourced. Companies whose operations are considered international freights can choose to pay income taxes on their revenues at aneffective tax rate of 1% on such revenues, without considering any other kind of adjustments. Fiscal losses, if any, are neither deducted nor carriedforward.The corporate income tax rate in Brazil and Paraguay is 34% and 10%, respectively, for the year ended December 31, 2018.The Company’s deferred taxes as of December 31, 2018 and 2017, relate primarily to deferred tax liabilities on acquired intangible assetsrecognized in connection with Navios Logistics.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 changein judgment related to the expected ultimate resolution of uncertain tax positions be recognized in earnings in the quarter of such change. Kleimar’sopen tax years are 2015 and onwards. Argentinean companies have open tax years ranging from 2011 and onwards and Paraguayan and Braziliancompanies have open tax years ranging from 2013 and onwards. In relation to these open tax years, the Company believes that there are no materialuncertain tax positions. F-64 Table of ContentsNAVIOS MARITIME HOLDINGS INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. dollars — except share data) NOTE 22: OTHER INCOME — OTHER EXPENSEDuring the years ended December 31, 2018, 2017 and 2016, taxes other-than-income taxes of Navios Logistics amounted to $7,056, $9,018, and$9,740, 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 23: SUBSEQUENT EVENTS a)On April 25, 2019, Navios Holdings entered into a secured credit facility of $50,000 with Navios Logistics to be used for general corporatepurposes, including the repurchase of 2022 Notes. This credit facility is secured by (i) any 2022 Notes purchased by Navios Holdings withthese funds and (ii) equity interests in five subsidiaries of the Company that have entered into certain bareboat contracts. Each suchbareboat contract has a ten-year term for a newbuilding bulk carrier and an option to acquire the related vessel. The credit facility isavailable in multiple drawings, has an arrangement fee of $500, a fixed interest rate of 12.75% for the first year and a fixed interest rate of14.75% for the second year, payable annually. The secured credit facility includes negative covenants substantially similar to the 2022Notes and customary events of default. The credit facility matures in April 2021. As of April 25, 2019, $19,000 was drawn under thisfacility of which $18,726 was used to acquire the 2022 Notes from Navios Logistics. During March 2019 and as of April 15, 2019, NaviosLogistics purchased $35,500 of the 2022 Notes from unaffiliated third parties in open market transactions for $17,642 plus accrued interest. b)On April 23, 2019, Navios Containers took delivery of a 2011-built 10,000 TEU containership from an unrelated third party for a purchaseprice of $52,500. The acquisition of the containership was financed with a: (i) loan of up to $31,122 from a commercial bank; (ii) $15,000credit by the seller; and (iii) cash on balance sheet. c)On December 21, 2018, Navios Holdings announced that it commenced an offer to exchange cash and/or newly issued 9.75% Senior Notesdue 2024 (the “2024 Notes”) for approximately 66 2/3% of each of the outstanding Series G Depositary Shares and Series H DepositaryShares. As of March 21, 2019, a total of 10,930 Series H were validly tendered in exchange for a total of approximately $4,188 cashconsideration and a total of approximately $4,747 in aggregate principal amount of 2024 Notes. As of April 18, 2019, a total of 8,841Series G were validly tendered in exchange for a total of approximately $4,423 cash consideration and a total of approximately $3,879 inaggregate principal amount of 2024 Notes. d)In March 2019, Navios Holdings completed the sale to an unrelated third party of the Navios Meridian, a 2002-built Ultra Handymaxvessel of 50,316 dwt, for a total net sale price of $6,790, paid in cash. The loss due to sale amounted to $5,531. e)In February 2019, Navios Holdings funded with $4,000 Navios Europe I under Navios Revolving Loans I. f)In February 2019, Navios Containers announced the exercise of an option to acquire a 2011-built 10,000 TEU containership from anunrelated third party for a purchase price of $52,500. The acquisition of the containership will be financed with a: (i) loan of up to $31,800from a commercial bank; (ii) $5,000 credit by the seller; and (iii) cash on balance sheet. The containership is expected to be delivered toNavios Containers’ owned fleet in the third quarter of 2019. F-65 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 South American Logistics Inc. Sub-Holding Company 63.8% Marshall Is.Navios Maritime Containers L.P. Holding Company 3.7% 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.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.Asteroid Shipping S.A. Operating Company 100% Marshall Is.Cloud Atlas Marine S.A. Operating Company 100% Marshall Is.Heodor Shipping Inc. Vessel Owning Company 100% Marshall Is.Navios Maritime Containers GP LLC Operating Company 100% Marshall Is.Navios Containers Management Inc. Management Company 100% Marshall Is.Pacifico Navigation Corp. Vessel Owning Company 100% Marshall Is.Rider Shipmanagement Inc. Operating Company 100% Marshall Is.Talia Shiptrade 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 and NaviosContainers and its subsidiaries, which is 63.8% and 3.7% owned, respectively.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, 2018 was 20.0%, which includes a 2.0% generalpartner interest); (ii) Navios Acquisition and its subsidiaries (economic interest as of December 31, 2018 was 35.8%); (iii) Navios Europe I and itssubsidiaries (economic interest as of December 31, 2018 was 47.5%); (iv) Navios Europe II and its subsidiaries (economic interest as of December 31,2018 was 47.5%); and (v) Navios Containers and its subsidiaries (economic interest as of November 30, 2018, date of obtaining control, was 3.7%). 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 makethe statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respectsthe financial 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 the registrant and have:a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared;b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in 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 theeffectiveness of 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 theannual report 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 the registrant’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 controlover financial reporting.Date: April 26, 2019 /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 makethe statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respectsthe financial 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 the registrant and have:a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared;b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in 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 theeffectiveness of 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 theannual report 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 the registrant’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 controlover financial reporting.Date: April 26, 2019 /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 of the 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, 2018 (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 theCompany. Date: April 26, 2019 /s/ Angeliki Frangou Angeliki Frangou Chief Executive OfficerDate: April 26, 2019 /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) of Navios Maritime Holdings Inc. of our report dated April 26, 2019 relating to the financial statements and the effectiveness of internalcontrol over financial reporting, which appears in this Form 20-F./s/ PricewaterhouseCoopers S.A.Athens, GreeceApril 26, 2019
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