What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2024-03-14 compared with 2023-03-15 · 547 added, 156 removed, 553 unchanged (56% of the section changed)

Pangaea Logistics Solutions Ltd.

and its subsidiaries (collectively, “Pangaea” or the “Company”) provides seaborne drybulk logistics and transportation services.

and its subsidiaries (collectively, “Pangaea” or the “Company”) provides seaborne drybulk logistics and transportation services as well as terminal and stevedoring services.

Pangaea utilizes its logistics expertise to service a broad base of industrial customers who require the transportation of a wide variety of drybulk cargoes, including grains, coal, iron ore, pig iron, hot briquetted iron, bauxite, alumina, cement clinker, dolomite and limestone.

The Company addresses the logistics needs of its customers by undertaking a comprehensive set of services and activities, including cargo loading, cargo discharge, vessel chartering, voyage planning, and vessel technical management.

The Company addresses the logistics needs of its customers by undertaking a comprehensive set of services and activities, including cargo loading, cargo discharge, port and terminal operations, vessel chartering, voyage planning, and vessel technical management.

Business overview and Recent Developments

The Company provides logistics and transportation services to clients utilizing an ocean-going fleet of motor vessels ("m/v") in the Handymax, Supramax, Ultramax and Panamax segments.

The Company provides ocean transportation services to clients utilizing an ocean-going fleet of motor vessels ("m/v") in the Handymax, Supramax, Ultramax and Panamax and Post-Panamax segments.

At any time, this fleet may be comprised of a total of 45-60 vessels that are owned or chartered-in on a short-term basis.

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The Company uses this fleet to transport approximately 22 million tons of cargo annually to nearly 225 ports around the world, averaging approximately 46 vessels in service daily in 2023 and 49 during 2022.

The Company’s ocean logistics services provide cargo loading, cargo discharge, vessel chartering, voyage planning, and technical vessel management to vessel and cargo owners.

The Company’s port, projects, and logistics services include cargo loading, cargo discharge, and port and terminal services to vessel and cargo owners.

Our logistics capabilities provide a wide array of services which allow our customers to extend their own services, to more efficiently transport their cargo, and to extend relationships with their own suppliers and customers.

For some customers, the Company acts as their ocean logistics department, providing scheduling, terminal operations, port services, and marketing functions.

For other customers, the Company transports supplies used in mining or processing in addition to cargo transport.

The Company has worked with other customers on design, construction, and operation of loading and discharge facilities.

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Backhaul routes allow us to reduce ballast days and instead earn revenues at times and on routes that are typically traveled without paying cargo.

The Company is a leader in the high ice class sector, secured by its control of a majority of the world's large (over 60,000 DWT) dry bulk vessels with Ice-Class 1A designation.

The Company is a leader in the high ice class sector, supported by its operation of the world's largest fleet of dry bulk vessels over 60,000 dwt with Ice-Class 1A designation.

High ice class trading includes service in ice-restricted areas in the Northern Hemisphere during both the winter (Baltic Sea and Gulf of St.

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Active risk management is an important part of our business model.

The Company believes its active risk management allows it to reduce the sensitivity of its revenues to market fluctuations and helps it to secure its long-term profitability and lower relative

volatility of earnings.

We manage market risk by chartering in vessels for periods of less than nine months on average and through a portfolio approach based upon owned vessels, chartered-in vessels, COAs, voyage charters, and time charters.

The Company believes its active risk management allows it to reduce the sensitivity of its revenues to market fluctuations and helps it to secure its long-term profitability and lower relative volatility of earnings.

We manage market risk by chartering in vessels for periods of less than nine months on average and

through a portfolio approach based upon owned vessels, chartered-in vessels, COAs, voyage charters, and time charters.

The Company tries to identify routes and ports for efficient bunkering to minimize its fuel expense.

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The Company currently controls (owns or has an ownership interest in) a fleet of 24 bulk carriers as of March 14, 2024.

The current fleet includes six Ice-Class 1A Panamax, four Post Panamax Ice Class 1A, three Panamax, two Ultramax Ice Class 1C, one Ultramax and eight Supramax drybulk vessels.

The current fleet includes six Ice-Class 1A Panamax, four Post Panamax Ice Class 1A, three Panamax, two Ultramax Ice Class 1C, two Ultramax and seven Supramax drybulk vessels.

• Increase backhaul focus, expand and defend its presence in the niche ice trades and increase fleet efficiency.

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The Company works with certain customers to review their contractual delivery terms and conditions, permitting those customers to reduce costs and certain risks.

The Company also has a customer that is heavily dependent upon a port that was insufficiently supported by port pilots for the approach to port.

To permit a large expansion of its services for this client, the Company formed a separate pilots association to increase the number of available pilots and improve access to the port.

Another example of value-added services is the formation of a new port in Newfoundland, Canada to load aggregate cargo for export and a temporary port used in Greenland to load the northernmost dry bulk cargo ever carried.

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m/v Nordic Odyssey Panamax (Ice Class 1A) 75,603 2010 Oshima Shipbuilding

m/v Bulk Valor Supramax 58,105 2013 Tsuneishi Heavy Industries (Cebu)

m/v Bulk Friendship Supramax 58,738 2011 Nantong Cosco Kawasaki HI

m/v Bulk Sachuest Supramax 55,618 2010 Hyundai Vinashin

m/v Bulk Spirit Supramax 52,950 2009 Oshima Shipbuilding

m/v Bulk Independence Supramax 56,548 2008 Yokohama

m/v Bulk Pride Supramax 58,749 2008 Tsuneishi Group (Zhoushan) Shipbuilding Inc.

m/v Bulk Trident Supramax 52,514 2006 Tsuneishi Heavy Industries (Cebu)

m/v Bulk Freedom Supramax 52,454 2005 Tsuneishi Shipbuilding Co.

m/v Bulk Spirit Supramax 52,950 2009 Oshima Shipbuilding

m/v Bulk Valor Supramax 58,105 2013 Tsuneishi Heavy Industries (Cebu)

m/v Bulk Prudence Ultramax 61,330 2014 Imabari Shipbuilding

m/v Bulk Courageous Ultramax 61,393 2013 Imabari Shipbuilding Company Limited (Imabari)

m/v Bulk Promise Panamax 78,228 2013 Shin Kurushima Toyohashi Shipbuilding Company Limited

m/v Bulk Concord Panamax 76,600 2009 Shin Kasado Dockyard Co.

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Panamax 76,561 2006 Imabari SB Marugame

m/v Bulk Promise Panamax 78,228 2013 Shin Kurushima Toyohashi Shipbuilding Company Limited

Nordic Nuluujaak Post Panamax (Ice Class 1A) 95,000 2021 Guangzhou Shipyard International Company Limited

Nordic Qinngua Post Panamax (Ice Class 1A) 95,000 2021 Guangzhou Shipyard International Company Limited

Nordic Sanngijuq Post Panamax (Ice Class 1A) 95,000 2021 Guangzhou Shipyard International Company Limited

Nordic Siku Post Panamax (Ice Class 1A) 95,000 2021 Guangzhou Shipyard International Company Limited

m/v Nordic Nuluujaak Post Panamax (Ice Class 1A) 95,000 2021 Guangzhou Shipyard International Company Limited

m/v Nordic Qinngua Post Panamax (Ice Class 1A) 95,000 2021 Guangzhou Shipyard International Company Limited

m/v Nordic Sanngijuq Post Panamax (Ice Class 1A) 95,000 2021 Guangzhou Shipyard International Company Limited

m/v Nordic Siku Post Panamax (Ice Class 1A) 95,000 2021 Guangzhou Shipyard International Company Limited

(1) Formerly known as m/v Bulk PODS

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The m/v Nordic Orion (“Orion”), the m/v Nordic Odyssey (“Odyssey”), the m/v Nordic Oshima (“Oshima”), the m/v Nordic Olympic (“Olympic”), the m/v Nordic Odin (“Odin”) and the m/v Nordic Oasis (“Oasis”) are owned by wholly-owned subsidiaries of NBHC.

All of these vessels are time chartered to NBC, a wholly-owned subsidiary of the Company, at fixed rates and also have a profit share arrangement.

NBC commercially operates these vessels in spot and COA trades.

All of these vessels are time chartered to Pangaea Denmark, a wholly-owned subsidiary of the Company, at fixed rates and also have a profit share arrangement.

Pangaea Denmark commercially operates these vessels in spot and COA trades.

In September 2019, the Company entered into an LLC agreement for the formation of NBP, that, at inception is owned 75% by the Company and 25% by an independent third party.

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No change of control transactions occurred according to the NBP LLC agreement.

In addition to its owned fleet, the Company operates chartered-in Panamax, including post-Panamax and Kamsarmax, Supramax, including Ultramax, Handymax and Handysize drybulk carriers.

The Company operates a variety of chartered-in drybulk carriers in addition to its owned vessels.

These chartered-in vessels, including Panamax, Supramax, Ultramax, Handymax, and Handysize vessels, play a significant role in the Company's operations.

The Company employed an average of 46 vessels at any one time during 2023 and 49 in 2022.

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In 2022, the Company owned interests in 26 vessels and chartered in another 183 for one or more voyages.

The Company generally charters in third-party vessels for periods of less than nine months and, in most cases, less than six months.

The Company g enerally charters in third-party vessels for periods of less than nine months and, in most cases, less than six months.

Chartered-in contracts are negotiated through third-party brokers, who are paid commission on a percentage of charter cost.

The Company believes that shorter-term charters afford it flexibility to match its variable costs to its customers’ service requirements and to respond quickly to market volatility.

The Company believes that shorter-term charters afford it flexibility to match its variable costs to its customers’ service requirements and to respond quickly to market

The Company also believes that this combination of owned and chartered-in vessels helps it to more efficiently match its customer demand than the Company could with only owned vessels or an entirely chartered-in fleet.

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Phoenix Bulk Management Bermuda Limited Bermuda 100% (B)

Phoenix Bulk Carriers (BVI) Limited (“PBC”) British Virgin Islands 100% (C)

Pangaea Logistics Solutions (BVI) Limited (“Pangaea BVI”) British Virgin Islands 100% (C)

Bulk Ocean Shipping Company (Bermuda) Ltd.

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(“Bulk Trident”) Bermuda 100% (G)

Nordic Bulk Carriers A/S (“NBC”) Denmark 100% (H)

Pangaea Logistics Solutions Denmark A/S.

("Pangaea Denmark") (formerly known as Nordic Bulk Carriers A/S) Denmark 100% (H)

Nordic Bulk Ventures (Cyprus) Limited ("NBV") Cyprus 100% (H)

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Bulk Nordic Oshima (MI) Corp.

(“Bulk Oshima”) Bermuda 67% (J)

(“Bulk Oshima”) Marshall Islands 67% (J)

Bulk Nordic Odin (MI) Corp.

(“Bulk Odin”) Bermuda 67% (J)

(“Bulk Odin”) Marshall Islands 67% (J)

Bulk Nordic Olympic (MI) Corp.

(“Bulk Olympic”) Bermuda 67% (J)

(“Bulk Olympic”) Marshall Islands 67% (J)

Bulk Nordic Oasis (MI) Corp..

(“Bulk Oasis”) Bermuda 67% (J)

(“Bulk Oasis”) Marshall Islands 67% (J)

Bulk Nordic Odyssey Corp.

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("Bulk Sachuest") Marshall Islands 100% (G)

Bulk Prudence Corp.

("Bulk Prudence") Marshall Islands 100% (G)

Venture Logistics NL Inc.

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("Bulk Spirit") Marshall Islands 100% (G)

Nordic Bulk Carriers Singapore Pte.

Pangaea Logistics Solutions Singapore Pte.

Singapore 100% (H)

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Bay Stevedoring LLC Delaware 100% (R)

Pangaea Logistics Solutions (US) LLC Delaware 100% (S)

Pangaea Logistics Solutions (US) LLC ("PANL US") Delaware 100% (S)

Pangaea Baltimore LLC Delaware 100% (R)

Pangaea Port Everglades LLC Delaware 100% (R)

(A) The primary purpose of this corporation is to manage and operate ocean going vessels.

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(C) The primary purpose of this corporation is to provide logistics services to customers by chartering, managing and operating ships.

Formerly known as Phoenix Bulk Carriers (BVI) Limited.

(D) The primary purpose of this corporation is to manage the fuel procurement for all vessels.

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(H) The primary purpose of these entities is to provide logistics services to customers by chartering, managing and operating ships.

NBV is the holding company of NBC.

NBV is the holding company of Pangaea Denmark.

F ormerly known as Nordic Bulk Carriers A/S.

(I) Long Wharf is a limited liability company duly organized under the laws of Delaware for the purpose of holding real estate located in Newport, Rhode Island.

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(Q) The primary purpose of the company is to manage and operate the Brayton Point Commerce Center Marine Terminal.

(R) The primary purpose of the company is to manage and operate a port terminal in Louisiana.

(R) The primary purpose of the company is to manage and operate port terminals.

(S) The primary purpose of the company is to manage U.S.-based business activities.

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The Company has been able to obtain all permits and certificates currently required to permit its vessels to operate.

Additional laws and regulations, environmental or otherwise, may be adopted which could limit its ability to do business or increase the cost of doing business.

Additional laws and

regulations, environmental or otherwise, may be adopted which could limit its ability to do business or increase the cost of doing business.

Environmental and Other Regulations

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As a global logistics provider, headquartered in the United States, we recognize the impacts of our actions and are focused on establishing safe, responsible, and sustainable policies and practices that will enhance our business for the long term.

Transparency is an important step toward sustainability in our industry and we were pleased to present our second concise Environmental, Social and Governance (ESG) report based on the Marine Transportation framework developed by the Sustainability Accounting Standards Board (SASB) during 2022.

Transparency is an important step toward sustainability in our industry and we were pleased to present our third concise Environmental, Social and Governance (ESG) report based on the Marine Transportation framework developed by the Sustainability Accounting Standards Board (SASB) during 2023.

More specifically over the past several years we have taken steps to integrate ESG into operations, including:

Renewed our owned fleet with modern second hand and newbuilding vessels with lower overall fuel consumption than older vessels in order to reduce our fleet’s greenhouse gas emissions.

Renewed our owned fleet with modern second hand and newbuilding vessels with lower overall fuel consumption than

older vessels in order to reduce our fleet’s greenhouse gas emissions.

The Company took delivery of four Post Panamax vessels in 2021, which has significantly improved the fleet's emissions profile.

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These regulations subject ocean-going vessels to stringent emissions controls, and may cause us to incur substantial costs, including those related to the purchase, installation and operation of scrubbers and the purchase of compliant fuel oil.

Beginning January 1, 2015, ships operating within an emission control area ("ECA") were not permitted to use fuel with sulfur content in excess of 0.1% (from 1.0%).

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 fuel with sulfur content in excess of 0.1% m/m.

Amended Annex VI establishes procedures for designating new ECAs.

Currently, the Baltic Sea, the North Sea, certain coastal areas of North America and areas of the United States Caribbean Sea adjacent to Puerto Rico and the U.S.

Virgin Islands are designated ECAs.

Ocean-going vessels in these areas are subject to stringent emissions controls, which may cause the Company to incur additional costs.

In December 2021, the member states of the Convention for the Protection of the Mediterranean Sea Against Pollution (the "Barcelona Convention") agreed to support the designation of a new ECA in the Mediterranean Sea.

On December 15, 2022, MEPC 79 adopted the designation of a new ECA in the Mediterranean Sea, with an effective date of May 1, 2025.

Additional legislation or regulations applicable to the operation of its vessels that may be implemented in the future could adversely affect its business.

MEPC 75 introduced draft amendments to Annex VI which impose new regulations to reduce greenhouse gas emissions from ships.

Currently, the IMO has designated four ECAs, including specified portions of 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 may cause us to incur additional costs.

Certain ports in which our vessels call, including China and Singapore, are currently or may become subject to local regulations that impose stricter emission controls.

In December 2021, the member states of the Convention for the Protection of the Mediterranean Sea Against Pollution (the “Barcelona Convention”) agreed to support the designation of a new ECA in the Mediterranean.

On December 15, 2022, MEPC 79 adopted the designation of a new ECA in the Mediterranean, with an effective date of May 1, 2025.

In July 2023, MEPC 80 announced three new ECA proposals, including the Canadian Arctic waters and the North-East

Atlantic Ocean.

If other ECAs are approved by the IMO, or other new or more stringent requirements relating to emissions from marine diesel engines or port operations by vessels are adopted by the U.S.

Environmental Protection Agency (“EPA”) or the states where we operate, compliance with these regulations could entail significant capital expenditures or otherwise increase the costs of our operations.

Refer to “Capital Expenditures” in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations and “We are subject to regulation and liability under environmental and operational safety laws that could require significant expenditures or subject us to increased liability” in Item 1A.

Risk Factors for further details of our plan for compliance and potential costs.

Amended Annex VI also establishes new tiers of stringent nitrogen oxide emissions standards for marine diesel engines, depending on their date of installation.

At the MEPC meeting held from March to April 2014, amendments to Annex VI were adopted which address the date on which Tier III Nitrogen Oxide (NOx) standards in ECAs will go into effect.

Under the amendments, Tier III NOx standards apply to ships that operate in the North American and U.S.

Caribbean Sea ECAs designed for the control of NOx produced by vessels with a marine diesel engine installed and constructed on or after January 1, 2016.

Tier III requirements could apply to areas that will be designated for Tier III NOx in the future.

At MEPC 70 and MEPC 71, the MEPC approved the North Sea and Baltic Sea as ECAs for nitrogen oxide for ships built on or after January 1, 2021.

The EPA promulgated equivalent (and in some senses stricter) emissions standards in 2010 and we are compliant with the Tier I and Tier II requirements for NOx emissions under the EPA standards and Annex VI.

We do not currently own any vessels subject to the Tier III requirements, although we may acquire such vessels in the future.

As a result of these designations or similar future designations, we may be required to incur additional operating or other costs.

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 collect and report annual data on fuel oil consumption to an IMO database, with the first year of data collection having commenced on January 1, 2019.

The IMO intends to use such data as the first step 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 Energy Efficiency Management Plans (“SEEMP”), and new ships must be designed in compliance with minimum energy efficiency levels per capacity mile as defined by the Energy Efficiency Design Index (“EEDI”).

Under these measures, by 2025, all new ships built will be 30% more energy efficient than those built in 2014.

MEPC 75 adopted amendments to MARPOL Annex VI which brings forward the effective date of the EEDI’s “phase 3” requirements from January 1, 2025 to April 1, 2022 for several ship types, including gas carriers, general cargo ships, and LNG carriers.

Additionally, MEPC 75 introduced draft amendments to Annex VI which impose new regulations to reduce greenhouse gas emissions from ships.

These amendments introduce requirements to assess and measure the energy efficiency of all ships and set the required attainment values, with the goal of reducing the carbon intensity of international shipping.

To achieve a 40% reduction in

carbon emissions by 2023 compared to 2008, shipping companies are required to include:

(i) a technical requirement to reduce carbon intensity based on a new Energy Efficiency Existing Ship Index (“EEXI”), and (ii) operational carbon intensity reduction requirements, based on a new operational carbon intensity indicator (“CII”).

The EEXI is required to be calculated for ships of 400 gross tonnage and above.

The IMO and MEPC will calculate “required” EEXI levels based on the vessel’s technical design, such as vessel type, date of creation, size and baseline.

Additionally, an “attained” EEXI will be calculated to determine the actual energy efficiency of the vessel.

A vessel’s attained EEXI must be less than the vessel’s required EEXI.

Non-compliant vessels will have to upgrade their engine to continue to travel.

The requirements include (1) a technical requirement to reduce carbon intensity based on a new Energy Efficiency Existing Ship Index (“EEXI”), and (2) operational carbon intensity reduction requirements, based on a new operational carbon intensity indicator (“CII”).

The attained EEXI is required to be calculated for ships of 400 gross tonnage and above, in accordance with different values set for ship types and categories.

With respect to the CII, the draft amendments would require ships of 5,000 gross tonnage to document and verify their actual annual operational CII achieved against a determined required annual operational CII.

The vessel’s attained CII must be lower than its required CII.

Vessels that continually receive subpar CII ratings will be required to submit corrective action plans to ensure compliance.

MEPC 79 also adopted amendments to MARPOL Annex VI, Appendix IX to include the attained and required CII values, the CII rating and attained EEXI for existing ships in the required information to be submitted to the IMO Ship Fuel Oil Consumption Database.

The amendments will enter into force on May 1, 2024.

Additionally, MEPC 75 proposed draft amendments requiring that, on or before January 1, 2023, all ships above 400 gross tonnage must have an approved Ship Energy Efficiency Management Plan, or SEEMP, on board.

Additionally, MEPC 75 proposed draft amendments requiring that, on or before January 1, 2023, all ships above 400 gross tonnage must have an approved SEEMP on board.

For ships above 5,000 gross tonnage, the SEEMP would need to include certain mandatory content.

MEPC 75 also approved draft amendments to MARPOL Annex I to prohibit the use and carriage for use as fuel of heavy fuel oil by ships in Arctic waters on and after July 1, 2024.

The draft amendments introduced at MEPC 75 were adopted at the MEPC 76 session held on June 2021, entered into force on November 1, 2022 and became effective on January 1, 2023.

The Company is currently assessing the impact of these regulations on its fleet operations.

MEPC 75 also approved draft amendments to MARPOL Annex I to prohibit the use and carriage for use as fuel of heavy fuel oil (“HFO”) by ships in Arctic waters on and after July 1, 2024.

The draft amendments introduced at MEPC 75 were adopted at the MEPC 76 session in June 2021 and entered into force in November 2022, with the requirements for EEXI and CII certification coming into effect from January 1, 2023.

MEPC 77 adopted a non-binding resolution which urges Member States and ship operators to voluntarily use distillate or other cleaner alternative fuels or methods of propulsion that are safe for ships and could contribute to the reduction of Black Carbon emissions from ships when operating in or near the Arctic.

MEPC 79 adopted amendments to MARPOL Annex VI, Appendix IX to include the attained and required CII values, the CII rating and attained EEXI for existing ships in the required information to be submitted to the IMO Ship Fuel Oil Consumption Database.

MEPC 79 revised the EEDI calculation guidelines to include a CO2 conversion factor for ethane, a reference to the updated ITCC guidelines, and a clarification that in case of a ship with multiple load line certificates, the maximum certified summer draft should be used when determining the deadweight.

The amendments will enter into force on May 1, 2024.

In July 2023, MEPC 80 approved the plan for reviewing CII regulations and guidelines, which must be completed at the latest by January 1, 2026.

There will be no immediate changes to the CII framework, including correction factors and voyage adjustments, before the review is completed.

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 of expensive emission control systems and could adversely affect our business, results of operations, cash flows and financial condition.

The Company plans to continue to invest in its existing fleet to improve fuel efficiency and comply with these revised standards through its comprehensive IMO 2023 plan.

Safety Management System Requirements

The IMO also adopted the International Convention for the Safety of Life at Sea, or SOLAS, and the International Convention on Load Lines, or the LL Convention, which impose a variety of standards that regulate the design and operational features of ships.

The IMO periodically revises the SOLAS and LL Convention standards.

May 2012 SOLAS amendments entered into force as of January 1, 2014.

The operation of the Company’s ships is also affected by the requirements set forth in Chapter IX of SOLAS, which sets forth the IMO’s International Management Code for the Safe Operation of Ships and Pollution Prevention, or the ISM Code.

The ISM Code requires ship owners and ship managers to develop and maintain an extensive Safety Management System ("SMS"), that includes the adoption of a safety and environmental protection policy setting forth instructions and procedures for safe operation and describing procedures for dealing with emergencies.

The Company relies upon the safety management system that the Company and its technical managers have developed for compliance with the ISM Code.

The failure of a ship owner to comply with the ISM Code may subject such party to increased liability, may decrease available insurance coverage for the affected vessels and may result in a denial of access to, or detention in, certain ports.

As of the date of this filing, each of its vessels is ISM code-certified.

The ISM Code requires that vessel operators obtain a safety management certificate, or SMC, for each vessel they operate.

This certificate evidences compliance by a vessel’s operators with the ISM Code requirements for an SMS.

No vessel can obtain an SMC under the ISM Code unless its manager has been awarded a document of compliance, or DOC, issued in most instances by the vessel's flag state.

The Company’s appointed ship managers have obtained documents of compliance for their offices and safety management certificates for all of its vessels for which the certificates are required by the IMO.

The document of compliance, or the DOC, and ship management certificate, or the SMC, are renewed as required.

The SOLAS Convention was amended to address the safe manning of vessels and emergency training drills.

The Convention of Limitation of Liability for Maritime Claims (the “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 with SOLAS 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 (the “ISM Code”), our operations are also subject to environmental standards and requirements.

The ISM Code requires the party with operational control of a vessel to develop an extensive safety management system that includes, among other things, the adoption of a safety and environmental protection policy setting forth instructions and procedures for operating its vessels safely and describing procedures for responding to emergencies.

We rely upon the safety management system that we and our technical management team have developed for compliance 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 available insurance 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’s management 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 of compliance, issued by each flag state, under the ISM Code.

GSSM has valid documents of compliance for our offices and safety management certificates for all of our vessels for which the certificates are required by the IMO.

The document of compliance and safety management certificate are renewed as required.

Regulation II-1/3-10 of the SOLAS Convention governs ship construction and stipulates that ships over 150 meters in length must have adequate strength, integrity and stability to minimize risk of loss or pollution.

Goal-based standards amendments in SOLAS regulation II-1/3-10 entered into force in 2012, with July 1, 2016 set for application to new oil tankers and bulk carriers.

The SOLAS Convention regulation II-1/3-10 on goal-based ship construction standards for bulk carriers and oil tankers, which entered into force on January 1, 2012, requires that all oil tankers and bulk carriers of 150 meters in length and above, for which the building contract is placed on or after July 1, 2016, satisfy applicable structural requirements conforming to the functional requirements of the International Goal-based Ship Construction Standards for Bulk Carriers and Oil Tankers (“GBS Standards”).

Amendments to the SOLAS Convention Chapter VII apply to vessels transporting dangerous goods and require those vessels be in compliance with the International Maritime Dangerous Goods Code (“IMDG Code”).

Effective January 1, 2018, the IMDG Code includes (1) updates to the provisions for radioactive material, reflecting the latest provisions from the International Atomic Energy Agency, (2) new marking, packing and classification requirements for dangerous goods, and (3) new mandatory training requirements.

Amendments that took effect on January 1, 2020, also reflect the latest material from the UN Recommendations on the Transport of Dangerous Goods, including (1) new provisions regarding IMO type 9 tank, (2) new abbreviations for segregation groups, and (3) special provisions for carriage of lithium batteries and of vehicles powered by flammable liquid or gas.

Additional amendments, which came into force on June 1, 2022, include (1) addition of a definition of dosage rate, (2) additions to the list of high consequence dangerous goods, (3) new provisions for medical/clinical waste, (4) addition of various ISO standards for gas cylinders, (5) a new handling code, and (6) changes to stowage and segregation provisions.

The IMO has also adopted the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers (“STCW”).

As of February 2017, all seafarers are 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 classification societies, which have incorporated SOLAS and STCW requirements into their class rules, to undertake surveys to confirm compliance.

The IMO's Maritime Safety Committee and MEPC, respectively, each adopted relevant parts of the International Code for Ships Operating in Polar Water (the “Polar Code”).

The Polar Code, which entered into force on January 1, 2017, covers design, construction, equipment, operational, training, search and rescue as well as environmental protection matters relevant to ships operating in the waters surrounding the two poles.

It also includes mandatory measures regarding safety and pollution

prevention as well as recommendatory provisions.

The Polar Code applies to new ships constructed after January 1, 2017, and after January 1, 2018, ships constructed before January 1, 2017 are required to meet the relevant requirements by the earlier of their first intermediate or renewal survey.

Furthermore, recent action by the IMO’s Maritime Safety Committee and United States agencies indicates that cybersecurity regulations for the maritime industry are likely to be further developed in the near future in an attempt to combat cybersecurity threats.

For example, cyber-risk management systems must be incorporated by ship-owners and managers by 2021.

By IMO resolution, administrations are encouraged to ensure that cyber-risk management systems are incorporated by ship-owners and managers by their first annual Document of Compliance audit after January 1, 2021.

In February 2021, the U.S.

Coast Guard published guidance on addressing cyber risks in a vessel’s safety management system.

This might cause companies to create additional procedures for monitoring cybersecurity, which could require additional expenses and/or capital expenditures.

The impact of such regulations is hard to predict at this time.

The IMO continues to review and introduce new regulations.

It is impossible to predict what additional regulations, if any, may be passed by the IMO and what effect, if any, such regulations might have on the Company’s operations.

The impact of future regulations is hard to predict at this time.

In June 2022, SOLAS also set out new amendments that took effect on January 1, 2024, which include new requirements for:

(1) the design for safe mooring operations, (2) the Global Maritime Distress and Safety System (“GMDSS”), (3) watertight integrity, (4) watertight doors on cargo ships, (5) fault-isolation of fire detection systems, (6) life-saving appliances, and (7) safety of ships using LNG as fuel.

These new requirements may impact the cost of our operations.

Pollution Control and Liability Requirements

The IMO has negotiated international conventions that impose liability for pollution in international waters and the territorial waters of the signatories to such conventions.

For example, the IMO adopted the International Convention for the Control and Management of Ships’ Ballast Water and Sediments, or the BWM Convention, in February 2004.

The BWM Convention's implementing regulations call for a phased introduction of mandatory ballast water exchange requirements, to be replaced in time with mandatory concentration limits.

The BWM Convention entered into force on September 8, 2017 at which time mid-ocean ballast exchange or ballast water treatment systems became mandatory.

The Company’s vessels will be required to be equipped with a ballast water treatment system that meets mandatory concentration limits not later than the first intermediate or renewal survey, whichever occurs first, after the anniversary date of delivery of the vessel in 2014, for vessels with ballast water capacity of 1500 – 5000 cubic meters, or after such date in 2016, for vessels with ballast water capacity of greater than 5000 cubic meters.

The Company's current fleet of vessels are equipped with these systems.

The IMO adopted the International Convention on Civil Liability for Bunker Oil Pollution Damage, or the Bunker Convention, to impose strict liability on ship owners for pollution damage in jurisdictional waters of ratifying states caused by discharges of bunker fuel.

The Bunker Convention 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 national or international limitation regime (but not exceeding the amount calculated in accordance with the Convention on Limitation of Liability for Maritime Claims of 1976, as amended).

For example, the IMO adopted an International Convention for the Control and Management of Ships’ Ballast Water and Sediments (the “BWM Convention”) in 2004.

The BWM Convention entered into force on September 8, 2017.

The BWM Convention requires ships to manage their ballast water to remove, render harmless, or avoid the uptake or discharge of new or invasive aquatic organisms and pathogens within ballast water and sediments.

The BWM Convention’s implementing regulations call for a phased introduction of mandatory ballast water exchange requirements, to be replaced in time with mandatory concentration limits, and require all ships to carry a ballast water record book and an international ballast water management certificate.

On December 4, 2013, the IMO Assembly passed a resolution revising the application dates of the BWM Convention so that the dates are triggered by the entry into force date and not the dates originally in the BWM Convention.

This, in effect, makes all vessels delivered before the entry into force date “existing vessels” and allows for the installation of ballast water management systems on such vessels at the first International Oil Pollution Prevention (IOPP) renewal survey following entry into force of the convention.

The MEPC adopted updated guidelines for approval of ballast water management systems (G8) at MEPC 70.

At MEPC 71, the schedule regarding the BWM Convention’s implementation dates was also discussed and amendments were introduced to extend the date existing vessels are subject to certain ballast water standards.

Those changes were adopted at MEPC 72.

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 the date 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 involve installing on-board systems to treat ballast water and eliminate unwanted organisms.

Ballast water management systems, 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).

As of October 13, 2019, MEPC 72’s amendments to the BWM Convention took effect, making the Code for Approval of Ballast Water Management Systems, which governs assessment of ballast water management systems, mandatory rather than permissive, and formalized an implementation schedule for the D-2 standard.

Under these amendments, all ships must meet the D-2 standard by September 8, 2024.

Costs of compliance with these regulations may be substantial.

Additionally, in November 2020, MEPC 75 adopted amendments to the BWM Convention which would require a commissioning test of the ballast water management system for the initial survey or when performing an additional survey for retrofits.

This analysis will not apply to ships that already have an installed BWM system certified under the BWM Convention.

These amendments entered into force on June 1, 2022.

In December 2022, MEPC 79 agreed that it should be permitted to use ballast tanks for temporary storage of treated sewage and grey water.

MEPC 79 also established that ships are expected to return to D-2 compliance after experiencing challenging uptake water and bypassing a BWM system should only be used as a last resort.

In July 2023, MEPC 80 approved a plan for a comprehensive review of the BWM Convention over the next three years and the corresponding development of a package of amendments to the Convention.

MEPC 80 also adopted further amendments relating to Appendix II of the BWM Convention concerning the form of the Ballast Water Record Book, which are expected to enter into force in February 2025.

A protocol for ballast water compliance monitoring devices and unified interpretation of the form of the BWM Convention certificate were also adopted.

Once mid-ocean exchange ballast water treatment requirements become mandatory under the BWM Convention, the cost of compliance could increase for ocean carriers and may have a material effect on our operations.

However, many countries already regulate 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 reporting requirements.

The system specification requirements for trading in the U.S.

have been formalized and we have been installing ballast water treatment systems on our vessels as their special survey deadlines come due.

These ballast water treatment systems range in cost from $0.5 million to $0.7 million each, primarily dependent on the size of the vessel.

Refer to “Capital Expenditures” section for further information.

The IMO adopted the International Convention on Civil Liability for Oil Pollution Damage of 1969, as amended by different Protocols in 1976, 1984, and 1992, and amended in 2000 (the “CLC”).

Under the CLC and depending on whether the country in which the damage results is a party to the 1992 Protocol to the CLC, a vessel’s registered owner may be strictly liable for pollution damage caused in the territorial waters of a contracting state by discharge of persistent oil, subject to certain exceptions.

The 1992 Protocol changed certain limits on liability expressed using the International Monetary Fund currency unit, the Special Drawing Rights.

The limits on liability have since been amended so that the compensation limits on liability were raised.

The right to limit liability is forfeited under the CLC where the spill is caused by the shipowner’s actual fault and under the 1992 Protocol where the spill is caused by the shipowner’s intentional or reckless act or omission where the shipowner knew pollution damage would probably result.

The CLC requires ships over 2,000 tons covered by it to maintain insurance covering the liability of the owner in a sum equivalent to an owner’s liability for a single incident.

We have protection and indemnity insurance for environmental incidents.

P&I Clubs in the International Group issue the required Bunkers Convention “Blue Cards” to enable signatory states to issue certificates.

All of our vessels are in possession of a CLC State issued certificate attesting that the required insurance coverage is in force.

The IMO also adopted the International Convention on Civil Liability for Bunker Oil Pollution Damage (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.

With respect to non-ratifying states, liability for spills or releases of oil carried as fuel in ship’s bunkers typically is determined by the national or other domestic laws in the jurisdiction where the events or damages occur.

Noncompliance with the ISM Code or other IMO regulations may subject the Company to increased liability, lead to decreases in available insurance coverage for affected vessels or result in the denial of access to, or detention in, some ports.

As of the date of this report, each of the Company’s vessels is ISM Code certified.

However, there can be no assurance that such certificate will be maintained.

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 CLC or the Bunker Convention 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 Requirements

In 2001, the IMO adopted the International Convention on the Control of Harmful Anti-fouling Systems on Ships, or the “Anti-fouling Convention.” The Anti-fouling Convention, 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 of vessels.

The exteriors of vessels constructed prior to January 1, 2003 that have not been in drydock must, as of September 17, 2008, either not contain the prohibited compounds or have coatings applied to the vessel exterior that act as a barrier to the leaching of the prohibited compounds.

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 International Anti-fouling System Certificate, or the “IAFS Certificate,” is issued for the first time;

and subsequent surveys when the anti-fouling systems are altered or replaced.

Vessels of 24 meters in length or more but less than 400 gross tonnage engaged in international voyages will have to carry a Declaration on Anti-fouling Systems signed by the owner or authorized agent.

In November 2020, MEPC 75 approved draft amendments to the Anti-fouling Convention to prohibit anti-fouling systems containing cybutryne, which would apply to ships from January 1, 2023, or, for ships already bearing such an anti-fouling system, at the next scheduled renewal of the system after that date, but no later than 60 months following the last application to the ship of such a system.

In addition, the IAFS Certificate has been updated to address compliance options for anti-fouling systems to address cybutryne.

Ships which are affected by this ban on cybutryne must receive an updated IAFS Certificate no later than two years after the entry into force of these amendments.

Ships which are not affected (i.e.

with anti-fouling systems which do not contain cybutryne) must receive an updated IAFS Certificate at the next Anti-fouling application to the vessel.

These amendments were formally adopted at MEPC 76 in June 2021, and entered into force on January 1, 2023.

We have obtained Anti-fouling System Certificates for all of our vessels that are subject to the Anti-fouling Convention.

Compliance Enforcement

Noncompliance 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 insurance coverage 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 in compliance 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 is ISM 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 is impossible 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.

International Code for Ships Operating in Polar Waters

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The limitation on liability similarly does not apply if the responsible party fails or refuses to (i) report the incident where the responsibility party knows or has reason to know of the incident;

(ii) reasonably cooperate and assist as requested in connection with oil removal activities;

(ii) reasonably cooperate and assist 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)) or the Intervention on the High Seas Act.

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In addition, the Company intends to comply with all future applicable state regulations in the ports where its vessels call.

Other Environmental Initiatives

Other United States Environmental Initiatives

Clean Water Act, or CWA, prohibits the discharge of oil, hazardous substances and ballast water in U.S.

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ports or entering U.S.

VIDA establishes a new framework for the regulation of vessel incidental discharges under Clean Water Act (CWA), requires the EPA to develop performance standards for those discharges within two years of enactment, and requires the U.S.

VIDA establishes a new framework for the regulation of vessel incidental discharges under Clean Water Act (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.

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Aiding and abetting the discharge of a polluting substance may also lead to criminal penalties.

Member States were required to enact laws or regulations to comply with the directive by the end of 2010.

Criminal liability for pollution may result in substantial penalties or fines and increased civil liability claims.

The directive applies to all types of vessels, irrespective of their flag, but certain exceptions apply to warships or where 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) 2015/757 of the European Parliament and of the Council of 29 April 2015 (amending EU Directive 2009/16/EC) 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 gross tonnage 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 then extended a ban on substandard ships and enacted a minimum ban period and a definitive ban for repeated offenses.

The regulation also provided the European Union with greater authority and control over classification societies, by imposing more requirements on classification societies and providing for fines or penalty payments for organizations that failed to comply.

With effect from January 1, 2010, Directive 2005/33/EC of the European Parliament and of the Council of July 6, 2005, amending Directive 1999/32/EC came into force.

The objective of the directive is to reduce emission of sulfur dioxide and particulate matter caused by the combustion of certain petroleum derived fuels.

The directive imposes limits on the sulfur content of such fuels as a condition of their use within a Member State territory.

The maximum sulfur content for marine fuels used by inland waterway vessels and ships at berth in ports in EU countries after January 1, 2010, is 0.1% by mass.

As of January 1, 2015, all vessels operating within ECAs, worldwide must comply with 0.1% sulfur requirements.

Currently, the only grade of fuel meeting 0.1% sulfur content requirement is low sulfur marine gas oil, or LSMGO.

As of July 1, 2010, the reduction of applicable sulfur content limits in the North Sea, the Baltic Sea and the English Channel Sulfur Control Areas is 0.1%.

As of January 2020, EU member states must also ensure that ships in all EU waters, except the Emission Control Area, use fuels with a 0.5% maximum sulfur content.

The Company does not expect that it will be required to modify any of its vessels to meet any of the foregoing low sulfur fuel requirements.

On September 15, 2020, the European Parliament voted to include greenhouse gas emissions from the maritime sector in the European Union’s carbon market.

The European Union also adopted and extended a ban on substandard ships and enacted a minimum ban period and a definitive ban for repeated offenses.

The regulations also provided the European Union with greater authority and control over classification societies, by imposing more requirements on classification societies and providing for fines or penalty payments for organizations that failed to comply.

Furthermore, the EU has implemented regulations requiring vessels to use reduced sulfur content fuel for their main and auxiliary engines.

The EU Directive 2005/33/EC (amending Directive 1999/32/EC) introduced requirements parallel to those in Annex VI relating to the sulfur content of marine fuels.

In addition, the EU imposed a 0.1% maximum sulfur requirement for fuel used by ships at berth in the Baltic, the North Sea and the English Channel (the so-called “SOx-Emission Control Area”).

As of January 2020, EU member states must also ensure that ships in all EU waters, except the SOx-Emission Control Area, use fuels with a 0.5% maximum sulfur content.

On September 15, 2020, the European Parliament voted to include greenhouse gas emissions from the maritime sector in the European Union’s carbon market, the EU Emissions Trading System (“EU ETS”) as part of its “Fit-for-55” legislation to reduce net greenhouse gas emissions by at least 55% by 2030 as compared to 1990 levels.

On July 14, 2021, the European Parliament formally proposed its plan, which would involve gradually including the maritime sector from 2023 and phasing the sector in over a three-year period.

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The Environment Council adopted a general approach on the proposal in June 2022.

On December 18, 2022, the Environmental Council and European Parliament agreed to include maritime shipping emissions within the scope of the EU ETS on a gradual introduction of obligations for shipping companies to surrender allowances:

40% for verified emissions from 2024, 70% for 2025 and 100% for 2026.

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General cargo vessels and off-shore vessels between 400-5,000 gross tonnage will be included in the MRV regulation from 2025 and their inclusion in EU ETS will be reviewed in 2026.

Furthermore, starting from January 1, 2026, the ETS regulations will expand to include emissions of two additional greenhouse gases:

nitrous oxide and methane.

Compliance with the Maritime EU ETS will result in additional compliance and administration costs to properly incorporate the provisions of the Directive into our business routines.

Additional EU regulations which are part of the EU’s "Fit-for-55," could also affect our financial position in terms of compliance and administration costs when they take effect.

Additionally, on July 25, 2023, the European Council of the European Union adopted the Maritime Fuel Regulation under the FuelEU Initiative of its “Fit-for-55” package which sets limitations on the acceptable yearly greenhouse gas intensity of the energy used by covered vessels.

Among other things, the Maritime Fuel Regulation requires that greenhouse gas emissions

from covered vessels are reduced by 2% starting January 1, 2025, with additional reductions contemplated every five years (up to 80% from January 1, 2050).

Greenhouse Gas Regulation

In November 2020, MEPC 75 approved draft amendments to the Anti-Fouling Convention to prohibit anti-fouling systems containing cybutryne.

These amendments were adopted at MEPC 76 in June 2021 and will apply to ships from January 1, 2023.

During MEPC 76 in June 2021, the IMO approved amendments to Annex VI to cut the carbon intensity of existing ships.

The amendments will require ships to combine a technical and an operational approach to reduce their carbon intensity, in line with the ambition of the Initial IMO GHG Strategy, which aims to reduce carbon intensity of international shipping by 40% by 2030, compared to 2008.

The amendments include (1) a technical requirement to reduce carbon intensity based on a new Energy Efficiency Existing Ship Index (“EEXI”), and (2) operational carbon intensity reduction requirements, based on a new operational carbon intensity indicator (“CII”).

These amendments are expected to enter into force on November 1, 2022, with the requirements for EEXI and CII certification coming into effect from January 1, 2023.

The Company has evaluated the impact of EEXI requirements and determined that the majority of our fleet will be minimally impacted with some of the oldest ships requiring the application of an engine power limitation that may reduce operational maximum speed.

The Company is working with Class to complete the EEXI certification of all vessels in advance of the requirement coming into effect.

EEXI requirements will ultimately lead the oldest ships in the drybulk fleet to slow down significantly which will limit drybulk supply and could probably positively impact the freight rates.

The Company is evaluating the impact of CII requirements on the fleet and sees limited impact through 2026 after which further incremental decreases will be decided.

The most immediate impact of CII requirements coming into effect will likely be the need for collaboration between the Company and Charterers to actively manage CII scoring and working on optimizing operations.

In the United States, the EPA has issued a finding that greenhouse gases endanger the public health and safety and has adopted regulations to limit greenhouse gas emissions from certain mobile sources and large stationary sources.

Our industry currently is heavily dependent on the consumption of fossil fuels, which has been linked by certain experts to greenhouse gas emissions and the warming of the global climate system.

We are committed to working to reduce our carbon footprint, including by transitioning to low-carbon fuels while continuing to deliver for our customers.

Our governance, strategy, risk management and performance monitoring efforts with respect to managing this challenge continue to evolve.

Currently, the emissions of greenhouse gases from international shipping are not subject to the Kyoto Protocol of the United Nations Framework Convention on Climate Change, 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 targets extended 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 new treaty.

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 gas emissions.

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 limit greenhouse gas emissions from ships.

initially entered into the agreement, but on June 1, 2017, former U.S.

President Trump announced that the United States intended to withdraw from the Paris Agreement, and the withdrawal became effective on November 4, 2020.

On January 20, 2021, U.S.

President Biden signed an executive order to rejoin the Paris Agreement, which the U.S.

officially rejoined on February 19, 2021.

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 from ships 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 initial strategy identifies “levels of ambition” to reducing greenhouse gas emissions, including (1) decreasing the carbon intensity from ships through implementation of further phases of the EEDI 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% by 2050, 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 them out 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.

At MEPC 77, the Member States agreed to initiate the revision of the Initial IMO Strategy on Reduction of GHG emissions from ships, recognizing the need to strengthen the ambition during the revision process.

In July 2023, MEPC 80 adopted a revised strategy, which includes an enhanced common ambition to reach net-zero greenhouse gas emissions from international shipping around or close to 2050, a commitment to ensure an uptake of alternative zero and near-zero greenhouse gas fuels by 2030, as well as i).

reducing the total annual greenhouse gas emissions from international shipping by at least 20%, striving for 30%, by 2030, compared to 2008;

reducing the total annual greenhouse gas emissions from international shipping by at least 70%, striving for 80%, by 2040, compared to 2008.

At MEPC 80, the IMO also announced its intention to develop and approve mid-term greenhouse gas reduction measures by Spring 2025, with entry into force of those measures in 2027.

These measures include (1) a goal-based marine fuel standard regulating the phased reduction of the marine fuel's GHG intensity, and (2) a global carbon pricing mechanism.

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 its emissions by 20% under the Kyoto Protocol’s second period from 2013 to 2020.

Starting in January 2018, large ships over 5,000 gross tonnage calling at EU ports are required to collect and publish data on carbon dioxide emissions and other information.

Under the European Climate Law, the EU committed to reduce its net greenhouse gas emissions by at least 55% by 2030 through its “Fit-for-55” legislation package.

As part of this initiative, regulations relating to the inclusion of greenhouse gas emissions from the maritime sector in the European Union’s carbon market, EU ETS, are also forthcoming.

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 certain mobile sources, and proposed regulations to limit greenhouse gas emissions from large stationary sources.

However, in March 2017, former U.S.

President Trump signed an executive order to review and possibly eliminate the EPA’s plan to cut greenhouse gas emissions, and in August 2019, the Administration announced plans to weaken regulations for methane emissions.

Further, on August 13, 2020, the EPA released rules rolling back standards to control methane and volatile organic compound emissions from new oil and gas facilities.

However, U.S.

President Biden recently directed the EPA to publish a proposed rule suspending, revising, or rescinding certain of these rules.

On November 2, 2021, the EPA issued a proposed rule under the CAA designed to reduce methane emissions from oil and gas sources.

The proposed rule would reduce 41 million tons of methane emissions between 2023 and 2035 and cut methane emissions in the oil and gas sector by approximately 74 percent compared to emissions from this sector in 2005.

EPA issued a supplemental proposed rule in November 2022 to include additional methane reduction measures following public input and anticipates issuing a final rule in 2023.

If these new regulations are finalized, they could affect our operations.

Any passage of climate control legislation or other regulatory initiatives by the IMO, European Union, the U.S.

or other countries where the Company operates, or any treaty adopted at the international level to succeed the Kyoto Protocol, that restrict emissions of greenhouse gases could require the Company to make significant financial expenditures which the Company cannot predict with certainty at this time.

The proposed rule would reduce 41 million tons of methane emissions between 2023 and 2035 and cut methane emissions in the oil

and gas sector by approximately 74 percent compared to emissions from this sector in 2005.

EPA issued a supplemental proposed rule in November 2022 to include additional methane reduction measures.

On December 2, 2023, the Biden Administration announced the final rule that includes updated and strengthened standards for methane and other air pollutants from new, modified, and reconstructed sources, as well as Emissions Guidelines to assist states in developing plans to limit methane emissions from existing sources.

These new regulations could potentially 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 the international level to succeed the Kyoto Protocol or Paris Agreement, that restricts emissions of greenhouse gases could require us to make significant financial expenditures which we cannot predict 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 level changes or certain weather events.

International Labor Organization

The International Labour Organization (the “ILO”) is a specialized agency of the UN that has adopted the Maritime Labor Convention 2006 (“MLC 2006”).

A Maritime Labor Certificate and a Declaration of Maritime Labor Compliance is required to ensure compliance with the MLC 2006 for all ships that are 500 gross tonnage or over and are either engaged in international voyages or flying the flag of a Member and operating from a port, or between ports, in another country.

We believe that all of our vessels are in substantial compliance with and are certified to meet MLC 2006.

Vessel Security Regulations

Since 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 Maritime Transportation Security Act of 2002, or MTSA.

To implement certain portions of the MTSA, in July 2003, the U.S.

Coast Guard issued regulations requiring the implementation of certain security requirements aboard vessels operating in waters subject to the jurisdiction of the United States.

The regulations also impose requirements on certain ports and facilities, some of which are regulated by the U.S.

Environmental Protection Agency, or the EPA.

Similarly, in December 2002, amendments to SOLAS created a new chapter of the convention dealing specifically with maritime security.

The new Chapter V became effective in July 2004 and imposes various detailed security obligations on vessels and port authorities, and mandates compliance with the International Ship and Port Facilities Security Code, or the ISPS Code.

Since 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.

Maritime Transportation Security Act of 2002 (“MTSA”).

To implement certain portions of the MTSA, the USCG issued regulations requiring the implementation of certain security requirements aboard 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 Ship and Port Facility Security Code (“the ISPS Code”).

The ISPS Code is designed to enhance the security of ports and ships against terrorism.

To trade internationally, a vessel must attain an International Ship Security Certificate, or ISSC, from a recognized security organization approved by the vessel’s flag state.

Among the various requirements are:

• on-board installation 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;

To trade internationally, a vessel must attain an International Ship Security Certificate (“ISSC”) from a recognized security organization approved by the vessel’s flag state.

Ships operating without a valid certificate may be detained, 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-board installation 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 but only alert the authorities on shore;

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a continuous synopsis record kept onboard 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's identification number, the port at which the ship is registered and the name of the registered owner(s) and their registered address;

• compliance with flag state security certification requirements.

Ships operating without a valid certificate may be detained at port until it obtains an ISSC, or it may be expelled from port, or refused entry at port.

Furthermore, additional security measures could be required in the future which could have a significant financial impact on the Company.

Coast Guard regulations, intended to be aligned with international maritime security standards, exempt non-U.S.

vessels from MTSA vessel security measures, provided such vessels have on board a valid ISSC that attests to the vessel's compliance with SOLAS security requirements and the ISPS Code.

The Company intends to implement the various security measures addressed by MTSA, SOLAS and the ISPS Code, and the Company intends that its fleet will comply with applicable security requirements.

The Company has implemented the various security measures addressed by the MTSA, SOLAS and the ISPS Code.

International Labor Organization

The International Labor Organization (ILO) is a specialized agency of the UN with headquarters in Geneva, Switzerland.

The ILO has adopted the Maritime Labor Convention 2006, or MLC 2006.

A Maritime Labor Certificate 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.

The MLC 2006 entered into force on August 20, 2013.

Amendments to MLC 2006 entered into force on January 18, 2017.

Ships that are subject to the MLC will, after this date, be required to display certificates issued by an insurer or other financial security provider confirming that insurance or other financial security is in place for the cost and expense of crew repatriation, as well as up to four months contractually entitled arrears of wages and entitlements following abandonment.

Amendments also require a certificate for liabilities for contractual claims arising from seafarer personal injury, disability or death.

The Company’s vessels are in full compliance with its requirements.

and compliance with flag state security certification requirements.

The USCG regulations, intended to align with international maritime security standards, exempt non-U.S.

vessels from MTSA vessel security measures, provided such vessels have 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 a significant 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 the Gulf of Aden and Arabian Sea area, as well as off the coast of Western Africa.

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 of uninsured losses could significantly affect our business.

Costs are incurred in taking additional security measures in accordance with Best Management Practices to Deter Piracy, notably those contained in the BMP5 industry standard.

Inspection by Classification Societies

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The Company expects to perform two special surveys in 2024 at an aggregate total cost of approximately $2.0 million.

The Company expects to perform three intermediate surveys in 2023 at an aggregate total cost of approximately $0.4 million.

The Company expects to perform four intermediate surveys in 2024 at an aggregate total cost of approximately $0.3 million.

The Company estimates that offhire related to the surveys and related repair work is ten to twenty days per vessel, depending on the size and condition of the vessel.

7 unchanged sentences

In addition, there is an inherent possibility of marine disaster, including oil spills (e.g.

fuel oil) and other environmental incidents, and the liabilities arising from owning and operating vessels in international trade.

OPA, which imposes virtually unlimited liability for certain oil

pollution accidents upon owners, operators and demise charterers of vessels trading in the United States exclusive economic zone, has made liability insurance more expensive for ship owners and operators trading in the U.S.

fuel oil) and other environmental incidents, and the liabilities

arising from owning and operating vessels in international trade.

OPA, which imposes virtually unlimited liability for certain oil pollution accidents upon owners, operators and demise charterers of vessels trading in the United States exclusive economic zone, has made liability insurance more expensive for ship owners and operators trading in the U.S.

The Company maintains hull and machinery insurance, war risks insurance, protection and indemnity cover and freight, demurrage and defense cover for its owned fleet at amounts it believes address the normal risks of its operations.

26 unchanged sentences

Ocean going vessels represent the most efficient and often the only means of transporting large volumes of dry cargo over long distances.

Dry bulk cargo includes both major and minor commodities such as coal, iron ore, grain, bauxite, cement clinker, and

Dry bulk cargo includes both major and minor commodities such as coal, iron ore, grain, bauxite, cement clinker, and limestone.

Dry bulk trade is influenced by the underlying demand for the dry bulk commodities which in turn is influenced by the level of global economic activity.

34 unchanged sentences

Most of these charters are of a single voyage nature, as trading patterns do not encourage round trip voyage trading.

The ship operator receives payment based on a price per ton of cargo loaded on board the

The ship operator receives payment based on a price per ton of cargo loaded on board the vessel.

The ship operator is responsible for the payment of all voyage expenses, as well as the costs of owning or hiring the vessel.

33 unchanged sentences

The Company's ice class vessels also serve a long term customers requirement in the Canadian Arctic.

The following discussion is based upon the provisions of the U.S.

Internal Revenue Code of 1986, as amended, or the Code, existing and proposed U.S.

Treasury Department regulations, or the Treasury Regulations, administrative rulings and

pronouncements and judicial decisions, all as of the date of this annual report.

Unless otherwise noted, references to the “Company” include the Company’s Subsidiaries.

This discussion assumes that we do not have an office or other fixed place of business in the United States.

Taxation of the Company’s Shipping Income:

The Company anticipates that it will derive a significant portion of its gross income from the use and operation of vessels in international commerce and that this income will principally consist of freights from the transportation of cargoes, hire or lease from time or voyage charters and the performance of services directly related thereto, which the Company refers to as “shipping income”.

Shipping income that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States will be considered to be 50% derived from sources within the United States.

Shipping income attributable to transportation that both begins and ends in the United States will be considered to be 100% derived from sources within the United States.

The Company is not permitted by law to engage in transportation that gives rise to 100% U.S.

source income.

Shipping income attributable to transportation exclusively between non-U.S.

ports will be considered to be 100% derived from sources outside the United States.

Shipping income derived from sources outside the United States will not be subject to U.S.

federal income tax.

Based upon the Company’s anticipated shipping operations, the Company’s vessels will operate in various parts of the world, including to or from U.S.

Unless exempt from U.S.

federal income taxation under Section 883 of the Code, the Company will be subject to U.S.

federal income taxation, in the manner discussed below, to the extent its shipping income is considered derived from sources within the United States.

Application of Section 883 of the Code

Under the relevant provisions of Section 883 of the Code, or Section 883, the Company will be exempt from U.S.

federal income taxation on its U.S.

source shipping income if:

(i) It is organized in a “qualified foreign country,” which is one that grants an equivalent exemption from tax to corporations organized in the United States in respect of the shipping income for which exemption is being claimed under Section 883, and which the Company refers to as the Country of Organization Requirement;

(ii) It can satisfy any one of the following two stock ownership requirements for more than half the days during the taxable year:

• the Company’s stock is “primarily and regularly traded on an established securities market” located in the United States or a “qualified foreign country,” which the Company refers to as the Publicly-Traded Test;

• more than 50% of the Company’s stock, in terms of value, is beneficially owned by any combination of one or more individuals who are residents of a “qualified foreign country” or foreign corporations that satisfy the Country of Organization Requirement and the Publicly-Traded Test, which the Company refers to as the 50% Ownership Test.

Treasury Department has recognized Bermuda, the country of incorporation of the Company and certain of its subsidiaries, as a “qualified foreign country”.

In addition, the U.S.

Treasury Department has recognized Denmark, Canada, Greece, the Marshall Islands, Singapore, British Virgin Islands and Cyprus, the countries of incorporation of certain of the Company’s vessel-owning subsidiaries, as “qualified foreign countries”.

Accordingly, the Company and its vessel-owning subsidiaries satisfy the Country of Organization Requirement.

Therefore, the Company’s eligibility to qualify for exemption under Section 883 is wholly dependent upon being able to satisfy one of the stock ownership requirements.

As discussed below, for the 2023 taxable year we believe the Company satisfied the Publicly-Traded Test, since on more than half the days in the taxable year we believe the Company’s common shares were primarily and regularly traded on Nasdaq, an established securities market in the United States.

As to the Publicly-Traded Test, the Treasury Regulations under Section 883 provide, in pertinent part, that stock of a foreign corporation will be considered to be “primarily traded” on an established securities market in a country if the number of shares of each class of stock that is traded during any taxable year on all established securities markets in that country exceeds the number of shares in each such class that is traded during that year on established securities markets in any other single country.

The Publicly-Traded Test also requires our common shares be “regularly traded” on an established securities market.

Under the Treasury Regulations, our common shares are considered to be “regularly traded” on an established securities market if shares representing more than 50% of our outstanding common shares, by both total combined voting power of all classes of stock entitled to vote and total value, are listed on the market, referred to as the “listing threshold”.

The Treasury Regulations further

require that with respect to each class of stock relied upon to meet the listing threshold (i) such class of stock is traded on the market, other than in minimal quantities, on at least 60 days during the taxable year or 1/6 of the days in a short taxable year, which is referred to as the “trading frequency test”, and (ii) the aggregate number of shares of such class of stock traded on such market during the taxable year is at least 10% of the average number of shares of such class of stock outstanding during such year (as appropriately adjusted in the case of a short taxable year), which is referred to as the “trading volume test”.

Even if we do not satisfy both the trading frequency and trading volume tests, the Treasury Regulations provide that the trading frequency and trading volume tests will be deemed satisfied if our common shares are traded on an established securities market in the United States and such stock is regularly quoted by dealers making a market in our common shares, such the Nasdaq Capital Market, on which our common shares are listed.

Notwithstanding the foregoing, our common shares will not be considered to be regularly traded on an established securities market for any taxable year in which 50% or more of the vote and value of the outstanding common shares are owned, actually or constructively under certain stock attribution rules, on more than half the days during the taxable year by persons who each own 5% or more of the value of our common shares, which we refer to as the 5 Percent Override Rule.

In order to determine the persons who actually or constructively own 5% or more of our common shares, or 5% Shareholders, we are permitted to rely on those persons that are identified on Schedule 13G and Schedule 13D filings with the U.S.

Securities and Exchange Commission as having a 5% or more beneficial interest in our common shares.

In addition, an investment company identified on a Schedule 13G or Schedule 13D filing which is registered under the Investment Company Act of 1940, as amended, will not be treated as a 5% Shareholder for such purposes.

For our 2023 taxable year, we do not believe that we were subject to the 5 Percent Override Rule and, therefore, we believe that we satisfied the Publicly-Traded Test.

There are, however, factual circumstances beyond our control that could cause the Company to lose the benefit of the Section 883 exemption and thereby become subject to U.S.

federal income tax on its U.S.

source shipping income.

There is, therefore, a risk that the Company could no longer qualify for exemption under Section 883 for a particular taxable year if 5% Shareholders were to own 50% or more of the outstanding common shares of the Company on more than half the days during the taxable year.

Due to the factual nature of the issues involved, there can be no assurances as to the tax-exempt status of the Company or any of its subsidiaries.

In the event the 5 Percent Override Rule is triggered, the 5 Percent Override Rule will nevertheless not apply if we can establish that among the closely-held group of 5% Shareholders, there are sufficient 5% Shareholders that are considered to be “qualified shareholders” for purposes of Section 883 to preclude non-qualified 5% Shareholders in the closely-held group from owning 50% or more of our common shares for more than half the number of days during the taxable year.

In any year that the 5 Percent Override Rule is triggered with respect to us, we are eligible for the exemption from tax under Section 883 only if we can nevertheless satisfy the Publicly-Traded Test (which requires, among other things, showing that the exception to the 5 Percent Override Rule applies) or if we can satisfy the 50% Ownership Test.

In either case, certain substantiation and reporting requirements regarding the identity of our shareholders must be satisfied in order to qualify for the Section 883 exemption.

These requirements are onerous and there is no assurance that we would be able to satisfy them.

Taxation in Absence of the Section 883 Exemption To the extent the benefits of Section 883 are unavailable with respect to any item of U.S.

source income, the Company’s U.S.

source shipping income, to the extent not considered to be “effectively connected” with the conduct of a U.S.

trade or business, as described below, would be subject to a 4% tax imposed by Section 887 of the Code on a gross basis, without the benefit of deductions, which we refer to as the “4% gross basis tax regime”.

Since, under the sourcing rules described above, no more than 50% of the Company’s shipping income would be treated as being derived from U.S.

sources, the maximum effective rate of U.S.

federal income tax on the Company’s shipping income, to the extent not considered to be “effectively connected” with the conduct of a U.S.

trade or business, would never exceed 2% under the 4% gross basis tax regime.

To the extent the benefits of the Section 883 exemption are unavailable and our U.S.

source shipping income is considered to be “effectively connected” with the conduct of a U.S.

trade or business, as described below, any such “effectively connected” U.S.

source shipping income, net of applicable deductions, would be subject to the U.S.

federal corporate income tax imposed at rate of 21%.

In addition, we may be subject to the 30% “branch profits” tax on earnings “effectively connected” with the conduct of such U.S.

trade or business, as determined after allowance for certain adjustments, and on certain interest paid or deemed paid attributable to the conduct of such U.S.

trade or business.

source shipping income would be considered “effectively connected” with the conduct of a U.S.

trade or business only if:

• we have, or are considered to have, a fixed place of business in the United States involved in the earning of U.S.

source shipping income;

• substantially all of our U.S.

source shipping income were attributable to regularly scheduled transportation, such as the operation of a vessel that followed a published schedule 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 chartering of a vessel, were attributable to a fixed place of business in the United States.

We do not have, nor will we permit circumstances that would result in having, any vessel sailing to or from the United States on a regularly scheduled basis.

Based on the foregoing and on the expected mode of our shipping operations and other activities, we believe that none of our U.S.

source shipping income is or will be “effectively connected” with the conduct of a U.S.

trade or business.

Gain on Sale of Vessels

Regardless of whether we qualify for exemption under Section 883, we will not be subject to U.S.

federal income taxation with respect to gain realized on a sale of a vessel, provided the sale is considered to occur outside of the United States under U.S.

federal income tax principles.

In general, a sale of a vessel will be considered to occur outside 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 of a vessel by us will be considered to occur outside of the United States.

Taxation of U.S.

The following is a discussion of the material U.S.

federal income tax considerations relevant to an investment decision by a U.S.

Holder, as defined below, with respect to our common shares.

This discussion does not purport to deal with the tax consequences of owning our common shares to all categories of investors, some of which may be subject to special rules.

You are encouraged to consult your own tax advisors concerning the overall tax consequences arising in your own particular situation under U.S.

federal, state, local or foreign law of the ownership of our common shares.

As used herein, the term U.S.

Holder means a beneficial owner of our common shares that (i) is a U.S.

citizen or resident, a U.S.

corporation or other U.S.

entity taxable as a corporation, an estate, the income of which is subject to U.S.

federal income taxation regardless of its source, or a trust if (a) a court within the United States is able to exercise primary jurisdiction over the administration of the trust and one or more U.S.

persons have the authority to control all substantial decisions of the trust or (b) the trust has in effect a valid election to be treated as a United States person for U.S.

federal income tax purposes, (ii) owns our common shares as a capital asset, generally, for investment purposes, and (iii) owns less than 10% of our common shares for U.S.

federal income tax purposes.

If a partnership holds our common shares, the tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership.

If you are a partner in a partnership holding our common shares, you are encouraged to consult your own tax advisor regarding this issue.

Distributions

Subject to the discussion below of passive foreign investment companies, or PFICs, any distributions made by us with respect to our common shares to a U.S.

Holder will generally constitute 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 and profits, as determined under U.S.

federal income tax principles.

Distributions in excess of our earnings and profits will be treated first as a nontaxable return of capital to the extent of the U.S.

Holder’s tax basis in 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 will generally not be entitled to claim a dividends-received deduction with respect to any distributions they receive from us.

Dividends paid on our common shares to a U.S.

Holder who is an individual, trust or estate, which we refer to as a U.S.

Individual Holder, will generally be treated as “qualified dividend income” that is taxable to such U.S.

Individual Holders at preferential tax rates provided that (1) the common shares are readily tradable on an established securities market in the United States (such as the Nasdaq Capital Market, on which our common shares are listed);

(2) we are not a PFIC for the taxable year during which the dividend is paid or the immediately preceding taxable year (see discussion below);

and (3) the U.S.

Individual Holder 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.

There is no assurance that any dividends paid on our common shares will be eligible for these preferential rates in the hands of a U.S.

Individual Holder.

Any dividends paid by the Company which are not eligible for these preferential rates will be taxed as ordinary income to a U.S.

Individual Holder.

Sale, Exchange or other Disposition of Common Shares

Assuming 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 common shares 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 common shares.

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 or other disposition.

Otherwise, it will be treated as short-term capital gain or loss.

Holder’s ability to deduct capital losses is subject to certain limitations.

Passive Foreign Investment Company Status and Significant Tax Consequences

federal income tax rules apply to a U.S.

Holder that holds stock in a foreign corporation classified as a PFIC for U.S.

federal income tax purposes.

In general, we will be treated as a PFIC with respect to a U.S.

Holder if, for any taxable year in which such holder held our common shares, 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 a rental business), or at least 50% of the average value of the assets held by the corporation during such taxable year produce, or are held for the production of, “passive income”.

For purposes of determining whether we are a PFIC, we will be treated as earning and owning our proportionate share of the income and assets, respectively, of any of our subsidiary 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 services would not constitute passive income.

By contrast, rental income would generally constitute “passive income” unless we were treated under specific rules as deriving our rental income in the active conduct of a trade or business.

Although there is no legal authority directly on point, we believe that, for purposes of determining whether we are a PFIC, the gross income we derive or are deemed to derive from the time chartering activities of our wholly-owned subsidiaries more likely than not constitutes 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 whether we are a PFIC.

We believe there is substantial legal authority supporting our position consisting of case law and Internal Revenue Service, or IRS, pronouncements concerning the characterization of income derived from time charters and voyage charters as services income for other tax purposes.

This position is principally based upon the positions that our time charter income will constitute services income, rather than rental income for other tax purposes.

Based on our current and anticipated chartering activities, we do not believe that we will be treated as a PFIC for the current or future taxable years, although no assurance can be given in this regard.

We intend to take the position that we were not treated as a PFIC for our 2023 taxable year.

We note that there is no direct legal authority under the PFIC rules addressing our current and proposed method of operation.

In addition, although we intend to conduct our affairs in a manner to avoid being classified as a PFIC with respect to any taxable year, we cannot assure you that the nature of our operations will not change in the future.

Accordingly, no assurance can be given that the IRS or a court of law will accept our position, and there is a significant risk that the IRS or a court of law could determine that we are a PFIC.

As 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 we refer to as a QEF Election.

As an alternative to making a QEF election, a U.S.

Holder should be able to make a “mark-to-market” election with respect to our common shares, as discussed below, and which election we refer to as a Mark-to-Market Election.

Taxation of U.S.

Holders Making a Timely QEF Election

If we were to be treated as a PFIC for any taxable year and a U.S.

Holder makes a timely QEF Election, which U.S.

Holder we refer to as an Electing Holder, the Electing Holder must report each year for U.S.

federal income tax purposes its pro rata share of our ordinary earnings and our net capital gain, if any, for our taxable year that ends with or within the taxable year of the Electing Holder, regardless of whether or not distributions 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 but undistributed 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 common shares and will not be taxed again once distributed.

Holder would make a QEF Election with respect to any

taxable year that we are a PFIC by filing one copy of IRS Form 8621 with its U.S.

federal income tax return.

To make a QEF Election, a U.S.

Holder must receive annually certain tax information from us.

There can be no assurances that we will be able to provide such information annually.

An Electing Holder would generally recognize capital gain or loss on the sale, exchange or other disposition of our common shares.

Taxation of U.S.

Holders Making a Mark-to-Market Election

Alternatively, if we were to be treated as a PFIC for any taxable year and, as we anticipate, our common shares are treated as “marketable stock”, a U.S.

Holder would be permitted to make a Mark-to-Market Election with respect to our common shares, provided the U.S.

Holder completes and files IRS Form 8621 in accordance with the relevant instructions and related Treasury Regulations.

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 holder’s adjusted tax basis in the common shares.

Holder would also be permitted 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 to the extent of the net amount previously included in income as a result of the Mark-to-Market Election.

Holder’s tax basis in its common shares would be adjusted to reflect any such income or loss amount.

Gain realized on the sale, exchange or other disposition of our 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 in income by the U.S.

Taxation of U.S.

Holders Not Making a Timely QEF or Mark-to-Market Election

Finally, 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 refer to 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 on our common shares in a taxable year in excess of 125% of the average annual distributions received by the Non-Electing Holder in the three preceding taxable years, or, if shorter, the Non-Electing Holder’s holding period for the common shares), and (2) any gain realized on the sale, exchange or other disposition of our common shares.

Under these special rules:

• the excess distribution or gain would be allocated ratably over the Non-Electing Holders’ aggregate holding period for the common shares;

• the amount allocated to the current taxable year and any taxable years before the Company became a PFIC would be taxed as ordinary income;

• 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 interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year.

These 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 with its acquisition of our common shares.

If we were a PFIC, and a Non-Electing Holder who is an individual died while owning our common shares, such holder’s successor generally would not receive a step-up in tax basis with respect to such common shares.

Taxation of Non-U.S.

A beneficial owner of common shares (other than a partnership) that is not a U.S.

Holder is referred to herein as a Non-U.S.

Dividends on Common Shares

Holders generally will not be subject to U.S.

federal income or withholding tax on dividends received from us with respect to our common shares, unless that dividend is effectively connected with the Non-U.S.

Holder’s conduct of a trade or business in the United States.

If the Non-U.S.

Holder is entitled to the benefits of a U.S.

income tax treaty with respect to those dividends, that income is taxable, or taxable at the full rate, only if it is attributable to a permanent establishment maintained by the Non-U.S.

Holder in the United States.

Sale, Exchange or Other Disposition of Common Shares

Holders generally will not be subject to U.S.

federal income or withholding tax on any gain realized upon the sale, exchange or other disposition of our common shares, unless:

• the gain is effectively connected with the Non-U.S.

Holder’s conduct of a trade or business in the United States (and, if the Non-U.S.

Holder is entitled to the benefits of an income tax treaty with respect to that gain, that gain is attributable to a permanent establishment maintained by the Non-U.S.

Holder in the United States);

• the Non-U.S.

Holder is an individual who is present in the United States for 183 days or more during the taxable year of disposition and other conditions are met.

If the Non-U.S.

Holder is engaged in a U.S.

trade or business for U.S.

federal income tax purposes, the income from the common shares, including dividends and the gain from the sale, exchange or other disposition of the common shares, that is effectively connected with the conduct of that trade or business will generally be subject to regular U.S.

federal income tax in the same manner as discussed in the previous section relating to the taxation of U.S.

In addition, if you are a corporate Non-U.S.

Holder, your earnings and profits that are attributable to the effectively connected income, subject to certain adjustments, may be subject to an additional branch profits tax at a rate of 30%, or at a lower rate as may be specified by an applicable income tax treaty.

Backup Withholding and Information Reporting

In general, dividend payments, or other taxable distributions, made within the United States to you will be subject to information reporting requirements.

Such payments will also be subject to “backup withholding” if you are a non-corporate U.S.

Holder and you:

• fail to provide an accurate taxpayer identification number;

• are notified by the IRS that you have failed to report all interest or dividends required to be shown on your

federal income tax returns;

• in certain circumstances, fail to comply with applicable certification requirements.

Holders may be required to establish their exemption from information reporting and backup

withholding by certifying their status on an applicable IRS Form W-8.

If you are a Non-U.S.

Holder and you sell your common shares to or through a U.S.

office of a broker, the payment of the proceeds is subject to both U.S.

backup withholding and information reporting unless you certify that you are a non-U.S.

person, under penalties of perjury, or otherwise establish an exemption.

If you sell your common shares through a non-U.S.

office of a non-U.S.

broker and the sales proceeds are paid to you outside the United States, then information reporting and backup withholding generally will not apply to that payment.

However, U.S.

information reporting, but not backup withholding, will apply to a payment of sales proceeds, including a payment made to you outside the United States, if you sell your common shares through a non-U.S.

office of a broker that is a U.S.

person or has some other contacts with the United States.

Such information reporting requirements will not apply, however, if the broker has documentary evidence that you are a non-U.S.

person and certain other conditions are met, or you otherwise establish an exemption.

Backup withholding is not an additional tax.

Rather, you generally may obtain a refund of any amounts withheld under backup withholding rules that exceed your income tax liability by filing a refund claim with the IRS.

Information Reporting Obligations

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) who hold “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 which the 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 by applicable Treasury regulations).

Specified foreign financial assets would include, among other assets, our common shares, unless the shares are held through an account maintained with 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 willful neglect.

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 required to file IRS Form 8938 does not file such form, the statute of limitations on the assessment and collection of U.S.

federal income taxes of such holder for the related tax year may not close until three years after the date that the required information is filed.

Holders (including U.S.

entities) and Non-U.S.

Holders are encouraged to consult their own tax advisors regarding their reporting obligations under this legislation.

Changes in Global Tax Laws

Long-standing international tax initiatives that determine each country’s jurisdiction to tax cross-border international trade and profits are evolving as a result of, among other things, initiatives such as the Anti-Tax Avoidance Directives, as well as the Base Erosion and Profit Shifting reporting requirements, mandated and/or recommended by the EU, G8, G20 and Organization for Economic Cooperation and Development, including the imposition of a minimum global effective tax rate for multinational businesses regardless of the jurisdiction of operation and where profits are generated (Pillar Two).

As these and other tax laws and related regulations change (including changes in the interpretation, approach and guidance of tax authorities), our financial results could be materially impacted.

Given the unpredictability of these possible changes and their potential interdependency, it is difficult to assess whether the overall effect of such potential tax changes would be cumulatively positive or negative for our earnings and cash flow, but such changes could adversely affect our financial results.

On December 12, 2022, the European Union member states agreed to implement the OECD’s Pillar Two global corporate minimum tax rate of 15% on companies with revenues of at least €750 million effective from 2024.

Various countries have either adopted implementing legislation or are in the process of drafting such legislation.

Any new tax law in a jurisdiction where we conduct business or pay tax could have a negative effect on our company.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business