Seanergy Maritime Holdings Corp.
Annual Report 2019

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, DC 20549FORM 20-F(Mark One)☐REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THESECURITIES EXCHANGE ACT OF 1934OR☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2019OR☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934OR☐SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934Date of event requiring this shell company report: Not applicableFor the transition period from _______ to _______Commission file number: 001-34848SEANERGY MARITIME HOLDINGS CORP.(Exact name of Registrant as specified in its charter)(Translation of Registrant’s name into English)Republic of the Marshall Islands(Jurisdiction of incorporation or organization)154 Vouliagmenis Avenue, 166 74 Glyfada, Athens, Greece(Address of principal executive offices)Stamatios Tsantanis, Chairman & Chief Executive OfficerSeanergy Maritime Holdings Corp.154 Vouliagmenis Avenue, 166 74 Glyfada, Athens, GreeceTelephone: +30 213 0181507, Fax: +30 210 9638404(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 classTrading Symbol(s)Name of exchange on whichregisteredShares of common stock, par value $0.0001 per shareSHIPNasdaq Capital MarketClass A WarrantsSHIPWNasdaq Capital MarketClass B WarrantsSHIPZNasdaq Capital MarketSecurities 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: NoneIndicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: As of December 31, 2019,there were 26,900,050 shares of the registrant’s common stock, $0.0001 par value, outstanding.Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒ NoIf 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 ☒ NoIndicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (orfor such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ NoIndicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of thischapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ NoIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “largeaccelerated filer”, “accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act.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 has elected not to use the extendedtransition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April5, 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 issued by the International Accounting Standards Board☐ Other ☐ If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected 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 Exchange Act). ☐ Yes ☒ No TABLE OF CONTENTS PagePART I 1ITEM 1.IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS1ITEM 2.OFFER STATISTICS AND EXPECTED TIMETABLE1ITEM 3.KEY INFORMATION1ITEM 4.INFORMATION ON THE COMPANY26ITEM 4A.UNRESOLVED STAFF COMMENTS43ITEM 5.OPERATING AND FINANCIAL REVIEW AND PROSPECTS43ITEM 6.DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES60ITEM 7.MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS64ITEM 8.FINANCIAL INFORMATION65ITEM 9.THE OFFER AND LISTING66ITEM 10.ADDITIONAL INFORMATION66ITEM 11.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK76ITEM 12.DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES76 PART II 76ITEM 13.DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES76ITEM 14.MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS76ITEM 15.CONTROLS AND PROCEDURES76ITEM 16.[RESERVED]77ITEM 16A.AUDIT COMMITTEE FINANCIAL EXPERT77ITEM 16B.CODE OF ETHICS78ITEM 16C.PRINCIPAL ACCOUNTANT FEES AND SERVICES78ITEM 16D.EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES78ITEM 16E.PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS78ITEM 16F.CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT78ITEM 16G.CORPORATE GOVERNANCE78ITEM 16H.MINE SAFETY DISCLOSURE79 PART III 79ITEM 17.FINANCIAL STATEMENTS79ITEM 18.FINANCIAL STATEMENTS79ITEM 18.1SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF SEANERGY MARITIME HOLDINGS CORP. (PARENT COMPANY ONLY)79ITEM 19.EXHIBITS79Table of ContentsCAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTSThis annual report contains certain forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements regarding our or our management’s expectations, hopes, beliefs, intentions or strategies regarding the future and otherstatements that are other than statements of historical fact. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances,including any underlying assumptions, are forward-looking statements. The words “anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”, “intend”, “may”, “might”, “plan”,“possible”, “potential”, “predict”, “project”, “should”, “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that astatement is not forward-looking. The forward-looking statements in this report are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation,management’s examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions werereasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond ourcontrol, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections. As a result, you are cautioned not to rely on any forward-looking statements. Many of these statements are based on our assumptions about factors that are beyond our ability to control or predict and are subject to risks and uncertainties that aredescribed more fully in “Item 3. Key Information—D. Risk Factors”. Any of these factors or a combination of these factors could materially affect our future results of operations and theultimate accuracy of the forward-looking statements. In addition to these important factors, important factors that, in our view, could cause actual results to differ materially from thosediscussed in the forward-looking statements include among other things: •changes in shipping industry trends, including charter rates, vessel values and factors affecting vessel supply and demand; •changes in seaborne and other transportation patterns; •changes in the supply of or demand for dry bulk commodities, including dry bulk commodities carried by sea, generally or in particular regions; •changes in the number of newbuildings under construction in the dry bulk shipping industry; •changes in the useful lives and the value of our vessels and the related impact on our compliance with loan covenants; •the aging of our fleet and increases in operating costs; •changes in our ability to complete future, pending or recent acquisitions or dispositions; •our ability to achieve successful utilization of our expanded fleet; •changes to our financial condition and liquidity, including our ability to pay amounts that we owe and obtain additional financing to fund capital expenditures, acquisitions andother general corporate activities; •risks related to our business strategy, areas of possible expansion or expected capital spending or operating expenses; •changes in our ability to leverage the relationships and reputation in the dry bulk shipping industry of V.Ships Limited, or V.Ships, our technical manager, and Fidelity MarineInc., or Fidelity, our commercial manager; •changes in the availability of crew, number of off-hire days, classification survey requirements and insurance costs for the vessels in our fleet; •changes in our relationships with our contract counterparties, including the failure of any of our contract counterparties to comply with their agreements with us; Table of Contents•loss of our customers, charters or vessels; •damage to our vessels; •potential liability from future litigation and incidents involving our vessels; •our future operating or financial results; •acts of terrorism and other hostilities; •changes in global and regional economic and political conditions; •changes in governmental rules and regulations or actions taken by regulatory authorities, particularly with respect to the dry bulk shipping industry; •our ability to continue as a going concern; and •other factors discussed in “Item 3. Key Information—D. Risk Factors”. Should one or more of the foregoing risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from thoseprojected in these forward looking statements. Consequently, there can be no assurance that actual results or developments anticipated by us will be realized or, even if substantiallyrealized, that they will have the expected consequences to, or effects, on us. Given these uncertainties, prospective investors are cautioned not to place undue reliance on such forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be requiredunder applicable laws. If one or more forward-looking statements are updated, no inference should be drawn that additional updates will be made with respect to those or other forward-looking statements.Table of ContentsPART IUnless the context otherwise requires, as used in this annual report, the terms “Company”, “Seanergy”, “we”, “us”, and “our” refer to Seanergy Maritime Holdings Corp.and any or all of its subsidiaries, and “Seanergy Maritime Holdings Corp.” refers only to Seanergy Maritime Holdings Corp. and not to its subsidiaries. References in this annualreport to “Seanergy Maritime” refer to our predecessor, Seanergy Maritime Corp. We use the term deadweight tons, or “dwt”, in describing the size of vessels. Dwt, expressed in metric tons, each of which is equivalent to 1,000 kilograms, refers to themaximum weight of cargo and supplies that a vessel can carry. Unless otherwise indicated, all references to “U.S. dollars”, “dollars”, “U.S. $” and “$” in this annual report are tothe lawful currency of the United States of America. References in this annual report to our common shares are adjusted to reflect the consolidation of our common shares throughreverse stock splits, including the one-for-five reverse stock split which became effective as of January 8, 2016 and the one-for-fifteen reverse stock split which became effective as ofMarch 20, 2019. ITEM 1.IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERSNot applicable. ITEM 2.OFFER STATISTICS AND EXPECTED TIMETABLENot applicable. ITEM 3.KEY INFORMATIONA.Selected Financial DataThe following table sets forth our selected consolidated financial data. The selected consolidated financial data in the table as of December 31, 2019, 2018, 2017, 2016 and 2015are derived from our audited consolidated financial statements and notes thereto which have been prepared in accordance with U.S. generally accepted accounting principles, or U.S.GAAP. The following data should be read in conjunction with “Item 5. Operating and Financial Review and Prospects” and the consolidated financial statements and related notesincluded elsewhere in this annual report. On January 7, 2016, we effected a 1-for-5 reverse split of our common stock. The reverse stock split became effective and our common stock began trading on a split-adjustedbasis on the NASDAQ Capital Market at the opening of trading on January 8, 2016. There was no change in the number of authorized shares or the par value of our common stock. Allshare and per share amounts disclosed herein give effect to this reverse stock split retroactively, for all periods presented. On March 19, 2019, we effected a 1-for-15 reverse split of our common stock. The reverse stock split became effective and our common stock began trading on a split-adjustedbasis on the NASDAQ Capital Market at the opening of trading on March 20, 2019. There was no change in the number of authorized shares or the par value of our common stock. Allshare and per share amounts disclosed herein give effect to this reverse stock split retroactively, for all periods presented. (Amounts in the tables below are in thousands of U.S. dollars, except for share and per share data.) Year Ended December 31, 2019 2018 2017 2016 2015 Statement of Income Data: Vessel revenue, net 86,499 91,520 74,834 34,662 11,223 Voyage expenses (36,641) (40,184) (34,949) (21,008) (7,496)Vessel operating expenses (18,980) (20,742) (19,598) (14,251) (5,639)Management fees (989) (1,042) (1,016) (895) (336)General and administration expenses (5,989) (6,500) (5,081) (4,134) (2,804)General and administration expenses - related party - - - - (70)Loss on bad debts - - - - (30)Amortization of deferred dry-docking costs (844) (634) (870) (556) (38)Depreciation (11,016) (10,876) (10,518) (8,531) (1,865)Impairment loss - (7,267) - - - Operating income / (loss) 12,040 4,275 2,802 (14,713) (7,055)Interest and finance costs (15,216) (16,415) (12,277) (7,235) (1,460)Interest and finance costs - related party (8,629) (8,881) (5,122) (2,616) (399)Gain on debt refinancing - - 11,392 - - Interest and other income 213 83 47 20 - Foreign currency exchange losses, net (52) (104) (77) (45) (42)Total other expenses, net (23,684) (25,317) (6,037) (9,876) (1,901)Net loss before income taxes (11,644) (21,042) (3,235) (24,589) (8,956)Income taxes (54) (16) - (34) - Net loss (11,698) (21,058) (3,235) (24,623) (8,956)Net loss per common share Basic and diluted (0.76) (8.40) (1.35) (17.97) (12.47)Weighted average common shares outstanding Basic and diluted 15,332,755 2,507,087 2,389,719 1,370,200 718,226 1Table of Contents As of December 31, 2019 2018 2017 2016 2015 Balance Sheet Data: Total current assets 21,927 16,883 19,498 22,329 8,278 Vessels, net 253,781 243,214 254,730 232,109 199,840 Total assets 282,551 267,562 275,705 257,534 209,352 Total current liabilities, including current portion of long-term debt andother financial liabilities 237,281 36,263 34,460 21,230 9,250 Total liabilities 252,693 246,259 234,392 226,702 186,068 Common stock 3 - - - - Total stockholders’ equity 29,858 21,303 41,313 30,832 23,284 Shares issued and outstanding as at December 31, 26,900,050 2,666,184 2,465,289 2,271,480 1,301,494 Year Ended December 31, 2019 2018 2017 2016 2015 Cash Flow Data: Net cash provided by (used in) operating activities 13,108 5,723 2,782 (15,339) (4,737)Net cash used in investing activities (12,349) (8,827) (32,992) (40,779) (201,684)Net cash provided by (used in) financing activities 6,351 (491) 25,341 68,672 206,902 B.Capitalization and IndebtednessNot applicable. C.Reasons for the Offer and Use of ProceedsNot applicable. D.Risk FactorsRisk Factors Some of the following risks relate principally to the industry in which we operate and others relate to our business in general or our common stock. If any of the following risksoccur, our business, financial condition, operating results and cash flows could be materially adversely affected and the trading price of our securities could decline. Risks Relating to Our Industry The market values of our vessels may decrease, which could limit the amount of funds that we can borrow or trigger certain financial covenants under our loan agreements, and wemay incur an impairment or, if we sell vessels following a decline in their market value, a loss. The fair market values of our vessels are related to prevailing freight charter rates. While the fair market value of vessels and the freight charter market have a very closerelationship as the charter market moves from trough to peak, the time lag between the effect of charter rates on market values of ships can vary. A decrease in the market value of ourvessels could require us to raise additional capital in order to remain compliant with our loan covenants and could result in the loss of our vessels (including, through foreclosure by ourlenders) and adversely affect our earnings and financial condition. 2Table of ContentsThe fair market value of our vessels may increase or decrease, and we expect the market values to fluctuate depending on a number of factors including: •prevailing level of charter rates; •general economic and market conditions affecting the shipping industry, including changes in global dry cargo commodity supply; •types and sizes of vessels; •number of newbuilding deliveries; •number of vessels scrapped or otherwise removed from the world fleet; •changes in environmental and other regulations that may limit the useful life of vessels; •decreased costs and increases in use of other modes of transportation; •cost of newbuildings or secondhand vessel acquisitions; •governmental and other regulations; •technological advances; and •the cost of retrofitting or modifying existing ships to respond to technological advances in vessel design or equipment, changes in applicable environmental or otherregulations or standards, or otherwise. In addition, as vessels grow older, they generally decline in value. If the fair market value of our vessels declines, we may not be in compliance with certain covenants in ourloan agreements, and our lenders could accelerate our indebtedness or require us to pay down our indebtedness to a level where we are again in compliance with our loan covenants. Ifany of our loans are accelerated, we may not be able to refinance our debt or obtain additional funding. We expect that we will enter into more loan agreements in connection with ourfuture acquisitions of vessels. For more information regarding our current loan facilities, please see “Item 5. Operating and Financial Review and Prospects – B. Liquidity and CapitalResources – Loan Arrangements – Credit Facilities.” In addition, if vessel values decline, we may have to record an impairment adjustment in our financial statements, which could adversely affect our financial results. Furthermore,if we sell one or more of our vessels at a time when vessel prices have fallen, the sale price may be less than the vessel’s carrying value on our consolidated financial statements,resulting in a loss on sale or an impairment loss being recognized, leading to a reduction in earnings. 3Table of ContentsCharter hire rates for dry bulk vessels are volatile and have declined significantly since their historic highs and may remain at low levels or decrease in the future, which mayadversely affect our earnings, revenue and profitability and our ability to comply with our loan covenants.The downturn in recent years in the dry bulk charter market, from which we derive substantially all of our revenues, has affected the dry bulk shipping industry and has harmedour business. The Baltic Dry Index, or BDI, declined from a high of 11,793 in May 2008 to a low of 290 in February 10, 2016, which represents a decline of 98%. In 2019, the BDI rangedfrom a low of 595 on February 11, 2019 to a high of 2,518 on September 4, 2019, and during 2020 the BDI has ranged from a high of 976 on January 2, 2020 to a low of 411 on February 10,2020. The decline and volatility in charter rates has been due to various factors, including the over-supply of dry bulk vessels, the lack of trade financing for purchases ofcommodities carried by sea, which resulted in a significant decline in cargo shipments, and trade disruptions caused by natural or other disasters, such as those that resulted from thedam collapse in Brazil in 2019 and the recent outbreak of the coronavirus infection in China. Dry bulk charter rates remain at depressed levels and may decline further. Thesecircumstances have had adverse consequences from time to time for dry bulk shipping, including, among other developments: •decrease in available financing for vessels; •no active secondhand market for the sale of vessels; •charterers seeking to renegotiate the rates for existing time charters; •widespread loan covenant defaults in the dry bulk shipping industry due to the substantial decrease in vessel values; and •declaration of bankruptcy by some operators, charterers and vessel owners. The degree of charter hire rate volatility among different types of dry bulk vessels has varied widely. If we enter into a charter when charter hire rates are low, our revenues andearnings will be adversely affected and we may not be able to successfully charter our vessels at rates sufficient to allow us to operate our business profitably or meet our obligations.Further, if low charter rates in the dry bulk market continue or decline further for any significant period, this could have an adverse effect on our vessel values and ability to comply withthe financial covenants in our loan agreements. In such a situation, unless our lenders were willing to provide waivers of covenant compliance or modifications to our covenants, ourlenders could accelerate our debt and we could face the loss of our vessels. The recent outbreak of the Covid-19 novel coronavirus, or other epidemics, could have a material adverse impact on our business, results of operations, or financial condition. Our financial and operating performance may be adversely affected by the on-going novel coronavirus outbreak or other epidemics or pandemics. As a result of the spread of thecoronavirus, several countries have imposed quarantine checks on arriving vessels, which have caused delays in loading and delivery of cargoes. It is possible that charterers couldassert a right to invoke force majeure clauses as a result of such delays or other disruptions. Delays have also been reported at Chinese shipyards for newbuildings, drydocks and otherworks. In addition, the measures taken by the Chinese government in response to the outbreak, which included numerous factory closures and restrictions on travel, as well as potentiallabor shortages resulting from the outbreak, has slowed production in China and in other regions relying on Chinese production or raw materials, and is expected to decrease the level ofexport and import of goods from such regions. Similar measures taken by governments in other countries may further slow global trade. Even though it is too early to assess the fullimpacts of the coronavirus outbreak on global markets, and particularly on the shipping industry, the spread of the coronavirus has already added, and could continue to add, pressureto dry bulk shipping freight rates and, as a result, could have a material adverse effect on our business, results of operations, financial condition and cash flows.4Table of ContentsWe are mostly dependent on spot or index-linked charters and any decrease in spot charter rates or indexes in the future may adversely affect our earnings. We currently operate four of our vessels in the spot market, exposing us to fluctuations in spot market charter rates. The other six are employed on time charters whose dailyrates are linked to the Baltic Capesize Index, or BCI. Furthermore, we may employ any additional vessels that we may acquire in the spot market or on index-linked time charters. Although the number of vessels in our fleet that participate in the spot market or have index-linked charters will vary from time to time, we anticipate that a significant portion ofour fleet will be affected by the spot market or the BCI. As a result, our financial performance will be significantly affected by conditions in the dry bulk spot market or the BCI and onlyour vessels that would operate under fixed-rate time charters would, during the period in which such vessels operate under such time charters, provide a fixed source of revenue to us. Historically, spot charter rates and dry bulk charter indices have been volatile as a result of the many conditions and factors that can affect the price, supply of and demand fordry bulk capacity. The successful operation of our vessels in the competitive spot charter market depends upon, among other things, obtaining profitable spot charters and minimizing,to the extent possible, time spent waiting for charters and time spent traveling unladen to pick up cargo. The spot market is very volatile, and, in the past, there have been periods whenspot rates have declined below the operating cost of vessels. If future spot charter rates or the BCI decline, then we may be unable to operate our vessels trading in the spot market or onBCI-linked charters profitably or to meet our other obligations, including payments on indebtedness. Furthermore, as charter rates for spot charters are fixed for a single voyage, whichmay last up to several weeks, during periods in which spot charter rates are rising, we will generally experience delays in realizing the benefits from such increases. An over-supply of dry bulk vessel capacity may prolong or further depress the current low charter rates and, in turn, adversely affect our profitability. The market supply of dry bulk vessels had increased due to the high level of new deliveries in the last years. Dry bulk newbuildings were delivered in significant numbersstarting at the beginning of 2006 and continued to be delivered in significant numbers through 2017. In addition, the dry bulk newbuilding orderbook, which extends to 2023, equaledapproximately 9.10% of the existing world dry bulk fleet as of February 14, 2020, according to Clarksons Research, and the orderbook may increase further in proportion to the existingfleet. Even though the overall level of the orderbook has declined over the past years, an over-supply of dry bulk vessel capacity could prolong the period during which low charter ratesprevail. Factors that influence the supply of vessel capacity include: •number of new vessel deliveries; •scrapping rate of older vessels; •vessel casualties; •price of steel; •number of vessels that are out of service; •changes in environmental and other regulations that may limit the useful life of vessels; and •port or canal congestion. If dry bulk vessel capacity increases but the demand for vessel capacity does not increase or increases at a slower rate, charter rates could materially decline, which could havea material adverse effect on our business, financial condition, results of operations and cash flows. If economic conditions throughout the world decline, it will negatively impact our results of operations, financial condition and cash flows, and could cause the market price ofour common shares to decline. The world economy is facing a number of actual and potential challenges, including current trade tension between the United States and China, political instability in the MiddleEast and the South China Sea region and other geographic countries and areas, geopolitical events such as the withdrawal of the U.K. from the European Union, or Brexit, protests inHong Kong, terrorist or other attacks, war (or threatened war) or international hostilities, such as those between the United States and North Korea or Iran, and epidemics or pandemics,such as the on-going novel coronavirus outbreak. Such events may contribute to economic instability in global financial markets or cause a decrease in worldwide demand for certaingoods and, thus, shipping. We cannot predict how long current market conditions will last. 5Table of ContentsThe European Union, or EU, and other parts of the world were recently in a recession and uncertainty surrounds the potential for continued economic growth. Moreover, thereis uncertainty related to certain European member countries’ ability to refinance their sovereign debt, including Greece, despite the country’s return to the sovereign debt markets in 2019.As a result, the credit markets in the United States and Europe have experienced significant contraction, deleveraging and reduced liquidity, and the U.S. federal and state governmentsand European authorities have implemented a broad variety of governmental action and new regulation of the financial markets and may implement additional regulations in the future.As a result, global economic conditions and global financial markets have been, and continue to be, volatile. Further, credit markets and the debt and equity capital markets have beendistressed and the uncertainty surrounding the future of the global credit markets has resulted in reduced access to credit worldwide. In addition, the recent economic slowdown in the Asia Pacific region, particularly in China, may exacerbate the effect of the weak economic trends in the rest of the world.Before the global economic financial crisis that began in 2008, China had one of the world’s fastest growing economies in terms of gross domestic product, or GDP, which had asignificant impact on shipping demand. The quarterly year-over-year growth rate of China’s GDP was approximately 6.1% for the year ended December 31, 2019, decreasing from 6.6% in2018 and continuing to remain below pre-2008 levels. It is possible that China and other countries in the Asia Pacific region will continue to experience slowed or even negative economicgrowth in the near future. Moreover, the current economic slowdown in the economies of the EU and in certain Asian countries may further adversely affect economic growth in Chinaand elsewhere. Our results of operations and ability to grow our fleet could be impeded by a continuing or worsening economic downturn in any of these countries or geographicregions. Furthermore, governments may turn to trade barriers to protect their domestic industries against foreign imports, thereby depressing shipping demand. In particular, asindicated, the United States is seeking to implement more protective trade measures. The current U.S. President was elected on a platform promoting trade protectionism. The outcome ofthe 2016 presidential election has, thus, created significant uncertainty about the future relationship between the United States and China and other exporting countries with respect totrade policies, treaties, government regulations and tariffs. On January 23, 2017, the U.S. President signed an executive order withdrawing the United States from the Trans-PacificPartnership, a global trade agreement intended to include the United States, Canada, Mexico, Peru and a number of Asian countries. In March 2018, the U.S. President announced tariffson imported steel and aluminum into the United States, which were recently expanded to include certain products made of steel and aluminum, that could have a negative impact oninternational trade generally. In addition, beginning in 2019, the United States imposed sanctions against the Government of Venezuela and its state-owned oil subsidiary, which had aneffect on Venezuela’s oil output and in turn affected global oil supply. Protectionist developments, or the perception that they may occur, may have a material adverse effect on globaleconomic conditions, and may significantly reduce global trade. Moreover, increasing trade protectionism may cause an increase in (i) the cost of goods exported from regions globally,particularly the Asia-Pacific region, (ii) the length of time required to transport goods and (iii) the risks associated with exporting goods. Such increases may further reduce the quantityof goods to be shipped, shipping time schedules, voyage costs and other associated costs, which could have an adverse impact on our charterers’ business, operating results andfinancial condition and could thereby affect their ability to make timely charter hire payments to us and to renew and increase the number of their time charters with us. This could have amaterial adverse effect on our business, results of operations, financial condition and cash flows. We face risks attendant to the trends in the global economy, such as changes in interest rates, instability in the banking and securities markets around the world, the risk ofsovereign defaults, reduced levels of growth, and trade protectionism, among other factors. Major market disruptions and the current adverse changes in market conditions andregulatory climate worldwide may adversely affect our business or impair our ability to borrow under our loan agreements or any future financial arrangements. We cannot predict howlong the current market conditions will last. However, these recent and developing economic and governmental factors, together with depressed charter rates and vessel values, mayhave a material adverse effect on our results of operations, financial condition or cash flows and the trading price of our common stock. In the absence of available financing, we mayalso be unable to complete vessel acquisitions, take advantage of business opportunities or respond to competitive pressures. 6Table of ContentsRisks associated with operating ocean-going vessels could affect our business and reputation, which could adversely affect our revenues and expenses. The operation of an ocean-going vessel carries inherent risks. These risks include the possibility of: •crew strikes and/or boycotts; •the damage or destruction of vessels due to marine disaster; •piracy or other detentions; •environmental accidents; •cargo and property losses or damage; and •business interruptions caused by mechanical failure, human error, war, terrorism, political action in various countries, labor strikes or adverse weather conditions. Any of these circumstances or events could increase our costs or lower our revenues. Such circumstances could result in death or injury to persons, loss of property orenvironmental damage, delays in the delivery of cargo, loss of revenues from or termination of charter contracts, governmental fines, penalties or restrictions on conducting business,litigation with our employees, customers or third parties, higher insurance rates, and damage to our reputation and customer relationships generally. Although we maintain hull andmachinery and war risks insurance, as well as protection and indemnity insurance, which may cover certain risks of loss resulting from such occurrences, our insurance coverage may besubject to deductibles, caps or not cover such losses and any of these circumstances or events could increase our costs or lower our revenues. The involvement of our vessels in anenvironmental disaster may harm our reputation as a safe and reliable vessel owner and operator. Any of these results could have a material adverse effect on business, results ofoperations and financial condition, as well as our cash flows. Rising fuel prices may adversely affect our profits. The cost of fuel is a significant factor in negotiating charter rates. As a result, an increase in the price of fuel may adversely affect our profitability. The price and supply of fuelis unpredictable and fluctuates based on events outside our control, including geopolitical developments, supply and demand for oil and gas, actions by members of the Organization ofthe Petroleum Exporting Countries and other oil and gas producers, war and unrest in oil producing countries and regions, regional production patterns and environmental concerns andregulations. Furthermore, fuel may become much more expensive in the future, including as a result of the imposition of recent sulfur oxide emissions limits in January 2020 under newregulations adopted by the International Maritime Organization, or the IMO, which may reduce the profitability and competitiveness of our business versus other forms oftransportation, such as truck or rail. Upon redelivery of vessels at the end of a period of time or voyage time charter, we may be obligated to repurchase bunkers on board at prevailing market prices, which could bematerially higher than fuel prices at the inception of the charter period. In addition, fuel is a significant, if not the largest, expense that we would incur with respect to vessels operatingon voyage charter. A number of our vessels are chartered on the spot charter market, either through trip charter contracts or voyage charter contracts. Voyage charter contracts generally providethat the vessel owner bears the cost of fuel in the form of bunkers, which is a material operating expense. We do not intend to hedge our fuel costs, and, therefore, an increase in theprice of fuel may affect in a negative way our profitability and our cash flows. Our revenues are subject to seasonal fluctuations, which could affect our operating results and ability to service our debt or pay dividends. We operate our vessels in markets that have historically exhibited seasonal variations in demand and, as a result, in charter hire rates. This seasonality may result in quarter-to-quarter volatility in our operating results. The dry bulk shipping market is typically stronger in the fall and winter months in anticipation of increased consumption of coal and other rawmaterials in the northern hemisphere during the winter months. In addition, unpredictable weather patterns in these months tend to disrupt vessel schedules and supplies of certaincommodities. As a result, our revenues may be weaker during the fiscal quarters ending June 30 and September 30, and, conversely, our revenues may be stronger in fiscal quartersending December 31 and March 31. This seasonality should not affect our operating results if our vessels are employed on period time charters, but because our vessels are employed inthe spot market or on index-linked charters, seasonality may materially affect our operating results and our ability to pay dividends, if any, in the future. 7Table of ContentsEnvironmental, social and governance matters may impact our business and reputation. In addition to the importance of their financial performance, companies are increasingly being judged by their performance on a variety of environmental, social and governancematters, or ESG, which are considered to contribute to the long-term sustainability of companies’ performance. A variety of organizations measure the performance of companies on such ESG topics, and the results of these assessments are widely publicized. In addition, investment infunds that specialize in companies that perform well in such assessments are increasingly popular, and major institutional investors have publicly emphasized the importance of suchESG measures to their investment decisions. Topics taken into account in such assessments include, among others, the company’s efforts and impacts on climate change and humanrights, ethics and compliance with law, and the role of the company’s board of directors in supervising various sustainability issues. We actively manage a broad range of such ESG matters, taking into consideration their expected impact on the sustainability of our business over time, and the potential impactof our business on society and the environment. As far as the environmental aspect is concerned, in 2019 we implemented technical and operational measures that will result in energysavings and a reduced carbon footprint for our vessels. Scrubber installations, Existing Vessel Design Index, or EVDI, upgrades, and Energy Saving Device installations constituteexamples of the environmental practices we have adopted. However, in light of investors’ increased focus on ESG matters, there can be no certainty that we will manage such issuessuccessfully, or that we will successfully meet society’s expectations as to our proper role. Any failure or perceived failure by us in this regard could have a material adverse effect on ourreputation and on our business, share price, financial condition, or results of operations, including the sustainability of our business over time. Our vessels may call on ports located in or may operate in countries that are subject to restrictions imposed by the United States, the European Union or other governments thatcould result in fines or other penalties imposed on us and may adversely affect our reputation and the market price of our common stock. During the year ended December 31, 2019, none of our vessels called on ports located in countries subject to comprehensive sanctions and embargoes imposed by the U.S.government or countries identified by the U.S. government or other authorities as state sponsors of terrorism; however, our vessels may call on ports in these countries from time to timein the future on our charterers’ instructions. The U.S. sanctions and embargo laws and regulations vary in their application, as they do not all apply to the same covered persons orproscribe the same activities, and such sanctions and embargo laws and regulations may be amended or strengthened over time. We believe that we are currently in compliance with all applicable sanctions and embargo laws and regulations. In order to maintain compliance, we monitor and review themovement of our vessels on a daily basis. We endeavor to provide that all or most of our future charters include provisions and trade exclusion clauses prohibiting the vessels from calling on ports where there is anexisting U.S. embargo. Furthermore, as of the date hereof, neither the Company nor its subsidiaries have entered into or have any plans to enter into, directly or indirectly, any contracts,agreements or other arrangements with the governments of Iran, Syria, North Korea, Cuba, or any entities controlled by the governments of these countries. Due to the nature of our business and the evolving nature of the foregoing sanctions and embargo laws and regulations, there can be no assurance that we will be incompliance at all times in the future, particularly as the scope of certain laws may be unclear and may be subject to changing interpretations. Any such violation could result in fines,penalties or other sanctions that could severely impact our ability to access U.S. capital markets and conduct our business, and could result in some investors deciding, or beingrequired, to divest their interest, or refrain from investing, in us. In addition, certain institutional investors may have investment policies or restrictions that prevent them from holdingsecurities of companies that have contracts with countries identified by the U.S. government as state sponsors of terrorism. The determination by these investors not to invest in, or todivest from, our common stock may adversely affect the price at which our common stock trades. Moreover, our charterers may violate applicable sanctions and embargo laws andregulations as a result of actions that do not involve us or our vessels, and those violations could in turn negatively affect our reputation. In addition, our reputation and the market forour securities may be adversely affected if we engage in certain other activities, such as entering into charters with individuals or entities in countries subject to U.S. sanctions andembargo laws that are not controlled by the governments of those countries, or engaging in operations associated with those countries pursuant to contracts with third parties that areunrelated to those countries or entities controlled by their governments. 8Table of ContentsSulfur regulations to reduce air pollution from ships have required retrofitting of vessels and may cause us to incur significant costs. Effective January 1, 2020, IMO regulations require vessels comply with a new global cap on the sulfur in fuel oil used on board of 0.5%, down from the previous cap of 3.5%.The interpretation of “fuel oil used on board” includes use in main engine, auxiliary engines and boilers. Shipowners may comply with this regulation by (i) using 0.5% sulfur fuels onboard, which are available at a higher cost; (ii) installing “scrubbers” for cleaning of the exhaust gas; or (iii) retrofitting vessels to be powered by liquefied natural gas (LNG), which maynot be a viable option due to the lack of supply network and high costs involved in this process. We have installed scrubbers on 50% of our current fleet in cooperation with first-classtime charterers who currently employ the vessels on time charters. As part of these agreements, the charterers covered the installation costs. Furthermore, we have made necessarypreparations for the remaining 50% of our fleet to burn low sulfur fuel (0.5% or 0.1%). All engineering officers, engineering crew and deck officers employed on our vessels beginningJanuary 1, 2020 are required to undergo training and complete a certain e-module regarding the use of low sulfur fuels. We have further developed ship specific implementation plans forsafeguarding the smooth transition with the usage of compliant fuels for such vessels that will not be equipped with scrubbers. Costs of ongoing compliance may have a materialadverse effect on our future performance, results of operations, cash flows and financial position. See Item 4. “Information on the Company—B. Business Overview— Environmentaland Other Regulations—The International Maritime Organization”. We are subject to regulation and liability under environmental laws that could require significant expenditures and affect our cash flows and net income. Our business and the operation of our vessels are materially affected by government regulation in the form of international conventions, national, state and local laws andregulations in force in the jurisdictions in which the vessels operate, as well as in the country or countries of their registration, including those governing oil spills, discharges to air andwater, ballast water management, and the handling and disposal of hazardous substances and wastes. These requirements include, but are not limited to, EU regulations, the U.S. OilPollution Act of 1990, or OPA, the U.S. Comprehensive Environmental Response, Compensation and Liability Act of 1980, or CERCLA, the U.S. Clean Air Act, including its amendmentsof 1977 and 1990, or the CAA, the U.S. Clean Water Act, or the CWA, the U.S. Maritime Transportation Security Act of 2002, or the MTSA, and regulations of the IMO, including, but notlimited to, the International Convention on Civil Liability for Oil Pollution Damage of 1969, as from time to time amended and generally referred to as CLC, the IMO InternationalConvention for the Prevention of Pollution from Ships of 1973, as from time to time amended and generally referred to as MARPOL, including the designation of emission control areas,or ECAs, thereunder, the IMO International Convention for the Safety of Life at Sea of 1974, as from time to time amended and generally referred to as SOLAS, the IMO InternationalConvention on Load Lines of 1966, as from time to time amended and generally referred to as the LL Convention, the International Convention on Civil Liability for Bunker Oil PollutionDamage, generally referred to as the Bunker Convention, the IMO’s International Management Code for the Safe Operation of Ships and for Pollution Prevention, generally referred to asthe ISM Code, the International Convention for the Control and Management of Ships’ Ballast Water and Sediments, generally referred to as the BWM Convention, and the InternationalShip and Port Facility Security Code, or ISPS. We may also incur additional costs in order to comply with other existing and future regulatory obligations, including, but not limited to, costs relating to the 0.5% sulfur cap onmarine fuels, air emissions including greenhouse gases, the management of ballast water, maintenance and inspection, development and implementation of emergency procedures andinsurance coverage or other financial assurance of our ability to address pollution incidents. These costs could have a material adverse effect on our business, results of operations,cash flows and financial condition and our available cash. Because such conventions, laws and regulations are often revised, we cannot predict the ultimate cost of complying withsuch conventions, laws and regulations or the impact thereof on the resale price or useful life of vessels we may acquire in the future. Additional conventions, laws and regulations maybe adopted which could limit our ability to do business or increase the cost of our doing business and which may materially adversely affect our operations. Regulations relating to ballast water discharge may adversely affect our revenues and profitability. The IMO has imposed updated guidelines for ballast water management systems specifying the maximum amount of viable organisms allowed to be discharged from a vessel’sballast water. Depending on the date of the IOPP renewal survey, existing vessels constructed before September 8, 2017 must comply with the updated D-2 standard on or afterSeptember 8, 2019. For most vessels, compliance with the D-2 standard will involve installing on-board systems to treat ballast water and eliminate unwanted organisms. Shipsconstructed on or after September 8, 2017 are to comply with the D-2 standards on or after September 8, 2017. Vessels are required to meet the discharge standard D-2 by installing anapproved Ballast Water Management System (or BWMS). Pursuant to the BWM Convention amendments that entered into force in October 2019, BWMSs installed on or after October28, 2020 shall be approved in accordance with BWMS Code, while BWMSs installed before October 23, 2020 must be approved taking into account guidelines developed by the IMO orthe BWMS Code. Ships sailing in U.S. waters are required to employ a type-approved BWMS which is compliant with USCG regulations. The USCG has approved a number of BWMS. Currently three of our vessels comply with the updated guidelines and we have made arrangements for the installation of ballast water treatment systems in another five of our vessels,prior to the respective compliance deadlines. The costs of compliance may be substantial and affect our profitability. 9Table of ContentsFurthermore, United States regulations are currently changing. Although the 2013 Vessel General Permit, or VGP, program and U.S. National Invasive Species Act, or NISA, arecurrently in effect to regulate ballast discharge, exchange and installation, the Vessel Incidental Discharge Act, or VIDA, which was signed into law on December 4, 2018, requires thatthe U.S. Coast Guard develop implementation, compliance, and enforcement regulations regarding ballast water within two years. The new regulations could require the installation ofnew equipment, which may cause us to incur substantial costs. VIDA requires the EPA to develop performance standards for incidental discharges, and requires the Coast Guard todevelop regulations within two years of the EPA’s promulgation of standards. Under VIDA, all provisions of the Vessel General Permit remain in force and effect as currently written untilthe Coast Guard regulations are published. Increased inspection procedures, tighter import and export controls and new security regulations could increase costs and disrupt our business. International shipping is subject to security and customs inspection and related procedures in countries of origin, destination and trans-shipment points. Since the events ofSeptember 11, 2001, there have been a variety of initiatives intended to enhance vessel security, such as the MTSA. These security procedures can result in delays in the loading,discharging or trans-shipment and the levying of customs duties, fines or other penalties against exporters or importers and, in some cases, vessels. Future changes to the existingsecurity procedures may be implemented that could affect the dry bulk sector. These changes have the potential to impose additional financial and legal obligations on vessels and, incertain cases, to render the shipment of certain types of goods uneconomical or impractical. These additional costs could reduce the volume of goods shipped, resulting in a decreaseddemand for vessels and have a negative impact on our business, revenues and customer relations. Acts of piracy on ocean-going vessels have increased in frequency, which could adversely affect our business. Acts of piracy have historically affected ocean-going vessels trading in regions of the world such as the South China Sea, Strait of Malacca, Arabian Sea, Red Sea, Gulf of Adenoff the coast of Somalia, Indian Ocean and Gulf of Guinea. Sea piracy incidents continue to occur, particularly in the South China Sea, the Indian Ocean, in the Gulf of Guinea and theStrait of Malacca, with dry bulk vessels particularly vulnerable to such attacks. If piracy attacks result in regions in which our vessels are deployed being characterized as “war risk”zones by insurers, as the Gulf of Aden temporarily was in May 2008, or if our vessels are deployed in Joint War Committee “war and strikes” listed areas, premiums payable for insurancecoverage could increase significantly and such insurance coverage may be more difficult to obtain. In addition, crew and security equipment costs, including costs which may beincurred to employ onboard security armed guards, could increase in such circumstances. Furthermore, while we believe the charterer remains liable for charter payments when a vesselis seized by pirates, the charterer may dispute this and withhold charter hire until the vessel is released. A charterer may also claim that a vessel seized by pirates was not “on-hire” for acertain number of days and is therefore entitled to cancel the charterparty, a claim that we would dispute. We may not be adequately insured to cover losses from these incidents, whichcould have a material adverse effect on us. In addition, any detention hijacking as a result of an act of piracy against our vessels, or an increase in cost, or unavailability, of insurance forour vessels could have a material adverse impact on our business, financial condition and results of operations. The operation of dry bulk vessels has particular operational risks. The operation of dry bulk vessels has certain unique risks. With a dry bulk vessel, the cargo itself and its interaction with the vessel can be an operational risk. By their nature,dry bulk cargoes are often heavy, dense, easily shifted, and react badly to water exposure. In addition, dry bulk vessels are often subjected to battering treatment during dischargingoperations with grabs, jackhammers (to pry encrusted cargoes out of the hold) and small bulldozers. This treatment may cause damage to the vessel. Vessels damaged due to treatmentduring discharging procedures may affect a vessel’s seaworthiness while at sea. Hull fractures in dry bulk vessels may lead to the flooding of the vessels’ holds. If a dry bulk vesselsuffers flooding in its forward holds, the bulk cargo may become so dense and waterlogged that its pressure may buckle the vessel’s bulkheads, leading to the loss of a vessel. If we areunable to adequately maintain our vessels, we may be unable to prevent these events. Any of these circumstances or events could negatively impact our business, financial condition,and results of operations. 10Table of ContentsIf any of our vessels fails to maintain its class certification or fails any annual survey, intermediate survey, or special survey, or if any scheduled class survey takes longer or is moreexpensive than anticipated, this could have a material adverse impact on our financial condition and results of operations. The hull and machinery of every commercial vessel must be certified by a classification society authorized by its country of registry. The classification society certifies that avessel is safe and seaworthy in accordance with the applicable rules and regulations of the country of registry of the vessel and the SOLAS. A vessel must undergo annual, intermediate and special surveys. The vessel’s machinery may be on a continuous survey cycle, under which the machinery would be surveyedperiodically over a five-year period. At the beginning, in between and in the end of this cycle, every vessel is required to undergo inspection of her underwater parts that usuallyincludes dry-docking. These surveys and dry-dockings can be costly and can result in delays in returning a vessel to operation. If any vessel does not maintain its class, the vessel will not be allowed to carry cargo between ports and cannot be employed or insured. Any such inability to carry cargo or beemployed, or any related violation of our loan covenants, could have a material adverse impact on our financial condition and results of operations. Because seafaring employees we employ are covered by industry-wide collective bargaining agreements, failure of industry groups to renew those agreements may disrupt ouroperations and adversely affect our earnings. We employ a large number of seafarers. All the seafarers employed on the vessels in our fleet are covered by industry-wide collective bargaining agreements that set basicstandards. We cannot assure you that these agreements will be renewed as necessary or will prevent labor interruptions. Any labor interruptions could disrupt our operations and harmour financial performance. Maritime claimants could arrest or attach one or more of our vessels, which could interrupt our cash flows. Crew members, suppliers of goods and services to a vessel, shippers of cargo and other parties may be entitled to a maritime lien against a vessel for unsatisfied debts, claims ordamages. In many jurisdictions, a maritime lien holder may enforce its lien by arresting a vessel through foreclosure proceedings. The arrest or attachment of one or more of our vesselscould interrupt our cash flow and require us to pay large sums of funds to have the arrest lifted, which would have a material adverse effect on our financial condition and results ofoperations. In addition, in some jurisdictions, such as South Africa, under the “sister ship” theory of liability, a claimant may arrest both the vessel which is subject to the claimant’smaritime lien and any “associated” vessel, which is any vessel owned or controlled by the same owner. Claimants could try to assert “sister ship” liability against one of our vessels forclaims relating to another of our vessels. Governments could requisition our vessels during a period of war or emergency, which could negatively impact our business, financial condition, results of operations, andavailable cash. A government could requisition for title or hire one or more of our vessels. Requisition for title occurs when a government takes control of a vessel and becomes the owner.Also, a government could requisition a vessel for hire. Requisition for hire occurs when a government takes control of a vessel and effectively becomes the charterer at dictated charterrates. Generally, requisitions occur during a period of war or emergency. Government requisition of one or more of our vessels could have a material adverse effect on our financialcondition and results of operations. The shipping industry has inherent operational risks that may not be adequately covered by our insurances. Further, because we obtain some of our insurances through protectionand indemnity associations, we may also be retrospectively subject to calls or premiums in amounts based not only on our own claim records, but also on the claim records of allother members of the protection and indemnity associations. 11Table of ContentsWe procure insurance for our fleet against risks commonly insured against by vessel owners and operators. Our current insurances include hull and machinery insurance, warrisks insurance, demurrage and defense insurance and protection and indemnity insurance (which includes environmental damage and pollution insurance). We do not expect to maintainfor our vessels insurance against loss of hire, which covers business interruptions that result from the loss of use of a vessel. We may not be adequately insured against all risks or ourinsurers may not pay a particular claim. Even if our insurance coverage is adequate to cover our losses, we may not be able to timely obtain a replacement vessel in the event of a loss.Furthermore, in the future, we may not be able to obtain adequate insurance coverage at reasonable rates for our fleet. Our insurance policies also contain deductibles, limitations andexclusions which, although we believe are standard in the shipping industry, may nevertheless increase our costs. If our insurances are not enough to cover claims that may arise, thedeficiency may have a material adverse effect on our financial condition and results of operations. We may also be retrospectively subject to calls, or premiums, in amounts based notonly on our own claim records but also the claim records of all other members of the protection and indemnity associations through which we receive indemnity insurance coverage fortort liability, including pollution-related liability. Our payment of these calls could result in significant expenses to us. Risks Relating to Our Company We have depended on an entity affiliated with our principal shareholder for financing. We have relied on Jelco Delta Holding Corp., or Jelco, a company affiliated with Claudia Restis, who is our principal shareholder, or Sponsor, for funding for vessel acquisitionsand general corporate purposes during 2015 through 2019. This has included convertible notes and loan facilities, as further described under “Item 5. Operating and Financial Reviewand Prospects – B. Liquidity and Capital Resources – Loan Arrangements”. We cannot assure you that in the future we will be able to rely on Jelco for financing on similar terms or at all.Any inability to secure financing in the future from Jelco could negatively affect our liquidity position and ability to fund our ongoing operations. Substantial debt levels could limit our flexibility to obtain additional financing and pursue other business opportunities. As of December 31, 2019, we had $209.9 million of outstanding debt, excluding unamortized financing fees and the convertible notes issued to Jelco. Moreover, we anticipatethat we will incur significant future indebtedness in connection with the acquisition of additional vessels, although there can be no assurance that we will be successful in identifyingfurther vessels or securing such debt financing. Significant levels of debt could have important consequences to us, including the following: •our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes may be impaired, or such financing may beunavailable on favorable terms, or at all; •we may need to use a substantial portion of our cash from operations to make principal and interest payments on our bank debt and financing liabilities, reducing the funds thatwould otherwise be available for operations, future business opportunities and any future dividends to our shareholders; •our debt level could make us more vulnerable to competitive pressures or a downturn in our business or the economy generally than our competitors with less debt; and •our debt level may limit our flexibility in responding to changing business and economic conditions. Our ability to service our indebtedness will depend upon, among other things, our future financial and operating performance, which will be affected by prevailing economicconditions and financial, business, regulatory and other factors, some of which are beyond our control, as well as the interest rates applicable to our outstanding indebtedness. If ouroperating income is not sufficient to service our indebtedness, we will be forced to take actions, such as reducing or delaying our business activities, acquisitions, investments or capitalexpenditures, selling assets, restructuring or refinancing our debt or seeking additional equity capital. We may not be able to effect any of these remedies on satisfactory terms, or at all.In addition, a lack of liquidity in the debt and equity markets could hinder our ability to refinance our debt or obtain additional financing on favorable terms in the future. For moreinformation regarding our current loan arrangements, please see “Item 5. Operating and Financial Review and Prospects – B. Liquidity and Capital Resources – Loan Arrangements”. 12Table of ContentsOur loan agreements and other financing arrangements contain, and we expect that other future loan agreements and financing arrangements will contain, restrictive covenantsthat may limit our liquidity and corporate activities, which could limit our operational flexibility and have an adverse effect on our financial condition and results of operations.In addition, because of the presence of cross-default provisions in our loan agreements and financing arrangements, a default by us under one loan could lead to defaults undermultiple loans. Our loan agreements and other financial arrangements contain, and we expect that other future loan agreements and financing arrangements will contain, customary covenantsand event of default clauses, financial covenants, restrictive covenants and performance requirements, which may affect operational and financial flexibility. Such restrictions couldaffect, and in many respects limit or prohibit, among other things, our ability to pay dividends, incur additional indebtedness, create liens, sell assets, or engage in mergers oracquisitions. These restrictions could limit our ability to plan for or react to market conditions or meet extraordinary capital needs or otherwise restrict corporate activities. There can beno assurance that such restrictions will not adversely affect our ability to finance our future operations or capital needs. As a result of these restrictions, we may need to seek permission from our lenders and other financing counterparties in order to engage in some corporate actions. Our lenders’and other financing counterparties’ interests may be different from ours and we may not be able to obtain their permission when needed. This may prevent us from taking actions that webelieve are in our best interests, which may adversely impact our revenues, results of operations and financial condition. A failure by us to meet our payment and other obligations, including our financial covenants and any security coverage requirements, could lead to defaults under our financingarrangements. Likewise, a decrease in vessel values or adverse market conditions could cause us to breach our financial covenants or security requirements (the market values of drybulk vessels have generally experienced high volatility). In the event of a default that we cannot remedy, our lenders and other financing counterparties could then accelerate theirindebtedness and foreclose on the respective vessels in our fleet. The loss of any of our vessels could have a material adverse effect on our business, results of operations and financialcondition. In the recent past, we obtained waivers and deferrals of most major financial covenants under our loan facilities with our lenders until the second quarter of 2019. BetweenMarch and August 2019, we entered into supplemental agreements with certain of our lenders to amend the applicable thresholds of certain financial covenants of our credit facilitiesuntil the later of maturity or June 2020. Furthermore, in February 2020, we received approval from the credit committee of one of our lenders to, inter alia, extend the maturities of two ofour credit facilities and cancel certain of our corporate covenants under these facilities. This approval is subject to completion of definitive documentation. However, there can be noassurance that we will obtain similar waivers and deferrals from our lenders in the future, if needed, as we have obtained in the past. As of the date of this annual report, we comply withall applicable financial covenants under our existing loan facilities, except for the security cover ratio covenant under the HCOB Loan Facility. Such covenant breach can be rectified bypaying the lender an amount equal to the difference of the value secured and the security requirement or by providing additional security. For more information regarding our currentloan facilities, see please see “Item 5. Operating and Financial Review and Prospects – B. Liquidity and Capital Resources – Loan Arrangements”. Because of the presence of cross-default provisions in our loan agreements, a default by us under a loan and the refusal of any one lender to grant or extend a waiver couldresult in the acceleration of our indebtedness under our other loans. A cross-default provision means that if we default on one loan, we would then default on our other loans containinga cross-default provision. Our independent auditors have expressed doubt about our ability to continue as a going concern. The existence of such report may adversely affect our stock price, our businessrelationships and our ability to raise capital. There is no assurance that we will not receive a similar report for the year ended December 31, 2020. Our financial statements have been prepared assuming that we will continue as a going concern and do not include any adjustments that might be necessary if we are unable tocontinue as a going concern. Accordingly, the financial statements did not include any adjustments that might result in the event we are unable to continue as a going concern.However, there are material uncertainties related to events or conditions which raise substantial doubt on our ability to continue as a going concern and, therefore, we may be unable torealize our assets and discharge our liabilities in the normal course of business. Our independent registered public accounting firm, Ernst & Young (Hellas) Certified AuditorsAccountants S.A., or EY, has issued their opinion with an explanatory paragraph in connection with our audited financial statements included in this annual report that expressessubstantial doubt about our ability to continue as a going concern. 13Table of ContentsBased on our cash flow projections, cash on hand and cash provided by operating activities might not be sufficient to cover the liquidity needs that become due in the twelve-month period ending December 31, 2020, primarily scheduled interest payments, installments and balloon payments on certain of our debt facilities and other financing arrangements. Weplan to settle the loan interest and scheduled loan repayments with cash on hand and cash expected to be generated from operations. Concerning the final balloon payments, we areexploring, on an ongoing basis, several alternatives, including refinancing the existing facilities and extending the respective maturities, issuing additional debt or equity securities,entering into restructuring transactions or a combination of the foregoing. These alternatives are supported by the fair market valuation of the vessels, as assessed by third partyvaluators, which cover sufficiently the underlying loans. In addition, we could consider the sale of some of the collateral vessels to free-up liquidity and support the refinancing of theremaining units by reducing the overall indebtedness. In the event that none of the above materialize, we could consider the sale of all the underlying collaterals (i.e., four vessels) andrepay in full the loans under consideration. In this case we would continue to operate with a reduced fleet which would have no impact on our financial standing. In February 2020, wereceived approval from the credit committee of one of our lenders to, inter alia, extend the maturities of two of our credit facilities and cancel certain of our corporate covenants applyingon these facilities. This approval is subject to completion of definitive documentation. However, we cannot provide any assurance that we will in fact generate sufficient revenue and operating cash flow or otherwise cover our liquidity needs that become due inthe twelve-month period ending December 31, 2020. Accordingly, there can be no assurance that our independent registered public accounting firm’s report on our future financialstatements for any future period will not include a similar explanatory paragraph. Our independent registered public accounting firm’s expression of such doubt or our inability toovercome the factors leading to such doubt could have a material adverse effect on our stock price, our business relationships and ability to raise capital and therefore could have amaterial adverse effect on our business and financial prospects.If we fail to manage our planned growth properly, we may not be able to successfully expand our market share. Our fleet currently consists of ten Capesize vessels, and we may acquire additional vessels in the future. Our ability to manage our growth will primarily depend on our ability to: •generate excess cash flow so that we can invest without jeopardizing our ability to cover current and foreseeable working capital needs, including debt service; •finance our operations, through equity offerings or otherwise, for our existing and new operations; •locate and acquire suitable vessels; •identify and consummate acquisitions or joint ventures; •integrate any acquired businesses or vessels successfully with our existing operations; •hire, train and retain qualified personnel and crew to manage and operate our growing business and fleet; and •expand our customer base. Growing any business by acquisitions presents numerous risks such as obtaining acquisition financing on acceptable terms or at all, undisclosed liabilities and obligations,difficulty in obtaining additional qualified personnel, managing relationships with customers and suppliers and integrating newly acquired operations into existing infrastructures. Wemay not be successful in executing our growth plans and we may incur significant additional expenses and losses in connection therewith. Purchasing and operating secondhand vessels, such as our current fleet, may result in increased operating costs and vessel off-hire, which could adversely affect our financialcondition and results of operations. All ten of the vessels in our fleet are secondhand vessels. Our inspection of these or other secondhand vessels prior to purchase does not provide us with the same knowledgeabout their condition and the cost of any required or anticipated repairs that we would have had if these vessels had been built for and operated exclusively by us. We have not receivedin the past, and do not expect to receive in the future, the benefit of warranties on any secondhand vessels we acquire. 14Table of ContentsAs the vessels in our fleet or other secondhand vessels we may acquire age, they may become less fuel efficient and costlier to maintain and will not be as advanced as recentlyconstructed vessels due to improvements in design, technology and engineering, including improvements required to comply with government regulations. Rates for cargo insurance,paid by charterers, also increase with the age of a vessel, making older vessels less desirable to charterers. In addition, charterers actively discriminate against hiring older vessels. Rightship, the ship vetting service founded by Rio Tinto and BHP-Billiton, has become a major vettingservice in the dry bulk shipping industry, which ranks the suitability of vessels based on a scale of one to five stars. There are carriers that may not charter a vessel that Rightship hasvetted with fewer than three stars. Therefore, a potentially deteriorated star rating for our vessels may affect their commercial operation and profitability and vessels in our fleet withlower ratings may experience challenges in securing charters. Effective as of January 1, 2018, Rightship’s age trigger for a dry cargo inspection for vessels over 8,000 dwt changed from18 years to 14 years, after which an annual acceptable Rightship inspection will be required. Rightship may downgrade any vessel over 18 years of age that has not completed asatisfactory inspection by Rightship, in the same manner as any other vessel over 14 years of age, to two stars, which significantly decreases its chances of entering into a charter.Therefore, one of our dry bulk carriers is 19 years of age, we may not be able to operate this vessel profitably during the remainder of its useful life. All of the vessels in our fleet havefive-star risk ratings from Rightship. Governmental regulations, safety or other equipment standards related to the age or condition of vessels may require expenditures for alterations, or the addition of newequipment, to our vessels and may restrict the type of activities in which the vessels may engage. As our vessels age, market conditions may not justify those expenditures or enable usto operate our vessels profitably during the remainder of their useful lives. In addition, unless we maintain cash reserves for vessel replacement, we may be unable to replace the vessels in our fleet upon the expiration of their useful lives. We estimatethe useful life of our vessels to be 25 years from the date of initial delivery from the shipyard. Our cash flows and income are dependent on the revenues we earn by chartering ourvessels to customers. If we are unable to replace the vessels in our fleet upon the expiration of their useful lives, our business, financial condition and results of operations will bematerially adversely affected. Any reserves set aside for vessel replacement would not be available for other cash needs or dividends. Newbuilding projects are subject to risks that could cause delays. We may enter into newbuilding contracts in connection with our vessel acquisition strategy. Newbuilding construction projects are subject to risks of delay inherent in anylarge construction project from numerous factors, including shortages of equipment, materials or skilled labor, unscheduled delays in the delivery of ordered materials and equipment orshipyard construction, failure of equipment to meet quality and/or performance standards, financial or operating difficulties experienced by equipment vendors or the shipyard,unanticipated actual or purported change orders, inability to obtain required permits or approvals, design or engineering changes and work stoppages and other labor disputes, adverseweather conditions or any other events of force majeure. A shipyard’s failure to deliver a vessel on time may result in the delay of revenue from the vessel. Any such failure or delaycould have a material adverse effect on our operating results. We may acquire additional vessels, and if those vessels are not delivered on time or are delivered with significant defects, our earnings and financial condition could suffer. We may acquire further vessels in the future. The delivery of these vessels could be delayed, or certain events may arise which could result in us not taking delivery of a vessel,such as a total loss of a vessel, a constructive loss of a vessel, or substantial damage to a vessel prior to delivery. A delay in the delivery of any vessels to us, the failure of the contractcounterparty to deliver a vessel at all, or us not taking delivery of a vessel could cause us to breach our obligations under a related time charter or could otherwise adversely affect ourfinancial condition and results of operations. In addition, the delivery of any vessel with substantial defects could have similar consequences. 15Table of ContentsIf volatility in the London InterBank Offered Rate, or LIBOR, occurs, or if LIBOR is replaced as the reference rate under our debt obligations, it could 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. These conditions are the result of thedisruptions in the international credit markets. Because the interest rates borne by our outstanding indebtedness fluctuate with changes in LIBOR, if such volatility were to occur infuture, or if LIBOR is replaced as the reference rate under our debt obligations, it could affect the amount of interest payable on our debt which, in turn, could have an adverse effect onour profitability, earnings and cash flow. On July 27, 2017, the UK Financial Conduct Authority announced that it would phase-out LIBOR by the end of 2021. As a result, lenders have insisted on provisions that entitlethe lenders, in their discretion, to replace published LIBOR as the basis for the interest calculation with their cost-of-funds rate. Certain of our existing financing arrangements, providefor the use of replacement rates if LIBOR is discontinued. We are in the process of evaluating the impact of LIBOR discontinuation on us. While we cannot predict the effect of thepotential changes to LIBOR or the establishment and use of alternative rates or benchmarks, the interest payable on our debt could be subject to volatility and our lending costs couldincrease, which would have an adverse effect on our profitability, earnings and cash flow. The failure of our counterparties to meet their obligations under our charter agreements could cause us to suffer losses or otherwise adversely affect our business. The ability and willingness of each of our counterparties to perform its obligations under charter agreements with us will depend on a number of factors that are beyond ourcontrol and may include, among other things, general economic conditions, the condition of the dry bulk shipping industry and the industries in which our counterparties operate andthe overall financial condition of the counterparties. From time to time, those counterparties may account for a significant amount of our chartering activity and revenues. In addition, inchallenging market conditions, there have been reports of charterers renegotiating their charters or defaulting on their obligations under charter agreements, and so our customers mayfail to pay charter hire or attempt to renegotiate charter rates. Should a counterparty fail to honor its obligations under agreements with us, it may be difficult to secure substituteemployment for such vessel, and any new charter arrangements we secure in the spot market or on time charters could be at lower rates. If our charterers fail to meet their obligations tous or attempt to renegotiate our charter agreements, we could suffer significant losses, which could have a material adverse effect on our business, financial condition, results ofoperations and cash flows. Rising crew costs may adversely affect our profits. Crew costs are expected to be a significant expense for us. Recently, the limited supply of and increased demand for highly skilled and qualified crew, due to the increase in thesize of the global shipping fleet, has created upward pressure on crewing costs. Increases in crew costs may adversely affect our profitability if we are not able to increase our rates. We may not be able to attract and retain key management personnel and other employees in the shipping industry, which may negatively affect the effectiveness of our managementand our results of operations. Our success will depend to a significant extent upon the abilities and efforts of our management team, including our ability to retain key members of our management team andthe ability of our management to recruit and hire suitable employees. The loss of any of these individuals could adversely affect our business prospects and financial condition.Difficulty in hiring and retaining personnel could adversely affect our results of operations. Our vessels may suffer damage, and we may face unexpected repair costs, which could adversely affect our cash flow and financial condition. If our vessels suffer damage, they may need to be repaired at a shipyard facility. The costs of repairs are unpredictable and can be substantial. The loss of earnings while ourvessels are being repaired and repositioned, as well as the actual cost of these repairs, would decrease our earnings and reduce the amount of any dividends in the future. We may nothave insurance that is sufficient to cover all or any of these costs or losses and may have to pay repair costs not covered by our insurance. 16Table of ContentsWe are exposed to U.S. dollar and foreign currency fluctuations and devaluations that could harm our reported revenue and results of operations.We generate all of our revenues and incur the majority of our operating expenses in U.S. dollars, but we currently incur many of our general and administration expenses incurrencies other than the U.S. dollar, primarily the euro. Because such portion of our expenses is incurred in currencies other than the U.S. dollar, our expenses may from time to timeincrease relative to our revenues as a result of fluctuations in exchange rates, particularly between the U.S. dollar and the euro, which could affect the amount of net income that wereport in future periods. We may use financial derivatives to operationally hedge some of our currency exposure. Our use of financial derivatives involves certain risks, including the riskthat losses on a hedged position could exceed the nominal amount invested in the instrument and the risk that the counterparty to the derivative transaction may be unable or unwillingto satisfy its contractual obligations, which could have an adverse effect on our results. We maintain cash with a limited number of financial institutions including financial institutions that may be located in Greece, which will subject us to credit risk. We maintain all of our cash with a limited number of financial institutions, including institutions that are located in Greece. These financial institutions located in Greece may besubsidiaries of international banks or Greek financial institutions. Economic conditions in Greece have been, and continue to be, uncertain as a result of recent sovereign weakness.Although Moody’s Investor Services Inc. upgraded the bank financial strength ratings, as well as the deposit and debt ratings, of several Greek banks in July 2019 to reflect improvingprospects, the stand-alone financial strength of the banks and the anticipated additional pressures stemming from the legacy of the country’s multi-year debt crisis continue to createchallenging economic prospects. We are a holding company and we depend on the ability of our subsidiaries to distribute funds to us in order to satisfy financial obligations or to pay dividends. We are a holding company and our subsidiaries, which are all wholly-owned by us either directly or indirectly, conduct all of our operations and own all of our operating assets.We have no significant assets other than the equity interests in our wholly-owned subsidiaries. As a result, our ability to make dividend payments depends on our subsidiaries and theirability to distribute funds to us. The ability of a subsidiary to make these distributions could be affected by the covenants in our loan agreements, a claim or other action by a third party,including a creditor, and the laws of Bermuda, the British Virgin Islands, Hong Kong, Liberia, Malta and the Republic of the Marshall Islands, where our vessel-owning subsidiaries areincorporated, which regulate the payment of dividends by companies. If we are unable to obtain funds from our subsidiaries, we may not be able to satisfy our financial obligations. In the highly competitive international shipping industry, we may not be able to compete for charters with new entrants or established companies with greater resources, which mayadversely affect our results of operations. We employ our vessels in a highly competitive market that is capital intensive and highly fragmented. Competition arises primarily from other vessel owners, some of whomhave substantially greater resources than we do. Competition for the transportation of dry bulk cargoes by sea is intense and depends on price, location, size, age, condition and theacceptability of the vessel and its operators to the charterers. Due in part to the highly fragmented market, competitors with greater resources could enter the dry bulk shipping industryand operate larger fleets through consolidations or acquisitions and may be able to offer lower charter rates and higher quality vessels than we are able to offer. Although we believe thatno single competitor has a dominant position in the markets in which we compete, we are aware that certain competitors may be able to devote greater financial and other resources totheir activities than we can, resulting in a significant competitive threat to us. We cannot give assurances that we will continue to compete successfully with our competitors or thatthese factors will not erode our competitive position in the future. Due to our limited fleet diversification, adverse developments in the maritime dry bulk shipping industry would adversely affect our business, financial condition, and operatingresults. We depend primarily on the transportation of dry bulk commodities. Our relative lack of diversification could make us vulnerable to adverse developments in the maritime drybulk shipping industry, which would have a significantly greater impact on our business, financial condition and operating results than it would if we maintained more diverse assets orlines of business. We may be subject to litigation that, if not resolved in our favor and not sufficiently insured against, could have a material adverse effect on us. We may be, from time to time, involved in various litigation matters. These matters may include, among other things, contract disputes, personal injury claims, environmentalclaims or proceedings, asbestos and other toxic tort claims, employment matters, governmental claims for taxes or duties, and other litigation that arises in the ordinary course of ourbusiness. Although we intend to defend these matters vigorously, we cannot predict with certainty the outcome or effect of any claim or other litigation matter, and the ultimate outcomeof any litigation or the potential costs to resolve them may have a material adverse effect on us. Insurance may not be applicable or sufficient in all cases or insurers may not remainsolvent, which may have a material adverse effect on our financial condition. 17Table of ContentsBecause we obtain some of our insurances through protection and indemnity associations, we may also be retrospectively subject to calls or premiums in amounts based not onlyon our own claim records, but also on the claim records of all other members of the protection and indemnity associations. We may be retrospectively subject to calls, or premiums, in amounts based not only on our claim records but also on the claim records of all other members of the protection andindemnity associations through which we receive insurance coverage for tort liability, including pollution-related liability. Our payment of these calls could result in significant expensesto us, which could have a material adverse effect on our business, results of operations and financial condition and our ability to pay dividends in the future. Failure to comply with the U.S. Foreign Corrupt Practices Act of 1977, or FCPA, could result in fines, criminal penalties, and an adverse effect on our business. We operate throughout the world, including countries with a reputation for corruption. We are committed to doing business in accordance with applicable anti-corruption lawsand have adopted a code of business conduct and ethics which is consistent and in full compliance with the FCPA. We are subject, however, to the risk that we, our affiliated entities orour or their respective officers, directors, employees and agents may take action determined to be in violation of such anti-corruption laws, including the FCPA. Any such violationcould result in substantial fines, sanctions, civil and/or criminal penalties, curtailment of operations in certain jurisdictions, and might adversely affect our business, results of operationsor financial condition. In addition, actual or alleged violations could damage our reputation and ability to do business. Furthermore, detecting, investigating, and resolving actual oralleged violations is expensive and can consume significant time and attention of our senior management. We depend on our commercial and technical managers to operate our business and our business could be harmed if our managers fail to perform their services satisfactorily. Pursuant to our management agreements, V.Ships provides us with technical, general administrative and support services (including vessel maintenance, crewing, purchasing,shipyard supervision, assistance with regulatory compliance, accounting related to vessels and provisions). Fidelity provides us with commercial management services for our vesselsand Seanergy Management Corp., or Seanergy Management, our wholly owned subsidiary, provides us with certain other management services. Our operational success dependssignificantly upon V.Ships’, Fidelity’s and Seanergy Management’s satisfactory performance of these services. Our business would be harmed if V.Ships, Fidelity or SeanergyManagement failed to perform these services satisfactorily. In addition, if our management agreements with any of V.Ships, Fidelity or Seanergy Management were to be terminated or iftheir terms were to be altered, our business could be adversely affected, as we may not be able to immediately replace such services, and even if replacement services were immediatelyavailable, the terms offered could be less favorable than those under our existing management agreements. Our ability to compete for and enter into new period time and spot charters and to expand our relationships with our existing charterers will depend largely on our relationshipwith our commercial manager, Fidelity, and its reputation and relationships in the shipping industry. If Fidelity suffers material damage to its reputation or relationships, it may harm ourability to: •renew existing charters upon their expiration; •obtain new charters; •obtain financing on commercially acceptable terms; •maintain satisfactory relationships with our charterers and suppliers; and •successfully execute our business strategies. If our ability to do any of the things described above is impaired, it could have a material adverse effect on our business, financial condition and results of operations. 18Table of ContentsOur managers are each privately held companies and there is little or no publicly available information about them. The ability of V.Ships, Fidelity and Seanergy Management to render management services will depend in part on their own financial strength. Circumstances beyond our controlcould impair their financial strength, and because each is a privately held company, information about their financial strength is not available. As a result, we and our shareholders mighthave little advance warning of financial or other problems affecting them even though their financial or other problems could have a material adverse effect on us. Management fees will be payable to our technical manager regardless of our profitability, which could have a material adverse effect on our business, financial condition andresults of operations. Pursuant to our technical management agreements with V.Ships, we paid a monthly fee of $8,240 per vessel in 2019 and we have been paying a monthly fee of about $8,488 pervessel starting January 1, 2020 in exchange for V.Ships’ provision of technical, support and administrative services. The management fees do not cover expenses such as voyageexpenses, vessel operating expenses, maintenance expenses and crewing costs, for which we reimburse the technical manager. The management fees are payable whether or not ourvessels are employed and regardless of our profitability, and we have no ability to require our technical managers to reduce the management fees if our profitability decreases, whichcould have a material adverse effect on our business, financial condition and results of operations. The majority of the members of our shipping committee are appointees nominated by Jelco, which could create conflicts of interest detrimental to us. Our board of directors has created a shipping committee, which has been delegated exclusive authority to consider and vote upon all matters involving shipping and vesselfinance, subject to certain limitations. Jelco has the right to appoint two of the three members of the shipping committee and as a result effectively controls all decisions with respect toour shipping operations that do not involve a transaction with our Sponsor. Mr. Stamatios Tsantanis, Ms. Christina Anagnostara and Mr. Elias Culucundis currently serve on ourshipping committee. We may be classified as a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to U.S. holders of our common stock. A foreign corporation will be treated as a “passive foreign investment company”, or PFIC, for U.S. federal income tax purposes if either (1) at least 75% of its gross income forany taxable year consists of certain types of “passive income” or (2) at least 50% of the average value of the corporation’s assets produce or are held for the production of those typesof “passive income”. For purposes of these tests, “passive income” includes dividends, interest, and gains from the sale or exchange of investment property and rents and royaltiesother than rents and royalties which are received from unrelated parties in connection with the active conduct of a trade or business. For purposes of these tests, income derived fromthe performance of services does not constitute “passive income”. U.S. shareholders of a PFIC are subject to a disadvantageous U.S. federal income tax regime with respect to theincome derived by the PFIC, the distributions they receive from the PFIC and the gain, if any, they derive from the sale or other disposition of their shares in the PFIC. Based upon our current and anticipated method of operations, we do not believe that we should be a PFIC with respect to our 2019 taxable year, and we do not expect to becomea PFIC in any future taxable year. In this regard, we intend to treat our gross income from time charters as active services income, rather than rental income. Accordingly, our income fromour time chartering activities should not constitute “passive income”, and the assets that we own and operate in connection with the production of that income should not constitutepassive assets. There is substantial legal authority supporting this position including case law and U.S. Internal Revenue Service, or IRS, pronouncements concerning thecharacterization 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 whichcharacterizes time charter income as rental income rather than services income for other tax purposes. Accordingly, no assurance can be given that the IRS or a court of law will acceptthis position, and there is a risk that the IRS or a court of law could determine that we are a PFIC. Moreover, no assurance can be given that we would not constitute a PFIC for any futuretaxable year if the nature and extent of our operations change. If the IRS were to find that we are or have been a PFIC for any taxable year, our U.S. shareholders would face adverse U.S. federal income tax consequences and certaininformation reporting requirements. Under the PFIC rules, unless those shareholders make an election available under the United States Internal Revenue Code of 1986 as amended, orthe Code (which election could itself have adverse consequences for such shareholders), such shareholders would be liable to pay U.S. federal income tax at the then prevailing incometax rates on ordinary income plus interest upon excess distributions and upon any gain from the disposition of their shares of our common stock, as if the excess distribution or gain hadbeen recognized ratably over the shareholder’s holding period of the shares of our common stock. Similar consequences would apply to holders of our warrants. See “Item 10.E. TaxConsiderations – U.S. Federal Income Tax Consequences – U.S. Federal Income Taxation of U.S. Holders - Passive Foreign Investment Company Rules” for a more comprehensivediscussion of the U.S. federal income tax consequences to U.S. shareholders if we are treated as a PFIC. 19Table of ContentsWe may have to pay tax on U.S. source income, which would reduce our earnings. Under the Code, 50% of the gross shipping income of a vessel-owning or chartering corporation, such as us and our subsidiaries, that is attributable to transportation thatbegins or ends, but that does not both begin and end, in the United States, exclusive of certain U.S. territories and possessions, “U.S. source gross shipping income” may be subject to a4% U.S. federal income tax without allowance for deduction, unless that corporation qualifies for exemption from tax under Section 883 of the Code and the applicable TreasuryRegulations promulgated thereunder. We did not qualify for exemption from the 4% tax under Section 883 for our 2019 taxable year as we did not satisfy one of the ownership tests described in “Item 10.E. TaxConsiderations – United States Federal Income Tax Consequences – Exemption of Operating Income from United States Federal Income Taxation” for such taxable year. The ownershiptests require us, inter alia, to establish or substantiate sufficient ownership of our common shares by one or more “qualified” shareholders. For our 2019 taxable year, we had U.S. sourcegross shipping income, on which we were subject to a U.S federal tax of $147,548. Some of our charterparties contain clauses that permit us to seek reimbursement from charterers of anyU.S. tax paid. We have sought reimbursement and have secured payment from all of our charterers for the 2019 taxable year. Due to the factual nature of the issues involved, and given that we are currently not eligible for the exemption from tax under Section 883 of the Code, we can give noassurances on the tax-exempt status of ourselves or that of any of our subsidiaries for our 2020 or subsequent taxable year. If we or our subsidiaries continue not to be entitled toexemption under Section 883, we or our subsidiaries will continue to be subject to the 4% U.S. federal income tax on 50% of any shipping income such companies derive that isattributable to the transport of cargoes to or from the United States. This tax is a cost, which, if unreimbursed, has a negative effect on our business and results in decreased earningsavailable for distribution to our shareholders. We may be subject to tax in the jurisdictions in which we or our vessel-owning subsidiaries are incorporated or operate. In addition to the tax consequences discussed herein, we may be subject to tax in one or more other jurisdictions where we or our vessel-owning subsidiaries are incorporatedor conduct activities. We are subject to a corporate flat tax for our subsidiaries in Malta for the period from January 1, 2019 to December 31, 2019 and could be subject to additionaltaxation in the future in Malta or other jurisdictions where our subsidiaries are incorporated or do business. The amount of any such tax imposed upon our operations or on oursubsidiaries’ operations may be material and could have an adverse effect on our earnings. We are a “foreign private issuer”, which could make our common stock less attractive to some investors or otherwise harm our stock price. We are a “foreign private issuer”, as such term is defined in Rule 405 under the Securities Act. As a “foreign private issuer” the rules governing the information that we disclosediffer from those governing U.S. corporations pursuant to the Exchange Act. We are not required to file quarterly reports on Form 10-Q or provide current reports on Form 8-K disclosingsignificant events within four days of their occurrence. In addition, our officers and directors are exempt from the reporting and “short-swing” profit recovery provisions of Section 16 ofthe Exchange Act and related rules with respect to their purchase and sales of our securities. Our exemption from the rules of Section 16 of the Exchange Act regarding sales of commonstock by insiders means that you will have less data in this regard than shareholders of U.S. companies that are subject to the Exchange Act. Moreover, we are exempt from the proxyrules, and proxy statements that we distribute will not be subject to review by the Commission. Accordingly, there may be less publicly available information concerning us than there isfor other U.S. public companies. These factors could make our common stock less attractive to some investors or otherwise harm our stock price. 20Table of ContentsThe Public Company Accounting Oversight Board inspection of our independent accounting firm, could lead to adverse findings in our auditors’ reports and challenges to theaccuracy of our published audited consolidated financial statements. Auditors of U.S. public companies are required by law to undergo periodic Public Company Accounting Oversight Board, or PCAOB, inspections that assess their compliancewith U.S. law and professional standards in connection with performance of audits of financial statements filed with the SEC. For several years certain European Union countries,including Greece, did not permit the PCAOB to conduct inspections of accounting firms established and operating in such European Union countries, even if they were part of majorinternational firms. Accordingly, unlike for most U.S. public companies, the PCAOB was prevented from evaluating our auditor’s performance of audits and its quality controlprocedures, and, unlike stockholders of most U.S. public companies, we and our stockholders were deprived of the possible benefits of such inspections. Since 2015, Greece agreed toallow the PCAOB to conduct inspections of accounting firms operating in Greece. In the future, such PCAOB inspections could result in findings in our auditors’ quality controlprocedures, question the validity of the auditor’s reports on our published consolidated financial statements and the effectiveness of our internal control over financial reporting, andcast doubt upon the accuracy of our published audited financial statements. We conduct business in China, where the legal system is not fully developed and has inherent uncertainties that could limit the legal protections available to us. Some of our vessels may be chartered to Chinese customers and from time to time on our charterers’ instructions, our vessels may call on Chinese ports. Such charters andvoyages may be subject to regulations in China that may require us to incur new or additional compliance or other administrative costs and may require that we pay to the Chinesegovernment new taxes or other fees. Applicable laws and regulations in China may not be well publicized and may not be known to us or our charterers in advance of us or ourcharterers becoming subject to them, and the implementation of such laws and regulations may be inconsistent. Changes in Chinese laws and regulations, including with regards to taxmatters, or changes in their implementation by local authorities, could affect our vessels if chartered to Chinese customers as well as our vessels calling to Chinese ports and could havea material adverse impact on our business, financial conditions 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 Protection Regulation, or GDPR, may create additionalcompliance requirements for us. To maintain high standards of corporate governance and public disclosure, we have invested in, and continue to invest in, reasonably necessaryresources to comply with evolving standards. GDPR broadens the scope of personal privacy laws to protect the rights of European Union citizens and requires organizations to report on data breaches within 72 hours andbe bound by more stringent rules for obtaining the consent of individuals on how their data can be used. Non-compliance with GDPR may expose entities to significant fines or otherregulatory claims which could have an adverse effect on our business, and results of operations. A cyber-attack could materially disrupt our business. We rely on information technology systems and networks in our operations and administration of our business. Our business operations could be targeted by individuals orgroups seeking to sabotage or disrupt our information technology systems and networks, or to steal data. A successful cyber-attack could materially disrupt our operations, includingthe safety of our operations, or lead to unauthorized release of information or alteration of information in our systems. Any such attack or other breach of our information technologysystems could have a material adverse effect on our business and results of operations. In addition, the unavailability of the information systems or the failure of these systems toperform as anticipated for any reason could disrupt our business and could result in decreased performance and increased operating costs, causing our business and results ofoperations to suffer. Any significant interruption or failure of our information systems or any significant breach of security could adversely affect our business and results of operations. The smuggling of drugs or other contraband onto our vessels may lead to governmental claims against us. We expect that our vessels will call in ports in South America and other areas where smugglers attempt to hide drugs and other contraband on vessels, with or without theknowledge of crew members. Under some jurisdictions, vessels used for the conveyance of illegal drugs could subject the vessels to forfeiture to the government of such jurisdiction. Tothe extent our vessels are found with contraband, whether inside or attached to the hull of our vessel and whether with or without the knowledge of any member of our crew, we may facereputational damage and governmental or other regulatory claims or penalties which could have an adverse effect on our business, results of operations, cash flows and financialcondition, as well as our ability to maintain cash flows, including cash available for distributions to pay dividends to our unitholders. Under some jurisdictions, vessels used for theconveyance of illegal drugs could subject result in forfeiture of the vessel to forfeiture to the government of such jurisdiction. 21Table of ContentsRisks Relating to Our Common Shares The market price of our common shares has been and may in the future be subject to significant fluctuations. Further, there is no guarantee of a continuing public market to resellour common shares. Our common shares commenced trading on the Nasdaq Global Market on October 15, 2008. Since December 21, 2012, our common shares have traded on the Nasdaq CapitalMarket. We cannot assure you that an active and liquid public market for our common shares will continue. The market price of our common shares has been and may in the future be subject to significant fluctuations as a result of many factors, some of which are beyond our control.Among the factors that have in the past and could in the future affect our stock price are: •quarterly variations in our results of operations; •changes in market valuations of similar companies and stock market price and volume fluctuations generally; •changes in earnings estimates or the publication of research reports by analysts; •speculation in the press or investment community about our business or the shipping industry generally; •strategic actions by us or our competitors such as acquisitions or restructurings; •the thin trading market for our common shares, which makes it somewhat illiquid; •regulatory developments; •additions or departures of key personnel; •general market conditions; and •domestic and international economic, market and currency factors unrelated to our performance. The stock markets in general, and the markets for dry bulk shipping and shipping stocks in particular, have experienced extreme volatility that has sometimes been unrelated tothe operating performance of individual companies. These broad market fluctuations may adversely affect the trading price of our common stock. Additionally, there is no guarantee of a continuing public market to resell our common shares. Our common shares now trade on the Nasdaq Capital Market. We cannot assureyou that an active and liquid public market for our common shares will continue. On July 15, 2019, we received written notification from the NASDAQ Stock Market, indicating thatbecause the closing bid price of our common stock for 30 consecutive business days, from May 31, 2019 to July 12, 2019, was below the minimum $1.00 per share bid price requirementfor continued listing on the Nasdaq Capital Market, we were not in compliance with Nasdaq Listing Rule 5550(a)(2). Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the applicable graceperiod to regain compliance was 180 days, or until January 13, 2020. On January 14, 2020, we received written notification from the NASDAQ Stock Market, indicating that we weregranted an additional 180-day grace period, until July 13, 2020, to cure our non-compliance with Nasdaq Listing Rule 5550(a)(2). We can cure this deficiency if the closing bid price of ourcommon stock is $1.00 per share or higher for at least ten consecutive business days during the grace period. A reverse stock split will be considered by our board of directors if deemednecessary in order to regain compliance prior to the expiration of the grace period. During this time, our common stock will continue to be listed and trade on the Nasdaq Capital Market. 22Table of ContentsThe declaration and payment of dividends will always be subject to the discretion of our board of directors and will depend on a number of factors. Our board of directors may notdeclare dividends in the future. The declaration, timing and amount of any dividend is subject to the discretion of our board of directors and will be dependent upon our earnings, financial condition, marketprospects, capital expenditure requirements, investment opportunities, restrictions in our loan agreements, the provisions of Marshall Islands law affecting the payment of dividends toshareholders, overall market conditions and other factors. Our board of directors may not declare dividends in the future. Both of our loan facilities with Alpha Bank A.E. place restrictions on our ability to distribute dividends to our shareholders, specifically that the amount of the dividends sodeclared shall not exceed 50% of our net income except in case that cash and marketable securities are equal or greater than the amount required to meet our debt service for thefollowing eighteen-month period. However, in February 2020, we received approval from the credit committee of Alpha Bank A.E. to, inter alia, remove these restrictions. This approval issubject to completion of definitive documentation. Further, Marshall Islands law generally prohibits the payment of dividends if the company is insolvent or would be rendered insolventupon payment of such dividend, and dividends may be declared and paid out of our operating surplus. Dividends may also be declared or paid out of net profits for the fiscal year inwhich the dividend is declared and for the preceding fiscal year. We may be unable to pay dividends in any anticipated amount or at all.Anti-takeover provisions in our restated articles of incorporation and second amended and restated bylaws could make it difficult for shareholders to replace or remove ourcurrent board of directors or could have the effect of discouraging, delaying or preventing a merger or acquisition, which could adversely affect the market price of our commonshares. Several provisions of our restated articles of incorporation and second amended and restated bylaws could make it difficult for shareholders to change the composition of ourboard of directors in any one year, preventing them from changing the composition of our management. In addition, the same provisions may discourage, delay or prevent a merger oracquisition that shareholders may consider favorable. These provisions: •authorize our board of directors to issue “blank check” preferred stock without shareholder approval; •provide for a classified board of directors with staggered, three-year terms; •require a super-majority vote in order to amend the provisions regarding our classified board of directors; •permit the removal of any director from office at any time, with or without cause, at the request of the shareholder group entitled to designate such director; and •prevent our board of directors from dissolving the shipping committee or altering the duties or composition of the shipping committee without an affirmative vote of not lessthan 80% of the board of directors. These anti-takeover provisions could substantially impede the ability of shareholders to benefit from a change in control and, as a result, may adversely affect the market priceof our common shares and your ability to realize any potential change of control premium. Issuance of preferred shares may adversely affect the voting power of our shareholders and have the effect of discouraging, delaying or preventing a merger or acquisition, whichcould adversely affect the market price of our common shares. Our restated articles of incorporation currently authorize our board of directors to issue preferred shares in one or more series and to determine the rights, preferences,privileges and restrictions, with respect to, among other things, dividends, conversion, voting, redemption, liquidation and the number of shares constituting any series withoutshareholders’ approval. If our board of directors determines to issue preferred shares, such issuance may discourage, delay or prevent a merger or acquisition that shareholders mayconsider favorable. The issuance of preferred shares with voting and conversion rights may also adversely affect the voting power of the holders of common shares. This couldsubstantially impede the ability of public shareholders to benefit from a change in control and, as a result, may adversely affect the market price of our common shares and ourshareholders’ ability to realize any potential change of control premium. 23Table of ContentsJelco and Comet Shipholding Inc. are able to exercise considerable control over the outcome of all matters requiring a shareholder vote, and their interests could conflict with theinterests of our other shareholders. Jelco and Comet Shipholding Inc., or Comet, both companies affiliated with our Sponsor, currently collectively own approximately 7,934,388, or approximately 27%, of ouroutstanding common shares. Jelco may also acquire up to 2,867,776 additional common shares upon conversion of the convertible notes issued to it by the Company, in which case ourSponsor would own approximately 33.5% of our outstanding common shares, based on the number of common shares outstanding as of March 4, 2020. Jelco also owns Class Bwarrants exercisable for an aggregate of 1,823,529 common shares at an exercise price of $1.00 per share. As a result, Jelco and Comet are able to exercise considerable control over theoutcome of all matters requiring a shareholder vote. This concentration of ownership may delay, deter or prevent acts that would be favored by our other shareholders or depriveshareholders of an opportunity to receive a premium for their shares as part of a sale of our business, and it is possible that the interests of our Sponsor may in some cases conflict withour interests and the interests of our other holders of shares. For example, conflicts of interest may arise between us, on one hand, and our Sponsor or affiliated entities, on the otherhand, which may result in the transactions on terms not determined by market forces. Any such conflicts of interest could adversely affect our business, financial condition and resultsof operations, and the trading price of our common shares. In addition, this concentration of share ownership may adversely affect the trading price of our shares because investors mayperceive disadvantages in owning shares in a company with such concentrated shareholding. We may issue additional common shares or other equity securities without shareholder approval, which would dilute our existing shareholders’ ownership interests and maydepress the market price of our common shares. We may issue additional common shares or other equity securities of equal or senior rank in the future without shareholder approval in connection with, among other things,future vessel acquisitions, the repayment of outstanding indebtedness, and the conversion of convertible financial instruments. Our issuance of additional common shares or other equity securities of equal or senior rank in these situations would have the following effects: •our existing shareholders’ proportionate ownership interest in us would decrease; •the proportionate amount of cash available for dividends payable on our common shares could decrease; •the relative voting strength of each previously outstanding common share could be diminished; and •the market price of our common shares could decline. In addition, we may issue additional common shares upon any conversion of our outstanding convertible notes issued to Jelco or upon exercise of our outstanding Class Awarrants, Class B warrants or the Representative’s Warrant issued to Maxim Group LLC, or Maxim, in connection with our public offering in May 2019. As of March 4, 2020, Jelco had the right to acquire 281,481 common shares upon exercise of a conversion option pursuant to the convertible note dated March 12, 2015, asamended, issued by the Company to Jelco, 1,567,777 common shares upon exercise of a conversion option pursuant to the revolving convertible note dated September 7, 2015, asamended, issued by the Company to Jelco, 1,018,518 common shares upon exercise of a conversion option pursuant to the convertible note dated September 27, 2017, as amended,issued by the Company to Jelco. Under each of the convertible notes, Jelco may, at its option, convert the principal amount under the note at any time into common shares at aconversion price of $13.50 per share. As of March 4, 2020, Jelco had also the right to acquire 1,823,529 common shares upon exercise of the Class B warrants issued by the Company toJelco in May 2019. Each Class B Warrant is exercisable for one common share at an adjusted exercise price of $1.00 per share and expires in May 2022. Our issuance of additional commonshares in such instance and assuming no exercises from other warrant holders, would cause the proportionate ownership interest in us of our existing shareholders, other than Jelco, todecrease; the relative voting strength of each previously outstanding common share held by our existing shareholders, other than the converting noteholder, to decrease; and the marketprice of our common shares could decline. 24Table of ContentsAs of March 4, 2020, we had 11,500,000 Class A warrants outstanding to purchase an aggregate of 766,666 common shares, 4,830,000 Class B Warrants outstanding to purchasean aggregate of 4,830,000 common shares and one Representative’s Warrant outstanding to purchase an aggregate of 210,000 common shares. Each Class A warrant is exercisable forone common share at an exercise price of $30.00 per share and expires in December 2021. Each Class B Warrant is exercisable for one common share at an adjusted exercise price of $1.00per share and expires in May 2022. The Representative’s Warrant has an adjusted exercise price equal $1.00 and expire in May 2022. Our issuance of additional common shares upon theexercise of the Class A warrants, Class B warrants or the Representative’s Warrant would cause the proportionate ownership interest in us of our existing shareholders, other than theexercising warrant holders, to decrease; the relative voting strength of each previously outstanding common share held by our existing shareholders to decrease; and the market price ofour common shares could decline. We are incorporated in the Republic of the Marshall Islands, which does not have a well-developed body of corporate law, which may negatively affect the ability of shareholdersto protect their interests. Our corporate affairs are governed by our Restated Articles of Incorporation, our Second Amended and Restated Bylaws and by the Marshall Islands Business CorporationsAct, or the BCA. The provisions of the BCA resemble provisions of the corporation laws of a number of states in the United States. However, there have been few judicial cases in theRepublic of the Marshall Islands interpreting the BCA. The rights and fiduciary responsibilities of directors under the laws of the Republic of the Marshall Islands are not as clearlyestablished as the rights and fiduciary responsibilities of directors under statutes or judicial precedent in existence in certain U.S. jurisdictions. Shareholder rights may differ as well.While the BCA does specifically incorporate the non-statutory law, or judicial case law, of the State of Delaware and other states with substantially similar legislative provisions,shareholders may have more difficulty in protecting their interests in the face of actions by the management, directors or controlling shareholders than would shareholders of acorporation incorporated in a U.S. jurisdiction. Additionally, the Republic of the Marshall Islands does not have a legal provision for bankruptcy or a general statutory mechanism for insolvency proceedings. As such, in theevent of a future insolvency or bankruptcy, our shareholders and creditors may experience delays in their ability to recover for their claims after any such insolvency or bankruptcy.Further, in the event of any bankruptcy, insolvency, liquidation, dissolution, reorganization or similar proceeding involving us or any of our subsidiaries, bankruptcy laws other thanthose of the United States could apply. If we become a debtor under U.S. bankruptcy law, bankruptcy courts in the United States may seek to assert jurisdiction over all of our assets,wherever located, including property situated in other countries. There can be no assurance, however, that we would become a debtor in the United States, or that a U.S. bankruptcycourt would be entitled to, or accept, jurisdiction over such a bankruptcy case, or that courts in other countries that have jurisdiction over us and our operations would recognize a U.S.bankruptcy court’s jurisdiction if any other bankruptcy court would determine it had jurisdiction. As a Marshall Islands corporation with principal executive offices in Greece, and also having subsidiaries in the Republic of the Marshall Islands and other offshore jurisdictionssuch as Liberia, Bermuda and the British Virgin Islands, our operations may be subject to economic substance requirements. In December 2017, following an assessment of the tax policies of various countries by the Code of Conduct Group for Business Taxation of the European Union, or the COCG,the Council of the European Union, or the Council, approved and published Council conclusions containing a list of “non-cooperative jurisdictions” for tax purposes, the 2017Conclusions. In March 2019, the Council adopted a revised list of non-cooperative jurisdictions, the 2019 Conclusions. In the 2019 Conclusions, the Republic of the Marshall Islands,among others, was placed by the E.U. on its list of non-cooperative jurisdictions for tax purposes for failing to implement certain commitments previously made to the E.U. by the agreeddeadline. However, it was announced by the Council in October 2019 that the Marshall Islands had been removed from the list of non-cooperative tax jurisdictions. E.U. member stateshave agreed upon a set of measures, which they can choose to apply against the listed countries, including increased monitoring and audits, withholding taxes, special documentationrequirements and anti-abuse provisions. The European Commission has stated it will continue to support member states’ efforts to develop a more coordinated approach to sanctions forthe listed countries. E.U. legislation prohibits E.U. funds from being channeled or transited through entities in non-cooperative jurisdictions. We are a Marshall Islands corporation with principal executive offices in Greece. Several of our subsidiaries are organized in the Republic of the Marshall Islands, Liberia,Bermuda and the British Virgin Islands. The Marshall Islands have enacted economic substance regulations with which we are obligated to comply. The Marshall Islands economicsubstance regulations require certain entities that carry out particular activities to comply with a three-part economic substance test whereby the entity must show that it (i) is directedand managed in the Marshall Islands in relation to that relevant activity, (ii) carries out core income-generating activity in relation to that relevant activity in the Marshall Islands(although it is being understood and acknowledged by the regulators that income-generated activities for shipping companies will generally occur in international waters) and (iii) havingregard to the level of relevant activity carried out in the Marshall Islands has (a) an adequate amount of expenditures in the Marshall Islands, (b) adequate physical presence in theMarshall Islands and (c) an adequate number of qualified employees in the Marshall Islands. Bermuda and the British Virgin Islands have enacted similar legislation. 25Table of ContentsIf we fail to comply with our obligations under such legislation or any similar law applicable to us in any other jurisdictions, we could be subject to financial penalties andspontaneous disclosure of information to foreign tax officials, or could be struck from the register of companies, in related jurisdictions. Any of the foregoing could be disruptive to ourbusiness and could have a material adverse effect on our business, financial conditions and operating results. We do not know (i) if the E.U. will add the Marshall Islands, Liberia, Bermuda or the British Virgin Islands to the list of non-cooperative jurisdictions, (ii) how quickly the E.U.would react to any changes in legislation of the relevant jurisdictions, or (iii) how E.U. banks or other counterparties will react while we or any of our subsidiaries remain as entitiesorganized and existing under the laws of listed countries. The effect of the E.U. list of non-cooperative jurisdictions, and any noncompliance by us with any legislation adopted byapplicable countries to achieve removal from the list, including economic substance regulations, could have a material adverse effect on our business, financial conditions and operatingresults. It may not be possible for investors to serve process on or enforce U.S. judgments against us. We and all of our subsidiaries are incorporated in jurisdictions outside the U.S. and substantially all of our assets and those of our subsidiaries are located outside the U.S. Inaddition, most of our directors and officers are non-residents of the U.S., and all or a substantial portion of the assets of these non-residents are located outside the U.S. As a result, itmay be difficult or impossible for U.S. investors to serve process within the U.S. upon us, our subsidiaries or our directors and officers or to enforce a judgment against us for civilliabilities in U.S. courts. In addition, you should not assume that courts in the countries in which we or our subsidiaries are incorporated or where our assets or the assets of oursubsidiaries are located (1) would enforce judgments of U.S. courts obtained in actions against us or our subsidiaries based upon the civil liability provisions of applicable U.S. federaland state securities laws or (2) would enforce, in original actions, liabilities against us or our subsidiaries based on those laws. ITEM 4.INFORMATION ON THE COMPANYA.History and Development of the CompanyOverviewWe are an international shipping company specializing in the worldwide seaborne transportation of dry bulk commodities. We currently own a modern fleet of ten Capesize bulkcarriers with a cargo-carrying capacity of approximately 1,748,581 dwt and an average fleet age of 11 years. We are the only pure-play Capesize shipowner publicly listed in the U.S.We believe we have established a reputation in the international dry bulk shipping industry for operating and maintaining vessels with high standards of performance, reliabilityand safety. We have assembled a management team comprised of executives who have extensive experience operating large and diversified fleets, and who have strong ties to a numberof international charterers.We were incorporated under the laws of the Republic of the Marshall Islands, pursuant to the BCA, on January 4, 2008, originally under the name Seanergy Merger Corp. Wechanged our name to Seanergy Maritime Holdings Corp. on July 11, 2008. Our executive offices are located at 154 Vouliagmenis Avenue, 166 74 Glyfada, Athens, Greece and ourtelephone number is + 30 213 0181507. Our website is www.seanergymaritime.com. The SEC maintains a website that contains reports, proxy and information statements, and otherinformation that we file electronically at www.sec.gov. 26Table of ContentsHistory and Development On February 3, 2017, we entered into an Equity Distribution Agreement with Maxim, as sales agent, pursuant to which we sold 185,475 of our common shares for an aggregatenet proceeds of $2.6 million. On June 27, 2017, we and Maxim mutually terminated the Equity Distribution Agreement.On March 7, 2017, we entered into a settlement agreement with Natixis related to our 2015 secured term loan facility with Natixis. Under the terms of the settlement agreement,we were granted an option, until September 29, 2017, to satisfy the full amount of the facility at a discount by making a prepayment of $28 million. On September 29, 2017, Natixis, enteredinto a deed of release and fully discharged the $35.4 million balance of our secured term loan facility obligations to the lender for a total settlement amount of $24.0 million. The firstpriority mortgage over the Championship and all other securities created in favour of Natixis were irrevocably and unconditionally released pursuant to the deed of release. Werecognized a gain from the Natixis refinancing of $11.4 million.On March 28, 2017, we entered into an agreement with an unaffiliated third party for the purchase of a secondhand Capesize vessel, the Partnership, for a gross purchase priceof $32.7 million. We took delivery of the Partnership on May 31, 2017. The acquisition costs of the Partnership were funded with proceeds from a $18 million secured loan facility withAmsterdam Trade Bank N.V., or ATB, as described below and a $16.2 million secured loan facility with Jelco, referred to as the Second Jelco Loan Facility.On May 24, 2017, we entered into an up to $18 million term loan facility with ATB, the ATB Loan Facility, to partially finance the acquisition of the Partnership. On May 24, 2017, we entered into an up to $16.2 million loan facility with Jelco to partially finance the acquisition of the Partnership.On September 25, 2017, in order to partially fund the refinancing of our Natixis facility, we amended and restated the ATB Loan Facility, increasing the loan amount of the ATBLoan Facility by an additional tranche of $16.5 million, the Amended and Restated ATB Loan Facility.On September 27, 2017, we entered into an amendment and restatement of the $16.2 million Second Jelco Loan Facility, as described below.On April 10, 2018, we entered into a $2 million loan facility with Jelco for working capital purposes, also described below as the Third Jelco Loan Facility. We drew down the $2million on April 12, 2018.On June 11, 2018, we entered into a $24.5 million term loan facility with Blue Ocean maritime lending funds managed by EnTrustPermal in order to partially fund the refinancing ofa $32 million loan facility with Northern Shipping Funds, or NSF, the NSF Loan Facility. On June 13, 2018, NSF, entered into a deed of release and fully discharged the $16 million balanceof the NSF Loan Facility. The first priority mortgage over the Lordship and all other securities granted in favour of NSF were irrevocably and unconditionally released pursuant to thedeed of release.On June 28, 2018, we entered into a sale and leaseback agreement with Hanchen Limited, or Hanchen, an affiliate of AVIC International Leasing Co., Ltd., for the purpose ofrefinancing the outstanding indebtedness under the NSF Loan Facility. On June 28, 2018, NSF, entered into a deed of release and fully discharged the $16 million balance of the NSF LoanFacility. The first priority mortgage over the Knightship and all other securities granted in favour of NSF were irrevocably and unconditionally released pursuant to the deed of release.Under the terms of the sale and leaseback agreement, the Knightship was sold for $26.5 million and leased back on a bareboat basis for a period of 8 years.On August 31, 2018 we entered into an agreement with an unaffiliated third party to acquire a secondhand Capesize vessel, the Fellowship, for a gross purchase price of $28.7million. We took delivery of the Fellowship on November 22, 2018. The acquisition costs of the Fellowship were funded with proceeds from an amended and restated term loan facilitywith UniCredit, the Amended and Restated UniCredit Loan Facility, described below, and by cash on hand.On September 20, 2018, we entered into two separate definitive agreements with unaffiliated third parties for the sale of our two Supramax vessels, the Gladiatorship and theGuardianship for an aggregate gross sale price of $22.7 million. The previous lender, UniCredit, agreed to rollover the loan amount under the $52.7 million loan facility by funding theFellowship under the Amended and Restated UniCredit Loan Facility. The Gladiatorship and the Guardianship were delivered to their new owners on October 11, 2018 and onNovember 19, 2018, respectively.27Table of ContentsOn November 7, 2018, we entered into a sale and leaseback agreement with Cargill International SA, or Cargill, for the purpose of refinancing the outstanding indebtednessunder the Amended and Restated ATB Loan Facility. Pursuant to the terms of the agreement, the Championship was sold and chartered back on a bareboat basis and subsequently wasentered into a five-year time charter with Cargill. The refinancing released approximately $7.8 million of liquidity for the Company that was used to partially finance the acquisition price ofthe Fellowship. As part of this agreement 120,000 common shares were issued to Cargill.On February 13, 2019, we entered into a new loan facility with ATB in order to refinance the existing indebtedness over the Partnership under the Amended and Restated ATBLoan Facility, for general working capital purposes and more specifically, for the financing of installation of open loop scrubber systems on the Squireship and Premiership.Effective at the opening of trading on March 20, 2019, we effected a one-for-fifteen reverse split of our common stock. On March 26, 2019, we entered into a $7.0 million loan facility with Jelco, or the Fourth Jelco Loan Facility, the proceeds of which were utilized to (i) refinance the Third JelcoLoan Facility and (ii) for general corporate purposes. We drew down the entire $7.0 million on March 27, 2019. On May 13, 2019, we sold 4,200,000 units at a price of $3.40 per unit in a public offering. Each unit consisted of one common share (or one pre-funded warrant in lieu of onecommon share in the unit), one Class B warrant to purchase one common share and one Class C warrant to purchase one common share. In addition, we issued one RepresentativeWarrant to the underwriters to purchase 210,000 common shares. In connection with the offering, the underwriters exercised their overallotment option with regard to 630,000 Class Bwarrants and 630,000 Class C warrants. The gross proceeds of the offering, before underwriting discounts and commissions and estimated offering expenses, were approximately $14.3million. The net proceeds from the sale of common shares and warrants, after deducting underwriters’ fees and expenses, were approximately $12.6 million. As of the date of this report,no pre-funded warrants, no Class C warrants and 4,830,000 Class B warrants are outstanding. Of the 4,830,000 Class C warrants issued on May 13, 2019, 4,770,500 were exercised and theremaining 59,500 Class C warrants expired pursuant to their terms on November 13, 2019. All the 1,435,000 pre-funded warrants issued on May 13, 2019 were exercised from May untilJune 2019. Effective December 13, 2019, each Class B warrant is exercisable to purchase one common share at an exercise price of $1.00 and expires three years from the date of issuance.The Representative Warrant is exercisable to purchase 210,000 common shares at an adjusted exercise price of $1.00 per share and expires three years from the date of issuance. Concurrently with the public offering on May 13, 2019, we sold 1,823,529 units in a private placement to Jelco in exchange for, inter alia, the forgiveness of certain paymentobligations of ours, including all interest payments accrued and due through December 31, 2019, pursuant to a Securities Purchase Agreement entered into with Jelco on May 9, 2019, orthe Purchase Agreement. In connection with the private placement, 1,823,529 common shares were issued to Jelco on May 13, 2019 and pursuant to the alternate cashless exercise ofJelco’s Class C warrants further 4,996,469 common shares were issued to Jelco on June 17, 2019. As of the date of this report, the 1,823,529 Class B Warrants issued to Jelco remainoutstanding. All Class C Warrants issued to Jelco were exercised on June 14, 2019. Between March and August 2019, we entered into supplemental agreements with certain of our lenders to, inter alia, (i) amend the applicable thresholds of certain financialcovenants of our credit facilities until the later of maturity or June 30, 2020 and (ii) defer a total of $3.3 million of debt installments, that were originally scheduled for 2019, to dates fallingin 2020 and 2021. On July 15, 2019, we received written notification from the NASDAQ Stock Market, indicating that because the closing bid price of our common stock for 30 consecutivebusiness days, from May 31, 2019 to July 12, 2019, was below the minimum $1.00 per share bid price requirement for continued listing on the Nasdaq Capital Market, we were not incompliance with Nasdaq Listing Rule 5550(a)(2). Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the applicable grace period to regain compliance was 180 days, or until January 13, 2020.On January 14, 2020, we received written notification from the NASDAQ Stock Market, indicating that we were granted an additional 180-day grace period, until July 13, 2020, to cure ournon-compliance with Nasdaq Listing Rule 5550(a)(2). We can cure this deficiency if the closing bid price of its common stock is $1.00 per share or higher for at least ten consecutivebusiness days during the grace period. During this time, our common stock will continue to be listed and trade on the Nasdaq Capital Market. 28Table of ContentsDuring our 2019 annual general meeting, our shareholders approved a reverse stock split of our issued and outstanding common stock at a ratio of not less than 1‑for‑2 and notmore than 1‑for‑20, and granted our board of directors the authority to determine whether to implement any reverse stock split and, if so, to select an exchange ratio within the approvedrange. A reverse stock split will be considered by our board of directors if deemed necessary in order to regain compliance with the Nasdaq Capital Market minimum bid pricerequirement. In December 2019, we completed our program of installation of scrubbers in anticipation of the IMO’s low sulfur fuel oil requirements in effect from January 1, 2020. We haveretrofitted five Capesize vessels, or 50% of our fleet, with scrubbers. The costs of the scrubber program, amounting to approximately $21.4 million, were partly borne by the vessels’charterers. The five vessels are under long-term time charters, which commenced in 2018 and 2019. In February 2020, we received approval from the credit committee of one of our lenders to, inter alia, extend the maturities of two of our credit facilities and cancel certain of ourcorporate covenants applying on these facilities. This approval is subject to completion of definitive documentation. B.Business OverviewWe are an international shipping company specializing in the worldwide seaborne transportation of dry bulk commodities. We currently operate ten Capesize vessels, with acargo-carrying capacity of approximately 1,748,581 dwt and an average age of 11 years. We are the only pure-play Capesize shipping company listed in the U.S. We believe we have established a reputation in the international dry bulk shipping industry for operating and maintaining vessels with high standards of performance, reliabilityand safety. We have assembled a management team comprised of executives who have extensive experience operating large and diversified fleets, and who have strong ties to a numberof international charterers. Our Current FleetThe following table lists the vessels in our fleet as of the date of this annual report: Vessel NameYear BuiltDwtFlagYardType of EmploymentFellowship2010179,701MIDaewooSpotChampionship(1)2011179,238MISungdongT/C Index Linked(2)Partnership2012179,213MIHyundaiT/C Index Linked(3)Knightship(4)2010178,978LIBHyundaiSpotLordship2010178,838LIBHyundaiT/C Index Linked(5)Gloriuship(6)2004171,314MIHyundaiT/C Index LinkedLeadership2001171,199BAKoyo-ImabariSpotGeniuship2010170,058MISungdongSpotPremiership2010170,024IoMSungdongT/C Index Linked(7)Squireship2010170,018LIBSungdongT/C Index Linked(8)(1)In November 2018, we entered into a financing arrangement with Cargill according to which this vessel was sold and leased back on a bareboat basis from Cargill for a five-year-period. We have a purchase obligation at the end of the five-year period and we further have the option to repurchase the vessel at any time during the bareboat charter.(2)This vessel is being chartered by Cargill. The vessel was delivered to the charterer on November 7, 2018 for a period of employment of 60 months, with an additional period of 24to 27 months at the charterer’s option. The net daily charter hire is calculated at an index linked rate based on the five T/C routes of the BCI. In addition, the time charter providesus with the option to convert the index linked rate to a fixed rate for a period of between three and 12 months priced at the then prevailing Capesize Forward Freight Agreementrate, or FFA, for the selected period.(3)This vessel is being chartered by a major European utility and energy company and was delivered to the charterer on September 11, 2019, for a period of minimum 33 to maximum37 months with an optional period of about 11 to maximum 13 months. The net daily charter hire is calculated at an index linked rate based on the five T/C routes rate of the BCI. Inaddition, the time charter provides us an option for any period of time during the hire to be converted into a fixed rate time charter, between three months and 12 months, with arate corresponding to the prevailing value of the respective Capesize FFA.(4)In June 2018, we entered into a financing arrangement with AVIC International Leasing Co., Ltd., or AVIC, according to which this vessel was sold and leased back on a bareboatbasis from AVIC’s affiliate, Hanchen, for an eight-year period. We have a purchase obligation at the end of the eight-year period and we further have the option to repurchase thevessel at any time following the second anniversary of delivery under the bareboat charter.(5)This vessel is being chartered by a major European utility and energy company and was delivered to the charterer on August 4, 2019, for a period of minimum 33 to maximum 37months with an optional period of about 11 to maximum 13 months. The net daily charter hire is calculated at an index linked rate based on the five T/C routes rate of the BCI. Inaddition, the time charter provides us an option for any period of time during the hire to be converted into a fixed rate time charter, between three months and 12 months, with arate corresponding to the prevailing value of the respective Capesize FFA.(6)This vessel is being chartered by a dry bulk charter operator and was delivered to the charterer on December 19, 2019, for a period of minimum four to maximum seven months. Thenet daily charter hire is calculated at an index linked rate based on the five T/C routes of the BCI.(7)This vessel is being chartered by a major commodity trading company and was delivered to the charterer on November 29, 2019 for a period of minimum 36 to maximum 42 monthswith two optional periods of about 11 to maximum 13 months. The net daily charter hire is calculated at an index linked rate based on the five T/C routes rate of the BCI.(8)This vessel is being chartered by a major commodity trading company and was delivered to the charterer on December 19, 2019 for a period of minimum 36 to maximum 42 monthswith two optional periods of about 11 to maximum 13 months. The net daily charter hire is calculated at an index linked rate based on the five T/C routes rate of the BCI.Key to Flags:BA – Bahamas, IoM – Isle of Man, LIB – Liberia, MI – Marshall Islands. 29Table of ContentsOur Business StrategyWe currently operate ten Capesize vessels. We intend to continue to review the market in order to identify potential acquisition targets which will be accretive to our earningsper share. Our acquisition strategy focuses on newbuilding or secondhand Capesize dry bulk vessels, although we may acquire vessels in other sectors which we believe offer attractiveinvestment opportunities.Management of Our FleetWe manage our vessel’s operations, insurances and bunkering and have the general supervision of our third-party technical and commercial managers.V.Ships, an independent third party, provides technical management for our vessels that includes general administrative and support services, such as crewing and othertechnical management, accounting related to vessels and provisions. Pursuant to our technical management agreements with V.Ships, we paid a monthly fee of $8,240 per vessel in 2019,and we are paying a monthly fee of about $8,488 per vessel as of January 1, 2020 in exchange for V.Ships providing these technical, support and administrative services. The managementfees do not cover expenses such as voyage expenses, vessel operating expenses, maintenance expenses and crewing costs, which are reimbursed by us to V.Ships. The technicalmanagement agreements are for an indefinite period until terminated by either party, giving the other notice in writing, in which event the applicable agreement shall terminate after onemonth from the date upon which such notice is received.Seanergy Management Corp., or Seanergy Management, one of our wholly-owned subsidiaries, has entered into a commercial management agreement with Fidelity, anindependent third party, pursuant to which Fidelity provides commercial management services for all of the vessels in our fleet. Fidelity serves as a commercial broker for Capesizevessels exclusively to us. Under the commercial management agreement, we have agreed to reimburse Fidelity for all reasonable running and/or out-of-pocket expenses, including butnot limited to, telephone, fax, stationary and printing expenses, as well as any pre-approved travelling expenses. In addition, we have agreed to pay the following fees to Fidelity, (i) anannual fee of EUR 120,000 net payable in equal monthly payments and (ii) commission fees equal to 0.15% calculated on the collected gross hire/freight/demurrage payable when therelevant hire/freight/demurrage is collected. The fees under (i) and (ii) are capped at EUR 300,000 per year. The commercial management agreement may be terminated by either partyupon giving one-month prior written notice to the other party.30Table of ContentsEmployment of Our FleetAs of the date of this report, four of our vessels are chartered on the spot charter market, either through trip charter contracts or voyage charter contracts. A spot marketvoyage charter is generally a contract to carry a specific cargo from a load port to a discharge port for an agreed freight per ton of cargo or a specified total amount. Under spot marketvoyage charters, we pay specific voyage expenses such as port, canal and bunker costs. Spot charter rates are volatile and fluctuate on a seasonal and year-to-year basis. Fluctuationsderive from imbalances in the availability of cargoes for shipment and the number of vessels available at any given time to transport these cargoes. Vessels operating in the spot marketgenerate revenue that is less predictable than those under time charters, but may enable us to capture increased profit margins during periods of improvements in dry bulk vessel charterrates. Downturns in the dry bulk industry would result in a reduction in profit margins and could lead to losses.The remaining six of our vessels are employed under long-term time charters which have a charter hire calculated at an index-linked rate based on the 5-routes T/C average ofthe BCI. Also, under some of our time charter agreements we have the option to convert the index linked rate into a fixed rate corresponding to the prevailing value of the respectiveCapesize FFAs. In the future, we may opportunistically look to employ more of our vessels under time charter contracts with a fixed rate, should rates become more attractive.Shipping CommitteeWe have established a shipping committee. The purpose of the shipping committee is to consider and vote upon all matters involving shipping and vessel finance in order toaccelerate the pace of our decision making in respect of shipping business opportunities, such as the acquisition of vessels or companies. The shipping industry often demands veryprompt review and decision-making with respect to business opportunities. In recognition of this, and in order to best utilize the experience and skills that our directors bring to us, ourboard of directors has delegated all such matters to the shipping committee. Transactions that involve the issuance of our securities or transactions that involve a related party, however,shall not be delegated to the shipping committee but instead shall be considered by the entire board of directors. The shipping committee consists of three directors. In accordance withthe amended and restated charter of the shipping committee, two of the directors on the shipping committee are nominated by Jelco and one of the directors on the shipping committee isnominated by a majority of our board of directors and is an independent member of the board of directors. The members of the shipping committee are Mr. Stamatios Tsantanis and Ms.Christina Anagnostara, who are Jelco’s nominees, and Mr. Elias Culucundis, who is the nominee of the board of directors.In order to assure the continued existence of the shipping committee, our board of directors has agreed that the shipping committee may not be dissolved and that the duties orcomposition of the shipping committee may not be altered without the affirmative vote of not less than 80% of our board of directors. In addition, the duties of our chief executive officermay not be altered without a similar vote. These duties and powers include voting the shares of stock that the Company owns in its subsidiaries. In addition to these agreements, wehave amended certain provisions in our articles of incorporation and second amended and restated bylaws to incorporate these requirements.As a result of these various provisions, in general, all shipping-related decisions will be made by Jelco’s appointees to our board of directors unless 80% of the board membersvote to change the duties or composition of the shipping committee.The Dry bulk Shipping IndustryThe global dry bulk vessel fleet is divided into four categories based on a vessel’s carrying capacity. These categories are:Capesize. Capesize vessels have a carrying capacity of exceeding 100,000 dwt. Only the largest ports around the world possess the infrastructure to accommodate vessels ofthis size. Capesize vessels are primarily used to transport iron ore or coal and, to a much lesser extent, grains, primarily on long-haul routes.31Table of ContentsPanamax. Panamax vessels have a carrying capacity of between 60,000 and 100,000 dwt. These vessels are designed to meet the physical restrictions of the Panama Canal locks(hence their name “Panamax” — the largest vessels able to transit the Panama Canal prior to its 2016 expansion, making them more versatile than larger vessels). These vessels carrycoal, grains, and, to a lesser extent, minerals such as bauxite/alumina and phosphate rock.Handymax/Supramax. Handymax vessels have a carrying capacity of between 30,000 and 60,000 dwt. These vessels operate on a large number of geographically dispersedglobal trade routes, carrying primarily grains and minor bulks. The standard vessels are usually built with 25-30 ton cargo gear, enabling them to discharge cargo where grabs arerequired (particularly industrial minerals), and to conduct cargo operations in countries and ports with limited infrastructure. This type of vessel offers good trading flexibility and can,therefore, be used in a wide variety of bulk and neobulk trades, such as steel products. Supramax are a sub-category of this category typically having a cargo carrying capacity ofbetween 50,000 and 60,000 dwt. Handysize. Handysize vessels have a carrying capacity of up to 30,000 dwt. These vessels are almost exclusively carry minor bulk cargo. Increasingly, vessels of this typeoperate on regional trading routes, and may serve as trans-shipment feeders for larger vessels. Handysize vessels are well suited for small ports with length and draft restrictions. Theircargo gear enables them to service ports lacking the infrastructure for cargo loading and discharging.The supply of dry bulk vessels is dependent on the delivery of new vessels and the removal of vessels from the global fleet, either through scrapping or loss. The level ofscrapping activity is generally a function of scrapping prices in relation to current and prospective charter market conditions, as well as operating, repair and survey costs.The demand for dry bulk vessel capacity is determined by the underlying demand for commodities transported in dry bulk vessels, which in turn is influenced by trends in theglobal economy. Demand for dry bulk vessel capacity is also affected by the operating efficiency of the global fleet, with port congestion, which has been a feature of the market since2004, absorbing tonnage and therefore leading to a tighter balance between supply and demand. In evaluating demand factors for dry bulk vessel capacity, we believe that dry bulkvessels can be the most versatile element of the global shipping fleets in terms of employment alternatives.Charter Hire RatesCharter hire rates fluctuate by varying degrees among dry bulk vessel size categories. The volume and pattern of trade in a small number of commodities (major bulks) affectdemand for larger vessels. Therefore, charter rates and vessel values of larger vessels often show greater volatility. Conversely, trade in a greater number of commodities (minor bulks)drives demand for smaller dry bulk vessels. Accordingly, charter rates and vessel values for those vessels are subject to less volatility.Charter hire rates paid for dry bulk vessels are primarily a function of the underlying balance between vessel supply and demand, although at times other factors may play arole. Furthermore, the pattern seen in charter rates is broadly mirrored across the different charter types and the different dry bulk vessel categories. However, because demand forlarger dry bulk vessels is affected by the volume and pattern of trade in a relatively small number of commodities, charter hire rates (and vessel values) of larger ships tend to be morevolatile than those for smaller vessels.In the time charter market, rates vary depending on the length of the charter period and vessel specific factors such as age, speed and fuel consumption.In the voyage charter market, rates are influenced by cargo size, commodity, port dues and canal transit fees, as well as commencement and termination regions. In general, alarger cargo size is quoted at a lower rate per ton than a smaller cargo size. Routes with costly ports or canals generally command higher rates than routes with low port dues and nocanals to transit. Voyages with a load port within a region that includes ports where vessels usually discharge cargo or a discharge port within a region with ports where vessels loadcargo also are generally quoted at lower rates, because such voyages generally increase vessel utilization by reducing the unloaded portion (or ballast leg) that is included in thecalculation of the return charter to a loading area.Within the dry bulk shipping industry, the charter hire rate references most likely to be monitored are the freight rate indices issued by the Baltic Exchange. These references arebased on actual charter hire rates under charters entered into by market participants as well as daily assessments provided to the Baltic Exchange by a panel of major shipbrokers.32Table of ContentsCompetitionWe operate in markets that are highly competitive and based primarily on supply and demand. We compete for charters on the basis of price, vessel location, size, age andcondition of the vessel, as well as on its reputation. Fidelity negotiates the terms of our charters (whether voyage charters, period time charters, bareboat charters or pools) based onmarket conditions. We compete primarily with other owners of dry bulk vessels, many of which may have more resources than us and may operate vessels that are newer, and thereforemore attractive to charterers than vessels we may operate. Ownership of dry bulk vessels is highly fragmented and is divided among publicly listed companies, state-controlledcompanies and independent dry bulk vessel owners. We compete primarily with owners of dry bulk vessels in the Capesize class size.CustomersOur customers include or have included national, regional and international companies. Customers individually accounting for more than 10% of our revenues during the yearsended December 31, 2019, 2018 and 2017 were: Customer 2019 2018 2017A 19% 26% 17%B 18% 21% -C 15% - -D - 11% 17%Total 52% 58% 34%SeasonalityCoal, iron ore and grains, which are the major bulks of the dry bulk shipping industry, are somewhat seasonal in nature. The energy markets primarily affect the demand for coal,with increases during hot summer periods when air conditioning and refrigeration require more electricity and towards the end of the calendar year in anticipation of the forthcomingwinter period. The demand for iron ore tends to decline in the summer months because many of the major steel users, such as automobile makers, reduce their level of productionsignificantly during the summer holidays. Grain trades are completely seasonal as they are driven by the harvest within a climate zone. Because three of the five largest grain producers(the United States of America, Canada and the European Union) are located in the northern hemisphere and the other two (Argentina and Australia) are located in the southernhemisphere, harvests occur throughout the year and grains transportation requires dry bulk shipping accordingly.Environmental and Other RegulationsGovernment regulation and laws significantly affect the ownership and operation of our fleet. We are subject to international conventions and treaties, national, state and locallaws and regulations in force in the countries in which our vessels may operate or are registered relating to safety and health and environmental protection including the storage,handling, emission, transportation and discharge of hazardous and non-hazardous materials, and the remediation of contamination and liability for damage to natural resources.Compliance with such laws, regulations and other requirements entails significant expense, including vessel modifications and implementation of certain operating procedures.A variety of government and private entities subject our vessels to both scheduled and unscheduled inspections. These entities include the local port authorities (applicablenational authorities such as the United States Coast Guard, or USCG, harbor master or equivalent), classification societies, flag state administrations (countries of registry), terminaloperators and charterers. Certain of these entities require us to obtain permits, licenses, certificates and other authorizations for the operation of our vessels. Failure to maintainnecessary permits or approvals could require us to incur substantial costs or result in the temporary suspension of the operation of one or more of our vessels.Increasing environmental concerns have created a demand for vessels that conform to stricter environmental standards. We are required to maintain operating standards for allof our vessels that emphasize operational safety, quality maintenance, continuous training of our officers and crews and compliance with United States and international regulations. Webelieve that the operation of our vessels is in substantial compliance with applicable environmental laws and regulations and that our vessels have all material permits, licenses,certificates or other authorizations necessary for the conduct of our operations. However, because such laws and regulations frequently change and may impose increasingly stricterrequirements, we cannot predict the ultimate cost of complying with these requirements, or the impact of these requirements on the resale value or useful lives of our vessels. In addition,a future serious marine incident that causes significant adverse environmental impact could result in additional legislation or regulation that could negatively affect our profitability.33Table of ContentsInternational Maritime OrganizationThe IMO, the United Nations agency for maritime safety and the prevention of pollution by vessels, has adopted the International Convention for the Prevention of Pollutionfrom Ships, 1973, as modified by the Protocol of 1978 relating thereto, collectively referred to as MARPOL 73/78 and herein as MARPOL, adopted the International Convention for theSafety of Life at Sea of 1974, or SOLAS Convention, and the International Convention on Load Lines of 1966, or LL Convention. MARPOL establishes environmental standards relatingto oil leakage or spilling, garbage management, sewage, air emissions, the handling and disposal of noxious liquids and the handling of harmful substances in packaged forms. MARPOLis applicable to dry bulk, tanker and LNG carriers, among other vessels, and is broken into six Annexes, each of which regulates a different source of pollution. Annex I relates to oilleakage or spilling; Annexes II and III relate to harmful substances carried in bulk in liquid or in packaged form, respectively; Annexes IV and V relate to sewage and garbagemanagement, respectively; and Annex VI, lastly, relates to air emissions. Annex VI was separately adopted by the IMO in September of 1997.In 2013, the IMO’s Marine Environmental Protection Committee, or the MEPC, adopted a resolution amending MARPOL Annex I Condition Assessment Scheme, or CAS. Theseamendments became effective on October 1, 2014 and require compliance with the 2011 International Code on the Enhanced Programme of Inspections during Surveys of Bulk Carriersand Oil Tankers, or ESP Code, which provides for enhanced inspection programs. We may need to make certain financial expenditures to comply with these amendments.Air EmissionsIn September of 1997, the IMO adopted Annex VI to MARPOL to address air pollution from vessels. Effective May 2005, Annex VI sets limits on sulfur oxide and nitrogen oxideemissions from all commercial vessel exhausts and prohibits “deliberate emissions” of ozone depleting substances (such as halons and chlorofluorocarbons), emissions of volatilecompounds from cargo tanks, and the shipboard incineration of specific substances. Annex VI also includes a global cap on the sulfur content of fuel oil and allows for special areas tobe established with more stringent controls on sulfur emissions, as explained below. Emissions of “volatile organic compounds” from certain vessels, and the shipboard incineration(from incinerators installed after January 1, 2000) of certain substances (such as polychlorinated biphenyls, or PCBs) are also prohibited. We believe that all our vessels are currentlycompliant in all material respects with these regulations. The MEPC adopted amendments to Annex VI regarding emissions of sulfur oxide, nitrogen oxide, particulate matter and ozone depleting substances, which entered into forceon July 1, 2010. The amended Annex VI seeks to further reduce air pollution by, among other things, implementing a progressive reduction of the amount of sulfur contained in any fueloil used on board ships. Effective January 1, 2020, there is a global limit of 0.5% m/m sulfur oxide emissions (reduced from 3.50%). This limitation can be met by using low-sulfurcompliant fuel oil, alternative fuels, or certain exhaust gas cleaning systems. Ships are required to obtain bunker delivery notes and International Air Pollution Prevention, or IAPP,Certificates from their flag states that specify sulfur content. Additionally, at MEPC 73, amendments to Annex VI to prohibit the carriage of bunkers above 0.5% sulfur on ships wereadopted and will take effect on March 1, 2020. These regulations subject ocean-going vessels to stringent emissions controls and may cause us to incur substantial costs.Sulfur content standards are even stricter within certain “Emission Control Areas”, or ECAs. As of January 1, 2015, ships operating within an ECA were not permitted to use fuelwith sulfur content in excess of 0.1%. Amended Annex VI establishes procedures for designating new ECAs. Currently, the IMO has designated four ECAs, including specified portionsof the Baltic Sea area, North Sea area, North American area and United States Caribbean area. Ocean-going vessels in these areas will be subject to stringent emission controls and maycause us to incur additional costs. If other ECAs are approved by the IMO, or other new or more stringent requirements relating to emissions from marine diesel engines or portoperations by vessels are adopted by the U.S. Environmental Protection Agency, or EPA, or the states where we operate, compliance with these regulations could entail significantcapital expenditures or otherwise increase the costs of our operations.34Table of ContentsAmended Annex VI also establishes new tiers of stringent nitrogen oxide emissions standards for marine diesel engines, depending on their date of installation. Now Annex VIprovides for a three-tier reduction in NOx emissions from marine diesel engines, with the final tier (or Tier III) to apply to engines installed on vessels constructed on or after January 1,2016 and which operate in the North American ECA or the U.S. Caribbean Sea ECA as well as ECAs designated in the future by the IMO. At MEPC 70 and MEPC 71, the MEPC approvedthe North Sea and Baltic Sea as ECAs for nitrogen oxide for ships built after January 1, 2021. The EPA promulgated equivalent (and in some senses stricter) emissions standards in late2009.As determined at the MEPC 70, the new Regulation 22A of MARPOL Annex VI became effective as of March 1, 2018 and requires ships above 5,000 gross tonnage to collectand report annual data on fuel oil consumption to an IMO database, with the first year of data collection commencing on January 1, 2019. The IMO intends to use such data as the firststep in its roadmap (through 2023) for developing its strategy to reduce greenhouse gas emissions from ships, as discussed further below.As of January 1, 2013, MARPOL made mandatory certain measures relating to energy efficiency for ships. All ships are now required to develop and implement Ship EnergyEfficiency Management Plans, or SEEMPS, and new ships must be designed in compliance with minimum energy efficiency levels per capacity mile as defined by the Energy EfficiencyDesign Index, or EEDI. Under these measures, by 2025, all new ships built will be 30% more energy efficient than those built in 2014.We may incur costs to comply with these revised standards. Additional or new conventions, laws and regulations may be adopted that could require the installation ofexpensive emission control systems and could adversely affect our business, results of operations, cash flows and financial condition. Safety Management System RequirementsThe SOLAS Convention was amended to address the safe manning of vessels and emergency training drills. The Convention of Limitation of Liability for Maritime Claims, orthe LLMC, sets limitations of liability for a loss of life or personal injury claim or a property claim against ship owners. We believe that our vessels are in substantial compliance withSOLAS and LLMC standards.Under Chapter IX of the SOLAS Convention, or the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention, or the ISM Code, ouroperations are also subject to environmental standards and requirements. The ISM Code requires the party with operational control of a vessel to develop an extensive safetymanagement 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. We rely upon the safety management system that we and our technical management team have developed forcompliance with the ISM Code. The failure of a vessel owner or bareboat charterer to comply with the ISM Code may subject such party to increased liability, may decrease availableinsurance coverage for the affected vessels and may result in a denial of access to, or detention in, certain ports.The ISM Code requires that vessel operators obtain a safety management certificate for each vessel they operate. This certificate evidences compliance by a vessel’smanagement with the ISM Code requirements for a safety management system. No vessel can obtain a safety management certificate unless its manager has been awarded a document ofcompliance, issued by each flag state, under the ISM Code. We have obtained applicable documents of compliance for our offices and safety management certificates for all of ourvessels for which the certificates are required by the IMO. The document of compliance and safety management certificate are renewed as required.Amendments to the SOLAS Convention Chapter VII apply to vessels transporting dangerous goods and require those vessels be in compliance with the International MaritimeDangerous Goods Code, or IMDG Code. Effective January 1, 2018, the IMDG Code includes (1) updates to the provisions for radioactive material, reflecting the latest provisions from theInternational Atomic Energy Agency, (2) new marking, packing and classification requirements for dangerous goods, and (3) new mandatory training requirements.The IMO has also adopted the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers, or STCW. As of February 2017, all seafarersare required to meet the STCW standards and be in possession of a valid STCW certificate. Flag states that have ratified SOLAS and STCW generally employ the classificationsocieties, which have incorporated SOLAS and STCW requirements into their class rules, to undertake surveys to confirm compliance.35Table of ContentsFurthermore, recent action by the IMO’s Maritime Safety Committee and United States agencies indicate that cybersecurity regulations for the maritime industry are likely to befurther developed in the near future in an attempt to combat cybersecurity threats. For example, cyber-risk management systems must be incorporated by shipowners and managers by2021. This might cause companies to create additional procedures for monitoring cybersecurity, which could require additional expenses and/or capital expenditures. The impact of suchregulations is hard to predict at this time.Pollution Control and Liability RequirementsThe IMO has negotiated international conventions that impose liability for pollution in international waters and the territorial waters of the signatories to such conventions. Forexample, the IMO adopted an International Convention for the Control and Management of Ships’ Ballast Water and Sediments, or the BWM Convention, in 2004. The BWMConvention entered into force on September 9, 2017. The BWM Convention requires ships to manage their ballast water to remove, render harmless, or avoid the uptake or discharge ofnew or invasive aquatic organisms and pathogens within ballast water and sediments. The BWM Convention’s implementing regulations call for a phased introduction of mandatoryballast water exchange requirements, to be replaced in time with mandatory concentration limits, and require all ships to carry a ballast water record book and an international ballastWater management certificate.Specifically, ships over 400 gross tons generally must comply with a “D-1 standard”, requiring the exchange of ballast water only in open seas and away from coastal waters. The “D-2 standard” specifies the maximum amount of viable organisms allowed to be discharged, and compliance dates vary depending on the IOPP renewal dates. Depending on thedate of the IOPP renewal survey, existing vessels must comply with the D-2 standard on or after September 8, 2019. For most ships, compliance with the D-2 standard will involveinstalling on-board systems to treat ballast water and eliminate unwanted organisms. Ballast Water Management systems (or BWMS), which include systems that make use of chemical,biocides, organisms or biological mechanisms, or which alter the chemical or physical characteristics of the Ballast Water, must be approved in accordance with IMO Guidelines(Regulation D-3). Pursuant to the BWM Convention amendments that entered into force in October 2019, BWMS installed on or after October 28, 2020 shall be approved in accordancewith BWMS Code, while BWMS installed before October 23, 2020 must be approved taking into account guidelines developed by the IMO or the BWMS Code. Costs of compliancewith these regulations may be substantial. The cost of compliance could increase for ocean carriers and may have a material effect on our operations. However, many countries alreadyregulate the discharge of ballast water carried by vessels from country to country to prevent the introduction of invasive and harmful species via such discharges. The U.S., for example,requires vessels entering its waters from another country to conduct mid-ocean ballast exchange, or undertake some alternate measure, and to comply with certain reportingrequirements.The IMO also adopted the International Convention on Civil Liability for Bunker Oil Pollution Damage, or the Bunker Convention, to impose strict liability on ship owners(including the registered owner, bareboat charterer, manager or operator) for pollution damage in jurisdictional waters of ratifying states caused by discharges of bunker fuel. The BunkerConvention requires registered owners of ships over 1,000 gross tons to maintain insurance for pollution damage in an amount equal to the limits of liability under the applicable nationalor international limitation regime (but not exceeding the amount calculated in accordance with the LLMC). With respect to non-ratifying states, liability for spills or releases of oil carriedas fuel in ship’s bunkers typically is determined by the national or other domestic laws in the jurisdiction where the events or damages occur.Ships are required to maintain a certificate attesting that they maintain adequate insurance to cover an incident. In jurisdictions such as the United States where the BunkerConvention has not been adopted, various legislative schemes or common law govern, and liability is imposed either on the basis of fault or on a strict-liability basis.Anti‑Fouling RequirementsIn 2001, the IMO adopted the International Convention on the Control of Harmful Anti‑fouling Systems on Ships, or the “Anti‑fouling Convention”. The Anti‑foulingConvention, which entered into force on September 17, 2008, prohibits the use of organotin compound coatings to prevent the attachment of mollusks and other sea life to the hulls ofvessels. Vessels of over 400 gross tons engaged in international voyages will also be required to undergo an initial survey before the vessel is put into service or before an InternationalAnti‑fouling System Certificate is issued for the first time; and subsequent surveys when the anti‑fouling systems are altered or replaced. We have obtained Anti‑fouling SystemCertificates for all of our vessels that are subject to the Anti‑fouling Convention.36Table of ContentsCompliance EnforcementNoncompliance with the ISM Code or other IMO regulations may subject the ship owner or bareboat charterer to increased liability, may lead to decreases in available insurancecoverage for affected vessels and may result in the denial of access to, or detention in, some ports. The USCG and European Union authorities have indicated that vessels not incompliance with the ISM Code by applicable deadlines will be prohibited from trading in U.S. and European Union ports, respectively. As of the date of this report, each of our vessels isISM Code certified. However, there can be no assurance that such certificates will be maintained in the future. The IMO continues to review and introduce new regulations. It isimpossible to predict what additional regulations, if any, may be passed by the IMO and what effect, if any, such regulations might have on our operations.United States RegulationsThe U.S. Oil Pollution Act of 1990 and the Comprehensive Environmental Response, Compensation and Liability ActThe U.S. Oil Pollution Act of 1990, or OPA, established an extensive regulatory and liability regime for the protection and cleanup of the environment from oil spills. OPA affectsall “owners and operators” whose vessels trade or operate within the U.S., its territories and possessions or whose vessels operate in U.S. waters, which includes the U.S.’s territorial seaand its 200 nautical mile exclusive economic zone around the U.S. The U.S. has also enacted the Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA,which applies to the discharge of hazardous substances other than oil, except in limited circumstances, whether on land or at sea. OPA and CERCLA both define “owner and operator” inthe case of a vessel as any person owning, operating or chartering by demise, the vessel. Both OPA and CERCLA impact our operations.Under OPA, vessel owners and operators are “responsible parties” and are jointly, severally and strictly liable (unless the spill results solely from the act or omission of a thirdparty, an act of God or an act of war) for all containment and clean-up costs and other damages arising from discharges or threatened discharges of oil from their vessels, includingbunkers (fuel). OPA defines these other damages broadly to include:(i) injury to, destruction or loss of, or loss of use of, natural resources and related assessment costs;(ii) injury to, or economic losses resulting from, the destruction of real and personal property;(ii) injury to, or economic losses resulting from, the destruction of real and personal property;(iii) loss of subsistence use of natural resources that are injured, destroyed or lost;(iv) net loss of taxes, royalties, rents, fees or net profit revenues resulting from injury, destruction or loss of real or personal property, or natural resources;(v) lost profits or impairment of earning capacity due to injury, destruction or loss of real or personal property or natural resources; and(vi) net cost of increased or additional public services necessitated by removal activities following a discharge of oil, such as protection from fire, safety or health hazards,and loss of subsistence use of natural resources.OPA contains statutory caps on liability and damages; such caps do not apply to direct cleanup costs. Effective November 12, 2019, the USCG adjusted the limits of OPAliability for non-tank vessels, edible oil tank vessels, and any oil spill response vessels, to the greater of $1,200 per gross ton or $997,100 (subject to periodic adjustment for inflation).These limits of liability do not apply if an incident was proximately caused by the violation of an applicable U.S. federal safety, construction or operating regulation by a responsibleparty (or its agent, employee or a person acting pursuant to a contractual relationship), or a responsible party’s gross negligence or willful misconduct. The limitation on liability similarlydoes not apply if the responsible party fails or refuses to (i) report the incident where the responsible party knows or has reason to know of the incident; (ii) reasonably cooperate andassist as requested in connection with oil removal activities; or (iii) without sufficient cause, comply with an order issued under the Federal Water Pollution Act (Section 311 (c), (e)) orthe Intervention on the High Seas Act. CERCLA contains a similar liability regime whereby owners and operators of vessels are liable for cleanup, removal and remedial costs, as well as damages for injury to, ordestruction or loss of, natural resources, including the reasonable costs associated with assessing the same, and health assessments or health effects studies. There is no liability if thedischarge of a hazardous substance results solely from the act or omission of a third party, an act of God or an act of war. Liability under CERCLA is limited to the greater of $300 pergross ton or $5.0 million for vessels carrying a hazardous substance as cargo and the greater of $300 per gross ton or $500,000 for any other vessel. These limits do not apply (renderingthe responsible person liable for the total cost of response and damages) if the release or threat of release of a hazardous substance resulted from willful misconduct or negligence, or theprimary cause of the release was a violation of applicable safety, construction or operating standards or regulations. The limitation on liability also does not apply if the responsibleperson fails or refused to provide all reasonable cooperation and assistance as requested in connection with response activities where the vessel is subject to OPA.37Table of ContentsOPA and CERCLA each preserve the right to recover damages under existing law, including maritime tort law. OPA and CERCLA both require owners and operators of vessels toestablish and maintain with the USCG evidence of financial responsibility sufficient to meet the maximum amount of liability to which the particular responsible person may be subject.Vessel owners and operators may satisfy their financial responsibility obligations by providing a proof of insurance, a surety bond, qualification as a self-insurer or a guarantee. Wecomply and plan to comply going forward with the USCG’s financial responsibility regulations by providing applicable certificates of financial responsibility.The 2010 Deepwater Horizon oil spill in the Gulf of Mexico resulted in additional regulatory initiatives or statutes, including higher liability caps under OPA, new regulationsregarding offshore oil and gas drilling, and a pilot inspection program for offshore facilities. However, several of these initiatives and regulations have been or may be revised. Forexample, the U.S. Bureau of Safety and Environmental Enforcement’s, or BSEE, revised Production Safety Systems Rule, or PSSR, effective December 27, 2018, modified and relaxedcertain environmental and safety protections under the 2016 PSSR. Additionally, the BSEE released a final Well Control Rule, which eliminated a number of provisions which could affectoffshore drilling operations. Compliance with any new requirements of OPA and future legislation or regulations applicable to the operation of our vessels could negatively impact thecost of our operations and adversely affect our business.OPA specifically permits individual states to impose their own liability regimes with regard to oil pollution incidents occurring within their boundaries, provided they accept, at aminimum, the levels of liability established under OPA and some states have enacted legislation providing for unlimited liability for oil spills. Many U.S. states that border a navigablewaterway have enacted environmental pollution laws that impose strict liability on a person for removal costs and damages resulting from a discharge of oil or a release of a hazardoussubstance. These laws may be more stringent than U.S. federal law. Moreover, some states have enacted legislation providing for unlimited liability for discharge of pollutants withintheir waters, although in some cases, states which have enacted this type of legislation have not yet issued implementing regulations defining vessel owners’ responsibilities underthese laws. The Company intends to comply with all applicable state regulations in the ports where the Company’s vessels call.We currently maintain pollution liability coverage insurance in the amount of $1 billion per incident for each of our vessels. If the damages from a catastrophic spill were toexceed our insurance coverage, that could have an adverse effect on our business and results of operation. Other United States Environmental InitiativesThe U.S. Clean Air Act of 1970 (including its amendments of 1977 and 1990), or CAA, requires the EPA to promulgate standards applicable to emissions of volatile organiccompounds and other air contaminants. The CAA requires states to adopt State Implementation Plans, or SIPs, some of which regulate emissions resulting from vessel loading andunloading operations which may affect our vessels.The U.S. Clean Water Act, or CWA, prohibits the discharge of oil, hazardous substances and ballast water in U.S. navigable waters unless authorized by a duly-issued permit orexemption, and imposes strict liability in the form of penalties for any unauthorized discharges. The CWA also imposes substantial liability for the costs of removal, remediation anddamages and complements the remedies available under OPA and CERCLA. In 2015, the EPA expanded the definition of “waters of the United States”, or WOTUS, thereby expandingfederal authority under the CWA. Following litigation on the revised WOTUS rule, in December 2018, the EPA and Department of the Army proposed a revised, limited definition of“waters of the United States”. On October 22, 2019, the EPA and the Department of the Army published a final rule to repeal the 2015 WOTUS definition, reverting to the priordefinition; the final rule became effective on December 23, 2019.38Table of ContentsThe EPA and the USCG have also enacted rules relating to ballast water discharge, compliance with which requires the installation of equipment on our vessels to treat ballastwater before it is discharged or the implementation of other port facility disposal arrangements or procedures at potentially substantial costs, and/or otherwise restrict our vessels fromentering U.S. Waters. The EPA will regulate these ballast water discharges and other discharges incidental to the normal operation of certain vessels within United States waterspursuant to the Vessel Incidental Discharge Act, or VIDA, which was signed into law on December 4, 2018 and will replace the 2013 Vessel General Permit, or VGP, program (whichauthorizes discharges incidental to operations of commercial vessels and contains numeric ballast water discharge limits for most vessels to reduce the risk of invasive species in U.S.waters, stringent requirements for exhaust gas scrubbers, and requirements for the use of environmentally acceptable lubricants) and current Coast Guard ballast water managementregulations adopted under the U.S. National Invasive Species Act, or NISA, such as mid-ocean ballast exchange programs and installation of approved USCG technology for all vesselsequipped with ballast water tanks bound for U.S. ports or entering U.S. waters. VIDA establishes a new framework for the regulation of vessel incidental discharges under Clean WaterAct (CWA), requires the EPA to develop performance standards for those discharges within two years of enactment, and requires the U.S. Coast Guard to develop implementation,compliance, and enforcement regulations within two years of EPA’s promulgation of standards. Under VIDA, all provisions of the 2013 VGP and USCG regulations regarding ballastwater treatment remain in force and effect until the EPA and U.S. Coast Guard regulations are finalized. Non-military, non-recreational vessels greater than 79 feet in length must continueto comply with the requirements of the VGP, including submission of a Notice of Intent, or NOI, or retention of a PARI form and submission of annual reports. We have submitted NOIsfor our vessels where required. Compliance with the EPA, U.S. Coast Guard and state regulations could require the installation of ballast water treatment equipment on our vessels or theimplementation of other port facility disposal procedures at potentially substantial cost or may otherwise restrict our vessels from entering U.S. waters.European Union RegulationsIn October 2009, the European Union amended a directive to impose criminal sanctions for illicit ship-source discharges of polluting substances, including minor discharges, ifcommitted with intent, recklessly or with serious negligence and the discharges individually or in the aggregate result in deterioration of the quality of water. Aiding and abetting thedischarge of a polluting substance may also lead to criminal penalties. The directive applies to all types of vessels, irrespective of their flag, but certain exceptions apply to warships orwhere human safety or that of the ship is in danger. Criminal liability for pollution may result in substantial penalties or fines and increased civil liability claims. Regulation (EU) 2015/757of the European Parliament and of the Council of 29 April 2015 ( amended by Regulation (EU) 2016/2071 with respect to methods of calculating, inter alia, emission and consumption)governs the monitoring, reporting and verification of carbon dioxide emissions from maritime transport, and, subject to some exclusions, requires companies with ships over 5,000 grosstonnage to monitor and report carbon dioxide emissions annually, which may cause us to incur additional expenses. The European Union has adopted several regulations and directives requiring, among other things, more frequent inspections of high-risk ships, as determined by type, age,and flag as well as the number of times the ship has been detained. The European Union also adopted and extended a ban on substandard ships and enacted a minimum ban period and adefinitive ban for repeated offenses. The regulation also provided the European Union with greater authority and control over classification societies, by imposing more requirements onclassification societies and providing for fines or penalty payments for organizations that failed to comply. Furthermore, the EU has implemented regulations requiring vessels to usereduced sulfur content fuel for their main and auxiliary engines. Since January 1, 2015, vessels have been required to burn fuel with sulphur content not exceeding 0.1% while within EUmember states’ territorial seas, exclusive economic zones and pollution control zones that are included in “SOx Emission Control Areas.” EU Directive (EU) 2016/802 establishes limits onthe maximum Sulphur content of gas oils and heavy fuel oil and contains fuel-specific requirements for ships calling at EU ports. EU Directive 2004/35/CE regarding the prevention and remedying of environmental damage addresses liability for environmental damage (including damage to water, land,protected species and habitats) on the basis of the “polluter pays” principle. Operators whose activities caused the environmental damage are liable for the damage (subject to certainexceptions). With regard to specified activities causing environmental damage, operators are strictly liable. The directive applies where damage has already occurred and where there isan imminent threat of damage. The directive requires preventative and remedial actions, and that operators report environmental damage or an imminent threat of such damage.International Labor OrganizationThe International Labor Organization, or the ILO, is a specialized agency of the UN that has adopted the Maritime Labor Convention 2006, or MLC 2006. A Maritime LaborCertificate and a Declaration of Maritime Labor Compliance is required to ensure compliance with the MLC 2006 for all ships above 500 gross tons in international trade. We believe thatall our vessels are in substantial compliance with and are certified to meet MLC 2006.39Table of ContentsGreenhouse Gas RegulationCurrently, the emissions of greenhouse gases from international shipping are not subject to the Kyoto Protocol to the United Nations Framework Convention on ClimateChange, which entered into force in 2005 and pursuant to which adopting countries have been required to implement national programs to reduce greenhouse gas emissions with targetsextended through 2020. International negotiations are continuing with respect to a successor to the Kyoto Protocol, and restrictions on shipping emissions may be included in any newtreaty. In December 2009, more than 27 nations, including the U.S. and China, signed the Copenhagen Accord, which includes a non-binding commitment to reduce greenhouse gasemissions. The 2015 United Nations Climate Change Conference in Paris resulted in the Paris Agreement, which entered into force on November 4, 2016 and does not directly limitgreenhouse gas emissions from ships. On November 4, 2019, the United States began the process to withdraw from the Paris Agreement.At MEPC 70 and MEPC 71, a draft outline of the structure of the initial strategy for developing a comprehensive IMO strategy on reduction of greenhouse gas emissions fromships was approved. In accordance with this roadmap, in April 2018, nations at the MEPC 72 adopted an initial strategy to reduce greenhouse gas emissions from ships. The initialstrategy identifies “levels of ambition” to reducing greenhouse gas emissions, including (1) decreasing the carbon intensity from ships through implementation of further phases of theEEDI for new ships; (2) reducing carbon dioxide emissions per transport work, as an average across international shipping, by at least 40% by 2030, pursuing efforts towards 70% by2050, compared to 2008 emission levels; and (3) reducing the total annual greenhouse emissions by at least 50% by 2050 compared to 2008 while pursuing efforts towards phasing themout entirely. The initial strategy notes that technological innovation, alternative fuels and/or energy sources for international shipping will be integral to achieve the overall ambition. These regulations could cause us to incur additional substantial expenses.The EU made a unilateral commitment to reduce overall greenhouse gas emissions from its member states from 20% of 1990 levels by 2020. The EU also committed to reduce itsemissions by 20% under the Kyoto Protocol’s second period from 2013 to 2020. As of January 2018, large ships calling at EU ports have been required to collect and publish data oncarbon dioxide emissions and other information.In the United States, the EPA issued a finding that greenhouse gases endanger the public health and safety, adopted regulations to limit greenhouse gas emissions from certainmobile sources, and proposed regulations to limit greenhouse gas emissions from large stationary sources. The EPA or individual U.S. states could enact environmental regulations thatcould negatively affect our operations.Any passage of climate control legislation or other regulatory initiatives by the IMO, the EU, the U.S. or other countries where we operate, or any treaty adopted at theinternational level to succeed the Kyoto Protocol or Paris Agreement, that restricts emissions of greenhouse gases could require us to make significant expenditures which we cannotpredict with certainty at this time. Even in the absence of climate control legislation, our business may be indirectly affected to the extent that climate change may result in sea levelchanges or certain weather events.Vessel Security RegulationsSince the terrorist attacks of September 11, 2001 in the United States, there have been a variety of initiatives intended to enhance vessel security such as the U.S. MaritimeTransportation Security Act of 2002, or MTSA. To implement certain portions of the MTSA, the USCG issued regulations requiring the implementation of certain security requirementsaboard vessels operating in waters subject to the jurisdiction of the United States and at certain ports and facilities, some of which are regulated by the EPA.Similarly, Chapter XI-2 of the SOLAS Convention imposes detailed security obligations on vessels and port authorities and mandates compliance with the International Shipand Port Facilities Security Code, or the ISPS Code. The ISPS Code is designed to enhance the security of ports and ships against terrorism. To trade internationally, a vessel must attainan International Ship Security Certificate, or ISSC, from a recognized security organization approved by the vessel’s flag state. Ships operating without a valid certificate may bedetained, expelled from, or refused entry at port until they obtain an ISSC. The various requirements, some of which are found in the SOLAS Convention, include, for example, on-boardinstallation of automatic identification systems to provide a means for the automatic transmission of safety-related information from among similarly equipped ships and shore stations,including information on a ship’s identity, position, course, speed and navigational status; on-board installation of ship security alert systems, which do not sound on the vessel butonly alert the authorities on shore; the development of vessel security plans; ship identification number to be permanently marked on a vessel’s hull; a continuous synopsis record keptonboard showing a vessel’s history including the name of the ship, the state whose flag the ship is entitled to fly, the date on which the ship was registered with that state, the ship’sidentification number, the port at which the ship is registered and the name of the registered owner(s) and their registered address; and compliance with flag state security certificationrequirements.40Table of ContentsThe USCG regulations, intended to align with international maritime security standards, exempt non-U.S. vessels from MTSA vessel security measures, provided such vesselshave on board a valid ISSC that attests to the vessel’s compliance with the SOLAS Convention security requirements and the ISPS Code. Future security measures could have asignificant negative financial impact on us. We intend to comply with the various security measures addressed by MTSA, the SOLAS Convention and the ISPS Code.The cost of vessel security measures has also been affected by the escalation in the frequency of acts of piracy against ships, notably off the coast of Somalia, including theGulf of Aden and Arabian Sea area. Substantial loss of revenue and other costs may be incurred as a result of detention of a vessel or additional security measures, and the risk ofuninsured losses could significantly and negatively affect our business. Costs may be incurred in taking additional security measures in accordance with Best Management Practices toDeter Piracy, notably those contained in the BMP5 industry standard.Inspection by Classification SocietiesThe hull and machinery of every commercial vessel must be classed by a classification society authorized by its country of registry. The classification society certifies that avessel is safe and seaworthy in accordance with the applicable rules and regulations of the country of registry of the vessel and SOLAS. Most insurance underwriters make it acondition for insurance coverage and lending that a vessel be certified “in class” by a classification society which is a member of the International Association of ClassificationSocieties, the IACS. The IACS has adopted harmonized Common Structural Rules, or the Rules, which apply to oil tankers and bulk carriers constructed on or after July 1, 2015. TheRules attempt to create a level of consistency between IACS Societies. All of our vessels are certified as being “in class” by all the applicable Classification Societies (e.g., AmericanBureau of Shipping, Lloyd’s Register of Shipping, Bureau Veritas).A vessel must undergo annual surveys, intermediate surveys, drydockings and special surveys. In lieu of a special survey, a vessel’s machinery may be on a continuous surveycycle, under which the machinery would be surveyed periodically over a five-year period. Every vessel is also required to be drydocked every 30 to 36 months for inspection of theunderwater parts of the vessel. If any vessel does not maintain its class and/or fails any annual survey, intermediate survey, drydocking or special survey, the vessel will be unable tocarry cargo between ports and will be unemployable and uninsurable which could cause us to be in violation of certain covenants in our loan agreements. Any such inability to carrycargo or be employed, or any such violation of covenants, could have a material adverse impact on our financial condition and results of operations.Risk of Loss and Liability InsuranceGeneralThe operation of any cargo vessel includes risks such as mechanical failure, physical damage, collision, property loss, cargo loss or damage and business interruption due topolitical circumstances in foreign countries, piracy incidents, hostilities and labor strikes. In addition, there is always an inherent possibility of marine disaster, including oil spills andother environmental mishaps, and the liabilities arising from owning and operating vessels in international trade. OPA, which imposes virtually unlimited liability upon shipowners,operators and bareboat charterers of any vessel trading in the exclusive economic zone of the United States for certain oil pollution accidents in the United States, has made liabilityinsurance more expensive for shipowners and operators trading in the United States market. We carry insurance coverage as customary in the shipping industry. However, not all riskscan be insured, specific claims may be rejected and we might not be always able to obtain adequate insurance coverage at reasonable rates.Hull & Machinery and War Risks Insurances We maintain marine hull and machinery and war risks insurances, which include the risk of actual or constructive total loss, for all of our vessels. Each of our vessels is coveredup to at least fair market value with deductibles of $150,000 per vessel per incident. We also maintain increased value coverage for our vessels. Under this increased value coverage, inthe event of total loss of a vessel, we will be able to recover the sum insured under the increased value policy in addition to the sum insured under the hull and machinery policy. Increased value insurance also covers excess liabilities which are not recoverable under our hull and machinery policy by reason of under insurance.41Table of ContentsProtection and Indemnity InsuranceProtection and indemnity insurance, provided by mutual protection and indemnity associations, or P&I Associations, covers our third-party liabilities in connection with ourshipping activities. This includes third-party liability and other related expenses of injury, illness or death of crew, passengers and other third parties, loss or damage to cargo, claimsarising from collisions with other vessels, damage to other third-party property such as fixed and floating objects, pollution arising from oil or other substances, salvage, towing andother related costs, including wreck removal. Protection and indemnity insurance is a form of mutual indemnity insurance, extended by protection and indemnity mutual associations, or“clubs”.Our coverage is limited to approximately $3.1 billion, except for oil pollution and crew liabilities which is limited to $1 billion and $3 billion, respectively. The 13 P&I Associationsthat comprise the International Group insure approximately 90% of the world’s commercial tonnage and have entered into a pooling agreement to reinsure each association’s liabilities.The International Group’s website states that the Pool provides a mechanism for reinsuring an International Group member’s claims in excess of US$ 10 million up to, currently,approximately US$ 8 billion. As a member of a P&I Association, which is a member of the International Group, we are subject to calls payable to the associations based on our claimrecords as well as the claim records of all other members of the individual associations and members of the shipping pool of P&I Associations comprising the International Group.Permits and AuthorizationsWe are required by various governmental and quasi-governmental agencies to obtain certain permits, licenses and certificates with respect to our vessels. The kinds of permits,licenses and certificates required depend upon several factors, including the commodity transported, the waters in which the vessel operates, the nationality of the vessel’s crew and theage of a vessel. We believe that we have obtained all permits, licenses and certificates currently required to permit our vessels to operate as planned. Additional laws and regulations,environmental or otherwise, may be adopted which could limit our ability to do business or increase the cost of us doing business in the future.C.Organizational StructureSeanergy Maritime Holdings Corp. is the ultimate parent company of the following wholly-owned subsidiaries, either directly or indirectly, as of the date of this annual report:Subsidiary Jurisdiction of IncorporationSeanergy Management Corp. Republic of the Marshall IslandsSeanergy Shipmanagement Corp. Republic of the Marshall IslandsLeader Shipping Co. Republic of the Marshall IslandsSea Glorius Shipping Co. Republic of the Marshall IslandsSea Genius Shipping Co. Republic of the Marshall IslandsGuardian Shipping Co. Republic of the Marshall IslandsGladiator Shipping Co. Republic of the Marshall IslandsPremier Marine Co. Republic of the Marshall IslandsSquire Ocean Navigation Co. LiberiaChampion Ocean Navigation Co. Limited MaltaLord Ocean Navigation Co. LiberiaKnight Ocean Navigation Co. LiberiaEmperor Holding Ltd. Republic of the Marshall IslandsPartner Shipping Co. Limited MaltaPembroke Chartering Services Limited MaltaMartinique International Corp. British Virgin IslandsHarbour Business International Corp. British Virgin IslandsMaritime Capital Shipping Limited BermudaMaritime Capital Shipping (HK) Limited Hong KongMaritime Grace Shipping Limited British Virgin IslandsMaritime Glory Shipping Limited British Virgin IslandsAtlantic Grace Shipping Limited British Virgin IslandsFellow Shipping Co. Republic of the Marshall IslandsChampion Marine Co. LiberiaChampion Marine Co. Republic of the Marshall Islands42Table of ContentsD.Property, Plants and EquipmentWe do not own any real estate property. We maintain our principal executive offices at Glyfada, Athens, Greece. Other than our vessels, we do not have any material property.See “Item 4.B. Business Overview - Our Current Fleet” and “Item 5. Operating and Financial Review and Prospects — B. Liquidity and Capital Resources – Loan Arrangements”. ITEM 4A.UNRESOLVED STAFF COMMENTSNone.ITEM 5.OPERATING AND FINANCIAL REVIEW AND PROSPECTSThe following discussion of the results of our operations and our financial condition should be read in conjunction with the financial statements and the notes to thosestatements included in “Item 18. Financial Statements”. This discussion contains forward-looking statements that involve risks, uncertainties, and assumptions. Actual results maydiffer materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth in “Item 3. Key Information–D. Risk Factors”.A.Operating ResultsFactors Affecting our Results of Operations OverviewWe are an international shipping company specializing in the worldwide seaborne transportation of dry bulk commodities. We currently operate a modern fleet of ten Capesizevessels, with a cargo-carrying capacity of approximately 1,748,581 dwt and an average fleet age of 11 years. We are the only pure-play Capesize shipowner publicly listed in the U.S.Important Measures and Definitions for Analyzing Results of Operations We use a variety of financial and operational terms and concepts. These include the following: Ownership days. Ownership days are the total number of calendar days in a period during which we owned or chartered in on bareboat basis each vessel in our fleet. Ownershipdays are an indicator of the size of our fleet over a period and affect both the amount of revenues and the amount of expenses recorded during that period.Available days. Available days are the number of ownership days less the aggregate number of days that our vessels are off-hire due to major repairs, dry-dockings, lay-up orspecial or intermediate surveys. The shipping industry uses available days to measure the aggregate number of days in a period during which vessels are available to generate revenues.Operating days. Operating days are the number of available days in a period less the aggregate number of days that our vessels are off-hire due to unforeseen circumstances.Operating days include the days that our vessels are in ballast voyages without having fixed their next employment. The shipping industry uses operating days to measure theaggregate number of days in a period during which vessels could actually generate revenues.Fleet utilization. Fleet utilization is the percentage of time that our vessels were generating revenues and is determined by dividing operating days by ownership days for therelevant period.Off-hire. The period a vessel is not being chartered or is unable to perform the services for which it is required under a charter.Dry-docking. We periodically dry-dock each of our vessels for inspection, repairs and maintenance and any modifications to comply with industry certification or governmentalrequirements. 43Table of ContentsTime charter. A time charter is a contract for the use of a vessel for a specific period of time (period time charter) or for a specific voyage (trip time charter) during which thecharterer pays substantially all of the voyage expenses, including port charges, bunker expenses, canal charges and other commissions. The vessel owner pays the vessel operatingexpenses, which include crew costs, provisions, deck and engine stores and spares, lubricants, insurance, maintenance and repairs. The vessel owner is also responsible for eachvessel’s dry-docking and intermediate and special survey costs. Time charter rates are usually fixed during the term of the charter. Prevailing time charter rates do fluctuate on a seasonaland year-to-year basis and may be substantially higher or lower from a prior time charter agreement when the subject vessel is seeking to renew the time charter agreement with theexisting charterer or enter into a new time charter agreement with another charterer. Fluctuations in time charter rates are influenced by changes in spot charter rates.Bareboat charter. A bareboat charter is generally a contract pursuant to which a vessel owner provides its vessel to a charterer for a fixed period of time at a specified dailyrate. Under a bareboat charter, the charterer assumes responsibility for all voyage and vessel operating expenses and risk of operation.Voyage charter. A voyage charter is generally a contract to carry a specific cargo from a load port to a discharge port for an agreed-upon total amount. Under voyage charters,voyage expenses, such as port charges, bunker expenses, canal charges and other commissions, are paid by the vessel owner, who also pays vessel operating expenses.TCE. Time charter equivalent, or TCE, rate is defined as our net revenue less voyage expenses during a period divided by the number of our operating days during the period.Voyage expenses include port charges, bunker expenses, canal charges and other commissions.Daily Vessel Operating Expenses. Daily Vessel Operating Expenses are calculated by dividing vessel operating expenses less pre-delivery expenses by ownership days for therelevant time periods. Vessel operating expenses include crew costs, provisions, deck and engine stores, lubricants, insurance, maintenance and repairs. Vessel operating expenses beforepre-delivery expenses exclude one-time pre-delivery and pre-joining expenses associated with initial crew manning and supply of stores of Company’s vessels upon delivery.Principal Factors Affecting Our BusinessThe principal factors that affect our financial position, results of operations and cash flows include the following: •number of vessels owned and operated; •voyage charter rates; •time charter trip rates; •period time charter rates; •the nature and duration of our voyage charters; •vessels repositioning; •vessel operating expenses and direct voyage costs; •maintenance and upgrade work; •the age, condition and specifications of our vessels; •issuance of our common shares and other securities; •amount of debt obligations; and •financing costs related to debt obligations. We are also affected by the types of charters we enter into. Vessels operating on period time charters and bareboat time charters provide more predictable cash flows, but canyield lower profit margins than vessels operating in the spot charter market, either on trip time charters or voyage charters, during periods characterized by favorable market conditions. 44Table of ContentsVessels operating in the spot charter market generate revenues that are less predictable, but can yield increased profit margins during periods of improvements in dry bulk rates. Spotcharters also expose vessel owners to the risk of declining dry bulk rates and rising fuel costs in case of voyage charters. The majority of our vessels in 2018 and 2017 operated in thespot charter market, except for the Lordship and the Partnership, while towards the end of 2018 the Championship was also time-chartered on a long-term employment. In 2019 threeadditional vessels were time-chartered on long-term employment arrangements, the Premiership, the Squireship and the Gloriuship.Results of Operations Year ended December 31, 2019 as compared to year ended December 31, 2018(In thousands of U.S. Dollars, except for share and per share data) Year ended December31, Change 2019 2018 Amount % Revenues: Vessel revenue, net 86,499 91,520 (5,021) (5)% Expenses: Voyage expenses (36,641) (40,184) 3,543 (9)%Vessel operating expenses (18,980) (20,742) 1,762 (8)%Management fees (989) (1,042) 53 (5)%General and administration expenses (5,989) (6,500) 511 (8)%Depreciation and amortization (11,860) (11,510) (350) 3%Impairment loss - (7,267) 7,267 (100)%Operating income 12,040 4,275 7,765 182%Other expenses: Interest and finance costs (23,845) (25,296) 1,451 (6)%Other, net 161 (21) 182 (867)%Total other expenses, net: (23,684) (25,317) 1,633 (6)%Net loss before income taxes (11,644) (21,042) 9,398 (45)%Income taxes (54) (16) (38) 238%Net loss (11,698) (21,058) 9,360 (44)% Net loss per common share, basic and diluted (0.76) (8.40) Weighted average number of common shares outstanding, basic and diluted 15,332,755 2,507,087 Vessel Revenue, Net – The decrease was attributable to the decrease in operating days and was partially offset by the increase in prevailing charter rates. We had 3,393operating days in 2019, as compared to 3,902 operating days in 2018. The operating days in 2019 were affected by seven vessels which underwent drydocking during 2019, incurring 233repair days as compared to only 13 days in drydock during 2018. The TCE rate increased by 12% in 2019 to $14,694, as compared to $13,156 in 2018 due to the improved overall earningsenvironment. TCE rate is a non-GAAP measure. Please see the reconciliation below of TCE rate to net revenues from vessels, the most directly comparable U.S. GAAP measure. Voyage Expenses – The decrease was primarily attributable to the decrease in operating days and increased days that our vessels were chartered under time charterarrangements in 2019. We had 3,393 operating days in 2019 as compared to 3,902 operating days in 2018 and 1,633 and 1,514 days under time-charter employment in the respective years. Vessel Operating Expenses - The decrease was primarily attributable to the decrease in ownership days as a result of the sale of two vessels towards the end of 2018 coupledwith the acquisition of a vessel during the same period. We had 3,650 ownership days in 2019 as compared to 3,931 ownership days in 2018. Management Fees - The decrease was attributable to the decrease in ownership days. We had 3,650 ownership days in 2019 as compared to 3,931 ownership days in 2018. 45Table of ContentsGeneral and Administration Expenses – The decrease is mainly attributable to a decrease in management remuneration, legal expenses and professional fees. Depreciation and Amortization – The increase was primarily attributable to the increased amortization of drydock expenses in 2019 as compared to 2018 which was howeverpartly offset by a decrease in ownership days. Seven vessels performed their scheduled drydocks in 2019. Impairment loss – The decrease was attributable to the impairment loss of $7.3 million recorded in respect with the Gladiatorship and Guardianship that were both sold in thefourth quarter of 2018. Interest and Finance Costs - The decrease was primarily attributable to the NSF Loan Facility that was fully repaid in June 2018 and the Jelco Loans and Jelco Notes interestwaived for the period of April 1, 2019 to December 31, 2019, effectively resetting the interest rate to zero for such period. The resetting of the Jelco interest rate was amortized as adeferred finance cost through the respective maturities between 2020 and 2022, thus offsetting the interest and finance cost decrease. The decrease was also partially offset by theamortization of the Wilmington Trust loan facility entered into on June 11, 2018 for the entire 2019, the amortization of the Hanchen financial liability entered into on June 28, 2018 for theentire 2019, the amortization of the Cargill sale and leaseback agreement entered into on November 7, 2018 for the entire 2019 and the amortization of the shares issued to Jelco under theSecurities Purchase Agreement entered into on May 9, 2019. The weighted average interest rate on our outstanding debt and convertible notes for the years ended 2019 and 2018 wasapproximately 5.72% and 7.54%, respectively. Please see Item 5.A of our Form 20-F filed with the SEC on March 25, 2019 for a discussion of the year-to-year comparison between 2018 and 2017.Performance IndicatorsThe figures shown below are non-GAAP statistical ratios used by management to measure performance of our vessels. For the “Fleet Data” figures, there are no comparableU.S. GAAP measures. Year Ended December 31, Fleet Data: 2019 2018 2017 Ownership days 3,650 3,931 3,864 Available days(1) 3,417 3,918 3,851 Operating days(2) 3,393 3,902 3,837 Fleet utilization 93% 99% 99% Average Daily Results: TCE rate(3) $14,694 $13,156 $10,395 Daily Vessel Operating Expenses(4) $5,172 $5,198 $4,985 (1)During the year ended December 31, 2019, we incurred 233 off-hire days for five scheduled dry-dockings and scrubber installation on five of our vessels. During the year endedDecember 31, 2018, we incurred 13 off-hire days.(2)During the year ended December 31, 2019, we incurred 24 off-hire days due to unforeseen circumstances. During the year ended December 31, 2018, we incurred 16 off-hires daysdue to other unforeseen circumstances.(3)We include TCE rate, a non-GAAP measure, as we believe it provides additional meaningful information in conjunction with net revenues from vessels, the most directlycomparable U.S. GAAP measure, because it assists our management in making decisions regarding the deployment and use of our vessels and in evaluating their financialperformance. Our calculation of TCE rate may not be comparable to that reported by other companies. The following table reconciles our net revenues from vessels to TCE rate.46Table of Contents Year Ended December 31, (In thousands of US Dollars, except operating days and TCE rate)2019 2018 2017 Net revenues from vessels $86,499 $91,520 $74,834 Voyage expenses (36,641) (40,184) (34,949)Net operating revenues $49,858 $51,336 $39,885 Operating days 3,393 3,902 3,837 Daily time charter equivalent rate $14,694 $13,156 $10,395 (4)We include Daily Vessel Operating Expenses, a non-GAAP measure, as we believe it provides additional meaningful information in conjunction with vessel operating expenses, themost directly comparable U.S. GAAP measure, because it assists our management in making decisions regarding the deployment and use of our vessels and in evaluating theirfinancial performance. Our calculation of Daily Vessel Operating Expenses may not be comparable to that reported by other companies. The following table reconciles our vesseloperating expenses to Daily Vessel Operating Expenses.(In thousands of US Dollars, except ownership days and Daily Vessel Operating Expenses)Year Ended December 31, 2019 2018 2017 Vessel operating expenses $18,980 $20,742 $19,598 Less: Pre-delivery expenses (104) (309) (337)Vessel operating expenses before pre-delivery expenses 18,876 20,433 19,261 Ownership days 3,650 3,931 3,864 Daily Vessel Operating Expenses $5,172 $5,198 $4,985 Recent Accounting Pronouncements Refer to Note 2 of the consolidated financial statements included in this annual report. Critical Accounting Policies and Estimates Our Fleet – Illustrative Comparison of Possible Excess of Carrying Value Over Estimated Charter-Free Market Value of Certain Vessels In “Critical Accounting Policies and Estimates – Impairment of long-lived assets”, we discuss our policy for impairing the carrying values of our vessels. Historically, the marketvalues of vessels have experienced volatility, which from time to time may be substantial. As a result, the charter-free market value of certain of our vessels may have declined belowthose vessels’ carrying value, even though we would not impair those vessels’ carrying value under our accounting impairment policy. The table set forth below indicates (i) the carryingvalue of each of our vessels as of December 31, 2019 and 2018, respectively, and (ii) which of our vessels we believe had a basic market value below their carrying value. This aggregatedifference between the carrying value of our vessels and their market value of $33.8 million and $10 million, as of December 31, 2019 and 2018, respectively, represents the amount bywhich we believe we would have had to reduce our net income if we sold all of such vessels, on industry standard terms, in cash transactions, and to a willing buyer where we are notunder any compulsion to sell, and where the buyer was not under any compulsion to buy as of December 31, 2019 and 2018, respectively. For purposes of this calculation, we assumedthat the vessels would be sold at a price that reflected our estimate of their charter-free market values as of December 31, 2019 and 2018, respectively. Our estimates of charter-free market value assume that our vessels were all in good and seaworthy condition without need for repair and if inspected would be certified in classwithout notations of any kind. Our estimates are based on information available from various industry sources, including:•reports by industry analysts and data providers that focus on our industry and related dynamics affecting vessel values;•news and industry reports of similar vessel sales;•news and industry reports of sales of vessels that are not similar to our vessels where we have made certain adjustments in an attempt to derive information that can be used aspart of our estimates;47Table of Contents•approximate market values for our vessels or similar vessels that we have received from shipbrokers, whether solicited or unsolicited, or that shipbrokers have generallydisseminated;•offers that we may have received from potential purchasers of our vessels; and •vessel sale prices and values of which we are aware through both formal and informal communications with shipowners, shipbrokers, industry analysts and various othershipping industry participants and observers.As we obtain information from various industry and other sources, our estimates of basic market value are inherently uncertain. In addition, vessel values are highly volatile; assuch, our estimates may not be indicative of the current or future basic market value of our vessels or prices that we could achieve if we were to sell them.Vessel Year Built Dwt Carrying Value as ofDecember 31, 2019(in millions of U.S. dollars) Carrying Value as ofDecember 31, 2018(in millions of U.S. dollars) Fellowship 2010 179,701 27.3* 28.6 Championship 2011 179,238 39.4* 36.7*Partnership 2012 179,213 33.3* 30.7 Knightship 2010 178,978 18.4 19.1 Lordship 2010 178,838 22.7 19.0 Gloriuship 2004 171,314 13.8* 14.5 Leadership 2001 171,199 12.5* 13.5*Geniuship 2010 170,057 23.3* 24.4 Premiership 2010 170,024 29.5* 26.2 Squireship 2010 170,018 33.6* 30.5*TOTAL 253.8 243.2 *Indicates dry bulk carrier vessels for which we believe, as of December 31, 2019 and 2018, respectively, the basic charter-free market value was lower than the vessel’s carryingvalue. We refer you to the risk factor entitled “The market values of our vessels may decrease, which could limit the amount of funds that we can borrow or trigger certain financialcovenants under our loan agreements, and we may incur an impairment or, if we sell vessels following a decline in their market value, a loss”.Impairment of long-lived assets We review our long-lived assets for impairment whenever events or changes in circumstances, such as prevailing market conditions, obsolesce or damage to the asset, businessplans to dispose a vessel earlier than the end of its useful life and other business plans, indicate that the carrying amount of the assets, plus unamortized dry-docking costs, may not berecoverable. The volatile market conditions in the dry bulk market with decreased charter rates and decreased vessel market values are conditions we consider to be indicators of apotential impairment for our vessels. We determine undiscounted projected operating cash flows, for each vessel and compare it to the vessel’s carrying value. When the undiscountedprojected operating cash flows expected to be generated by the use of the vessel and/or its eventual disposition are less than its carrying amount, we impair the carrying amount of thevessel. Measurement of the impairment loss is based on the fair value of the asset as determined by independent valuators and use of available market data. The undiscounted projectedoperating cash inflows are determined by considering the charter revenues from existing time charters for the fixed fleet days and an estimated daily time charter equivalent for the non-fixed days (based on a combination of one year charter rates estimate and the average of the trailing 10-year historical charter rates, excluding the outliers) adjusted for commissions,expected off hires due to scheduled vessels’ maintenance and estimated unexpected breakdown off hires. The undiscounted projected operating cash outflows are determined byapplying various assumptions regarding vessel operating expenses, management fees and scheduled vessels’ maintenance.Our assessment concluded that no impairment loss should be recorded as of December 31, 2019. The Company recognized an impairment loss of $7,267 for the year endedDecember 31, 2018 with respect to the two vessels Gladiatorship and Guardianship that were sold in the fourth quarter of 2018.48Table of ContentsAlthough we believe that the assumptions used to evaluate potential asset impairment are based on historical trends and are reasonable and appropriate, such assumptions arehighly subjective. To minimize such subjectivity, our analysis for the year ended December 31, 2019 also involved sensitivity analysis to the model input we believe is more important andlikely to change. In particular, in terms of our estimates for the time charter equivalent for the unfixed period, we use a combination of one-year charter rates estimate and the average ofthe trailing 10-year historical charter rates, excluding outliers. Although the trailing 10-year historical charter rates, excluding the outliers, cover at least a full business cycle, wesensitized our model with regards to long-term historical charter rate assumptions for the unfixed period beyond the first year. Our sensitivity analysis revealed that, to the extent thatgoing forward the 10-year historical charter rates, excluding the outliers, would not decline by more than 48% for Capesize vessels and we would not require to recognize impairment. Ouranalysis for the year ended December 31, 2018 also involved sensitivity analysis to the model input we believe was more important and likely to change. In particular, in terms of ourestimates for the time charter equivalent for the unfixed period, we used a combination of one year charter rates estimate and the average of the trailing 10-year historical charter rates,excluding the trough years 2015 and 2016, available for each type of vessel. Although the trailing 10-year historical charter rates, excluding the trough years 2015 and 2016, covered atleast a full business cycle, we sensitized our model with regards to long-term historical charter rate assumptions for the unfixed period beyond the first year. Our sensitivity analysisrevealed that, to the extent that going forward the 10-year historical charter rates, excluding the trough years 2015 and 2016, would not decline by more than 46% for Capesize vessels, wewould not require to recognize impairment.Vessel depreciationDepreciation is computed using the straight-line method over the estimated useful life of the vessels (25 years), after considering the estimated salvage value. Salvage value isestimated by taking the cost of steel times the weight of the ship noted in lightweight ton. Salvage values are periodically reviewed and revised to recognize changes in conditions, newregulations or for other reasons. Revisions of salvage values affect the depreciable amount of the vessels and affect the depreciation expense in the period of the revision and futureperiods.Revenue from Contracts with CustomersOn January 1, 2018, we adopted ASU 2014-09 (ASC 606) Revenue from Contracts with Customers, issued by the FASB in May 2016 and as further amended, and elected toapply the modified retrospective method only to contracts that were not completed at January 1, 2018, the date of initial application. The prior period comparative information has notbeen restated and continues to be reported under the accounting guidance in effect for those periods. Under the new guidance, voyage revenue is recognized from the time when thevessel arrives at the load port until completion of cargo discharge. Previously, voyage revenue was recognized from the latter of the cargo discharge of the previous voyage and thesigning of the next charter or date of the new charterparty until completion of cargo discharge. This change results in revenue being recognized over a shorter voyage time period, whichmay cause additional volatility in revenues and earnings between reporting periods. Accounting for Revenue and Related Expenses We generate our revenues from chartering our vessels under time or bareboat charter agreements and voyage charter agreements. Time and bareboat charters: Vessels are chartered when a contract exists and the vessel is delivered (commencement date) to the charterer, for a fixed period of time, at ratesthat are generally determined in the main body of charter parties and the relevant voyage expenses burden the charterer (i.e. port dues, canal tolls, pilotages and fuel consumption). Upondelivery of the vessel, the charterer has the right to control the use of the vessel (under agreed prudent operating practices) as it has the enforceable right to: (i) decide the delivery andredelivery time of the vessel; (ii) arrange the ports from which the vessel shall pass; (iii) give directions to the master of the vessel regarding vessel’s operations (i.e. speed, route,bunkers purchases, etc.); (iv) sub-charter the vessel and (v) consume any income deriving from the vessel’s charter. Time and bareboat charter agreements are accounted for as operatingleases, ratably on a straight line over the duration of the charter basis in accordance with ASC 842. Any variable lease payments are recognized in the period when changes in the factsand circumstances on which the variable lease payments are based occur. Any off-hires are recognized as incurred. The charterer may charter the vessel with or without owner’s crew and other operating services (time and bareboat charter, respectively). In the case of time charter agreements,the agreed hire rates include compensation for part of the agreed crew and other operating services provided by the owner (non-lease components). We elected to account for the leaseand non-lease component of time charter agreements as a combined component in our financial statements, having taken into account that the non-lease component would be accountedfor ratably on a straight-line basis over the duration of the time charter in accordance with ASC 606 and that the lease component is considered as the predominant. In this respect, wequalitative assessed that more value is ascribed to the vessel rather than to the services provided under the time charter agreements. 49Table of ContentsApart from the agreed hire rates, the owner may be entitled to an additional income, such as ballast bonus which is considered as reimbursement of owner’s expenses and isrecognized together with the lease component over the duration of the charter. The related ballast costs incurred over the period between the charterparty date or the prior redeliverydate (whichever is latest) and the delivery date to the charterer are deferred and amortized on a straight line over the duration of the charter. Spot charters: Spot, or voyage, charter is a charter where a contract is made in the spot market for the use of a vessel for a specific voyage for a specified freight rate per ton,regardless of time to complete. A voyage is deemed to commence upon the loading of the cargo and is deemed to end upon the completion of discharge of the current cargo. Spot charterpayments are due upon discharge of the cargo. We have determined that under our spot charters, the charterer has no right to control any part of the use of the vessel. Thus, our spotcharters do not contain lease and are accounted for in accordance with ASC 606. More precisely, we satisfy our single performance obligation to transfer cargo under the contract overthe voyage period. Thus, spot charter revenues are recognized ratably over the loading to discharge period (voyage period). Voyage related and vessel operating costs: Voyage expenses primarily consist of commissions, port dues, canal and bunkers. Vessel operating costs include crew costs,provisions, deck and engine stores and spares, lubricants, insurance, maintenance and repairs including dry-docking costs. Under spot charter arrangements, voyage expenses that areunique to a particular charter are paid for by us. Under a time charter, specified voyage costs, such as bunkers and port charges are paid by the charterer and other non-specified voyageexpenses, such as commissions, are paid by us. Under a bareboat charter, the charterer assumes responsibility for all voyage and vessel operating expenses and risk of operation.Commissions are expensed as incurred. Contract fulfillment costs (mainly consisting of bunker expenses and port dues) for spot charters are recognized as a deferred contract cost andamortized over the voyage period when the relevant criteria under ASC 340-40 are met or are expensed as incurred. All vessel operating expenses are expensed as incurred. Deferred revenue: Deferred revenue primarily relates to cash advances received from charterers. These amounts are recognized as revenue over the charter period. Leases In February 2016, the FASB issued ASU No. 2016-02, Leases (ASC 842), as amended, which requires lessees to recognize most leases on the balance sheet. In July 2018, theFASB issued ASU No. 2018-11, Leases (ASC 842) – Targeted Improvements. The amendments in this Update: (i) provide entities with an additional (and optional) transition method toadopt the new lease requirements by allowing entities to initially apply the requirements at the adoption date and recognize a cumulative-effect adjustment to the opening balance ofretained earnings in the period of adoption; and, (ii) provide lessors with a practical expedient, by class of underlying asset, to not separate non-lease components from the associatedlease component and, instead, to account for those components as a single component if the non-lease components otherwise would be accounted for under the new revenue guidance(ASC 606) and both of the following are met: (a) the timing and pattern of transfer of the non-lease component(s) and associated lease component are the same and (b) the leasecomponent, if accounted for separately, would be classified as an operating lease. If the non-lease component or components associated with the lease component are the predominantcomponent of the combined component, an entity is required to account for the combined component in accordance with ASC 606. Otherwise, the entity should account for thecombined component as an operating lease in accordance with ASC 842. We early adopted ASU No. 2016-02, Leases (ASC 842), as amended, retrospectively from January 1, 2018, using the modified retrospective method, and elected to apply theadditional and optional transition method to existing leases at the beginning of the period of adoption of January 1, 2018. The prior period comparative information has not been restatedand continues to be reported under the accounting guidance in effect for those periods (ASC 840), including the disclosure requirements. Under the new guidance, we elected certainpractical expedients: (i) a package of practical expedients which does not require us to reassess: (1) whether any expired or existing contracts are or contain leases; (2) lease classificationfor any expired or existing leases; and (3) whether initial direct costs for any expired or existing leases would qualify for capitalization under ASC 842; (ii) to account for non-leasecomponents (primarily crew and maintenance services) of time charters as a single lease component as the timing and pattern of transfer of the non-lease components and associatedlease component are the same, the lease components, if accounted for separately would be classified as an operating lease, and such non-lease components are not predominantcomponents of the combined component. We qualitatively assessed that more value is ascribed to the vessel rather than to the services provided under the time charter agreements.Therefore, the Company accounts for the combined component as a lease under ASC 842. 50Table of ContentsSale-leaseback transactionsIn accordance with ASC 842, we, as seller-lessee, determine whether the transfer of an asset should be accounted for as a sale in accordance with ASC 606. The existence of anoption for the seller-lessee to repurchase the asset precludes the accounting for the transfer of the asset as a sale unless both of the following criteria are met: (1) the exercise price of theoption is the fair value of the asset at the time the option is exercised and (2) there are alternative assets, substantially the same as the transferred asset, readily available in themarketplace; and the classification of the leaseback as a finance lease or a sales-type lease, precludes the buyer-lessor from obtaining control of the asset. The existence of an obligationfor us, as seller-lessee, to repurchase the asset precludes accounting for the transfer of the asset as sale as the transaction would be classified as a financing arrangement by us as weeffectively retain control of the underlying asset. If the transfer of the asset meets the criteria of sale, we as seller-lessee recognize the transaction price for the sale when the buyer-lessor obtains control of the asset,derecognizes the carrying amount of the underlying asset and accounts for the lease in accordance with ASC 842. If the transfer does not meet the criteria of sale, we do not derecognizethe transferred asset, account for any amounts received as a financing arrangement and recognize the difference between the amount of consideration received and the amount ofconsideration to be paid as interest. Going ConcernIn August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern. ASU No. 2014-15 provides guidance on management’s responsibilityin evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and on related required footnote disclosures. For each reporting period,management is required to evaluate whether there are conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern within one year fromthe date the financial statements are issued. B.Liquidity and Capital ResourcesOur principal source of funds has been our operating cash inflows, long-term borrowings from banks and our Sponsor, and equity provided by the capital markets and ourSponsor. Our principal use of funds has primarily been capital expenditures to establish our fleet, maintain the quality of our dry bulk vessels, comply with international shippingstandards and environmental laws and regulations, fund working capital requirements, and make principal repayments and interest payments on our outstanding debt obligations.Our funding and treasury activities are conducted in accordance to corporate policies to maximize investment returns while maintaining appropriate liquidity for both our short-and long-term needs. This includes arranging borrowing facilities on a cost-effective basis. Cash and cash equivalents are held primarily in U.S. dollars, with minimal amounts held inEuros.As of December 31, 2019, we had cash and cash equivalents of $13.7 million, as compared to $6.7 million as of December 31, 2018.Working capital is equal to current assets minus current liabilities, including the current portion of long-term debt. As of December 31, 2019, we had a working capital deficit of$215.4 million as compared to a working capital deficit of $19.4 million as of December 31, 2018. Our working capital was primarily affected the classification of the long-term debt andother financial liabilities as current due to a technical breach under one of our long-term debt facilities, as well as by the decrease in our cash and cash equivalents balance due to debtinstallment payments, cash paid for interest and an increase in year-end balances to our trade accounts payable.As of December 31, 2019, we had total indebtedness under our credit facilities of $209.9 million, excluding unamortized financing fees, as compared to $218.0 million as ofDecember 31, 2018.51Table of ContentsOur commitments, as of December 31, 2019, primarily relate to debt and interest repayments of $211.5 million under our credit facilities and our credit facilities and convertiblenotes issued to Jelco (please see “Loan Arrangements”). Our cash flow projections indicate that cash on hand and cash to be provided by operating activities will not be sufficient tocover the liquidity needs that become due in the twelve-month period ending one year after the financial statements’ issuance. We plan to settle the loan interest and scheduled loanrepayments with cash on hand and cash expected to be generated from operations. Concerning the final balloon payments, we are exploring, on an ongoing basis, several alternatives,including refinancing the existing facilities and extending the respective maturities, issuing additional debt or equity securities, entering into restructuring transactions or a combinationof the foregoing. These alternatives are supported by the fair market valuation of the vessels, as assessed by third party valuators, which cover sufficiently the underlying loans. Inaddition, we could consider the sale of some of the collateral vessels to free-up liquidity and support the refinancing of the remaining units by reducing the overall indebtedness. In theevent that none of the above materialize, we could consider the sale of all the underlying collaterals (i.e., four vessels) and repay in full the loans under consideration. Cash Flows (In thousands of US Dollars)Year ended December 31, 2019 2018 2017 Cash Flow Data: Net cash provided by / (used in) operating activities 13,108 5,723 2,782 Net cash used in investing activities (12,349) (8,827) (32,992)Net cash (used in) / provided by financing activities 6,351 (491) 25,341 Year ended December 31, 2019, as compared to year ended December 31, 2018 Operating Activities: Net cash provided by operating activities amounted to $13.1 million in 2019, consisting of net income after non-cash items of $10.1 million plus anincrease in working capital of $3.0 million. Net cash provided by operating activities amounted to $5.7 million in 2018, consisting of net income after non-cash items of $4.5 million plus anincrease in working capital of $1.2 million. Investing Activities: The 2019 cash outflow resulted from the completion of installation of exhaust gas cleaning systems, or scrubbers, on five of its vessels. The 2018 cashoutflow primarily resulted from the acquisition of our vessel Fellowship in November 2018 payments related to scrubbers and expenses incurred in respect to the new office space. The2018 cash outflow was offset by the cash inflow from the sale of our vessels Gladiatorship and Guardianship in October 2018 and November 2018 respectively. Financing Activities: The 2019 cash inflow resulted mainly from: proceeds from issuance of common stock and warrants, net of underwriters’ fees and commissions, of $13.2million, proceeds of $4.5 million obtained from the New ATB Loan Facility, proceeds of $1.9 million obtained from Cargill financial liability, proceeds of $5 million from the Fourth JelcoLoan Facility. The 2019 cash inflow was offset by total debt repayments of $17.6 million and $0.7 million financing and stock issuance fees payments. The 2018 cash inflow resultedmainly from: proceeds of $24.5 million obtained from the Wilmington Trust Loan Facility, proceeds of $18.6 million obtained from the June 28, 2018 Hanchen financial liability, proceeds of$23.5 million obtained from the Cargill financial liability on November 7, 2018 and proceeds of $2 million from Jelco loan facility dated April 10, 2018. The 2018 cash inflow was offset bydebt repayments of $68.5 million and $1.2 million loan finance fees payments. Please see Item 5.A of our Form 20-F filed with the SEC on March 25, 2019 for a discussion of the year-to-year comparison between 2018 and 2017. Loan Arrangements Credit FacilitiesLeader Alpha Bank Loan Facility On March 6, 2015, we entered into a $8.75 million secured floating interest rate loan facility with Alpha Bank A.E. to partly finance the acquisition of the Leadership, referred toas the Leader Alpha Bank Loan Facility. The borrower under the facility is our applicable vessel-owning subsidiary and the facility is guaranteed by the Company. On December 23, 2015,July 28, 2016, June 29, 2018 and July 1, 2019, we and Alpha Bank entered into a first, second, third and fourth supplemental agreement, respectively, to the Leader Alpha Bank LoanFacility. 52Table of ContentsAs amended to date, the Leader Alpha Bank Loan Facility bears interest at LIBOR plus a margin of 3.75% and is repayable by a final installment of $0.25 million, payable alongwith a final balloon payment of $5.0 million due on March 17, 2020. In February 2020, we have received approval, in the form of a commitment letter, from the credit committee of AlphaBank to, inter alia, extend the maturity of this facility to December 31, 2022. This approval is subject to completion of definitive documentation. Following the reduction by $0.6 million offour previous repayment installments that were originally due in 2016 and which were added to the balloon installment by the second supplemental agreement, 80% of Leadership’sexcess earnings (as defined therein) during each financial year starting from 2016, shall be applied by the lender towards payment of the deferred amount until same is fully repaid. Of thedeferred amount, $0.1 million was repaid in 2018 and $0.5 million was further deferred to the final balloon installment in March 2020, pursuant to the fourth supplemental agreement.Moreover, the Leader Alpha Bank Loan Facility provides that (i) the Corporate Leverage Ratio (as defined therein) shall not be higher than 0.85:1.0 until the maturity date, (ii) theconsolidated interest cover ratio (EBITDA to Net Interest Expense) shall not be lower than 1:1 until maturity, (iii) borrower’s minimum liquidity of $0.5 million shall be maintained in freedeposits as from January 1, 2020 and (iv) the ratio of the market value of the Leadership plus any additional security to the total facility outstanding shall not be less than 125%. The Leader Alpha Bank Loan Facility is secured by a first preferred mortgage and a general assignment covering earnings, insurances and requisition compensation over theLeadership, an account pledge agreement and technical and commercial managers’ undertakings. The Leader Alpha Bank Loan Facility imposes operating and financing covenants,certain of which may significantly limit or prohibit, among other things, the borrower’s ability to incur additional indebtedness, create liens, sell capital shares of subsidiaries, engage inmergers, or sell the vessel without the consent of the lender. Also, the facility restricts our ability to distribute dividends to our shareholders in excess of 50% of our net income exceptwhen our cash and marketable securities are equal or greater than the amount required to meet our debt service until maturity. Pursuant to the terms of the February 2020 commitmentletter, certain financial covenants and restrictions on dividend payments binding the Company would no longer apply. As of December 31, 2019, $5.3 million was outstanding under the Leader Alpha Bank Loan Facility, excluding the unamortized financing fees. Hamburg Commercial Bank AG (formerly HSH Nordbank AG) Loan FacilityOn September 1, 2015, we entered into a $44.4 million senior secured loan facility with Hamburg Commercial Bank AG, or HCOB (at the time of entering into the facilityagreement, HSH Nordbank AG), to finance the acquisition of the Geniuship and the Gloriuship, referred to as the HCOB Loan Facility. The borrowers under the facility are our twoapplicable vessel-owning subsidiaries and the facility is guaranteed by the Company. The facility was made available in two advances: on October 13, 2015, we drew the first advance of$27.6 million in order to finance the acquisition of the Geniuship and on November 3, 2015, we drew the second advance of $16.8 million in order to finance the acquisition of theGloriuship. On May 16, 2016, February 23, 2017, March 28, 2018 and April 1, 2019, we and HCOB entered into two supplemental letters followed by two supplemental agreements to theHCOB Loan Facility. As amended to date, the HCOB Loan Facility bears interest at LIBOR plus a margin of 3.75% and is repayable in quarterly installments of about $1.0 million each, with a finalballoon payment of $28.8 million due on June 30, 2020. Moreover, the HCOB Loan Facility provides that: (i) the security cover percentage requirement (as defined therein) is required tobe equal to 120% starting from October 1, 2019 and for the period thereafter, (ii) the Leverage Ratio (as defined therein) shall not exceed 85% during the period ending on March 31, 2020and 75% starting from April 1, 2020 and for the period thereafter and (iii) the ratio of EBITDA to net interest payments (as defined therein) shall be not less than 1:1 for the period endingon March 31, 2020 and not less than 2:1 starting from April 1, 2020 and for the period thereafter. The HCOB Loan Facility is secured by first priority mortgages and general assignments covering earnings, charter parties, insurances and requisition compensation over eachof the vessels, earnings account pledge agreements, technical and commercial managers’ undertakings, shares security deeds of the two borrowers’ shares and a master agreementassignment. The facility imposes operating and financing covenants, certain of which may significantly limit or prohibit, among other things, the borrowers’ ability to incur additionalindebtedness, sell capital shares of subsidiaries, make certain investments, engage in mergers and acquisitions, or sell the vessels without the consent of the lender. The facility alsoplaces a restriction on the borrowers’ ability to distribute dividends to the Company in case the market values of the Geniuship and the Gloriuship plus any additional security is lessthan 145% of the total facility outstanding. 53Table of ContentsAs of December 31, 2019, $30.9 million was outstanding under the facility, excluding the unamortized financing fees. As of the same date, the security cover ratio covenantunder the HCOB Loan Facility was in breach. Such covenant breach can be rectified by paying the lender an amount equal to the difference of the value secured and the securityrequirement or by providing additional security. UniCredit Bank Loan Facilities On September 11, 2015, we entered into a $52.7 million secured term loan facility with UniCredit Bank AG to partly finance the acquisition of the Premiership, the Gladiatorshipand the Guardianship, referred to as the UniCredit Loan Facility. The borrowers under the UniCredit Loan Facility were originally our three applicable vessel-owning subsidiaries, andthe facility was guaranteed by the Company. On June 3, 2016, July 29, 2016, March 7, 2017, September 25, 2017, April 30, 2018 and October 10, 2018, we and UniCredit Bank AG enteredinto one amendment and five supplemental letter agreements, respectively, to the UniCredit Loan Facility. On November 22, 2018, we entered into an amendment and restatement of the UniCredit Loan Facility, referred to as the Amended and Restated UniCredit Loan Facility, in orderto (i) release the respective vessel-owning subsidiaries of the Gladiatorship and the Guardianship as borrowers and (ii) include as replacement borrower the vessel-owning subsidiaryof the Fellowship. The first priority mortgages over the Gladiatorship and the Guardianship and all other securities previously created in favor of UniCredit over these vessels underthe UniCredit Loan Facility were irrevocably and unconditionally released. On July 3, 2019, we entered into a supplemental agreement to the Amended and Restated UniCredit LoanFacility. As amended to date, the Amended and Restated UniCredit Loan Facility bears interest at LIBOR plus a margin of 3.20% starting from December 28, 2019 and for the periodthereafter, and is repayable in four quarterly installments of about $1.6 million each, of which the fourth is payable along with a final balloon installment of $31.6 million due on December29, 2020. Moreover, the Amended and Restated UniCredit Loan Facility provides that: (i) the Leverage Ratio (as defined therein) shall not exceed 85% during the period ending on March31, 2020 and no more than 75% for the period thereafter, (ii) the ratio of EBITDA to net interest payments (as defined therein) shall be not less than 1:1 for the period ending on March 31,2020 and not less than 2:1 for the period thereafter and (iii) minimum liquidity of $0.5 million per vessel owned by the guarantor shall be maintained by the Company. The security coverpercentage requirement (as defined therein) is required to be equal to 120% starting from July 1, 2019 and for the period thereafter. The Amended and Restated UniCredit Loan Facility is secured by first preferred mortgages and general assignments covering earnings, charter parties, insurances andrequisition compensation over the Premiership and the Fellowship, account pledge agreements, a charterparty assignment over the Premiership, technical and commercial managers’undertakings, shares security deeds of the two applicable vessel-owning subsidiaries’ shares and a hedging assignment agreement. The facility imposes operating and financingcovenants, certain of which may significantly limit or prohibit, among other things, the borrowers’ ability to incur additional indebtedness, create liens, engage in mergers, or sell thevessels without the consent of the lender. As of December 31, 2019, $37.8 million was outstanding under the Amended and Restated UniCredit Loan Facility, excluding the unamortized financing fees. Squire Alpha Bank Loan Facility On November 4, 2015, we entered into a $33.8 million secured floating interest rate loan facility with Alpha Bank A.E. to partly finance the acquisition of the Squireship, referredto as the Squire Alpha Bank Loan Facility. The borrower under the Squire Alpha Bank Loan Facility is our applicable vessel-owning subsidiary and the facility is guaranteed by theCompany. On July 28, 2016, June 29, 2018 and July 1, 2019, we and Alpha Bank entered into a first, second and third supplemental agreement, respectively, to the Squire Alpha Bank LoanFacility. As amended to date, the Squire Alpha Bank Loan Facility bears interest at LIBOR plus a margin of 3.50% and is repayable in eight consecutive quarterly installments of $0.9million each, of which the eighth is payable along with a final balloon payment of $19.7 million due on November 10, 2021. In February 2020, we have received approval from the creditcommittee of Alpha Bank to, inter alia, extend the maturity of this facility to December 31, 2022. This approval is subject to completion of definitive documentation. Moreover, the SquireAlpha Bank Loan Facility provides that: (i) the ratio of the market value of the Squireship plus any additional security to the total facility outstanding shall not be less than 100% untilMarch 31, 2020, not less than 111% starting from April 1, 2020 until March 31, 2021 and not less than 125% from April 1, 2021 until the maturity, (ii) the consolidated interest cover ratio(EBITDA to Net Interest Expense) (as defined therein) shall not be (a) lower than 1:1 until March 31, 2020 and (b) lower than 2:1 as from April 1, 2020 until the maturity, (iii) the CorporateLeverage Ratio (as defined therein) shall not be (a) higher than 0.85:1.0 until March 31, 2020, (b) higher than 0.75:1.0 starting from April 1, 2020 until maturity and (iv) minimum borrower’sliquidity of $0.5 million shall be maintained in free deposits as from January 1, 2020. 54Table of ContentsThe Squire Alpha Bank Loan Facility is secured by a first preferred mortgage and a general assignment covering earnings, insurances and requisition compensation over theSquireship, a corporate guarantee by Leader Shipping Co., being the vessel-owning subsidiary of the Leadership, a second preferred mortgage over the Leadership, an account pledgeagreement, a charterparty assignment over the Squireship and technical and commercial managers’ undertakings. The Squire Alpha Bank Loan Facility imposes operating and financialcovenants, certain of which may significantly limit or prohibit, among other things, the borrower’s ability to incur additional indebtedness, create liens, sell capital shares of subsidiaries,engage in mergers, or sell the vessel without the consent of the lender. Also, the facility restricts our ability to distribute dividends to our shareholders in excess of 50% of our netincome except if our cash and marketable securities are equal or greater than the amount required to meet our debt service for the following eighteen-month period. Pursuant to the termsof the February 2020 commitment letter, certain financial covenants and restrictions on dividend payments binding the Company would no longer apply. As of December 31, 2019, $27.0 million was outstanding under the facility, excluding the unamortized financing fees. ATB Loan Facilities On May 24, 2017, we entered into an up to $18 million term loan facility with Amsterdam Trade Bank N.V., or ATB, to partially finance the acquisition of the Partnership, referredto as the ATB Loan Facility. The borrower under the ATB Loan Facility was our applicable vessel-owning subsidiary. On September 25, 2017, in order to partially fund the refinancing of a previous loan facility with Natixis with respect to the Championship, we amended and restated the ATBLoan Facility, increasing the loan amount by an additional tranche of $16.5 million, referred to as the Amended and Restated ATB Loan Facility. The borrowers under the Amended andRestated ATB Loan Facility were the vessel-owning subsidiaries of the Partnership and the Championship. On May 18, 2018, we and ATB entered into a supplemental agreement to theAmended and Restated ATB Loan Facility. On November 7, 2018, ATB entered into a deed of release, with respect to the Championship, releasing and discharging the underlyingborrower and all securities created over the Championship in full after the settlement of the outstanding balance of $15.7 million pertaining to Championship’s tranche. On February 13, 2019, after a further deed of release with respect to the Partnership resulting in a complete release of the Amended and Restated ATB Loan Facility and fullsettlement of the outstanding balance of $16.4 million, we entered into a new loan facility with ATB in order (i) to refinance the existing indebtedness over the Partnership under theAmended and Restated ATB Loan Facility and (ii) for general working capital purposes, and more specifically, for the financing of installation of open loop scrubber systems on theSquireship and the Premiership. We refer to this facility as the New ATB Loan Facility. The borrower under the New ATB Loan Facility is the vessel-owning subsidiary of thePartnership, and the facility is guaranteed by the Company. On June 13, 2019 and August 21, 2019, we and ATB entered into a supplemental agreement and a supplemental letter to theNew ATB Loan Facility, respectively. As amended to date, the New ATB Loan Facility bears interest of LIBOR plus a margin of 4.65% and is divided in Tranche A relating to the refinancing of the Partnership andTranches B and C for the financing of the scrubber systems on the Squireship and the Premiership, respectively. Tranche A is repayable in twelve consecutive quarterly installments of$0.2 million each and a balloon payment of $13.2 million on November 26, 2022. Tranche B and C is repayable in eleven consecutive quarterly installments of $0.19 million with the last onefalling due on August 26, 2022. Moreover, the New ATB Loan Facility provides that: (i) the Leverage Ratio (as defined therein) shall not exceed 85% until March 31, 2020 and 75%starting from April 1, 2020 and for the period thereafter, (ii) the ratio of EBITDA to interest payments (as defined therein) shall not be less than 1:1 from January 1, 2020 until March 31,2020 and 2:1 starting from April 1, 2020 and for the period thereafter and (iii) legally restricted minimum liquidity of $0.5 million and $4.0 million ,not legally restricted, shall be maintainedby the borrower and the Company, respectively. The security cover percentage requirement (as defined therein) is required to be equal to 140% until June 30, 2020 and 165% for theperiod thereafter. 55Table of ContentsThe New ATB Loan Facility is secured by a first priority mortgage and a general assignment covering earnings, insurances and requisition compensation over the Partnership,an earnings account pledge, a shares security deed relating to the shares of the vessel’s owning subsidiary, technical and commercial managers’ undertakings and charterpartyassignments. As of December 31, 2019, $19.8 million was outstanding under the facility, excluding the unamortized financing fees. First Jelco Loan Facility On October 4, 2016, we entered into a $4.2 million loan facility with Jelco to finance the initial deposits for the Lordship and the Knightship. On November 17, 2016 we enteredinto an amendment of the facility and on November 28, 2016 and February 13, 2019, we amended and restated the facility, which, among other things, increased the aggregate amount thatcould be borrowed under the facility to up to $12.8 million (to partially finance the remaining payment for the Lordship and the Knightship) and extended the maturity date to June 30,2020. On May 29, 2019, we further amended the First Jelco Loan to reflect the changes agreed with Jelco in the Purchase Agreement: (i) interest of $0.2 million accrued up to March 31,2019 was deemed fully and finally settled, (ii) the interest rate for the period of April 1, 2019 to December 31, 2019 was set at 0% and (iii) the interest rate from January 1, 2020 untilmaturity was set at LIBOR plus a margin of 8.5% per annum. The First Jelco Loan Facility is repayable in one bullet payment together with accrued interest thereon on the maturity date.Seanergy Maritime Holdings Corp. is the borrower under this facility. This facility is secured by the following: a second preferred mortgage and a second priority general assignmentcovering earnings, insurances and requisition compensation over the Partnership, a guarantee from the vessel-owning subsidiary of the Partnership, all cross collateralized with theSecond Jelco Loan Facility and the Third Jelco Note, and a guarantee from Emperor Holding Ltd., or Emperor, our wholly owned subsidiary that owns the vessel-owning subsidiary ofthe Lordship and the bareboat charterer of the Knightship. As of December 31, 2019, $5.9 million was outstanding under the First Jelco Loan Facility. Second Jelco Loan Facility On May 24, 2017, we entered into an up to $16.2 million loan facility with Jelco to partially finance the acquisition of the Partnership. On June 22, 2017 and on August 22, 2017,we entered into supplemental letters with Jelco to amend the terms of this loan facility, whereby a repayment of $4.8 million was deferred until September 29, 2017, on which date it wasrepaid. On September 27, 2017, we amended and restated the Second Jelco Loan Facility and on February 13, 2019, we entered into a supplemental agreement and extended the maturitydate to December 30, 2020. On May 29, 2019, we further amended the Second Jelco Loan to reflect the changes agreed with Jelco in the Purchase Agreement: (i) interest of $0.4 millionaccrued up to March 31, 2019 was deemed fully and finally settled, (ii) the interest rate for the period of April 1, 2019 to December 31, 2019 was set at 0% and (iii) the interest rate fromJanuary 1, 2020 until maturity was set at LIBOR plus a margin of 6.0% per annum. The Second Jelco Loan Facility is repayable in one bullet payment together with accrued interestthereon to the maturity date. The facility is secured by the following securities: a second preferred mortgage and a second priority general assignment covering earnings, insurances andrequisition compensation over the Partnership and a guarantee from the vessel-owning subsidiary of the Partnership, all cross collateralized with the First Jelco Loan Facility and theThird Jelco Note and a guarantee from Emperor. As of December 31, 2019, $11.5 million was outstanding under Second Jelco Loan Facility. Third Jelco Loan Facility On April 10, 2018, we had entered into a $2.0 million loan facility with Jelco for working capital purposes which was refinanced on March 27, 2019 by the Fourth Jelco LoanFacility, described below. All obligations thereunder were irrevocably and unconditionally discharged pursuant to the deed of release of March 27, 2019. Fourth Jelco Loan Facility On March 26, 2019, we entered into a $7.0 million loan facility with Jelco, the proceeds of which were utilized (i) to refinance the $2.0 million outstanding under the Third JelcoLoan Facility and (ii) for general corporate purposes. We drew down the entire $7.0 million on March 27, 2019. The Fourth Jelco Loan Facility is repayable through one installment of $1.0million which was due on January 5, 2020 and a balloon installment of $6.0 million payable at maturity, September 27, 2020. On May 29, 2019, we further amended the Fourth Jelco LoanFacility to reflect the changes agreed with Jelco in the Purchase Agreement: (i) interest of $0.01 million accrued up to March 31, 2019 was deemed fully and finally settled, (ii) the interestrate for the period of April 1, 2019 to December 31, 2019 was set at 0%, (iii) the interest rate from January 1, 2020 until maturity was set at 6.0% per annum, or 8.5% per annum if the $1.0million installment is deferred to maturity and (iv) the mandatory prepayment obligation to prepay the full or any part of the Fourth Jelco Loan Facility by utilizing an amount equal to notless than 25% of the net proceeds of a public offering of securities was waived in respect to our public offering in May 2019. The Fourth Jelco Loan Facility is secured by a guaranteefrom Emperor. As of December 31, 2019, $7.0 million was outstanding under the Fourth Jelco Loan Facility. 56Table of ContentsWilmington Trust Loan Facility On June 11, 2018, we entered into a $24.5 million loan agreement with certain Blue Ocean maritime lending funds managed by EnTrustPermal for the purpose of refinancing theoutstanding indebtedness of the Lordship under the NSF Loan Facility. The borrower under the facility is the applicable vessel-owning subsidiary and the facility is guaranteed by theCompany. The Wilmington Trust Loan Facility matures in June 13, 2023 and may be extended until June 13, 2025 subject to certain conditions. Specifically, the borrower has the right to sellthe ship back to the lender at a pre-agreed price of $20.8 million on the fifth anniversary of the loan utilization, referred to as the Year-5 Put Option. If the borrower elects to exercise theYear-5 Put Option, the lender has the right to extend the termination date of the loan by a further two years, in which case the exercise of the Year-5 Put Option by the borrower shall becancelled in its entirety. Furthermore, the borrower has the right to sell the ship back to the lender at a pre-agreed price of $15.0 million on the seventh anniversary of the loan utilization,referred to as the Year-7 Put Option. If the borrower elects to exercise the Year-7 Put Option, then the lenders will be obliged to purchase the ship at the pre-agreed price. The WilmingtonTrust Loan Facility bears a weighted average all-in interest rate of 11.4% and 11.2% assuming a maturity date in June 2023 or in June 2025, respectively. The principal obligation amortizesin 20 or 28 quarterly installments, with a balloon payment of $15.3 million or $9.5 million due at maturity, assuming a maturity date in June 2023 or in June 2025, respectively. The Wilmington Trust Loan Facility is secured by a first priority mortgage and a general assignment covering earnings, insurances and requisition compensation over theLordship, an account pledge agreement, a share pledge agreement concerning the respective vessel-owning subsidiary, technical and commercial managers’ undertakings and acharterparty assignment over the Lordship. The Wilmington Trust Loan Facility also imposes certain customary operating covenants, certain of which may significantly limit or prohibit,among other things, the borrower’s ability to incur additional indebtedness, create liens, sell capital shares of subsidiaries, engage in mergers, or sell the vessel without the consent ofthe relevant lenders. As of December 31, 2019, $23.3 million was outstanding under the Wilmington Trust Loan Facility. Other Financial Liabilities: Sale and Leaseback Agreements Hanchen Sale and Leaseback On June 28, 2018, we entered into a $26.5 million sale and leaseback agreement for the Knightship with Hanchen for the purpose of refinancing the outstanding indebtedness ofthe Knightship under the NSF Loan Facility. The Company’s wholly-owned subsidiary owing the Knightship, or the Charterer, sold and chartered back the vessel on a bareboat basis foran eight year period, having a purchase obligation at the end of the eighth year. The Company has continuous options to buy back the Knightship at any time following the secondanniversary of the bareboat charter. The transaction was accounted for as a financial liability. The bareboat charter is secured by a general assignment covering earnings, insurances andrequisition compensation, an account pledge agreement, a share pledge agreement of the shares of the Charterer, technical and commercial managers’ undertakings and a guarantee fromthe Company. Of the $26.5 million purchase price, $18.6 million were cash proceeds, $6.6 million were withheld by Hanchen as an upfront charterhire, and an amount of $1.3 million waspaid by the Charterer to Hanchen as security of the due observance and performance by the Charterer of its obligations and undertakings as per the sale and leaseback agreement, or theCharterer’s Deposit. The Charterer’s Deposit can be set off against the balloon payment at maturity. The Charterer is required to maintain a value maintenance ratio (as defined in theadditional clauses of the bareboat charter) of at least 120% of the charterhire principal minus the amount of the Charterer’s Deposit and an additional amount of $1.3 million until thesecond anniversary of the vessel’s delivery date or until a sub-charter in form and substance acceptable to Hanchen is available, whichever is earlier. The charterhire principal bearsinterest at LIBOR plus a margin of 4% and amortizes in twenty-six consecutive equal quarterly installments of approximately $0.46 million along with a balloon payment of $5.3 million dueon June 29, 2026. The charterhire principal, as of December 31, 2019, was $17.1 million. 57Table of ContentsCargill Sale and Leaseback On November 7, 2018, we entered into a $23.5 million sale and leaseback agreement for the Championship with Cargill for the purpose of refinancing the outstandingindebtedness of the Championship under the Amended and Restated ATB Loan Facility. The Company sold and chartered back the vessel from Cargill on a sub-bareboat basis for afive-year period, having a purchase obligation at the end of the fifth year. The transaction was accounted for as a financial liability. The sub-bareboat charter is secured by a guaranteefrom the Company, a scrubber supply contract assignment, an account pledge agreement and technical and commercial managers’ undertakings. The Company is required to maintain anamount of $1.6 million from the $23.5 million proceeds as a performance guarantee, which amount of $1.6 million will be used at the vessel’s repurchase. Moreover, under the subject saleand leaseback agreement, an additional tranche was provided to the Company for an amount of up to $2.75 million for the purpose of financing the cost associated with the acquisitionand installation on board the Championship of an open loop scrubber system. The subject tranche has been placed in an escrow account in the name of Cargill and is made availablegradually subject to certain progress milestones. The cost of the financing is equivalent to an expected fixed interest rate of 4.71% for five years. The sale and leaseback agreement doesnot include any financial covenants or security value maintenance provisions. The Company has continuous options to buy back the vessel during the whole five-year sale andleaseback period at the end of which it has a purchase obligation at $14.05 million. Additionally, at the time of purchase, if the market value of the vessel is greater than a certain floorprice, the Company will pay to Cargill 20% of the difference between the market price and the floor price. The floor price started at $30 million on November 7, 2018 and amortizes to $22.8million at the end of the five year term. The Company has concluded that such contingency shall not be accrued in the financial statements, since information available does not indicatethat it is probable that a liability has been incurred as of the latest balance sheet date and cannot be estimated. Moreover, as part of the transaction, the Company has issued 120,000 ofits common shares to Cargill which are subject to customary statutory registration requirements. The fair market value of the shares on the date issued to Cargill will be amortized overthe lease term using the effective interest method. The unamortized balance is classified under other financial liabilities on the consolidated balance sheet. The charterhire principalamortizes in forty-seven monthly installments averaging approximately $0.2 million each along with a balloon payment of $14.1 million, including the additional scrubber tranche, atmaturity on November 7, 2023. The charterhire principal, as of December 31, 2019, was $24.2 million including the additional scrubber tranche. Convertible Notes First Jelco Note On March 12, 2015, we issued a $4.0 million convertible note to Jelco, or the First Jelco Note. Following four amendments between May 2015 and May 2019, the First Jelco Noteis repayable in one installment due on December 31, 2020. The fourth amendment entered into on May 29, 2019 reflects the changes agreed with Jelco in the Purchase Agreement: (i)interest of $0.2 million accrued up to March 31, 2019 was deemed fully and finally settled, (ii) the interest rate for the period of April 1, 2019 to December 31, 2019 was set at 0% and (iii)the interest rate from January 1, 2020 until maturity was set at three-month LIBOR plus a margin of 5% with quarterly interest payments. As of December 31, 2019, $3.8 million wasoutstanding under the First Jelco Note. Second Jelco Note On September 7, 2015, we issued an up to $6.8 million, or the Applicable Limit, revolving convertible note to Jelco, or the Second Jelco Note. The Second Jelco Note is repayablein one installment due on December 31, 2022. Following twelve amendments between December 2015 and May 2019, the Applicable Limit was raised to $24.7 million. Moreover, pursuantto the eleventh amendment entered into on March 26, 2019, we have been provided with the option to drawdown up to $3.5 million by April 10, 2020, or the Final Revolving AdvanceDate. If the request is not made by the Final Revolving Advance Date, the advance will not be available to be drawn and the Applicable Limit will be reduced to $21.2 million. The twelfthamendment entered into on May 29, 2019, reflects the changes agreed with Jelco in the Purchase Agreement: (i) interest of $0.9 million accrued up to March 31, 2019 was deemed fullyand finally settled, (ii) the interest rate for the period of April 1, 2019 to December 31, 2019 was set at 0% and (iii) the interest rate from January 1, 2020 until maturity was set at three-month LIBOR plus a margin of 5% with quarterly interest payments. As of December 31, 2019, $21.2 million was outstanding under the Second Jelco Note. 58Table of ContentsThird Jelco Note On September 27, 2017, we issued a $13.75 million convertible note to Jelco, or the Third Jelco Note. Following two amendments between February and May 2019, the ThirdJelco Note is repayable in one installment due on December 31, 2022. The second amendment entered into on May 29, 2019, reflects the changes agreed with Jelco in the PurchaseAgreement: (i) interest of $0.5 million accrued up to March 31, 2019 was deemed fully and finally settled, (ii) the interest rate for the period of April 1, 2019 to December 31, 2019 was set at0% and (iii) the interest rate from January 1, 2020 until maturity was set at three-month LIBOR plus a margin of 5% with quarterly interest payments. The Third Jelco Note is secured by asecond preferred mortgage and second priority general assignment covering earnings, insurances and requisition compensation over the Partnership and a guarantee from the vessel-owning subsidiary of the Partnership, all cross collateralized with the First Jelco Loan Facility and the Second Jelco Loan Facility. As of December 31, 2019, $13.75 million wasoutstanding under the Third Jelco Note. We may by giving a five business days prior written notice to Jelco at any time, prepay the whole or any part of the three Jelco notes in cash or, subject to Jelco’s prior writtenagreement on the price per share, in a number of fully paid and nonassessable shares of the Company equal to the amount of the note(s) being prepaid divided by the agreed price pershare. At Jelco’s option, our obligation to repay the principal amount(s) under the three Jelco notes or any part thereof may be paid in common shares at a conversion price of $13.50 pershare. Jelco also has received customary registration rights with respect to any shares to be received upon conversion of the notes. Emperor has provided a guarantee, dated September 27, 2017, to Jelco for the Company’s obligations under all three notes. C.Research and development, patents and licenses, etc.Not applicable.D.Trend InformationOur results of operations depend primarily on the charter rates earned by our vessels. Over the course of 2019, the BDI registered a low of 948 on April 6, 2018 and a high of2,518 on September 4, 2019.Since the start of the financial crisis in 2008 the performance of the BDI has been characterized by high volatility, as the growth in the size of the dry bulk fleet outpaced growthin vessel demand for an extended period of time.Specifically, in the period from 2009 to 2019, the size of the fleet in terms of deadweight tons grew by an annual average of about 6.5% while the corresponding growth indemand for dry bulk carriers grew by 4.4%, resulting in a drop of about 48.3% in the value of the BDI over the period. According to tentative projections, the total size of the dry bulkfleet is expected to rise by about 3.8% in 2020, compared to expected demand growth of 2.5%.Please also see “–B. Liquidity and Capital Resources”.E.Off-balance Sheet ArrangementsWe do not have any off-balance sheet arrangements.F.Tabular Disclosure of Contractual ObligationsThe following table sets forth our contractual obligations as of December 31, 2019 (in thousands of U.S. Dollars):Contractual Obligations Total less than 1 year 1-3 years 3-5 years more than5 years Long-term debt, debt to related party and other financial liabilities $209,859 $209,859 $- $- $- Convertible notes 38,715 3,800 34,915 - - Interest expense - debt to related party (1) 1,612 1,612 - - - Interest expense - convertible notes $7,348 2,674 4,674 - - Office rent 542 127 362 53 - Total $258,076 $218,072 $39,951 $53 $- (1)As discussed in Note 3 to our consolidated financial statements, we have classified our long-term debt and other financial liabilities as of December 31, 2019 in current liabilities. Theamounts in the table under “Interest expense - debt to related party” does not include any projected interest payments for our long-term debt and other financial liabilities.59Table of ContentsAs a supplement to our contractual obligations table, the following schedule sets forth our loan repayment obligations as required under our loan facilities as of December 31,2019.Contractual Obligations Total less than1 year 1-3 years 3-5 years more than5 years Long-term debt, debt to related party and other financial liabilities $209,859 $110,379 $54,715 $25,733 $19,032 Convertible notes 38,715 3,800 34,915 - - Interest expense - long term debt, debt to related party and other financialliabilities 34,553 14,189 14,292 4,850 1,222 Interest expense - convertible notes 7,348 2,674 4,674 - - Office rent 542 127 362 53 - Total $291,017 $131,169 $108,958 $30,636 $20,254 G.Safe HarborSee the section titled “Cautionary Statement Regarding Forward-Looking Statements” at the beginning of this annual report.ITEM 6.DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEESA.Directors and Senior ManagementSet forth below are the names, ages and positions of our current directors and executive officers. Members of our board of directors are elected annually on a staggered basis,and each director elected holds office for a three-year term. Officers are elected from time to time by vote of our board of directors and hold office until a successor is elected. Thebusiness address of each of our directors and executive officers listed below is 154 Vouliagmenis Avenue, 166 74 Glyfada, Athens, Greece.Name Age Position Director ClassStamatios Tsantanis 48 Chairman, Chief Executive Officer & Director A (term expires in 2022)Stavros Gyftakis 41 Chief Financial Officer Christina Anagnostara 49 Director B (term expires in 2020)Elias Culucundis 77 Director* A (term expires in 2022)Dimitrios Anagnostopoulos 73 Director* C (term expires in 2021)Ioannis Kartsonas 48 Director* C (term expires in 2021)*Independent DirectorBiographical information with respect to each of our directors and our executive officer is set forth below.Stamatios Tsantanis has been a member of our board of directors and our chief executive officer since October 1, 2012. Mr. Tsantanis has also been the Chairman of our Boardof Directors since October 1, 2013 and our Interim Chief Financial Officer from November 1, 2013 until October 2, 2018. Mr. Tsantanis brings more than 22 years of experience in shippingand finance and held senior management positions in prominent shipping companies and financial institutions. Mr. Tsantanis previously served as the Chief Financial Officer and as aDirector of Top Ships Inc. from its initial public offering and listing on Nasdaq. Prior to that, he was an investment banker at Alpha Finance, a member of the Alpha Bank Group, withactive roles in a number of shipping corporate finance transactions. Mr. Tsantanis holds a Master of Science (MSc) in Shipping Trade and Finance from Cass Business School in Londonand a Bachelor of Science (BSc) in Shipping Economics from the University of Piraeus. He is also a fellow of the Institute of Chartered Shipbrokers.60Table of ContentsStavros Gyftakis has been appointed as our Chief Financial Officer on October 3, 2018, and previously served as Finance Director since November 2017. He has more than 14years of experience in senior positions in the shipping finance industry. Before joining Seanergy, he was a Senior Vice President in the Greek shipping finance desk at DVB Bank SE.Stavros holds a BSc in Mathematics from the Aristotle University of Thessaloniki, a MSc in Business Mathematics awarded with Honors, from the Athens University of Economics andBusiness and a MSc in Shipping, Trade and Finance, awarded with Distinction, from Cass Business School of City University in London.Christina Anagnostara served as our chief financial officer from November 17, 2008 until October 31, 2013 and has served as a member of our board of directors since December2008. She has more than 22 years of maritime and international business experience in the areas of finance, banking, capital markets, consulting, accounting and audit. She has served inexecutive and board positions of publicly listed companies in the maritime industry and she was responsible for the financial, capital raising and accounting functions. Since June 2017she is a Director of the Investment Banking Division of AXIA Ventures Group and from 2014 to 2017 she provided advisory services to corporate clients involved in all aspects of themaritime industry. Between 2006 and 2008 she served as Chief Financial Officer and member of the Board of Directors of Global Oceanic Carriers Ltd, a dry bulk shipping company listedon the Alternative Investment Market of the London Stock Exchange. Between 1999 and 2006, she was a senior management consultant of the Geneva-based EFG Group. Prior to EFGGroup she worked for Eurobank EFG and Ernst & Young, the international accounting firm. Ms. Anagnostara studied Economics in Athens and is a Certified Chartered Accountant. Sheis a member of various industry organizations including ACCA, Propeller Club, WISTA, Shipping Finance Executives and American Hellenic Chamber of Commerce.Elias Culucundis has been a member of our board of directors since our inception. Since 1999, Mr. Culucundis has been president, chief executive officer and director of EquityShipping Company Ltd., a company specializing in starting, managing and operating commercial and technical shipping projects. Additionally, from 1996 to 2000, he was a director ofKassian Maritime Shipping Agency Ltd., a vessel management company operating a fleet of ten bulk carriers. During this time, Mr. Culucundis was also a director of Point ClearNavigation Agency Ltd, a marine project company. From 1981 to 1995, Mr. Culucundis was a director of Kassos Maritime Enterprises Ltd., a company engaged in vessel management.While at Kassos, he was initially a technical director and eventually ascended to the position of chief executive officer, overseeing a large fleet of Panamax, Aframax and VLCC tankers,as well as overseeing new vessel building contracts, specifications and the construction of new vessels. From 1971 to 1980, Mr. Culucundis was a director and the chief executive officerof Off Shore Consultants Inc. and Naval Engineering Dynamics Ltd. In Off Shore Consultants Inc. he worked in Floating Production, Storage and Offloading vessel, or FPSO, design andconstruction and was responsible for the technical and commercial supervision of a pentagon-type drilling rig utilized by Royal Dutch Shell Plc. Seven FPSOs were designed andconstructed that were subsequently utilized by Pertamina, ARCO, Total and Elf-Aquitaine. Naval Engineering Dynamics Ltd. was responsible for purchasing, re-building and operatingvessels that had suffered major damage. From 1966 to 1971, Mr. Culucundis was employed as a Naval Architect for A.G. Pappadakis Co. Ltd., London, responsible for tanker and bulkcarrier new buildings and supervising the technical operation of their fleet. He is a graduate of Kings College, Durham University, Great Britain, with a degree in Naval Architecture andShipbuilding. He is a member of the Hellenic National Committee of American Bureau of Shipping and he served in the Council of the Union of Greek Shipowners. Mr. Culucundis is aFellow of the Royal Institute of Naval Architects and a Chartered Engineer. Dimitrios Anagnostopoulos has been a member of our board of directors since May 2009. Mr. Anagnostopoulos has over 41 years of experience in Shipping, Ship finance andBank Management. Mr. Anagnostopoulos obtained his BSc at the Athens University of Economics and Business. His career began in the 1970’s as Assistant Lecturer at the sameUniversity followed by four years with the Onassis Shipping Group in Monaco. Mr. Anagnostopoulos also held various posts at the National Investment Bank of IndustrialDevelopment (ETEBA), Continental Illinois National Bank of Chicago, the Greyhound Corporation, and with ABN AMRO, where he has spent nearly two decades with the Bank, holdingthe positions of Senior Vice-President and Head of Shipping. Since 2010 he is also an advisor and Board Member in the Aegean Baltic Bank S.A. Mr. Anagnostopoulos has been aspeaker and panelist in various shipping conferences in Europe, and a regular guest lecturer at the City University Cass Business School in London, the Athens University of Economicsand Business and the ALBA Graduate Business School. He is a member (and ex-vice chairman) of the Association of Banking and Financial Executives of Greek Shipping and anAssociate Member of the Institute of Energy of South East Europe. In 2008 he was named by the Lloyd’s Organization as Shipping Financier of the Year. 61Table of ContentsIoannis Kartsonas has been a member of our board of directors since May 2017. Mr. Kartsonas has more than 20 years of experience in finance and commodities trading. He iscurrently the Principal and Managing Partner of Breakwave Advisors LLC., a commodity-focused advisory firm based in New York. From 2011 to 2017, he was a Senior Portfolio Managerat Carlyle Commodity Management, a commodity-focused investment firm based in New York and part of the Carlyle Group, being responsible for the firm’s Shipping and Freightinvestments. During his tenure, he managed one of the largest freight futures funds globally. Prior to his role, Mr. Kartsonas was a Co-Founder and Portfolio Manager at Sea AdvisorsFund, an investment fund focused in Shipping. From 2004 to 2009, he was the leading Transportation Analyst at Citi Investment Research covering the broader transportation spaceincluding Shipping. Prior to that, he was an Equity Analyst focusing on Shipping and Energy for Standard & Poor’s Investment Research. Mr. Kartsonas holds an MBA in Finance fromthe Simon School of Business, University of Rochester.No family relationships exist among any of the directors and executive officers.B.CompensationFor the year ended December 31, 2019, we paid our executive officers and directors aggregate compensation of $0.58 million. Our executive officers are employed by uspursuant to employment and consulting contracts.Each member of our board of directors received a fee of $60,000 in 2019. The Shipping Committee fee has been suspended since July 1, 2013 until the board of directors decidesotherwise. The aggregate director fees paid by us for the years ended December 31, 2019, 2018 and 2017 totaled $300,000, $300,000 and $246,000, respectively.On January 12, 2011 our board of directors adopted the Seanergy Maritime Holdings Corp. 2011 Equity Incentive Plan, or the Plan. The Plan was amended and restated onDecember 15, 2016, to increase the aggregate number of shares of our common stock reserved for issuance under the Plan from 57,111 shares to 66,666 shares. The Plan was alsoamended and restated on February 1, 2018, to further increase the aggregate number of shares of our common stock reserved for issuance under the Plan to 200,000. The Plan was furtheramended and restated on January 10, 2019, to further increase the aggregate number of shares of our common stock reserved for issuance under the Plan to 200,000. The Plan was furtheramended and restated on December 30, 2019, to further increase the aggregate number of shares of our common stock reserved for issuance under the Plan to 3,000,000. The Plan isadministered by the Compensation Committee of our board of directors. Under the Plan, our officers, key employees, directors, consultants and service providers may be grantedincentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, unrestricted stock, restricted stock units, and unrestricted stock at the discretion of ourCompensation Committee. Any awards granted under the Plan that are subject to vesting are conditioned upon the recipient’s continued service as an employee or a director of theCompany, through the applicable vesting date.On October 1, 2015, the Compensation Committee granted an aggregate of 12,600 restricted shares of common stock pursuant to the Plan. Of the total 12,600 shares issued, 2,400shares were granted to our board of directors and the other 10,200 shares were granted to certain of our other employees. The fair value of each share on the grant date was $55.50 andwas expensed over three years. The shares to our board of directors vested over a period of two years, which commenced on October 1, 2015. On October 1, 2015, 800 shares vested, onOctober 1, 2016, 800 shares vested, and on October 1, 2017, 800 shares vested. All the shares granted to certain of our employees vested over a period of three years, commencing onOctober 1, 2015. On October 1, 2015, 1,666 shares vested, on October 1, 2016, 2,066 shares vested, on October 1, 2017, 2,800 shares vested and 3,000 shares vested on October 1, 2018.On December 15, 2016, the Compensation Committee granted an aggregate of 51,520 restricted shares of common stock pursuant to the Plan. Of the total 51,520 shares issued,18,320 shares were granted to our board of directors, 29,867 shares were granted to certain of our employees and 3,333 shares were granted to the sole director of the Company’scommercial manager, a non-employee. The fair value of each share on the grant date was $19.50. The shares to our board of directors vested over a period of two years, whichcommenced on December 15, 2016. On December 15, 2016, 6,106 shares vested, on October 1, 2017, 6,107 shares vested and 6,107 shares vested on October 1, 2018. All the other sharesgranted will vest over a period of three years, which commenced on December 15, 2016. Of the shares granted to certain of our other employees, 7,633 shares vested on December 15,2016, 7,633 shares vested on October 1, 2017, 6,833 shares vested on October 1, 2018 and 6,833 shares will vest on October 1, 2019. Of the shares granted to the sole director of theCompany’s commercial manager, 1,000 shares vested on December 15, 2016, 1,000 shares vested on October 1, 2017, 666 shares vested on October 1, 2018 and 667 shares vested onOctober 1, 2019.On February 1, 2018, the Compensation Committee granted an aggregate of 84,000 restricted shares of common stock pursuant to the Plan. Of the total 84,000 shares issued,38,334 shares were granted to our board of directors, 44,333 shares were granted to certain of our employees and 1,333 shares were granted to the sole director of the Company’scommercial manager, a non-employee. The fair value of each share on the grant date was $15.53. All the shares will vest over a period of two years. 28,001 shares vested on February 1,2018, 26,999 shares vested on October 1, 2018 and 27,000 shares vested on October 1, 2019.62Table of ContentsOn January 10, 2019, the Compensation Committee granted an aggregate of 144,000 restricted shares of common stock pursuant to the Plan. Of the total 144,000 shares issued,66,667 shares were granted to the board of directors, 70,666 shares were granted to certain of the Company’s employees and 6,667 shares were granted to the sole director of theCompany’s commercial manager, a non-employee. The fair value of each share on the grant date was $9.15. All the shares will vest over a period of two years. 48,000 shares vested onJanuary 10, 2019, 48,000 shares vested on October 1, 2019 and 48,000 shares will vest on October 1, 2020. On February 24, 2020, the Compensation Committee granted an aggregate of 2,500,000 restricted shares of common stock pursuant to the Plan. Of the total 2,500,000 sharesissued, 720,000 shares were granted to the non-executive members of the board of directors, 685,000 were granted to the executive officers, 970,000 shares were granted to certain of theCompany’s non-executive employees and 125,000 shares were granted to the sole director of the Company’s commercial manager, a non-employee. The fair value of each share on thegrant date was $0.32. All the shares will vest in equal tranches on each of the grant date, October 1, 2020 and October 1, 2021.C.Board PracticesOur directors do not have service contracts and do not receive any benefits upon termination of their directorships. Our board of directors has an audit committee, acompensation committee, a nominating committee and a shipping committee. Our board of directors has adopted a charter for each of these committees.Audit CommitteeOur audit committee consists of Messrs. Dimitrios Anagnostopoulos and Elias Culucundis. Our board of directors has determined that the members of the audit committee meetthe applicable independence requirements of the Commission and the NASDAQ Stock Market Rules. Our board of directors has determined that Mr. Dimitrios Anagnostopoulos is an“Audit Committee Financial Expert” under the Commission’s rules and the corporate governance rules of the NASDAQ Stock Market.The audit committee has powers and performs the functions customarily performed by such a committee (including those required of such a committee by NASDAQ and theCommission). The audit committee is responsible for selecting and meeting with our independent registered public accounting firm regarding, among other matters, audits and theadequacy of our accounting and control systems.Compensation CommitteeOur compensation committee consists of Messrs. Dimitrios Anagnostopoulos and Elias Culucundis, each of whom is an independent director. The compensation committeereviews and approves the compensation of our executive officers.Nominating CommitteeOur nominating committee consists of Messrs. Elias Culucundis and Dimitrios Anagnostopoulos, each of whom is an independent director. The nominating committee isresponsible for overseeing the selection of persons to be nominated to serve on our board of directors.Shipping CommitteeWe have established a shipping committee. The purpose of the shipping committee is to consider and vote upon all matters involving shipping and vessel finance in order toaccelerate the pace of our decision making in respect of shipping business opportunities, such as the acquisition of vessels or companies. The shipping industry often demands veryprompt review and decision-making with respect to business opportunities. In recognition of this, and in order to best utilize the experience and skills that our directors bring to us, ourboard of directors has delegated all such matters to the shipping committee. Transactions that involve the issuance of our securities or transactions that involve a related party,however, shall not be delegated to the shipping committee but instead shall be considered by the entire board of directors. The shipping committee consists of three directors. Inaccordance with the Amended and Restated Charter of the Shipping Committee, two of the directors on the shipping committee are nominated by Jelco and one of the directors on theshipping committee is nominated by a majority of our board of directors and is an independent member of the board of directors. The members of the shipping committee are Mr.Stamatios Tsantanis and Ms. Christina Anagnostara, who are Jelco’s nominees, and Mr. Elias Culucundis, who is the board of directors’ nominee.63Table of ContentsIn order to assure the continued existence of the shipping committee, our board of directors has agreed that the shipping committee may not be dissolved and that the duties orcomposition of the shipping committee may not be altered without the affirmative vote of not less than 80% of our board of directors. In addition, the duties of our chief executiveofficer, who is currently Mr. Tsantanis, may not be altered without a similar vote. These duties and powers include voting the shares of stock that Seanergy owns in its subsidiaries. Inaddition to these agreements, we have amended certain provisions in its articles of incorporation and bylaws to incorporate these requirements.As a result of these various provisions, in general, all shipping-related decisions will be made by Jelco’s appointees to our board of directors unless 80% of the board membersvote to change the duties or composition of the shipping committee.D.EmployeesWe currently have two executive officers, Mr. Stamatios Tsantanis and Mr. Stavros Gyftakis. In addition, we employ Ms. Theodora Mitropetrou, our general counsel, and asupport staff of thirty-five employees.E.Share OwnershipThe common shares beneficially owned by our directors and executive officers are disclosed below in “Item 7. Major Shareholders and Related Party Transactions”.ITEM 7.MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONSA.Major ShareholdersThe following table sets out information, of which we are aware as of the date of this annual report, regarding the beneficial ownership of our common shares by (i) the ownersof more than five percent of our outstanding common shares and (ii) our directors and executive officers. All of the shareholders, including the shareholders listed in this table, areentitled to one vote for each common share held.Identity of Person or Group NumberofSharesOwned PercentofClass(2) Claudia Restis(1) 12,625,693 37.0%Eric Krafft 2,440,500 8.3%Stamatios Tsantanis 616,781 2.1%Stavros Gyftakis — * Christina Anagnostara — * Elias Culucundis — * Dimitrios Anagnostopoulos — * Ioannis Kartsonas — * Directors and executive officers as a group (6 individuals) 1,538,302 5.2%*Less than one percent.(1)Based on the Schedule 13D/A filed by Jelco, Comet and Claudia Restis on November 8, 2019, Claudia Restis may be deemed to beneficially own 12,571,992 of our common sharesthrough Jelco and 53,701 of our common shares through Comet, each through a revocable trust of which she is beneficiary. The shares she may be deemed to beneficially ownthrough Jelco include: (i) 281,481 common shares, issuable upon exercise of a conversion option pursuant to the First Jelco Note, (ii) 1,567,777 common shares, issuable uponexercise of a conversion option pursuant to the Second Jelco Note, (iii) 1,018,518 common shares, issuable upon exercise of a conversion option pursuant to the Third Jelco Noteand (iv) 1,823,529 common shares, representing the maximum number of shares issuable upon exercise of the Class B warrants of the Company issued to Jelco pursuant to thePurchase Agreement, and assuming no exercises by any other holder of Class B warrants.(2)Based on 29,399,939 common shares outstanding as of March 4, 2020 and any additional shares that such person may be deemed to beneficially own in accordance with Rule 13d-3 under the Exchange Act.64Table of ContentsB.Related Party TransactionsJelco Loan Facilities For information on our loan facilities with Jelco, please see the sections entitled “First Jelco Loan Facility”, “Second Jelco Loan Facility”, “Third Jelco Loan Facility” and“Fourth Jelco Loan Facility” under “Item 5. Operating and Financial Review and Prospects – B. Liquidity and Capital Resources – Loan Arrangements – Credit Facilities”. Jelco Convertible Notes For information on our convertible notes issued to Jelco, please see “Item 5. Operating and Financial Review and Prospects – B. Liquidity and Capital Resources – LoanArrangements – Convertible Notes”. Frontier Services Agreement On December 19, 2019, we entered into a services agreement with Frontier Tankers Corp., or Frontier, a corporation controlled by our Sponsor, engaged in the ownership oftanker vessels through wholly owned vessel-owning subsidiaries. Pursuant to the Frontier Services Agreement, Seanergy and Seanergy Management, assist Frontier’s vessel-owningsubsidiaries in their dealings with third parties, provide them with certain administration and accounting services and provide certain other services to Frontier, for a quarterly fee of $900per vessel-owning subsidiary.C.Interests of Experts and CounselNot applicable.ITEM 8.FINANCIAL INFORMATIONA.Consolidated Statements and Other Financial InformationSee Item 18.Legal ProceedingsWe have previously reported that between 2010 and 2017 certain of our then shareholders, including our former Chairman that served between 2008 to 2010, had brought suitsin Greece against certain other shareholders of the Company, our former Chief Financial Officer, and such Chairman’s immediate successor to the board of directors. The plaintiffswithdrew their suits filed in 2010 and 2014 and therefore these are now closed.The hearing of the only two remaining suits that were filed in 2017 against, amongst other, the former Chairman’s immediate successor, took place on November 15, 2018 and thecourt’s decision is now expected to be issued. These suits seek damages from the defendants (including our former Chairman) for alleged willful misconduct that purportedly caused theplaintiffs damage both by way of diminution of the value of their shares in the Company and harm to their reputations. Our former Chairman has advised us that he does not believe theaction has any merit.Neither we nor our Directors nor our current executive officers are named in any of these 2017 actions. We have also notified our insurance underwriters of these actions, andour underwriters are advancing a portion of the defendants’ legal expenses.Various claims, suits, and complaints, including those involving government regulations and product liability, arise in the ordinary course of the shipping business. Other thanthe proceedings mentioned above, we are not a party to any material litigation where claims or counterclaims have been filed against us other than routine legal proceedings incidental toour business.65Table of ContentsDividend PolicyThe declaration, timing and amount of any dividend is subject to the discretion of our board of directors and will be dependent upon our earnings, financial condition, marketprospects, capital expenditure requirements, investment opportunities, restrictions in our loan agreements, the provisions of the Marshall Islands law affecting the payment of dividendsto shareholders, overall market conditions and other factors. We have not declared any dividends since our inception. Our board of directors may review and amend our dividend policyfrom time to time in light of our plans for future growth and other factors. In addition, since we are a holding company with no material assets other than the shares of our subsidiariesand affiliates through which we conduct our operations, our ability to pay dividends will depend on our subsidiaries and affiliates distributing to us their earnings and cash flow. Some ofour loan agreements limit our ability to pay dividends and our subsidiaries’ ability to make distributions to us.B.Significant ChangesThere have been no significant changes since the date of the consolidated financial statements included in this annual report.ITEM 9.THE OFFER AND LISTINGA.Offer and Listing DetailsOur common shares, Class A warrants and Class B warrants trade on the NASDAQ Capital Market under the symbol “SHIP”, “SHIPW” and “SHIPZ”, respectively.B.Plan of DistributionNot applicable.C.MarketsOur common shares, Class A warrants and Class B warrants trade on the NASDAQ Capital Market under the symbol “SHIP”, “SHIPW” and “SHIPZ”, respectively.D.Selling ShareholdersNot applicable.E.DilutionNot applicable.F.Expenses of the IssueNot applicable.ITEM 10.ADDITIONAL INFORMATIONA.Share CapitalNot applicable.B.Memorandum and Articles of IncorporationOur restated articles of incorporation have been filed as Exhibit to our report filed with the Commission on Form 6-K on August 30, 2019. Those restated articles ofincorporation contained in such Exhibit are incorporated by reference. Our second amended and restated bylaws have been filed with the Commission on Form 6-K on July 20, 2011,which we incorporate by reference. We also incorporate by reference, the section titled “Description of Capital Stock” in our Registration Statement on Form F-1 (Registration No. 333-221058), declared effective by the Commission on May 9, 2019.66Table of ContentsC.Material contractsAttached as exhibits to this annual report are the contracts we consider to be both material and outside the ordinary course of business and are to be performed in whole or inpart after the filing of this annual report. We refer you to “Item 4. Information on the Company – A. History and Development of the Company”, “Item 4. Information on the Company –B. Business Overview”, “Item 5. Operating and Financial Review and Prospects – B. Liquidity and Capital Resources – Loan Arrangements”, and “Item 7. Major Shareholders andRelated Party Transactions–B. Related Party Transactions” for a discussion of these contracts. Other than as discussed in this annual report, we have no material contracts, other thancontracts entered into in the ordinary course of business, to which we are a party.D.Exchange controlsUnder Marshall Islands law, there are currently no restrictions on the export or import of capital, including foreign exchange controls, or restrictions that affect the remittance ofdividends, interest or other payments to non-resident holders of our common shares.E.TaxationThe following is a summary of the material U.S. federal income tax and Marshall Islands tax consequences of the ownership and disposition of our common stock as well as thematerial U.S. federal and Marshall Islands income tax consequences applicable to us and our operations. The discussion below of the U.S. federal income tax consequences to “U.S.Holders” will apply to a beneficial owner of our common stock and/or warrants that is treated for U.S. federal income tax purposes as:•an individual citizen or resident of the United States; •a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) that is created or organized (or treated as created or organized) in or under the lawsof the United States, any state thereof or the District of Columbia; or •an estate whose income is includible in gross income for U.S. federal income tax purposes regardless of its source; or a trust if (i) a U.S. court can exercise primary supervisionover the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust, or (ii) it has a valid election in effect under applicableU.S. Treasury regulations to be treated as a U.S. person. If you are not described as a U.S. Holder and are not an entity treated as a partnership or other pass-through entity for U.S. federal income tax purposes, you will be considereda “Non-U.S. Holder”. The U.S. federal income tax consequences applicable to Non-U.S. Holders is described below under the heading “United States Federal Income Taxation of Non-U.S. Holders”.This discussion does not consider the tax treatment of partnerships or other pass-through entities or persons who hold our common stock or warrants through such entities. Ifa partnership (or other entity classified as a partnership for U.S. federal income tax purposes) is the beneficial owner of our common stock or warrants, the U.S. federal income taxtreatment of a partner in the partnership generally will depend on the status of the partner and the activities of the partnership.This summary is based on the U.S. Internal Revenue Code of 1986. as amended, or the Code, its legislative history, Treasury Regulations promulgated thereunder, publishedrulings and court decisions, all as currently in effect. These authorities are subject to change, possibly on a retroactive basis.This summary does not address all aspects of U.S. federal income taxation that may be relevant to any particular holder based on such holder’s individual circumstances. Inparticular, this discussion considers only holders that will own and hold our common stock and warrants as capital assets within the meaning of Section 1221 of the Code and does notaddress the potential application of the alternative minimum tax or the U.S. federal income tax consequences to holders that are subject to special rules, including:67Table of Contents•financial institutions or “financial services entities”; •broker-dealers; •taxpayers who have elected mark-to-market accounting; •tax-exempt entities; •governments or agencies or instrumentalities thereof; •insurance companies; •regulated investment companies; •real estate investment trusts; •certain expatriates or former long-term residents of the United States; •persons that actually or constructively own 10% or more of our voting shares; •persons that own shares through an “applicable partnership interest”; •persons required to recognize income for U.S. federal income tax purposes no later than when such income is reported on an “applicable financial statement”; •persons that hold our common stock or warrants as part of a straddle, constructive sale, hedging, conversion or other integrated transaction; or •persons whose functional currency is not the U.S. dollar. This summary does not address any aspect of U.S. federal non-income tax laws, such as gift or estate tax laws, or state, local or non-U.S. tax laws.We have not sought, nor will we seek, a ruling from the Internal Revenue Service, or the IRS, as to any U.S. federal income tax consequence described herein. The IRS maydisagree with the description herein, and its determination may be upheld by a court.Because of the complexity of the tax laws and because the tax consequences to any particular holder of our common stock and warrants may be affected by matters notdiscussed herein, each such holder is urged to consult with its tax advisor with respect to the specific tax consequences of the ownership and disposition of our common stock andwarrants, including the applicability and effect of state, local and non-U.S. tax laws, as well as U.S. federal tax laws.United States Federal Income Tax ConsequencesTaxation of Operating Income In GeneralUnless exempt from United States federal income taxation under the rules discussed below, a foreign corporation is subject to United States federal income taxation in respect ofany income that is derived from the use of vessels, from the hiring or leasing of vessels for use on a time, voyage or bareboat charter basis, from the participation in a shipping pool,partnership, strategic alliance, joint operating agreement, code sharing arrangements or other joint venture it directly or indirectly owns or participates in that generates such income, orfrom the performance of services directly related to those uses, which we refer to as “shipping income”, to the extent that the shipping income is derived from sources within the UnitedStates. For these purposes, 50% of the gross shipping income that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States,exclusive of certain U.S. territories and possessions, constitutes income from sources within the United States, which we refer to as “U.S. source gross shipping income”.68Table of ContentsShipping income attributable to transportation that both begins and ends in the United States is considered to be 100% from sources within the United States. We areprohibited by law from engaging in transportation that produces income considered to be 100% from sources within the United States.Shipping income attributable to transportation exclusively between non-U.S. ports will be considered to be 100% derived from sources outside the United States. Shippingincome derived from sources outside the United States will not be subject to any United States federal income tax.For our 2019 taxable year, we had U.S. source gross shipping income of approximately $3,688,713.We are subject to a 4% tax imposed without allowance for deductions for such taxable year, as described in “ – Taxation in Absence of Exemption”, unless we qualify forexemption from tax under Section 883 of the Code, the requirements of which are described in detail below. For our 2019 taxable year, we were subject to a U.S federal tax of $147,548 onour U.S. source gross shipping income.Exemption of Operating Income from United States Federal Income TaxationUnder Section 883 of the Code and the regulations thereunder, we will be exempt from United States federal income taxation on our U.S.-source shipping income if:•we are organized in a foreign country (our “country of organization”) that grants an “equivalent exemption” to corporations organized in the United States one of the followingis true; and •more than 50% of the value of our stock is owned, directly or indirectly, by “qualified shareholders”, that are persons (i) who are “residents” of our country of organization or ofanother foreign country that grants an “equivalent exemption” to corporations organized in the United States, and (ii) we satisfy certain substantiation requirements, which werefer to as the “50% Ownership Test”; or •our stock is “primarily” and “regularly” traded on one or more established securities markets in our country of organization, in another country that grants an “equivalentexemption” to United States corporations, or in the United States, which we refer to as the “Publicly-Traded Test”. The jurisdictions where we and our shipowning subsidiaries are incorporated grant “equivalent exemptions” to United States corporations. Therefore, we will be exempt fromUnited States federal income taxation with respect to our U.S. source shipping income if we satisfy either the 50% Ownership Test or the Publicly-Traded Test.50% Ownership TestUnder the regulations, a foreign corporation will satisfy the 50% Ownership Test for a taxable year if (i) for at least half of the number of days in the taxable year, more than 50%of the value of its stock is owned, directly or constructively through the application of certain attribution rules prescribed by the regulations, by one or more shareholders who areresidents of foreign countries that grant “equivalent exemption” to corporations organized in the United States and (ii) the foreign corporation satisfies certain substantiation andreporting requirements with respect to such shareholders. Holders of warrants will not be treated as constructive owners of shares for purposes of the 50% Ownership Test.We did not satisfy the 50% Ownership Test for our 2019 taxable year. Furthermore, these substantiation requirements are onerous and therefore there can be no assurance thatwe would be able to satisfy them, even if our share ownership would otherwise satisfy the requirements of the 50% Ownership Test.Publicly-Traded TestThe regulations provide that the stock of a foreign corporation will be considered to be “primarily traded” on an established securities market in a country if the number ofshares of each class of stock used to satisfy the Publicly Traded Test that is traded during the taxable year on all established securities markets in that country exceeds the number ofshares in each such class that is traded during that year on established securities markets in any other single country.69Table of ContentsUnder the regulations, the stock of a foreign corporation will be considered “regularly traded” if one or more classes of its stock representing 50% or more of its outstandingshares, by total combined voting power of all classes of stock entitled to vote and by total combined value of all classes of stock, are listed on one or more established securities markets(such as NASDAQ Capital Market), which we refer to as the “listing threshold”.The regulations further require that with respect to each class of stock relied upon to meet the listing requirement: (i) such class of the stock is traded on the market, other thanin minimal quantities, on at least sixty (60) days during the taxable year or one-sixth (1/6) of the days in a short taxable year; and (ii) the aggregate number of shares of such class of stocktraded on such market is at least 10% of the average number of shares of such class of stock outstanding during such year or as appropriately adjusted in the case of a short taxableyear. Even if a foreign corporation does not satisfy both tests, the regulations provide that the trading frequency and trading volume tests will be deemed satisfied by a class of stock ifsuch class of stock is traded on an established market in the United States and such class of stock is regularly quoted by dealers making a market in such stock.Notwithstanding the foregoing, the regulations provide, in pertinent part, that a class of stock will not be considered to be “regularly traded” on an established securities marketfor any taxable year in which 50% or more of the vote and value of the outstanding shares of such class of stock are owned, actually or constructively under specified attribution rules,on more than half the days during the taxable year by persons who each own directly or indirectly 5% or more of the vote and value of such class of stock, whom we refer to as “5%Shareholders”. We refer to this restriction in the regulations as the “Closely-Held Rule”.For purposes of being able to determine our 5% Shareholders, the regulations permit a foreign corporation to rely on Schedule 13G and Schedule 13D filings with theCommission. The regulations further provide that an investment company that is registered under the Investment Company Act of 1940, as amended, will not be treated as a 5%Shareholder for such purposes.Additionally, holders of warrants will not be treated as constructive owners of shares for purposes of the Closely Held Rule.The Closely-Held Rule will not disqualify a foreign corporation, however, if it can establish and substantiate that qualified shareholders own, actually or constructively underspecified attribution rules, sufficient shares in the closely-held block of stock to preclude the shares in the closely-held block that are owned by non-qualified 5% Shareholders fromrepresenting 50% or more of the value of such class of stock for more than half of the days during the tax year. These substantiation requirements are onerous and consequently therecan be no assurance that we will be able to satisfy them with respect to any taxable year. We do not believe that we can satisfy that less than 50% of our shares were held for more thanhalf of the days in the 2019 taxable year by non-qualified 5% Shareholders.Due to the factual nature of the issues involved, there can be no assurance that we or any of our subsidiaries will qualify for the benefits of Section 883 of the Code for oursubsequent taxable years.Taxation in Absence of ExemptionTo the extent the benefits of Section 883 are unavailable, our U.S. source gross shipping income, to the extent not considered to be “effectively connected” with the conduct ofa U.S. trade or business, as described below, would be subject to a 4% tax imposed by Section 887 of the Code on a gross basis, without the benefit of deductions, otherwise referred toas the “4% Tax”. Since under the sourcing rules described above, no more than 50% of our shipping income would be treated as being derived from U.S. sources, the maximum effectiverate of U.S. federal income tax on our shipping income would never exceed 2% under the 4% Tax.To the extent the benefits of the Section 883 exemption are unavailable and our U.S. source gross shipping income is considered to be “effectively connected” with the conductof a U.S. trade or business, as described below, any such “effectively connected” U.S. source gross shipping income, net of applicable deductions, would be subject to the U.S. federalcorporate income tax currently imposed at a rate of 21%. In addition, we may be subject to the 30% “branch profits” tax on earnings effectively connected with the conduct of such tradeor business, as determined after allowance for certain adjustments, and on certain interest paid or deemed paid attributable to the conduct of our U.S. trade or business.70Table of ContentsOur U.S. source gross shipping income would be considered “effectively connected” with the conduct of a U.S. trade or business only if:•we have, or are considered to have, a fixed place of business in the United States involved in the earning of shipping income; and •substantially all of our U.S. source gross shipping income is attributable to regularly scheduled transportation, such as the operation of a vessel that follows a publishedschedule with repeated sailings at regular intervals between the same points for voyages that begin or end in the United States, or, in the case of income from the leasing of avessel, is attributable to a fixed place of business in the United States. We do not intend to have, or permit circumstances that would result in having, any vessel operating to the United States on a regularly scheduled basis, or earning income fromthe leasing of a vessel attributable to a fixed place of business in the United States. Based on the foregoing and on the expected mode of our shipping operations and other activities, webelieve that none of our U.S. source gross shipping income will be “effectively connected” with the conduct of a U.S. trade or business.United States Taxation of Gain on Sale of VesselsRegardless of whether we qualify for exemption under Section 883, we will not be subject to United States federal income taxation with respect to gain realized on a sale of avessel, provided the sale is considered to occur outside of the United States under United States federal income tax principles. In general, a sale of a vessel will be considered to occuroutside of the United States for this purpose if title to the vessel, and risk of loss with respect to the vessel, pass to the buyer outside of the United States. It is expected that any sale ofa vessel by us will be considered to occur outside of the United States.United States Federal Income Taxation of U.S. HoldersTaxation of Distributions Paid on Common StockSubject to the passive foreign investment company, or PFIC, rules discussed below, any distributions made by us with respect to common shares to a U.S. Holder will generallyconstitute dividends, which may be taxable as ordinary income or “qualified dividend income” as described in more detail below, to the extent of our current or accumulated earnings andprofits, as determined under U.S. federal income tax principles. Distributions in excess of our earnings and profits will be treated first as a non-taxable return of capital to the extent of theU.S. Holder’s tax basis in his common shares on a dollar-for-dollar basis and thereafter as capital gain. Because we are not a U.S. corporation, U.S. Holders that are corporations willgenerally not be entitled to claim a dividends-received deduction with respect to any distributions they receive from us.Dividends paid on common shares to a U.S. Holder which is an individual, trust, or estate (a “U.S. Non-Corporate Holder”) will generally be treated as “qualified dividendincome” that is taxable to such shareholders at preferential U.S. federal income tax rates provided that (1) the common shares are readily tradable on an established securities market inthe United States (such as the Nasdaq Capital Market on which the common shares are currently listed); (2) we are not a passive foreign investment company, or PFIC, for the taxableyear during which the dividend is paid or the immediately preceding taxable year (which we do not believe we are or have been, and do not expect to be); (3) the U.S. Non-CorporateHolder has owned the common shares for more than 60 days in the 121-day period beginning 60 days before the date on which the common shares become ex-dividend; and (4) certainother conditions are met.Any dividends paid by us which are not eligible for these preferential rates will be taxed as ordinary income to a U.S. Holder.Special rules may apply to any “extraordinary dividend”—generally, a dividend in an amount which is equal to or in excess of 10% of a shareholder’s adjusted basis in acommon share—paid by us. If we pay an “extraordinary dividend” on our common stock that is treated as “qualified dividend income”, then any loss derived by a U.S. Non-CorporateHolder from the sale or exchange of such common stock will be treated as long-term capital loss to the extent of such dividend.Sale, Exchange or other Disposition of Common SharesAssuming we do not constitute a PFIC for any taxable year, a U.S. Holder generally will recognize taxable gain or loss upon a sale, exchange or other disposition of our commonshares in an amount equal to the difference between the amount realized by the U.S. Holder from such sale, exchange or other disposition and the U.S. Holder’s tax basis in such stock.Such gain or loss will be treated as long-term capital gain or loss if the U.S. Holder’s holding period in the common shares is greater than one year at the time of the sale, exchange orother disposition. A U.S. Holder’s ability to deduct capital losses is subject to certain limitations.71Table of ContentsExercise, Sale, Retirement or Other Taxable Disposition of WarrantsNeither we nor a U.S. Holder of a warrant will recognize gain or loss as a result of the U.S. Holder’s receipt of our common stock upon exercise of a warrant. A U.S. Holder’sadjusted tax basis in the common shares received will be an amount equal to the sum of (i) the U.S. Holder’s adjusted tax basis in the warrant exercised plus (ii) the amount of the exerciseprice for the warrant. If the warrants lapse without exercise, the U.S. Holder will recognize capital loss in the amount equal to the U.S. Holder’s adjusted tax basis in the warrants. A U.S.Holder’s holding period for common shares received upon exercise of a warrant will commence on the date the warrant is exercised.Upon the sale, retirement or other taxable disposition of a warrant, the U.S. Holder will recognize gain or loss to the extent of the difference between the sum of the cash and thefair market value of any property received in exchange therefor and the U.S. Holder’s tax basis in the warrant. Any such gain or loss recognized by a holder upon the sale, retirement orother taxable disposition of a warrant will be capital gain or loss and will be long-term capital gain or loss if the warrant has been held for more than one year.The exercise price of a warrant is subject to adjustment under certain circumstances. If an adjustment increases a proportionate interest of the holder of a warrant in the fullydiluted common stock without proportionate adjustments to the holders of our common stock, a U.S. Holder of the warrants may be treated as having received a constructivedistribution, which may be taxable to the U.S. Holder as a dividend.Passive Foreign Investment Company RulesSpecial U.S. federal income tax rules apply to a U.S. Holder that holds stock or warrants in a foreign corporation classified as a PFIC for U.S. federal income tax purposes. Ingeneral, we will be treated as a PFIC with respect to a U.S. Holder if, for any taxable year in which such holder held our common shares or warrants, either:•at least 75% of our gross income for such taxable year consists of passive income (e.g., dividends, interest, capital gains and rents derived other than in the active conduct of arental business); or •at least 50% of the average value of the assets held by us during such taxable year produce, or is held for the production of, passive income. For purposes of determining whether we are a PFIC, we will be treated as earning and owning our proportionate share of the income and assets, respectively, of any of itssubsidiary corporations in which we own at least 25% of the value of the subsidiary’s stock. Income earned, or deemed earned, by us in connection with the performance of servicesshould not constitute passive income. By contrast, rental income, which includes bareboat hire, would generally constitute “passive income” unless we are treated under specific rulesas deriving rental income in the active conduct of a trade or business.Based on our current operations and future projections, we do not believe that we are or have been a PFIC during our 2019 taxable year, nor do we expect to become, a PFIC withrespect to our 2020 taxable year or any future taxable year. Although there is no legal authority directly on point, our belief is based principally on the position that, for purposes ofdetermining whether we are a PFIC, the gross income we derive or are deemed to derive from the time chartering and voyage chartering activities of our wholly-owned subsidiariesshould constitute services income, rather than rental income. Correspondingly, we believe that such income does not constitute passive income, and the assets that we or our wholly-owned subsidiaries own and operate in connection with the production of such income, in particular the vessels, do not constitute passive assets for purposes of determining whetherwe are a PFIC. We believe there is substantial legal authority supporting our position consisting of case law and Internal Revenue Service pronouncements concerning thecharacterization of income derived from time charters and voyage charters as services income for other tax purposes. However, there is also authority which characterizes time charterincome as rental income rather than services income for other tax purposes. It should be noted that in the absence of any legal authority specifically relating to the statutory provisionsgoverning PFICs, the Internal Revenue Service or a court could disagree with this position. In addition, although we intend to conduct our affairs in a manner so as to avoid beingclassified as a PFIC with respect to any taxable year, there can be no assurance that the nature of our operations will not change in the future.72Table of ContentsAs discussed more fully below, if we were to be treated as a PFIC for any taxable year, a U.S. Holder would be subject to different taxation rules depending on whether the U.S.Holder makes an election to treat us as a “Qualified Electing Fund”, which election is referred to as a “QEF election”. As an alternative to making a QEF election, a U.S. Holder should beable to make a “mark-to-market” election with respect to the common shares, as discussed below. In addition, if we were to be treated as a PFIC, a U.S. Holder would be required to file anIRS Form 8621 with respect to such holder’s common stock.Taxation of U.S. Holders Making a Timely QEF ElectionIf a U.S. Holder makes a timely QEF election, which U.S. Holder is referred to as an “Electing Holder”, the Electing Holder must report each year for U.S. federal income taxpurposes its pro rata share of our ordinary earnings and its net capital gain, if any, for our taxable year that ends with or within the taxable year of the Electing Holder, regardless ofwhether or not distributions were received from us by the Electing Holder. The Electing Holder’s adjusted tax basis in the common shares will be increased to reflect taxed butundistributed earnings and profits. Distributions of earnings and profits that had been previously taxed will result in a corresponding reduction in the adjusted tax basis in the commonshares and will not be taxed again once distributed. An Electing Holder would generally recognize capital gain or loss on the sale, exchange or other disposition of the common shares. AU.S. Holder would make a QEF election with respect to any year that we are a PFIC by filing IRS Form 8621 with his, her or its U.S. federal income tax return. After the end of each taxableyear, we will determine whether we were a PFIC for such taxable year. If we determine or otherwise become aware that we are a PFIC for any taxable year, we will use commercially bestefforts to provide each U.S. Holder with all necessary information, including a PFIC Annual Information Statement, in order to enable such holder to make a QEF election for such taxableyear. A U.S. Holder may not make a QEF election with respect to its ownership of a warrant.Taxation of U.S. Holders Making a “Mark-to-Market” ElectionAlternatively, if we were to be treated as a PFIC for any taxable year and, as anticipated, our common stock is treated as “marketable stock”, a U.S. Holder would be allowed tomake a “mark-to-market” election with respect to our common shares. If that election is made, the U.S. Holder generally would include as ordinary income in each taxable year the excess,if any, of the fair market value of the common shares at the end of the taxable year over such U.S. Holder’s adjusted tax basis in the common shares. The U.S. Holder would also bepermitted an ordinary loss in respect of the excess, if any, of the U.S. Holder’s adjusted tax basis in the common shares over its fair market value at the end of the taxable year, but only tothe extent of the net amount previously included in income as a result of the mark-to-market election. A U.S. Holder’s tax basis in his common shares would be adjusted to reflect anysuch income or loss amount. Gain realized on the sale, exchange or other disposition of the common shares would be treated as ordinary income, and any loss realized on the sale,exchange or other disposition of the common shares would be treated as ordinary loss to the extent that such loss does not exceed the net mark-to-market gains previously included bythe U.S. Holder. The mark-to-market election is generally unavailable to U.S. Holders of warrants.Taxation of U.S. Holders Not Making a Timely QEF or Mark-to-Market ElectionFinally, if we were to be treated as a PFIC for any taxable year, a U.S. Holder who does not make either a QEF election or a “mark-to-market” election for that year, whom we referto as a “Non-Electing Holder”, would be subject to special rules with respect to (1) any excess distribution (i.e., the portion of any distributions received by the Non-Electing Holder onour common stock or warrants in a taxable year in excess of 125 percent of the average annual distributions received by the Non-Electing Holder in the three preceding taxable years, or, ifshorter, the Non-Electing Holder’s holding period for the common stock or warrants), and (2) any gain realized on the sale, exchange or other disposition of our common stock orwarrants. Under these special rules:•the excess distribution or gain would be allocated ratably over the Non-Electing Holders’ aggregate holding period for the common stock or warrants; •the amount allocated to the current taxable year and any taxable year before we became a passive foreign investment company would be taxed as ordinary income; and •the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interestcharge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year. 73Table of ContentsThese penalties would not apply to a pension or profit sharing trust or other tax-exempt organization that did not borrow funds or otherwise utilize leverage in connection withits acquisition of our common stock or warrants. If a Non-Electing Holder who is an individual dies while owning our common stock, such Non-Electing Holder’s successor generallywould not receive a step-up in tax basis with respect to such stock or warrants. Net Investment Income Tax A U.S. Holder that is an individual or estate, or a trust that does not fall into a special class of trusts that is exempt from such tax, is subject to a 3.8% tax on the lesser of (1) suchU.S. Holder’s “net investment income” (or undistributed “net investment income” in the case of estates and trusts) for the relevant taxable year and (2) the excess of such U.S. Holder’smodified adjusted gross income for the taxable year over a certain threshold (which in the case of individuals will be between $125,000 and $250,000, depending on the individual’scircumstances). A U.S. Holder’s net investment income will generally include its gross dividend income and its net gains from the disposition of the common shares, unless suchdividends or net gains are derived in the ordinary course of the conduct of a trade or business (other than a trade or business that consists of certain passive or trading activities). Netinvestment income generally will not include a U.S. Holder’s pro rata share of the Company’s income and gain (if we are a PFIC and that U.S. Holder makes a QEF election, as describedabove in “—Taxation of U.S. Holders Making a Timely QEF Election”). However, a U.S. Holder may elect to treat inclusions of income and gain from a QEF election as net investmentincome. Failure to make this election could result in a mismatch between a U.S. Holder’s ordinary income and net investment income. If you are a U.S. Holder that is an individual, estateor trust, you are urged to consult your tax advisor regarding the applicability of the net investment income tax to your income and gains in respect of your investment in our commonshares or warrants. United States Federal Income Taxation of Non-U.S. HoldersDividends paid to a Non-U.S. Holder with respect to our common stock generally should not be subject to U.S. federal income tax, unless the dividends are effectivelyconnected with the Non-U.S. Holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, are attributable to a permanentestablishment or fixed base that such holder maintains in the United States).In addition, a Non-U.S. Holder generally should not be subject to U.S. federal income tax on any gain attributable to a sale or other disposition of our common stock or warrantsunless such gain is effectively connected with its conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, is attributable to a permanentestablishment or fixed base that such holder maintains in the United States) or the Non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxableyear of sale or other disposition and certain other conditions are met (in which case such gain from United States sources may be subject to tax at a 30% rate or a lower applicable taxtreaty rate).Dividends and gains that are effectively connected with the Non-U.S. Holder’s conduct of a trade or business in the United States (and, if required by an applicable income taxtreaty, are attributable to a permanent establishment or fixed base in the United States) generally should be subject to tax in the same manner as for a U.S. Holder and, if the Non-U.S.Holder is a corporation for U.S. federal income tax purposes, it also may be subject to an additional branch profits tax at a 30% rate or a lower applicable tax treaty rate.A Non-U.S. Holder will not recognize any gain or loss on the exercise or lapse of the warrants.Backup Withholding and Information ReportingIn general, information reporting for U.S. federal income tax purposes should apply to distributions made on our common stock within the United States to a non-corporate U.S.Holder and to the proceeds from sales and other dispositions of our common stock to or through a U.S. office of a broker by a non-corporate U.S. Holder. Payments made (and sales andother dispositions effected at an office) outside the United States will be subject to information reporting in limited circumstances.In addition, backup withholding of U.S. federal income tax, currently at a rate of 24%, generally should apply to distributions paid on our common stock to a non-corporate U.S.Holder and the proceeds from sales and other dispositions of our common stock by a non-corporate U.S. Holder, who:•fails to provide an accurate taxpayer identification number; 74Table of Contents•is notified by the IRS that backup withholding is required; or •fails in certain circumstances to comply with applicable certification requirements. A Non-U.S. Holder generally may eliminate the requirement for information reporting and backup withholding by providing certification of its foreign status, under penalties ofperjury, on a duly executed applicable IRS Form W-8 or by otherwise establishing an exemption.Backup withholding is not an additional tax. Rather, the amount of any backup withholding generally should be allowed as a credit against a U.S. Holder’s or a Non-U.S.Holder’s U.S. federal income tax liability and may entitle such holder to a refund, provided that certain required information is timely furnished to the IRS.Individuals who are U.S. Holders (and to the extent specified in applicable Treasury regulations, certain individuals who are Non-U.S. Holders and certain U.S. entities) whohold “specified foreign financial assets” (as defined in Section 6038D of the Code) are required to file IRS Form 8938 with information relating to the asset for each taxable year in whichthe aggregate value of all such assets exceeds $75,000 at any time during the taxable year or $50,000 on the last day of the taxable year (or such higher dollar amount as prescribed byapplicable Treasury regulations). Specified foreign financial assets would include, among other assets, our common shares, unless the shares are held through an account maintainedwith a U.S. financial institution. Substantial penalties apply to any failure to timely file IRS Form 8938, unless the failure is shown to be due to reasonable cause and not due to willfulneglect. Additionally, in the event an individual U.S. Holder (and to the extent specified in applicable Treasury regulations, an individual Non-U.S. Holder or a U.S. entity) that is requiredto file IRS Form 8938 does not file such form, the statute of limitations on the assessment and collection of U.S. federal income taxes of such holder for the related tax year may not closeuntil three years after the date that the required information is filed. U.S. Holders (including U.S. entities) and Non-U.S. Holders are encouraged consult their own tax advisors regardingtheir reporting obligations under this legislation.Marshall Islands Tax ConsequencesWe are incorporated in the Marshall Islands. Under current Marshall Islands law, we are not subject to tax on income or capital gains, no Marshall Islands withholding tax willbe imposed upon payment of dividends by us to its shareholders, and holders of our common stock that are not residents of or domiciled or carrying on any commercial activity in theMarshall Islands will not be subject to Marshall Islands tax on the sale or other disposition of our common stock.F.Dividends and paying agentsNot applicable.G.Statement by expertsNot applicable.H.Documents on displayWe file annual reports and other information with the Commission. You may inspect and copy any report or document we file, including this annual report and theaccompanying exhibits, at the Commission’s public reference facilities located at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You may obtain information on the operation ofthe public reference facilities by calling the Commission at 1-800-SEC-0330, and you may obtain copies at prescribed rates. Our Commission filings are also available to the public at thewebsite maintained by the Commission at http://www.sec.gov, as well as on our website at http://www.seanergymaritime.com. Information on our website does not constitute a part ofthis annual report and is not incorporated by reference.We will also provide without charge to each person, including any beneficial owner of our common stock, upon written or oral request of that person, a copy of any and all ofthe information that has been incorporated by reference in this annual report. Please direct such requests to Investor Relations, Seanergy Maritime Holdings Corp., 154 VouliagmenisAvenue, 166 74 Glyfada, Athens, Greece, telephone number +30 213 0181507 or facsimile number +30 210 9638404.75Table of ContentsI.Subsidiary informationNot applicable.ITEM 11.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKInterest Rate RiskWe are exposed to risks associated with changes in interest rates relating to our unhedged variable–rate borrowings, according to which we pay interest at LIBOR plus amargin; as such increases in interest rates could affect our results of operations and ability to service our debt. As of December 31, 2019, we had aggregate variable-rate borrowings,including the convertible notes issued to Jelco, of $138 million. An increase of 1% in the interest rates of our variable-rate borrowings, as of December 31, 2019 would increase ourinterest payments $1.5 million per year. Pursuant to the Purchase Agreement, we sold 1,823,529 units in a private placement to Jelco in exchange for the forgiveness of certain paymentobligations of ours, including all interest payments accrued and due through December 31, 2019. As a result, all outstanding Jelco indebtedness has been excluded from variable rateborrowings. We have not entered into any hedging contracts to protect against interest rate fluctuations.Foreign Currency Exchange Rate RiskWe generate all of our revenue in U.S. dollars. The minority of our operating expenses (approximately 1% in 2019) and the slight majority of our general and administrationexpenses (approximately 56% in 2019) are in currencies other than the U.S. dollar, primarily the Euro. For accounting purposes, expenses incurred in other currencies are converted intoU.S. dollars at the exchange rate prevailing on the date of each transaction. We do not consider the risk from exchange rate fluctuations to be material for our results of operations, asduring 2019, these non-US dollar expenses represented 4% of our revenues. However, the portion of our business conducted in other currencies could increase in the future, whichcould expand our exposure to losses arising from exchange rate fluctuations. We have not hedged currency exchange risks associated with our expenses.Inflation RiskWe do not consider inflation to be a significant risk to direct expenses in the current and foreseeable future. However, in the event that inflation becomes a significant factor inthe global economy, inflationary pressures would result in increased operating, voyage and financing costs.ITEM 12.DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIESNot applicable.PART IIITEM 13.DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIESNone.ITEM 14.MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDSNone.ITEM 15.CONTROLS AND PROCEDURES(a)Disclosure Controls and ProceduresManagement (our Chief Executive Officer and our Chief Financial Officer) has evaluated the effectiveness of the design and operation of the Company’s disclosure controls andprocedures pursuant to Rules 13a-15(e) and 15d-15(e) under the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act, as of the end of the period covered by thisannual report (as of December 31, 2019). The term disclosure controls and procedures is defined under the Commission’s rules as controls and other procedures of an issuer that aredesigned to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized andreported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed toensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’smanagement (our Chief Executive Officer and our Chief Financial Officer, or persons performing similar functions) as appropriate to allow timely decisions regarding required disclosure. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding ofthe controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.76Table of ContentsBased on that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures are effective as of theevaluation date.(b)Management’s Annual Report on Internal Control over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is identified in Exchange Act Rule 13a-15(f). Ourinternal control over financial reporting is a process designed under the supervision of our Chief Executive Officer and our Chief Financial Officer and effected by our board of directors,management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reportingpurposes in accordance with U.S. GAAP.Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect transactions and dispositions of assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordancewith U.S. GAAP, and that receipts and expenditures are being made only in accordance with the authorization of our management and directors; and (iii) provide reasonable assuranceregarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the consolidated financialstatements.Management (our Chief Executive Officer and our Chief Financial Officer), has assessed the effectiveness of our internal control over financial reporting as of December 31,2019, based on the framework established in Internal Control - Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission. Basedon this assessment, management has determined that the Company’s internal control over financial reporting is effective as of December 31, 2019.However, it should be noted that because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements with certainty even whendetermined to be effective and can only provide reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate / obsolete because of changes in conditions, or that the degree of compliance with thepolicies and procedures may deteriorate.(c)Attestation Report of the Registered Public Accounting FirmNot applicable.(d)Changes in Internal Control over Financial ReportingThere have been no changes in our internal control over financial reporting during the year covered by this annual report that have materially affected, or are reasonably likelyto materially affect, our internal control over financial reporting.ITEM 16.[RESERVED]ITEM 16A.AUDIT COMMITTEE FINANCIAL EXPERT Our board of directors has determined that Mr. Dimitrios Anagnostopoulos, an independent director and a member of our audit committee, is an “Audit Committee FinancialExpert” under Commission rules and the corporate governance rules of the NASDAQ Stock Market.77Table of ContentsITEM 16B.CODE OF ETHICSWe have adopted a Code of Business Conduct and Ethics that applies to our employees, officers and directors. Our Code of Business Conduct and Ethics is available on theCorporate Governance section of our website at www.seanergymaritime.com. Information on our website does not constitute a part of this annual report and is not incorporated byreference. We will also provide a hard copy of our Code of Business Conduct and Ethics free of charge upon written request. We intend to disclose any waivers to or amendments ofthe Code of Business Conduct and Ethics for the benefit of any of our directors and executive officers within 5 business days of such waiver or amendment. Shareholders may directtheir requests to the attention of Investor Relations, Seanergy Maritime Holdings Corp., 154 Vouliagmenis Avenue, 16674 Glyfada, Athens, Greece, telephone number +30 213 0181507 orfacsimile number +30 210 9638404.ITEM 16C.PRINCIPAL ACCOUNTANT FEES AND SERVICESOur principal accountants are EY. Audit, audit-related and non-audit services billed and accrued from EY are as follows: 2019 2018 Audit fees $195,000 $199,000 Audit related fees 80,000 38,000 Tax fees - - All other fees - - Total fees $275,000 $237,000 Audit fees for 2019 and 2018 related to professional services rendered for the audit of our financial statements for the years ended December 31, 2019 and 2018, respectively.Audit related fees for 2019 and 2018 related to services provided related to our equity offerings during 2019 and 2018, respectively. As per the audit committee charter, our auditcommittee pre-approves all audit, audit-related and non-audit services not prohibited by law to be performed by our independent registered public accounting firm and associated feesprior to the engagement of the independent registered public accounting firm with respect to such services.ITEM 16D.EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEESNot applicable.ITEM 16E.PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERSPlease see “Item 7. Major Shareholders and Related Party Transactions–B. Related Party Transactions–Share Purchase Agreements” for a description of our recent sales of ourcommon shares to certain of our affiliates.ITEM 16F.CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANTNone.ITEM 16G.CORPORATE GOVERNANCEAs a foreign private issuer, as defined in Rule 3b-4 under the Exchange Act, the Company is permitted to follow certain corporate governance rules of its home country in lieu ofNASDAQ’s corporate governance rules. The Company’s corporate governance practices deviate from NASDAQ’s corporate governance rules in the following ways:•In lieu of obtaining shareholder approval prior to the issuance of designated securities or the adoption of equity compensation plans or material amendments to such equitycompensation plans, we will comply with provisions of the BCA, providing that the board of directors approve share issuances and adoptions of and material amendments toequity compensation plans. Likewise, in lieu of obtaining shareholder approval prior to the issuance of securities in certain circumstances, consistent with the BCA and ourrestated articles of incorporation and second amended and restated bylaws, the board of directors approves certain share issuances. 78Table of Contents•The Company’s board of directors is not required to have an Audit Committee comprised of at least three members. Our Audit Committee is comprised of two members.•The Company’s board of directors is not required to meet regularly in executive sessions without management present.•As a foreign private issuer, we are not required to solicit proxies or provide proxy statements to NASDAQ pursuant to NASDAQ corporate governance rules or MarshallIslands law. Consistent with Marshall Islands law and as provided in our second amended and restated bylaws, we will notify our shareholders of meetings between 15 and 60days before the meeting. This notification will contain, among other things, information regarding business to be transacted at the meeting. Other than as noted above, we are in full compliance with all other applicable NASDAQ corporate governance standards.ITEM 16H.MINE SAFETY DISCLOSURENot applicable.PART IIIITEM 17.FINANCIAL STATEMENTSSee Item 18.ITEM 18.FINANCIAL STATEMENTSThe financial information required by this item, together with the report of EY, is set forth on pages F-1 through F-45 and are filed as part of this annual report.ITEM 18.1SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF SEANERGY MARITIME HOLDINGS CORP. (PARENT COMPANY ONLY)The Schedule I, beginning on page F-40, is filed as part of this report.ITEM 19.EXHIBITSExhibit NumberDescription 1.1Restated Articles of Incorporation (1) 1.2Second Amended and Restated Bylaws (2) 2.1Specimen Common Stock Certificate (3) 2.2Form of Class A Warrant Agreement by and between Continental Stock Transfer & Trust Company and the registrant(4) 2.3Form of Class B Warrant Agreement by and between Continental Stock Transfer & Trust Company and the registrant(5) 2.4Form of Class B Warrant Certificate(6) 2.5Description of Common Stock, (incorporated by reference from the description included in the Company’s prospectus filed under Rule 424(b)(1) under the SecuritiesAct of 1933 on May 9, 2019, appearing under the headings “Description of Capital Stock” and "Certain Marshall Islands Company Considerations" which form a partof the Company’s Registration Statement on Form F-1 (File No. 333-221058))79Table of Contents2.6Description of Class A Warrants, (incorporated by reference from the description included in the Company’s the Company’s registration statement on Form F-1/Afiled with the Commission on December 6, 2016, appearing under the heading “Description of Capital Stock and Warrants” (File No. 333-221058)) 2.7Description of Class B Warrants, (incorporated by reference from the description included in the Company’s prospectus filed under Rule 424(b)(1) under theSecurities Act of 1933 on May 9, 2019, appearing under the heading “Description of Capital Stock” which forms a part of the Company’s Registration Statement onForm F-1 (File No. 333-221058)) 4.1Registration Rights Agreement dated March 26, 2010 between the registrant, United Capital Investments Corp., Atrion Shipholding S.A., Plaza Shipholding Corp. andComet Shipholding Inc. (7) 4.2Registration Rights Agreement dated January 4, 2012 between the registrant, United Capital Investments Corp., Atrion Shipholding S.A., Plaza Shipholding Corp. andComet Shipholding Inc. (8) 4.3Registration Rights Agreement dated June 24, 2014 between the registrant, Comet Shipholding Inc. and Plaza Shipholding Corp. (9) 4.4Registration Rights Agreement dated September 29, 2014 between the registrant, Comet Shipholding Inc. and Plaza Shipholding Corp. (10) 4.6Amended and Restated 2011 Equity Incentive Plan of the registrant adopted on December 30, 2019* 4.7Ship Technical Management Agreement dated as of February 11, 2015 between Leader Shipping Co. and V.Ships Greece Ltd. (11) 4.8Novation Agreement to Ship Technical Management Agreement dated July 27, 2015, between V.Ships Greece Ltd., Leader Shipping Co. and V.Ships Limited withrespect to the Ship Technical Management Agreement dated February 11, 2015 (12) 4.9Addendum No. 1 to Technical Management Agreement dated March 18, 2016, between Leader Shipping Co. and V.Ships Limited with respect to the Ship TechnicalManagement Agreement dated February 11, 2015 (13) 4.10Amendment dated May 23, 2018 with respect to the Partnership, between Partner Shipping Co. Limited (formerly known as Partner Shipping Co.) and V.Ships Limitedwith respect to the Ship Technical Management Agreement dated May 15, 2017 (14) 4.11Amendment dated May 23, 2018 with respect to the Championship, between Champion Ocean Navigation Co. Limited (formerly known as Champion OceanNavigation Co.) and V.Ships Limited with respect to the Ship Technical Management Agreement dated September 1, 2015(15) 4.12Amendment dated June 28, 2018 with respect to the Knightship, between Knight Ocean Navigation Co. and V.Ships Limited with respect to the Ship TechnicalManagement Agreement dated November 23, 2016 (16) 4.13Novation Agreement dated October 30, 2018 with respect to the Championship, between Champion Ocean Navigation Co. Limited, Champion Marine Co. and V.ShipsLimited with respect to the Ship Technical Management Agreement dated September 1, 2015 (17) 4.14Form of Ship Technical Management Agreement with V.Ships Limited (18) 4.15Commercial Management Agreement dated March 2, 2015 between Seanergy Management Corp. and Fidelity Marine Inc. (19)80Table of Contents4.16Amendment No. 1 dated September 11, 2015 between Seanergy Management Corp. and Fidelity Marine Inc. with respect to the Commercial Management Agreementdated March 2, 2015 (20) 4.17Amendment No. 2 dated as of February 24, 2016 between Seanergy Management Corp. and Fidelity Marine Inc. with respect to the Commercial ManagementAgreement dated March 2, 2015 (21) 4.18Amendment No. 3 dated February 1, 2018 between Seanergy Management Corp. and Fidelity Marine Inc. with respect to the Commercial Management Agreementdated March 2, 2015 (22) 4.19Amendment No. 4 dated June 28, 2018 between Seanergy Management Corp. and Fidelity Marine Inc. with respect to the Commercial Management Agreement datedMarch 2, 2015(23) 4.20Loan Agreement dated March 6, 2015 between Leader Shipping Co. and Alpha Bank A.E. (24) 4.21First Supplemental Agreement dated December 23, 2015 between Leader Shipping Co. and Alpha Bank A.E. with respect to the Loan Agreement dated March 6, 2015(25) 4.22Second Supplemental Agreement dated July 28, 2016 between Leader Shipping Co. and Alpha Bank A.E. with respect to the Loan Agreement dated March 6, 2015 (26) 4.23Third Supplemental Agreement dated June 29, 2018 between Leader Shipping Co. and Alpha Bank A.E. with respect to the Loan Agreement dated March 6, 2015 (27) 4.24Fourth Supplemental Agreement dated July 1, 2019, between Leader Shipping Co. and Alpha Bank A.E. with respect to the Loan Agreement dated March 6, 2015* 4.25Convertible Note dated March 12, 2015 of the registrant to Jelco Delta Holding Corp. (28) 4.26Amendment No. 1 dated May 14, 2015 between the registrant and Jelco Delta Holding Corp. with respect to the Convertible Note dated March 12, 2015 (29) 4.27Mutual Consent dated September 18, 2017 between the registrant and Jelco Delta Holding Corp. with respect to the Convertible Note dated March 12, 2015 (30) 4.28Amendment No. 2 dated September 18, 2017 between the registrant and Jelco Delta Holding Corp. with respect to the Convertible Note dated March 12, 2015 (31) 4.29Amendment No. 3 dated March 26, 2019 between the registrant and Jelco Delta Holding Corp. with respect to the Convertible Note dated March 12, 2015(32) 4.30Amendment No. 4 dated May 29, 2019 between the registrant and Jelco Delta Holding Corp. with respect to the Convertible Note dated March 12, 2015* 4.31Share Purchase Agreement dated March 12, 2015 between the registrant and Stamatios Tsantanis (33) 4.32Registration Rights Agreement dated March 12, 2015 between the registrant and Stamatios Tsantanis (34) 4.33Loan Agreement dated September 1, 2015 between Sea Glorius Shipping Co., Sea Genius Shipping Co., Hamburg Commercial Bank AG (formerly known as HSHNordbank AG) and the Banks and Financial Institutions listed in Schedule 1 thereto (35) 4.34Supplemental Letter dated May 16, 2016 from Hamburg Commercial Bank AG (formerly known as HSH Nordbank AG) to Sea Glorius Shipping Co. and Sea GeniusShipping Co. with respect to the Loan Agreement dated September 1, 2015 (36) 4.35Supplemental Letter dated February 23, 2017 from Hamburg Commercial Bank AG (formerly known as HSH Nordbank AG) to Sea Glorius Shipping Co., Sea GeniusShipping Co. and the registrant with respect to the Loan Agreement dated September 1, 2015 (37)81Table of Contents4.36Amendment to Term Loan Facility dated March 28, 2018 between Hamburg Commercial Bank AG (formerly known as HSH Nordbank AG), the registrant, Sea GloriusShipping Co. and Sea Genius Shipping Co. with respect to the Loan Agreement dated September 1, 2015 (38) 4.37Amendment No. 2 to Term Loan Facility dated April 1, 2019, between Hamburg Commercial Bank AG (formerly known as HSH Nordbank AG), the registrant, SeaGlorius Shipping Co. and Sea Genius Shipping Co. with respect to the Loan Agreement dated September 1, 2015(39) 4.38Revolving Convertible Note dated September 7, 2015 of the registrant to Jelco Delta Holding Corp. (40) 4.39First Amendment dated December 1, 2015 between the registrant and Jelco Delta Holding Corp. with respect to the Revolving Convertible Note dated September 7,2015 (41) 4.40Second Amendment dated December 14, 2015 between the registrant and Jelco Delta Holding Corp. with respect to the Revolving Convertible Note dated September7, 2015 (42) 4.41Third Amendment dated January 27, 2016 between the registrant and Jelco Delta Holding Corp. with respect to the Revolving Convertible Note dated September 7,2015 (43) 4.42Fourth Amendment dated March 7, 2016 between the registrant and Jelco Delta Holding Corp. with respect to the Revolving Convertible Note dated September 7,2015 (44) 4.43Fifth Amendment dated April 21, 2016 between the registrant and Jelco Delta Holding Corp. with respect to the Revolving Convertible Note dated September 7, 2015(45) 4.44Sixth Amendment dated May 17, 2016 between the registrant and Jelco Delta Holding Corp. with respect to the Revolving Convertible Note dated September 7, 2015(46) 4.45Seventh Amendment dated June 16, 2016 between the registrant and Jelco Delta Holding Corp. with respect to the Revolving Convertible Note dated September 7,2015 (47) 4.46Eighth Amendment dated March 28, 2017 between the registrant and Jelco Delta Holding Corp. with respect to the Revolving Convertible Note dated September 7,2015 (48) 4.47Mutual Consent dated September 8, 2017 between the registrant and Jelco Delta Holding Corp. with respect to the Revolving Convertible Note dated September 7,2015 (49) 4.48Ninth Amendment dated September 27, 2017 between the registrant and Jelco Delta Holding Corp. with respect to the Revolving Convertible Note dated September 7,2015 (50) 4.49Tenth Amendment dated September 1, 2018 between the registrant and Jelco Delta Holding Corp. with respect to the Revolving Convertible Note dated September 7,2015 (51) 4.50Eleventh Amendment dated March 26, 2019 between the registrant and Jelco Delta Holding Corp. with respect to the Revolving Convertible Note dated September 7,2015(52) 4.51Twelfth Amendment dated May 29, 2019 between the registrant and Jelco Delta Holding Corp. with respect to the Revolving Convertible Note dated September 7,2015* 4.52Amended and Restated Facility Agreement dated November 22, 2018 between Premier Marine Co., Fellow Shipping Co., the registrant and UniCredit Bank AG withrespect to the Facility Agreement dated September 11, 2015 (53) 4.53Supplemental Agreement dated July 3, 2019 between Premier Marine Co., Fellow Shipping Co., the registrant and UniCredit Bank AG with respect to the FacilityAgreement dated September 11, 2015* 4.54Loan Agreement dated November 4, 2015 between Squire Ocean Navigation Co. and Alpha Bank A.E. (54)82Table of Contents4.55First Supplemental Agreement dated July 28, 2016 between Alpha Bank A.E. and Squire Ocean Navigation Co. with respect to the Loan Agreement dated November 4,2015 (55) 4.56Second Supplemental Agreement dated June 29, 2018 between Alpha Bank A.E., Squire Ocean Navigation Co. and Leader Shipping Co. with respect to the LoanAgreement dated November 4, 2015 (56) 4.57Third Supplemental Agreement dated July 1, 2019 between Alpha Bank A.E. and Squire Ocean Navigation Co. with respect to the Loan Agreement dated November 4,2015* 4.58Amended and Restated Loan Agreement dated February 13, 2019 between the registrant and Jelco Delta Holding Corp. with respect to the Amended and RestatedFacility Agreement dated November 28, 2016(57) 4.59Supplemental Letter dated May 29, 2019 between the registrant and Jelco Delta Holding Corp. with respect to the Amended and Restated Loan Agreement datedFebruary 13, 2019* 4.60Amended and Restated Loan Agreement dated September 27, 2017 between the registrant and Jelco Delta Holding Corp. (58) 4.61Supplemental Agreement dated February 13, 2019 between the registrant and Jelco Delta Holding Corp. with respect to the Amended and Restated Loan Agreementdated September 27, 2017(59) 4.62Supplemental Letter dated May 29, 2019 between the registrant and Jelco Delta Holding Corp. with respect to the Amended and Restated Loan Agreement datedSeptember 27, 2017* 4.63Convertible Note dated September 27, 2017 between the registrant and Jelco Delta Holding Corp. (60) 4.64Registration Rights Agreement dated September 27, 2017 between the registrant and Jelco Delta Holding Corp. (61) 4.65Amendment to Convertible Note dated February 13, 2019, between the registrant and Jelco Delta Holding Corp. with respect to the Convertible Note dated September27, 2017(62) 4.66Second Amendment dated May 29, 2019 between the registrant and Jelco Delta Holding Corp. with respect to the Convertible Note dated September 27, 2017* 4.67Amended and Restated Loan Agreement dated June 13, 2018 between the registrant and Jelco Delta Holding Corp. (63) 4.68Supplemental Letter dated August 11, 2018 between the registrant and Jelco Delta Holding Corp. with respect to the Amended and Restated Loan Agreement datedJune 13, 2018 (64) 4.69Supplemental Letter dated January 31, 2019 between the registrant and Jelco Delta Holding Corp. with respect to the Amended and Restated Loan Agreement datedJune 13, 2018(65) 4.70Loan Agreement dated June 11, 2018, between the registrant, Lord Ocean Navigation Co., the financial institutions listed in Part B of Schedule 1 thereto andWilmington Trust, National Association (66) 4.71Bareboat Charterparty dated June 28, 2018 between Knight Ocean Navigation Co. and Hanchen Limited (67) 4.72Guarantee dated June 28, 2018 between the registrant and Hanchen Limited (68) 4.73On Demand Guarantee dated September 14, 2018 by the registrant in favor of Uniper Global Commodities SE in respect of the charterparty for the Partnership (69) 4.74On Demand Guarantee dated September 14, 2018 by the registrant in favor of Uniper Global Commodities SE in respect of the charterparty for the Lordship (70)83Table of Contents4.75Sale and Purchase Agreement dated September 19, 2018 between Seanergy Management Corp. and Hyundai Materials Corporation(71) 4.76Addendum No. 1 to Sale and Purchase Agreement dated September 28, 2018 between Seanergy Management Corp. and Hyundai Materials Corporation in respect ofthe Sale and Purchase Agreement dated September 19, 2018(72) 4.77Bareboat Charter Agreement dated November 7, 2018 between Cargill International SA and Champion Marine Co. for the Championship(73) 4.78Sale and Purchase Agreement dated September 28, 2018 between Champion Marine Co. and Hyundai Materials Corporation(74) 4.79Registration Rights Agreement dated November 7, 2018 between the registrant and Cargill International SA(75) 4.80Guarantee and Indemnity dated November 7, 2018 between the registrant and Cargill International SA(76) 4.81Loan Agreement dated February 13, 2019 between Partner Shipping Co. Limited, the registrant, and Amsterdam Trade Bank N.V.(77) 4.82Supplemental Agreement dated June 13, 2019 between Partner Shipping Co. Limited, the registrant, and Amsterdam Trade Bank N.V. with respect to the LoanAgreement dated February 13, 2019 * 4.83Supplemental Letter dated August 21, 2019 between Partner Shipping Co. Limited, the registrant, and Amsterdam Trade Bank N.V. with respect to the Loan Agreementdated February 13, 2019 * 4.84Loan Agreement dated March 26, 2019 between the registrant and Jelco Delta Holding Corp.(78) 4.85Supplemental Letter dated May 29, 2019 between the registrant and Jelco Delta Holding Corp. with respect to the Loan Agreement dated March 26, 2019* 4.86Securities Purchase Agreement by and between the registrant and Jelco Delta Holding Corp. dated May 9, 2019(79) 4.87Registration Rights Agreement by and between the registrant and Jelco Delta Holding Corp. dated May 9, 2019(80) 8.1List of Subsidiaries* 12.1Certificate of Principal Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act* 12.2Certificate of Principal Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act* 13.1Certificate of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* 13.2Certificate of Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* 15.1Consent of Ernst & Young (Hellas) Certified Auditors Accountants S.A.*84Table of Contents101The following financial information from the registrant’s annual report on Form 20-F for the fiscal year ended December 31, 2019, formatted in Extensible BusinessReporting Language (XBRL)* (1) Consolidated Balance Sheets as of December 31, 2019 and 2018; (2) Consolidated Statements of Income/(loss) for the years ended December 31, 2019, 2018 and 2017; (3) Consolidated Statements of Shareholders’ (Deficit) / Equity for the years ended December 31, 2019, 2018 and 2017; and (4) Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017.*Filed herewith(1)Incorporated herein by reference to Exhibit 3.1 to the registrant’s report on Form 6-k filed with the Commission on August 30, 2019.(2)Incorporated herein by reference to Exhibit 99.1 to the registrant’s report on Form 6-K filed with the Commission on July 20, 2011.(3)Incorporated herein by reference to Exhibit 4.1 to the registrant’s report on Form 6-K filed with the Commission on March 19, 2019.(4)Incorporated herein by reference to Exhibit 4.2 to the registrant’s registration statement on Form F-1/A filed with the Commission on December 6, 2016.(5)Incorporated herein by reference to Exhibit 4.2 to the registrant’s registration statement on Form F-1/A filed with the Commission on May 2, 2019.(6)Incorporated herein by reference to Exhibit 4.2 to the registrant’s registration statement on Form F-1/A filed with the Commission on May 2, 2019.(7)Incorporated herein by reference to Exhibit 4.1 to the registrant’s annual report on Form 20-F filed with the Commission on April 28, 2017.(8)Incorporated herein by reference to Exhibit 4.2 to the registrant’s annual report on Form 20-F filed with the Commission on April 28, 2017.(9)Incorporated herein by reference to Exhibit C to the Schedule 13D/A related to the registrant filed by United Capital Investments Corp. with the Commission on September 12,2014.(10)Incorporated herein by reference to Exhibit D to the Schedule 13D related to the registrant filed by Jelco Delta Holding Corp. with the Commission on March 12, 2015.(11)Incorporated herein by reference to Exhibit 4.51 to the registrant’s annual report on Form 20-F filed with the Commission on April 21, 2015.(12)Incorporated herein by reference to Exhibit 4.10 to the registrant’s annual report on Form 20-F filed with the Commission on April 20, 2016.(13)Incorporated herein by reference to Exhibit 4.11 to the registrant’s annual report on Form 20-F filed with the Commission on April 20, 2016.(14)Incorporated herein by reference to Exhibit 4.10 to the registrant’s annual report on Form 20-F filed with the Commission on March 25, 2019.(15)Incorporated herein by reference to Exhibit 4.11 to the registrant’s annual report on Form 20-F filed with the Commission on March 25, 2019.(16)Incorporated herein by reference to Exhibit 10.9 to the registrant’s registration statement on Form F-1 filed with the Commission on November 8, 2018.(17)Incorporated herein by reference to Exhibit 10.10 to the registrant’s registration statement on Form F-1 filed with the Commission on November 8, 2018.(18)Incorporated herein by reference to Exhibit 4.12 to the registrant’s annual report on Form 20-F filed with the Commission on April 20, 2016.(19)Incorporated herein by reference to Exhibit 4.52 to the registrant’s annual report on Form 20-F filed with the Commission on April 21, 2015.(20)Incorporated herein by reference to Exhibit 4.14 to the registrant’s annual report on Form 20-F filed with the Commission on April 20, 2016.(21)Incorporated herein by reference to Exhibit 4.15 to the registrant’s annual report on Form 20-F filed with the Commission on April 20, 2016.(22)Incorporated herein by reference to Exhibit 4.13 to the registrant’s annual report on Form 20-F filed with the Commission on March 7, 2018.(23)Incorporated herein by reference to Exhibit 4.19 to the registrant’s annual report on Form 20-F filed with the Commission on March 25, 2019.(24)Incorporated herein by reference to Exhibit 4.53 to the registrant’s annual report on Form 20-F filed with the Commission on April 21, 2015.(25)Incorporated herein by reference to Exhibit 4.17 to the registrant’s annual report on Form 20-F filed with the Commission on April 20, 2016.(26)Incorporated herein by reference to Exhibit 10.18 to the registrant’s registration statement on Form F-1 filed with the Commission on October 28, 2016.85Table of Contents(27)Incorporated herein by reference to Exhibit 10.19 to the registrant’s registration statement on Form F-1 filed with the Commission on November 8, 2018.(28)Incorporated herein by reference to Exhibit B to the Schedule 13D/A related to the registrant filed by Jelco Delta Holding Corp. with the Commission on April 13, 2015.(29)Incorporated herein by reference to Exhibit 10.17 to the registrant’s registration statement on Form F-1 filed with the Commission on October 20, 2017.(30)Incorporated herein by reference to Exhibit 10.18 to the registrant’s registration statement on Form F-1 filed with the Commission on October 20, 2017.(31)Incorporated herein by reference to Exhibit B to the Schedule 13D/A related to the registrant filed by Jelco Delta Holding Corp. with the Commission on October 20, 2017.(32)Incorporated herein by reference to Exhibit 10.28 to the registrant’s registration statement on Form F-1/A filed with the Commission on April 5, 2019.(33)Incorporated herein by reference to Exhibit 4.57 to the registrant’s annual report on Form 20-F filed with the Commission on April 21, 2015.(34)Incorporated herein by reference to Exhibit 4.58 to the registrant’s annual report on Form 20-F filed with the Commission on April 21, 2015.(35)Incorporated herein by reference to Exhibit 4.38 to the registrant’s annual report on Form 20-F filed with the Commission on April 20, 2016.(36)Incorporated herein by reference to Exhibit 10.43 to the registrant’s registration statement on Form F-1 filed with the Commission on October 28, 2016.(37)Incorporated herein by reference to Exhibit 4.43 to the registrant’s annual report on Form 20-F filed with the Commission on April 28, 2017.(38)Incorporated herein by reference to Exhibit 10.29 to the registrant’s registration statement on Form F-1 filed with the Commission on November 8, 2018.(39)Incorporated herein by reference to Exhibit 10.35 to the registrant’s registration statement on Form F-1/A filed with the Commission on April 5, 2019.(40)Incorporated herein by reference to Exhibit B to the Schedule 13D/A related to the registrant filed by Jelco Delta Holding Corp. with the Commission on October 29, 2015.(41)Incorporated herein by reference to Exhibit C to the Schedule 13D/A related to the registrant filed by Jelco Delta Holding Corp. with the Commission on December 29, 2015.(42)Incorporated herein by reference to Exhibit D to the Schedule 13D/A related to the registrant filed by Jelco Delta Holding Corp. with the Commission on December 29, 2015.(43)Incorporated herein by reference to Exhibit A to the Schedule 13D/A related to the registrant filed by Jelco Delta Holding Corp. with the Commission on February 11, 2016.(44)Incorporated herein by reference to Exhibit A to the Schedule 13D/A related to the registrant filed by Jelco Delta Holding Corp. with the Commission on March 14, 2016.(45)Incorporated herein by reference to Exhibit 10.1 to the registrant’s report on Form 6-K filed with the Commission on August 5, 2016.(46)Incorporated herein by reference to Exhibit 10.2 to the registrant’s report on Form 6-K filed with the Commission on August 5, 2016.(47)Incorporated herein by reference to Exhibit 10.3 to the registrant’s report on Form 6-K filed with the Commission on August 5, 2016.(48)Incorporated herein by reference to Exhibit A to the Schedule 13D/A related to the registrant filed by Jelco Delta Holding Corp. with the Commission on April 7, 2017.(49)Incorporated herein by reference to Exhibit 10.34 to the registrant’s registration statement on Form F-1 filed with the Commission on October 20, 2017.(50)Incorporated herein by reference to Exhibit C to the Schedule 13D/A related to the registrant filed by Jelco Delta Holding Corp. with the Commission on October 20, 2017.(51)Incorporated herein by reference to Exhibit 10.41 to the registrant’s registration statement on Form F-1 filed with the Commission on November 8, 2018.(52)Incorporated herein by reference to Exhibit 10.48 to the registrant’s registration statement on Form F-1/A filed with the Commission on April 5, 2019.(53)Incorporated herein by reference to Exhibit 4.53 to the registrant’s annual report on Form 20-F filed with the Commission on March 25, 2019.(54)Incorporated herein by reference to Exhibit 4.40 to the registrant’s annual report on Form 20-F filed with the Commission on April 20, 2016.86Table of Contents(55)Incorporated herein by reference to Exhibit 10.48 to the registrant’s registration statement on Form F-1 filed with the Commission on October 28, 2016.(56)Incorporated herein by reference to Exhibit 10.51 to the registrant’s registration statement on Form F-1 filed with the Commission on November 8, 2018.(57)Incorporated herein by reference to Exhibit 4.59 to the registrant’s annual report on Form 20-F filed with the Commission March 25, 2019.(58)Incorporated herein by reference to Exhibit 10.60 to the registrant’s registration statement on Form F-1 filed with the Commission on October 20, 2017.(59)Incorporated herein by reference to Exhibit 4.67 to the registrant’s annual report on Form 20-F filed with the Commission on March 25, 2019.(60)Incorporated herein by reference to Exhibit A to the Schedule 13D/A related to the registrant filed by Jelco Delta Holding Corp. with the Commission on October 20, 2017.(61)Incorporated herein by reference to Exhibit D to the Schedule 13D/A related to the registrant filed by Jelco Delta Holding Corp. with the Commission on October 20, 2017.(62)Incorporated herein by reference to Exhibit 4.69 to the registrant’s annual report on Form 20-F filed with the Commission on March 25, 2019.(63)Incorporated herein by reference to Exhibit 10.79 to the registrant’s registration statement on Form F-1 filed with the Commission on November 8, 2018.(64)Incorporated herein by reference to Exhibit 10.80 to the registrant’s registration statement on Form F-1 filed with the Commission on November 8, 2018.(65)Incorporated herein by reference to Exhibit 4.73 to the registrant’s annual report on Form 20-F filed with the Commission on March 25, 2019.(66)Incorporated herein by reference to Exhibit 10.81 to the registrant’s registration statement on Form F-1 filed with the Commission on November 8, 2018.(67)Incorporated herein by reference to Exhibit 10.82 to the registrant’s registration statement on Form F-1 filed with the Commission on November 8, 2018.(68)Incorporated herein by reference to Exhibit 4.77 to the registrant’s annual report on Form 20-F filed with the Commission on March 25, 2019.(69)Incorporated herein by reference to Exhibit 10.87 to the registrant’s registration statement on Form F-1 filed with the Commission on November 8, 2018.(70)Incorporated herein by reference to Exhibit 10.88 to the registrant’s registration statement on Form F-1 filed with the Commission on November 8, 2018.(71)Incorporated herein by reference to Exhibit 10.96 to the registrant’s registration statement on Form F-1 filed with the Commission on November 8, 2018.(72)Incorporated herein by reference to Exhibit 10.90 to the registrant’s registration statement on Form F-1 filed with the Commission on November 8, 2018.(73)Incorporated herein by reference to Exhibit 4.92 to the registrant’s annual report on Form 20-F filed with the Commission on March 25, 2019.(74)Incorporated herein by reference to Exhibit 10.96 to the registrant’s registration statement on Form F-1 filed with the Commission on November 8, 2018.(75)Incorporated herein by reference to Exhibit 4.93 to the registrant’s annual report on Form 20-F filed with the Commission on March 25, 2019.(76)Incorporated herein by reference to Exhibit 4.94 to the registrant’s annual report on Form 20-F filed with the Commission on March 25, 2019.(77)Incorporated herein by reference to Exhibit 4.95 to the registrant’s annual report on Form 20-F filed with the Commission on March 25, 2019.(78)Incorporated herein by reference to Exhibit 10.99 to the registrant’s registration statement on Form F-1/A filed with the Commission on April 5, 2019.(79)Incorporated herein by reference to Exhibit 4.4 to the registrant’s report on Form 6-K filed with the Commission on May 17, 2019.(80)Incorporated herein by reference to Exhibit 4.5 to the registrant’s report on Form 6-K filed with the Commission on May 17, 2019.87Table of ContentsSIGNATURESThe registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual reporton its behalf.SEANERGY MARITIME HOLDINGS CORP.By:/s/ Stamatios TsantanisName:Stamatios TsantanisTitle:Chairman & Chief Executive OfficerDate: March 5, 202088Table of ContentsINDEX TO CONSOLIDATED FINANCIAL STATEMENTSPageReport of Independent Registered Public Accounting FirmF-2Consolidated Balance Sheets as of December 31, 2019 and 2018F-3Consolidated Statements of Loss for the years ended December 31, 2019, 2018 and 2017F-4Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2019, 2018 and 2017F-5Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017F-6Notes to Consolidated Financial StatementsF-7Table of ContentsReport of Independent Registered Public Accounting FirmTo the Stockholders and the Board of Directors of Seanergy Maritime Holdings Corp.Opinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of Seanergy Maritime Holdings Corp. (the Company) as of December 31, 2019 and 2018, the related consolidatedstatements of loss, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2019, and the related notes and financial statement schedule listed inthe Table of Contents at Item 18.1 (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all materialrespects, the financial position of the Company at December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period endedDecember 31, 2019, in conformity with U.S. generally accepted accounting principles.The Company’s Ability to Continue as a Going ConcernThe accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidatedfinancial statements, the Company has a working capital deficiency and has stated that substantial doubt exists about the Company's ability to continue as a going concern. In addition,the Company has not complied with a certain covenant of a loan agreement with a bank. Management's evaluation of the events and conditions and management's plans regarding thesematters also are described in Note 3. The 2019 consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability andclassification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.Basis for OpinionThese financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits.We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to theCompany in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and 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 audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal controlover financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion onthe effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respondto those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating theaccounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide areasonable basis for our opinion./s/ Ernst & Young (Hellas) Certified Auditors Accountants S.A.We have served as the Company’s auditor since 2012.Athens, GreeceMarch 5, 2020F-2Table of ContentsSeanergy Maritime Holdings Corp.Consolidated Balance SheetsDecember 31, 2019 and December 31, 2018(In thousands of US Dollars, except for share and per share data) Notes 2019 2018 ASSETS Current assets: Cash and cash equivalents 5 13,654 6,684 Restricted cash 5, 8 900 260 Accounts receivable trade, net 2 1,763 2,649 Inventories 6 3,862 5,289 Prepaid expenses 400 707 Other current assets 2, 8 1,252 887 Deferred voyage expenses 2 96 407 Total current assets 21,927 16,883 Fixed assets: Vessels, net 7 253,781 243,214 Other fixed assets, net 386 503 Total fixed assets 254,167 243,717 Other non-current assets: Deposits assets, non-current 5 1,325 3,495 Deferred charges, non-current 2 4,677 2,323 Restricted cash, non-current 5, 8 - 500 Right of use asset – leases 426 615 Other non-current assets 29 29 TOTAL ASSETS 282,551 267,562 LIABILITIES AND STOCKHOLDERS EQUITY Current liabilities: Current portion of long-term debt and other financial liabilities, net of deferred finance costs of $2,443 and $1,078,respectively 3, 8 183,066 16,195 Trade accounts and other payables 16,105 14,426 Due to related parties, net of deferred finance costs of $113 and NIL, respectively 4 24,237 - Convertible notes, net of deferred finance costs of $17 and NIL, respectively 4 2,588 - Accrued liabilities 6,881 4,634 Lease liability 10 108 118 Deferred revenue 2 4,296 890 Total current liabilities 237,281 36,263 Non-current liabilities: Long-term debt and other financial liabilities, net of current portion and deferred finance costs of NIL and $2,308,respectively 8 - 179,026 Due to related parties, non-current, net of deferred finance costs of NIL and NIL, respectively 4 - 19,349 Long-term portion of convertible notes, net of deferred finance costs of $212 and NIL, respectively 4 12,020 11,124 Lease liability, non-current 10 318 497 Deferred revenue, non-current 2 3,074 Total liabilities 252,693 246,259 Commitments and contingencies 10 - - STOCKHOLDERS EQUITY Preferred stock, $0.0001 par value; 25,000,000 shares authorized; none issued - - Common stock, $0.0001 par value; 500,000,000 authorized shares as at December 31, 2019 and 2018; 26,900,050 and2,666,184 shares issued and outstanding as at December 31, 2019 and 2018, respectively 11 3 - Additional paid-in capital 4 406,096 385,846 Accumulated deficit (376,241) (364,543)Total Stockholders’ equity 29,858 21,303 TOTAL LIABILITIES AND STOCKHOLDERS EQUITY 282,551 267,562 The accompanying notes are an integral part of these consolidated financial statements.F-3Table of ContentsSeanergy Maritime Holdings Corp.Consolidated Statements of LossFor the years ended December 31, 2019, 2018 and 2017(In thousands of US Dollars, except for share and per share data) Notes 2019 2018 2017 Revenues: Vessel revenue 2 89,523 94,859 77,710 Commissions 2 (3,024) (3,339) (2,876)Vessel revenue, net 86,499 91,520 74,834 Expenses: Voyage expenses 2 (36,641) (40,184) (34,949)Vessel operating expenses (18,980) (20,742) (19,598)Management fees (989) (1,042) (1,016)General and administration expenses (5,989) (6,500) (5,081)Amortization of deferred dry-docking costs (844) (634) (870)Depreciation (11,016) (10,876) (10,518)Impairment loss 7 - (7,267) - Operating income 12,040 4,275 2,802 Other income / (expenses), net: Interest and finance costs 12 (15,216) (16,415) (12,277)Interest and finance costs – related party 4 & 12 (8,629) (8,881) (5,122)Gain on debt refinancing 8 - - 11,392 Interest and other income 213 83 47 Foreign currency exchange losses, net (52) (104) (77)Total other expenses, net (23,684) (25,317) (6,037)Net loss before income taxes (11,644) (21,042) (3,235)Income taxes (54) (16) - Net loss (11,698) (21,058) (3,235) Net loss per common share Basic and diluted 13 (0.76) (8.40) (1.35)Weighted average common shares outstanding Basic and diluted 13 15,332,755 2,507,087 2,389,719 The accompanying notes are an integral part of these consolidated financial statements.F-4Table of ContentsSeanergy Maritime Holdings Corp.Consolidated Statements of Stockholders’ EquityFor the years ended December 31, 2019, 2018 and 2017 (In thousands of US Dollars, except for share data) Common stock Additionalpaid-incapital Accumulateddeficit Totalstockholders’equity # of Shares ParValue Balance, January 1, 2017 2,271,479 - 369,294 (338,462) 30,832 Issuance of common stock (Note 11) 193,810 - 2,597 - 2,597 Issuance of convertible notes (Note 3) - - 10,389 - 10,389 Stock based compensation (Note 14) - - 730 - 730 Net loss - - - (3,235) (3,235)Balance, December 31, 2017 2,465,289 - 383,010 (341,697) 41,313 Adoption of revenue recognition accounting policy adjustment (Note 2) - - - (1,788) (1,788)Issuance of common stock (Note 11) 120,000 - 1,541 - 1,541 Stock based compensation (Note 14) 80,895 - 1,295 - 1,295 Net loss - - - (21,058) (21,058)Balance, December 31, 2018 2,666,184 - 385,846 (364,543) 21,303 Issuance of common stock and warrants (Notes 4 & 11) 24,090,199 3 18,844 - 18,847 Related parties liabilities released (Note 4) - 96 - 96 Stock based compensation (Note 14) 143,667 - 1,310 - 1,310 Net loss - - - (11,698) (11,698)Balance, December 31, 2019 26,900,050 3 406,096 (376,241) 29,858 The accompanying notes are an integral part of these consolidated financial statements.F-5Table of ContentsSeanergy Maritime Holdings Corp.Consolidated Statements of Cash FlowsFor the years ended December 31, 2019, 2018 and 2017(In thousands of US Dollars) 2019 2018 2017 Cash flows from operating activities: Net loss (11,698) (21,058) (3,235)Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 11,016 10,876 10,518 Amortization of deferred dry-docking costs 844 634 870 Amortization of deferred finance charges 1,140 1,173 518 Amortization of convertible note beneficial conversion feature 3,713 4,339 2,127 Stock based compensation 1,310 1,295 730 Amortization of deferred finance charges - related party 3,745 7 13 Gain on debt refinancing - - (11,392)Impairment loss - 7,267 - Changes in operating assets and liabilities: Accounts receivable trade, net 845 (511) (843)Inventories 1,427 (492) (748)Prepaid expenses 307 (424) 401 Other current assets (212) (534) 52 Deferred voyage expenses 311 (707) - Deferred charges, non-current (2,297) (32) (144)Other non-current assets - 2 (26)Trade accounts and other payables 1,679 5,499 2,345 Accrued liabilities (5,502) (760) 1,705 Deferred revenue 3,406 (851) (109)Deferred revenue, non-current 3,074 - - Net cash provided by operating activities 13,108 5,723 2,782 Cash flows from investing activities: Vessels acquisitions and improvements (12,349) (30,921) (32,992)Net proceeds from sale of vessels - 22,652 - Other fixed assets, net - (558) - Net cash used in investing activities (12,349) (8,827) (32,992)Cash flows from financing activities: Proceeds from issuance of common stock and warrants, net of underwriters fees and commissions 13,225 - 2,637 Proceeds from long term debt 6,422 67,130 34,500 Proceeds from convertible notes - - 9,000 Proceeds from related party debt 5,000 2,000 16,200 Payments of financing and stock issuance costs (698) (1,153) (561)Repayments of long term debt (17,598) (68,468) (36,435)Net cash provided by / (used in) financing activities 6,351 (491) 25,341 Net increase / (decrease) in cash and cash equivalents and restricted cash 7,110 (3,595) (4,869)Cash and cash equivalents and restricted cash at beginning of period 7,444 11,039 15,908 Cash and cash equivalents and restricted cash at end of period 14,554 7,444 11,039 SUPPLEMENTAL CASH FLOW INFORMATION Cash paid during the period for: Interest 14,144 18,504 14,661 Deposits - 4,075 - Noncash financing activities: Shares issued to settle unpaid interest in connection with financing – related party (Note 4) 2,115 - - Shares issued in lieu of interest payments in connection with financing – related party (Note 4) 3,846 - - Shares issued to settle deferred finance cost in connection with financing – related party (Note 4) 239 - - Unpaid interest waived – related party (Note 4) 96 - - Related party debt drawdown (Note 4) 2,000 - - Related party debt refinanced (Note 4) (2,000) - - Shares issued in connection with financing - 1,541 - Conversion of related party debt into convertible note - - (4,750)The accompanying notes are an integral part of these consolidated financial statements. F-6Table of ContentsSeanergy Maritime Holdings Corp.Notes To The Consolidated Financial Statements(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)1.Basis of Presentation and General Information: Seanergy Maritime Holdings Corp. (the “Company” or “Seanergy”) was formed under the laws of the Republic of the Marshall Islands on January 4, 2008, with executive offices locatedin Athens, Greece and an office in Hong Kong. The Company provides global transportation solutions in the dry bulk shipping sector through its subsidiaries. The accompanying consolidated financial statements include the accounts of Seanergy Maritime Holdings Corp. and its subsidiaries (collectively, the “Company” or “Seanergy”). In 2019, the Company changed the presentation of “Prepaid expenses and other current assets” and reclassified “Other current assets” into a separate line on the consolidated balancesheet. Comparative figures have been recast to reflect this change in presentation. On March 20, 2019, the Company’s common stock began trading on a split-adjusted basis, following a February 26, 2019 approval from the Company’s Board of Directors to reverse splitthe Company’s common stock at a ratio of one-for-fifteen (Note 11). No fractional shares were issued in connection with the reverse split. Shareholders who would otherwise hold afractional share of the Company’s common stock received a cash payment in lieu of such fractional share. All share and per share amounts disclosed in the consolidated financialstatements and notes give effect to this reverse stock split retroactively, for all periods presented. a.Subsidiaries in Consolidation: Seanergy’s subsidiaries included in these consolidated financial statements as of December 31, 2019: Company Country ofIncorporation Vessel name Date of Delivery Date ofSale/Disposal Seanergy Management Corp. (1)(3) Marshall Islands N/A N/A N/A Seanergy Shipmanagement Corp. (1)(3) Marshall Islands N/A N/A N/A Sea Glorius Shipping Co. (1) Marshall Islands Gloriuship November 3, 2015 N/A Sea Genius Shipping Co. (1) Marshall Islands Geniuship October 13, 2015 N/A Leader Shipping Co. (1) Marshall Islands Leadership March 19, 2015 N/A Premier Marine Co. (1) Marshall Islands Premiership September 11, 2015 N/A Gladiator Shipping Co. (1)(Note 7) Marshall Islands Gladiatorship September 29, 2015 October 11, 2018 Guardian Shipping Co. (1)(Note 7) Marshall Islands Guardianship October 21, 2015 November 19, 2018 Champion Ocean Navigation Co. Limited (1)(6) Malta Championship December 7, 2015 November 7, 2018 Squire Ocean Navigation Co. (1) Liberia Squireship November 10, 2015 N/A Emperor Holding Ltd. (1) Marshall Islands N/A N/A N/A Knight Ocean Navigation Co. (1)(8)(Note 8) Liberia Knightship December 13, 2016 June 29, 2018 Lord Ocean Navigation Co. (1) Liberia Lordship November 30, 2016 N/A Partner Shipping Co. Limited (1)(7) Malta Partnership May 31, 2017 N/A Pembroke Chartering Services Limited (1)(4) Malta N/A N/A N/A Martinique International Corp. (1)(5) British Virgin Islands Bremen Max September 11, 2008 March 7, 2014 Harbour Business International Corp. (1)(5) British Virgin Islands Hamburg Max September 25, 2008 March 10, 2014 Maritime Capital Shipping Limited (1) Bermuda N/A N/A N/A Maritime Capital Shipping (HK) Limited (2)(3) Hong Kong N/A N/A N/A Maritime Glory Shipping Limited (2) British Virgin Islands Clipper Glory May 21, 2010 December 4, 2012 Maritime Grace Shipping Limited (2) British Virgin Islands Clipper Glory May 21, 2010 October 15, 2012 Atlantic Grace Shipping Limited (2)(5) British Virgin Islands N/A N/A N/A Fellow Shipping Co. (1)(Note 7) Marshall Islands Fellowship November 22, 2018 N/A Champion Marine Co. (1) Liberia N/A N/A N/A Champion Marine Co. (1)(8) Marshall Islands N/A N/A N/A F-7Table of ContentsSeanergy Maritime Holdings Corp.Notes To The Consolidated Financial Statements(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)(1)Subsidiaries wholly owned(2)Former vessel-owning subsidiaries owned by Maritime Capital Shipping Limited (or “MCS”)(3)Management companies(4)Chartering services company(5)Dormant companies(6)Previously known as Champion Ocean Navigation Co., of the Republic of Liberia and redomiciled to the Republic of Malta on May 23, 2018(7)Previously known as Partner Shipping Co., of the Republic of the Marshall Islands and redomiciled to the Republic of Malta on May 23, 2018(8)Bareboat charterers2.Significant Accounting Policies:(a)Principles of ConsolidationThe accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP) andinclude the accounts and operating results of Seanergy and its wholly-owned subsidiaries where Seanergy has control. Control is presumed to exist when Seanergy, through direct orindirect ownership, retains the majority of the voting interest. In addition, Seanergy evaluates its relationships with other entities to identify whether they are variable interest entitiesand to assess whether it is the primary beneficiary of such entities. If the determination is made that the Company is the primary beneficiary, then that entity is included in theconsolidated financial statements. When the Company does not have a controlling interest in an entity, but exerts a significant influence over the entity, the Company applies the equitymethod of accounting. All significant intercompany balances and transactions and any intercompany profit or loss on assets remaining with the Group have been eliminated in theaccompanying consolidated financial statements. The Company deconsolidates a subsidiary or derecognizes a group of assets when the Company no longer controls the subsidiary or group of assets specified in Accounting StandardsCodification (ASC or Codification) 810-10-40-3A. When control is lost, the Company derecognizes the assets and liabilities of the qualifying subsidiary or group of assets. The FinancialAccounting Standards Board (“FASB”) concluded that the loss of control and the related deconsolidation of a subsidiary or derecognition of a group of assets specified in ASC 810-10-40-3A is a significant economic event that changes the nature of the investment held in the subsidiary or group of assets. Based on this consideration, a gain or loss is recognized uponthe deconsolidation of a subsidiary or derecognition of a group of assets.F-8Table of ContentsSeanergy Maritime Holdings Corp.Notes To The Consolidated Financial Statements(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)(b)Use of EstimatesThe preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilitiesand disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.Actual results could differ from those estimates. Significant items subject to such estimates include evaluation of relationships with other entities to identify whether they are variableinterest entities, determination of vessel useful lives, allocation of purchase price in a business combination, determination of vessels’ impairment and determination of goodwillimpairment. (c)Foreign Currency TranslationSeanergy’s functional currency is the United States dollar since the Company’s vessels operate in international shipping markets and therefore primarily transact business in U.S.Dollars. The Company’s books of accounts are maintained in U.S. Dollars. Transactions involving other currencies are translated into the United States dollar using exchange rates thatare in effect at the time of the transaction. At the balance sheet dates, monetary assets and liabilities, which are denominated in other currencies, are translated to United States dollars atthe foreign exchange rate prevailing at year-end. Gains or losses resulting from foreign currency translation are reflected in the consolidated statement of loss. (d)Concentration of Credit RiskFinancial instruments, which potentially subject the Company to significant concentrations of credit risk, consist principally of cash and cash equivalents and trade accounts receivable.The Company places its cash and cash equivalents, consisting mostly of deposits, with high credit qualified financial institutions. The Company performs periodic evaluations of therelative credit standing of the financial institutions in which it places its deposits. The Company limits its credit risk with accounts receivable by performing ongoing credit evaluations ofthe financial condition of its customers, receives charter hires in advance and generally does not require collateral for its accounts receivable. (e)Cash and Cash EquivalentsSeanergy considers time deposits and all highly liquid investments with an original maturity of three months or less to be cash equivalents. (f)Restricted CashRestricted cash is excluded from cash and cash equivalents. Restricted cash represents minimum cash deposits or cash collateral deposits required to be maintained with certain banksunder the Company’s borrowing arrangements or in relation to bank guarantees issued on behalf of the Company, which are legally restricted as to withdrawal or use. In the event thatthe obligation relating to such deposits is expected to be terminated within the next twelve months, these deposits are classified as current assets; otherwise they are classified as non-current assets. (g)Accounts Receivable Trade, NetAccounts receivable trade, net at each balance sheet date, includes receivables from charterers for hire, freight and demurrage billings, net of a provision for doubtful accounts.Receivables related to spot voyages are determined to be unconditional and include in Accounts Receivable Trade, Net. At each balance sheet date, all potentially uncollectibleaccounts are assessed individually for purposes of determining the appropriate provision for doubtful accounts. No provision for doubtful accounts was established as of December 31,2019 and 2018.F-9Table of ContentsSeanergy Maritime Holdings Corp.Notes To The Consolidated Financial Statements(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)(h)InventoriesInventory is measured at the lower of cost or net realizable value according to the provisions of ASU 2015-11, Inventory. Net realizable value is defined as estimated selling prices in theordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Cost is determined by the first in, first out method. (i)Insurance ClaimsThe Company records insurance claim recoveries for insured losses incurred on damage to fixed assets and for insured crew medical expenses and for legal fees covered by directors’and officers’ liability insurance. Insurance claim recoveries are recorded, net of any deductible amounts, at the time the Company’s fixed assets suffer insured damages or when crewmedical expenses are incurred, recovery is probable under the related insurance policies, the claim is not subject to litigation and the Company can make an estimate of the amount to bereimbursed. The classification of the insurance claims into current and non-current assets is based on management’s expectations as to their collection dates. (j)VesselsVessels acquired as a part of a business combination are recorded at fair market value on the date of acquisition. Vessels acquired as asset acquisitions are stated at historical cost, whichconsists of the contract price less discounts, plus any material expenses incurred upon acquisition (delivery expenses and other expenditures to prepare for the vessel’s initial voyage).Vessels acquired from entities under common control are recorded at historical cost. Subsequent expenditures for conversions and major improvements are capitalized when theyappreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels. Expenditures for routine maintenance and repairs are expensed as incurred. (k)Vessel DepreciationDepreciation is computed using the straight-line method over the estimated useful life of the vessels (25 years), after considering the estimated salvage value. Salvage value is estimatedby the Company by taking the cost of steel times the weight of the ship noted in lightweight ton. Salvage values are periodically reviewed and revised to recognize changes inconditions, new regulations or for other reasons. Revisions of salvage values affect the depreciable amount of the vessels and affect depreciation expense in the period of the revisionand future periods. (l)Impairment of Long-Lived Assets (Vessels)The Company reviews its long-lived assets for impairment whenever events or changes in circumstances, such as prevailing market conditions, obsolesce or damage to the asset,business plans to dispose a vessel earlier than the end of its useful life and other business plans, indicate that the carrying amount of the assets, plus unamortized dry-docking costs,may not be recoverable. The volatile market conditions in the dry bulk market with decreased charter rates and decreased vessel market values are conditions that the Companyconsiders to be indicators of a potential impairment for its vessels. The Company determines undiscounted projected operating cash flows for each vessel and compares it to the vessel’s carrying value. When the undiscounted projected operating cashflows expected to be generated by the use of the vessel and/or its eventual disposition are less than the vessel’s carrying amount, the Company impairs the carrying amount of thevessel. Measurement of the impairment loss is based on the fair value of the asset as determined by independent valuators and use of available market data. The undiscounted projectedoperating cash inflows are determined by considering the charter revenues from existing time charters for the fixed fleet days and an estimated daily time charter equivalent for the non-fixed days (based on a combination of one year charter rates estimates and the average of the trailing 10-year historical charter rates, excluding outliers) adjusted for commissions,expected off hires due to scheduled maintenance and estimated unexpected breakdown off hires. The undiscounted projected operating cash outflows are determined by applyingvarious assumptions regarding vessel operating expenses and scheduled maintenance.F-10Table of ContentsSeanergy Maritime Holdings Corp.Notes To The Consolidated Financial Statements(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)(m)Dry-Docking and Special Survey CostsThe Company follows the deferral method of accounting for dry-docking costs and special survey costs whereby actual costs incurred are deferred and are amortized on a straight-linebasis over the period through the expected date of the next dry-docking which is scheduled to become due in 2 to 3 years. Dry-docking costs which are not fully amortized by the nextdry-docking period are expensed. (n)Commitments and ContingenciesLiabilities for loss contingencies, arising from claims, assessments, litigation, fines and penalties, environmental and remediation obligations and other sources are recorded when it isprobable that a liability has been incurred and the amount of the loss can be reasonably estimated. (o)Revenue RecognitionRevenues are generated from time charters, bareboat charters and spot charters. A time charter is a contract for the use of a vessel as well as vessel operations for a specific period oftime and a specified daily charter hire rate, which is generally payable in advance. A bareboat charter is a contract in which the vessel is provided to the charterer for a fixed period of timeat a specified daily rate, which is generally payable in advance. Spot charter agreements are charter hires, where a contract is made in the spot market for the use of a vessel for a specificvoyage at a specified charter rate per ton of cargo.Time charter revenue, including bareboat charter revenue, is recorded over the term of the charter agreement as the service is provided and collection of the related revenue is reasonablyassured. Under a time charter, revenue is adjusted for a vessel’s off hire days due to major repairs, dry dockings or special or intermediate surveys (Note 2(p)). Spot charter revenue isrecognized on a pro-rata basis over the duration of the voyage, when a voyage agreement exists, the price is fixed or determinable, service is provided and the collection of the relatedrevenue is reasonably assured.Demurrage income, which is considered a form of variable consideration and is recognized as the performance obligation is satisfied, is included in voyage revenues, and representspayments by the charterer to the vessel owner when loading or discharging time exceeds the stipulated time in the voyage charter agreements. Demurrage income for the years endedDecember 31, 2019, 2018 and 2017 was $1,528, $2,108 and $1,935, respectively.Despatch expense, which is considered a form of variable consideration and is recognized as the performance obligation is satisfied, is included in voyage revenues, and representspayments to the charterer by the vessel owner when loading or discharging time is faster than the stipulated time in the voyage charter agreements. Despatch expense for the yearsended December 31, 2019, 2018 and 2017 was $432, $612 and $501, respectively.On January 1, 2018, the Company adopted ASU No. 2014-09, Revenue from Contracts with Customers and the related amendments (“ASC 606” or “the new revenue standard”). The coreprinciple is that a company should recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entityexpects to be entitled for those goods or services. The Company analyzed its contacts with charterers as at the adoption date, and determined that its spot charters fall under theprovisions of ASC 606, while its time charter agreements contain leases which are evaluated under lease guidance as discussed in Note 2(p).Under the new revenue standard, voyage revenue is recognized from the time when the vessel arrives at the load port until completion of cargo discharge.F-11Table of ContentsSeanergy Maritime Holdings Corp.Notes To The Consolidated Financial Statements(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)The adoption of new standard resulted in an increase in the opening Accumulated deficit balance as of January 1, 2018 of approximately $1,788 as a result of the adjustment of Vesselsrevenue and Voyage expenses. Having not adopted ASC 606, the Company’s consolidated net loss would have been $352 (approximately $0.14 per share) less for the year endedDecember 31, 2018.Remaining Performance ObligationsThe Company has taken the practical expedient not to disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.Disaggregation of Revenue The Company disaggregates its revenue from contracts with customers by the type of charter (time charters and spot charters). The following table presents the Company’s net tradeaccounts receivable disaggregated by revenue source as at December 31, 2019 and 2018: December 31, 2019 2018 Accounts receivable trade, net from spot charters 653 2,332 Accounts receivable trade, net from time charters 1,110 317 Total 1,763 2,649 Deferred revenue represents cash received in advance of performance under the contract prior to the balance sheet date and is realized when the associated revenue is recognized underthe contract in periods after such date. The current portion of Deferred revenue as of December 31, 2019 was $1,663 under ASC 606 and $2,633 under ASC 842. The non-current portionof Deferred revenue as of December 31, 2019 relates entirely to ASC 606. Revenue recognized in 2019 from amounts included in deferred revenue at the beginning of the period was $890.Revenue recognized in 2018 from amounts included in deferred revenue at the beginning of the period was approximately $1,741.(p)LeasesIn February 2016, the FASB issued ASU No. 2016-02 - Leases (ASC 842), and as amended, it requires lessees to recognize most leases on the balance sheet. The Company early adoptedASC 842, as amended from time to time, retrospectively from January 1, 2018. The Company also elected to apply the additional and optional transition method to new and existing leasesat the adoption date as well as all the practical expedients which allowed the Company’s existing lease arrangements, in which it was a lessee or lessor, classified as operating leasesunder ASC 840 to continue to be classified as operating leases under ASC 842. The Company concluded that the criteria for not separating lease and non-lease components of its timecharter contracts are met, since (i) the time pattern of recognizing revenues for crew and other services for the operation of the vessels is similar to the time pattern of recognizing rentalincome, (ii) the lease component of the time charter contracts, if accounted for separately, would be classified as an operating lease, and (iii) the predominant component in its timecharter agreements is the lease component. In this respect, the Company accounts for the combined component as an operating lease in accordance with ASC 842. The Companyrecognizes income from lease payments over the lease term on a straight line basis. The Company assessed its new time charter contracts at the adoption date under the new guidanceand concluded that these contracts contain a lease with the related executory costs (insurance), as well as non-lease components to provide other services related to the operation of thevessel, with the most substantial service being the crew cost to operate the vessel. The Company recognizes income for variable lease payments in the period when changes in facts andcircumstances on which the variable lease payments occur. Rental income on the Company’s time charterers is mostly calculated at an index linked rate based on the five T/C routes rateof the Baltic Capesize Index. The Company recognized a right of use asset for rental of office space at the adoption date.F-12Table of ContentsSeanergy Maritime Holdings Corp.Notes To The Consolidated Financial Statements(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)The following table presents the Company’s income statement figures derived from spot charters for the year ended December 31, 2019: December 31,2019 Vessel revenues, net of commissions 55,701 Voyage expenses (33,109)Total 22,592 The following table presents the Company’s income statement figures derived from time charters for the year ended December 31, 2019: December 31,2019 Vessel revenues, net of commissions 30,798 Voyage expenses (3,532)Total 27,266 Charterers individually accounting for more than 10% of revenues during the years ended December 31, 2019, 2018 and 2017 were:Customer 2019 2018 2017 A 19% 26% 17%B 18% 21% - C 15% - - D - 11% 17%Total 52% 58% 34%As of December 31, 2019, the Company has entered into five long-term time charter agreements for periods of thirty-three to sixty months, with charterer’s option to extend all timecharters. The first time charter commenced on November 5, 2018. Two time charters commenced in the third quarter of 2019. The remaining two time charters commenced in the fourthquarter or 2019. During 2019, the Company successfully installed exhaust gas cleaning systems, or scrubbers, on these five vessels. A portion of the scrubbers cost was paid for by thecharterers, where such portion is provided for by the chartering agreements as an increased daily rate, which the Company accounts for on a straight-line basis over the minimumduration of each charter party. Amounts received in advance related to scrubber increased daily rates are recorded in Other current assets in the accompanying balance sheets.Office leaseIn April 2018, the Company moved into new office spaces. Under ASC 842, the lease is classified as an operating lease and a lease liability and right-of-use asset based on the presentvalue of future minimum lease payments have been recognized on the balance sheet. The monthly rent expense is recorded in general and administration expenses. The Company hasassessed the lease for impairment, and since no impairment indicators existed, no impairment charge was recorded.F-13Table of ContentsSeanergy Maritime Holdings Corp.Notes To The Consolidated Financial Statements(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)(q)Sale and Leaseback TransactionsIn accordance with ASC 842, the Company, as seller-lessee, determines whether the transfer of an asset should be accounted for as a sale in accordance with ASC 606. The existence ofan option for the seller-lessee to repurchase the asset precludes the accounting for the transfer of the asset as a sale unless both of the following criteria are met: (1) the exercise price ofthe option is the fair value of the asset at the time the option is exercised and (2) there are alternative assets, substantially the same as the transferred asset, readily available in themarketplace; and the classification of the leaseback as a finance lease or a sales-type lease, precludes the buyer-lessor from obtaining control of the asset. The existence of an obligationfor the Company, as seller-lessee, to repurchase the asset precludes accounting for the transfer of the asset as sale as the transaction would be classified as a financing arrangement bythe Company as it effectively retains control of the underlying asset. If the transfer of the asset meets the criteria of sale, the Company, as seller-lessee recognizes the transaction pricefor the sale when the buyer-lessor obtains control of the asset, derecognizes the carrying amount of the underlying asset and accounts for the lease in accordance with ASC 842. If thetransfer does not meet the criteria of sale, the Company does not derecognize the transferred asset, accounts for any amounts received as a financing arrangement and recognizes thedifference between the amount of consideration received and the amount of consideration to be paid as interest.(r)CommissionsCommissions, which include address and brokerage commissions, are recognized in the same period as the respective charter revenues. Address commissions to third parties areincluded in Commissions while brokerage commissions to third parties are included in Voyage expenses.(s)Vessel Voyage ExpensesVessel voyage expenses primarily consist of port, canal, bunker expenses and brokerage commissions that are unique to a particular charter and are paid for by the charterer under timecharter agreements, bareboat charters and other non-specified voyage expenses. Under a spot charter, the Company incurs and pays for certain voyage expenses, primarily consisting ofbunkers consumption, brokerage commissions, port and canal costs. Under ASC 606 and after implementation of ASC 340-40 “Other assets and deferred costs” for contract costs,incremental costs of obtaining a contract with a customer, and contract fulfillment costs, are capitalized and amortized as the performance obligation is satisfied, if certain criteria are met.The Company has adopted the practical expedient not to capitalize incremental costs when the amortization period (voyage period) is less than one year. Costs to fulfill the contract priorto arriving at the load port primarily consist of bunkers which are deferred and amortized during the voyage period. Voyage costs arising as performance obligation are expensed asincurred.(t)Repairs and MaintenanceAll repair and maintenance expenses, including major overhauling and underwater inspection expenses are expensed in the year incurred. Such costs are included in Vessel operatingexpenses.(u)Financing CostsUnderwriting, legal and other direct costs incurred with the issuance of long-term debt or to refinance existing debt are deferred and amortized to interest expense over the life of therelated debt using the effective interest method. Unamortized fees relating to loans repaid are expensed in the period the repayment is made. The Company presents unamortized deferredfinancing costs as a reduction of long-term debt in the accompanying balance sheets.F-14Table of ContentsSeanergy Maritime Holdings Corp.Notes To The Consolidated Financial Statements(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)(v)Income TaxesIncome taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized, when applicable, for the future tax consequences attributable todifferences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred taxassets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the effect ofincome tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50%likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest related to unrecognizedtax benefits in interest expense and penalties in general and administration expenses.Maritime Capital Shipping (HK) Limited, the Company’s management office in Hong Kong, is subject to Hong Kong profits tax at a rate of 16.5% on the estimated assessable profit forthe year. The estimated profits tax for the year ended December 31, 2019 is $NIL.Seanergy Management Corp. (“Seanergy Management”), the Company’s management company, established in Greece under Greek Law 89/67 (as amended to date), is subject to anannual contribution calculated on the total amount of foreign exchange annually imported and converted to Euros. The contribution to be paid in 2020 by Seanergy Management for 2019is estimated at $80.Two of the Company’s vessel-owning subsidiaries are registered in Malta since May 23, 2018. The subsidiaries are subject to a corporate flat tax rate.Pursuant to the Internal Revenue Code of the United States (the “Code”), U.S. source income from the international operations of ships is generally exempt from U.S. tax if the companyoperating the ships meets both of the following requirements: (a) the Company is organized in a foreign country that grants an equivalent exception to corporations organized in theUnited States and (b) either (i) more than 50% of the value of the Company’s stock is owned, directly or indirectly, by individuals who are “residents” of the Company’s country oforganization or of another foreign country that grants an “equivalent exemption” to corporations organized in the United States (50% Ownership Test) or (ii) the Company’s stock is“primarily and regularly traded on an established securities market” in its country of organization, in another country that grants an “equivalent exemption” to United Statescorporations, or in the United States (Publicly-Traded Test).Notwithstanding the foregoing, the regulations provide, in pertinent part, that each class of the Company’s stock will not be considered to be “regularly traded” on an establishedsecurities market for any taxable year in which 50% or more of the vote and value of the outstanding shares of such class are owned, actually or constructively under specified stockattribution rules, on more than half the days during the taxable year by persons who each own 5% or more of the value of such class of the Company’s outstanding stock (“5 PercentOverride Rule”).The Company and each of its subsidiaries did not qualify for this statutory tax exemption for the 2019 taxable year, as the Company did not meet the 50% Ownership Test requirementand was subject to the 5 Percent Override Rule for 2019.The Company estimates that since no more than the 50% of its shipping income will be treated as being United States source income, the effective tax rate is expected to be 2% andaccordingly it anticipates that the impact on its results of operations will not be material. Some of the charterparties contain clauses that permit the Company to seek reimbursement fromcharterers of any U.S. tax paid. The Company has sought reimbursement and has secured payment from most of its charterers. The Company’s U.S. federal income tax based on its U.S.source shipping income for 2019 2018 and 2017, taking into consideration charterers’ reimbursement, was $22, $NIL and $NIL, respectively.F-15Table of ContentsSeanergy Maritime Holdings Corp.Notes To The Consolidated Financial Statements(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)(w)Stock-based CompensationStock-based compensation represents vested and non-vested common stock granted to directors and employees for their services as well as to non-employees. The Company calculatesstock-based compensation expense for the award based on its fair value on the grant date and recognizes it on an accelerated basis over the vesting period. The Company assumes thatall non-vested shares will vest. The Company does not include estimated forfeitures in determining the total stock-based compensation expense because it estimates the forfeitures ofnon-vested shares to be immaterial. The Company re-evaluates the reasonableness of its assumption at each reporting period. (x)Earnings (Losses) per ShareBasic earnings (losses) per common share are computed by dividing net income (loss) available to Seanergy’s shareholders by the weighted average number of common sharesoutstanding during the period. Diluted earnings (losses) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised orconverted at the beginning of the periods presented, or issuance date, if later. The treasury stock method is used to compute the dilutive effect of warrants and shares issued under theEquity Incentive Plan. The if-converted method is used to compute the dilutive effect of shares which could be issued upon conversion of the convertible notes. Potential commonshares that have an anti-dilutive effect (i.e. those that increase income per share or decrease loss per share) are excluded from the calculation of diluted earnings per share.(y)Segment ReportingSeanergy reports financial information and evaluates its operations by total charter revenues and not by the length of vessel employment, customer, or type of charter. As a result,management, including the chief operating decision maker, reviews operating results solely by revenue per day and operating results of the fleet and thus, Seanergy has determined thatit operates under one reportable segment. Furthermore, when Seanergy charters a vessel to a charterer, the charterer is free to trade the vessel worldwide and, as a result, disclosure ofgeographic information is impracticable. (z)Fair Value MeasurementsThe Company follows the provisions of ASC 820, Fair Value Measurement, which defines fair value and provides guidance for using fair value to measure assets and liabilities. Theguidance creates a fair value hierarchy of measurement and describes fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transactionbetween market participants in the market in which the reporting entity transacts. In accordance with the requirements of accounting guidance relating to Fair Value Measurements, theCompany classifies and discloses its assets and liabilities carried at the fair value in one of the following categories:•Level 1: Quoted market prices in active markets for identical assets or liabilities;•Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data;•Level 3: Unobservable inputs that are not corroborated by market data.(aa)Debt Modifications and ExtinguishmentsThe Company follows the provisions of ASC 470-50, Modifications and Extinguishments, to account for all modifications or extinguishments of debt instruments, except debt that isextinguished through a troubled debt restructuring or a conversion of debt to equity securities of the debtor pursuant to conversion privileges provided in terms of the debt at issuance.This Subtopic also provides guidance on whether an exchange of debt instruments with the same creditor constitutes an extinguishment and whether a modification of a debt instrumentshould be accounted for in the same manner as an extinguishment. In circumstances where an exchange of debt instruments or a modification of a debt instrument does not result inextinguishment accounting, this Subtopic provides guidance on the appropriate accounting treatment. Costs associated with new loans or refinancing of existing loans, including feespaid to lenders or required to be paid to third parties on the lender’s behalf for obtaining new loans or refinancing existing loans, are recorded as deferred charges. Costs paid directly tothird parties are expensed as incurred. Deferred financing costs are presented as a deduction from the corresponding liability. Such fees are deferred and amortized to interest and financecosts during the life of the related debt using the effective interest method. Unamortized fees relating to loans repaid or refinanced, meeting the criteria of debt extinguishment, areexpensed in the period the repayment or refinancing is made.F-16Table of ContentsSeanergy Maritime Holdings Corp.Notes To The Consolidated Financial Statements(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)(ab)Convertible Notes and related Beneficial Conversion FeaturesThe convertible notes are accounted for in accordance with ASC 470-20 “Debt with Conversion and Other Options.” The terms of each convertible note included an embeddedconversion feature which provided for a conversion at the option of the holder into shares of common stock at a predetermined rate. The Company determined that the conversionfeatures were beneficial conversion features (“BCF”) pursuant to ASC 470-20. The Company considered the BCF guidance only after determining that the features did not need to bebifurcated under ASC 815 “Derivatives and Hedging” or separately accounted for under the cash conversion literature of ASC 470-20.Accounting for an embedded BCF in a convertible instrument requires that the BCF be recognized separately at issuance by allocating a portion of the proceeds equal to the intrinsicvalue of the BCF to additional paid-in capital, resulting in a discount on the convertible instrument. This discount is accreted from the date on which the BCF is first recognized throughthe stated maturity date of the convertible instrument using the effective yield method. If the intrinsic value of the BCF is greater than the proceeds allocated to the convertibleinstrument, the amount of the discount assigned to the BCF is limited to the amount of the proceeds allocated to the convertible instrument. The intrinsic value of the BCF is determinedas the number of shares converted from the convertible note times the positive difference between the fair value of the stock on the commitment date and the contractual conversionprice.(ac)Distinguishing Liabilities from EquityThe Company follows the provisions of ASC 480 “Distinguishing liabilities from equity” to determine the classification of certain freestanding financial instruments as either liabilities orequity. The Company in its assessment for the accounting of the warrants issued in connection with the May 13, 2019 public offering and the Jelco Private Placement has taken intoconsideration ASC 480 “Distinguishing liabilities from equity” and determined that the warrants should be classified as equity instead of liability. The Company further analyzed keyfeatures of the warrants to determine whether these are more akin to equity or to debt and concluded that the warrants are equity-like. In its assessment, the Company identified certainembedded features, examined whether these fall under the definition of a derivative according to ASC 815 applicable guidance or whether certain of these features affected theclassification. Derivative accounting was deemed inappropriate and thus no bifurcation of these features was performed. Upon exercise of the warrants, the holder is entitled to receivecommon shares. ASC 480 requires that a warrant which contains an obligation that may require the issuer to redeem the shares in cash, be classified as a liability and accounted for at fairvalue. No warrants were classified as liabilities.(ad)Going ConcernIn August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern. ASU No. 2014-15 provides guidance on management’s responsibility inevaluating whether there is substantial doubt about a company’s ability to continue as a going concern and on related required footnote disclosures. For each reporting period,management is required to evaluate whether there are conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern within one year fromthe date the financial statements are issued.F-17Table of ContentsSeanergy Maritime Holdings Corp.Notes To The Consolidated Financial Statements(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)Recent Accounting Pronouncements AdoptedOn January 1, 2019, the Company adopted ASU No. 2018-07, Compensation—Stock Compensation, which concerns improvements to nonemployee share-based payment accounting.The amendments in this Update affect all entities that enter into share-based payment transactions for acquiring goods and services from nonemployees. The amendments in this Updateexpand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic 718to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost (that is, the period of time over which share-based payment awardsvest and the pattern of cost recognition over that period). The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods orservices to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-basedpayments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted forunder Topic 606, Revenue from Contracts with Customers. The classification of equity-classified nonemployee share-based payment awards will continue to be subject to therequirements of Topic 718 unless modified after the good has been delivered, the service has been rendered, any other conditions necessary to earn the right to benefit from theinstruments have been satisfied, and the nonemployee is no longer providing goods or services. This eliminates the requirement to reassess classification of such awards upon vesting.The adoption of ASU No. 2018-07 did not have a material effect in the Company’s consolidated financial statements and disclosures.Recent Accounting Pronouncements Not Yet AdoptedIn June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This standard, includingthe codification improvements issued in November 2018, requires entities to measure all expected credit losses of financial assets held at a reporting date based on historical experience,current conditions, and reasonable and supportable forecasts in order to record credit losses in a more timely manner. ASU 2016-13 also amends the accounting for credit losses onavailable-for-sale debt securities and purchased financial assets with credit deterioration. In November 2018, FASB issued ASU 2018-19, Codification Improvements to topic 326,Financial Instruments-Credit Losses. The amendments in this update clarify that operating lease receivables are not within the scope of ASC 326-20 and should instead be accounted forunder the new leasing standard, ASC 842. In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments Credit Losses, FinancialInstruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825 Financial Instruments, the amendments of which clarify the modification of accounting for available forsale debt securities excluding applicable accrued interest, which must be individually assessed for credit losses when fair value is less than the amortized cost basis. In May 2019, theFASB issued ASU 2019-05, Financial Instruments—Credit Losses (Topic 326)—Targeted Transition Relief, which is the final version of Proposed Accounting Standards Update 2019-100—Targeted Transition Relief for Topic 326, Financial Instruments—Credit Losses, which has been deleted. This Update provides entities with an option to irrevocably elect the fair valueoption applied on an instrument-by-instrument basis for certain financial assets upon the adoption of Topic 326. The fair value option election does not apply to held-to-maturity debtsecurities. An entity that elects the fair value option should subsequently apply the guidance in Subtopics 820-10, Fair Value Measurement-Overall, and 825-10. In December 2019, FASBissued ASU No. 2019-11, Codification Improvements to Topic 326, Financial Instruments—Credit Losses. This update introduced an expected credit loss model for the impairment offinancial assets measured at amortized cost basis. That model replaces the probable, incurred loss model for those assets. The standard is effective for interim and annual reportingperiods beginning after December 15, 2019, although early adoption is permitted for interim and annual periods beginning after December 15, 2018. The Company has assessed all theexpected credit losses of its financial assets and the adoption of this ASU does not have a material impact on the Company’s consolidated financial statements.F-18Table of ContentsSeanergy Maritime Holdings Corp.Notes To The Consolidated Financial Statements(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework: Changes to the Disclosure Requirements for Fair Value Measurement, which improves the effectiveness offair value measurement disclosures. The amendments in the Update apply to all entities that are required under existing GAAP, to make disclosures about recurring and non-recurring fairvalue measurements. ASU No. 2018-13 is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2019. The Company hasassessed the impact of this new accounting guidance and the adoption of this ASU does not have a material impact on its consolidated financial statements and related disclosures. In November 2019, the FASB issued ASU 2019-08, Codification Improvements—Share-Based Consideration Payable to a Customer. The amendments in this update require that an entitymeasure and classify share-based payment awards granted to a customer by applying the guidance in Topic 718. The amount recorded as a reduction of the transaction price is requiredto be measured on the basis of the grant-date fair value of the share-based payment award in accordance with Topic 718. The grant date is the date at which a grantor (supplier) and agrantee (customer) reach a mutual understanding of the key terms and conditions of a share-based payment award. The classification and subsequent measurement of the award aresubject to the guidance in Topic 718 unless the share-based payment award is subsequently modified and the grantee is no longer a customer. The new guidance is effective in the firstquarter of 2020 for entities that have adopted ASU 2018-07. The Company has assessed the impact of this new accounting guidance and the adoption of this ASU does not have amaterial impact on its consolidated financial statements and the related disclosures.3.Going Concern: As described in Note 2, management is required under ASC 205-40, Going Concern, to evaluate whether there are conditions or events that raise substantial doubt about the Company’sability to continue as a going concern within one year from the date the financial statements are issued.As of December 31, 2019, the Company has scheduled installments and balloon payments that are due within one year as follows:•$65,523 final balloon installments with respect to three of the Company’s debt facilities.•$20,506 debt and other financial liabilities installments with respect to third party lenders.•$28,150 related party loans and notes installments and final balloon installments.The Company’s cash flow projections for the period after one year after the date that the financial statements are issued indicated that cash on hand and cash provided by operatingactivities will not be sufficient to cover the liquidity needs that become due within one year after the date that the financial statements are issued mainly due to the balloon payments thatare due within the respective period.On February 24, 2020, the Company received approval from the credit committee of one of its lenders to, inter alia, extend the maturities of two of its credit facilities to December 31, 2022.This approval is subject to completion of definitive documentation, following of which, the balloon installments due within one year after the issuance of the financial statements shallrefer to only two facilities and shall amount to $60,470 instead of $65,523.F-19Table of ContentsSeanergy Maritime Holdings Corp.Notes To The Consolidated Financial Statements(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)Any failure on the part of the Company to timely repay the balloons falling due within one year will result in the lenders demanding payment, which can potentially result in paymentdefault that would trigger cross-default provisions in the Company’s remaining facilities. As such, as of December 31, 2019, the Company has classified the long-term portion of its bankdebt and other financial liabilities in current liabilities and reported a working capital deficit of $215,354. Since as of the date of the issuance of these financial statements no definite planhas crystalized, the above conditions raised substantial doubts about the Company's ability to continue as a going concern.Management plans to settle the loan interest and scheduled loan repayments with cash on hand and cash expected to be generated from operations. Concerning the final balloonpayments, management has engaged in advanced discussions with its existing lenders which it believes they will have a positive outcome and is exploring, on an ongoing basis, severalalternatives, including refinancing the existing third party and related party facilities and extending the respective maturities, issuing additional debt or equity securities or a combinationof the foregoing. In addition, in the event that none of the above materialize, Management may consider the sale of all the underlying collaterals (i.e., four vessels) and repay in full theloans the maturity of which falls within 2020, rectifying as such the underlying defaults and consequently the cross default provisions that might be triggered under the remainingfacilities. These alternatives are supported by the fair market valuation of the vessels, as assessed by third party valuators, which cover sufficiently the underlying loans.The consolidated financial statements have been prepared assuming that the Company will continue as a going concern. Accordingly, they do not include any adjustments that mightresult in the event the Company is unable to continue as a going concern.4.Transactions with Related Parties:a.Securities Purchase Agreement:On May 9, 2019, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Jelco Delta Holding Corp., or Jelco, a company affiliated with ClaudiaRestis, who is the Company’s principal shareholder, in exchange for, among other things, the full and final settlement of certain unpaid interest and the neutralization of the interest rateunder the Jelco Notes and the Jelco Loans (see below) for the period of April 1, 2019 until December 31, 2019 inclusive and a waiver of a mandatory prepayment requirement under theFourth Jelco Loan (Note 4(c) & 11). In particular, in exchange for: (a) 621,958 Units (Note 11), Jelco settled $2,115 of accrued unpaid interest through March 31, 2019 and (b) 1,201,571Units, Jelco (i) amended the interest rate at 0% per annum under each of the Jelco Notes and Jelco Loans for the period between April 1, 2019 and December 31, 2019 inclusive, resultingin an elimination of interest payments in an aggregate amount of $3,846 (which was accounted for as a deferred finance cost), and (ii) waived the mandatory prepayment obligation underthe Fourth Jelco Loan to prepay the full or any part of the loan by utilizing at least 25% of the net proceeds of any public offering of securities, resulting in a deferred finance cost of$239. The $2,115 accrued unpaid interest settled was written off and an equal amount was recorded in equity at a price of $3.40 per unit which was determined as the fair value of the unitsat the date of the transaction, by reference to the public offering of units (Note 11) that took place concurrently with the private placement. In this respect, no gain or loss was recognizedin the accompanying consolidated financial statements in relation with this transaction. The Company considered the guidance under ASC 470-50 “Debt Modifications andExtinguishments” regarding the elimination of interest payments and the deferred finance cost for the waiver of the prepayment of $3,846 and $239, respectively. Such amounts weredeemed equivalent to the fair value of the shares issued to Jelco under the Purchase Agreement. The transaction was accounted for as debt modification, and as such, both amountswere recorded in equity and were deferred and amortized over the duration of the related facilities (and presented on the balance sheet against the respective balances as “net of deferredfinance costs”).F-20Table of ContentsSeanergy Maritime Holdings Corp.Notes To The Consolidated Financial Statements(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)b.Convertible Notes:March 12, 2015 - $4,000 Convertible Note (First Jelco Note)On March 12, 2015, the Company issued a convertible note of $4,000 to Jelco for general corporate purposes. The aggregate outstanding principal is repayable in December 2020. TheFirst Jelco Note is secured by a guarantee from the Company’s wholly-owned subsidiary, Emperor Holding Ltd. (“Emperor”), which is the holding company of the vessel-owningsubsidiary that owns the Lordship and of the bareboat charterer of the Knightship. On March 26, 2019, the Company and Jelco amended the First Jelco Note, in order to, among otherthings, (i) extend the maturity to December 31, 2020 and (ii) provide that the aggregate outstanding principal amount along with accrued interest shall be repaid in one bullet payment onthe maturity date. On May 29, 2019, the Company and Jelco further amended the First Jelco Note, in order to reflect the changes agreed with Jelco in the Purchase Agreement: (i) interestof $155 unpaid and accrued up to March 31, 2019 inclusive was deemed fully and finally settled, (ii) the interest rate was amended to 0% per annum for the period between April 1, 2019and December 31, 2019 inclusive and (iii) the interest rate from January 1, 2020 until maturity was set at three-month LIBOR plus a margin of 5% with quarterly interest payments. As ofDecember 31, 2019, $3,800 was outstanding under the First Jelco Note. September 27, 2017 - $13,750 Convertible Note (Third Jelco Note) On September 27, 2017, the Company issued a convertible note of $13,750 to Jelco for, inter alia, general corporate purposes. The aggregate outstanding principal is repayable inDecember 2022. The Third Jelco Note is secured by a second preferred mortgage and second priority general assignment covering earnings, insurances and requisition compensationover the Partnership and a guarantee from the Company’s vessel-owning subsidiary that owns the Partnership; all cross collateralized with the First and the Second Jelco Loans (seebelow) and secured by a guarantee from Emperor. On February 13, 2019, the Company and Jelco amended the Third Jelco Note, in order to, among other things, (i) extend the note’smaturity to December 31, 2022, (ii) provide that the aggregate outstanding principal amount along with unpaid and accrued interest shall be repaid in one bullet payment on the maturitydate and (iii) record the second priority securities and the first guarantee mentioned above. The second priority mortgage, second priority general assignment covering earnings,insurances and requisition compensation over the Partnership and the guarantee issued from the vessel’s owning subsidiary were executed on February 15, 2019. Additionally, anoption was given to the Company to prepay at any time the whole or any part of the note in a number of fully paid and non-assessable shares in the Company equal to an amount of thenote being prepaid divided by a price per share to be agreed with Jelco. On May 29, 2019, the Company and Jelco further amended the Third Jelco Note, in order to reflect the changesagreed with Jelco in the Purchase Agreement: (i) interest of $540 unpaid and accrued up to March 31, 2019 inclusive was deemed fully and finally settled, (ii) the interest rate wasamended to 0% per annum for the period between April 1, 2019 and December 31, 2019 inclusive and (iii) the interest rate from January 1, 2020 until the note’s maturity was set at three-month LIBOR plus a margin of 5% with quarterly interest payments. As of December 31, 2019, $13,750 was outstanding under the Third Jelco Note. The debt movement of the First and Third Jelco Notes is presented below: Applicablelimit Debtdiscount Accumulateddeficit Debt Balance, December 31, 2017 17,750 (14,389) 1,217 4,578 Amortization (Note 12) - - 2,384 2,384 Balance, December 31, 2018 17,750 (14,389) 3,601 6,962 Amortization (Note 12) - - 2,200 2,200 Balance, December 31, 2019 17,750 (14,389) 5,801 9,162 F-21Table of ContentsSeanergy Maritime Holdings Corp.Notes To The Consolidated Financial Statements(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)The equity movement of the First and Third Jelco Notes is presented below: Additionalpaid-incapital Balance, December 31, 2017 14,189 Balance, December 31, 2018 14,189 Balance, December 31, 2019 14,189 September 7, 2015 - $24,665 Revolving Convertible Note (Second Jelco Note)On September 7, 2015, the Company issued a revolving convertible note of $6,765 (the “Applicable Limit”) to Jelco for general corporate purposes. Following twelve amendments to theSecond Jelco Note between December 2015 and May 2019, the Applicable Limit was raised to $24,665. Following the eleventh amendment on March 26, 2019, a drawdown request of upto $3,500 can be made by April 10, 2020 (the “Final Revolving Advance Date”). If the request is not made by the Final Revolving Advance Date, the advance will not be available to bedrawn. The aggregate outstanding principal is repayable in December 2022. The Second Jelco Note is secured by a guarantee from Emperor. On May 29, 2019, the Company and Jelcoamended the Second Jelco Note, in order to reflect the changes agreed with Jelco in the Purchase Agreement: (i) interest of $901 unpaid and accrued up to March 31, 2019 inclusive wasdeemed fully and finally settled, (ii) the interest rate was amended to 0% per annum for the period between April 1, 2019 and December 31, 2019 inclusive and (iii) the interest rate fromJanuary 1, 2020 until the note’s maturity was set at three-month LIBOR plus a margin of 5% with quarterly interest payments. As of December 31, 2019, $21,165 was outstanding underthe Second Jelco Note.The debt movement of the Second Jelco Note is presented below: Applicablelimit Debtdiscount Accumulateddeficit Debt Balance, December 31, 2017 21,165 (21,165) 2,207 2,207 Additions 3,500 - - - Amortization (Note 12) - - 1,955 1,955 Balance, December 31, 2018 24,665 (21,165) 4,162 4,162 Amortization (Note 12) - - 1,513 1,513 Balance, December 31, 2019 24,665 (21,165) 5,675 5,675 The equity movement of the Second Jelco Note is presented below: Additionalpaid-incapital Balance, December 31, 2017 21,165 Balance, December 31, 2018 21,165 Balance, December 31, 2019 21,165 F-22Table of ContentsSeanergy Maritime Holdings Corp.Notes To The Consolidated Financial Statements(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)The Company refers to the First Jelco Note, the Second Jelco Note and the Third Jelco Note as the “Jelco Notes”. The Company may, by giving five business days prior written notice to Jelco at any time, prepay the whole or any part of the Jelco Notes in cash or, subject to Jelco’s prior writtenagreement on the price per share, in a number of fully paid and nonassessable shares of the Company equal to the amount of the note(s) being prepaid divided by the agreed price pershare. At Jelco’s option, the Company’s obligation to repay the principal amount(s) under the Jelco Notes or any part thereof may be paid in common shares at a conversion price of$13.50 per share. Jelco has also received customary registration rights with respect to any shares to be received upon conversion of the Jelco Notes.c.Loan Agreements: First Jelco Loan originally entered into on October 4, 2016 On October 4, 2016, the Company entered into a loan facility with Jelco to partly finance the acquisition of the Lordship and Knightship. As amended, the aggregate amount borrowedwas $12,800. As further amended, the facility is repayable in one bullet payment together with accrued interest on the maturity date. The Company is the borrower under the First JelcoNote. On February 13, 2019, the Company and Jelco amended and restated the First Jelco Loan, in order to, among other things, extend the final repayment date to June 30, 2020. On May29, 2019, the Company and Jelco further amended the First Jelco Loan in order to reflect the changes agreed with Jelco in the Purchase Agreement: (i) interest of $159 unpaid and accruedup to March 31, 2019 inclusive was deemed fully and finally settled, (ii) the interest rate was amended to 0% per annum for the period between April 1, 2019 and December 31, 2019inclusive, and (iii) the interest rate from January 1, 2020 until maturity was set at three-month LIBOR plus a margin of 8.5%. The First Jelco Loan is secured by a second preferred mortgage and second priority general assignment covering earnings, insurances and requisition compensation over thePartnership and a guarantee from the vessel-owning subsidiary of the Partnership, all cross collateralized with the Third Jelco Note and the Second Jelco Loan, and a guarantee fromEmperor. As of December 31, 2019, an amount of $5,900, gross of deferred financing costs, was outstanding under the First Jelco Loan. Second Jelco Loan originally entered into on May 24, 2017 On May 24, 2017, the Company entered into a $16,200 loan facility with Jelco to partially finance the acquisition of the Partnership. On February 13, 2019, the Company and Jelcoamended the Second Jelco Loan, in order to, among other things, extend the final repayment date to December 30, 2020. On May 29, 2019, the Company and Jelco further amended theSecond Jelco Loan to reflect the changes agreed with Jelco in the Purchase Agreement: (i) interest of $354 unpaid and accrued up to March 31, 2019 was deemed fully and finally settled,(ii) the interest rate was amended to 0% per annum for the period between April 1, 2019 and December 31, 2019 inclusive and (iii) the interest rate from January 1, 2020 until maturity wasset at three-month LIBOR plus a margin of 6.0%. The Second Jelco Loan is secured by a second preferred mortgage and second priority general assignment covering earnings,insurances and requisition compensation over the Partnership and a guarantee from the vessel-owning subsidiary of the Partnership; all cross collateralized with the Third Jelco Noteand the First Jelco Loan, and a guarantee from Emperor. As of December 31, 2019, an amount of $11,450, gross of deferred financing costs, was outstanding under the Second Jelco Loan. Third Jelco Loan originally entered into on April 10, 2018 On April 10, 2018, the Company entered into a $2,000 loan facility with Jelco for working capital purposes which was refinanced on March 27, 2019 by the Fourth Jelco Loan, describedbelow. All obligations thereunder, including unpaid interest of $96 as of December 31, 2018 (which was written off in the year ended December 31, 2019 and was recorded in equity underthe provisions of ASC 470-50), were irrevocably and unconditionally discharged pursuant to the deed of release of March 27, 2019.F-23Table of ContentsSeanergy Maritime Holdings Corp.Notes To The Consolidated Financial Statements(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)Fourth Jelco Loan originally entered into on March 26, 2019On March 26, 2019, the Company entered into a $7,000 loan facility with Jelco, the proceeds of which were utilized (i) to refinance the Third Jelco Loan and (ii) for general corporatepurposes. The Company drew down the entire $7,000 on March 27, 2019. The facility has a maturity date of September 27, 2020 and was repayable through one installment of $1,000 dueon January 5, 2020 and a balloon installment of $6,000 payable at maturity. If the balance of Cash and Cash Equivalents (including Restricted Cash) as of December 31, 2019 was lowerthan $7,500, the Company had the option to request the deferral of the first repayment installment to the balloon installment; the Company repaid the $1,000 to Jelco in January 2020. OnMay 29, 2019, the Company and Jelco amended the Fourth Jelco Loan to reflect the changes agreed with Jelco in the Purchase Agreement: (i) interest of $6 unpaid and accrued up toMarch 31, 2019 inclusive was deemed fully and finally settled, (ii) the interest rate was amended to 0% per annum for the period between April 1, 2019 and December 31, 2019 inclusive,(iii) the interest rate from January 1, 2020 until maturity was set at 6.0% per annum and (iv) the mandatory obligation to prepay the full or any part of the Fourth Jelco Loan by utilizing anamount equal to not less than 25% of the net proceeds of any public offering of securities was waived. The Fourth Jelco Loan is secured by a guarantee from Emperor. As of December31, 2019, an amount of $7,000, gross of deferred financing costs, was outstanding under the Fourth Jelco Loan.The Company refers to the First Jelco Loan, the Second Jelco Loan and the Fourth Jelco Loan as the “Jelco Loans”.d.Frontier Services Agreement: On December 19, 2019, the Company entered into a services agreement with Frontier Tankers Corp., or Frontier, a corporation controlled by Claudia Restis, engaged in the ownership oftanker vessels through wholly owned vessel-owning subsidiaries. Pursuant to the Frontier Services Agreement, the Company and Seanergy Management assist Frontier and Frontier’svessel-owning subsidiaries in their dealings with third parties and provide certain administration and management services. Each of Frontier’s vessel-owning subsidiaries shall paySeanergy Management a quarterly fee of $0.90.F-24Table of ContentsSeanergy Maritime Holdings Corp.Notes To The Consolidated Financial Statements(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)5.Cash and Cash Equivalents and Restricted Cash:The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the balance sheet that sum to the total of the same such amounts shown inthe statement of cash flows: December 31,2019 December 31,2018 Cash and cash equivalents 13,654 6,684 Restricted cash 900 260 Restricted cash, non-current - 500 Total 14,554 7,444 Restricted cash as of December 31, 2019 includes $500 of minimum liquidity requirements as per the New ATB Loan Facility (Note 8), $350 in a dry-docking reserve account as per theNew ATB Loan Facility and $50 of restricted deposits pledged as collateral regarding credit cards balances with one of the Company’s financial institutions. Minimum liquidity, notlegally restricted, as of December 31, 2019, of $4,000 as per the Company’s credit facilities covenants, calculated as $500 per owned vessel, is included in Cash and cash equivalents. Anaggregate amount of $2,925, not legally restricted, as per the sale and leaseback transactions is included in Cash and cash equivalents as of December 31, 2019 (Note 8). An aggregateamount of $200, not legally restricted, as per the New ATB Loan Facility, is included in Cash and cash equivalents as of December 31, 2019. Restricted cash as of December 31, 2018includes $500 of minimum liquidity requirements as per the New ATB Loan Facility (Note 8), $210 in a dry-docking reserve account as per the New ATB Loan Facility and $50 of restricteddeposits pledged as collateral regarding credit cards balances with one of the Company’s financial institutions. Minimum liquidity, not legally restricted, as of December 31, 2018, of$4,000 as per the Company’s credit facilities covenants, calculated as $500 per owned vessel, is included in Cash and cash equivalents in the accompanying consolidated balance sheets.An aggregate amount of $2,925, not legally restricted, as per the sale and leaseback transactions is included in Cash and cash equivalents in the accompanying consolidated balancesheets as of December 31, 2018 (Note 8).6.Inventories:The amounts in the accompanying consolidated balance sheets are analyzed as follows: December 31,2019 December 31,2018 Lubricants 522 556 Bunkers 3,340 4,733 Total 3,862 5,289 F-25Table of ContentsSeanergy Maritime Holdings Corp.Notes To The Consolidated Financial Statements(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)7.Vessels, Net: The amounts in the accompanying consolidated balance sheets are analyzed as follows: December 31,2019 December 31,2018 Cost: Beginning balance 270,814 275,582 - Additions 21,466 28,789 - Disposals - (26,290)- Impairment charges - (7,267)Ending balance 292,280 270,814 Accumulated depreciation: Beginning balance (27,600) (20,852)- Additions (10,899) (10,793)- Disposals - 4,045 Ending balance (38,499) (27,600) Net book value 253,781 243,214 On August 31, 2018, the Company entered into an agreement with an unaffiliated third party for the purchase of one second hand Capesize vessel, the Fellowship, for a gross purchaseprice of $28,700. The vessel was delivered to the Company on November 22, 2018. The acquisition of the vessel was financed through the Amended and Restated UniCredit Loan Facility(Note 8) and by cash on hand. On September 20, 2018, the Company entered into two separate agreements with unaffiliated third parties for the sale of its two Supramax vessels, namely the Gladiatorship and theGuardianship for a gross sale price of $10,960 and $11,700, respectively. The Gladiatorship and the Guardianship were delivered to their new owners on October 11, 2018 and onNovember 19, 2018, respectively. Proceeds of $9,505 from the sale of Gladiatorship and $10,332 from the sale of Guardianship were retained with UniCredit to fund the acquisition ofFellowship. The Gladiatorship and the Guardianship were impaired since their carrying amount on the sale agreement date was higher than their fair value less cost to sell inaccordance with the provisions of ASC 360. Accordingly, an impairment loss of $7,267 was recognized in the accompanying consolidated statements of loss. The fair value of the vesselswas determined based on the agreed sale prices (Note 9). During 2019, the Company installed exhaust gas cleaning systems, or scrubbers, on five of its vessels. The cost of these scrubbers amounted to $21,435 in the aggregate. The cost of thescrubbers was accounted as major improvement and was capitalized to vessels’ cost and will be depreciated over the remaining useful life of each vessel. Additionally, an amounts of $31and $89 of expenditures were capitalized during the years ended December 31, 2019 and December 31, 2018, respectively. As of December 31, 2019, all vessels, except for the Knightship and the Championship that are financed through other financial liabilities (sale and leaseback agreements), are mortgagedto secured loans of the Company (Note 8).F-26Table of ContentsSeanergy Maritime Holdings Corp.Notes To The Consolidated Financial Statements(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)8.Long-Term Debt and Other Financial Liabilities: The amounts in the accompanying consolidated balance sheets are analyzed as follows: December31,2019 December 31,2018 Long-term debt and other financial liabilities 185,509 198,607 Less: Deferred financing costs (2,443) (3,386)Total 183,066 195,221 Less - current portion (183,066) (16,195)Long-term portion - 179,026 Long-term debt On March 6, 2015, the Company entered into a loan agreement with Alpha Bank A.E., for a secured loan facility in an amount of $8,750 or the Leader Alpha Bank Loan Facility. The loanwas used to partially finance the acquisition of the Leadership. On July 1, 2019, the Company entered into a supplemental agreement to the facility, whereby, among other things, (i) theamount of the four scheduled quarterly amortization payments falling due within 2019 was reduced from $250 to $100 and (ii) an amount of $503 due to be repaid in the first quarter of2019 was deferred to the final balloon installment due on March 17, 2020. As of December 31, 2019, the amount outstanding under the facility was $5,303. On September 1, 2015, the Company entered into a loan agreement with Hamburg Commercial Bank AG, formerly known as HSH Nordbank AG, for a secured loan facility of $44,430, orthe HCOB Facility. The loan was fully drawn down in 2015 and was used to pay for the acquisition of the Geniuship and the Gloriuship. The loan is repayable in quarterly installmentsbeing approximately $1,049 each, along with a balloon installment of $28,837 payable on the final maturity date, June 30, 2020. As of December 31, 2019, the amount outstanding underthe facility was $30,936. On September 11, 2015, the Company entered into a facility agreement with UniCredit Bank AG, for a secured loan facility of $52,705. The loan was fully drawn down in 2015 and wasmade available to partially finance the acquisition of the Premiership, Gladiatorship and Guardianship. On November 22, 2018, the Company entered into an amendment andrestatement of the facility, referred to as the Amended and Restated UniCredit Loan Facility, in order to (i) release the respective vessel-owning subsidiaries of the Gladiatorship and theGuardianship as borrowers and (ii) include as replacement borrower the vessel-owning subsidiary of the Fellowship. On July 3, 2019, the Company entered into a supplementalagreement to the Amended and Restated UniCredit Bank Loan Facility. Pursuant to its terms, among other things: (i) $2,208 of installments originally falling due within 2019 were deferredto the balloon installment on December 28, 2020, (ii) the applicable margin was increased by 1% from 3.20% to 4.20% with effect from March 26, 2019 until December 27, 2019 inclusiveand reinstated to the original levels subsequently and (iii) the requirement for each borrower to hold minimum liquidity of $500 cash was cancelled. As of December 31, 2019, the amountoutstanding under this facility was $37,841. On November 4, 2015, the Company entered into a loan agreement with Alpha Bank A.E., for a secured loan facility of $33,750, or the Squire Alpha Bank Loan Facility. The loan was usedto partially finance the acquisition of the Squireship. On July 1, 2019, the Company entered into a supplemental agreement to the Squire Alpha Bank Loan Facility. Pursuant to its terms,among other things: (i) the amount of the eight scheduled quarterly amortization payments falling due within 2020 and 2021 was increased from $844 to $919 (and as a result the ballooninstallment was reduced accordingly) and (ii) the requirement for the borrower to hold minimum liquidity of $500 cash was cancelled for 2019. The loan is repayable in eight quarterlyinstallments of $919 each along with a balloon installment of $20,250 payable on the final maturity date, November 10, 2021. As of December 31, 2019, the amount outstanding under thisfacility was $27,000.F-27Table of ContentsSeanergy Maritime Holdings Corp.Notes To The Consolidated Financial Statements(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)On December 2, 2015, the Company entered into a facility agreement with Natixis, for a secured loan facility of $39,412. The loan was used to partially finance the acquisition of theChampionship. On September 29, 2017, Natixis entered into a deed of release and fully discharged the then outstanding balance of $35,412 of the secured term loan facility obligations tothe lender for a total settlement amount of $24,000 on September 29, 2017. The first-priority mortgage over the Championship and all other securities created in favor of Natixis wereirrevocably and unconditionally released pursuant to the deed of release. In the third quarter of 2017, the Company recognized a gain from the Natixis refinancing of $11,392, net of $6refinancing charges and $14 write-off of unamortized deferred financing charges which is presented in “Gain on debt refinancing” in the consolidated statements of loss. On May 24, 2017, the Company entered into a loan agreement with Amsterdam Trade Bank N.V. for a secured loan facility of up to $18,000 to partially finance the acquisition of thePartnership. On September 25, 2017, in order to partially fund the refinancing of the previous loan facility with Natixis dated December 2, 2015, the facility was amended and restated (the“Amended and Restated ATB Loan Facility”), increasing the loan amount by an additional tranche of $16,500, or Tranche B. The amendment and restatement of the facility did not alterthe interest rate, the maturity date, the amortization and the repayment terms of the existing tranche under the loan facility, or the financial covenants applicable to the Company asguarantor. On November 7, 2018, ATB entered into a deed of release with respect to the Championship, releasing the underlying borrower in full after the settlement of the outstandingbalance of $15,700 pertaining to the specific vessel tranche. The first-priority mortgage over the Championship and all other securities created in favor of ATB for the specific vessel’stranche were irrevocably and unconditionally released pursuant to the deed of release. On February 15, 2019, Amsterdam Trade Bank N.V. entered into a further deed of release withrespect to the Partnership resulting in a complete release of the facility agreement after full settlement of the outstanding balance of $16,390.On February 13, 2019, the Company entered into a new loan facility with ATB, or the New ATB Loan Facility, in order to (i) refinance the existing indebtedness over the Partnershipunder the Amended and Restated ATB Loan Facility and (ii) for the financing of installation of open loop scrubber systems on the Squireship and Premiership. The New ATB LoanFacility is divided in Tranche A, relating to the refinancing of the Partnership, and Tranches B and C for the financing of the scrubber systems on the Squireship and the Premiership,respectively. Pursuant to the terms of the facility, Tranche A is repayable in sixteen equal quarterly installments being $200 each starting from February 26, 2019 and a balloon payment of$13,190 payable on November 27, 2022 and each of Tranche B and C is repayable in one quarterly installment of $162.5 and eleven quarterly installments of $189.8 starting from November28, 2019 until August 26, 2022. As of December 31, 2019, the amount outstanding under this facility was $19,765.On June 11, 2018, the Company entered into a $24,500 loan agreement with Blue Ocean maritime lending funds managed by EnTrustPermal for the purpose of refinancing the outstandingindebtedness of the Lordship under the previous loan facility with NSF dated November 28, 2016. The facility matures in June 2023 and can be extended until June 2025 subject to certainconditions. Specifically, the borrower has the right to sell the vessel back to the lender at a pre-agreed price of $20,800 on the fifth anniversary of the loan utilization (“Year-5 PutOption”). If the borrower elects to exercise the Year-5 Put Option, the lender has the right to extend the termination date of the loan by a further two years, in which case the exercise ofthe Year-5 Put Option by the borrower shall be cancelled in its entirety. Furthermore, the borrower has the right to sell the ship back to the lender at a pre-agreed price of $15,000 on theseventh anniversary of the loan utilization (“Year-7 Put Option”). If the borrower elects to exercise the Year-7 Put Option then the lenders will be obliged to purchase the ship at the pre-agreed price. The loan facility bears a weighted average all-in interest rate of 11.4% and 11.2% assuming a maturity date in June 2023 or in June 2025, respectively. The principal obligationamortizes in 20 or 28 quarterly installments, with a balloon payment of $15,300 or $9,500 due at maturity, assuming a maturity date in June 2023 or in June 2025, respectively. As ofDecember 31, 2019, the amount outstanding under this facility was $23,300.F-28Table of ContentsSeanergy Maritime Holdings Corp.Notes To The Consolidated Financial Statements(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)Each of the facilities mentioned above is secured by a first priority mortgage over the respective vessel. The Squire Alpha Bank Loan Facility is additionally secured by a second prioritymortgage over the Leadership. As of December 31, 2019, the Company was in compliance with all covenants relating to its loan facilities, except for the security cover ratio covenantunder the HCOB Loan Facility. Such covenant breach can be rectified by the Company by paying the lender an amount equal to the difference of the value secured and the securityrequirement of approximately $936, or by providing additional security of $1,123 (Note 3). Even though as of the date of issuance of the consolidated financial statements the lendershave not declared an event of default under the loan agreement, the breach of this financial covenant constitutes an event of default with the passage of time and under certaincircumstances and could result in the lender requiring immediate repayment of the outstanding loan, which matures in late June 2020. Management believes that the lender will notdemand payment of the loan before its maturity, since the Company will continue to pay interest and loan installments, as they fall due under the existing loan facility.Other Financial Liabilities - Sale and Leaseback TransactionsOn June 28, 2018, the Company entered into a $26,500 sale and leaseback agreement for the Knightship with Hanchen Limited (“Hanchen”), an affiliate of AVIC International Leasing Co.,Ltd., for the purpose of refinancing the outstanding indebtedness of the Knightship under the previous loan facility with NSF dated November 28, 2016. The Company’s wholly-ownedsubsidiary, Knight Ocean Navigation Co (“Knight”) sold and chartered back the vessel on a bareboat basis for an eight year period, having a purchase obligation of $5,299 at the end ofthe eighth year and having the option to repurchase the Knightship at any time following the second anniversary of the bareboat charter. Under ASC 842-40, the transaction wasaccounted for as a financial liability. The bareboat charter is secured by a general assignment covering earnings, insurances and requisition compensation, an account pledge agreement,a share pledge agreement of the shares of the Charterer, technical and commercial managers’ undertakings and a guarantee from the Company. Of the $26,500, $18,550 were cashproceeds, $6,625 was withheld by Hanchen as an upfront charterhire upon the delivery of the vessel, and an amount of $1,325, or Charterer’s Deposit, included in “Deposits assets, non-current” in the consolidated balance sheet, was given as a deposit by Knight to Hanchen upon the delivery of the vessel in order to secure the due observance and performance byKnight of its obligations and undertakings as per the sale and leaseback agreement. The Charterer’s Deposit can be set off against the balloon payment at maturity. The bareboat charterrequires Knight to maintain an amount of $1,325 (Note 5) until June 28, 2020 or if earlier, a sub-charter in form and substance acceptable to Hanchen is available. The charterhire principalbears interest at LIBOR plus a margin of 4% and amortizes in thirty-two consecutive equal quarterly installments of approximately $456 along with a balloon payment of $5,299 at maturityon June 29, 2026. The Charterer is required to maintain a value maintenance ratio (as defined in the additional clauses of the bareboat charter) of at least 120% of the charterhire principalminus the Charterer’s Deposit and the additional amount of $1,325 (Note 5). The charterhire principal, as of December 31, 2019, was $17,142.On November 7, 2018, the Company entered into a $23,500 sale and leaseback agreement for the Championship with Cargill International SA (“Cargill”) for the purpose of refinancing theoutstanding indebtedness of the Championship under the Amended and Restated ATB Loan Facility. The Company sold and chartered back the vessel from Cargill on a bareboat basisfor a five year period, having a purchase obligation at the end of the fifth year. Under ASC 842-40, the transaction was accounted for as a financial liability. The Company is required tomaintain an amount of $1,600 which may be set-off against the vessel repurchase price (Note 5). Moreover, under the subject sale and leaseback agreement, an additional tranche wasprovided to the Company for an amount of up to $2,750 for the purpose of financing the cost associated with the acquisition and installation on board the Championship of an openloop scrubber system. The subject tranche has been placed in an escrow account and is made available gradually subject to certain progress milestones. As of December 31, 2019, $248remained from this additional tranche, which is included in “Other current assets” in the consolidated balance sheet. The cost of the financing is equivalent to an expected fixed interestrate of 4.71% for five years. The sale and leaseback agreement does not include any financial covenants or security value maintenance provisions. The Company has continuous optionsto buy back the vessel during the whole five-year sale and leaseback period at predetermined prices as set forth in the agreement and at the end of which period it has a purchaseobligation at $14,051. Additionally, at the time of purchase, if the market value of the vessel is greater than a floor price, as set forth in the agreement, the Company will pay to Cargill 20%of the difference between the market price and the floor price. The floor price started at $30,000 on November 7, 2018 and reduces to to $22,773 at the end of the five year term. TheCompany has concluded that such contingent payment shall not be accrued in the consolidated financial statements, since information available does not indicate that it is probable thata liability has been incurred (i.e., buy back option) as of the latest balance sheet date and cannot be estimated. Moreover, as part of the transaction, the Company issued 120,000 of itscommon shares to Cargill which were subject to customary statutory registration requirements. The fair market value of the shares on the date issued to Cargill was $1,541 and amortizeover the lease term using the effective interest method. The unamortized balance is accounted for as a deferred finance cost and is classified in other financial liabilities on theconsolidated balance sheet. The charterhire principal amortizes in sixty monthly installments averaging approximately $167 each along with a balloon payment of $14,051, including theadditional scrubber tranche, at maturity on November 7, 2023. The charterhire principal and the scrubber tranche, as of December 31, 2019, was $21,515 and $2,708, respectively.F-29Table of ContentsSeanergy Maritime Holdings Corp.Notes To The Consolidated Financial Statements(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)All of the Company’s secured facilities (i.e., long-term debt and other financial liabilities) bear either floating interest at LIBOR plus a margin or fixed interest.Certain of the Company’s long-term debt and other financial liabilities contain financial covenants and undertakings requiring the Company to maintain various financial ratios, including:•a minimum earnings before interest, taxes, depreciation and amortization (“EBITDA”) to interest coverage ratio;•a minimum borrower’s liquidity;•a minimum guarantor’s liquidity;•a security coverage requirement; and•a leverage ratio.The Leader and Squire Alpha Bank Loan Facilities place a restriction on the Company’s ability to distribute dividends to its shareholders, pursuant to which the amount of the dividendsso declared shall not exceed 50% of the Company’s net income except in case the cash and marketable securities are equal or greater than the amount required to meet the Company’sconsolidated debt installments and interest payments until maturity for the Leader Alpha Bank Loan Facility and for the following eighteen-month period for the Squire Alpha Bank LoanFacility. Pursuant to the terms of the commitment letters signed on February 24, 2020, the Company expects the restrictions on its ability to distribute dividends to be removed (Note 15).At December 31, 2019, eight of the Company’s owned vessels, having a net carrying value of $195,993, were subject to first and second priority mortgages as collateral to their long-termdebt facilities. In addition, the Company’s two bareboat chartered vessels, having a net carrying value of $57,788 at December 31, 2019, have been financed through other financialliabilities (i.e., sale and leaseback agreements).F-30Table of ContentsSeanergy Maritime Holdings Corp.Notes To The Consolidated Financial Statements(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)The annual principal payments required to be made after December 31, 2019, without taking into consideration the classification of all long-term debt and other financial liabilities ascurrent as discussed in Note 3, are as follows:Twelve month periods ending Amount December 31, 2020 82,726 December 31, 2021 14,058 December 31, 2022 43,960 December 31, 2023 21,011 Thereafter 23,754 Total 185,509 9.Financial Instruments: The guidance for fair value measurements applies to all assets and liabilities that are being measured and reported on a fair value basis. This guidance enables the reader of the financialstatements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values.The same guidance requires that assets and liabilities carried at fair value should be classified and disclosed in one of the following three categories based on the inputs used todetermine its fair value: •Level 1: Quoted market prices in active markets for identical assets or liabilities;•Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data;•Level 3: Unobservable inputs that are not corroborated by market data.(a)Significant Risks and Uncertainties, including Business and Credit Concentration The Company places its temporary cash investments, consisting mostly of deposits, primarily with high credit qualified financial institutions. The Company performs periodicevaluations of the relative credit standing of those financial institutions that are considered in the Company’s investment strategy. The Company limits its credit risk with accountsreceivable by performing ongoing credit evaluations of its customers’ financial condition and generally does not require collateral for its accounts receivable and does not have anyagreements to mitigate credit risk. (b)Fair Value of Financial Instruments The fair values of the financial instruments shown in the consolidated balance sheets as of December 31, 2019 and 2018, represent management’s best estimate of the amounts that wouldbe received to sell those assets or that would be paid to transfer those liabilities in an orderly transaction between market participants at that date. Those fair value measurements maximize the use of observable inputs. However, in situations where there is little, if any, market activity for the asset or liability at the measurement date,the fair value measurement reflects the Company’s own judgments about the assumptions that market participants would use in pricing the asset or liability. Those judgments aredeveloped by the Company based on the best information available in the circumstances.F-31Table of ContentsSeanergy Maritime Holdings Corp.Notes To The Consolidated Financial Statements(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)The following methods and assumptions were used to estimate the fair value of each class of financial instruments: a.Cash and cash equivalents, restricted cash, accounts receivable trade, other current assets and trade accounts and other payables: the carrying amounts approximate fair valuebecause of the short maturity of these instruments. The carrying value approximates the fair market value for interest bearing cash classified as restricted cash, non-current.b.Long-term debt and other financial liabilities: The carrying value of long-term debt and other financial liabilities with variable interest rates approximates the fair market value asthe long-term debt and other financial liabilities bear interest at floating interest rate. The fair value of fixed interest long-term debt is estimated using prevailing market rates asof the period end. The Company believes the terms of its fixed interest long-term debt are similar to those that could be procured as of December 31, 2019, and the carrying valueof $7,000 approximates the fair market value of $6,907. The fair value of the fixed interest long-term debt has been obtained through Level 2 inputs of the fair value hierarchy.10.Commitments and Contingencies:ContingenciesVarious claims, lawsuits, and complaints, including those involving government regulations and product liability, arise in the ordinary course of the shipping business. In addition, lossesmay arise from disputes with charterers, agents, insurance and other claims with suppliers relating to the operations of the Company’s vessels. Currently, management is not aware ofany such claims or contingent liabilities, which should be disclosed, or for which a provision should be established in the accompanying consolidated financial statements. The Company accrues for the cost of environmental liabilities when management becomes aware that a liability is probable and is able to reasonably estimate the probable exposure.Currently, management is not aware of any such claims or contingent liabilities that should be disclosed, or for which a provision should be established in the accompanyingconsolidated financial statements. The Company is covered for liabilities associated with the individual vessels’ actions to the maximum limits as provided by Protection and Indemnity(P&I) Clubs, members of the International Group of P&I Clubs. Commitments The Company operates certain of its vessels under lease agreements. Time charters typically may provide for charterers’ options to extend the lease terms and termination clauses. TheCompany’s time charters range from 1 to 60 months and extension periods vary from 11 to 27 months. In addition, the time charters contain termination clauses which protect either theCompany or the charterers from material adverse events. Variable lease payments in the Company’s time charters vary based on changes on freight market index. The Company has theoption to convert some of these variable lease payments to fixed based on the prevailing Capesize forward freight agreement rates.F-32Table of ContentsSeanergy Maritime Holdings Corp.Notes To The Consolidated Financial Statements(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)The following table sets forth the Company’s future minimum contractual charter revenue based on vessels committed to non-cancelable time charter contracts as at December 31, 2019(these amounts do not include any assumed off-hire): Twelve month periods ending December 31, Amount 2020 45,736 2021 44,234 2022 29,475 2023 5,035 Total 124,480 In April 2018, the Company moved into its new office spaces under a five-year lease term, with a Company’s option to extend the lease term for another five year term. The monthly rentis Euro 13,000 (or $15 based on the Euro/U.S. dollar exchange rate of €1.0000:$1.1234 as of December 31, 2019), which is adjusted annually by one percent for inflation. The first year’srent payments had been prepaid as of December 31, 2018. The second year’s rent payments were prepaid in April 2019. Under ASC 842, the lease is classified as an operating lease and alease liability and right-of-use asset based on the present value of future minimum lease payments have been recognized on the balance sheet. The monthly rent expense is recorded ingeneral and administration expenses.The following table sets forth the Company’s undiscounted office rental obligations as at December 31, 2019: Twelve month periods ending December 31, Amount 2020 127 2021 180 2022 182 2023 53 Total 542 Less: imputed interest 116 Present value of lease liabilities 426 Lease liabilities, current 108 Lease liabilities, non-current 318 Present value of lease liabilities 426 F-33Table of ContentsSeanergy Maritime Holdings Corp.Notes To The Consolidated Financial Statements(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)11.Capital Structure:(a)Common Stock On February 3, 2017, the Company entered into an Equity Distribution Agreement with Maxim Group LLC, or “Maxim”, as sales agent, under which the Company would offer and sell,from time to time through Maxim up to $20,000 of its common shares. On June 27, 2017, the Company and Maxim mutually terminated the Equity Distribution Agreement. As of June 27,2017, the Company has sold a total of 185,477 of its common shares for aggregate net proceeds of $2,597 in connection with this public at-the-market offering. Maxim has receivedaggregate compensation for such sales of $86 as of June 27, 2017. On April 10, 2017, the Company issued 8,333 of its common shares to an unaffiliated third party for the provision of investor relations services.On May 18, 2017, the Company was notified by NASDAQ Stock Market that it was no longer in compliance with NASDAQ Listing Rule 5550(a)(2) because the closing bid price of theCompany’s common stock for 30 consecutive business days, from April 5, 2017 to May 17, 2017, was below the minimum $1.00 per share bid price requirement for continued listing on theNasdaq Capital Market. This notification had no effect on the listing of the Company’s common stock, and the applicable grace period to regain compliance was 180 days, expiring onNovember 14, 2017. The Company could cure this deficiency if the closing bid price of its common stock was $1.00 per share or higher for at least ten consecutive business days duringthe grace period. On September 5, 2017, the Company received a letter from The Nasdaq Stock Market confirming that it had regained compliance with the minimum bid price requirement.On April 23, 2018, the Company received written notification from the NASDAQ Stock Market, indicating that because the closing bid price of the Company’s common stock for 30consecutive business days, from March 8, 2018 to April 20, 2018, was below the minimum $1.00 per share bid price requirement for continued listing on the Nasdaq Capital Market, theCompany was not in compliance with Nasdaq Listing Rule 5550(a)(2). The Company cured the deficiency with a reverse stock split which became effective on March 20, 2019.On March 20, 2019, the Company’s common stock began trading on a split-adjusted basis, following a February 26, 2019 approval from the Company’s Board of Directors to reverse splitthe Company’s common stock at a ratio of one-for-fifteen. No fractional shares were issued in connection with the reverse split. Shareholders who would otherwise hold a fractionalshare of the Company’s common stock received a cash payment in lieu of such fractional share. As a result, 961 shares were cancelled in order not to issue fractional shares. All shareand per share amounts disclosed in the consolidated financial statements and notes give effect to this reverse stock split retroactively, for all periods presented. On May 13, 2019, the Company completed a public offering of 4,200,000 Units, each unit consisting of (i) one common share, par value $0.0001 per share (a “Common Share”) or a pre-funded warrant to purchase one Common Share at an exercise price equal to $0.01 per common share (a “Pre-Funded Warrant”), (ii) one Class B Warrant to purchase one common share(a “Class B Warrant”) and (iii) one Class C Warrant to purchase one common share (a “Class C Warrant”), for $3.40 per unit. Under (i) above, the Company issued 2,765,000 commonshares and 1,435,000 pre-funded warrants. All Pre-Funded Warrants have been exercised as of June 30, 2019 resulting in issuance of 1,435,000 Common Shares. The offering wasshares and 1,435,000 pre-funded warrants. All Pre-Funded Warrants have been exercised as of June 30, 2019 resulting in issuance of 1,435,000 Common Shares. The offering wasconsummated in connection with the Company’s form F-1 originally filed with the SEC on October 20, 2017, which was further amended. The gross proceeds of the offering, beforeunderwriting discounts and commissions and estimated offering expenses, were approximately $14,293. The net proceeds from the sale of common shares and warrants, after deductingunderwriters’ fees and expenses, were approximately $12,647, which proceeds were used for general corporate purposes, including, among other things, prepaying debt.F-34Table of ContentsSeanergy Maritime Holdings Corp.Notes To The Consolidated Financial Statements(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)On May 13, 2019, the Company sold 1,823,529 Units of the Company in a separate private placement to Jelco, or the Jelco Private Placement, each Unit consisting of (i) one CommonShare, (ii) one Class B Warrant, and (iii) one Class C Warrant, for $3.40 per unit, to Jelco in exchange for, among other things, the waiver or forgiveness of certain payment obligations ofthe Company, pursuant to the Purchase Agreement (Note 4).On July 15, 2019, the Company received a written notification from the NASDAQ Stock Market, indicating that because the closing bid price of the Company’s common stock for 30consecutive business days, from May 31, 2019 to July 12, 2019, was below the minimum $1.00 per share bid price requirement for continued listing on the Nasdaq Capital Market, theCompany was not in compliance with Nasdaq Listing Rule 5550(a)(2). Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the applicable grace period to regain compliance was 180 days, oruntil January 13, 2020 (Note 15). The Company could cure this deficiency if the closing bid price of its common stock was $1.00 per share or higher for at least ten consecutive businessdays during the grace period. During that time, the Company’s common stock would continue to be listed and trade on the Nasdaq Capital Market (Note 15). (b)Warrants In December 2016, in connection with the public offering of December 13, 2016, the Company granted 11,500,000 class A warrants with an exercise price of $30.00 each. The class Awarrants were approved for listing on the Nasdaq Capital Market and trade under the ticker symbol “SHIPW” beginning on December 8, 2016. The class A warrants are immediatelyexercisable and expire on December 13, 2021. If and only if an effective registration statement covering the issuance of the common shares under the class A warrants is not available, theclass A warrants may be exercised, at the holder’s option, pursuant to the “cashless exercise” clause of the class A warrant agreement. Under the “cashless exercise”, the holder willreceive a net number of common shares determined according to class A warrant agreement. The Company may call the class A warrants for cancellation upon ten trading days priorwritten notice commencing thirteen months after issuance, subject to certain conditions, including the volume weighted average price of the Company’s common shares exceeding$105.00 for a period of ten consecutive trading days.On May 13, 2019, the Company sold a total of 6,023,529 Units in connection with the public offering and the Jelco Private Placement, with each Unit consisting of (i) one Common Shareor Pre-Funded Warrant, (ii) one Class B Warrant and (iii) one Class C Warrant. Each Class B Warrant had an exercise price of $3.74 per share, which was adjusted to $1.00 on December13, 2019 pursuant to the terms of the warrant agreement, is exercisable upon issuance and expires three years from issuance. The underwriters partially exercised an over-allotment optiongranted in connection with the offering and purchased an additional 630,000 Class B Warrants and 630,000 Class C Warrants. In connection with the Offering, the Company issued therepresentative of the underwriters a warrant to purchase 210,000 Common Shares (Representative Warrant). Each Class C Warrant has an exercise price of $3.74 per share, is exercisableupon issuance, and expires six months from issuance. Beginning on June 14, 2019, each Class C Warrant was exercisable on a cashless basis under certain circumstances for a number ofcommon shares calculated according to a formula based on the market price at the time of exercise. Each Representative Warrant had an exercise price of $4.25 per share, which wasadjusted to $1.00 on December 13, 2019 pursuant to the terms of the warrant agreement, and is exercisable at any time between November 9, 2019 and May 9, 2022.F-35Table of ContentsSeanergy Maritime Holdings Corp.Notes To The Consolidated Financial Statements(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)In connection to the public offering and private placement that took place on May 13, 2019, 6,653,529 Class C Warrants and 6,653,529 Class B Warrants were issued. As of December 31,2019, 6,594,029 Class C Warrants have been exercised in a cashless exercise that resulted in the issuance of 18,067,631 common shares according to the terms of the Warrants’Agreement. On November 13, 2019, all remaining unexercised Class C Warrants expired. No Class B Warrants and Representative Warrant have been exercised. As of December 31, 2019,the number of common shares that can potentially be issued under each outstanding warrant are: WarrantShares to be issued uponexercise of remainingwarrantsClass A766,666Class B6,653,529Representative Warrant210,000Total7,630,195No expenses were recorded in connection with these warrants which are classified in equity.The Class A Warrants and Class B Warrants are listed on the Nasdaq Capital Market under the symbols “SHIPW” and “SHIPZ”, respectively.12.Interest and Finance Costs: Interest and finance costs are analyzed as follows: Year ended December 31, 2019 2018 2017 Interest on long-term debt and other financial liabilities 13,630 14,819 11,698 Amortization of debt issuance costs 738 1,173 518 Amortization of shares issued to third party (non-cash) 402 - - Other 446 423 61 Total 15,216 16,415 12,277 Interest and finance costs-related party are analyzed as follows: Year ended December 31, 2019 2018 2017 Interest on long-term debt - related party 420 1,724 1,182 Amortization of debt issuance costs related party 240 7 13 Convertible notes interest expense 751 2,811 1,800 Convertible notes amortization of debt discount (non-cash) 3,713 4,339 2,127 Amortization of shares issued to related party (non-cash) 3,505 - - Total 8,629 8,881 5,122 F-36Table of ContentsSeanergy Maritime Holdings Corp.Notes To The Consolidated Financial Statements(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)13.Loss per Share:The calculation of net loss per common share is summarized below: For the years ended December 31, 2019 2018 2017 Net loss (11,698) (21,058) (3,235) Weighted average common shares outstanding – basic and diluted 15,332,755 2,507,087 2,389,719 Net loss per common share – basic and diluted $(0.76) $(8.40) $(1.35)As of December 31, 2019, 2018 and 2017, securities that could potentially dilute basic LPS in the future that were not included in the computation of diluted LPS, because to do so wouldhave anti-dilutive effect, are any incremental shares of non-vested equity incentive plan shares (Note 14) and of unexercised warrants (Note 11), both calculated with the treasury stockmethod, as well as shares assumed to be converted with respect to the convertible notes (Note 4) calculated with the if-converted method.14.Equity Incentive Plan: On February 1, 2018, the Compensation Committee granted an aggregate of 84,000 restricted shares of common stock pursuant to the 2011 Equity Incentive Plan, as amended. Of the total84,000 shares issued, 38,334 shares were granted to the Company’s board of directors, 44,333 shares were granted to certain of the Company’s employees and 1,333 shares were grantedto the sole director of the Company’s commercial manager, a non-employee. The fair value of each share on the grant date was $15.53. All the shares vest over a period of two years. On January 10, 2019, the Company’s Equity Incentive Plan was amended and restated to increase the aggregate number of shares of the common stock reserved for issuance under thePlan to 200,000 shares. On January 10, 2019, the Compensation Committee granted an aggregate of 144,000 restricted shares of common stock pursuant to the Plan. Of the total 144,000shares issued, 66,667 shares were granted to the board of directors, 70,666 shares were granted to certain of the Company’s employees and 6,667 shares were granted to the sole directorof the Company’s commercial manager, a non-employee. The fair value of each share on the grant date was $9.15. All the shares vest over a period of two years. 48,000 shares vested onJanuary 10, 2019, 48,000 shares vested on October 1, 2019 and 48,000 shares will vest on October 1, 2020. On December 30, 2019, the Company’s Equity Incentive Plan was amended and restated to increase the aggregate number of shares of the common stock reserved for issuance under thePlan from 56,000 shares to 3,000,000 shares.F-37Table of ContentsSeanergy Maritime Holdings Corp.Notes To The Consolidated Financial Statements(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)Restricted shares during 2019, 2018 and 2017 are analyzed as follows: Number ofShares WeightedAverageGrantDate Price Outstanding at December 31, 2016 43,514 $25.05 Vested (18,340) 26.55 Outstanding at December 31, 2017 25,174 $24.00 Granted 84,000 15.53 Vested (71,607) 15.53 Forfeited (3,066) 18.60 Outstanding at December 31, 2018 34,501 $16.35 Granted 144,000 9.15 Vested (130,499) 7.02 Forfeited (333) 9.15 Outstanding at December 31, 2019 47,669 $8.36 The fair value of the restricted shares has been determined with reference to the closing price of the Company’s common share on the date the agreements were signed. The aggregatecompensation cost is being recognized ratably in the consolidated statement of loss over the respective vesting periods. The related expense for shares granted to the Company’s boardof directors and certain of its employees for the years ended December 31, 2019, 2018 and 2017 amounted to $1,295, $1,281 and $591, respectively, and is included under general andadministration expenses. The related expense for shares granted to non-employees for the years ended December 31, 2019, 2018 and 2017, amounted to $15, $21 and $24, respectively, andis included under voyage expenses.The unrecognized cost for the non-vested shares granted to the Company’s Board of Directors and certain of its employees as of December 31, 2019 and 2018 amounted to $181 and$221, respectively. At December 31, 2019, the weighted-average period over which the total compensation cost related to non-vested awards granted to the Company’s board of directorsand its other employees not yet recognized is expected to be recognized is 0.75 year.15.Subsequent Eventsa)On January 14, 2020, the Company received a second written notification from the NASDAQ Stock Market, indicating that the Company is eligible for an additional 180 calendarday period, from January 13, 2020 to July 13, 2020, to regain compliance with the minimum $1.00 per share bid price requirement for continued listing on the Nasdaq CapitalMarket, as the Company was not in compliance with Nasdaq Listing Rule 5550(a)(2). The Company can cure this deficiency if the closing bid price of its common stock is $1.00per share or higher for at least ten consecutive business days during the grace period. During this time, the Company’s common stock will continue to be listed and trade on theNasdaq Capital Market.b)On February 24, 2020, the Compensation Committee granted an aggregate of 2,500,000 restricted shares of common stock pursuant to the Plan. Of the total 2,500,000 sharesissued, 720,000 shares were granted to the non-executive members of the board of directors, 685,000 were granted to the executive officers, 970,000 shares were granted tocertain of the Company’s non-executive employees and 125,000 shares were granted to the sole director of the Company’s commercial manager, a non-employee. The fair valueof each share on the grant date was $0.32. All the shares will vest in equal tranches on each of the grant date, October 1, 2020 and October 1, 2021.F-38Table of ContentsSeanergy Maritime Holdings Corp.Notes To The Consolidated Financial Statements(All amounts in footnotes in thousands of US Dollars, except for share and per share and warrants data, unless otherwise stated)c)On February 24, 2020, the Company received approval from the credit committee of Alpha Bank A.E. to, inter alia, amend the applicable thresholds and extend the maturities ofthe two credit facilities with the bank to December 31, 2022. This approval is subject to completion of definitive documentation.F-39Table of ContentsSchedule I- Condensed Financial Information of Seanergy Maritime Holdings Corp. (Parent Company Only)Balance SheetsDecember 31, 2019 and 2018(In thousands of US Dollars, except for share and per share data) 2019 2018 ASSETS Current assets: Cash and cash equivalents 7,163 792 Restricted cash 50 50 Other current assets 278 222 Total current assets 7,491 1,064 Non-current assets: Investments in subsidiaries* 62,484 52,999 Total non-current assets 62,484 52,999 TOTAL ASSETS 69,975 54,063 LIABILITIES AND STOCKHOLDERS EQUITY Current liabilities: Convertible notes, net of deferred finance costs of $17 and NIL, respectively 2,588 - Due to related parties, net of deferred finance costs of $113 and NIL, respectively 24,237 - Trade accounts and other payables 883 433 Accrued liabilities 389 1,854 Total current liabilities 28,097 2,287 Non-current liabilities: Due to related parties, non-current, net of deferred finance costs of NIL and NIL, respectively - 19,349 Long-term portion of convertible notes, net of deferred finance costs of $212 and NIL, respectively 12,020 11,124 Total liabilities 40,117 32,760 Commitments and contingencies - - STOCKHOLDERS EQUITY Preferred stock, $0.0001 par value; 25,000,000 shares authorized; none issued - - Common stock, $0.0001 par value; 500,000,000 authorized shares as at December 31, 2019 and 2018; 26,900,050 and 2,666,184 shares issuedand outstanding as at December 31, 2019 and 2018, respectively 3 - Additional paid-in capital 406,096 385,846 Accumulated deficit (376,241) (364,543)Total Stockholders’ equity 29,858 21,303 TOTAL LIABILITIES AND STOCKHOLDERS EQUITY 69,975 54,063 * Eliminated in consolidationF-40Table of ContentsSchedule I- Condensed Financial Information of Seanergy Maritime Holdings Corp. (Parent Company Only)Statements of LossFor the years ended December 31, 2019, 2018 and 2017(In thousands of US Dollars, except for share and per share data) 2019 2018 2017 Expenses: General and administration expenses (3,136) (3,380) (2,642)Operating loss (3,136) (3,380) (2,642) Other (expenses) / income, net: Interest and finance cost – related party (8,629) (8,881) (5,122)Gain on debt refinancing - - 11,392 Other, net (22) (327) (29)Total other (expenses) / income, net (8,651) (9,208) 6,241 Equity in loss of subsidiaries* 89 (8,470) (6,834) Net loss (11,698) (21,058) (3,235) Net loss per common share Basic (0.76) (8.40) (1.35)Weighted average common shares outstanding Basic 15,332,755 2,507,087 2,389,719 * Eliminated in consolidationF-41Table of ContentsSchedule I- Condensed Financial Information of Seanergy Maritime Holdings Corp. (Parent Company Only)Statements of Cash FlowsFor the years ended December 31, 2019, 2018 and 2017(In thousands of US Dollars) 2019 2018 2017 Net cash (used in) / provided by operating activities (4,090) (5,609) 6,314 Cash flows used in investing activities: Investments in subsidiaries (7,764) 2,413 (40,972)Net cash (used in) / provided by investing activities (7,764) 2,413 (40,972) Cash flows from financing activities: Proceeds from issuance of common stock and warrants, net of underwriters fees and commissions 13,225 - 2,637 Proceeds from convertible notes - - 9,000 Proceeds from related party debt 5,000 2,000 16,200 Net cash provided by financing activities 18,225 2,000 27,837 Net increase / (decrease) in cash and cash equivalents and restricted cash 6,371 (1,196) (6,821)Cash and cash equivalents and restricted cash at beginning of period 842 2,038 8,859 Cash and cash equivalents and restricted cash at end of period 7,213 842 2,038 SUPPLEMENTAL CASH FLOW INFORMATION Cash paid during the period for: Interest 164 3,648 2,773 Noncash financing activities: Shares issued to settle unpaid interest in connection with financing – related party 2,115 - - Shares issued in lieu of interest payments in connection with financing – related party 3,846 - - Shares issued to settle deferred finance cost in connection with financing – related party 239 - - Unpaid interest waived – related party 96 Related party debt drawdown 2,000 - - Related party debt refinanced (2,000) - - Shares issued in connection with financing - 1,541 - Conversion of related party debt into convertible note - - (4,750)F-42Table of ContentsSchedule I- Condensed Financial Information of Seanergy Maritime Holdings Corp. (Parent Company Only)Notes To The Condensed Financial Statements(All amounts in footnotes in thousands of US Dollars)1.Basis of Presentation In the parent-company-only condensed financial statements, the Parent Company’s (the “Company”) investment in subsidiaries is stated at cost plus equity in undistributed earnings ofsubsidiaries. The Parent Company did not receive cash dividends from its subsidiaries during the years ended December 31, 2019, 2018 and 2017.The parent-company-only condensed financial statements should be read in conjunction with the Company’s consolidated financial statements.2.Transactions with Related Parties Securities Purchase Agreement: On May 9, 2019, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Jelco in exchange for, among other things, the full and final settlement ofcertain unpaid interest and the neutralization of the interest rate under the Jelco Notes and the Jelco Loans for the period of April 1, 2019 until December 31, 2019 and a waiver under theFourth Jelco Loan. In particular, in exchange for: (a) 621,958 Units, Jelco settled $2,115 of unpaid interest through March 31, 2019 and (b) 1,201,571 Units, Jelco (i) amended the interestrate at 0% per annum under each of the Jelco Notes and Jelco Loans for the period between April 1, 2019 and December 31, 2019, resulting in a reduction of interest payments in anaggregate estimated amount of $3,846, and (ii) waived the mandatory prepayment obligation under the Fourth Jelco Loan to prepay the full or any part of the loan by utilizing at least 25%of the net proceeds of any public offering of securities, resulting in a deferred finance cost of $239. See Note 4 “Transactions with Related Parties” to the consolidated financial statements for further information.Convertible NotesOn March 12, 2015, the Company issued a convertible note of $4,000 to Jelco for general corporate purposes (First Jelco Note).On September 7, 2015, the Company issued a revolving convertible note of up to $6,765 to Jelco for general corporate purposes (Second Jelco Note). As amended, the maximum principalamount available to be drawn was increased to $24,665. Following an amendment on March 26, 2019, a drawdown request of up to $3,500 may be made by April 10, 2020 (the “FinalRevolving Advance Date”). If the request is not made by the Final Revolving Advance Date, the advance will not be available to be drawn and the principal amount will be decreased to$21,165.On September 27, 2017, the Company issued a convertible note of $13,750 to Jelco (Third Jelco Note). Of the $13,750 under the note, $4,750 were used to make a mandatory prepaymentunder the May 2017 Jelco loan facility.The Company refers to the First Jelco Note, the Second Jelco Note and the Third Jelco Note as the “Jelco Notes”. At Jelco’s option, the Company’s obligation to repay the principalamount(s) under the Jelco Notes or any part thereof may be paid in common shares at a conversion price of $13.50 per share.See Note 4 “Transactions with Related Parties” to the consolidated financial statements for further information.F-43Table of ContentsSchedule I- Condensed Financial Information of Seanergy Maritime Holdings Corp. (Parent Company Only)Notes To The Condensed Financial Statements(All amounts in footnotes in thousands of US Dollars)Loan AgreementsOn October 4, 2016, the Company entered into a $4,150 secured loan facility with Jelco to finance the initial deposits for the vessels Lordship and the Knightship (First Jelco Loan). OnNovember 17, 2016 and November 28, 2016, the Company entered into amendments to this facility, which, among other things, increased the aggregate amount that may be borrowedunder the facility to up to $12,800.On May 24, 2017, the Company entered into an up to $16,200 secured loan facility with Jelco to partially finance the acquisition of the Partnership (Second Jelco Loan). The Companydrew down the $16,200 on May 24, 2017. On June 22, 2017 and on August 22, 2017, the Company entered into supplemental letters with Jelco to amend the terms of this loan facility,whereby a mandatory repayment of $4,750 was deferred until September 29, 2017. On September 27, 2017, the facility was amended and restated. The mandatory repayment of $4,750 wasfinanced by the convertible note issued to Jelco on September 27, 2017.On April 10, 2018, the Company entered into a $2,000 loan facility with Jelco (Third Jelco Loan) for working capital purposes which was refinanced on March 27, 2019 by the Fourth JelcoLoan, described below. All obligations thereunder, including unpaid interest of $96 (which was recorded in equity), were irrevocably and unconditionally discharged pursuant to thedeed of release of March 27, 2019.On March 26, 2019, the Company entered into a $7,000 loan facility with Jelco (Fourth Jelco Loan), the proceeds of which were utilized (i) to refinance the Third Jelco Loan and (ii) forgeneral corporate purposes. The Company drew down the entire $7,000 on March 27, 2019. The Company refers to the First Jelco Loan, the Second Jelco Loan and the Fourth Jelco Loan as the “Jelco Loans”. See Note 4 “Transactions with Related Parties” to the consolidated financial statements for further information.3.Guarantee The Company has guaranteed the payment of principal and interest under the terms of the following loan agreements: the March 6, 2015 loan agreement with Alpha Bank A.E., theSeptember 1, 2015 loan agreement with Hamburg Commercial Bank AG, formerly known as HSH Nordbank AG, the September 11, 2015 facility agreement with UniCredit Bank AG, theNovember 4, 2015 loan agreement with Alpha Bank A.E., the February 13, 2019 facility agreement with Amsterdam Trade Bank N.V, the June 11, 2018 loan agreement with Blue Oceanmaritime lending funds managed by EnTrustPermal and the June 28, 2018 sale and leaseback agreement with Hanchen Limited. In the event of a default under these loan agreements, theCompany will be directly liable to the lenders. These facilities mature at various times between 2020 and 2026. The maximum potential amount that the Company could be liable for underthese guarantee as of December 31, 2019 is $161,287.See Note 8 “Long-Term Debt” to the consolidated financial statements for further information.F-44Table of ContentsSchedule I- Condensed Financial Information of Seanergy Maritime Holdings Corp. (Parent Company Only)Notes To The Condensed Financial Statements(All amounts in footnotes in thousands of US Dollars)4.Restrictions Which Limit the Payment of Dividends Restrictions on Payment of DividendsThe Alpha Bank A.E. loan facility dated March 6, 2015 places a restriction on the Company’s ability to distribute dividends to its shareholders. The amount of the dividends so declaredshall not exceed 50% of Seanergy’s net income except in case the cash and marketable securities are equal or greater than the amount required to meet Seanergy’s consolidatedinstallment and debt interest payments for the following eighteen-month period.The Alpha Bank A.E. loan facility dated November 4, 2015 places a restriction on the Company’s ability to distribute dividends to its shareholders. The amount of the dividends sodeclared shall not exceed 50% of Seanergy’s net income except in case the cash and marketable securities are equal or greater than the amount required to meet Seanergy’s consolidatedinstallment and debt interest payments for the following eighteen-month period.Pursuant to the terms of the commitment letters signed on February 24, 2020, we expect the restrictions on the Company’s ability to distribute dividends to be removed.Restricted Net Assets of Consolidated SubsidiariesAs of December 31, 2019, the restricted net assets of the vessel owning subsidiary of Geniuship under the September 1, 2015 loan agreement with Hamburg Commercial Bank AGamounted to $3,753. As of December 31, 2019, the restricted net assets of the vessel owning subsidiary of Gloriuship under the September 1, 2015 loan agreement with HamburgCommercial Bank amounted to $4,277. The Hamburg Commercial Bank AG loan agreement places a restriction on the vessel owning subsidiaries’ ability to distribute dividends to theCompany, in case the market values of Geniuship and Gloriuship plus any additional security is less than 145% of total loan outstanding.As of December 31, 2019, the restricted net assets of the vessel owning subsidiary of Partnership that has entered into the February 13, 2019 loan agreement with Amsterdam TradeBank NV (ATB) amounted to $11,666. The ATB loan agreement places a restriction on the vessel owning subsidiary’s ability to distribute dividends to the Company, unless an additionalrepayment in an aggregate amount of $3,190 has been made.F-45

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