UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 20-F
 
☐
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR
 
 ☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2025
 
OR
 
 ☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________________ to ___________________

OR
 
 ☐
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report: Not applicable

Commission file number 001-41561
 
Toro Corp.
(Exact name of Registrant as specified in its charter)

N/A
(Translation of Registrant’s name into English)

Republic of the Marshall Islands
(Jurisdiction of incorporation or organization)

223 Christodoulou Chatzipavlou Street
Hawaii Royal Gardens
3036 Limassol, Cyprus
(Address of principal executive offices)

Petros Panagiotidis, Chairman and Chief Executive Officer
223 Christodoulou Chatzipavlou Street, Hawaii Royal Gardens, 3036 Limassol, Cyprus
Phone number: + 357 25 357 768
Fax Number: +357 25 357 796
(Name, Telephone, E-mail and/or Facsimile number and
Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:
 
Title of each class
​
​
Trading Symbol(s)
​
​
Name of each exchange on which registered
Common Shares, $0.001 par value, including associated Preferred Share Purchase Rights under the Shareholder Protection Rights Agreement
​
​
TORO
​
​
The Nasdaq Stock Market LLC

Securities registered or to be registered pursuant to Section 12(g) of the Act: None
 
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the issuer’s classes of share capital as of the close of the period covered by the annual report:

As of December 31, 2025, there were outstanding 21,473,509 common shares of the Registrant, $0.001 par value per share.

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

☐ Yes
☒ No

If this report is an annual report or transition report, indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

☐ Yes
☒ No

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

☒  Yes
☐  No

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during this preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☒  Yes
☐  No

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

​
Large accelerated filer ☐
​
Accelerated filer  ☐
​
Non-accelerated filer  ☒
​
Emerging Growth Company ☒

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☒

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.  ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).  ☐

Indicate by check mark which basis of accounting the Registrant has used to prepare the financial statements included in this filing:
☒ U.S. GAAP
 ☐ International Financial Reporting Standards as issued by the International Accounting Standards Board
 ☐ Other

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the Registrant has elected to follow.
 ☐ Item 17
 ☐ Item 18

If this is an annual report, indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes
☒ No
  
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

 ☐ Yes
 ☐ No

TABLE OF CONTENTS

   
PAGE
PART I
1
ITEM 1.
1
ITEM 2.
1
ITEM 3.
1
ITEM 4.
46
ITEM 4A.
65
ITEM 5.
 66
ITEM 6.
 87
ITEM 7.
 90
ITEM 8.
98
ITEM 9.
99
ITEM 10.
100
ITEM 11.
116
ITEM 12.
116
 
  
 
PART II
 117
ITEM 13.
 117
ITEM 14.
117
ITEM 15.
 117
ITEM 16.
118
ITEM 16A.
118
ITEM 16B.
119
ITEM 16C.
119
ITEM 16D.
119
ITEM 16E.
120
ITEM 16F.
121
ITEM 16G.
121
ITEM 16H.
122
ITEM 16I.
122
ITEM 16J.
122
ITEM 16K.
122
 
 
PART III
123
ITEM 17.
123
ITEM 18.
123
ITEM 19.
123

i
CERTAIN DEFINED TERMS

Unless the context otherwise requires, as of the date of and as used in this Annual Report the term:


 •
“we”, “us”, “our” or the “Company” include the Toro Corp. and all of its subsidiaries;

•
“Castor” refers to Castor Maritime Inc.;

•
“Castor Master Management Agreement” refers to the amended and restated master management agreement between Castor and Castor Ships, effective July 1, 2022 under which the vessels owned by the Toro Subsidiaries were commercially and technically managed by Castor Ships prior to the Spin-Off;

•
“common shares” refers to the common shares, par value $0.001 per share, of Toro;

•
“Distribution” refers to the distribution of 9,461,009 common shares on a pro rata basis to the holders of common stock of Castor

•
“Master Management Agreement” refers to the amended and restated master management agreement entered into between Toro, Toro’s shipowning subsidiaries and Castor Ships, effective April 26, 2023, for the commercial and technical management of our vessels;

•
“Robin” refers to Robin Energy Ltd., a Nasdaq listed company and our former wholly-owned subsidiary to which we contributed our Handysize tanker business in connection with the Robin Spin-Off (as defined and described in “Item 3. Key Information”);

•
“Spin-Off” refers to, collectively, the separation of the assets, liabilities and obligations of Castor and the Toro Subsidiaries and the contribution of the Toro Subsidiaries to Toro, the issuance of 140,000 shares of 1.00% Series A Fixed Rate Cumulative Perpetual Convertible Preferred Shares (the “Series A Preferred Shares”) to Castor, the issuance of the 40,000 Series B Preferred Shares (the “Series B Preferred Shares”) of Toro to Pelagos Holdings Corp (“Pelagos”) and the Distribution, all of which occurred on March 7, 2023 (such date, the “Distribution Date”);

•
“Toro” refers only to Toro Corp. (formerly named “Tankco Shipping Inc.”) and not to its subsidiaries;

•
“Toro Spin-Off Resolutions” refers to, collectively, resolutions by our board of directors (the “Board”) on November 15, 2022 and December 30, 2022, (a) to focus our efforts on our then current business of tanker shipping services, (b) that we have no interest or expectancy to participate or pursue any opportunity in areas of business outside of the tanker shipping business and (c) that Petros Panagiotidis, our director, Chairman, Chief Executive Officer and controlling shareholder and his affiliates, such as Castor Ships S.A. (“Castor Ships”), are not required to offer or inform us of any such opportunity; and

•
“Toro Subsidiaries” refers to the eight tanker-owning subsidiaries and an additional subsidiary formerly owning the M/T Wonder Arcturus contributed to Toro prior to the Distribution (as defined herein).

We use the term “deadweight ton”, or “dwt”, in describing the size of vessels. Dwt, expressed in metric tons, each of which is equivalent to 1,000 kilograms, refers to the maximum weight of cargo and supplies that a vessel can carry. A “ton mile” is a standardized shipping metric and refers to the volume of cargo being carried (a “ton”) and the distance sailed for the shipment in nautical miles.

ii
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Matters discussed in this Annual Report on Form 20-F (the “Annual Report”) may constitute forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include all matters that are not historical facts or matters of fact at the date of this document. We are including this cautionary statement in connection with this safe harbor legislation. This Annual Report and any other written or oral statements made by us or on our behalf may include forward-looking statements, which reflect our current views with respect to future events and financial performance. These forward-looking statements may generally, but not always, be identified by the use of words such as “anticipate”, “believe”, “target”, “likely”, “will”, “would”, “could”, “should”, “seeks”, “continue”, “contemplate”, “possible”, “might”, “expect”, “intend”, “estimate”, “forecast”, “project”, “plan”, “objective”, “potential”, “may”, “anticipates” or similar expressions or phrases.

The forward-looking statements in this Annual Report are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, our management’s examination of current or historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish any forward-looking statements, including these expectations, beliefs or projections.

In addition to these assumptions, other important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include generally:


 •
our business strategy, expected capital spending and other plans and objectives for future operations, including our ability to expand our business as a new entrant to the liquefied petroleum gas (“LPG”) and product tanker shipping industry;


•
market conditions and trends, including volatility and cyclicality in charter rates (particularly for vessels employed in the spot voyage market or pools), factors affecting supply and demand for vessels, such as fluctuations in demand for and the price of the products we transport, fluctuating vessel values, changes in worldwide fleet capacity, opportunities for the profitable operations of vessels in the segments of the shipping industry in which we operate and global economic and financial conditions, including interest rates, inflation and the growth rates of world economies;


•
our ability to realize the expected benefits of vessel acquisitions or sales, and the effects of any change in our fleet’s size or composition, increased transactions costs and other adverse effects (such as lost profit) due to any failure to consummate any sale of our vessels, on our future financial condition, operating results, future revenues and expenses, future liquidity and the adequacy of cash flows from our operations;


•
our relationships with our current and future service providers and customers, including the ongoing performance of their obligations, dependence on their expertise, compliance with applicable laws, and any impacts on our reputation due to our association with them;


•
the availability of debt or equity financing on acceptable terms and our ability to comply with the covenants contained in agreements relating thereto, in particular due to economic, financial or operational reasons;

iii

 •
our continued ability to enter into time charters, voyage charters or pool arrangements with existing and new customers and pool operators and to re-charter our vessels upon the expiry of the existing charters or pool agreements;


•
any failure by our contractual counterparties to meet their obligations;


•
changes in our operating and capitalized expenses, including bunker prices, dry-docking, insurance costs, costs associated with regulatory compliance and costs associated with climate change;


•
our ability to fund future capital expenditures and investments in the acquisition and refurbishment of our vessels (including the amount and nature thereof and the timing of completion thereof, the delivery and commencement of operations dates, expected downtime and lost revenue);


•
instances of off-hire;

iv

 •
fluctuations in interest rates and currencies, including the value of the U.S. dollar relative to other currencies;


•
any malfunction or disruption of information technology systems and networks that our operations rely on or any impact of a possible cybersecurity breach;


•
existing or future disputes, proceedings or litigation;


•
future sales of our securities in the public market, our ability to maintain compliance with applicable listing standards or the delisting of our common shares;


•
volatility in our share price;


•
potential conflicts of interest involving members of our Board, senior management and certain of our service providers that are related parties;


•
general domestic and international geopolitical conditions, such as political instability, events or conflicts (including armed conflicts, such as the war in Ukraine and the tensions in the Middle East, including the outbreak of war in Iran and any escalation or broadening of the conflict), acts of piracy or maritime aggression, such as recent maritime incidents involving vessels in and around the Red Sea, sanctions, “trade wars” (including the imposition of tariffs or other protectionist measures) and potential governmental requisitioning of our vessels during a period of war or emergency;


•
global public health threats and major outbreaks of disease;


•
any material cybersecurity incident;


•
changes in seaborne and other transportation, including due to the maritime incidents in and around the Red Sea, fluctuating demand for LPG carriers, product tankers and/or disruption of shipping routes due to accidents, political events, international sanctions, international hostilities and instability, piracy, smuggling or acts of terrorism, including the closure of the Strait of Hormuz or other shipping routes due to the war in Iran;


•
changes in governmental rules and regulations or actions taken by regulatory authorities, including changes to environmental regulations applicable to the shipping industry and to vessel rules and regulations, as well as changes in inspection procedures and import and export controls;


•
inadequacies in our insurance coverage;


•
developments in tax laws, treaties or regulations or their interpretation in any country in which we operate and changes in our tax treatment or classification;


•
the impact of climate change, adverse weather and natural disasters;


•
accidents or the occurrence of other unexpected events, including in relation to the operational risks associated with transporting refined petroleum products; and

v

 •
any other factor described in this Annual Report.

Any forward-looking statements contained herein are made only as of the date of this Annual Report, and we disclaim any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this Annual Report, except to the extent required by applicable law. New factors emerge from time to time, and it is not possible for us to predict all or any of these factors. Further, we cannot assess the impact of each such factor on our business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward-looking statement. See “Item 3. Key Information—D. Risk Factors” for a more detailed discussion of these risks and uncertainties and for other risks and uncertainties. Please see our filings with the Securities and Exchange Commission for a more complete discussion of these foregoing and other risks and uncertainties. These factors and the other risk factors described in this Annual Report are not necessarily all of the important factors that could cause actual results or developments to differ materially from those expressed in any of our forward-looking statements. Given these uncertainties, investors are cautioned not to place undue reliance on such forward-looking statements.

PART I

ITEM 1.
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

A.
Directors and Senior Management

Not applicable.

B.
Advisers

Not applicable.

C.
Auditors

Not applicable.

ITEM 2.
OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3.
KEY INFORMATION

The descriptions of agreements contained herein are summaries that set forth certain material provisions of those agreements. Such descriptions do not purport to be complete and are subject to, and are qualified in their entirety by reference to, the applicable provisions of each agreement, each of which is an exhibit to this Annual Report or included as an exhibit to certain of our other reports and other information filed with the Securities and Exchange Commission (the “SEC”). We encourage you to refer to each agreement for additional information.

1
Market and Industry Data

This Annual Report includes estimates regarding market and industry data. Unless otherwise indicated, information concerning our industry and the markets in which we operate, including our general expectations, market position, market opportunity, market trends and market size, are based on our management’s knowledge and experience in the markets in which we operate, together with currently available information obtained from various sources, including publicly available information, industry reports and publications, surveys, our clients, trade and business organizations and other contacts in the markets in which we operate. Certain information is based on management estimates, which have been derived from third-party sources, as well as data from our internal research, and are based on certain assumptions that we believe to be reasonable based on such data and other similar sources and on our knowledge of, and our experience to date in, the markets in which we operate.

While we believe the estimated market and industry data included in this Annual Report are generally reliable, such information, which is derived in part from management’s estimates and beliefs, is inherently uncertain and imprecise. Market and industry data are subject to change and may be limited by the availability of raw data, the voluntary nature of the data gathering process and other limitations inherent in any statistical survey of such data. In addition, projections, assumptions and estimates of the future performance of the markets in which we operate and our future performance are necessarily subject to uncertainty and risk due to a variety of factors, including those described in “Cautionary Statement Regarding Forward-Looking Statements” and “Item 3. Key Information—D. Risk Factors.” These and other factors could cause results to differ materially from those expressed in the estimates made by third parties and by us. Accordingly, you are cautioned not to place undue reliance on such market and industry data or any other such estimates. We cannot guarantee the accuracy or completeness of this information.

A.
[Reserved]

Not applicable.

B.
Capitalization and Indebtedness

Not applicable

C.
Reasons for the Offer and Use of Proceeds

Not applicable.

2
D.
Risk Factors

Some of the following risks relate principally to the industry in which we operate. Other risks relate principally to the ownership of our common shares. The occurrence of any of the events described in this section could significantly and negatively affect our business, financial condition, operating results, cash available for dividends, as and if declared, or the trading price of our common shares or any other securities of ours.

Summary of Risk Factors


 •
Charter rates for our vessels are volatile and cyclical in nature. A decrease in charter rates may adversely affect our business, financial condition and operating results.


•
An oversupply of LPG carrier or tanker vessel tonnage may result in a prolonged period of depressed charter rates or further reduce the same when they occur, which may limit our ability to operate our vessels profitably.


•
Future growth in the demand for our services will depend among others on changes in supply and demand, economic growth in the world economy and demand for LPG and LPG transportation relative to changes in worldwide fleet capacity.


•
Global economic and financial conditions may negatively impact the sectors of the shipping industry in which we operate, including the extension of credit.


•
Risks involved in operating ocean-going vessels could affect our business and reputation.


•
The operation of LPG carriers and tankers has unique operational risks associated with the transportation of liquefied petroleum gases.


•
Geopolitical conditions, such as political instability or conflict, terrorist attacks and international hostilities, including the war in Iran, as well as trade protectionism, including in relation to tariffs imposed by the U.S. or other countries, can affect the seaborne transportation industry, which could adversely affect our business.


•
Compliance with rules and other vessel requirements imposed by classification societies may be costly and could reduce our net cash flows and negatively impact our results of operations.


•
We are subject to international laws and regulations and standards (including, but not limited to, environmental standards such as IMO 2020 for the low sulfur fuels and the International Ballast Water Convention for discharging of ballast water), as well as to regional requirements, such as European Union (EU) and U.S. laws and regulations for the protection of the environment, each of which may adversely affect our business, results of operations, and financial condition. In particular, new short-, medium- and long-term measures developed by the IMO, the European Union and other entities to promote decarbonization and the reduction of greenhouse gas (“GHG”) emissions may adversely impact our operations and markets.


•
Increased inspection procedures and tighter import and export controls could increase costs and disrupt our business.


•
We may not be able to execute our strategy and we may not realize the benefits we expect from acquisitions or other strategic transactions.


•
We are dependent on a small number of charterers for substantially all of our business, and the loss of  any such charterer could materially impact our results.


•
We operate secondhand vessels, some of which have an age above the industry average, which may lead to increased technical problems for our vessels and/or higher operating expenses or affect our ability to profitably charter our vessels and to comply with environmental standards and future maritime regulations and result in a more rapid depreciation in our vessels’ market and book values.

3

 •
We are dependent upon Castor Ships, a related party, and other third-party sub-managers for the management of our fleet and business, and failure of such counterparties to meet their obligations could cause us to suffer losses or could negatively impact our results of operations and cash flows.


•
Our investment in the Series D Preferred Shares of Castor and Series A Preferred Shares of Robin constitute a substantial portion of our assets, therefore we are exposed to the risks affecting Castor’s and Robin’s respective businesses.


•
Our Chairman and Chief Executive Officer, who may be deemed to beneficially own, directly or indirectly, a majority of our outstanding common shares and 100% of our Series B Preferred Shares, has control over us.


•
We expect that any credit facility we enter into in the future will contain restrictive financial covenants that we may not be able to comply with due to economic, financial or operational reasons and may limit our business and financing activities.


•
We may be unable to achieve some or all of the benefits that we expect to derive from the spin-off of our Handysize tanker business.


•
We do not have a declared dividend policy, and our Board may not declare dividends on our common shares in the future.


•
Our share price may be highly volatile, as a result, investors in our common shares could incur substantial losses.


•
Future issuances of common shares or other equity securities, including as a result of an optional conversion of our Series A Preferred Shares, or the potential for such issuances, may impact the price of our common shares and could impair our ability to raise capital through equity offerings, to the extent available and permitted. Shareholders may experience significant dilution as a result of any such issuances.


•
We are incorporated in the Marshall Islands, which does not have a well-developed body of corporate and case law.


•
We have limited the fields in which we focus our operations, and this may have an adverse effect on our business, financial condition and operating results.

Risks Relating to Our Industry

Charter rates for our vessels are volatile and cyclical in nature. A decrease in charter rates may adversely affect our business, financial condition and operating results.

The LPG carrier and tanker industry are both cyclical and volatile in terms of charter rates, profitability and vessel values. Fluctuations in charter rates result from changes in the supply and demand for vessel capacity and changes in the supply and demand for the products transported by our vessels. Further, because many factors influencing the supply of, and demand for, vessel capacity (including the supply and demand for the products transported by LPG carriers and tankers) are unpredictable, the timing, direction and degree of changes in these markets are also unpredictable. Deterioration of charter rates resulting from various factors relating to the cyclicality and volatility of our business may adversely affect our ability to profitably charter or re-charter our vessels or to sell our vessels on a profitable basis. This could negatively impact our operating results, liquidity and financial condition.

For a discussion of factors impacting charter rates in the LPG carrier industry, refer to “—Charter rates for LPG carriers are volatile and cyclical in nature. A decrease in LPG carrier charter rates may adversely affect our business, financial condition and operating results.”

4
For a discussion of factors impacting charter rates in the tanker industry, refer to “—Charter rates for tankers are volatile and cyclical in nature. A decrease in tanker charter rates may adversely affect our business, financial condition and operating results.” and affecting the supply of tanker vessel capacity, see “—An oversupply of tanker vessel tonnage may result in a prolonged period of depressed charter rates or further reduce the same when they occur, which may limit our ability to operate our vessels profitably.” These factors are outside of our control and are unpredictable, and accordingly we may not be able to correctly assess the nature, timing and degree of changes in charter rates. Any of these factors could have a material adverse effect on our business, financial condition and operating results.

We are exposed to fluctuating demand, supply and prices for LPG and refined petroleum products, and may be affected by a decrease in the demand for such products and the volatility in their prices due to their effects on supply and demand of maritime transportation services.

Our growth significantly depends on continued growth in worldwide and regional demand for the products we transport and their carriage by sea, which could be negatively affected by several factors, including declines in prices for such products or general political, regulatory and economic conditions.

In past years, China and India have had two of the world’s fastest growing economies in terms of gross domestic product and have been the main driving forces behind increases in shipping trade and the demand for marine transportation. While China in particular has enjoyed rates of economic growth significantly above the world average, slowing economic growth rates may reduce the country’s contribution to world trade growth. If economic growth continues to slow down in China, India or other countries in the Asia Pacific region, particularly in sectors of the economy related to the products we transport, we may face decreases in shipping trade and demand. The level of imports to and exports from China may also be adversely affected by changes in political, economic and social conditions (including a slowing of economic growth) or other relevant policies of the Chinese government, such as changes in laws, regulations or export and import restrictions, internal political instability, changes in currency policies, changes in trade policies and territorial or trade disputes. Furthermore, a slowdown in the economies of the United States or the European Union, or certain other Asian countries may also have adverse impacts on economic growth in the Asia Pacific region. Therefore, a negative change in the economic conditions of any of these countries or elsewhere may reduce demand for our vessels and their associated charter rates, which could have a material adverse effect on our business, financial condition and operating results, as well as our prospects.

Supply and demand for the products our vessels transport are sensitive to the price of oil, which is usually volatile. During 2024, the price of Very Low Sulphur Fuel Oil (“VLSFO”) in Singapore ranged from a peak of $656 per metric ton in February 2024 to a low of $547 per metric ton in December 2024 and a peak of $604 per metric ton in January 2025 to a low of $424 per metric ton in December 2025. Volatility in 2025 was moderate, despite continued heightened geopolitical tension, including the expansion and tightening of sanctions against Russia and Belarus in connection with its invasion of Ukraine. The price of VLSFO in Singapore ranged from a peak of $604 per metric ton in January 2025 to a low of $424 per metric ton in December 2025. In March 2026, the outbreak of war in the Middle East between Iran and the U.S. and Israel, including strikes by Iran on energy infrastructure in a number of other Middle Eastern countries and related disruption of shipping in the Persian Gulf and the substantial closure of the Strait of Hormuz, has resulted in a sharp increase in oil prices and concerns that the supply of crude oil, petroleum products and LPG may be significantly constrained for some period of time. On April 7, 2026, a two-week cease fire in the war between Iran and the U.S. and Israel was announced. The impact of this temporary cease fire, including whether its duration will hold or be extended, is uncertain, including the extent to which it may eliminate conditions that have supported energy prices and high charter rates for vessels that initially had resulted after the outbreak of the war. The resulting volatility in the market for crude oil, petroleum products and LPG and in the product tanker and LPG carrier charter markets, could result in lower product tanker and LPG carrier charter rates and adversely affect our business. As of March 25, 2026, the price of VLSFO in Singapore was $895 per metric ton. For further details on the Russian sanctions, see “—Our charterers calling on ports located in countries or territories that are the subject of sanctions or embargoes imposed by the U.S. government (including OFAC) or other authorities or failure to comply with the U.S. Foreign Corrupt Practices Act (the “FCPA”) or similar laws could lead to monetary fines or penalties and adversely affect our reputation. Such failures and other events could adversely affect the market for our common shares.” .

5
Certain additional factors may influence the price of oil and therefore supply and demand for the products we transport. For example, sustained periods of low oil prices typically result in reduced exploration and extraction because oil companies’ capital expenditure budgets are subject to cash flow from such activities and are therefore sensitive to changes in energy prices, a fact which could limit oil supply and lead to increases in crude oil and refined petroleum product prices. Consumer demand for crude oil and refined petroleum products, and as a result crude oil and refined petroleum product prices, could also be affected by a shift towards other (renewable) energy resources such as wind energy, solar energy, nuclear energy, electricity or water energy. There is growing evidence of softening global demand for oil products, including LPG and refined petroleum products, due to, among other factors, persistent inflationary pressures, the impact of higher interest rates and deteriorating macroeconomic outlooks in certain of the regions we operate in, such as Europe, which has experienced a decline in manufacturing and industrial activity. Changes in oil supply balance and oil prices, or the supply balance and prices of products derived from oil, can have a material effect on demand for LPG and refined petroleum product shipping services. While seaborne LPG trade is expected to continue to grow and remain relatively resilient compared to other oil products, the price of oil is likely to remain volatile as the market continues to adjust in changing patterns in supply and demand. In particular, changes to the trade patterns or trade routes of the products we transport may have a significant negative or positive impact on the ton mile, and therefore the demand for our LPG carriers and tankers.

As of March 25, 2026, trade routes for LPG carriers and tankers have been disrupted by escalating attacks on vessels in and around the Red Sea and in the Persian Gulf and Strait of Hormuz as a result of the outbreak of war in Iran between Iran, U.S. and Israel. For further details, see “—Geopolitical conditions, such as political instability or conflict, terrorist attacks and international hostilities, can affect the seaborne transportation industry, which could adversely affect our business.” Periods of low demand can cause excess vessel supply and intensify the competition in the industry, which often results in vessels being idle for long periods of time, which could reduce our revenues and materially harm the profitability of our business and/or segments, operating results and/or available cash. As noted above, the global economy and demand for LPG and refined petroleum products continue to adapt to disruptions in oil supply due to Russia’s invasion of Ukraine and related sanctions and the market may enter a period of oversupply of oil products as demand shows signs of weakening in 2025 compared to 2024, which may have a material effect on demand for LPG carriers and tanker shipping services, and, consequently, on our business, financial condition, cash flows and operating results. See also “—Geopolitical conditions, such as political instability or conflict, terrorist attacks and international hostilities, can affect the seaborne transportation industry, which could adversely affect our business” and “—Trade disputes or the imposition of tariffs on imports and exports could affect international trade, and therefore could adversely affect our business.”

Worldwide inflationary pressures could negatively impact our results of operations and cash flows.

Over the course of 2025, inflationary pressures across many sectors globally continued to weigh on economic activity, though to a lesser extent than in 2023. The U.S. consumer price index, an inflation gauge that measures costs across dozens of items, rose slightly to 3.0% in September 2025 up from 2.9% in December 2024, before decreasing slightly to 2.7% in December 2025. The ongoing effects of inflation on the supply and demand of the products we transport could alter demand for our services and reduced economic activity due to governmental responses to persistent inflation in any of the regions in which we operate could cause a reduction in trade by altering consumer purchasing habits and reducing demand for the products we carry. As a result, the volumes of goods we deliver and/or charter rates for our vessels may be adversely affected. Alternatively, if inflation fails to abate in 2026, we could experience persistently high operating, voyage and administrative costs. Any of these factors could have an adverse effect on our business, financial condition, cash flows and operating results. For additional information, see “—We are exposed to fluctuating demand, supply and prices for LPG and refined petroleum products, and may be affected by a decrease in the demand for such products and the volatility in their prices due to their effects on supply and demand of maritime transportation services.”

Global economic and financial conditions may negatively impact the sectors of the shipping industry in which we operate, including the extension of credit.

As the shipping industry is highly dependent on economic growth and the availability of credit to finance and expand operations, it may be negatively affected by a decline in economic activity or a deterioration of economic growth and financial conditions. Various factors may impact economic growth and the availability of credit, including those discussed in “—We are exposed to fluctuating demand, supply and prices for LPG products and refined petroleum products, and may be affected by a decrease in the demand for such products and the volatility in their prices due to their effects on supply and demand of maritime transportation services.” and “—Worldwide inflationary pressures could negatively impact our results of operations and cash flows.”

6
A decline in economic activity or a deterioration of economic growth and financial conditions may have a number of adverse consequences for the sectors of the shipping industry in which we operate, including, among other things:


 •
low charter rates, particularly for vessels employed on short-term time charters and in the spot voyage market or pools;


•
decreases in the market value of vessels and the limited second-hand market for the sale of vessels;


•
limited financing for vessels;


•
widespread loan covenant defaults; and


•
declaration of bankruptcy by certain vessel operators, vessel managers, vessel owners, shipyards and charterers.

The occurrence of one or more of these events could have a material adverse effect on our business, cash flows, compliance with debt covenants, financial condition and operating results.

Increases in bunker prices could affect our operating results and cash flows.

Fuel is a significant, if not the largest, expense in our shipping operations when vessels are under voyage charters and is an important factor in negotiating charter rates. Bunker prices have increased significantly since 2021, starting at $415 per metric ton in January 2021 and reaching a high of $1,100 per metric ton in July 2022, before declining to a still elevated price of $617 per metric ton by the end of December 2022. This volatility was in part attributable to the eruption of the armed conflict in Ukraine. In 2023, 2024 and 2025, bunker rates demonstrated overall decreasing volatility as the market adapted to the conflict in Ukraine. In particular, in 2024, the price of VLSFO in Singapore reached a high of $656 per metric ton in February, and a low of $547 per metric ton in December. The price of VLSFO in Singapore reached a high of $604 per metric ton in January 2025 which decreased to $424 per metric ton in December, 2025. As of March 25, 2026, the price of VLSFO in Singapore was approximately $895 per metric ton but uncertainty regarding its future direction remains. In addition, the conflict in the Middle East, including recent maritime incidents in and around the Red Sea, could cause disruptions to the production and supply of oil, and therefore fuel, with adverse impacts on the price of VLSFO in 2026. As a result, our bunker costs for our vessels when off-hire, idling, or operating in the spot voyage charter market have increased substantially in recent years and may continue to increase, which could have an adverse impact on our operating results and cash flows.

Geopolitical conditions, such as political instability or conflict, terrorist attacks and international hostilities, can affect the seaborne transportation industry, which could adversely affect our business.

We conduct most of our operations outside of the United States and our business, results of operations, cash flows, financial condition and ability to pay dividends, if any, in the future may be adversely affected by changing economic, political and government conditions in the countries and regions where our vessels are employed or registered. Moreover, we operate in a sector of the economy that has been and is likely to continue to be adversely impacted by the effects of geopolitical developments, including political instability or conflict, terrorist attacks or international hostilities.

Currently, the world economy faces a number of challenges, including tensions between the United States and China, new and continuing turmoil and hostilities in Russia, Ukraine, the Middle East, including the war in Iran (and such as recent maritime incidents in and around the Red Sea and up to 600 nautical miles off the East African coast) and other geographic areas and countries, continuing economic weakness in the European Union and slowing growth in China and the continuing threat of terrorist attacks around the world.

7
In particular, the armed conflict between Russia and Ukraine and a severe worsening of Russia’s relations with Western economies has disrupted global markets, contributing to shifts in trading patterns and trade routes for products, including LPG, which may continue into the future. These changes are due in part to the imposition of sanctions against Russia and Belarus by various governments, which have contributed to increased volatility in the price of energy and other products. The instability in Venezuela and the outbreak of war in Iran, including restrictions on transit of ships through the Strait of Hormuz, has and may continue to disrupt the supply of energy products including oil, and shipping of refined petroleum products and LPG.  These circumstances have led to an increase in the length of LPG and oil tanker voyages and sanctions have resulted in elimination of some vessels that are engaged in sanctioned activity from the available fleet. These factors resulted in fleet inefficiencies and support for LPG and tanker charter rates, which may not continue. The factors influencing the supply of and demand for LPG and tanker shipping capacity are outside of our control, and we may not be able to correctly assess the nature, timing and degree of changes in industry conditions. See “—Our charterers calling on ports located in countries or territories that are the subject of sanctions or embargoes imposed by the U.S. government (including OFAC) or other authorities or failure to comply with the U.S. Foreign Corrupt Practices Act (the “FCPA”) or similar laws could lead to monetary fines or penalties and adversely affect our reputation. Such failures and other events could adversely affect the market for our common shares”, “—Worldwide inflationary pressures could negatively impact our results of operations and cash flows”, “—We are exposed to fluctuating demand, supply and prices for LPG products and refined petroleum products, and may be affected by a decrease in the demand for such products and the volatility in their prices due to their effects on supply and demand of maritime transportation services.” and “—Trade disputes or the imposition of tariffs on imports and exports could affect international trade, and therefore could adversely affect our business”.

Geopolitical conflicts have also resulted in attacks on vessels, mining of waterways and other efforts to disrupt international shipping. An attack on one of our vessels or merely the perception that our vessels are a potential piracy or terrorist target could have a material adverse effect on our business, financial condition and operating results. Notably, since November 2023, vessels in and around the Red Sea have faced an increasing number of attempted hijackings and attacks by drones and projectiles launched from Yemen, which armed Houthi groups have claimed responsibility for. These groups have stated that these attacks are a response to the Israel-Hamas conflict. While initially Israeli and US-linked vessels were thought to be the primary targets of these attacks, vessels from a variety of countries have been the subject of these incidents, including vessels flying the Marshall Islands flag. As a result of these attacks, certain vessels have sunk, been set alight and suffered other physical damage and crew injuries and fatalities have occurred, leading to heightened concerns for crew safety and security, as well as trade disruption. An increasing number of companies have rerouted their vessels to avoid passage through affected areas and are now completing their trades via alternative routes, such as through the Cape of Good Hope, incurring greater shipping costs and delays, as well as the costs of security measures. Though governments including the United States and United Kingdom have responded with air strikes against the hostile groups believed to be responsible for these attacks, the continuation or escalation of the conflict may drive the foregoing costs and risks higher. Any physical damage to our vessels or injury or loss of life of any of the individuals onboard our vessels could result in significant reputational damage or operational disruption, the exact magnitude of which cannot be estimated with certainty at this time. In addition, recently Iran has threatened to attack vessels, mine or otherwise close the Strait of Hormuz as a result of the war in Iran, which may have similar effects. There can be no assurance regarding the precise nature, expected duration or likely severity of these maritime incidents. Future hostilities or other political instability in regions where our vessels trade could also negatively affect the shipping industry by rising costs and changing patterns of supply and demand, as well as our trade patterns, trade routes, operations and performance.

Further, if attacks on vessels occur in regions designated by insurers as “war risk” zones or listed by the Joint War Committee (“JWC”) as areas of heightened risk for war, strikes, terrorism, or related perils, the premiums payable for such coverage could increase significantly. In some cases, such insurance coverage may become more difficult to obtain, or unavailable altogether. As of March 3, 2026, the JWC’s Listed Areas included parts of the Southern Red Sea, Gulf of Aden, and Black Sea, as well as the coastal waters of Yemen, Israel, Iran, Somalia, Nigeria, Libya, Bahrain, Djibouti, Kuwait, Oman and Qatar, among others. Insurance costs for vessels with links to the United States, United Kingdom or Israel have already increased as a result of attacks in and around the Red Sea, with such vessels reportedly seeing significant increases in their war risk premium relative to other vessels transiting through the Red Sea, and should these attacks continue or become indiscriminate, we could similarly experience a significant increase in our insurance costs and/or we may not be adequately insured to cover losses from these incidents. See also “—Our business has inherent operational risks, which may not be adequately covered by insurance.” Crew costs, including costs that may be incurred to the extent we employ onboard security guards, could also increase due to acts of piracy or other maritime incidents, including attacks on vessels. Our customers could also suffer significant losses, impairing their ability to make payments to us under our charters. Any of the foregoing factors could have an adverse effect on our business, results of operations, financial condition and cash flows.

8
The threat of future terrorist attacks around the world also continues to cause uncertainty in the world’s financial markets and international commerce and may affect our business, operating results and financial condition. Continuing conflicts and recent developments in the Middle East, including continuing unrest in Syria and Iran and relating to the Israel-Hamas conflict and recent attacks on vessels in and around the Red Sea which armed Houthi groups have claimed responsibility for, as well as the overthrow of Afghanistan’s democratic government by the Taliban, may lead to additional acts of terrorism and armed conflict around the world. This may contribute to further economic instability in the global financial markets and international commerce. Additionally, the outbreak of war in Iran, has and may continue to affect the shipping industry, including restrictions on the ability of ships to transit the Strait of Hormuz and attacks on vessels in the Persian Gulf and throughout the region. Any of these occurrences could have a material adverse impact on our operating results, revenues and costs. See also “—Acts of piracy or other attacks on ocean-going vessels, including due to geopolitical conflicts, could adversely affect our business.”

Geopolitical conditions in the shipping industry have also been significantly impacted by GPS jamming and spoofing. These practices pose serious risks to navigation systems, particularly in high-risk areas such as the Strait of Hormuz, Black Sea, Eastern Mediterranean, Red Sea and other regional hotspots. As new jamming hubs emerged in 2025 in Sudan, Djibouti, and the Black Sea–Gulf of Guinea corridor and 13 European coastal nations and Iceland issued a joint warning in January 2026 over growing GNSS interference in the Baltic and North Sea. The scale has also grown dramatically over 10,000 vessels were affected in Q2 2025 alone, an eightfold increase over the prior quarter. This particular issue may impose additional costs, as it might be considered necessary to provide vessels with additional navigational equipment to countermeasure jamming and spoofing.

Separately, protectionism has been and continues to be on the rise globally. For example, in Europe, large sovereign debts and fiscal deficits, low growth prospects and high unemployment rates in a number of countries have contributed to the rise of various Eurosceptic parties, which advocate for their countries to leave the European Union and/or adopt protectionist policies. These parties are increasingly popular in various European countries, including major European economic powers such as Germany and France. The withdrawal of the United Kingdom from the European Union has increased the risk of additional trade protectionism and has created supply chain disruptions. The United States has similarly seen a rise in protectionist policies. For example, in 2018, China and the United States each began implementing increasingly protective trade measures, including significant tariff increases, in a trade war between these countries.

Recently, the U.S. government has made statements and taken actions that may impact U.S. and international trade policies, including tariffs affecting certain Chinese industries. Additionally, new tariffs have been imposed by the second Trump administration on imports from Canada, Mexico and China as well as on imports of steel and aluminum. The United States has recently imposed blanket 10% tariffs on virtually all imports to the U.S. and significantly higher tariffs applicable to imports from many countries, including tariffs aggregating 104% on imports from China, which have resulted in other countries imposing additional tariffs on imports from the U.S., including additional tariffs of 125% on imports from the U.S., announced by China, and is likely to continue to result in more retaliatory tariffs. On April 9, 2025, the U.S. announced a temporary pause on its tariffs applicable to many countries, while increasing the tariffs applicable to imports from China, with the U.S. subsequently announcing the imposition of substantial tariffs, well in excess of the blanket 10% tariff threshold previously announced, on numerous countries and specific goods effective from August 2025.

A ruling by the U.S. Supreme Court in February 2026 invalidated many of the tariffs imposed by the U.S. administration in 2025, however, the U.S. administration immediately imposed new tariffs based on different statutory authority. The U.S. administration has and is expected to continue to broadly impose tariffs, which has led, and could lead to further, corresponding punitive actions by the countries with which the U.S. trades. It is unknown whether and to what extent such new tariffs (or other new laws or regulations which may be adopted) will affect us or our industry. If any new tariffs, legislation and/or regulations are implemented, or if existing trade agreements are renegotiated or, in particular, if the U.S. government takes retaliatory trade actions due to the ongoing U.S.-China trade tension, such changes could have an adverse effect on our business, results of operations and financial condition. These policy pronouncements have created significant uncertainty about the future relationship between the United States and China, Canada, Mexico and other exporting countries, including with respect to trade policies, treaties, government regulations and tariffs, and has led to concerns regarding the potential for an extended trade war. Protectionist developments, or the perception they may occur, may have a material adverse effect on global economic conditions, and may significantly reduce global trade and, in particular, trade between the United States and other countries, including China, which could adversely and materially affect our business, results of operations, and financial condition.

9
On April 17, 2025, the United States Trade Representative ("USTR") announced the imposition of port fees on certain vessels calling at U.S. ports. The fees, which took effect on October 14, 2025, with phased increases scheduled through 2028, target vessels that are (i) owned or operated by Chinese shipping companies, (ii) built at Chinese shipyards, or (iii) owned or operated by companies that have newbuilding orders at Chinese shipyards. Depending on vessel size and cargo type, charges could reach up to $1.5 million per U.S. port call per Chinese-built vessel, based on the net tonnage of the vessel. On October 30, 2025, the U.S. and China each announced that these port fees would be suspended for a one-year period; however, the suspension may be lifted and the underlying regulatory framework remains in effect.

Our fleet currently includes the M/T Wonder Altair, an MR tanker built in China in 2021. As a result, if the USTR port fees are reimposed upon expiration of the suspension period, we or our charterers may be subject to port fees for U.S. port calls made by the M/T Wonder Altair, which could materially increase the cost of deploying this vessel on routes that include U.S. ports. In addition, the fees apply not only to individual Chinese-built vessels but may also be assessed based on the proportion of Chinese-built vessels in an operator's fleet. As the M/T Wonder Altair represents approximately 25% of our current fleet by vessel count, this could result in fees being assessed on our other vessels calling at U.S. ports as well. In response to the USTR measures, China has imposed reciprocal port fees on U.S.-linked vessels, further escalating trade tensions. The imposition of these fees, if resumed, could limit the trading flexibility of our fleet, reduce the number of potential charterers willing to employ our vessels on U.S.-linked trade routes, and adversely affect our revenues, operating results and the market value of the M/T Wonder Altair. We have no current newbuilding orders at Chinese shipyards. It is unknown the full effect that these port fees, should they be reimposed, will have on us, our fleet or our industry generally.

Trade barriers to protect domestic industries against foreign imports depress shipping demand. Protectionist developments, such as the imposition of trade tariffs or the perception they may occur, may have a material adverse effect on global economic conditions, and may significantly reduce global trade. Moreover, increasing trade protectionism may cause an increase in (a) the cost of goods exported from regions globally, (b) the length of time required to transport goods and (c) the risks associated with exporting goods. Such increases may significantly affect the quantity of goods to be shipped, shipping time schedules, voyage costs and other associated costs, which could have an adverse impact on our charterers’ business, operating results and financial condition and could thereby affect their ability to make timely charter hire payments to us and to renew and increase the number of their time charters with us. This could have a material adverse effect on our business, financial condition and operating results. Further, protectionist policies in any country could impact global markets, including foreign exchange and securities markets. Any resulting changes in currency exchange rates, tariffs, treaties and other regulatory matters could in turn adversely impact our business, results of operations, financial condition and cash flows.

We are new entrants to the competitive tanker and LPG shipping sector and may face difficulties in establishing our business.

Our LPG carrier-owning subsidiaries entered into the LPG shipping business in 2023, and we re-entered the tanker shipping business in the third quarter of 2025, which certain of our previously owned subsidiaries had operated in from 2021 until April 2025. As new entrants to the tanker and LPG shipping businesses, we may struggle to establish market share and broaden our customer base for our operations in these highly competitive markets due to our lesser-known reputation, while incurring operating costs associated with the operation and upkeep of our tankers and LPG carriers. In addition, we compete with various companies that operate larger fleets and may be able to offer more competitive prices and greater availability and diversity of vessels, all while achieving economies of scale in their fleet operating costs. Due in part to the fragmented tanker and LPG carrier markets, existing or additional competitors with greater resources may enter or grow their positions in the tanker and LPG carrier sector through consolidations or acquisitions and could operate more competitive fleets, causing us to lose or be unable to gain market share. Any of these competitors may be able to devote greater financial and other resources to their activities than we can, resulting in a significant competitive threat to us.

Further, we likely possess less operational expertise relative to more experienced competitors and, in general, are more heavily reliant on the knowledge and services of third-party managers for our commercial success. As of the date of this Annual Report, our manager, Castor Ships, has subcontracted, with our consent, the technical management for all of our vessels to a third-party ship-management company, except M/T Wonder Maia and M/T Wonder Altair for which Castor Ships has provided technical management since September 29, 2025 and February 8, 2026, respectively. Any failure by us or Castor Ships to partner with third-party providers with the appropriate expertise to effectively deliver our services could tarnish our reputation as a vessel operator and impact the growth of our business, our financial condition and operating profits.

Risks involved in operating ocean-going vessels could affect our business and reputation.

The operation of an ocean-going vessel carries inherent risks. These risks include the possibility of:


 •
a marine disaster;

10

 •
war and terrorism;


•
piracy;


•
environmental and other accidents;


•
cargo and property losses and damage;


•
business interruptions caused by mechanical failure, human error, armed conflict, terrorism, piracy, political action in various countries, labor strikes or adverse weather conditions; and


•
work stoppages or other labor problems with crew members serving on our vessels, some of whom are unionized and covered by collective bargaining agreements.

Environmental laws often impose strict liability for remediation of spills and releases of oil, oil products and hazardous substances, which could subject us to liability without regard to whether we were negligent or at fault. A spill of any products carried by our vessels, or a release of other hazardous substances from our vessels, could result in significant liability, including fines, penalties and criminal liability and remediation costs for natural resource damages, as well as third-party damages.

Any of these circumstances or events could increase our costs or lower our revenues. The involvement of our vessels in an oil spill or other environmental incident may harm our reputation as a safe and reliable operator, which could have a material adverse effect on our business, cash flows, financial condition, and operating results.

In addition to the foregoing risks, the operation of LPG carriers and tankers presents unique operational risks. See “—The operation of LPG carriers has unique operational risks associated with the transportation of liquefied petroleum gases.” In addition to the foregoing risks, the operation of tankers and transportation of oil presents unique operational risks. See “—The operation of tankers has unique operational risks associated with the transportation of refined petroleum products.”

Acts of piracy or other attacks on ocean-going vessels, including due to geopolitical conflicts, could adversely affect our business.

Acts of piracy have historically affected ocean-going vessels trading in regions of the world such as the South China Sea, the Indian Ocean and, in particular, the Gulf of Aden off the coast of Somalia and the Gulf of Guinea region off Nigeria, which experienced increased incidents of piracy in recent years. Pirate activity is also intermittent off the coast of Eastern Malaysia, and a number of oil cargo seizures have occurred there. Sea piracy incidents continue to occur with LPG carrier and tanker vessels particularly vulnerable to such attacks. Acts of piracy may result in death or injury to persons or damage to property. In addition, crew costs, including costs of employing on-board security guards, could increase in such circumstances. We may not be adequately insured to cover losses from these incidents, which could have a material adverse effect on our business, financial condition, cash flows and results of operations. See also “—Geopolitical conditions, such as political instability or conflict, terrorist attacks and international hostilities, can affect the seaborne transportation industry, which could adversely affect our business” and “—Our business has inherent operational risks, which may not be adequately covered by insurance.”

Our charterers calling on ports located in countries or territories that are the subject of sanctions or embargoes imposed by the U.S. government (including OFAC) or other authorities or failure to comply with the U.S. Foreign Corrupt Practices Act (the “FCPA”) or similar laws could lead to monetary fines or penalties and adversely affect our reputation. Such failures and other events could adversely affect the market for our common shares.

11
Certain countries (including certain regions of Ukraine, Russia, Belarus, Cuba, Iran, North Korea and Syria), entities and persons are targeted by economic sanctions and embargoes imposed by the United States, the European Union and other jurisdictions, and a number of those countries have been identified as state sponsors of terrorism by the U.S. Department of State. In particular, sanctions imposed in relation to the Russian invasion of Ukraine have created significant disruptions in the global economy and in the shipping industry. Since Russia’s invasion of Ukraine in 2022, economic sanctions have been imposed by the United States, the European Union, the United Kingdom and a number of other countries on Russian financial institutions, businesses and individuals, as well as certain regions within the Donbas region of Ukraine. Certain of these sanctions have targeted the Russian oil and petroleum industry and, in particular, the transport of Russian crude oil and refined petroleum products by maritime vessels. Several jurisdictions, including the United States, the United Kingdom, European Union and Canada, have adopted import bans of Russian energy products, such as crude oil and refined petroleum products. The United Kingdom and European Union have also introduced export restrictions, which capture the provision of maritime vessels and supplies to or for use in Russia. They have also imposed additional restrictions on providing financing, financial assistance, technical assistance and brokering or other services that would further the provision of vessels to or for use in Russia. For example, the United Kingdom has barred the provision of ships or services, including shipping services, facilitating the maritime transport of Russian crude oil, with effect from December 5, 2022, and refined oil products, with effect from February 5, 2023. The Group of Seven nations and the European Union have also imposed a price cap of $60 per barrel on Russian crude oil with effect from December 5, 2022, and introduced a separate price cap on refined petroleum products with effect from February 5, 2023. In October 2023, the United States also introduced sanctions against 50 tanker vessels with ties to the Russian oil trade, significantly impeding such vessels’ abilities to load cargoes, and has imposed sanctions against at least two companies and their tankers for breaching the $60 per barrel price cap on Russian crude oil. In June 2024, the Council of the European Union introduced a new package of sanctions on Russian oil, including a new measure targeting specific vessels contributing to Russia’s war against Ukraine, which are subject to a port access ban and a ban on the provision of services; so far, the EU has placed 79 vessels on this list, including tankers transporting Russian oil and performing dangerous and illegal shipping practices. On January 15, 2025, the U.S. Department of Treasury introduced new sanctions on two Russian oil producers as well as 183 vessels that have shipped Russian oil in violation of existing sanctions. These and other recent sanctions efforts by the United States, the European Union and United Kingdom have focused on preventing the circumvention of sanctions against Russia. These restrictions may affect our current or future charters.

In addition, certain jurisdictions, such as Greece and the United States, have temporarily detained vessels suspected of violating sanctions. Countries, such as Canada, the United Kingdom and the EU, have also broadly prohibited Russian-affiliated vessels from entering their waters and/or ports. Furthermore, certain of the oil majors, such as ExxonMobil and BP, have divested from Russia or announced their intention to exit the region.

As a result of these bans and related trade sanctions, many consumers of crude oil and refined petroleum products have sought out alternative sources of these products and trade patterns and trade routes for crude oil and refined petroleum products have changed. For example, the United States has emerged as a major producer of crude oil, refined petroleum products and natural gas liquids, producing record amounts of oil in 2023 that have helped to offset supply constraints due to Russia’s exclusion from the market and strong demand for exported crude oil. The prices of crude oil, refined petroleum and LPG-related products have increased and remained elevated as a result of these bans and related trade sanctions, though record production by the United States has exerted downward price pressure. Increases in the price of oil, refined petroleum and LPG products have and are likely to affect adversely global oil demand and reduce worldwide oil transport should they continue. While global shipping rates of oil have generally increased since the commencement of Russia’s invasion of Ukraine, especially because of increased ton mile demand due to changing trading patterns and the banning of Russian oil tankers by several countries, it is uncertain what the ultimate result will be on our business and financial position. However, due to their effect on the global market for petroleum products, current or additional sanctions could have a material adverse impact on our business, cash flows, financial condition and operating results. We will keep monitoring the events in the Ukraine war and the possibility of the cessation of the hostilities between the two nations.

Economic sanctions and embargo laws and regulations vary in their application with regard to countries, entities or persons and the scope of activities they subject to sanctions. These sanctions and embargo laws and regulations may be strengthened, relaxed or otherwise modified over time. Any violation of sanctions or embargoes could result in the Company incurring monetary fines, penalties or other sanctions. In addition, certain institutional investors may have investment policies or restrictions that prevent them from holding securities of companies that have contacts with countries or entities or persons within these countries that are identified by the U.S. government as state sponsors of terrorism. We are required to comply with such policies in order to maintain access to charterers and capital.

12
Current or future counterparties of ours may be affiliated with persons or entities that are or may be in the future the subject of sanctions imposed by the governments of the United States, the European Union, and/or other international bodies. Further, it is possible that, in the future, our vessels may call on ports located in sanctioned jurisdictions on charterers’ instructions, without our consent and in violation of their charter party. Moreover, our charterers may violate applicable sanctions and embargo laws and regulations as a result of actions that do not involve us or our vessels. As a result, we may be required to terminate existing or future contracts to which we, or our subsidiaries, are party.

We operate in a number of countries throughout the world, including countries known to have a reputation for corruption. We are committed to doing business in accordance with applicable anti-corruption laws, and have adopted a code of business conduct and ethics. However, we are subject to the risk that we, or our affiliated entities, or our affiliated entities’ respective officers, directors, employees or agents’ actions may be deemed to be in violation of such anti-corruption laws, including the FCPA. Any such violation could result in substantial fines, sanctions, civil and/or criminal penalties and curtailment of operations in certain jurisdictions.

If we, our affiliated entities, or our or their respective officers, directors, employees and agents, or any of our charterers are deemed to have violated economic sanctions and embargo laws, or any applicable anti-corruption laws, our results of operations may be adversely affected due to the resultant monetary fines, penalties or other sanctions. In addition, we may suffer reputational harm as a result of any actual or alleged violations. This may affect our ability to access U.S. capital markets and conduct our business, and could result in some investors deciding, or being required, to divest their interest, or not to invest, in us. The determination by these investors not to invest in, or to divest from, our common shares may adversely affect the price at which our common shares trade. Investor perception of the value of our common shares may also be adversely affected by the consequences of war, the effects of terrorism, civil unrest and governmental actions in the countries or territories in which we operate. Any of these factors could adversely affect our business, financial condition, and operating results.

Furthermore, detecting, investigating and resolving actual or alleged violations is expensive and can consume significant time and attention of our senior management and adversely affect our business, results of operations or financial condition as a result.

We may use artificial intelligence (“AI”) to grow and manage our business. This technology and the rapid advancement of AI present both opportunities and significant risks to our operations.

We may deploy AI-enabled tools to optimize operations and performance monitoring, including vessel deployment, fuel efficiency, routing, and overall utilization, with the objective of supporting better decision-making and targeting an improvement in our operations. However, there can be no assurance that we will be successful in leveraging AI to support our business. AI-related challenges include compliance with emerging laws and regulations, ethical and legal issues, reputational harm from potential system failures, and risks associated with third-party vendors employing AI. The complexity and rapid evolution of AI technologies further amplify these risks, potentially exposing the organization to regulatory penalties, reputational damage, or operational disruptions.

While we are committed to using AI responsibly, as well as ensuring compliance with applicable laws and ethical standards, the inherent complexity and pace of change may result in unforeseen challenges. Key areas of concern include data privacy, data protection, ethical AI use, and intellectual property. Additionally, failure to adapt to technological advancements may negatively impact our competitive position.

Global public health threats can affect the seaborne transportation industry, which could adversely affect our business.

Public health threats or widespread health emergencies, such as the COVID-19 pandemic, influenza and other highly communicable diseases or viruses (or concerns over the possibility of such threats or emergencies) could lead to a significant decrease in demand for the transportation of the products carried by our vessels. In recent years, our business and the LPG carrier sectors have from time to time been impacted by various public health emergencies in various parts of the world in which we operate, most notably the COVID-19 pandemic. While most countries around the world have removed restrictions implemented in response to the COVID-19 pandemic, the emergence of new public health threats or widespread health emergencies, whether globally or in the regions in which we operate, may result in new restrictions, lead to further economic uncertainty and heighten certain of the other risks described in this Annual Report. In particular, such events have and may also in the future adversely impact our operations, including timely rotation of our crews, the timing of completion of any outstanding or future newbuilding projects or repair works in dry-dock as well as the operations of our customers. Delayed rotation of crew may adversely affect the mental and physical health of our crew and the safe operation of our vessels as a consequence. Any public health threat or widespread health emergency, whether widespread or localized, could create significant disruptions in our business and adversely impact our business, financial condition, cash flows and operating results.

13
A cyber-attack could materially disrupt our business and may result in a significant financial cost to us.

We rely on information technology systems and networks in our operations, our vessels and administration of our business. Information systems are vulnerable to security breaches by computer hackers and cyber terrorists. As cyberattacks become increasingly sophisticated, and as tools and resources become more readily available to malicious third parties, including the risk associated with the use of emerging technologies, such as AI and quantum computing for nefarious purposes, there can be no guarantee that our actions, security measures and controls designed to prevent, detect or respond to intrusion, to limit access to data, to prevent destruction or alteration of data or to limit the negative impact from such attacks, can provide absolute security against compromise. We rely on industry-accepted security measures and technology to securely maintain confidential and proprietary information maintained on our information systems. However, these measures and technology may not adequately prevent security breaches. Our business operations could be targeted by individuals or groups seeking to sabotage or disrupt our information technology systems and networks, to steal data, or to ask for ransom. A successful cyber-attack could materially disrupt our operations, including the safety of our operations, or lead to unauthorized release, alteration or unavailability of information in our systems. Any such attack or other breach of our information technology systems could have a material adverse effect on our business and operating results. In addition, the unavailability of our information systems or the failure of these systems to perform as anticipated for any reason could disrupt our business and could result in decreased performance and increased operating costs, causing our business and operating results to suffer.

In 2017, the IMO adopted Resolution MSC.428(98) on Maritime Cyber Risk Management, which encourages administrations to ensure that cyber risks are appropriately addressed in Safety Management Systems (SMS) no later than the first annual verification of our Document of Compliance (DOC) after January 1, 2021. The U.S. Coast Guard also issued non-binding guidance in February 2021 on incorporating cyber risk into a vessel’s SMS. While we are currently in compliance with the requirements of Resolution MSC.428(98), the cybersecurity measures we maintain may not be sufficient to prevent the occurrence of a cybersecurity attack or incident. Any inability to prevent security breaches—including those involving our third-party vendors, suppliers, or counterparties—or any failure to adopt or maintain appropriate cybersecurity risk management and governance procedures could cause existing or prospective clients to lose confidence in our IT systems and could adversely affect our reputation, cause losses to us or our customers, and/or damage our brand. On April 4, 2025, the IMO issued updated guidance under IMO Circular MSC-FAL.1/Circ.3/Rev.3, emphasizing the importance of proactive cyber risk governance, digital asset inventories, and incident recovery planning aligned with international standards such as ISO/IEC 27001, which we successfully obtained in May 2025. Compliance with these evolving standards may require us to implement additional procedures for managing cybersecurity risks, which could result in increased expenses and/or capital expenditures. The impact of such regulations is difficult to predict at this time.

The risks associated with informational and operational technology incidents have increased in recent years given the increased prevalence of remote work arrangements, and may be further heightened by geopolitical tensions and conflicts, such as the ongoing conflict between Russia and Ukraine. State-sponsored Russian actors have taken and may continue to take retaliatory actions and enact countermeasures against countries and companies that have divested from or curtailed business with Russia as a result of Russia’s invasion of Ukraine and related sanctions imposed on Russia. See “—Our charterers calling on ports located in countries or territories that are the subject of sanctions or embargoes imposed by the U.S. government (including OFAC) or other authorities or failure to comply with the U.S. Foreign Corrupt Practices Act (the “FCPA”) or similar laws could lead to monetary fines or penalties and adversely affect our reputation. Such failures and other events could adversely affect the market for our common shares” for further information on these sanctions. This includes cyber-attacks and espionage against other countries and companies in the world, which may negatively impact such countries in which we operate and/or companies to whom we provide services or receive services from. Any such attacks, whether widespread or targeted, could create significant disruptions in our business and adversely impact our financial condition, cash flows and operating results.

14
Compliance with rules and other vessel requirements imposed by classification societies may be costly and could reduce our net cash flows and negatively impact our results of operations.

The hull and machinery of every commercial vessel must be certified as being “in class” by a classification society recognized by the flag administration in the jurisdiction in which the vessel is registered (or “flagged”). The classification society certifies that a vessel is safe and seaworthy in accordance with the applicable rules of the class and the regulations of the country of registry of the vessel and the Safety of Life at Sea Convention.

A vessel must undergo annual, intermediate, and special surveys in accordance with IMO regulations. Machinery may be placed on a Continuous Machinery Survey (CMS) cycle, under which it is inspected periodically over a five-year period. We expect our vessels to follow a special survey cycle for hull inspections and a continuous survey cycle for machinery. Vessels are also required to be dry-docked, or inspected by approved divers, every two to three years for underwater inspections.

While we believe that we have adequately budgeted for compliance with all currently applicable safety and other vessel operating requirements, newly enacted regulations applicable to us and our vessels may result in significant and unanticipated future expense. If any vessel does not maintain its class or fails any annual, intermediate or special survey, the vessel will be unable to trade between ports and will be unemployable, which could have a material adverse effect on our business, cash flows, financial condition and operating results.

15
We are subject to international laws and regulations and standards (including, but not limited to, environmental standards such as IMO 2020 for the low sulfur fuels and the International Ballast Water Convention for discharging of ballast water), as well as to regional requirements, such as European Union and U.S.  laws and regulations for the protection of the environment, each of which may adversely affect our business, results of operations, and financial condition. In particular, new short-, medium- and long-term measures developed by the IMO, the European Union and other entities to promote decarbonization and the reduction of GHG emissions may adversely impact our operations and markets.

Our operations are subject to numerous international, regional, national, state and local laws, regulations, treaties and conventions in force in international waters and the jurisdictions in which our vessels operate or are registered, which can significantly affect the ownership and operation of our vessels. See “Item 4. Information on the Company—B. Business Overview—Environmental and Other Regulations in the Shipping Industry” for a discussion of certain of these laws, regulations and standards. Compliance with such laws, regulations and standards, where applicable, may require installation of costly equipment or implementation of operational changes and may affect the profitability, resale value and useful lives of our vessels. These costs could have a material adverse effect on our business, cash flows, financial condition, and operating results. A failure to comply with applicable laws and regulations may result in administrative and civil penalties, criminal sanctions or the suspension or termination of our operations.

Environmental laws can impose strict liability for emergency response, remediation of spills and releases of oil and hazardous substances and natural resource damages, which could subject us to liability without regard to whether we are negligent or at fault. See “—Risks involved in operating ocean-going vessels could affect our business and reputation.” and “—The operation of LPG carriers has unique operational risks associated with the transportation of liquefied petroleum gases.” and “—The operation of tankers has unique operational risks associated with the transportation of refined petroleum products.”

In connection with IMO 2020 regulations and requirements relating to fuel sulfur levels, as of the date of this Annual Report, we have transitioned to burning IMO compliant fuels as none of our vessels are equipped with scrubbers (also known as Exhaust Gas Cleaning Systems). As a result, these vessels currently utilize VLSFO containing up to 0.5% sulfur content. Beginning May 1, 2025, in accordance with the Mediterranean Emission Control Area (“ECA”) designation under MARPOL Annex VI, our vessels will burn Ultra Low Sulfur Fuel Oil (“ULSFO”) with a maximum sulfur content of 0.1% while operating in the Mediterranean region. Notably, low sulfur fuel is more expensive than standard high fuel oil and may become more expensive. The price of VLSFO in Singapore ranged from a peak of $656 per metric ton in February 2024 to a low of around $547 per metric ton in December 2024. As of March 25, 2026, the price of VLSFO in Singapore was around $895 per metric ton, but uncertainty regarding its future direction and the availability of VLSFO remains. For further information, see “—Increases in bunker prices could affect our operating results and cash flows.”

The IMO has also imposed updated guidelines for ballast water management systems specifying the maximum amount of viable organisms allowed to be discharged from a vessel’s ballast water. Depending on the date of the International Oil Pollution Prevention (IOPP) renewal survey, existing vessels constructed before September 8, 2017 must comply with the updated D-2 standard on or after September 8, 2019. For most vessels, compliance with the D-2 standard involves installing onboard systems to treat ballast water and eliminate unwanted organisms. All of our vessels are equipped with a ballast water treatment system and therefore are currently in compliance with this regulation.

Due to concern over climate change, a number of countries, the European Union and the IMO have adopted regulatory frameworks to reduce greenhouse gas emissions. These regulatory measures may include, among others, adoption of cap-and-trade regimes, carbon taxes, increased efficiency standards, and incentives or mandates for renewable energy. Further, although the emissions of GHG from international shipping currently are not subject to the Paris Agreement or the Kyoto Protocol to the United Nations Framework Convention on Climate Change, which required adopting countries to implement national programs to reduce emissions of certain gases. In the European Union, emissions are regulated under the EU Emissions Trading System (the “EU ETS”), an EU-wide trading scheme for industrial GHG emissions, while carbon intensity of the fuel which the vessels burn is regulated under the Fuel EU Maritime regulation (the “FuelEU”). In addition, the International Convention for the Prevention of Pollution from Ships (MARPOL) Annex VI has been adopted that restricts air emissions from vessels.

16
In June 2021, IMO’s Marine Environment Protection Committee (“MEPC”) adopted amendments to the MARPOL Annex VI that will require ships to reduce their carbon dioxide and GHG emissions. These requirements combine technical and operational approaches to improve the energy efficiency of ships for future GHG reduction measures. Beginning January 1, 2023, each vessel is required to comply with the new Energy Efficiency Existing Ship Index (“EEXI”). Furthermore, from 2023 to 2026, each vessel must initiate the collection of data for the reporting of its annual operational Carbon Intensity Indicator (“CII”) and CII rating. The IMO is required to review the effectiveness of the implementation of the CII and EEXI requirements by January 1, 2026 at the latest. Prior to the implementation of the new regulations under revised Annex VI of MARPOL, official calculations and estimations suggested that merchant vessels built before 2013, including some of our older vessels, may not fully comply with the EEXI requirements. Therefore, to ensure compliance with EEXI requirements many owners/operators may choose to limit engine power rather than apply energy-saving devices and/or effect certain alterations on existing propeller designs, as the reduction of engine power can be a less costly solution than these measures. As of the date of this Annual Report, official calculations had determined that all of our vessels were in compliance with the EEXI requirements.

The engine power limitation is predicted to lead to reduced ballast and laden speeds (at scantling draft) in the non-compliant vessels, which will affect non-compliant vessels’ commercial utilization and also decrease the global availability of vessel capacity. Furthermore, required software and hardware alterations as well as documentation and recordkeeping requirements will increase a vessel’s capital and operating expenditures.

Further, on January 27, 2021, the Biden administration issued an executive order temporarily blocking new leases for oil and gas drilling in U.S. federal waters. While leasing has since resumed, a record low of just three offshore lease sales over the next five years were unveiled in September 2023. However, leasing for oil and gas drilling in federal waters remains a contentious political issue, with certain states and Republicans in U.S. Congress pushing for increased leasing. On January 6, 2025, the Biden administration issued an executive order prohibiting new oil and gas leases in offshore areas, and President Trump then issued an executive order seeking to revoke it.

On November 13, 2021, the Glasgow Climate Pact was announced following discussions at the 2021 United Nations Climate Change Conference (“COP26”). The Glasgow Climate Pact calls for signatory states to voluntarily phase out fossil fuels subsidies. A shift away from these products could potentially affect the demand for our vessels and negatively impact our future business, operating results, cash flows and financial position. COP26 also produced the Clydebank Declaration, in which 22 signatory states (including the United States and United Kingdom) announced their intention to voluntarily support the establishment of zero-emission shipping routes. Governmental and investor pressure to voluntarily participate in these green shipping routes could cause us to incur significant additional expenses to “green” our vessels. The 2023 United Nations Climate Change Conference (“COP28”) in Dubai called for, among other measures, a swift transition from fossil fuels and deep GHG emission cuts and a tripling of renewable energy capacity by 2030. The 2024 United Nations Climate Change Conference (“COP29”) in Baku, Azerbaijan called for, among other measures, mitigating actions that would keep the Paris Agreement’s temperature goals on track through rapid and sustained emissions reductions globally. On January 20, 2025, the U.S. administration signed an Executive Order initiating the withdrawal of the United States from the Paris Agreement. This decision introduces uncertainty regarding future U.S. climate policy and international commitments, which may affect global regulatory frameworks and investment flows. At 2025 United Nations Climate Change Conference (“COP30”), held in Belém, Brazil, parties adopted the Global Mutirão decision as part of the Belém Political Package, reinforcing Paris Agreement objectives. Key outcomes included the launch of the Baku-to-Belém Climate Finance Roadmap, targeting mobilization of approximately $1.3 trillion annually by 2035, approval of a new Gender Action Plan, and progress on Article 6 carbon market mechanisms. However, consensus on a global fossil fuel phase-out was not achieved, although Brazil announced a separate initiative to advance this goal.

Failure to adapt to evolving climate policies, carbon pricing mechanisms, and international trade measures could result in increased compliance costs, restricted market access, and reputational risks. These developments may materially and adversely affect our operations, financial condition, and long-term growth prospects.

The foregoing regulations represent a growing trend towards “green” or sustainable sources of energy and increasing intervention by certain governments to impose more stringent emissions regimes. These regulations have had, and will continue to have, an impact on demand for LPG, oil and refined petroleum products, as well as increase our costs of operation, any of which could have an adverse effect on our business and operating results.

17
Developments in safety and environmental requirements relating to the recycling and demolition of vessels may result in escalated and unexpected costs.

The 2009 Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships, or the Hong Kong Convention, aims to ensure ships being recycled once they reach the end of their operational lives do not pose any unnecessary risks to the environment, human health and safety. On November 28, 2019, the Hong Kong Convention was ratified by the required number of countries and entered into force on June 26, 2025, as the ratifying states represent 40% of world merchant shipping by gross tonnage after the ratification by Bangladesh and Liberia in June 2023. The Republic of the Marshall Islands ratified this Hong Kong Convention in January 2024. Upon the Hong Kong Convention’s entry into force, each ship sent for recycling will have to carry an inventory of its hazardous materials. The hazardous materials, the use or installation of which are prohibited in certain circumstances, are listed in an appendix to the Hong Kong Convention. Ships will be required to have surveys to verify their inventory of hazardous materials initially, throughout their lives and prior to the ship being recycled. When implemented, the foregoing requirement may lead to cost escalation by shipyards, repair yards and recycling yards. This may then result in a decrease in the residual scrap value of a vessel, and a vessel could potentially not cover the cost to comply with the latest requirements, which may have an adverse effect on our future performance, cash flows, financial position and operating results.

Further, on November 20, 2013, the European Parliament and the Council of the EU adopted the Ship Recycling Regulation, which, among other things, requires any non-EU flagged vessels calling at a port or anchorage of an EU member state, including ours, to set up and maintain an Inventory of Hazardous Materials from December 31, 2020. Such a system includes information on the hazardous materials with a quantity above the threshold values specified in relevant EU Resolution that are identified in the ship’s structure and equipment. This inventory must be properly maintained and updated, especially after repairs, conversions or unscheduled maintenance on board the ship.

The smuggling of drugs or other contraband onto our vessels may lead to governmental claims against us.

We expect that our vessels will call in ports in areas where smugglers attempt to hide drugs and other contraband on vessels, with or without the knowledge of crew members. To the extent our vessels are found with contraband, whether inside or attached to the hull of our vessel, with or without the knowledge of any of our crew, we may face governmental or other regulatory claims which could have an adverse effect on our business, results of operations, cash flows and financial condition.

We are subject to international safety standards and the failure to comply with these regulations may subject us to increased liability, may adversely affect our insurance coverage and may result in a denial of access to, or detention in, certain ports.

The operation of our vessels is affected by the requirements set forth in the International Safety Management Code, or the ISM Code, promulgated by the IMO under the SOLAS Convention (each as defined in “Item 4. Information on the Company—B. Business Overview—Environmental and Other Regulations in the Shipping Industry—International Maritime Organization”). The ISM Code requires ship owners, ship managers and bareboat charterers to develop and maintain an extensive “Safety Management System” that includes the adoption of a safety and environmental protection policy setting forth instructions and procedures for the safe operation of vessels and describing procedures for dealing with emergencies. In addition, vessel classification societies impose significant safety and other requirements on our vessels. Failure to comply with these regulations may subject us to increased liability, may adversely affect our insurance coverage and may result in a denial of access to, or detention in, certain ports, and have a material adverse effect on our business, financial condition and operating results.
 
18
Maritime claimants could arrest our vessels, which could interrupt our cash flow and business.

Crew members, suppliers of goods and services to a vessel, shippers and receivers of cargo and other parties may be entitled to a maritime lien against a vessel for unsatisfied debts, claims or damages. In many jurisdictions, a maritime lien holder may enforce its lien by “arresting” or “attaching” a vessel through judicial proceedings. The arrest or attachment of our vessels, if not timely discharged, could have significant ramifications for us, including off-hire periods and/or potential cancellations of charters, high costs incurred in discharging the maritime lien, other expenses to the extent such arrest or attachment is not covered under our insurance coverage, breach the covenants in our future credit facilities and reputational damage. This in turn could negatively affect the market for our shares and adversely affect our business, financial condition, results of operations, cash flows and ability to service or refinance our debt. In addition, in jurisdictions where the “sister ship” theory of liability applies, such as South Africa, a claimant may arrest the vessel that is subject to the claimant’s maritime lien and any “associated” vessel, which is any vessel owned or controlled by the same owner. In countries with “sister ship” liability laws, claims might be asserted against us or any of our vessels for liabilities of other vessels that we then own, compounding the negative effects of an arrest or attachment on us. Any of those occurrences could have a material adverse effect on our business, financial condition and operating results.

Governments could requisition our vessels during a period of war or emergency resulting in a loss of earnings.

The government of a vessel’s registry could requisition for title or seize a vessel. Requisition for title occurs when a government takes control of a vessel and becomes the owner. A government could also requisition a vessel for hire. Requisition for hire occurs when a government takes control of a vessel and effectively becomes the charterer at dictated charter rates. Generally, requisitions occur during a period of war or emergency although governments may elect to requisition vessels in other circumstances. Although we would expect to be entitled to compensation in the event of a requisition of one or more of our vessels, the amount and timing of payment, if any, would be uncertain. Government requisition of one or more of our vessels could have a material adverse effect on our business, cash flows, financial condition and operating results.

Increased inspection procedures and tighter import and export controls could increase costs and disrupt our business.

International shipping is subject to various security and customs inspection and related procedures in countries of origin and destination and trans-shipment points. Inspection procedures may result in the seizure of the contents of our vessels, delays in the loading, offloading, trans-shipment or delivery and the levying of customs duties, fines or other penalties against us.

It is possible that changes to inspection procedures could impose additional financial and legal obligations on us. Changes to inspection procedures could also impose additional costs and obligations on our customers and may, in certain cases, render the shipment of certain types of cargo uneconomical or impractical. Any such changes or developments may have a material adverse effect on our business, financial condition and operating results.

Our business has inherent operational risks, which may not be adequately covered by insurance.

Our vessels and their cargoes are at risk of being damaged or lost because of events such as marine disasters, adverse weather conditions, mechanical failures, human error, environmental accidents, war, terrorism, piracy and other circumstances or events. In addition, transporting cargoes across a wide variety of international jurisdictions creates a risk of business interruptions due to political circumstances in foreign countries, hostilities, labor strikes and boycotts, the potential changes in tax rates or policies, and the potential for government expropriation of our vessels. See “—Geopolitical conditions, such as political instability or conflict, terrorist attacks and international hostilities, can affect the seaborne transportation industry, which could adversely affect our business” and “Trade disputes or the imposition of tariffs on imports and exports could affect international trade, and therefore could adversely affect our business” for further information regarding geopolitical circumstances which have or may impact insurance. Any of these events may result in loss of revenues, increased costs and decreased cash flows to our customers, which could impair their ability to make payments to us under our charters.

19
We procure insurance for our vessels against those risks that we believe the shipping industry commonly insures against. This insurance includes marine hull and machinery insurance, protection and indemnity insurance, which include environmental damage, pollution insurance coverage, crew insurance, and, in certain circumstances, war risk insurance. Currently, the amount of coverage for liability for pollution, spillage and leakage available to us on commercially reasonable terms through protection and indemnity associations and providers of excess coverage is $1 billion per occurrence. In certain instances, we may be required by our pooling agreements to arrange for additional loss of hire cover.

We do not carry loss of hire insurance. Loss of hire insurance covers the loss of revenue during extended vessel off-hire periods, such as those that occur during an unscheduled dry-docking due to damage to the vessel from accidents. Accordingly, any loss of a vessel or any extended period of vessel off-hire, due to an accident or otherwise, could have a material adverse effect on our business, results of operations and financial condition.

Despite the above policies, we may not be insured in amounts sufficient to address all risks and we or our pool managers may not be able to obtain adequate insurance coverage for our vessels in the future or may not be able to obtain certain coverage at reasonable rates. For example, in the past more stringent environmental regulations have led to increased costs for, and in the future may result in the lack of availability of, insurance against risks of environmental damage or pollution. We may enter into credit facilities that impose restrictions on the use of any proceeds we may receive from claims under our insurance policies.

Further, insurers may not pay particular claims. Our insurance policies contain deductibles for which we will be responsible and limitations and exclusions which may increase our costs or lower our revenues. Moreover, insurers may default on claims they are required to pay. Any of these factors could have a material adverse effect on our financial condition.

Risks Relating to the LPG Carrier Industry

Charter rates for LPG carriers are volatile and cyclical in nature. A decrease in LPG carrier charter rates may adversely affect our business, financial condition and operating results.

The LPG carrier industry is both cyclical and volatile in terms of charter rates, profitability and vessel values. Fluctuations in charter rates result from changes in the supply and demand for vessel capacity and changes in the supply and demand for the products transported by LPG carriers. The degree of charter rate volatility among different types of LPG carriers has also varied widely. Further, because many factors (including the supply and demand for the products transported by LPG carriers) influencing the supply of, and demand for, vessel capacity are unpredictable, the timing, direction and degree of changes in the LPG carrier market are also unpredictable.

The global economy and the LPG carrier industry have experienced significant disruptions as a result of Russia’s invasion of Ukraine and sanctions imposed in relation to such conflict. LPG carrier rates have been impacted by changing energy prices as a result of disruptions to energy production, trade patterns and trade routes, including shipping in the Black Sea, Persian Gulf and elsewhere. The continuation or further extension of economic sanctions, boycotts or otherwise may eventually result in a reduction in the supply of LPG available for transportation and could negatively impact charter rates over the longer term. For further details regarding Russian sanctions, see “—Our charterers calling on ports located in countries or territories that are the subject of sanctions or embargoes imposed by the U.S. government (including OFAC) or other authorities or failure to comply with the U.S. Foreign Corrupt Practices Act (the “FCPA”) or similar laws could lead to monetary fines or penalties and adversely affect our reputation. Such failures and other events could adversely affect the market for our common shares.”

Any deterioration of charter rates resulting from various factors relating to the cyclicality and volatility of our business, including those above, may adversely affect our ability to profitably charter or re-charter our LPG carriers or to sell our vessels LPG carriers on a profitable basis. In particular, a significant decrease in charter rates would cause asset values to decline. Any of the foregoing factors could negatively impact our operating results, liquidity and/or financial condition.

Future growth in the demand for our services will depend among others on changes in supply and demand, economic growth in the world economy and demand for LPG and LPG transportation relative to changes in worldwide fleet capacity.

20
The capacity of the world LPG carrier fleet appears likely to increase in the near term. However, future growth in the demand for LPG carriers, as well as the charter rates for such LPG carriers, depends on a variety of factors that may impact the supply of and demand for the products we transport. Factors that influence demand for LPG carrier capacity include, but are not limited to:


 •
changes in the supply of vessel capacity for the seaborne transportation of LPG products, which is influenced by the following factors;


•
the available supply of LPG products;


•
the availability of financing for new and secondhand LPG carriers and shipping activity;


•
the number of newbuilding deliveries and the ability of shipyards to deliver newbuildings by contracted delivery dates and capacity levels of shipyards;


•
the scrapping rate of older vessels and secondhand LPG carrier values in relation to scrap prices;


•
the number of vessels that are out of service, as a result of vessel casualties, repairs and dry-dockings;


•
the number of conversions LPG carriers to other uses or conversions of other vessels to LPG carriers, as applicable;


•
port and canal congestion;


•
the speed of LPG carriers being operated;


 •
changes in environmental and other regulations that may limit the useful lives of vessels;


•
changes in LPG carrier prices;


•
any factors that affect the foregoing;


•
changes in the level of demand for seaborne transportation of LPG products, which is influenced by the following factors:


•
the level of production of LPG products in net export regions;

21

 •
the level of demand for LPG products globally, and in particular, in net import regions such as Asia, Europe, Latin America and India;


•
regional availability of refining, liquefaction and deliquefaction capacity and inventories compared to geographies of oil and natural gas production and liquefaction and deliquefaction regions;


•
a reduction in global or general industrial activity specifically in the plastics and chemical industry;


•
changes in the cost of petroleum and natural gas from which liquefied gases are derived;


•
prevailing global and regional economic conditions;


•
global and regional economic and political conditions and developments, including economic growth in global and local economies and the timeframe over which such growth occurs, demand for LPG carrier transport that exceeds capacity for such fleets worldwide, armed conflicts (such as Russia’s invasion of Ukraine or the armed conflict(s) in the Middle East, including the war with Iran and maritime incidents in and around the Red Sea, and the spread or worsening of any such conflicts) and terrorist activities, international trade sanctions, embargoes and strikes, particularly those that impact the regions or trade routes traveled by our vessels, the regions where the cargoes we carry are produced or consumed, or any similar events which would interrupt the production or consumption of liquefied gases and associated products;


•
developments in international trade, including national policies regarding strategic oil inventories (including the reduction or replenishment of strategic reserves and if strategic reserves are set at a lower level in the future as oil decreases in the energy mix), actions taken by OPEC and major oil and gas producers and refiners, as well a major LPG companies, and fluctuations in the profit margins of crude oil, refined petroleum products and/or LPG;


•
the distances between exporting and importing regions over which LPG products are to be transported by sea;


•
infrastructure to support seaborne LPG products trade, including pipelines, railways and terminals;


•
changes in seaborne and other transportation and distribution patterns, typically influenced by the relative advantage of the various sources of production, locations of consumption, opportunities for arbitrage, pricing differentials and seasonality;


•
changes to the arbitrage of certain LPG products in different countries, regions or continents;


•
currency exchange and interest rates;


•
changes in environmental and other regulations that may limit the production or consumption of LPG products;

22

 •
competition from alternative sources of energy, such as natural gas, coal, hydroelectric power and other alternative sources of energy, and consumer demand for “green” or sustainable products;


•
inclement weather and/or natural catastrophes; and


•
epidemics and pandemics.

These factors are outside of our control and are unpredictable, and accordingly we may not be able to correctly assess the nature, timing and degree of changes or their precise impact on our business. Any of these factors could have a material adverse effect on our business, financial condition and operating results.

The active fleet on the small LPG carrier vessels, which have similar characteristics to the ones we own, has remained largely stable with a marginal increase of 0.17% between 2024 and 2025 (from 582 to 583 vessels, respectively). Moreover, the orderbook of small LPG carrier vessels has remained at low levels with 10 vessels ordered in 2024.

A decline in the market values of our LPG carriers could limit the amount of funds that we can borrow, cause us to breach certain financial covenants in our future credit facilities and/or result in impairment charges or losses on sale.

The fair market values of LPG carriers have generally experienced high volatility based on a variety of factors. Factors which may affect the fair market values of our LPG carriers include, without limitation:


 •
prevailing level of charter rates;


•
general economic and market conditions affecting the shipping industry;


•
the types, sizes and ages of the LPG carriers, including as compared to other LPG carriers in the market and as relates to environmental and energy efficiency;


•
supply of and demand for LPG carriers, including as a result of the competitive environment we operate in;


•
the availability and cost of other modes of transportation;


•
distressed asset sales, including newbuilding contract sales below acquisition costs due to lack of financing;


•
cost of new buildings;


•
speculative LPG carrier orders from peers during periods of low LPG carrier prices, thereby increasing the supply of LPG carrier capacity, satisfying demand sooner and potentially suppressing charter rates;


•
shipyard capacity;

23

 •
governmental or other regulations, including those that may limit the useful life of LPG carriers;


•
the need to upgrade LPG carriers as a result of environmental, safety, regulatory or charterer requirements, technological advances in LPG carrier design or equipment or otherwise; and


•
the size of the LPG carrier market is small and illiquid resulting to only a limited number of vessel sales taking place on an annual basis.

In addition, when vessel prices are considered to be low, companies not usually involved in shipping may make speculative vessel orders, thereby increasing the supply of vessel capacity, satisfying demand sooner and potentially suppressing charter rates. To the extent we enter into any future facilities that require the maintenance of a certain percentage of the fair market values of the LPG carriers securing any future facility to the principal outstanding amount of the respective facility, a decline in the fair value of our LPG carriers could cause us not to be in compliance with such covenants. We have entered into facilities on these terms in the past.

Further, if vessel values are elevated at a time when we wish to acquire additional vessels, the cost of such acquisitions may increase and this could adversely affect our business, cash flows, financial condition and operating results. We may also incur losses and be unable to recoup part of our investment in our LPG carriers if we sell any LPG carrier at less than its book value due to unfavorable market or operating conditions.

The operation of LPG carriers has unique operational risks associated with the transportation of liquefied petroleum gases.

The operation of LPG carriers is inherently risky and presents unique operational risks. For example, an LPG release may cause significant environmental damage. Additionally, compared to other types of vessels, LPG carriers are exposed to a higher risk of damage and loss by fire, whether ignited by a terrorist attack, collision, or other cause, due to the high flammability and hazardous characteristics of LPG. Our crews could also be inadvertently exposed to escaped gases, which may pose a risk to their health and safety. As a result, the unique operational risks associated with the transportation of LPG could result in significantly more expensive insurance coverage and the associated costs of an LPG release or other health and safety incidents could exceed the insurance coverage available to us. Any of the foregoing factors may adversely affect our LPG carrier fleet, our cash flows and segment and overall operating results.

Risks Relating to the Tanker Industry

Charter rates for tanker vessels are volatile and cyclical in nature. A decrease in tanker charter rates may adversely affect our business, financial condition and operating results.

The tanker industry is both cyclical and volatile in terms of charter rates and profitability. Fluctuations in charter rates result from changes in the supply and demand for tanker capacity and changes in the supply and demand for vessel capacity and changes in the supply and demand for and refined petroleum products transported by our tanker vessels. Further, because many factors (including the supply and demand for the products transported by tankers) influencing the supply of, and demand for, vessel capacity are unpredictable, the timing, direction and degree of changes in the tanker market are also unpredictable. Deterioration of charter rates resulting from various factors relating to the cyclicality and volatility of our business may adversely affect our ability to profitably charter or re-charter our vessels or to sell our vessels on a profitable basis. This could negatively impact our operating results, liquidity and financial condition.

24
Russia’s invasion of Ukraine, and more recently the war in Iran, has disrupted energy production, trade patterns and trade routes, including shipping in the Black Sea and elsewhere, and has impacted energy prices and tanker rates. For further details, see “—We are exposed to fluctuating demand, supply and prices for LPG products and refined petroleum products, and may be affected by a decrease in the demand for such products and the volatility in their prices due to their effects on supply and demand of maritime transportation services.” and “—Our charterers calling on ports located in countries or territories that are the subject of sanctions or embargoes imposed by the U.S. government (including OFAC) or other authorities or failure to comply with the U.S. Foreign Corrupt Practices Act (the “FCPA”) or similar laws could lead to monetary fines or penalties and adversely affect our reputation. Such failures and other events could adversely affect the market for our common shares.”

Demand for tanker capacity is affected by the supply of and demand for oil products transported by such vessels, including refined petroleum products, which are transported by our MR tanker vessels. A variety of factors may impact the supply of and demand for refined petroleum products, including regional availability of refining capacity and inventories and competition from alternative sources of energy. Factors that influence demand for tanker vessel capacity include, but are not limited to:


 •
global and regional economic and political conditions and developments, including economic growth in global and local economies and the timeframe over which such growth occurs, demand for tanker transport that exceeds capacity for such fleets worldwide, armed conflicts (such as Russia’s invasion of Ukraine or the armed conflict(s) in the Middle East, including the war in Iran and maritime incidents in and around the Red Sea, and the spread or worsening of any such conflicts) and terrorist activities, international trade sanctions, embargoes and strikes, particularly those that impact the regions or trade routes traveled by our vessels, the regions where the cargoes we carry are produced or consumed, or any similar events which would interrupt the production or consumption of liquefied gases and associated products;


•
regional availability of refining capacity and inventories compared to geographies of oil production regions;


•
developments in international trade, including national policies regarding strategic oil inventories (including the reduction or replenishment of strategic reserves and if strategic reserves are set at a lower level in the future as oil decreases in the energy mix), actions taken by OPEC and major oil producers and refiners and fluctuations in the profit margins of crude oil and refined petroleum products;


•
the distance over which refined petroleum products are to be moved by sea;


•
changes in seaborne and other transportation and distribution patterns, typically influenced by the relative advantage of the various sources of production, locations of consumption, pricing differentials and seasonality;


•
alternative sources of energy, such as natural gas, coal, hydroelectric power and other alternative sources of energy;


•
environmental and other regulatory developments;


•
epidemics and pandemics;


•
natural catastrophes;


•
currency exchange and interest rates; and


•
the weather.

For a discussion of factors affecting the supply of tanker vessel capacity, see “—An oversupply of tanker vessel capacity may prolong or further depress low charter rates when they occur, which may limit our ability to operate our vessels profitably.” These factors are outside of our control and are unpredictable, and accordingly we may not be able to correctly assess the nature, timing and degree of changes in charter rates. Any of these factors could have a material adverse effect on our business, financial condition and operating results.

25
An oversupply of tanker tonnage may result in a prolonged period of depressed charter rates or further reduce the same when they occur, which may limit our ability to operate our vessels profitably.

Factors that influence the supply of tanker vessel capacity include:


 •
supply and demand for energy resources and crude oil and/or refined petroleum products
 

 •
the number of newbuilding orders and deliveries;
 

 •
the number of shipyards and ability of shipyards to deliver vessels;
 

 •
the number of conversions of tankers to other uses or conversions of other vessels to tankers;
 

 •
scrapping of older vessels;
 

 •
vessel freight rates, which are affected by factors that may affect the rate of newbuilding, scrapping and laying-up vessels (as set out below);
 

 •
the availability of modern tanker capacity;
 

 •
the speed of vessels being operated;
 

 •
the number of vessels that are out of service;
 

 •
Refinery closures or maintenance, which may change trade routes and increase ton-mile demand; and
 

 •
Changes in vetting requirements imposed by oil majors

In addition to the prevailing and anticipated charter rates, factors that affect the rate of newbuilding, scrapping and laying-up include newbuilding prices, secondhand vessel values in relation to scrap prices, the availability of financing for new vessels and shipping activity, and special survey expenditures, costs of bunkers and other operating costs, costs associated with classification society surveys, normal maintenance costs, insurance coverage costs, the efficiency and age profile of the existing fleet in the market, and government and industry regulations of maritime transportation practices, in particular environmental protection laws and regulations and laws and regulations regarding safety which impact our industry.

The limited activity in the MR tanker newbuilding market during 2024 has not continued into 2025. As a result, the ratio of new contracting to the active fleet is no longer remaining at relatively low levels. The MR tanker fleet grew by 1.13% during 2024, while growth up to 31st December 2025 stands at 4.31%. The total tanker fleet development for MR tanker vessels was 1.09% in 2024 and 4.08% up to 31st December 2025, with a significant number of newbuilding deliveries entering the market in 2025 and even more expected mainly over the next two to three years.

Vessel supply will continue to be affected by the delivery of new vessels and potential orders of more vessels than vessels removed from the global fleet, either through scrapping or accidental losses. Furthermore, if sanctions against Russia persist, overaged vessels may continue trading as part of the shadow fleet, which could adversely affect the scrapping rate thus contributing to an oversupply of vessels. An oversupply of vessel capacity could exacerbate decreases in charter rates or prolong the period during which low charter rates prevail, which may have a material adverse effect on the profitability of our business, cash flows, financial condition and operating results.
 
The operation of tankers has unique operational risks associated with the transportation of oil.

The operation of tankers transporting refined petroleum products is inherently risky and presents unique operational risks. For example, an oil spill may cause significant environmental damage. Additionally, compared to other types of vessels, tankers are exposed to a higher risk of damage and loss by fire, whether ignited by a terrorist attack, collision, or other cause, due to the high flammability and hazardous characteristics of the crude oil and refined petroleum products transported in tankers. Our crews could also be inadvertently exposed to the crude oil and refined petroleum products that we transport or their byproducts, such as escaped gases, which may pose a risk to their health and safety. As a result, the unique operational risks associated with the transportation of oil could result in significantly more expensive insurance coverage and the associated costs of an oil spill or other health and safety incidents could exceed the insurance coverage available to us. Any of the foregoing factors may adversely affect our tanker segments, our cash flows and segment and overall operating results.

26
The operation of tankers is subject to strict regulations and vetting requirements, that our manager and sub-managers need to comply with. Should either we or our manager and third-party sub-managers not continue to successfully clear the oil majors’ risk assessment processes, our tanker vessels’ employment, as well as our relationship with charterers, could be adversely affected.

Shipping, and especially refined petroleum products have been, and will remain, heavily regulated. For an overview of government regulations that may impact our tanker operations, see “Item 4.B. Business Overview—Environmental and Other Regulations in the Shipping Industry.” The so called “oil major” companies, together with a number of commodities traders, represent a significant percentage of the production, trading and shipping logistics (i.e., terminals) of crude oil and refined petroleum products worldwide. Concerns for the environment have led the oil majors to develop and implement a strict ongoing due diligence process when selecting their commercial partners. This vetting process has evolved into a sophisticated and comprehensive risk assessment of both the vessel operator and the vessel, including physical ship inspections, completion of vessel inspection questionnaires performed by accredited inspectors and the production of comprehensive risk assessment reports. In the case of term charter relationships, additional factors are considered when awarding such contracts, including:


 •
office assessments and audits of the vessel operator;


•
the operator’s environmental, health and safety record;


•
compliance with the standards of the International Maritime Organization (the “IMO”), a United Nations agency that issues international trade standards for shipping;


•
compliance with heightened industry standards that have been set by several oil companies;

 
•
shipping industry relationships, reputation for customer service, technical and operating expertise;

 
•
compliance with oil majors’ codes of conduct, policies and guidelines, including transparency, anti-bribery and ethical conduct requirements and relationships with third parties;

 
•
shipping experience and quality of ship operations, including cost-effectiveness;


•
quality, experience and technical capability of crews;


•
the ability to finance vessels at competitive rates and overall financial stability;


•
relationships with shipyards and the ability to obtain suitable berths;


•
construction management experience, including the ability to procure on-time delivery of new vessels according to customer specifications;


•
willingness to accept operational risks pursuant to the charter, such as allowing termination of the charter for force majeure events; and


•
competitiveness of the bid in terms of overall price.

Should either we or our manager and sub-managers not continue to successfully clear the oil majors’ risk assessment processes on an ongoing basis, our tanker vessels’ present and future employment, as well as our relationship with our existing charterers and our ability to obtain new charterers, whether medium- or long-term, could be adversely affected. Such a situation may lead to the oil majors’ terminating existing charters and refusing to use our tanker vessels which would adversely affect the growth of our business, cash flows and operating results.

27
Risks Relating to Our Company

We are dependent on a small number of charterers for substantially all of our business, and the loss of any such charterer could materially impact our results.

A small number of charterers have accounted for a significant part of our revenues and we expect this trend to continue in our operations. Indicatively, in the year ended December 31, 2024, we derived 82% of our operating revenues from continuing operations from one pool manager and three charterers and in the year ended December 31, 2025, we derived 100% of our operating revenues from continuing operations from five charterers and one pool manager . While the majority of our vessels no longer participate in pools, we expect our credit concentration to remain significant because our LPG carrier and product tanker vessels are chartered by a small number of charterers. All the charters for our fleet have fixed terms, but may be terminated earlier due to certain events, such as a charterers’ failure to make payments to us because of financial inability, disagreements with us or otherwise. The ability of each of our counterparties to perform their obligations under a charter with us depends on a number of factors that are beyond our control and may include, among other things, general economic conditions, the condition of the shipping industry, prevailing prices for LPG-related products and refined petroleum products and the overall financial condition of the counterparty. Should a counterparty fail to honor its obligations under an agreement with us, we may be unable to realize revenue under that charter arrangement and could sustain losses. In addition, if we lose an existing charterer, it may be difficult for us to promptly replace the revenue we derived from that counterparty. Any of these factors could have a material adverse effect on our business, financial condition, cash flows and operating results. The highest concentration of total vessel revenues attributable to a single charterer was 25%, with all other charterers contributing between 10% and 20% each. For further information, see Note 1 to our consolidated financial statements included elsewhere in this Annual Report for an overview of our charterer concentration.

We may not be able to execute our business strategy and we may not realize the benefits we expect from acquisitions or other strategic transactions.

As our business grows, we intend to acquire additional tanker and/or LPG carrier vessels, including to replace existing vessels, diversify our fleet and expand our activities, subject to conditions set out in the Toro Spin-Off Resolutions. See“—We have limited the fields in which we focus our operations and this may have an adverse effect on our business, financial condition and operating results.” These objectives have implications for various operating costs, the perceived desirability of our vessels to charterers and the ability to attract financing for our business on favorable terms or at all. Our future growth will primarily depend upon a number of factors, some of which may not be within our control. These factors include our ability to:


 •
identify suitable vessels, including newbuilding slots at reputable shipyards and/or shipping companies for acquisitions at attractive prices;


•
realize anticipated benefits, such as new customer relationships, cost savings or cash flow enhancements from acquisitions;


•
obtain required financing for our existing and new operations;


•
integrate any acquired vessels, assets or businesses successfully with our existing operations, including obtaining any approvals and qualifications necessary to operate vessels that we acquire;


•
enlarge our customer base and continue to meet technical and safety performance standards;


•
ensure, either directly or through our manager and sub-managers, that an adequate supply of qualified personnel and crew are available to manage and operate our growing business and fleet;


•
improve our operating, financial and accounting systems and controls; and


•
cope with competition from other companies, many of which have significantly greater financial resources than we do, and may reduce our acquisition opportunities or cause us to pay higher prices.

28
Our failure to effectively identify, acquire, develop and integrate any vessels could adversely affect our business, financial condition, investor sentiment and operating results. Finally, acquisitions may require additional equity issuances, which may dilute our common shareholders if issued at lower prices than the price they acquired their shares, or debt issuances (with amortization payments), both of which could lower our available cash. See “—Future issuances of common shares or other equity securities, including as a result of an optional conversion of Series A Preferred Shares, or the potential for such issuances, may impact the price of our common shares and could impair our ability to raise capital through equity offerings. Shareholders may experience significant dilution as a result of any such issuances.” If any such events occur, our financial condition may be adversely affected.

We operate secondhand vessels, which may lead to increased technical problems for our vessels and/or higher operating expenses or affect our ability to profitably charter our vessels, to comply with environmental standards and future maritime regulations and to obtain financing on favorable terms or at all and result in a more rapid deterioration in our vessels’ market and book values.

Our current fleet consists only of secondhand vessels. While we have inspected our vessels and we intend to inspect any potential future vessel acquisition, this does not provide us with the same knowledge about its condition that we would have had if the vessel had been built for and operated exclusively by us. Generally, purchasers of secondhand vessels do not receive the benefit of warranties that purchasers of newbuild vessels receive from the builders and the makers of the vessels that they acquire.

The cost of maintaining a vessel in good operating condition and operating it generally increases with the age of a vessel because, amongst other things:


 •
as our vessels age, typically, they become less fuel-efficient and more costly to maintain than more recently constructed vessels due to improvements in design, engineering and technology and due to increased maintenance requirements;


•
cargo insurance rates increase with the age of a vessel, making our vessels more expensive to operate; and


•
governmental regulations, environmental and safety or other equipment standards related to the age of vessels may also require expenditures for alterations or the addition of new equipment to our vessels and may restrict the type of activities in which our vessels may engage.

The average age of our LPG carrier fleet was 10.5 years as of December 31, 2025, compared to the industry average of the world fleet of small LPG carriers up to 5,000 cbm, which was 22.9 years as of the same date.

The age of our Eco tanker fleet was 4.5 years as of December 31, 2025, compared to the industry average of the world fleet of MR Eco tankers, which was 7.7 years as of the same date. The age of our Non-Eco tanker fleet was 11.5 years as of December 31, 2025, compared to the industry average of the world fleet of MR Non-Eco tankers, which was 18.7 years as of the same date.

Charterers have age restrictions on the vessels they charter and in the past have actively discriminated against chartering older vessels, which may result in lower utilization of our vessels and, in turn, in lower revenues. Our charterers have a high and increasing focus on quality and compliance standards with their suppliers across the entire supply chain, including the shipping and transportation segment. Our continued compliance with these standards and quality requirements is vital for our operations. The charter hire rates and the value and operational life of a vessel are determined by a number of factors, including the vessel’s efficiency, operational flexibility and physical life. Efficiency includes speed, fuel economy and the ability to load and discharge cargo quickly. Flexibility includes the ability to enter harbors, operate in extreme climates, utilize related docking facilities and pass-through canals and straits. The length of a vessel’s physical life is related to its original design and construction, its maintenance and the impact of the stress of operations.

29
While the average age of our LPG carriers  and MR tanker vessels is relatively low compared to the industry average, over the course of time the age of our vessels may impact our ability to obtain external financing against those older vessels at all or at reasonable terms, to the extent  our vessels may be seen as less valuable collateral.

We face competition from companies with more modern vessels with more fuel-efficient designs than our vessels (“eco–vessels”). If new LPG carriers and MR tankers vessels are built that are more efficient or more flexible or have longer physical lives than even the current eco-vessels, competition from the current eco-vessels and any more technologically advanced vessels could adversely affect the amount of charter hire payments we receive for our vessels once their charters expire and the resale value of our vessels could significantly decrease.

We cannot assure you that, as our vessels age, market conditions will justify expenditures to maintain or update our vessels or enable us to operate our vessels profitably during the remainder of their useful lives or that we will be able to finance the acquisition of new vessels at the time that we retire or sell our aging vessels. This could have a material adverse effect on our business, financial condition and operating results.

We are reliant on the spot market for a portion of our revenue, thereby exposing us to risk of losses based on short-term volatility in shipping rates.

We may opportunistically employ some or all of our vessels in the spot market, either in the voyage charter market or in spot-market oriented pools, if spot market conditions are favorable. The spot charter market is highly competitive and freight rates in this market have been volatile, fluctuating significantly based upon supply of and demand for vessels and LPG and refined petroleum products. Conversely, longer-term charter contracts have pre-determined rates over more extended periods of time, providing a fixed source of revenue to us. The successful operation of our vessels in the competitive spot charter market depends upon, among other things, our commercial manager and/or our pool operators obtaining profitable spot charters and minimizing, to the extent possible, time spent waiting for charters and time spent traveling unladen to pick up cargo. We cannot assure you that we will be successful in keeping our vessels fully employed in these short-term markets, or that future spot revenues will be sufficient to enable such vessels to operate profitably.

In the past, there have been periods when revenues derived in the spot market have declined below the operating cost of vessels. If spot charter rates decline, then we may be unable to operate our vessels trading in the spot market profitably and/or meet our obligations, including payments on indebtedness. Furthermore, as charter rates for spot charters are fixed for a single voyage which may last up to several weeks, during periods in which spot charter rates are rising, we will generally experience delays in realizing the benefits from such increases. A significant decrease in spot revenues or our inability to fully employ our vessels by taking advantage of the spot market would therefore adversely affect operating results, including our profitability and cash flows, with the result that our ability to serve our working capital and debt service needs could be impaired.

We are subject to certain risks with respect to our counterparties on contracts, and failure of such counterparties to meet their obligations could cause us to suffer losses or negatively impact our results of operations and cash flows.

We have entered into, and may enter into in the future, various contracts, including charter agreements, pool agreements, management agreements, shipbuilding contracts and credit facilities. Such agreements subject us to counterparty risks. The ability of each of our counterparties to perform its obligations under a contract with us will depend on a number of factors that are beyond our control and may include, among other things, general economic conditions, the condition of the maritime and offshore industries, the overall financial condition of the counterparty, charter rates received for specific types of vessels, and various expenses. For example, the combination of a reduction of cash flow resulting from a decline in world trade and the lack of availability of debt or equity financing may result in a significant reduction in the ability of our charterers and/or pool operators to make payments to us. In addition, in depressed market conditions, our charterers and customers may no longer need a vessel that is then under charter or contract or may be able to obtain a comparable vessel at lower rates and pool operators may not be able to profitably employ our participating vessels, if any. As a result, charterers and customers may seek to renegotiate the terms of their existing charter agreements or avoid their obligations under those contracts and pool operators may terminate the pool agreements or admit inability to comply with their obligations under those agreements. This may have a significant impact on our revenues due to our concentrated customer base. For further details, see “—We may be dependent on a small number of charterers for the majority of our business.” We may also face these counterparty risks due to assignments. Should a counterparty fail to honor its obligations under agreements with us, we could sustain significant losses which could have a material adverse effect on our business, cash flows, financial condition, and operating results.

30
We are dependent upon Castor Ships, a related party, and other third-party sub-managers for the management of our fleet and business and failure of such counterparties to meet their obligations could cause us to suffer losses or could negatively impact our results of operations and cash flows.

The management of our business, including, but not limited to, the commercial and technical management of our fleet as well as administrative, financial and other business functions, is carried out by Castor Ships, which is a company controlled by our Chairman and Chief Executive Officer, Petros Panagiotidis. We are reliant on Castor Ships’ continued and satisfactory provision of its services.

As of the date of this Annual Report, Castor Ships has subcontracted, with our consent, the technical management for all our vessels to a third-party ship-management company at its own expense, except for the M/T Wonder Maia and M/T Wonder Altair, for which Castor Ships has provided the technical management since September 29, 2025 and February 8, 2026, respectively. The subcontracting arrangements with third-parties may expose us to risks such as low customer satisfaction with the service provided by these subcontractors, increased operating costs compared to those we would achieve for our vessels, and an inability to maintain our vessels according to our standards or our current or potential customers’ standards.

Our ability to enter into new charters and expand our customer relationships depends largely on our ability to leverage our relationship with our manager and its subcontractors and their reputations and relationships in the shipping industry. If any of these counterparties suffer material damage to their reputations or relationships, it may also harm our ability to renew existing charters upon their expiration, obtain new charters or maintain satisfactory relationships with suppliers and other third parties. In addition, the inability of our manager to fix our vessels at competitive charter rates either due to prevailing market conditions at the time or due to its inability to provide the requisite quality of service, could adversely affect our revenues and profitability and we may have difficulty meeting our working capital and debt obligations.

Our operational success and ability to execute our business strategy will depend significantly upon the satisfactory and continued performance of these services by our manager and/or sub-managers, as well as their reputations. Any of the foregoing factors could have an adverse effect on our and their reputations and on our business, financial condition and operating results. Although we may have rights against our manager and/or sub-managers if they default on their obligations to us, our shareholders will share that recourse only indirectly to the extent that we recover funds.

We have limited the fields in which we focus our operations and this may have an adverse effect on our business, financial condition and operating results.

Our Chairman and Chief Executive Officer also serves as Chairman, Chief Executive Officer and Chief Financial Officer of our former parent company, Castor and as Chairman and Chief Executive Officer of our former wholly-owned subsidiary, Robin. In connection with the Spin-Off, we resolved to limit the fields in which we focus our operations. After the Spin-Off, we initially focused our efforts on LPG carrier  shipping services and have since reentered the product tanker sector, and we have no interest or expectancy to participate or pursue any opportunity in areas of business outside of these shipping businesses nor that Petros Panagiotidis, our director, Chairman, Chief Executive Officer and controlling shareholder and his affiliates, such as Castor Ships, offer or inform us of any such opportunity. This does not, however, preclude us from pursuing opportunities outside of this shipping business if in the future our Board determines to do so. Focusing our operations on LPG carrier and product tanker shipping business may reduce the scope of opportunities we may exploit and have an adverse effect on our business, financial condition and operating results.

31
In connection with the Spin-Off, Castor’s board resolved to, among other things, limit the fields in which it focuses its operations, and that Castor has no interest or expectancy to participate or pursue any opportunity in areas of business outside of the dry bulk shipping business nor that Petros Panagiotidis, its director, Chairman, Chief Executive Officer, Chief Financial Officer and controlling shareholder and his affiliates will offer or inform it of any such opportunity. This does not preclude Castor, however, from pursuing opportunities outside of the dry bulk shipping business if in the future Castor’s board determines to do so, including in the shipping sectors we operate in, and Castor has since entered the container shipping business.

 Robin may pursue opportunities outside of the Handysize tanker shipping business if Robin’s board determines to do so, including in the LPG carrier shipping business which it entered in the third quarter of 2025, which may have an adverse effect on our business, financial condition and operating results.

Our failure to obtain an opportunity that our Board deems in the interest of our shareholders may have an adverse effect on our business, financial condition and operating results. See also “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Certain resolutions of the board of directors of Toro, Robin and Castor in connection with the Robin Spin-Off and the Spin-Off.”

Our credit facility contains, and we expect that any new or amended credit facilities we enter into in the future will contain, restrictive covenants that we may not be able to comply with due to economic, financial or operational reasons and may limit our business and financing activities.

Our senior secured revolving credit facility that we entered into on March 30, 2026 imposes, and we expect that any future credit facilities we enter into in the future will impose,  operating and financial restrictions and covenants on us. In particular, under the terms of our senior secured revolving credit facility we are required, and under any new or amended facilities we may be required, to obtain the consent of our lenders to undertake various actions, such as:


 •
our subsidiaries incurring or guaranteeing additional indebtedness outside of our ordinary course of business;


•
charging, pledging or encumbering our vessels;


•
changing the flag, class, management or ownership of our vessels;


•
changing the commercial and technical management of our vessels;


•
declaring or paying any dividends or other distributions at a time when we have an event of default or the payment of such distribution would cause an event of default;


•
forming or acquiring any subsidiaries;


•
making any investments in any person, asset, firm, corporation, joint venture or other entity;


•
merging or consolidating with any other person;


•
changing the ownership, beneficial ownership, control or management of the Company entities party to the facility, or of any of secured vessels, if the effect of such change would be to materially change the ultimate legal and beneficial ownership in effect at the time the facility was executed; and


•
entering into any demise charter contract or let our vessels under any pooling agreement whereby all of the vessel’s earnings are pooled or shared with any other person.

We may also be subject to various financial covenants under any new or amended facilities, including those that require us to maintain a (i) certain minimum level of cash and cash equivalents, (ii) specified leverage ratio and/or (iii) minimum net worth amount.

32
Our ability to comply with the covenants and restrictions contained in our senior secured revolving credit facility, and any future credit facilities we enter into, may be affected by events beyond our control and which could impair our ability to comply with the terms of such facilities, including prevailing economic, financial and industry conditions, interest rate developments, changes in the funding costs of our banks and changes in vessel earnings and asset valuations. In particular, inflationary pressures have and may continue to impact interest rates, including SOFR, as discussed in “—Worldwide inflationary pressures could negatively impact our results of operations and cash flows.” In the event of non-compliance, we may be required to make prepayments or trigger cross-default provisions that we may not have sufficient funds to satisfy. Any such payments may impede our business strategy due to the diversion of funds away from our core operating activities. To the extent facilities are secured by our vessels, such as our senior secured revolving credit facility, which is secured by four vessels, lenders could also seek to foreclose on those assets. Financial and operating covenants in our facilities could also constrain our ability to acquire vessels, as we would have to make contemplated expenditures for vessel acquisitions at levels which do not breach any applicable covenants in our future credit facilities. Any of these factors could have a material adverse effect on our business, financial condition and operating results.

All of our outstanding debt is exposed to Secured Overnight Financing Rate (“SOFR”) Risk. If volatility in SOFR occurs, the interest on our indebtedness could be higher than prevailing market interest rates and our profitability, earnings and cash flows may be materially and adversely affected.

We are exposed to the risk of interest rate variations, principally in relation to the SOFR, a secured rate published by the Federal Reserve Bank of New York. SOFR or any other replacement rate may be volatile. Because the interest rates borne by our outstanding indebtedness fluctuate with changes in SOFR, if this volatility were to occur, it would affect the amount of interest payable on our debt. Our outstanding indebtedness is exposed to SOFR risk at an annual rate of margin over SOFR.

Given that SOFR is a secured rate backed by government securities (and therefore does not take into account bank credit risk), it may be lower than other reference rates. Inflation is generally expected to continue trending downwards in the United States but is subject to various uncertainties and other factors discussed in “-Worldwide inflationary pressures could negatively impact our results of operations and cash flows.” Further, as a secured rate backed by government securities, SOFR may be less likely to correlate with the funding costs of financial institutions. As a result, parties may seek to adjust spreads relative to SOFR in underlying contractual arrangements. Therefore, the use of SOFR-based rates has and may continue to result in interest rates and/or payments that are higher or lower than the rates and payments that we experienced under our credit facilities when interest was based on LIBOR. Alternative reference rates may behave in a similar manner or have other disadvantages or advantages in relation to our indebtedness.

In order to manage our exposure to interest rate fluctuations, we may from time to time use interest rate derivatives to effectively fix some of our floating rate debt obligations. We currently do not have any derivative instruments in place. SOFR rates fluctuated during 2024 and 2025, including a period of rate reductions in the second half of 2024, and may rise if inflation rates increase. However, our financial condition could be materially adversely affected by rate changes at any time that we have not entered into interest rate hedging arrangements to hedge our exposure to the interest rates applicable to our credit facilities and any other financing arrangements we may enter into in the future. Conversely, the use of derivative instruments, if any, may not effectively protect us from adverse interest rate movements. The use of interest rate derivatives may result in substantial losses and may affect our results through mark to market valuation of these derivatives. Also, adverse movements in interest rate derivatives may require us to post cash as collateral, which may impact our free cash position. Entering into swaps and derivatives transactions is inherently risky and presents various possibilities for incurring significant expenses.

Any of the foregoing factors, including any combination of them, could have an adverse effect on our business, financial condition, cash flow and operating results.

We may not be able to obtain debt or equity financing on acceptable terms, which may negatively impact our planned growth.

As a result of concerns about the stability of financial markets generally and the solvency of counterparties, among other factors, the ability to obtain money from the credit markets has become more difficult as many lenders have increased interest rates, enacted tighter lending standards, refused to refinance existing debt at all or on terms similar to current debt and reduced, and, in some cases, ceased to provide funding to borrowers. Due to these factors, we cannot be certain that financing or refinancing will be available if needed and, to the extent required, on acceptable terms. If financing is not available when needed, or is available only on unfavorable terms, we may be unable to enhance our existing business, complete additional vessel acquisitions or otherwise take advantage of business opportunities as they arise.

We are a holding company, and we depend on the ability of our subsidiaries to distribute funds to us to satisfy our financial and other obligations.

We are a holding company and have no significant assets other than the equity interests in our subsidiaries. Our subsidiaries own all of our existing vessels, and subsidiaries we form or acquire will own any other vessels we may acquire in the future. All payments under our charters and/or pool arrangements are made to our subsidiaries. As a result, our ability to meet our financial and other obligations, and to pay dividends in the future, as and if declared, will depend on the performance of our subsidiaries and their ability to distribute funds to us. The ability of a subsidiary to make these distributions could be affected by a claim or other action by a third party, including a creditor, by the terms of our financing arrangements, or by the applicable law regulating the payment of dividends in the jurisdictions in which our subsidiaries are organized. If we are unable to obtain funds from our subsidiaries, we will not be able to meet our liquidity needs unless we obtain funds from other sources, which we may not be able to do.


33
We may be unable to achieve some or all of the benefits that we expect to derive from our spin-off of our Handysize tanker business.

On February 28, 2025, the disinterested and independent members of the Board approved the spin-off of our Handysize tanker segment, which occurred on April 14, 2025. Although we believe that the Robin Spin-Off will enable our Handysize tanker business, on the one hand, and our LPG carrier businesses, on the other, to each increase its focus on its distinct line of business, which is expected to enhance operational efficiencies, attract new investors and facilitate efficient strategic expansion, we may not be able to achieve some or all of the anticipated benefits from the separation of our businesses and the Robin Spin-Off may adversely affect our business. The separation of such businesses created two independent, publicly traded companies, each of which will initially be smaller, less diversified and more narrowly focused than before the Robin Spin-Off, which could make such businesses more vulnerable to changing market and economic conditions. Operating as a relatively smaller independent entity may reduce or eliminate some of the benefits and synergies which previously existed across our business platforms before the Robin Spin-Off, including our operating diversity, borrowing leverage, available capital for investments, partnerships and relationships and opportunities to pursue integrated strategies with the businesses within our former combined company and the ability to attract, retain and motivate key employees. In addition, as a smaller company, our ability to absorb costs may be negatively impacted, including the significant cost of the spin-off transaction, and we may be unable to obtain financing or refinance our existing indebtedness. Any of these factors could have a material adverse effect on our business, financial condition, results of operations, cash flows, business prospects and the trading price of our common stock. As a result of having spun off our Handysize tanker business, we also may be more susceptible to market fluctuations and other adverse events than we would be if we did not spin off such business. If we fail to achieve some or all of the benefits that we expect to derive as a result of the Robin Spin-Off, or do not achieve them in the time we expect, our results of operations and financial condition could be materially adversely affected.

We do not have a declared dividend policy and our Board may not declare dividends on our common shares in the future.

The declaration and payment of dividends, if any, will always be subject to the discretion of our Board, restrictions contained in our current or future agreements and the requirements of Marshall Islands law. We do not have a declared dividend policy and if the Board determines to declare dividends, the timing and amount of any dividends declared will depend on, among other things, our earnings, financial condition and cash requirements and availability, our ability to obtain debt and equity financing on acceptable terms as contemplated by our business strategy, our compliance with the terms of our outstanding indebtedness and the ability of our subsidiaries to distribute funds to us. In December 2025, the Board declared a one-time, special dividend of $1.75 per common share, consisting of either cash or our common shares. However, there is no assurance that the Board will declare dividends on our common shares in the future. The LPG and tanker shipping industry is highly volatile, and we cannot predict with certainty the amount of cash, if any, that will be available for distribution as dividends in any period. Also, there may be a high degree of variability from period to period in the amount of cash that is available for the payment of dividends.

In addition, we pay dividends on our Series A Preferred Shares. The dividend rate for the Series A Preferred Shares is 1.00% per annum of the stated amount of $1,000 per share; for each quarterly dividend period commencing on or after the seventh anniversary of the issue date (the “Reset Date”), the dividend rate will be the dividend rate in effect for the prior quarterly dividend period multiplied by a factor of 1.3; provided, however, that the dividend rate will not exceed 20% per annum in respect of any quarterly dividend period. Further, in the event that we declare a dividend of the stock of a subsidiary which we control, the holder(s) of the Series B Preferred Shares are entitled to receive preferred shares of such subsidiary. The rights of the holders of our Series A Preferred Shares rank senior to the obligations to holders of our common shares. This means that, unless accumulated dividends have been paid or set aside for payment on all of our outstanding Series A Preferred Shares for all past completed dividend periods, no distributions may be declared or paid on our common shares subject to limited exceptions. See “Item 8. Financial Information—A. Consolidated Statements and other Financial Information—Dividend Policy.”

We may incur expenses or liabilities or be subject to other circumstances in the future that reduce or eliminate the amount of cash that we have available for distribution as dividends, including as a result of the risks described herein. Our business strategy contemplates that we will finance our acquisitions of additional vessels using cash from operations, through debt financings and/or from the net proceeds of future equity issuances on terms acceptable to us. If financing is not available to us on acceptable terms or at all, our Board may determine to finance or refinance acquisitions with cash from operations, which would reduce the amount of any cash available for the payment of dividends, if any.

The Republic of Marshall Islands laws generally prohibit the payment of dividends other than from surplus (retained earnings and the excess of consideration received for the sale of shares above the par value of the shares) or while a company is insolvent or would be rendered insolvent by the payment of such a dividend. We may not have sufficient surplus in the future to pay dividends and our subsidiaries may not have sufficient funds or surplus to make distributions to us.

Increasing scrutiny and changing expectations from investors, lenders and other market participants with respect to our Environmental, Social and Governance (“ESG”) policies may impose additional costs on us or expose us to additional risks.

Companies across all industries are facing increasing scrutiny relating to their ESG practices and policies. Investor advocacy groups, certain institutional investors, investment funds, lenders and other market participants are increasingly focused on ESG practices and in recent years have placed increasing importance on the implications and social cost of their investments. The increased focus and activism related to ESG and similar matters may hinder access to capital, as investors and lenders may decide to reallocate capital or to not commit capital as a result of their assessment of a company’s ESG practices. Companies which do not adapt to or comply with investor, lender or other industry shareholder expectations and standards, which are evolving, or which are perceived to have not responded appropriately to the growing concern for ESG issues, regardless of whether there is a legal requirement to do so, may suffer from reputational damage and the business, financial condition, and/or stock price of such a company could be materially and adversely affected.

34
We may face increasing pressures from investors, lenders and other market participants, who are increasingly focused on climate change, to prioritize sustainable energy practices, reduce our carbon footprint and promote sustainability. As a result, we may be required to implement more stringent ESG procedures or standards so that our existing and future investors and lenders remain invested in us and make further investments in us, especially given the highly focused and specific trade and transport of LPG-related products in which we are engaged. If we do not meet these standards, our business and/or our ability to access capital could be harmed.

These limitations in both the debt and equity capital markets may affect our ability to grow. If those markets are unavailable, or if we are unable to access alternative means of financing on acceptable terms, or at all, we may be unable to implement our business strategy, which could impair our ability to service our indebtedness. Further, it is likely that we will incur additional costs and require additional resources to monitor, report, comply with and implement wide-ranging ESG requirements. Any of the foregoing factors could have a material adverse effect on our business, financial condition and operating results.

We are a new company, and our anti-fraud and corporate governance procedures might not be as advanced as those implemented by our listed peer competitors having a longer presence in the shipping industry.

As a publicly traded company, the SEC, Nasdaq Stock Market LLC (“Nasdaq”), and other regulatory bodies subject us to increased scrutiny on the way we manage and operate our business by urging us or mandating us to take a series of actions that have nowadays become an area of focus among policymakers and investors. Listed companies are occasionally encouraged to follow best practices and often must comply with these rules and/or practices addressing a variety of corporate governance and anti-fraud matters, such as director independence, board committees, corporate transparency, ethical behavior, sustainability, and prevention of and controls relating to corruption and fraud. While we believe we follow all requirements that regulatory bodies may from time to time impose on us, our internal processes and procedures might not be as advanced or mature as those implemented by other listed shipping companies with a longer experience and presence in the U.S. capital markets, which could be an area of concern to our investors and expose us to greater operational risks.

We may be subject to litigation that, if not resolved in our favor and not sufficiently insured against, could have a material adverse effect on us.

We may, from time to time, be involved in various litigation or arbitration matters. These matters may include, among other things, contract disputes, personal injury claims, environmental claims or proceedings, asbestos and other toxic tort claims, employment matters, governmental claims for taxes or duties, and other litigation or arbitration that arises in the ordinary course of our business. We cannot predict with certainty the outcome or effect of any claim or other litigation matter, and the ultimate outcome of any litigation or arbitration, or the potential costs to resolve it, may have a material adverse effect on our business. Insurance may not be applicable or sufficient in all cases and/or insurers may not remain solvent, which could have a material adverse effect on our financial condition.

 We may have to pay tax on United States source income, which would reduce our earnings, cash from operations and cash available for distribution to our shareholders.

Under the United States Internal Revenue Code of 1986 (the “Code”), 50% of the gross shipping income of a vessel owning or chartering corporation, such as ourselves and our subsidiaries, that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States may be subject to a 4% U.S. federal income tax without allowance for deduction, unless that corporation qualifies for exemption from tax under Section 883 of the Code and the applicable Treasury Regulations promulgated thereunder.

35
We intend to take the position that we and each of our subsidiaries qualify for this statutory tax exemption for our 2021 and future taxable years. However, as discussed below under “Taxation—U.S. Federal Income Tax Considerations—U.S. Federal Income Taxation of Our Company”, whether we qualify for this exemption in view of our share structure is unclear and there can be no assurance that the exemption from tax under Section 883 of the Code will be available to us. If we or our subsidiaries are not entitled to this exemption, we would be subject to an effective 2% U.S. federal income tax on the gross shipping income we derive during the year that is attributable to the transport of cargoes to or from the United States. If this tax had been imposed for our 2023, 2024 and 2025 taxable year, we anticipate that U.S. source income taxes of approximately $47,071, $0 and $0 from continuing operations and $303,596 , $0 and $(206,173) from discontinued operations would be charged for these periods, respectively, and we have included a provision/recovery from provision for these amounts in our Consolidated Financial Statements. However, there can be no assurance that such taxes will not be materially higher or lower in future taxable years.

A change in tax laws, treaties or regulations, or their interpretation, of any country in which we operate could result in a higher tax rate on our worldwide earnings, which could result in a significant negative impact on our earnings and cash flows from operations.

We conduct our operations through subsidiaries which can trade worldwide. Tax laws and regulations are highly complex and subject to interpretation. Consequently, we are subject to changing tax laws, treaties and regulations in and between countries in which we operate. Our income tax expense, if any, is based upon our interpretation of tax laws in effect in various countries at the time that the expense was incurred. A change in these tax laws, treaties or regulations, or in the interpretation thereof, could result in a materially higher tax expense or a higher effective tax rate on our worldwide earnings, and such change could be significant to our financial results. If any tax authority successfully challenges our operational structure, or the taxable presence of our operating subsidiaries in certain countries, or if the terms of certain income tax treaties are interpreted in a manner that is adverse to our structure, or if we lose a material tax dispute in any country, our effective tax rate on our worldwide earnings could increase substantially. An increase in our taxes could have a material adverse effect on our earnings and cash flows from these operations.

EU Finance ministers rate jurisdictions for tax rates and tax transparency, governance and real economic activity. Countries that are viewed by such finance ministers as not adequately cooperating, including by not implementing sufficient standards in respect of the foregoing, may be put on a “grey list” or a “blacklist”. EU member states have agreed upon a set of measures, which they can choose to apply against grey- or blacklisted countries, including increased monitoring and audits, withholding taxes, special documentation requirements and anti-abuse provisions. The European Commission has stated it will continue to support member states’ efforts to develop a more coordinated approach to sanctions for the listed countries. EU legislation prohibits EU funds from being channeled or transited through entities in countries on the blacklist.

The Marshall Islands was added to the EU blacklist in February 2023, and it was subsequently removed from the EU blacklist in October 2023. If any jurisdiction in which we are incorporated in is added to the list of non-cooperative jurisdictions in the future and sanctions or other financial, tax or regulatory measures were applied by European Member States to countries on the list, our business could be harmed. In addition, if further economic substance or other requirements were imposed by the Marshall Islands, our business could be adversely affected.

Our subsidiaries may be subject to taxation in the jurisdictions in which its activities are conducted. The amount of any such taxation may be material and would reduce the amounts available for distribution to us.

Our historical financial results may not be representative of our results as a separate, standalone company.

Some of the historical financial information we have included in this Annual Report has been derived from the consolidated financial statements and accounting records of Castor and does not necessarily reflect what our financial position, results of operations or cash flows would have been had we been a separate, standalone company during the periods presented. Although Castor did account for our business as two separate business segments, we were not operated as a separate, standalone company for the historical periods presented. The historical information included for the period prior to March 7, 2023 does not necessarily indicate what our results of operations, financial position, cash flows or costs and expenses will be in the future.

We are dependent on our management and their ability to hire and retain key personnel and their ability to devote sufficient time and attention to their respective roles. In particular, we are dependent on the retention and performance of our Chairman and Chief Executive Officer, Petros Panagiotidis.

36
Our success depends upon our and our management’s ability to hire and retain key members of our management team and the ability of our management team to devote sufficient time and attention to their respective roles in light of outside business interests. In particular, we are dependent upon the performance of our Chairman and Chief Executive Officer, Petros Panagiotidis, who has outside business interests in Castor, Castor Ships and other ventures. Mr. Panagiotidis will continue to devote such portion of his business time and attention to our business as is appropriate and will also continue to devote substantial time to Castor’s business and other business and/or investment activities that Mr. Panagiotidis maintains now or in the future. Mr. Panagiotidis’ intention to provide adequate time and attention to other ventures will preclude him from devoting substantially all his time to our business. Mr. Pagiaslis serves as Chief Financial Officer of both Robin and Toro, and accordingly faces similar demands on his time. The dual CFO role means that the same individual is responsible for the financial reporting, internal controls and SEC compliance of two separately listed public companies, which may strain his capacity to devote sufficient attention to each role. Further, the loss of Mr. Panagiotidis, either to outside business interests or for unrelated reasons, or resignation of Mr. Panagiotidis from any of his current managerial roles could adversely affect our business prospects and financial condition. Any difficulty in hiring and retaining key personnel generally could also adversely affect our results of operations. We do not maintain “key man” life insurance on any of our officers.

Risks Relating to Our Preferred Shares

Our Series A Preferred Shares rank senior to our common shares with respect to dividends, distributions and payments upon liquidation and are convertible into our common shares, which could have an adverse effect on the value of our common shares.

Dividends on the Series A Preferred Shares accrue and are cumulative from their issue date and are payable quarterly on each distribution payment date declared by the Board, out of funds legally available for such purpose. The dividend rate for the period from, and including, the issue date to, but excluding, the Reset Date will be 1.00% per annum of the stated amount of $1,000 per share; however, for each quarterly dividend period commencing on or after the Reset Date, the dividend rate will be the dividend rate in effect for the prior quarterly dividend period multiplied by a factor of 1.3, provided that the dividend rate will not exceed 20% per annum in respect of any quarterly dividend period.

The rights of the holders of our Series A Preferred Shares rank senior to the obligations to holders of our common shares. This means that, unless accumulated dividends have been paid or set aside for payment on all of our outstanding Series A Preferred Shares for all past completed dividend periods, no distributions may be declared or paid on our common shares subject to limited exceptions. Likewise, in the event of our voluntary or involuntary liquidation, dissolution or winding-up, no distribution of our assets may be made to holders of our common shares until we have paid to holders of our Series A Preferred Shares a liquidation preference equal to $1,000 per share plus accumulated and unpaid dividends.

In addition, our Series A Preferred Shares are convertible, in whole or in part, at their holder’s option, to common shares at any time and from time to time from and after the third anniversary of their issue date and prior to the seventh anniversary of such date. On December 23, 2025, Toro and Castor agreed to amend the terms of Series A Preferred Shares to extend the initial conversion date by one-year, which shall be to March 7, 2027. The conversion of our Series A Preferred Shares could result in significant dilution to our shareholders at the time of conversion. See also “—Risks Relating to Our Common Shares—Future issuances of common shares or other equity securities, including as a result of an conversion of Series A Preferred Shares, or the potential for such issuances, may impact the price of our common shares and could impair our ability to raise capital through equity offerings. Shareholders may experience significant dilution as a result of any such issuances.”

Accordingly, the existence of the Series A Preferred Shares and the ability of a holder to convert the Series A Preferred Shares into common shares on or after the third and prior to the seventh anniversary of their issue date could have a material adverse effect on the value of our common shares. See “Item 10. Additional Information—B. Memorandum and Articles of Incorporation—Description of the Series A Preferred Shares” for a more detailed description of the Series A Preferred Shares.

Risks Relating to Our Common Shares

Our share price may be highly volatile, as a result, investors in our common shares could incur substantial losses.

37
The stock market in general, and the market for shipping companies in particular, have experienced extreme volatility that has often been unrelated or disproportionate to the operating performance of particular companies. As a result of this volatility, investors may experience rapid and substantial losses on their investment in our common shares that are unrelated to our operating performance. Our stock price has been volatile and may continue to be volatile, which may cause our common shares to trade above or below what we believe to be their fundamental value. Furthermore, significant historical fluctuations in the market price of our former parent company’s common shares have been accompanied by reports of strong and atypical retail investor interest, including on social media and online forums, and, as our common shares were distributed to our former parent company’s common shareholders in connection with the Spin-Off, we may have a similar shareholder base and experience similar patterns of investment. Since completion of the Spin-Off, the price of our common shares has been volatile, ranging from a low of $1.47 per share on March 23, 2023 to a high of $6.42 per share on August 14, 2023. As of March 25, 2026, the closing bid price of our common shares was $3.82 per common share. Our shares may continue to experience volatility as the market evaluates our prospects as an independent publicly traded company.

Market volatility and trading patterns may create several risks for investors, including but not limited to the following:


 •
the market price of our common shares may experience rapid and substantial increases or decreases unrelated to our operating performance or prospects, or macro or industry fundamentals;


•
to the extent volatility in our common shares is caused by a “short squeeze” in which coordinated trading activity causes a spike in the market price of our common shares as traders with a short position make market purchases to avoid or to mitigate potential losses, investors may purchase common shares at inflated prices unrelated to our financial performance or prospects, and may thereafter suffer substantial losses as prices decline once the level of short-covering purchases has abated; and


•
if the market price of our common shares declines, you may be unable to resell your shares at or above the price at which you acquired them. We cannot assure you that the equity issuance of our common shares will not fluctuate, increase or decline significantly in the future, in which case you could incur substantial losses.

We may incur rapid and substantial increases or decreases in our stock price in the foreseeable future that may not coincide in timing with the disclosure of news or developments by or affecting us. Accordingly, the market price of our common shares may decline or fluctuate rapidly, regardless of any developments in our business. Overall, there are various factors, many of which are beyond our control, that could negatively affect the market price of our common shares or result in fluctuations in the price or trading volume of our common shares, which include but are not limited to:


 •
investor reaction to our business strategy;


•
the sentiment of the significant number of retail investors whom we believe hold our common shares, in part due to direct access by retail investors to broadly available trading platforms, and whose investment thesis may be influenced by views expressed on financial trading and other social media sites and online forums;


•
the amount and status of short interest in our common shares, access to margin debt, trading in options and other derivatives on our common shares and any related hedging and other trading factors;


•
our continued compliance with the listing standards of the Nasdaq Capital Market and any action we may take to maintain such compliance, such as a reverse stock split;


•
regulatory or legal developments in the United States and other countries, especially changes in laws or regulations applicable to our industry;


•
variations in our financial results or those of companies that are perceived to be similar to us;

38

 •
our ability or inability to raise additional capital and the terms on which we raise it;


•
our dividend strategy;


•
our continued compliance with our debt covenants;


•
variations in the value of our fleet;


•
declines in the market prices of stocks generally;


•
trading volume of our common shares;


•
sales of our common shares by us or our shareholders;


•
speculation in the press or investment community about our Company, our industry or our securities;


•
general economic, industry and market conditions; and


•
other events or factors, including those resulting from such events, or the prospect of such events, including war, terrorism and other international conflicts, public health issues including health epidemics or pandemics, and natural disasters such as fire, hurricanes, earthquakes, tornados or other adverse weather and climate conditions, whether occurring in the United States or elsewhere, could disrupt our operations or result in political or economic instability.

In addition, the Robin Spin-Off may temporarily increase the volatility of our share price for a variety of reasons. For example, it is possible that some of our shareholders will sell our common shares as a result of the Robin Spin-Off, for reasons such as our business profile or market capitalization as a stand-alone company no longer fitting their investment objectives. Volatility in our share price may also increase as the market evaluates our and Robin’s prospects as independent publicly traded companies. There can be no assurance that the effects of any such volatility in share price would be borne equally among us and Robin. The sale of significant volumes of our common shares, or the perception in the market that this will occur, may decrease their market price and have an adverse impact on our business, including due to Nasdaq minimum bid price requirements.

Some companies that have experienced volatility in the market price of their common shares have been subject to securities class-action litigation. If instituted against us, such litigation could result in substantial costs and diversion of management’s attention and resources, which could materially and adversely affect our business, financial condition, operating results and growth prospects. There can be no guarantee that the price of our common shares will remain at or rise above its current level or that future sales of our common shares will not be at prices lower than those initially distributed or sold to investors.

Our investments in the Series D Preferred Shares of Castor and Series A Preferred Shares of Robin constitute a substantial portion of our assets, therefore we are exposed to the risks affecting Castor’s and Robin’s respective businesses.

On August 7, 2023, we agreed to purchase 50,000 Castor Series D Preferred Shares for aggregate cash consideration of $50.0 million. On December 12, 2024, we agreed to purchase an additional 50,000 Castor Series D Preferred Shares for an aggregate consideration of $50.0 million in cash. As of the date of this Annual Report, we own all 100,000 outstanding Castor Series D Preferred Shares. For additional information, see “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions— Purchase by the Company of 5.00% Series D Cumulative Perpetual Convertible Preferred Shares of Castor.”

The Castor Series D Preferred Shares entitle us to certain dividends and, from January 1, 2027 will be convertible, in whole or in part, at our option, into common shares of Castor. On December 23, 2025, Toro and Castor agreed to amend the terms of Castor Series D Preferred Shares to extend the initial conversion date by one-year, which shall be to January 1, 2027.

39
As part of the contribution and spin-off of our handysize tanker segment to Robin in April 2025, we received 2,000,000 Series A Preferred Shares of Robin having a stated amount of $25.00 per share and a par value of $0.001 per share. The Robin Series A Preferred Shares entitle us to certain dividends and, from April 14, 2027 will be convertible, in whole or in part, at our option, into common shares of Robin.

Our investments in the Castor Series D Preferred Shares and Series A Preferred Shares of Robin constitute a substantial portion of our total assets. Our investment in Castor Series D Preferred Shares expose us to the risk of Castor’s default and our investment in Robin Series A Preferred Shares expose us to the risk of Robin’s default. Castor or Robin could default on its payment obligations to us due to, by way of example, bankruptcy or lack of liquidity, which in turn could be caused by the occurrence of any events which affect the business, results of operations and financial condition of Castor and Robin, respectively. The Castor Series D Preferred Shares are preferred equity securities of Castor and in a liquidation would rank junior to Castor’s debt obligations and the Robin Series A Preferred Shares are preferred equity securities of Robin and in a liquidation would rank junior to any debt obligations of Robin.

As a result of our investment in the Castor Series D Preferred Shares and Robin Series A Preferred Shares, we are, and in the event of a conversion of the Series D Preferred Shares into common shares of Castor or of a conversion of the Series A Preferred Shares into common shares of Robin we would continue to be, subject to risks affecting Castor and Robin, as applicable, including the risks that Castor and Robin discloses in its respective annual report on Form 20-F and other reports filed with or furnished to the SEC.

Future issuances of common shares or other equity securities, including as a result of an optional conversion of our Series A Preferred Shares, or the potential for such issuances, may impact the price of our common shares and could impair our ability to raise capital through equity offerings, to the extent available and permitted. Shareholders may experience significant dilution as a result of any such issuances.

Toro has an authorized share capital of 3,900,000,000 common shares that it may issue without further shareholder approval. Our business strategy may require the issuance of a substantial amount of additional shares and in the year ended December 31, 2023, we issued 8,500,000 common shares to Pani Corp. (“Pani”), a company controlled by Toro’s Chairman and Chief Executive Officer, for gross proceeds of $19,465,000, less issuance costs of $817,764. Based on market conditions, we may also opportunistically seek to issue equity securities, including additional common shares, to the extent available and permitted. We cannot assure you at what price the offering of our shares in the future, if any, will be made and they may be offered and sold at a price significantly below the current trading price of our common shares or the acquisition price of common shares by shareholders and may be at a discount to the trading price of our common shares at the time of such sale. Purchasers of the common shares we sell, as well as our existing shareholders, will experience significant dilution if we sell shares at prices significantly below the price at which they invested.

Further, our Series A Preferred Shares are convertible, in whole or in part, at their holder’s option, into common shares at any time and from time to time from and after the third anniversary of their issue date, which was subsequently extended until March 7, 2027, the fourth anniversary of their issue date, and prior to the seventh anniversary of such date. All 140,000 Series A Preferred Shares, which have an aggregate stated amount of $140,000,000, outstanding as of the date of this Annual Report are beneficially owned by Castor. Subject to certain adjustments, the “Conversion Price” for any conversion of the Series A Preferred Shares shall be the lower of (i) 150% of the volume weighted average price (“VWAP”) of our common shares over the five consecutive trading day period commencing on and including the Distribution Date, and (ii) the VWAP of our common shares over the 10 consecutive trading day period expiring on the trading day immediately prior to the date of delivery of written notice of the conversion; provided, that, in no event shall the Conversion Price be less than $2.50. The number of common shares to be issued to a converting holder shall be equal to the quotient of (i) the aggregate stated amount of the Series A Preferred Shares converted plus Accrued Dividends (but excluding any dividends declared but not yet paid) thereon on the date on which the conversion notice is delivered divided by (ii) the Conversion Price. If converted by Castor, Castor will have registration rights in relation to the common shares issued upon conversion. See “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Contribution and Spin-Off Distribution Agreement.” The issuance of additional common shares upon conversion of the Series A Preferred Shares could result in significant dilution to our shareholders at the time of conversion.

40
In addition, we may issue additional common shares or other equity securities of equal or senior rank in the future in connection with, among other things, our Equity Incentive Plan (under which a total of 2,000,000 restricted common shares have already been granted but 840,000 remain unvested as of March 25, 2026), our 2025 Equity Incentive Plan (under which a total of 2,400,000 restricted common shares have already been granted which remain unvested as of March 25, 2026), debt prepayments or future vessel acquisitions, without shareholder approval, in a number of circumstances. To the extent that we issue restricted stock units, stock appreciation rights, options or warrants to purchase our common shares in the future and those stock appreciation rights, options or warrants are exercised or as the restricted stock units vest, our shareholders may experience further dilution. Holders of shares of our common shares have no preemptive rights that entitle such holders to purchase their pro rata share of any offering of shares of any class or series and, therefore, such sales or offerings could result in increased dilution to our shareholders.

Our issuance of additional common shares or other equity securities of equal or senior rank, or the perception that such issuances may occur, could have the following effects:


 •
our existing shareholders’ proportionate ownership interest in us will decrease;


•
the earnings per share and the per share amount of cash available for dividends on our common shares (as and if declared) could decrease;


•
the relative voting strength of each previously outstanding common share could be diminished;


•
the market price of our common shares could decline; and


•
our ability to raise capital through the sale of additional securities at a time and price that we deem appropriate could be impaired.

On November 13, 2025, we entered into an at-the-market (“ATM”) offering agreement with Maxim Group LLC (“Maxim”), as sales agent, pursuant to which we may, from time to time, sell our common shares having an aggregate offering value of up to $12.5 million. Sales under the ATM facility, if any, will be made at prevailing market prices at the time of sale, which may be at, above or below the price at which existing shareholders acquired their shares. Unlike a traditional underwritten offering, ATM sales may occur continuously during normal trading hours without prior public announcement, making it difficult for investors to predict the timing, size or price of any such sales. As of December 31, 2025, there were no transactions under the ATM facility; however, the facility remains active and we may utilize it at any time at our sole discretion. The sale of shares under the ATM facility, or the perception that such sales could occur, may cause the market price of our common shares to decline and could impair our ability to raise capital through subsequent equity offerings on terms favorable to us.

The market price of our common shares could also decline due to sales, or the announcements of proposed sales, of a large number of common shares by our large shareholders (including sales of common shares issued upon conversion, if any, of the Series A Preferred Shares), or the perception that these sales could occur.

We are incorporated in the Marshall Islands, which does not have a well-developed body of corporate and case law.

We are organized in the Republic of the Marshall Islands, which does not have a well-developed body of corporate or case law, and as a result, shareholders may have fewer rights and protections under Marshall Islands law than under a typical jurisdiction in the United States. Our corporate affairs are governed by our Articles of Incorporation and Bylaws and by the Marshall Islands Business Corporations Act (the “BCA”). The provisions of the BCA resemble provisions of the corporation laws of a number of states in the United States. However, there have been few judicial cases in the Marshall Islands interpreting the BCA. The rights and fiduciary responsibilities of directors under the laws of the Marshall Islands are not as clearly established as the rights and fiduciary responsibilities of directors under statutes or judicial precedent in existence in the United States. The rights of shareholders of companies incorporated in the Marshall Islands may differ from the rights of shareholders of companies incorporated in the United States. While the BCA provides that its provisions shall be applied and construed in a manner to make them uniform with the laws of the State of Delaware and other states with substantially similar legislative provisions, there have been few, if any, court cases interpreting the BCA in the Marshall Islands and we cannot predict whether Marshall Islands courts would reach the same conclusions as U.S. courts. Thus, you may have more difficulty in protecting your interests in the face of actions by our management, directors or controlling shareholders than shareholders of a corporation incorporated in a United States jurisdiction which has developed a relatively more substantial body of case law would.

The Marshall Islands has no established bankruptcy act, and as a result, any bankruptcy action involving us would have to be initiated outside the Marshall Islands, and our shareholders may find it difficult or impossible to pursue their claims in such other jurisdictions.

We are incorporated in the Marshall Islands, and the majority of our officers and directors are non-U.S. residents. It may be difficult to serve legal process or enforce judgments against us, our directors or our management.

41
We are incorporated under the laws of the Republic of the Marshall Islands, and substantially all of our assets are located outside of the United States. Our principal executive office is located in Cyprus. In addition, the majority of our directors and officers are non-residents of the United States, and substantially all of their assets are located outside the United States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States if you believe that your rights have been infringed under securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Republic of the Marshall Islands and of other jurisdictions may prevent or restrict you from enforcing a judgment against our assets or our directors and officers. Although you may bring an original action against us or our affiliates in the courts of the Marshall Islands, and the courts of the Marshall Islands may impose civil liability, including monetary damages, against us or our affiliates for a cause of action arising under Marshall Islands law, it may be impracticable for you to do so.

Our Bylaws contain exclusive forum provisions that may limit a shareholder’s ability to bring a claim in a judicial forum that it finds favorable.

Our Bylaws provide that, unless we consent in writing to the selection of an alternative forum, the High Court of the Republic of the Marshall Islands shall be the sole and exclusive forum for asserting any internal corporate claim, intra-corporate claim or claim governed by the internal affairs doctrine and that the United States District Court for the Southern District of New York shall be the sole and exclusive forum for any action asserting a claim arising under the Securities Act or the Exchange Act. If the United States District Court for the Southern District of New York does not have jurisdiction over the claims assigned to it by our exclusive forum provisions, any other federal district court of the United States may hear such claims.

While the validity of exclusive forum provisions has been upheld under the law of certain jurisdictions, uncertainty remains as to whether our exclusive forum provisions will be fully or partially recognized by all jurisdictions. If a court were to find either exclusive forum provision contained in our articles of association to be inapplicable or unenforceable (in whole or in part) in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our operating results and financial condition.

The exclusive forum provision in our Bylaws will not relieve us of our duties to comply with federal securities laws and the rules and regulations thereunder, and our shareholders will not be deemed to have waived our compliance with these laws, rules and regulations. In particular, Section 27 of the Exchange Act creates exclusive federal jurisdiction over all claims brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder, and Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.

Our exclusive forum provision may limit a shareholder’s ability to bring a claim in a judicial forum of its choosing for disputes with us or our directors or other employees or increase the costs associated with bringing litigation against us or our directors, employees or officers, which may discourage lawsuits against such parties.

We are subject to certain anti-takeover provisions that could have the effect of discouraging, delaying or preventing a merger or acquisition, or could make it difficult for our shareholders to replace or remove our current Board, and could adversely affect the market price of our common shares.

Several provisions of our Articles of Incorporation and Bylaws could make it difficult for our shareholders to change the composition of our Board in any one year, preventing them from changing the composition of management. In addition, the same provisions may discourage, delay or prevent a merger or acquisition that shareholders may consider favorable. These provisions include:


 •
authorizing our Board to issue “blank check” preferred shares without shareholder approval;


•
providing for a classified Board with staggered, three-year terms;


•
establishing certain advance notice requirements for nominations for election to our Board or for proposing matters that can be acted on by shareholders at shareholder meetings;

42

 •
prohibiting cumulative voting in the election of directors;


•
prohibiting any owner of 15% or more of our voting stock from engaging in a business combination with us within three years after the owner acquired such ownership, except under certain conditions;


•
limiting the persons who may call special meetings of shareholders; and


•
establishing supermajority voting provisions with respect to amendments to certain provisions of our Articles of Incorporation and Bylaws.

On the Distribution Date, our Board declared a dividend of one preferred share purchase right (a “Right”), for each outstanding common share and adopt a shareholder rights plan, as set forth in the Shareholder Protection Rights Agreement (the “Rights Agreement”) entered into between Toro and Broadridge Corporate Issuer Solutions, Inc., as rights agent (the “Rights Agent”), on such same date. Each Right allows its holder to purchase from Toro one common share (or one one-thousandth of a share of Series C Participating Preferred Shares), for the Exercise Price of $22.00 once the Rights become exercisable. This portion of a Series C Participating Preferred Share will give the shareholder approximately the same dividend, voting and liquidation rights as would one common share. The Rights Agreement is intended to protect shareholders from coercive or otherwise unfair takeover tactics. In general terms, it imposes a significant penalty upon any person or group that acquires 15% or more of our outstanding common shares without the approval of our Board. If a shareholder’s beneficial ownership of our common shares as of the time of the public announcement of the rights plan and associated dividend declaration is at or above the applicable threshold, that shareholder’s then-existing ownership percentage would be grandfathered, but the rights would become exercisable if at any time after such announcement, the shareholder increases its ownership percentage by 1% or more. Our Chairman and Chief Executive Officer, Petros Panagiotidis, and Mr. Panagiotidis’ controlled affiliates are exempt from these provisions. For a full description of the rights plan, see “Item 10. Additional Information—B. Shareholder Protection Rights Agreement.”

The Rights may have anti-takeover effects. The Rights will cause substantial dilution to any person or group that attempts to acquire us without the approval of our Board. As a result, the overall effect of the Rights may be to render more difficult or discourage any attempt to acquire us. Because our Board can approve a redemption of the Rights for a permitted offer, the Rights should not interfere with a merger or other business combination approved by our Board.

In addition to the Rights above, we have issued 40,000 Series B Preferred Shares, representing 99.3% of the aggregate voting power of our total issued and outstanding share capital, as of March 25, 2026, to an entity controlled by Mr. Panagiotidis. See “—Our Chairman and Chief Executive Officer, who may be deemed to beneficially own, directly or indirectly, a majority of our outstanding common shares and 100% of our Series B Preferred Shares, has control over us” and “Item 10. Additional Information—B. Memorandum and Articles of Association.”

In addition, our future credit facilities may contain covenants prohibiting or limiting a change of control. See “—We expect that any new or amended credit facility we enter into will contain restrictive covenants that we may not be able to comply with due to economic, financial or operational reasons and may limit our business and financing activities” for associated risks.

The foregoing anti-takeover provisions could substantially impede the ability of public shareholders to benefit from a change in control and, as a result, may adversely affect the market price of our common shares and your ability to realize any potential change of control premium.

Our Chairman and Chief Executive Officer, who may be deemed to beneficially own, directly or indirectly, a majority of our outstanding common shares and 100% of our Series B Preferred Shares, has control over us.

43
Our Chairman and Chief Executive Officer, Petros Panagiotidis, may be deemed to be the ultimate beneficial owner of 18,506,195 common shares representing 64.1% of the 28,852,084 common shares outstanding, as of March 25, 2026 and 40,000 shares of our Series B Preferred Shares outstanding as of the same date. The shares of Series B Preferred Shares each carry 100,000 votes. Together, such shares represent 64.2% of our total outstanding share capital and 99.7% of the aggregate voting power of our total outstanding share capital as of March 25, 2026 and Mr. Panagiotidis therefore has control over our actions. Mr. Panagiotidis also controls Robin as he was the ultimate beneficial owner of 40,000 Series B Preferred Shares, each carrying 100,000 votes of Robin as of March 25, 2026. Mr. Panagiotidis is the Chairman, Chief Executive Officer and Chief Financial Officer of Castor as of March 25, 2026. The interests of Mr. Panagiotidis may be different from your interests.

We cannot assure you that our internal controls and procedures over financial reporting will be sufficient. Further, we are an “emerging growth company”, and we cannot be certain if the reduced requirements applicable to emerging growth companies make our securities less attractive to investors.

We are subject to the reporting requirements of the Exchange Act and the other rules and regulations of the SEC which create additional costs for us and will require the time and attention of management, including the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”). Section 404 of the Sarbanes-Oxley Act requires any company subject to the reporting requirements of the U.S. securities laws to do a comprehensive evaluation of its and its consolidated subsidiaries’ internal control over financial reporting. To comply with this statute, we are required to document and test our internal control procedures and our management is required to assess and issue a report concerning our internal control over financial reporting. Such evaluations, as well as any proposed remedial measures, require time and resources. We may not be able to predict or estimate the amount of the additional costs we may incur, the timing of such costs or the degree of impact that our management’s attention to these matters will have on our business. If our management cannot favorably assess the effectiveness of our internal control over financial reporting, investor confidence in our financial results may weaken, and our stock price may suffer. Further, controls previously evaluated as effective may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Because of its inherent limitations, internal control over financial reporting may also not prevent or detect misstatements.

As of the date of this Annual Report, we are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As an emerging growth company, we are not required to comply with, among other things, the auditor attestation requirements of the Sarbanes-Oxley Act. Investors may find our securities less attractive because we rely on this provision. If investors find our securities less attractive as a result, there may be a less active trading market for our securities and prices of such securities may be more volatile.

We are a foreign private issuer and, as a result, are not subject to U.S. proxy rules and will be subject to Exchange Act reporting obligations that, to some extent, are more lenient and less frequent than those of a U.S. domestic public company.

We report under the Exchange Act as a non-U.S. company with foreign private issuer status. Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including (i) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act, (ii) the sections of the Exchange Act  providing for liability for insiders who profit from trades made in a short period of time and requiring greater than 10% holders to file public reports of their stock ownership and trading activities, and (iii) the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K, upon the occurrence of specified significant events. In addition, foreign private issuers are not required to file their annual report on Form 20-F until four months after the end of each financial year, while U.S. domestic issuers that are large accelerated filers are required to file their annual report on Form 10-K within 60 days after the end of each fiscal year. Foreign private issuers are also exempt from Regulation FD, aimed at preventing issuers from making selective disclosures of material information. As a result of the above, you may not have the same protections afforded to shareholders of companies that are not foreign private issuers or controlled companies.

In addition, as a foreign private issuer, we are also entitled to and do rely on exceptions from certain corporate governance requirements of the Nasdaq Capital Market.

As a result, you may not have the same protections afforded to shareholders of companies that are not foreign private issuers.

44
U.S. tax authorities could treat us as a “passive foreign investment company”, which could have adverse U.S. federal income tax consequences to U.S. shareholders.

A foreign corporation will be treated as a “passive foreign investment company” (a “PFIC”) for U.S. federal income tax purposes if either (1) at least 75% of its gross income for any taxable year consists of certain types of “passive income” or (2) at least 50% of the average value of the corporation’s assets produce or are held for the production of those types of “passive income.” For purposes of these tests, “passive income” includes dividends, interest, and gains from the sale or exchange of investment property and rents and royalties other than rents and royalties which are received from unrelated parties in connection with the active conduct of a trade or business. For purposes of these tests, income derived from the performance of services does not constitute “passive income,” whereas rental income would generally constitute “passive income” to the extent not attributable to the active conduct of a trade or business. U.S. shareholders of a PFIC are subject to a disadvantageous U.S. federal income tax regime with respect to the income derived by the PFIC, the distributions they receive from the PFIC and the gain, if any, they derive from the sale or other disposition of their shares in the PFIC.

We do not believe that we will be treated as a PFIC for any taxable year. However, our status as a PFIC is determined on an annual basis and will depend upon the operations of our vessels and our other activities during each taxable year. In this regard, we intend to treat the gross income we derive or are deemed to derive from our time chartering, pool arrangements and/or voyage chartering activities as services income, rather than rental income. Accordingly, we believe that our income from our chartering and/or pool activities does not constitute “passive income,” and the assets that we own and operate in connection with the production of that income do not constitute passive assets.

There is, however, no direct legal authority under the PFIC rules addressing our method of operation, in particular, in the event that all our vessels are employed in pools. Accordingly, no assurance can be given that the U.S. Internal Revenue Service (the “IRS”), or a court of law will accept our position, and there is a risk that the IRS or a court of law could determine that we are a PFIC. Moreover, no assurance can be given that we would not constitute a PFIC for any taxable year in which we become unable to acquire vessels in a timely fashion or if there were to be changes in the nature and extent of our operations.

In addition, for purposes of the PFIC “asset” test described above, we are relying on the application of certain “look-through” rules, taking into account certain intercompany items (including our interest in Castor and Robin).  The application of these rules can be complex and can depend on facts that may change in the future.

PFIC status is also determined annually, and further depends upon the composition of our gross income and assets, both of which are subject to change. Therefore, there can be no assurance as to our PFIC status for the current taxable year or for future taxable years, nor any assurance that the IRS or a court will agree with our determination of our PFIC status.

If the IRS were to find that we are or have been a PFIC for any taxable year, our U.S. shareholders would face adverse U.S. federal income tax consequences and information reporting obligations. Under the PFIC rules, unless those shareholders made an election available under the Internal Revenue Code (which election could itself have adverse consequences for such shareholders, as discussed below under “Item 10. Additional Information—E. Taxation—U.S. Federal Income Tax Considerations—Passive Foreign Investment Company Status and Significant Tax Consequences”), such shareholders would be liable to pay U.S. federal income tax upon excess distributions and upon any gain from the disposition of our common shares at the then prevailing income tax rates applicable to ordinary income plus interest as if the excess distribution or gain had been recognized ratably over the shareholder’s holding period of our common shares. Please see the section of this Annual Report entitled “Item 10. Additional Information—E. Taxation—U.S. Federal Income Tax Considerations—Passive Foreign Investment Company Status and Significant Tax Consequences” for a more comprehensive discussion of the U.S. federal income tax consequences to U.S. shareholders if we are treated as a PFIC.

45
ITEM 4.
INFORMATION ON THE COMPANY

A.
History and Development of the Company

Spin-Off from Castor

Toro was incorporated by Castor under the laws of the Republic of the Marshall Islands on July 29, 2022 as Tankco Shipping Inc., to serve as the holding company of the Toro Subsidiaries in connection with the Spin-Off. On September 29, 2022, we were renamed Toro Corp. On November 15, 2022 and December 30, 2022, based on the recommendation of a special committee of independent disinterested directors of Castor, the independent disinterested members of the board of directors of Castor approved the Spin-Off in order for each of Toro, holding Castor’s tanker segments, and Castor, holding its dry bulk segment, to operate and pursue opportunities as a separate “pure play” company in the relevant shipping sector, to be evaluated as such by the market and to enhance our and Castor’s financing and growth opportunities. The Spin-Off was intended to operate our and Castor’s business separately, however, (a) through our holding of Castor Series D Preferred Shares we are exposed to the risks affecting the business of Castor, and (b) Castor, through its holding of our common shares and Series A Preferred Shares, is exposed to the risks affecting our business. The terms of the Spin-Off were negotiated and approved by the above mentioned special committee.

In connection with the Spin-Off, on March 7, 2023, Castor contributed to us the Toro Subsidiaries, in exchange for (i) all of our 9,461,009 common shares at the time, (ii) the issue of 140,000 Series A Preferred Shares to Castor, with a cumulative preferred distribution accruing initially at a rate of 1.00% per annum on the stated amount of $1,000 per share and a par value of $0.001 per share, all of which were retained by Castor after the Spin-Off, and (iii) the issue of 40,000 Series B Preferred Shares, each carrying 100,000 votes on all matters on which our shareholders are entitled to vote but no economic rights, to Pelagos, a company controlled by our and Castor’s Chairman and Chief Executive Officer, against payment of their nominal value of $0.001 per Series B Preferred Share. On March 7, 2023, Castor distributed all of our 9,461,009 common shares at the time on a pro rata basis to its holders of common stock. Our common shares commenced trading on March 7, 2023 on the Nasdaq Capital Market under the symbol “TORO”.

Subscription Agreement with Pani

On April 17, 2023, Toro entered into a subscription agreement with Pani, a company controlled by Toro’s Chairman and Chief Executive Officer. For a description of this and other recent equity transactions, please see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Equity Transactions.”

Purchase of Series D Cumulative Perpetual Convertible Preferred Shares of Castor

On August 7, 2023, we agreed to purchase 50,000 Castor Series D Preferred Shares for aggregate cash consideration of $50.0 million. On December 12, 2024, we agreed to purchase an additional 50,000 Castor Series D Preferred Shares for aggregate cash consideration of $50.0 million For a description of these transactions, please see “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions— Purchase by the Company of 5.00% Series D Cumulative Perpetual Convertible Preferred Shares of Castor.”

Loan Facility Agreement to Castor

 On December 11, 2024, Toro entered into a facility agreement with Castor to provide a $100.0 million senior term loan facility to Castor which was drawn down on the same date which was fully repaid as of December 31, 2025. For a description of this transaction, please see “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions— Loan Facility Agreement of $100.0 million to Castor.”

46
Robin Spin-Off

On February 28, 2025, the independent disinterested directors of Toro approved, based on the recommendation of a special committee of independent disinterested directors of Castor, and authorized, subject to the fulfillment of certain conditions, the proposed spin-off of our Handysize tanker segment to our newly formed wholly-owned subsidiary, Robin Energy Ltd., in order for each of Toro Corp., holding the LPG carrier segment, and Robin, holding the Handysize tanker segment, to operate and pursue opportunities as a separate “pure play” company in the relevant shipping sector, to be evaluated as such by the market and to enhance our and Robin’s financing and growth opportunities. Separating the LPG carrier and Handysize tanker businesses is intended to enable each of us and Robin to increase its focus on its distinct line of business, which is expected to enhance operational efficiencies, attract new investors and facilitate efficient strategic expansion. In connection with and as part of the Robin Spin-Off, our independent disinterested directors approved, based on the recommendation of the aforementioned special committee, the contribution to Robin of (a) our Handysize tanker-owning subsidiary (owning one Handysize tanker vessel) and an additional subsidiary formerly owning the M/T Wonder Formosa (which was sold pursuant to a memorandum of agreement entered into on September 1, 2023 and delivered to its new owner on November 16, 2023) and (b) $10.4 million in cash as a capital contribution, in exchange for (i) all issued and outstanding shares of Robin common stock, par value $0.001 per share, (ii) 2,000,000 shares of Robin’s 1.00% Series A Fixed Rate Cumulative Perpetual Convertible Preferred Shares of Robin, with a cumulative preferred distribution accruing initially at a rate of 1.00% per annum on the stated amount of $25 per share, all of which would be retained by us after the Robin Spin-Off and (iii) the issuance of 40,000 Series B Preferred Shares of Robin, each carrying 100,000 votes on all matters on which our shareholders are entitled to vote but no economic rights, to Pelagos, a company controlled by our and Robin’s Chairman and Chief Executive Officer, against payment of their nominal value of $0.001 per Series B Preferred Share.

On April 14, 2025, we distributed on a pro rata basis all of the common shares of Robin received in connection with the Robin Spin-Off to our holders of common stock of record at the close of business on April 7, 2025. Our common shareholders received one common share of Robin for every eight of our common shares held at the close of business on April 7, 2025. Further information regarding the details of the Robin Spin-Off may be found on Registration Statement No. 001- 42543 on Form 20-F of Robin Energy Ltd., declared effective by the U.S. Securities Exchange Commission (“SEC”) on March 28, 2025. The common shares of Robin have been approved for listing on the Nasdaq Capital Market. The terms of the Robin Spin-Off were negotiated and approved by a special committee of independent disinterested directors. The Robin Spin-Off was intended to operate our and Robin’s business separately, however, through our holding of Robin’s Series A Preferred Shares, we remain exposed to the risks affecting the tanker business of Robin.

Purchase and full redemption of Series E Cumulative Perpetual Convertible Preferred Shares of Castor

On September 29, 2025, we agreed to purchase 60,000 Series E Cumulative Perpetual Convertible Preferred shares (the “Series E Preferred Shares”) of Castor having a stated amount of $1,000 each for a total consideration of $60 million, in cash, which was fully redeemed equal to the stated amount of $60.0 million of the Series E Preferred Shares plus 0.523% thereof, including accrued and unpaid distributions, on October 13, 2025. For a description of these transactions, please see “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions— Purchase by the Company of 8.75% Series E Cumulative Perpetual Convertible Preferred Shares of Castor.”

Revolving Credit Facility

On March 30, 2026, we entered into a $60.0 million revolving credit facility (the “Facility”) with a leading European Financial Institution, which was partially drawn down for $15.0 million on April 2, 2026. The Facility has a tenor of five years, bears interest at a rate of Term SOFR plus a margin, and will be secured by, among others, a first priority mortgage over four of our vessels. The net proceeds from the Facility are expected to be used for general corporate purposes.

Business

We are an independent, growth-oriented shipping company that acquires, owns, charters and operates oceangoing LPG carrier vessels and MR tankers, providing worldwide energy seaborne transportation services. As of the date of this Annual Report, we primarily operate and maintain a fleet of two LPG carrier vessels with an aggregate cargo carrying capacity of 0.01 million dwt and an average fleet age of 10.7 years and a fleet of two MR tankers with an aggregate cargo carrying capacity of 0.1 million dwt and an average fleet age of 8.2 years. As of December 31, 2025, our fleet was comprised of these two LPG carrier vessels and two MR tanker vessels.

47
Our commercial strategy primarily focuses on deploying our fleet under a mix of time charters and voyage charters and according to our assessment of market conditions. We adjust the mix of these charters to take advantage of the relatively stable cash flows and high utilization rates for our vessels associated with period time charters, to profit from attractive trip charter rates during periods of strong charter market conditions associated with voyage charters or to take advantage of high utilization rates for our vessels along with exposure to attractive charter rates during periods of strong charter market conditions when employing our vessels in pools. As of the date of this Annual Report, our two LPG carrier vessels and two MR tanker vessels were employed in period time charters. Such arrangements will be reevaluated by management on a periodic basis.

We intend to expand our fleet in the future and may acquire additional LPG carriers and MR tankers or other vessels, including to replace existing vessels or vessels we have disposed of, diversify our fleet, expand our activities and reduce the average age of our fleet, and potentially, if our Board so determines, acquire vessels in other sectors, based on, in each case, our assessment of market conditions and subject to the conditions set out in the Toro Spin-Off Resolutions. We intend to acquire additional vessels principally in the secondhand market, including acquisitions from third-parties, and we may also acquire additional vessels from related parties, provided that such related party acquisitions are negotiated and conducted on an arms-length basis. We may also enter into newbuilding contracts to the extent that we believe they present attractive opportunities. For an overview of our fleet, please see “—B. Business Overview—Our fleet.”

Our principal executive office is at 223 Christodoulou Chatzipavlou Street, Hawaii Royal Gardens, 3036 Limassol, Cyprus. Our telephone number at that address is +357 25 357 768. Our website is www.torocorp.com. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of the SEC’s Internet site is www.sec.gov. None of the information contained on, or that can be accessed through, these websites is incorporated into or forms a part of this Annual Report.

Fleet Development and Vessel Capital Expenditures

In the second and third quarters of 2023, we acquired four LPG carriers comprising our newly established LPG carrier segment. Between the second and fourth quarters of 2023, we completed the sales of six of our tanker vessels to third-parties due to attractive purchase terms offered by these buyers. This included one of the two Handysize vessels then comprising our Handysize segment and all six of the seven Aframax/LR2 vessels then comprising our Aframax/LR2 segment. On January 24, 2024, we completed the sale of the M/T Wonder Sirius, the sole remaining Aframax/LR2 tanker comprising our Aframax/LR2 segment. Following the completion of the Robin Spin-Off, the Handysize vessel was contributed to Robin and our fleet was comprised of four LPG carrier vessels. In the third quarter of 2025, we acquired two MR tankers and sold two LPG carriers. For further information on these vessel acquisitions and the financing transaction associated with certain of these vessel acquisitions, see “—B. Business Overview—Our fleet” and Note 6 to our Consolidated Financial Statements included in this Annual Report.

As of the date of this Annual Report, our fleet consisted of two LPG carrier vessels and two MR tanker vessels and all of our vessels are equipped with a ballast water treatment system (“BWTS”). During the years ended December 31, 2023, 2024 and 2025, we made capital expenditures of $0.8 million, $0 and $0, respectively, for the installation of BWTS on our vessels.

B.
Business Overview

During the years ended December 31, 2023, 2024 and 2025 we operated tanker vessels that engaged in the worldwide transportation of crude oil and refined petroleum products using our Aframax/LR2 tankers, which transport crude oil, and MR2/Handysize tankers, which transport refined petroleum products and, from their first acquisition in the second quarter of 2023, we operated 5,000 cbm LPG carriers, which transport liquefied petroleum gas. Following the sale of the M/T Wonder Sirius in January of 2024, we no longer had any Aframax/LR2 vessels and the results of operations and cash flows of the Aframax/LR2 segment, as well as its assets and liabilities, are reported as discontinued operations. As a result of the different characteristics of the LPG carriers in relation to the Handysize segment, we determined that, with effect from the second quarter of 2024, we operated in two reportable segments: (i) Handysize tanker segment and (ii) LPG carrier segment. The reportable segments reflect our internal organization and the way our chief operating decision maker reviews the operating results and allocates capital within the Company. Further, the transport of refined petroleum products (carried by Handysize tanker vessels) and LPG (carried by LPG carriers) has different characteristics. In addition, the nature of trade, trading routes, charterers and cargo handling of LPG and refined petroleum products differs. Following the Robin Spin-Off of the Handysize tanker vessel and the acquisition of the new MR (MR2 class) tanker vessel, M/T Wonder Altair (built in 2021) on July 11, 2025, the former Handysize segment was renamed “MR (Handysize/MR2)” to reflect both the updated fleet composition and the strategic continuity of the segment. In addition, following the acquisition of the MR (MR2 class) tanker vessel, M/T Wonder Maia (built in 2014) on September 29, 2025 and considering the vessels’ eco-design technical characteristics, we reassessed its segments. As a result we operated in three reportable segments: (i) the Eco tanker segment (comprising of M/T Wonder Altair as discussed above), (ii) the Non-Eco tanker segment (comprising of M/T Wonder Maia) and the (iii) LPG carrier segment (comprising of LPG Dream Arrax and LPG Dream Vermax) and, each on a continuing operations basis.

48
We do not disclose geographic information relating to our segments. When we charter a vessel to a charterer, the charterer is free, subject to certain exemptions, to trade the vessel worldwide and, as a result, the disclosure of geographic information is impracticable. For further information, see Note 17 to our Consolidated Financial Statements included elsewhere in this Annual Report.

Our Fleet

The following table summarizes key information about our fleet as of the date of this Annual Report:

Vessel
Name
 
Capacity
(dwt)
 
Year
Built
 
Country of
Construction
 
Type of
Charter
 
Gross Charter
Rate ($)
 
Estimated
Earliest Charter
Expiration
 
Estimated
Latest Charter
Expiration
 
LPG Carrier
Segment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LPG Dream
Arrax
 
4,753
 
2015
 
Japan
 
Time Charter Period (1)
 
335,000 per month
 
April 2026
 
May 2026
 
LPG Dream
Vermax
 
5,155
 
2015
 
Japan
 
Time Charter Period (2)
 
$354,500 per month
(until March 21, 2026) and
$362,000 per month
(from March 22, 2026)
 
March 2027
 
April 2027
 
Eco
Segment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
M/T Wonder Altair
 
50,303
 
2021
 
China
 
Time Charter Period
 
20,600 per day
 
December 2026
 
March 2027

Non-Eco
Segment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
M/T Wonder Maia
 
50,880
 
2014
 
South Korea
 
Time Charter Period
 
22,800 per day
 
March 2026
 
May 2026
  

(1)
The vessel has been fixed under a time charter period contract of twelve months starting from May 2024, at $323,000 per month plus twelve months at $335,000 per month at the charterer’s option. The charterer exercised this option, effective from May 14, 2025.
(2)
The vessel has been fixed under a time charter period contract of twelve months starting from March 2025, at $354,500 per month plus twelve months at the charterer’s option at a rate to be mutually agreed between us and the charterer. On January 23, 2026, it was agreed between us and the charterer that from March 22, 2026 until March 22, 2027 (plus or minus twenty days in charterer’s option), the rate will be increased to $362,000 per month, plus twelve months at the charterer’s option (plus or minus twenty days in charterer’s option). The rate for the optional period will be mutually agreed between us and the charterer.

49
Chartering of our Fleet

We intend mainly to employ our LPG carrier and MR tanker fleet, which currently comprises four vessels in both fleets, in period time charter contracts, while evaluating the conditions and taking advantage of some spot voyages upon redelivery from period time charters if spot market conditions are favorable. Prior to the Robin Spin-Off, we actively marketed our tanker fleet predominantly in pool arrangements but also by entering into spot voyage market and/or time charter contracts in order to secure optimal employment in the tanker shipping market.

Charter rates in the spot market are volatile and sometimes fluctuate on a seasonal and year-to-year basis. Fluctuations derive from imbalances in the availability of cargoes for shipment and the number of vessels available at any given time to transport these cargoes, as well as supply and demand for crude oil and oil and LPG-related products carried by ocean-going vessels internationally. Vessels operating in the spot market generate revenue that is less predictable than those under period time charters but may enable us to capture increased profit margins during periods of improvements in the tanker shipping market. Industry downturns relating to the products that our vessels transport could result in a reduction in profit margins and lead to losses. Based on market conditions, we may opportunistically look to employ any of our vessels in the spot market under time charter trip contracts, voyage charter contracts and/or pooling arrangements.

Voyage charters involve a charterer engaging a vessel for a particular journey. A voyage contract is made for the use of a vessel, for which we are paid freight (a fixed amount per ton of cargo carried or a lump sum amount) on the basis of transporting cargo from a loading port to a discharge port. Depending on charterparty terms, freight can be fully prepaid, or be paid upon reaching the discharging destination upon delivery of the cargo, at the discharging destination but before discharging, or during a ship’s voyage. Revenues from voyage charters are typically tied to prevailing market rates and may therefore be more volatile than rates from other charters, such as time charters.

Time charters involve a charterer engaging a vessel for a set period of time. Time charter agreements may have extension options ranging from months to, sometimes, years and are therefore viewed as providing more predictable cash flows over the period of the engagement than may otherwise be attainable from other charter arrangements. The time charter party generally provides, among others, typical warranties regarding the speed and the performance of the vessel as well as owner protective restrictions such that the vessel is sent only to safe ports by the charterer, subject always to compliance with applicable sanction laws and war risks, and carry only lawful and non-hazardous cargo. We typically enter into time charters ranging from one month to 12 months and, in isolated cases, on longer terms depending on market conditions. Time charter agreements may have extension options that range over certain time periods, which are usually periods of months. The charterer has the full discretion over the ports visited, shipping routes and vessel speed, subject to the owner’s protective restrictions set forth in the agreed charterparty’s terms. Under our time charter agreements, whereby our vessels are utilized by a charterer for a set duration of time, the charterer pays a fixed or floating daily hire rate and other compensation costs related to the contracts.

A pool consists of a group of vessels of similar types and sizes provided by various owners for the purpose of enabling a centralized pool operator to engage those vessels commercially. Pools employ experienced commercial charterers and operators who have close working relationships with customers and brokers, while technical management is separate from pool operations. Their main objective is to enter into arrangements for the employment and operation of the pool vessels, so as to secure for the pool participants the highest commercially available earnings per vessel on the basis of pooling the net revenues of the pool vessels and dividing it between the pool participants based on the terms of the pool agreement. Pool vessels are marketed as a single group of vessels, primarily in the spot market but also from time to time for time charters, and all revenues earned from the operation of the pool vessels are aggregated together and, after deduction of all costs involved in the operation of the pool, shared between the pool participants based on an agreed key. The size and scope of pools enable them to achieve larger economies of scale and to have better negotiating power with all procurement vendors (e.g., bunker suppliers, port agents, towing companies, etc.) and as a result they are able to reduce their costs for such items. They also achieve geographic diversification by deploying their pool vessels in both Atlantic and Pacific markets while arbitraging from spread opportunities. The diversification in revenue streams due to typically broader shipping capabilities of pool fleet vessels and/or more accessible customer base, alongside payments to pool participants on a set schedule, can stabilize revenues for pool participants, though this may be offset by volatility in spot rates. Furthermore, due to their large fleets, pools can make vessels available for prompt cargoes (which are usually priced at higher than market rates) on short notice and thus they are able to capture the premium of such prompt cargoes. Pools also have higher market visibility, which provides them with opportunities not available to smaller market participants. By being able to reduce costs and optimize revenues, pools aim to outperform the industry benchmark indices by utilizing their size and sophistication and improving utilization rates for participating vessels through various methods, including securing backhaul voyages and contracts of affreightment.

50
For further information on our charters and charter terms, please refer to “Item 5. Operation and Financial Results Review—A. Operating Results—Hire Rates and the Cyclical Nature of the Industry.”

Management of our Business

Our vessels are commercially and technically managed by Castor Ships, a company controlled by our Chairman and Chief Executive Officer, Petros Panagiotidis. Castor Ships manages our business overall and provides us with crew management, technical management, operational employment management, insurance management, provisioning, bunkering, commercial, chartering and administrative services, including, but not limited to, securing employment for our fleet, arranging and supervising the vessels’ commercial operations, handling all of our vessel sale and purchase transactions, undertaking related shipping projects, management advisory and support services, accounting and audit support services, as well as other associated services requested from time to time by us and our ship-owning subsidiaries. Castor Ships may choose to subcontract these services to other parties at its discretion. As of the date of this Annual Report, Castor Ships has subcontracted the technical management of all of our four vessels to a third-party ship-management company, except for the M/T Wonder Maia  and M/T Wonder Altair, which Castor Ships has directly provided technical management services to since September 29, 2025 and February 8, 2026, respectively. Castor Ships pays, at its own expense, these technical management companies a fee for the services it has subcontracted to them, without burdening us with any additional cost.

In exchange for the above management services, Castor Ships charges and collects (i) following an inflation-based adjustment effective July 1, 2025, a (A) flat quarterly management fee in the amount of $0.85 million for the management and administration of our business and (B) daily fee of $1,100 per vessel for the provision of ship management services under separate Ship Management Agreements entered into by our ship-owning subsidiaries (as defined in Item 7. Major Shareholder and Related Party Transactions), (ii) a chartering commission for and on behalf of Castor Ships and/or on behalf of any third party broker(s) involved in the trading of our vessels on all gross income received arising out of or in connection with the operation of our vessels for distribution among Castor Ships and any third-party broker(s), which, when calculated together with any address commission that any charterer of our vessels is entitled to receive, will not exceed the aggregate rate of 6.25% on each vessel’s gross income, (iii) a sale and purchase brokerage commission at the rate of 1% on each consummated sale and purchase transaction applicable to the total consideration of acquiring or selling: (a) a vessel (secondhand or newbuilt), or (b) the shares of a ship-owning entity owning vessel(s) or (c) shares and/or other securities (including equity, debt and loan instruments), and (iv) a capital raising commission at the rate of 1% on all gross proceeds of each capital raising transaction completed by us including, without limitation, any equity, debt or loan transactions, operating leasing transactions, stand-alone derivative and/or swap agreements, other financing arrangements of a similar nature or any refinancing or restructuring thereof.

For further information, see “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions.”

Environmental and Other Regulations in the Shipping Industry

Government regulations and laws significantly affect the ownership and operation of our fleet. We are subject to international conventions and treaties, regional, national, state and local laws and regulations in force in the countries in which our vessels may operate or are registered relating to safety, health and environmental protection including the storage, handling, emission, transportation and discharge of hazardous and non-hazardous materials, and the remediation of contamination and liability for damage to natural resources. Compliance with such international conventions, laws, regulations, insurance and other requirements entails significant expense, including for vessel modifications and the implementation of certain operating procedures.

51
A variety of government and private entities subject our vessels to both scheduled and unscheduled inspections. These entities include the local port authorities (applicable national authorities such as the United States Coast Guard (“USCG”), harbor master or equivalent), classification societies, flag state administrations (countries of registry) and charterers, particularly terminal operators. Certain of these entities require us to obtain permits, licenses, certificates and other authorizations for the operation of our vessels. Failure to maintain necessary permits, certificates and approvals could require us to incur substantial costs or result in the detention or temporary suspension of the operation of our vessels.

Increasing environmental concerns have created a demand for vessels that conform to stricter environmental standards. We are required to maintain operating standards for our vessels that emphasize operational safety, quality maintenance, continuous training of our officers and crews and compliance with United States, European Union and international regulations. We believe that the operation of our vessels is in full compliance with applicable environmental laws and regulations and that our vessels have all material permits, licenses, certificates or other authorizations necessary for the conduct of our operations. However, because such laws and regulations frequently change and may impose increasingly stricter requirements, we cannot predict the ultimate cost of complying with these requirements, or the impact of these requirements on the resale value or useful lives of our vessels. In addition, a serious marine incident that causes significant adverse environmental impact could result in additional legislation or regulation that could have a material adverse effect on our business, financial condition and operating results.

International Maritime Organization

The International Maritime Organization, the United Nations agency for maritime safety and the prevention of pollution by vessels (the “IMO”), has adopted the International Convention for the Prevention of Pollution from Ships, 1973, as modified by the Protocol of 1978 relating thereto, collectively referred to as MARPOL 73/78 and herein as “MARPOL”, the International Convention for the Safety of Life at Sea of 1974 (“SOLAS Convention”), and the International Convention on Load Lines of 1966. MARPOL establishes environmental standards relating to oil leakage or spilling, garbage management, sewage, air emissions, handling and disposal of noxious liquids and handling of harmful substances in packaged forms. MARPOL is applicable to dry bulk, tanker, containers, LPG and LNG carriers, among other vessels, and includes six Annexes, each of which regulates a different source of pollution. Annex I relates to operational or accidental oil leakage or spilling; Annexes II and III relate to harmful substances carried in bulk in liquid or in packaged form, respectively; Annexes IV and V relate to sewage and garbage management, respectively. Annex VI, which relates to air emissions, was separately adopted by the IMO in September of 1997. New emissions standards, titled IMO-2020, took effect on January 1, 2020.

Air Emissions

In September 1997, the IMO adopted Annex VI to MARPOL to address air emissions from vessels. Effective May 2005, Annex VI sets limits on sulfur dioxide, nitrogen oxide and other emissions from all commercial vessel exhausts and prohibits “deliberate emissions” of ozone-depleting substances (such as halons and chlorofluorocarbons), emissions of volatile compounds from cargo tanks, and the shipboard incineration of specific substances. Annex VI also includes a global cap on the sulfur content of fuel oil and allows for special emission control areas to be established with more stringent limits on sulfur emissions, as explained below. Emissions of “volatile organic compounds” from certain tankers and shipboard incineration (from incinerators installed after January 1, 2000) of certain substances (such as polychlorinated biphenyls, or PCBs) are also prohibited. We believe that our vessels are currently compliant in all material respects with these requirements.

The Marine Environment Protection Committee, or “MEPC,” adopted amendments to Annex VI regarding emissions of sulfur dioxide, nitrogen oxide, particulate matter and ozone depleting substances, which entered into force on July 1, 2010. The amended Annex VI seeks to further reduce air pollution by, among other things, implementing a progressive reduction of the amount of sulfur contained in any fuel oil used on board ships. On October 27, 2016, at its seventieth session, the MEPC agreed to implement a global 0.5% m/m sulfur oxide emissions limit (reduced from 3.50%) starting from January 1, 2020. This limitation can be met by using low-sulfur compliant fuel oil, alternative fuels, or certain exhaust gas cleaning systems. Ships are now required to obtain bunker delivery notes and International Air Pollution Prevention Certificates from their flag states that specify sulfur content. Additionally, at MEPC 73, amendments to Annex VI to prohibit the carriage of bunkers above 0.5% sulfur on ships not equipped with exhaust gas cleaning systems were adopted and took effect on March 1, 2020. These regulations subject ocean-going vessels to stringent emissions controls and may cause us to incur substantial costs. As of the date of this Annual Report, our vessels are not equipped with scrubbers and we have transitioned to burning IMO compliant fuels.

52
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 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 are subject to more stringent emission controls and may cause us to incur additional costs. Other areas in China are subject to local regulations that impose stricter emission controls. 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 other jurisdictions where we operate, compliance with these regulations could entail significant capital expenditures or otherwise increase the costs of our operations.

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. Currently, as three of the four vessels in our current fleet were built prior to 2016, they are not affected by Tier III requirements from an operational perspective.  One of our vessels was built after January 1, 2016 but cannot comply with Tier III requirements due to the date of its construction (keel laid date). Our LPG carrier and tanker vessels are also subject to and currently in compliance with Tier II NOx, which regulates nitrogen dioxide emissions from vessels built on or after January 1, 2011. However, we may acquire additional vessels that are subject to Tier II or Tier III NOx in the future and/or additional trading restrictions could be imposed upon vessels that are currently in compliance with Tier I or II NOx standards, each of which may cause us to incur additional capital expenses and/or other compliance costs.

At MEPC 70 and MEPC 71, the IMO approved the designation of the North Sea and Baltic Sea as NOx Emission Control Areas (ECAs), applicable to ships constructed on or after January 1, 2021. As determined at MEPC 70, the new Regulation 22A of MARPOL Annex VI became effective on March 1, 2018, requiring ships of 5,000 gross tonnage and above to collect and report annual fuel oil consumption data to an IMO database, with the first year of data collection commencing on January 1, 2019. The IMO uses this data as a foundational step in its roadmap for reducing greenhouse gas (“GHG”) emissions from ships. The 2023 IMO GHG Strategy aims to reduce the carbon intensity of international shipping, as an average across the sector, by at least 40% by 2030 compared to 2008. In 2025, the IMO advanced this strategy by approving draft amendments to MARPOL Annex VI that introduce a fuel intensity compliance framework starting in 2028. This framework requires ships to calculate and report their annual GHG Fuel Intensity (“GFI”) and meet progressively stricter reduction targets through fuel selection, operational measures, or offset mechanisms. These developments signal a shift from data collection to enforceable decarbonization obligations. Related measures are discussed further below. 

At the 82nd session of MEPC 82 (September 30- October 4, 2024), the IMO designated two further Emission Control Areas (ECAs) - the Canadian Arctic and the Norwegian Sea. This ECA will fall under MARPOL Annex VI Regulations 13 (Nitrogen Oxides) and 14 (Sulphur Oxides and Particulate Matter). The ECA will apply to a marine diesel engine that is installed on a ship constructed on or after the following dates and in compliance with tier III standards:


 •
Norwegian Sea: constructed on or after March 1, 2026 and is operating in the Norwegian Sea Emission Control Area. For the Norwegian Sea Emission Control Area.

•
Canadian Arctic: ship is constructed on or after January 1, 2025 and is operating in the Canadian Arctic Emission Control Area.

53
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 (“SEEMPS”), 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 were built 30% more energy efficient than those built in 2014. Additionally, 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. This may require us to incur additional operating or other costs for those vessels built after January 1, 2013. Further, MEPC 75 approved 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 needs to include certain mandatory content.

In April 2025, during its 83rd session (MEPC 83), the International Maritime Organization (IMO) approved draft amendments to MARPOL Annex VI establishing the IMO Net-Zero Framework, a landmark package requiring a global fuel standard and a greenhouse-gas pricing mechanism for ships over 5,000 GT (covering ~85% of international shipping emissions). In October 2025, during the MEPC’s second extraordinary session (MEPC/ES.2, 14–17 Oct), IMO delegates voted to adjourn the formal adoption of the framework delaying it by one year due to lack of consensus postponing its final adoption until October 2026. As a result, the entry-into-force date has been pushed back. The earliest realistic implementation is now projected for March 2028, provided adoption occurs in October 2026 and is ratified according to IMO legislative timelines.

In addition to the recently implemented emission control regulations, the IMO has been devising strategies to reduce greenhouse gases and carbon emissions from ships. According to its latest announcement, IMO plans to initiate measures to reduce carbon intensity by at least 40% by 2030 and 70% by 2050 from the levels in 2008. It also plans to introduce measures to reduce GHG emissions by 50% by 2050 from the 2008 levels. These are likely to be achieved by setting energy efficiency requirements and encouraging ship owners to use alternative fuels such as biofuels, methanol, LNG, LPG and electro-/synthetic fuels such as hydrogen or ammonia and may also include limiting the speed of the ships. However, there is still uncertainty regarding the exact measures that the IMO will undertake to achieve these targets. IMO-related uncertainty is also a factor discouraging ship owners from ordering newbuild vessels, as these vessels may have high future environmental compliance costs with untested technology.

In June 2021, IMO’s Marine Environment Protection Committee (“MEPC”) adopted amendments to MARPOL Annex VI that will require ships to reduce their greenhouse gas emissions. These amendments combine technical and operational approaches to improve the energy efficiency of ships, also providing important building blocks for future GHG reduction measures. The new measures require the IMO to review the effectiveness of the implementation of the Carbon Intensity Indicator (“CII”) and Energy Efficiency Existing Ship Index (“EEXI”) requirements, by January 1, 2026 at the latest. EEXI is a technical measure and will apply to ships above 400 GT. It indicates the energy efficiency of the ship compared to a baseline and is based on a required reduction factor (expressed as a percentage relative to the EEDI baseline). On the other hand, CII is an operational measure which specifies carbon intensity reduction requirements for vessels with 5,000 GT and above. The CII determines the annual reduction factor needed to ensure continuous improvement of the ship’s operational carbon intensity within a specific rating level. The operational carbon intensity rating would be given on a scale of A, B, C, D or E indicating a major superior, minor superior, moderate, minor inferior, or inferior performance level, respectively. The performance level would be recorded in the ship’s SEEMP. A ship rated E for three consecutive years would have to submit a corrective action plan to show how the required index (D or above) would be achieved. Further, the European Union has endorsed a binding target of at least 55% domestic reduction in economy wide GHG reduction by 2030 compared to 1990. The amendments to MARPOL Annex VI (adopted in a consolidated revised Annex VI) entered into force on November 1, 2022, with the requirements for EEXI and CII certification coming into effect from January 1, 2023. This means that the first annual reporting on carbon intensity will be completed for 2023, with the first rating given in 2024. We are also required to comply with requirements relating to new EU ETS regulations for carbon emissions for voyages of vessels above 5000 GT departing from or arriving to ports in the European Union phased in from the beginning of 2024, with an implementation scheme of 40% of emissions, followed by 70% of emissions in 2025 and ending in 2026 with 100% of the emissions produced by these voyages. As of the date of this Annual Report, the ratings of M/T Wonder Maia and M/T Wonder Altair are A and B, respectively. Our two LPG carrier vessels, LPG Dream Arrax and LPG Dream Vermax, are exempt from rating requirements due to their size.

We may incur costs to comply with these revised standards including the introduction of new emissions software platform applications which will enable continuous monitoring of CIIs as well as automatic generation of CII reports, amendment of SEEMP part II plans and adoption and implementation of ISO 500001 procedures. 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, cash flows, financial condition and operating results.

54
Safety Management System Requirements

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, as well as a cybersecurity risk 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, decrease available insurance coverage for the affected vessels and 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. We have obtained applicable documents of compliance for our offices and safety management certificates for 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 on goal-based ship construction standards for oil tankers stipulates that ships over 150 meters in length must have adequate strength, integrity and stability to minimize risk of loss or pollution.

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 authorize the classification societies to undertake surveys to confirm compliance on their behalf.

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 recommended provisions. The Polar Code applies to new ships constructed after January 1, 2017, and from 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. Companies are required from January 2021 to develop additional procedures for monitoring cybersecurity in addition to those required by the IMO, which could require additional expenses and/or capital expenditures.

Fuel Regulations in Arctic Waters

MEPC 76 adopted amendments to MARPOL Annex I (addition of a new regulation 43A) to introduce a prohibition on 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 prohibition will cover the use and carriage for use as fuel of oils having a density at 15°C higher than 900 kg/m3 or a kinematic viscosity at 50°C higher than 180 mm2/s. Ships engaged in securing the safety of ships, or in search and rescue operations, and ships dedicated to oil spill preparedness and response are exempt. Ships which meet certain construction standards with regard to oil fuel tank protection would need to comply on and after July 1, 2029.

55
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 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, 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 onboard 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. Significant costs may be incurred to comply with these regulations. 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. To date we have made $2.3 million in capital expenditures relating to the installation of BWTS on our vessels. For further information on these installations, see “—A. History and Development of the Company—Fleet Development and Vessel Capital Expenditures.”

Many countries regulate the discharge of ballast water carried by vessels between jurisdictions to prevent the introduction of invasive and harmful species. In the United States, federal regulations require vessels operating in U.S. waters to implement an approved ballast water management method—such as using a U.S. Coast Guard–approved treatment system, conducting mid-ocean ballast water exchange at least 200 nautical miles offshore, or sourcing ballast water from a U.S. public water system. Vessels must also comply with detailed ballast water reporting requirements. Compliance with ballast water management and reporting requirements may increase operating costs, require capital investment in treatment systems, and limit operational flexibility. Failure to comply could result in fines, penalties, or restrictions on port access. These factors could adversely affect our business, results of operations, cash flows, and financial condition.

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

56
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 Bunker Convention has not been adopted, the Oil Pollution Act of 1990, along with various legislative schemes and common law standards of conduct 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 (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. Vessels of over 400 gross tons engaged in international voyages are also required to undergo an initial survey before the vessel is put into service or before an International Anti-fouling System Certificate is issued for the first time; and subsequent surveys when the anti-fouling systems are altered or replaced.

In June 2021, MEPC 76 adopted amendments to the Anti-fouling Convention to prohibit the use of biocide cybutryne contained in anti-fouling systems, 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, as studies have proven that the substance is harmful to a variety of marine organisms.

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 Annual Report, our vessels are ISM Code certified through their respective third-party managers. Castor Ships has obtained the documents of compliance in order to operate the vessels in accordance with the ISM Code and all other international and regional requirements that are applicable to our vessels. 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.

United States Regulations

The U.S. Oil Pollution Act of 1990 and the Comprehensive Environmental Response, Compensation and Liability Act

The U.S. Oil Pollution Act of 1990 (“OPA”) established an extensive regulatory and liability regime for the protection and cleanup of the environment from oil spills. OPA affects all “owners and operators” whose vessels trade or operate within the U.S., its territories and possessions or whose vessels operate in U.S. waters, which includes the U.S.’s territorial sea and its 200 nautical mile exclusive economic zone around the U.S. The U.S. has also enacted the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), which applies to the discharge of hazardous substances other than oil, except in limited circumstances, whether on land or at sea. OPA and CERCLA both define “owner and operator” in the case of a vessel as any person owning, operating or chartering by demise, the vessel. Both OPA and CERCLA impact our operations.

Under OPA, vessel owners and operators are “responsible parties” and are jointly, severally and strictly liable (unless the spill results solely from the act or omission of a third party, an act of God or an act of war) for all containment and clean-up costs and other damages arising from discharges or threatened discharges of oil from their vessels, including bunkers (fuel). OPA defines these other damages broadly to include:

57

 (i)
injury to, destruction or loss of, or loss of use of, natural resources and related assessment costs;


(ii)
injury to, or economic losses resulting from, the destruction of real and personal property;


(iii)
loss of subsistence use of natural resources that are injured, destroyed or lost;


(iv)
net loss of taxes, royalties, rents, fees or net profit revenues resulting from injury, destruction or loss of real or personal property, or natural resources;


(v)
lost profits or impairment of earning capacity due to injury, destruction or loss of real or personal property or natural resources; and


(vi)
net cost of increased or additional public services necessitated by removal activities following a discharge of oil, such as protection from fire, safety or health hazards, and loss of subsistence use of natural resources.

OPA contains statutory caps on liability and damages but such caps do not apply to direct clean-up costs. Effective December 12, 2019, the USCG adjusted the limits of OPA liability for non-tank vessels, edible oil tank vessels, and any oil spill response vessels, to the greater of $1,200 per gross ton or $997,100 (subject to periodic adjustment for inflation). However, these limits of liability do not apply if an incident was proximately caused by the violation of an applicable U.S. federal safety, construction or operating regulation by a responsible party (or its agent, employee or a person acting pursuant to a contractual relationship), or a responsible party’s gross negligence or willful misconduct. The limitation on liability similarly does not apply if the responsible party fails or refuses to (i) report the incident as required by law where the responsible party knows or has reason to know of the incident; (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.

CERCLA contains a similar liability regime whereby owners and operators of vessels are liable for cleanup, removal and remedial costs, as well as damages for injury to, or destruction or loss of, natural resources, including the reasonable costs associated with assessing the same, and health assessments or health effects studies. There is no liability if the discharge of a hazardous substance results solely from the act or omission of a third party, an act of God or an act of war. Liability under CERCLA is limited to the greater of $300 per gross ton or $5.0 million for vessels carrying a hazardous substance as cargo and the greater of $300 per gross ton or $500,000 for any other vessel. However, these limits do not apply (rendering the responsible person liable for the total cost of response and damages) if the release or threat of release of a hazardous substance resulted from willful misconduct or negligence, or the primary cause of the release was a violation of applicable safety, construction or operating standards or regulations. The limitation on liability also does not apply if the responsible person fails or refuses to provide all reasonable cooperation and assistance as requested in connection with response activities where the vessel is subject to OPA.

OPA and CERCLA each preserve the right to recover damages under existing law, including maritime tort law. OPA and CERCLA both require owners and operators of vessels to establish and maintain with the USCG evidence of financial responsibility sufficient to meet the maximum amount of liability to which the particular responsible person may be subject. Vessel owners and operators may satisfy their financial responsibility obligations by providing proof of insurance, a surety bond, qualification as a self-insurer or a guarantee. We comply and plan to be in compliance going forward with the USCG’s financial responsibility regulations by providing applicable certificates of financial responsibility.

58
The 2010 Deepwater Horizon oil spill in the Gulf of Mexico resulted in additional regulatory initiatives or statutes, including higher liability caps under OPA, new regulations regarding offshore oil and gas drilling, and a pilot inspection program for offshore facilities. Several of these initiatives and regulations have been or may be revised. For example, the U.S. Bureau of Safety and Environmental Enforcement’s (“BSEE”) revised Production Safety Systems Rule (“PSSR”), effective December 27, 2018, modified and relaxed certain environmental and safety protections under the 2016 PSSR. Additionally, the BSEE amended the Well Control Rule, effective July 15, 2019, which rolled back certain reforms regarding the safety of drilling operations. In 2023, the BSSE issued a final Well Control Rule which revises or rescinds certain modifications that were made in the 2019 rule. The effects of these proposals and changes are currently unknown. On January 27, 2021 the Biden administration issued an executive order temporarily blocking new leases for oil and gas drilling in federal waters. On April 18, 2022 the Bureau of Land Management resumed oil and gas leasing on a much reduced basis and, in September 2023, a record low of just three offshore lease sales over the next five years were unveiled. However, leasing for oil and gas drilling in federal waters remains a contentious political issue, with certain states and Republicans in U.S. Congress pushing for increased leasing. On January 6, 2025, the Biden administration issued an executive order prohibiting new oil and gas leases in offshore areas, and President Trump then issued an executive order seeking to revoke it. Compliance with any new requirements of OPA and future legislation or regulations applicable to the operation of our vessels could impact the cost of our operations or demand for our vessels and adversely affect our business.

OPA specifically permits individual states to impose their own liability regimes with regard to oil pollution incidents occurring within their boundaries, provided they accept, at a minimum, the levels of liability established under OPA and some states have enacted legislation providing for unlimited liability for oil spills, including bunker fuel spills. Many U.S. states that border a navigable waterway have enacted environmental pollution laws that impose strict liability on a person for removal costs and damages resulting from a discharge of oil or a release of a hazardous substance. Some of these laws are more stringent than U.S. federal law in some respects. Moreover, some states have enacted legislation providing for unlimited liability for discharge of pollutants within their waters, although in some cases, states which have enacted this type of legislation have not yet issued implementing regulations defining shipowners’ responsibilities under these laws. We intend to be in compliance with all applicable state regulations in the relevant ports where our vessels call.

We currently maintain pollution liability coverage insurance in the amount of $1.0 billion per incident for our vessels. If the damages from a catastrophic spill were to exceed our insurance coverage, it could have an adverse effect on our business and operating results.

Other United States Environmental Initiatives

The U.S. Clean Air Act of 1970 (including its amendments of 1977 and 1990) (“CAA”) requires the EPA to promulgate standards applicable to emissions of greenhouse gasses, volatile organic compounds and other air contaminants. The CAA requires states to adopt State Implementation Plans, some of which regulate emissions resulting from vessel loading and unloading operations which may affect our vessels.

The U.S. Clean Water Act (“CWA”) prohibits the discharge of oil, hazardous substances and ballast water in U.S. navigable waters unless authorized by a duly issued permit or exemption and imposes strict liability in the form of penalties for any unauthorized discharges. The CWA also imposes substantial liability for the costs of removal, remediation and damages and complements the remedies available under OPA and CERCLA.

The EPA and the U.S. Coast Guard (“USCG”) have enacted specific rules relating to ballast water discharges and other discharges incidental to the normal operation of vessels in United States waters. Compliance with these requirements may necessitate the installation of ballast water treatment systems on our vessels, the implementation of port facility disposal arrangements or other operational procedures, potentially at substantial cost, and/or may otherwise restrict certain of our vessels from entering U.S. waters.

On December 4, 2018, the Vessel Incidental Discharge Act (“VIDA”) was signed into law as Title IX of the Frank LoBiondo Coast Guard Authorization Act of 2018. VIDA establishes a new framework under Clean Water Act (“CWA”) Section 312(p) for the uniform national regulation of discharges incidental to the normal operation of non-military, non-recreational vessels of 79 feet or more in length, and is intended to consolidate and replace the existing patchwork of federal, state and local requirements applicable to such vessel discharges. For ballast water discharges specifically, VIDA also applies to smaller vessels (less than 79 feet) and fishing vessels of all sizes.

VIDA directed the EPA to develop national standards of performance for vessel incidental discharges, and directed the USCG to develop corresponding implementation, compliance and enforcement regulations, including requirements governing the design, construction, testing, approval, installation and use of marine pollution control devices necessary to achieve the EPA’s standards. Under the statute, the EPA was required to promulgate its standards within two years of VIDA’s enactment (i.e., by December 4, 2020); however, the EPA did not meet this deadline. Following litigation by environmental groups and the entry of a consent decree in September 2023, the EPA published its final rule, the Vessel Incidental Discharge National Standards of Performance (“VID-NSP”), in the Federal Register on October 9, 2024 (89 Fed. Reg. 82074). The rule became effective on November 8, 2024.

The USCG is required to promulgate its implementing regulations within two years of the EPA’s publication of the VID-NSP, resulting in a deadline of approximately October 2026. Until the USCG’s regulations are final, effective and enforceable, all existing requirements under the EPA’s 2013 Vessel General Permit (“VGP”) and the USCG’s existing ballast water management regulations under the Nonindigenous Aquatic Nuisance Prevention and Control Act of 1990 (“NANPCA”), as amended by the National Invasive Species Act of 1996 (“NISA”), remain in full force and effect. Once the USCG’s new regulations become final, effective and enforceable, the VGP and related existing federal, state and local vessel discharge requirements will be repealed and superseded.

The 2013 VGP, which remains in effect during this interim period, authorizes discharges incidental to the operations of commercial vessels and imposes, among other requirements, numeric ballast water discharge limits for most vessels to reduce the risk of introduction of aquatic invasive species into U.S. waters, requirements for the use of environmentally acceptable lubricants, and standards for exhaust gas scrubber wash water discharges. The USCG’s existing regulations under NANPCA require mid-ocean ballast water exchange and the installation of USCG type-approved ballast water management systems for vessels equipped with ballast water tanks that are bound for U.S. ports or entering U.S. waters.

During this interim period, non-military, non-recreational vessels of 79 feet or more in length must continue to comply with the requirements of the VGP, including submission of a Notice of Intent (“NOI”) or retention of a Permit Authorization and Record of Inspection form, and submission of annual reports. We have submitted NOIs for our vessels where required.

Compliance with the EPA, USCG and applicable state regulations, whether under the current interim requirements or under the forthcoming VIDA regulatory framework, could require the installation of additional or upgraded ballast water treatment equipment on vessels in our fleet that have not already installed compliant systems, or the implementation of other port facility disposal procedures, at potentially significant cost. Any such requirements, or any failure to comply with applicable discharge standards, could result in fines, penalties, vessel detentions or restrictions on certain of our vessels entering U.S. waters, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

59
The California Air Resources Board regulation for reducing emissions from diesel auxiliary engines on ships while at-berth is applicable for container vessels from January 1, 2023. Effective January 1, 2025, every dry bulk carrier and oil tanker vessel approaching California ports must be also equipped with shore power supply.

European Union Regulations

In October 2009, the European Union amended a directive to impose criminal sanctions for illicit ship-source discharges of polluting substances, including minor discharges, if committed with intent, recklessly or with serious negligence and the discharges individually or in the aggregate result in deterioration of the quality of water. Aiding and abetting the discharge of a polluting substance may also lead to criminal penalties. The directive applies to all types of vessels, irrespective of their flag, with certain exceptions for 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 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. 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 MARPOL 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 in the SOx-Emission Control Area, use fuels with a 0.5% maximum sulfur content.

As of May 1, 2025, the Mediterranean Sea has effectively become an Emission Control Area (ECA) for sulphur oxides (SOx) under MARPOL Annex VI Regulation 14. This implies that from then on when operating in the Mediterranean Sea, the sulphur content of the fuel used on board shall not exceed 0.10%, unless using an exhaust gas cleaning system (EGCS) ensuring an equivalent SOx emission level. That means that the fuel that will be used in the Mediterranean Sea will become more expensive, which may influence the net revenue of our vessels.

On September 15, 2020, the European Parliament voted to include greenhouse gas emissions from the maritime sector in the European Union’s carbon market. This will require shipowners to buy permits to cover these emissions. On July 14, 2021, the EU Commission proposed legislation to amend the EU ETS to include shipping emissions which was phased in beginning in 2023. In January 2024, EU ETS was extended to cover carbon dioxide emissions from all large ships (of 5,000 gross tonnage and above) entering EU ports, regardless of the flag they fly.

By September 2025, shipping companies will have to surrender emission allowances (EUAs) based on their verified emissions as quantified as per Regulation (EU) 2015/757 (Monitoring, Reporting and Verification of CO2 emissions from maritime transport, MRV).

60
In addition, the European Union’s Fuel EU Maritime Regulation 2023/1805, which came into force on January 1, 2025, aims to reduce the carbon intensity of fuels used by ships operating in EU waters. Under this regulation, shipping companies will be required to progressively reduce the carbon intensity of the fuels they use, with specific targets set for different years. By 2030, ships will need to achieve a 40% reduction in carbon intensity compared to 2020 levels, with further reductions by 2040 and 2050. This will impact shipping companies by requiring them to adopt cleaner fuels, invest in new technologies, or implement operational measures to meet the regulations. Compliance may involve additional costs related to fuel procurement, retrofitting vessels, or adopting new carbon-reducing technologies, significantly influencing operational strategies and fuel management practices.

Turkish Emissions Trading System

In July 2025, Türkiye enacted the Climate Act, establishing the legal framework for a national Emissions Trading System (ETS), which is currently in a pilot phase through 2027, with a possible extension to 2028. The system will include monitoring, reporting, and verification (“MRV”) obligations, allowance issuance and surrender, and penalties for non-compliance—reduced by 80% during the pilot period. Sector-specific secondary legislation, including for maritime transport, is expected during this transition. Vessels transiting Turkish waters, including the Istanbul Strait under Montreux Convention rights, may be indirectly subject to ETS-related costs such as emissions-based passage dues once the system is fully operational.

Greenhouse Gas Regulation

Currently, the emissions of greenhouse gases from international shipping are not subject to the Kyoto Protocol to 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 greenhouse gas emissions 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. The U.S. initially entered into the agreement, but the Trump administration withdrew from the Paris Agreement effective November 4, 2020. On January 20, 2021, U.S. President Biden signed an executive order to rejoin the Paris Agreement, which took effect on February 19, 2021. On January 20, 2025, U.S. President Trump signed an Executive Order seeking, again, to withdraw the United States from the Paris Agreement.

At MEPC 70 and MEPC 71, a draft outline of the structure of the initial strategy for developing a comprehensive IMO strategy on reduction of greenhouse gas emissions 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. The MEPC 76 adopted amendments to MARPOL Annex VI that will require ships to reduce their greenhouse gas emissions. These amendments combine technical and operational approaches to improve the energy efficiency of ships, in line with the targets established in the 2018 Initial IMO Strategy for Reducing GHG Emissions from Ships and provide important building blocks for future GHG reduction measures. The new measures will require all ships to calculate their EEXI following technical means to improve their energy efficiency and to establish their annual operational carbon intensity indicator (CII) and CII rating. Carbon intensity links the GHG emissions to the transport work of ships. These regulations could cause us to incur additional substantial expenses.

61
The EU made a unilateral commitment to reduce overall greenhouse gas emissions from its member states by 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. As previously discussed, implementation of regulations relating to the inclusion of greenhouse gas emissions from the maritime sector in the European Union’s carbon market is 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, U.S. President Trump sought to eliminate elements of the EPA’s plan to cut greenhouse gas emissions and rolled back standards to control methane and volatile organic compound emissions from new oil and gas facilities. However, the Biden administration directed the EPA to publish rules suspending, revising or rescinding certain of these regulations. The EPA and/or individual U.S. states could enact additional environmental regulations that would affect our operations, although the Trump administration has indicated it will again seek to eliminate the EPA’s plan to cut greenhouse gas emissions and we cannot predict the effect such regulations or limited regulations will have on 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 or further implement the Kyoto Protocol or Paris Agreement which further 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 results in sea level changes or increases in extreme weather events. Climate change models predict an increase in extreme weather events which would increase risks to our vessels and operations.

International Labor Organization

The International Labor Organization 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. Our vessels are certified as per MLC 2006 and, we believe, in substantial compliance with the 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 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 (“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, onboard 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; onboard installation of ship security alert systems, which do not sound on the vessel but only alert the authorities on shore; the development of vessel security plans; ship identification number to be permanently marked on a vessel’s hull; a continuous synopsis record 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; and compliance with flag state security certification requirements.

62
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 in the Gulf of Aden and off the coast of Nigeria in the Gulf of Guinea. Furthermore, costs of vessel security measures have been affected by the geopolitical conflicts in the Middle East and maritime incidents in and around the Red Sea, including off the coast of Yemen in the Gulf of Aden where vessels have faced an increased number of armed attacks targeting Israeli and US-linked ships, as well as Marshall Islands’ flagged vessels. 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 have a material adverse effect on our business, liquidity and operating results. 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

The hull and machinery of every commercial vessel must be classed by a classification society authorized by its country of registry. The classification society certifies that a vessel is safe and seaworthy in accordance with the applicable rules and regulations of the country of registry of the vessel and SOLAS. Most insurance underwriters make it a condition for insurance coverage and lending that a vessel be certified “in class” by a classification society which is a member of the International Association of Classification Societies, the IACS. The IACS has adopted harmonized Common Structural Rules, or the Rules, which apply to oil tankers contracted for construction on or after July 1, 2015. The Rules attempt to create a level of consistency between IACS Societies. Our vessels are certified as being “in class” by the applicable IACS Classification Societies (e.g., American Bureau of Shipping, Lloyd’s Register of Shipping, Det Norske Veritas, Nippon Kaiji Kyokai, etc.).

A vessel must undergo annual surveys, intermediate surveys, dry-dockings and special surveys. A vessel’s machinery may be on a continuous survey cycle, under which the machinery would be surveyed periodically over a five-year period. Every vessel is also required to be dry-docked every 30 to 36 months for inspection of the underwater parts of the vessel. If any vessel does not maintain its class and/or fails any annual survey, intermediate survey, dry-docking or special survey, the vessel will be unable to carry cargo between ports and will be unemployable and uninsurable which could cause us to be in violation of certain covenants in our loan agreements. Any such inability to carry cargo or to be employed, or any such violation of covenants, could have a material adverse impact on our financial condition and operating results.

Risk of Loss and Liability Insurance

General

The operation of any cargo vessel includes risks such as mechanical failure, physical damage, collision, property loss, cargo loss or damage and business interruption due to political circumstances in foreign countries, piracy incidents, hostilities and labor strikes. In addition, there is always an inherent possibility of marine disaster, including oil spills and other environmental events, and the liabilities arising from owning and operating vessels in international trade. We and our pool operators carry insurance coverage as customary in the shipping industry. However, not all risks can be insured, specific claims may be rejected, and we might not be always able to obtain adequate insurance coverage at reasonable rates. Any of these occurrences could have a material adverse effect on our business.

Hull and Machinery Insurance

We procure hull and machinery insurance, protection and indemnity insurance, which includes environmental damage and pollution insurance, war risk insurance, freight and demurrage and defense insurance for all vessels in our fleet. Each of our vessels is insured up to what we believe to be at least its fair market value, after meeting certain deductibles. We do not have and do not expect to obtain loss of hire insurance (or any other kind of business interruption insurance) covering the loss of revenue during off-hire periods, other than due to war risks, for any of our vessels. In certain instances where our vessels are participating in a pool transit through high-risk areas, the pool operator arranges for kidnap and ransom loss of hire insurance for a specified duration on our behalf.

63
Protection and Indemnity Insurance

Protection and indemnity insurance is provided by mutual protection and indemnity associations, or “P&I Associations” or clubs, and covers our third-party liabilities in connection with our shipping activities. This includes third-party liability and other related expenses of injury or death of crew, passengers and other third parties, loss or damage to cargo, claims arising from collisions with other vessels, damage to other third-party property, pollution arising from oil or other substances, and salvage, towing and other related costs, including wreck removal.

Our current protection and indemnity insurance coverage for pollution is $1 billion per vessel per incident. There are 13 P&I Associations that comprise the “International Group”, a group of P&I Associations that insure approximately 90% of the world’s commercial tonnage and have entered into a pooling agreement to reinsure each association’s liabilities. The International Group’s website states that the pool provides a mechanism for sharing all claims in excess of $10 million up to, currently, approximately $3.1 billion. As a member of a P&I Association, which is a member of the International Group, we are subject to calls payable to the associations based on our claim records as well as the claim records of all other members of the individual associations and members of the shipping pool of P&I Associations comprising the International Group.

Competition

We operate in markets that are highly competitive, particularly in the MR tanker industry where ownership of MR tanker vessels is highly fragmented. The LPG carrier market is also moderately fragmented in terms of ownership. Although we believe that at the present time no single company has a dominant position in the market in which we operate, that could change and we may face substantial competition for charters from a number of established companies who may have greater resources or experience.

The process of obtaining new employment for our fleet generally involves intensive screening, and competitive bidding, and often extends for several months. We compete for charters on the basis of price, vessel location, size, age and condition of the vessel, as well as based on customer relationships and our reputation as an owner and operator. In the LPG carrier sector, we may compete with LPG distributors and traders who use their fleets not only to transport their own LPG, but also to transport LPG for third-party charterers in direct competition with independent owners and operators. Demand for LPG carrier and tanker vessels fluctuates in line with the main patterns of trade for the cargoes transported by our vessels and varies according to supply and demand for such products.

Permits and Authorizations

We are required by various governmental and quasi-governmental agencies to obtain certain permits, licenses and certificates with respect to our vessels. The kinds of permits, licenses and certificates required depend upon several factors, including the commodity transported, the waters in which the vessel operates, the nationality of the vessel’s crew and the age of a vessel. We have been able to obtain all permits, licenses and certificates currently required to permit our vessels to operate. Additional laws and regulations, environmental or otherwise, may be adopted which could limit our ability to do business or increase our cost of doing business.

Seasonality

Based on our historical data and industry trends, we expect demand for our tanker and LPG carrier vessels to exhibit seasonal variations and, as a result, charter and freight rates to fluctuate. In particular, the LPG carrier market is typically stronger in the fall and winter months in anticipation of increased consumption of propane and butane for heating during the winter months. In addition, unpredictable weather patterns in these months tend to disrupt vessel scheduling and supplies of certain commodities. Similarly, tanker freight rates tend to perform stronger in the first and fourth quarters of the year, driven by higher demand for oil products in the winter months in the Northern hemisphere, though this seasonal pattern has somewhat weakened in recent years due to an increasing proportion of oil product demand originating from Asia, which is less affected by seasonal consumption patterns. These variations may result in quarter-to-quarter volatility in our operating results for our vessels when trading in the spot trip or voyage charter market or if on period time charter when a new time charter is being entered into. Seasonality in the tanker and LPG shipping sector in which we operate could materially affect our operating results and cash flows.

64
C.
Organizational Structure

We were incorporated by Castor in the Republic of the Marshall Islands on July 29, 2022, with our principal executive offices located at 223 Christodoulou Chatzipavlou Street, Hawaii Royal Gardens, 3036 Limassol, Cyprus. A list of our subsidiaries is filed as Exhibit 8.1 to this Annual Report.

D.
Property, Plants and Equipment

We own no properties other than our vessels. For a description of our fleet, please see “B. Business Overview—Our Fleet.”

ITEM 4A.
UNRESOLVED STAFF COMMENTS

None.

65
ITEM 5.
OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following is a discussion of the financial condition and results of operations of the Company for the year ended December 31, 2024, and December 31, 2025. You should read the following discussion and analysis together with our consolidated financial statements and related notes to those statements included in “Item 18. Financial Statements.” Amounts relating to percentage variations in period-on-period comparisons shown in this section are derived from those consolidated financial statements. The following discussion contains forward-looking statements that reflect our future plans, estimates, beliefs and expected performance. These forward-looking statements are dependent upon events, risks and uncertainties that may be outside our control which could cause actual results, cash flows, financial positions, events or conditions to differ materially from those currently anticipated and expressed or implied by such forward-looking statements as a result of many factors, including those set forth in “Item 3. Key Information—D. Risk Factors.” Refer to the section captioned “Cautionary Statement Regarding Forward-Looking Statements” for further discussion of such events, risks and uncertainties. All dollar amounts referred to in this discussion and analysis are expressed in U.S. dollars except where indicated otherwise.

For a discussion of our results for the year ended December 31, 2024, compared to the year ended December 31, 2023, please see “—Item 5. Operating and Financial Review and Prospects—A. Operating Results—Year ended December 31, 2024 as compared to year ended December 31, 2023” contained in our annual report on Form 20-F for the year ended December 31, 2024, filed with the SEC on April 15, 2025.

On April 14, 2025, we distributed on a pro rata basis all common shares of Robin received in connection with the Robin Spin-Off to our holders of common stock of record at the close of business on April 7, 2025. For more information, please see “Item 3. Key Information”, “Item 4. Information on the Company—A. History and Development of the Company”, “Item 7. Major Shareholders and Related Party Transaction—B. Related Party Transactions” and as included elsewhere in this Annual Report.

A.
Operating Results

In the second quarter of 2023, we established our LPG carrier operations through the acquisition of two LPG carrier vessels. Following the completion of the sale of the M/T Wonder Sirius in January 2024, the Company no longer owns any Aframax/LR2 vessels and management determined that the Company operated in two reportable segments: (i) the Handysize tanker segment and (ii) the LPG carrier segment, each on a continuing operations basis. Following the Robin Spin-Off of the Handysize tanker vessel and the acquisition of the new MR (MR2 class) tanker vessel, M/T Wonder Altair (built in 2021) on July 11, 2025, the former Handysize segment was renamed “MR (Handysize/MR2)” to reflect both the updated fleet composition and the strategic continuity of the segment. Following the acquisition of the MR (MR2 class) tanker vessel, M/T Wonder Maia (built in 2014) and considering the tanker vessels’ eco-design technical characteristics, the Company reassessed its segments. As a result, management determined that we now operate in three reportable segments: (i) the Eco tanker segment (comprising of M/T Wonder Altair as discussed above), (ii) the Non-Eco tanker segment (comprising of M/T Wonder Maia) and (iii) the LPG carrier segment comprising of LPG Dream Arrax and LPG Dream Vermax), each on a continuing operations basis. The reportable segments comprising Company’s continuing operations reflect the internal organization of the Company and the way the chief operating decision maker (“CODM”), who is the Chief Executive Officer of the Company, reviews the operating results and allocates capital within the Company.  The CODM assesses segment performance using key financial measures, including revenues, operating expenses, segment operating income and net income. These metrics help the CODM assess segment profitability, optimize fleet deployment, control costs and determine capital allocation. Based on these segment performance trends, the CODM makes resource allocation decisions such as adjusting chartering strategies, prioritizing fleet expansion or disposals, and optimizing cost efficiencies to enhance profitability and overall segment performance. In addition, the CODM separately reviews discrete financial information for tanker vessels with different eco-design technical characteristics, as these are subject to distinct operational strategies, maintenance profiles and capital allocation decisions. Further, the transport of refined petroleum products (carried by MR tanker vessels) and liquefied petroleum gas (carried by LPG carriers) have different characteristics. In addition, the nature of trade, trading routes, charterers and cargo handling of liquefied petroleum gas and refined petroleum products differs.

66
Principal factors impacting our business, results of operations and financial condition

Our results of operations are affected by numerous factors. The principal factors that have impacted the business during the fiscal periods presented in the following discussion and analysis and that are likely to continue to impact our business are the following:


 •
The levels of demand and supply of seaborne cargoes and vessel tonnage in the shipping industries in which we operate;


•
The cyclical nature of the shipping industry in general and its impact on charter and freight rates and vessel values;


•
The successful implementation of our business strategy, including the ability to obtain equity and debt financing at acceptable and attractive terms to fund future capital expenditures and/or to implement this business strategy and the size and composition of our fleet resulting from our vessel acquisitions and disposals;


•
The global economic growth outlook and trends;


•
Economic, regulatory, political and governmental conditions that affect shipping and the tanker and LPG shipping industries, including international conflict or war (or threatened war), such as between Russia and Ukraine, tensions in the Middle East, including the war involving Iran, the U.S. and Israel, instability in Venezuela, acts of piracy or maritime aggression, such as recent maritime incidents involving vessels in and around the Red Sea, and the imposition of tariffs and other protectionist measures, such as port fees, imposed or threatened by the United States, China and other countries;


•
The employment and operation of our fleet including the utilization rates of our vessels;


•
The ability to successfully employ our vessels at economically attractive rates and the strategic decisions regarding the employment mix of our fleet in the voyage, time charter and pool markets, as our charters expire or are otherwise terminated;


•
Management of the operational, financial, general and administrative elements involved in the conduct of our business and ownership of our fleet, including the effective and efficient management of our fleet by our manager and its sub-managers, and each of their suppliers;


•
The number of charterers who use our services and the performance of their obligations under their agreements, including their ability to make timely payments to us;


•
The ability to maintain solid working relationships with our existing charterers and our ability to increase the number of our charterers through the development of new working relationships;


•
The vetting approvals requested by oil majors and the Chemical Distribution Institute (CDI) for the vessels managed by our manager and/or sub-managers;

67

 •
Dry-docking and special survey costs and duration, both expected and unexpected;


•
Our borrowing levels and the finance costs related to any outstanding debt we may incur as well as our compliance with debt covenants in any such financing arrangements;


•
Management of our financial resources, including banking relationships and of the relationships with our various stakeholders;


•
Major outbreaks of diseases and governmental responses thereto;


•
The level of any distribution on all classes of our shares; and


•
The risks associated with Castor’s and Robin’s respective businesses as a result of our investment in the Series D Preferred Shares of Castor and Series A Preferred Shares of Robin.

These factors are volatile and in certain cases may not be within our control. Accordingly, past performance is not necessarily indicative of future performance, and it is difficult to predict future performance with any degree of certainty. See also “Item 3. Key Information—D. Risk Factors” in this Annual Report.

Hire Rates and the Cyclical Nature of the Industry

One of the factors that impacts our profitability is the hire and freight rates at which we are able to fix our vessels. The shipping industry is cyclical with attendant volatility in rates and, as a result, profitability. The tanker and LPG shipping sectors have been characterized by long and short periods of imbalances between supply and demand, causing charter rates to be volatile.

The degree of charter rate volatility among different types of tanker and LPG carrier vessels has varied widely, and charter rates for these vessels have also varied significantly in recent years. Fluctuations in charter rates result from changes in the supply and demand for vessel capacity and changes in the supply and demand for the crude oil, refined petroleum products and liquefied petroleum gas carried by oceangoing vessels internationally. The factors and the nature, timing, direction and degree of changes in industry conditions affecting the supply and demand for vessels are unpredictable to a great extent and outside our control.

Our vessel deployment strategy seeks to maximize revenues throughout industry cycles while maintaining cash flow stability and foreseeability. Our gross revenues on a standalone basis for the year ended December 31, 2025 consisted predominantly of hire earned by our vessels under time charter contracts. For a description of these chartering arrangements, refer to “Item 4. Information on the Company—B. Business Overview—Chartering of Our Fleet.”

The year ended December 31, 2025 was among the stronger years for spot MR tanker trades since 2010, although average earnings remained below the exceptionally high levels recorded in 2022 and 2023. Deadweight carrying capacity of the MR tanker fleet increased by approximately 4.3% in 2025, as compared to 1.0% in 2024, while demand in terms of tonne miles for oil products in 2024 is estimated to have grown by 7.0% but is estimated to have declined by 2.2% in 2025. The MR tanker spot charter market experienced noticeable volatility throughout 2025, with rates ranging from a low of $14,845 to a high of $29,556 for clean products.

68
In comparison to the spot market average, LPG 5,000 cbm rates showed little volatility in 2024 and 2025. In 2024, charter rates ranged from a low of $10,356 per day in January 2024 to a high of $11,178 per day in December 2024 and in 2025 charter rates ranged from a low of $11,178 per day in January 2025 to a high of $11,671 per day in September 2025 after which rates remained roughly the same until year end. There was an increase in time charter rates of around 2.5% in 2024 and a decline of approximately 1.9% in 2025 in the regions from the Red Sea to the Indian, North and South Pacific Oceans. In comparison, time charter rates in the regions from the Mediterranean and Adriatic Seas to the Baltic Sea, North and South Atlantic Oceans increased by around 4.6% in 2024 and further by approximately 6.4% in 2025. In 2024, the deadweight carrying capacity of small LPG carrier vessels is estimated to have declined by approximately 1% year on year, reflecting a slight contraction of the fleet. In 2025, capacity increased marginally by around 0.17%, indicating broadly stable fleet levels with only limited net growth.

Our future gross revenues may be affected by our commercial strategy, including decisions regarding the employment mix of our fleet among time and voyage charters and pool arrangements. See Note 15 to our Consolidated Financial Statements included elsewhere in this Annual Report for a breakdown of revenues per category.

Employment and operation of our fleet

A significant factor that impacts our profitability is the employment and operation of our fleet. The profitable employment of our fleet is highly dependent on the levels of demand and supply in the shipping segments in which we operate, our commercial strategy including the decisions regarding the employment mix of our fleet among time charters and pool arrangements, as well as our manager’s and sub-manager’s ability to leverage our relationships with existing or potential customers. As a new entrant to the LPG carriers’ business and, to the tankers’ business, our customer base is currently concentrated to a small number of charterers. The breadth of our customer base has historically had an impact on the profitability of our business and in the year ended December 31, 2025, 90% of our revenues were earned on time charters entered into with five different charterers. Further, the effective operation of our fleet mainly requires regular maintenance and repair, effective crew selection and training, ongoing supply of our fleet with the spares and the stores that it requires, contingency response planning, auditing of our vessels’ onboard safety procedures, arrangements for our vessels’ insurance, chartering of the vessels, training of onboard and on shore personnel with respect to the vessels’ security and security response plans (ISPS), obtaining of ISM certifications, compliance with environmental regulations and standards and performing the necessary audit for the vessels within the year of taking over a vessel and the ongoing performance monitoring of the vessels.

Financial, general and administrative management

The management of financial, general and administrative elements involved in the conduct of our business and ownership of our vessels requires us to manage our financial resources, which includes managing banking relationships, administrating our bank accounts, managing our accounting system, records and financial reporting, monitoring and ensuring compliance with the legal and regulatory requirements affecting our business and assets and managing our relationships with our service providers and customers.

Important Measures and Definitions for Analyzing Results of Operations

Our management uses the following metrics to evaluate our operating results, including our operating results at the segment level, and to allocate capital accordingly:

Total vessel revenues. Total vessel revenues are generated from voyage charters, time charters and pool arrangements. Total vessel revenues are affected by the number of vessels in our fleet, hire and freight rates and the number of days a vessel operates which, in turn, are affected by several factors, including the amount of time that we spend positioning our vessels, the amount of time that our vessels spend in dry-dock undergoing repairs, maintenance and upgrade work, the age, condition and specifications of our vessels, and levels of supply and demand in the seaborne transportation market. Total vessel revenues are also affected by our commercial strategy related to the employment mix of our fleet between vessels on time charters, vessels operating on voyage charters and vessels in pools.

69
We measure revenues in each segment for three separate activities: (i) time charter revenues, (ii) voyage charter revenues, and (iii) pool revenues.

Voyage expenses. Our voyage expenses primarily consist of bunker expenses, port and canal expenses, costs of European Union Allowances (“EUAs”) and brokerage commissions paid in connection with the chartering of our vessels. Voyage expenses are incurred primarily during voyage charters or when the vessel is repositioning or unemployed. Bunker expenses, port and canal dues increase in periods during which vessels are employed on voyage charters because these expenses are in this case borne by us. Under a time charter, the charterer pays substantially all the vessel voyage related expenses. Under pooling arrangements, voyage expenses are borne by the pool operator. Gain/loss on bunkers may also arise where the cost of the bunker fuel sold to the new charterer is greater or less than the cost of the bunker fuel acquired.

Operating expenses. We are responsible for vessel operating costs, which include crewing, expenses for repairs and maintenance, the cost of insurance, tonnage taxes, the cost of spares and consumable stores, lubricating oils costs, communication expenses and other expenses. Expenses for repairs and maintenance tend to fluctuate from period to period because most repairs and maintenance typically occur during periodic dry-docking. Our ability to control our vessels’ operating expenses also affects our financial results. Daily vessel operating expenses are calculated by dividing fleet operating expenses by the Ownership Days for the relevant period.

Management fees. Management fees include fees paid to related parties providing certain ship management services to our fleet pursuant to Ship Management Agreements (as defined in Item 7. Major Shareholders and Related Party Transactions) with Castor Ships.

Off-hire. Off-hire is the period our fleet is unable to perform the services for which it is required under a charter for reasons such as scheduled repairs, vessel upgrades, dry-dockings or special or intermediate surveys or other unforeseen events.

Dry-docking/Special Surveys. We periodically dry-dock and/or perform special surveys on our fleet for inspection, repairs and maintenance and any modifications to comply with industry certification or governmental requirements. Our ability to control our dry-docking and special survey expenses and our ability to complete our scheduled dry-dockings and/or special surveys on time also affects our financial results. Dry-docking and special survey costs are accounted for under the deferral method whereby the actual costs incurred are deferred and are amortized on a straight-line basis over the period through the date the next survey is scheduled to become due.

Ownership Days. Ownership Days are the total number of calendar days in a period during which we owned a vessel. Ownership Days are an indicator of the size of our fleet over a period and determine both the level of revenues and expenses recorded during that specific period.

Available Days. Available Days are the Ownership Days in a period less the aggregate number of days our vessels are off-hire due to scheduled repairs, dry-dockings or special or intermediate surveys. The shipping industry uses Available Days to measure the aggregate number of days in a period during which vessels are available to generate revenues. Our calculation of Available Days may not be comparable to that reported by other companies.

Operating Days. Operating Days are the Available Days in a period after subtracting unscheduled off-hire and idle days.

Fleet Utilization. Fleet Utilization is calculated by dividing the Operating Days during a period by the number of Available Days during that period. Fleet Utilization is used to measure a company’s ability to efficiently find suitable employment for its vessels and minimize the number of days that its vessels are off-hire for reasons such as major repairs, vessel upgrades, dry-dockings or special or intermediate surveys and other unforeseen events.

70
Time Charter Equivalent (“TCE”) revenues. The Time Charter Equivalent revenues (“TCE”) is a measure of the revenue performance of a vessel and is defined as the total vessel revenues (time charter and/or voyage charter revenues, and/or pool revenues, net of charterers’ commissions), less voyage expenses. The TCE revenues is not a measure of financial performance under U.S. GAAP (i.e., it is a non-GAAP measure) and should not be considered as an alternative to any measure of financial performance presented in accordance with U.S. GAAP.

Daily TCE Rate. The Daily Time Charter Equivalent Rate (“Daily TCE Rate”), is a measure of the average daily revenue performance of a vessel. The Daily TCE Rate is not a measure of financial performance under U.S. GAAP (i.e., it is a non-GAAP measure) and should not be considered as an alternative to any measure of financial performance presented in accordance with U.S. GAAP. We calculate Daily TCE Rate by dividing total revenues (time charter and/or voyage charter revenues, and/or pool revenues, net of charterers’ commissions), less voyage expenses, by the number of Available Days during that period. Under a time charter, the charterer pays substantially all the vessel voyage related expenses. However, we may incur voyage related expenses when positioning or repositioning vessels before or after the period of a time or other charter, during periods of commercial waiting time or while off-hire during dry-docking or due to other unforeseen circumstances. Under voyage charters, the majority of voyage expenses are generally borne by us whereas for vessels in a pool, such expenses are borne by the pool operator. The Daily TCE Rate is a standard shipping industry performance measure used primarily to compare period-to-period changes in a company’s performance and, management believes that the Daily TCE Rate provides meaningful information to our investors because it compares daily net earnings generated by our vessels irrespective of the mix of charter types (e.g., time charter, voyage charter, pools) under which our vessels are employed between the periods while it further assists our management in making decisions regarding the deployment and use of our vessels and in evaluating our financial performance. Our calculation of the Daily TCE Rates may be different from and may not be comparable to that reported by other companies.

EBITDA. EBITDA is not a measure of financial performance under U.S. GAAP, does not represent and should not be considered as an alternative to net income, operating income, cash flow from operating activities or any other measure of financial performance presented in accordance with U.S. GAAP. We define EBITDA as earnings before interest and finance costs (if any), net of interest income, taxes (when incurred), depreciation and amortization of deferred dry-docking costs. EBITDA is used as a supplemental financial measure by management and external users of financial statements to assess our operating performance. We believe that EBITDA assists our management by providing useful information that increases the comparability of our operating performance from period to period and against the operating performance of other companies in our industry that provide EBITDA information. This increased comparability is achieved by excluding the potentially disparate effects between periods or companies of interest, other financial items, depreciation and amortization and taxes, which items are affected by various and possibly changing financing methods, capital structure and historical cost basis and which items may significantly affect net income between periods. We believe that including EBITDA as a measure of operating performance benefits investors in (a) selecting between investing in us and other investment alternatives and (b) monitoring our ongoing financial and operational strength. EBITDA as presented below may be different from and may not be comparable to similarly titled measures of other companies.

The following tables reconcile our consolidated and per segment Daily TCE Rate and our consolidated EBITDA to the most directly comparable GAAP measures and present operational metrics of the Company on a consolidated basis and per operating segment for the periods presented (amounts in U.S. dollars, except for utilization and days). We entered the Non-Eco tanker segment in the third quarter of 2025 and, accordingly, no comparative financial information exists for the year ended December 31, 2024.

71
Reconciliation of Daily TCE Rate to Total vessel revenues — Consolidated (continuing operations)

 
  
Year ended
December
31,
    
Year ended
December
31,
  
 
  
2024
    
2025
  
Total vessel revenues
  
$
22,394,283
    
$
21,081,840
  
Voyage expenses – including commissions to related party
    
(1,594,751
)
    
(1,307,290
)
TCE revenues
  
$
20,799,532
    
$
19,774,550
  
Available Days
    
1,790
      
1,527
  
Daily TCE Rate
  
$
11,620
    
$
12,950
  

Reconciliation of Daily TCE Rate to Total vessel revenues — Eco Tanker Segment

 
  
Year ended
December
31,
    
Year ended
December
31,
  
 
  
2024
    
2025
  
Total vessel revenues
  
$
6,768,672
    
$
6,231,397
  
Voyage expenses – including commissions to related party
    
(315,055
)
    
(489,741
)
TCE revenues
  
$
6,453,617
    
$
5,741,656
  
Available Days
    
326
      
277
  
Daily TCE Rate
  
$
19,796
    
$
20,728
  

Reconciliation of Daily TCE Rate to Total vessel revenues — Non-Eco Tanker Segment

 
  
Year ended
December
31,
  
 
  
2025
  
Total vessel revenues
  
$
2,047,250
  
Voyage expenses – including commissions to related party
    
(127,361
)
TCE revenues
  
$
1,919,889
  
Available Days
    
93
  
Daily TCE Rate
  
$
20,644
  

Reconciliation of Daily TCE Rate to Total vessel revenues — LPG Carrier Segment

 
  
Year ended
December
31,
    
Year ended
December
31,
  
 
  
2024
    
2025
  
Total vessel revenues
  
$
15,625,611
    
$
12,803,193
  
Voyage expenses – including commissions to related party
    
(1,279,696
)
    
(690,188
)
TCE revenues
  
$
14,345,915
    
$
12,113,005
  
Available Days
    
1,464
      
1,157
  
Daily TCE Rate
  
$
9,799
    
$
10,469
  

Operational Metrics — Consolidated (continuing operations)

 
  
Year ended
December
31,
    
Year ended
December
31,
  
 
  
2024
    
2025
  
Daily vessel operating expenses
  
$
5,082
    
$
5,629
  
Ownership Days
    
1,830
      
1,613
  
Available Days
    
1,790
      
1,527
  
Operating Days
    
1,790
      
1,525
  
Fleet Utilization
    
100
%
    
100
%
Daily TCE Rate
  
$
11,620
    
$
12,950
  
EBITDA
  
$
1,924,499
    
$
6,031,060
  

72
Operational Metrics — Eco Tanker Segment

 
  
Year ended
December
31,
    
Year ended
December
31,
  
 
  
2024
    
2025
  
Daily vessel operating expenses
  
$
6,312
    
$
6,351
  
Ownership Days
    
366
      
277
  
Available Days
    
326
      
277
  
Operating Days
    
326
      
277
  
Fleet Utilization
    
100
%
    
100
%
Daily TCE Rate
  
$
19,796
    
$
20,728
  

Operational Metrics — Non-Eco Tanker Segment

 
  
Year ended
December
31,
  
 
  
2025
  
Daily vessel operating expenses
  
$
7,307
  
Ownership Days
    
93
  
Available Days
    
93
  
Operating Days
    
91
  
Fleet Utilization
    
98
%
Daily TCE Rate
  
$
20,644
  

Operational Metrics — LPG Carrier Segment

 
  
Year ended
December
31,
    
Year ended
December
31,
  
 
  
2024
    
2025
  
Daily vessel operating expenses
  
$
4,775
    
$
5,343
  
Ownership Days
    
1,464
      
1,243
  
Available Days
    
1,464
      
1,157
  
Operating Days
    
1,464
      
1,157
  
Fleet Utilization
    
100
%
    
100
%
Daily TCE Rate
  
$
9,799
    
$
10,469
  

Reconciliation of EBITDA to Net income – Consolidated (continuing operations)

 
  
Year ended
December
31,
    
Year ended
December
31,
  
 
  
2024
    
2025
  
Net income
  
$
5,511,535
      
5,613,058
  
Depreciation and amortization
    
4,901,246
      
4,934,655
  
Interest and finance costs, net(1)
    
(8,488,282
)
    
(4,516,653
)
EBITDA
  
$
1,924,499
    
$
6,031,060
  

(1)
Includes interest and finance costs and interest income, if any.

73
Consolidated Results of Operations

Following the sale of the M/T Wonder Sirius in January 2024, the Company no longer has any Aframax/LR2 vessels and the results of operations and cash flows of the Aframax/LR2 segment, as well as its assets and liabilities, are reported as discontinued operations. For information on our discontinued operations, see Note 3 to our consolidated financial statements included elsewhere in this Annual Report.

Year ended December 31, 2025, as compared to the year ended December 31, 2024

 
  
Year ended
December 31, 2024
    
Year ended
December 31, 2025
    
Change – amount
  
Total vessel revenues
  
$
22,394,283
    
$
21,081,840
    
$
(1,312,443
)
Expenses:
                        
Voyage expenses (including commissions to related party)
    
(1,594,751
)
    
(1,307,290
)
    
287,461
  
Vessel operating expenses
    
(9,300,399
)
    
(9,079,838
)
    
220,561
  
Management fees to related parties
    
(1,930,810
)
    
(1,807,089
)
    
123,721
  
Depreciation and amortization
    
(4,901,246
)
    
(4,934,655
)
    
(33,409
)
General and administrative expenses (including costs from related parties)
    
(10,198,863
)
    
(8,602,749
)
    
1,596,114
  
Provision for doubtful accounts
    
(25,369
)
    
—
      
25,369
  
Operating loss
  
$
(5,557,155
)
  
$
(4,649,781
)
    
907,374
  
Interest and finance costs, net(1)
    
8,488,282
      
4,516,653
      
(3,971,629
)
Foreign exchange (losses)/gains
    
(21,019
)
    
35,352
      
56,371
  
Dividend income from related party
    
2,645,833
      
5,651,212
      
3,005,379
  
Dividend income on equity securities
    
4,136
      
4,623
      
487
  
(Loss)/Gain on equity securities
    
(48,542
)
    
54,999
      
103,541
  
Net income and comprehensive income from continuing operations, net of taxes
  
$
5,511,535
    
$
5,613,058
    
$
101,523
  
Net income and comprehensive income from discontinued operations, net of taxes
  
$
19,695,969
    
$
321,387
    
$
(19,374,582
)
Net income and comprehensive income
  
$
25,207,504
    
$
5,934,445
    
$
(19,273,059
)

(1)
Includes interest and finance costs, net of interest income (including interest income from related party), if any.

74
Total Vessel Revenues

Total vessel revenues decreased to $21.1 million in the year ended December 31, 2025, from $22.4 million in the same period in 2024. This decrease of $1.3 million was mainly associated with (A) the decrease in the Available Days of our fleet to 1,527 days in the year ended December 31, 2025, from 1,790 days in the corresponding period in 2024, as a result of the Robin Spin-Off on April 14, 2025 and the sale of LPG Dream Syrax and LPG Dream Terrax on September 3, 2025 and September 29, 2025, respectively, partially offset by the acquisition of M/T Wonder Altair and M/T Wonder Maia on July 11, 2025 and September 29, 2025, respectively, and (B) partially offset by the increase of the Daily TCE Rate to $12,950 in the year ended December 31, 2025, from $11,620 the same period of 2024. The Daily TCE Rate increased to $12,950 in the year ended December 31, 2025, from $11,620 in the same period in 2024, mainly due to the change in the mix of our fleet following the (i) sales of the two LPG carrier vessels and (ii) acquisitions of two MR tanker vessels which generally earn a higher Daily TCE Rate than the LPG carrier vessels due to their size and the trade they operate in. Daily TCE Rate is not a recognized measure under U.S. GAAP. Please refer to “—Daily TCE Rate” and “—Reconciliation of Daily TCE Rate to Total vessel revenues — Consolidated”  for the definition and reconciliation of this measure to the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP.

Voyage Expenses

Voyage expenses for our fleet decreased to $1.3 million in the year ended December 31, 2025, from $1.6 million in the same period in 2024. This decrease of $0.3 million was mainly associated with decreased bunkers consumption costs by $0.5 million in the year ended December 31, 2025, as compared to the same period in 2024, which was partially offset by the increase of brokerage commissions of $0.2 million.

Vessel Operating Expenses

The decrease in vessel operating expenses by $0.2 million, to $9.1 million in the year ended December 31, 2025, from $9.3 million in the same period in 2024, mainly reflects the decrease in the Ownership Days of our fleet to 1,613 days in the year ended December 31, 2025, from 1,830 days in the corresponding period in 2024, partially offset by the increase in the daily vessel operating expenses of the vessels in our fleet to $5,629 in the year ended December 31, 2025, from $5,082 in the same period in 2024, mainly due to the change in the mix of our fleet following the addition of the MR tanker vessels which incur higher daily vessel operating expenses than the LPG carrier vessels due to their size.

Management Fees

Management fees decreased to $1.8 million in the year ended December 31, 2025, from $1.9 million in the same period in 2024, as a result of (i) the decrease in the Ownership Days of our fleet and partially counterbalanced by (ii) higher management fees, which increased from (a) $1,039 per vessel per day to $1,071 per vessel per day effective July 1, 2024, and (b) $1,071 per vessel per day to $1,100 per vessel per day effective July 1, 2025, as a result of adjustments for inflation in accordance with the terms of the Master Management Agreement.

75
Depreciation and Amortization

Depreciation expenses for our fleet increased to $4.4 million in the year ended December 31, 2025, from $4.3 million in the same period in 2024 as a result of higher depreciation expenses of M/T Wonder Altair and M/T Wonder Maia, offset by the decrease in the Ownership Days of our fleet in the year ended December 31, 2025, as compared to the same period in 2024. Dry-dock amortization charges decreased to $0.5 million in the year ended December 31, 2025, from $0.6 million in the same period in 2024. For the year ended December 31, 2025, the dry-dock amortization charges are related to (i) LPG Dream Terrax (classified as held for sale on September 16, 2025) and LPG Dream Arrax, which completed their scheduled dry-dock in the second quarter of 2025, respectively, (ii) LPG Dream Vermax and LPG Dream Syrax (classified as held for sale on July 10, 2025), which completed their scheduled dry-dock in third quarter of 2025, and (iii) M/T Wonder Mimosa until the Robin Spin-Off on April 14, 2025, which completed its scheduled dry-dock in the third quarter of 2024. For the year ended December 31, 2024, the dry-dock amortization charges are solely related to M/T Wonder Mimosa.

General and Administrative Expenses

General and administrative expenses in the year ended December 31, 2025, amounted to $8.6 million, whereas, in the same period in 2024, general and administrative expenses totaled $10.2 million. This decrease is mainly associated with the stock-based compensation cost for non-vested shares granted under our Equity Incentive Plan and 2025 Equity Incentive Plan amounting to $3.6 million in the year ended December 31, 2025, as compared to $5.3 million to the same period of 2024.

Interest and finance costs, net

Interest and finance costs, net, amounted to $(4.5) million in the year ended December 31, 2025, whereas in the same period in 2024, interest and finance costs, net amounted to $(8.5) million. This variation is mainly due to the decrease in interest income we earned from our time and cash deposits due to decreased average cash balances and interest rates for the year ended December 31, 2025, as compared with the same period of 2024.

Net income from discontinued operations

Net income from discontinued operations decreased by $19.4 million to $0.3 million in the year ended December 31, 2025, as compared to $19.7 million in the same period in 2024. For further details regarding the amounts recorded in respect of discontinued operations in the year ended December 31, 2024 and 2025, please refer to Note 3 to our consolidated financial statements.

Year ended December 31, 2025, as compared to the year ended December 31, 2024 — Eco Tanker Segment

 
  
Year ended
December 31, 2024
    
Year ended
December 31, 2025
    
Change – amount
  
Total vessel revenues
  
$
6,768,672
    
$
6,231,397
    
$
(537,275
)
Expenses:
                        
Voyage expenses (including commissions to related party)
    
(315,055
)
    
(489,741
)
    
(174,686
)
Vessel operating expenses
    
(2,310,289
)
    
(1,759,149
)
    
551,140
  
Management fees to related parties
    
(386,162
)
    
(347,485
)
    
38,677
  
Depreciation and amortization
    
(1,168,558
)
    
(1,176,038
)
    
(7,480
)
Segment operating income
  
$
2,588,608
    
$
2,458,984
    
$
(129,624
)

Total Vessel Revenues

Total vessel revenues for our Eco tanker segment decreased to $6.2 million in the year ended December 31, 2025, from $6.8 million in the same period in 2024. This decrease of $0.6 million was largely driven by the decrease in the Available Days of our Eco vessels in our fleet to 277 days in the year ended December 31, 2025, from 326 days in the corresponding period in 2024, as a result of the Robin Spin-Off on April 14, 2025, partially offset by the acquisition of M/T Wonder Altair on July 11, 2025. The Daily TCE Rate increased to $20,728 in the year ended December 31, 2025, from $19,796 in the same period in 2024, mainly due to the amortization of the below market acquired time charter related to the M/T Wonder Altair acquisition amounting to $1.0 million which is included in total vessel revenues. Daily TCE Rate is not a recognized measure under U.S. GAAP. Please refer to “-Daily TCE Rate” and “-Reconciliation of Daily TCE Rate to Total vessel revenues — Eco Tanker Segment” for the definition and reconciliation of this measure to Total vessel revenues, the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP.

76
Voyage Expenses

Voyage expenses increased to $0.5 million for our Eco tanker segment in the year ended December 31, 2025, from $0.3 million in the same period in 2024, as a result of the increase by $0.1 million of port and other expenses and $0.1 million of brokerage commission costs.

Vessel Operating Expenses

The decrease in operating expenses for our Eco tanker segment by $0.5 million to $1.8 million in the year ended December 31, 2025, from $2.3 million in the corresponding period of 2024, mainly reflects the decrease of the Ownership Days of our Eco tanker fleet to 277 days in the year ended December 31, 2025, from 366 days in the corresponding period in 2024.

Management Fees

Management fees for our Eco tanker segment decreased to $0.3 million in the year ended December 31, 2025, from $0.4 million in the same period in 2024, as a result of the decrease of the Ownership Days of our Eco  tanker fleet, partially offset by the increased management fees following the inflation-based adjustments in management fees discussed in more detail under “—Consolidated Results of Operations—Management Fees”.

Depreciation and Amortization

Depreciation expenses for our Eco tanker segment increased to $0.9 million in the year ended December 31, 2025, from $0.6 million in the same period in 2024, as a result of increased depreciation expenses of M/T Wonder Altair, partially offset by the decrease in the Ownership Days of our Eco tanker fleet. Dry-dock amortization charges in the year ended December 31, 2025, amounted to $0.3 million, related to the amortization of the M/T Wonder Mimosa until the Robin Spin-Off on April 14, 2025, which initiated and completed its scheduled dry-dock and special survey in the second and third quarters of 2024, respectively. Dry-dock and special survey amortization charges amounted to $0.6 million in the same period in 2024, related to the amortization of the M/T Wonder Mimosa.

Year ended December 31, 2025— Non-Eco Tanker Segment

 
  
Year ended
December 31, 2025
  
Total vessel revenues
  
$
2,047,250
  
Expenses:
        
Voyage expenses (including commissions to related party)
    
(127,361
)
Vessel operating expenses
    
(679,547
)
Management fees to related parties
    
(114,400
)
Depreciation and amortization
    
(493,712
)
Segment operating income
  
$
632,230
  

Total Vessel Revenues

Total vessel revenues for our Non-Eco tanker segment amounted to $2.0 million in the year ended December 31, 2025 since the delivery of the vessel M/T Wonder Maia on September 29, 2025. During the year ended December 31, 2025, we owned on average 0.3 Non-Eco tanker vessels that earned a Daily TCE Rate of $20,644. Daily TCE Rate is not a recognized measure under U.S. GAAP. Please refer to “—Daily TCE Rate” and “—Reconciliation of Daily TCE Rate to Total vessel revenues — Non-Eco Tanker Segment” for the definition and reconciliation of this measure to Total vessel revenues, the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP. During the period in which we owned the vessel, we were engaged in time charter.

77
Voyage Expenses

Voyage expenses for our Non-Eco tanker segment amounted to $0.1 million in the year ended December 31, 2025, mainly comprised of bunkers’ consumption costs and brokerage commissions.

Vessel Operating Expenses

Operating expenses for our Non-Eco tanker segment amounted to $0.7 million in the year ended December 31, 2025, and mainly comprised crew costs and spares, repairs and maintenance costs.

Management Fees

Management fees for our Non-Eco tanker segment amounted to $0.1 million in the year ended December 31, 2025.

Depreciation and Amortization

Depreciation expenses amounted to $0.5 million in the year ended December 31, 2025, and exclusively relate to depreciation for the period during which we owned the vessel.

Year ended December 31, 2025, as compared to the year ended December 31, 2024 — LPG Carrier Segment

 
  
Year ended
December 31, 2024
    
Year ended
December 31, 2025
    
Change – amount
  
Total vessel revenues
  
$
​ 15,625,611
    
$
​ 12,803,193
    
$
(2,822,418
)
Expenses:
                        
Voyage expenses (including commissions to related party)
    
(1,279,696
)
    
(690,188
)
    
589,508
  
Vessel operating expenses
    
(6,990,110
)
    
(6,641,142
)
    
348,968
  
Management fees to related parties
    
(1,544,648
)
    
(1,345,204
)
    
199,444
  
Depreciation and amortization
    
(3,732,688
)
    
(3,264,905
)
    
467,783
  
Provision for doubtful accounts
    
(25,369
)
    
—
      
25,369
  
Segment operating income
   $
2,053,100
     $
861,754
    
$
(1,191,346
)

Total Vessel Revenues

Total vessel revenues for our LPG carrier segment amounted to $12.8 million in the year ended December 31, 2025, as compared to $15.6 million in the same period in 2024. This decrease of $2.8 million is mainly due to the decrease in the Available Days of our LPG carrier vessels in our fleet to 1,157 days in the year ended December 31, 2025, from 1,464 days in the corresponding period in 2024, as the result of the sale of the (i) LPG Dream Syrax on September 3, 2025, and (ii) LPG Dream Terrax on September 29, 2025. During the year ended December 31, 2025, our LPG Carrier fleet earned on average a Daily TCE Rate of $10,469, compared to an average Daily TCE Rate of $9,799 earned during the same period in 2024. Daily TCE Rate is not a recognized measure under U.S. GAAP. Please refer to “—Daily TCE Rate” and “—Reconciliation of Daily TCE Rate to Total vessel revenues — LPG Carrier Segment” for the definition and reconciliation of this measure to Total vessel revenues, the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP. During the year ended December 31, 2024, our LPG carriers were engaged in voyage and time charters.

78
Voyage Expenses

Voyage expenses for our LPG carrier segment amounted to $0.7 million and $1.3 million, respectively, in the year ended December 31, 2025 and the same period of 2024. This decrease of $0.6 million is mainly associated with a $0.5 million decrease in bunkers consumption costs in the year ended December 31, 2025 compared to the same period in 2024.

Vessel Operating Expenses

The $0.3 million decrease in vessel operating expenses for our LPG carrier segment, to $6.6 million in the year ended December 31, 2025, from $6.9 million in 2024, mainly reflects the decrease in the Ownership Days of our LPG carrier vessels to 1,243 days in the year ended December 31, 2025, from 1,464 days in the same period in 2024.

Management Fees

The decrease in management fees by $0.2 million to $1.3 million in the year ended December 31, 2025, from $1.5 million in the same period in 2024, mainly reflects the decrease in the Ownership Days of our LPG carrier fleet, partially offset by the increase in management fees due to the inflation-based adjustments discussed in more detail under “—Consolidated Results of Operations—Management Fees.”

Depreciation and Amortization

Depreciation expenses for our LPG carrier segment decreased to $3.0 million in the year ended December 31, 2025, from $3.7 million in the same period in 2024, as a result of the decrease in the Ownership Days of our LPG carrier vessels. Dry-dock amortization charges in the year ended December 31, 2025, which amounted to $0.2 million, related to (i) LPG Dream Terrax (classified as held for sale on September 16, 2025) and LPG Dream Arrax, which completed their scheduled dry-dock in the second quarter of 2025, respectively and (ii) LPG Dream Vermax and LPG Dream Syrax (classified as held for sale on July 10, 2025), which completed their scheduled dry-dock in third quarter of 2025. There were no dry-dock and special survey amortization charges in the year ended December 31, 2024.

Implications of Being an Emerging Growth Company

We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act, or JOBS Act. An emerging growth company may take advantage of specified reduced public company reporting requirements that are otherwise applicable generally to public companies. These provisions include:


 •
an exemption from the auditor attestation requirement of management’s assessment of the effectiveness of the emerging growth company’s internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; and


•
an exemption from compliance with any new requirements adopted by the Public Company Accounting Oversight Board, or the PCAOB, requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about the audit and financial statements.

We may choose to take advantage of some or all of these reduced reporting requirements. We may take advantage of these provisions until the last day of the fiscal year following the fifth anniversary of the date we first sell our common equity securities pursuant to an effective registration statement under the Securities Act or such earlier time that we are no longer an emerging growth company. We will cease to be an emerging growth company if we have more than $1.235 billion in “total annual gross revenues” during our most recently completed fiscal year, if we become a “large accelerated filer” with a public float of more than $700 million, as of the last business day of our most recently completed second fiscal quarter or as of any date on which we have issued more than $1 billion in non-convertible debt over the three-year period prior to such date. For as long as we take advantage of the reduced reporting obligations, the information that we provide shareholders may be different from information provided by other public companies.

79
B.
Liquidity and Capital Resources

We operate in a capital-intensive industry, and we expect to finance the purchase of additional vessels and other capital expenditures through a combination of cash from operations, borrowings from debt transactions and proceeds from equity offerings, to the extent available and permitted. Our liquidity requirements relate to funding capital expenditures and working capital (which includes maintaining the quality of our vessels and complying with international shipping standards and environmental laws and regulations). In accordance with our business strategy, other liquidity needs may relate to funding potential investments in new vessels, financing new projects, investment in equity and debt securities and maintaining cash reserves against fluctuations in operating cash flows. Our funding and treasury activities are intended to maximize investment returns while maintaining appropriate liquidity.

On December 11, 2024, we entered into a facility agreement with Castor to provide a $100.0 million senior term loan facility to Castor (the “Term Loan”) (refer to Note 4 to our consolidated financial statements). During the year ended December 31, 2025, the Term Loan was fully repaid.

On September 29, 2025, we agreed to purchase 60,000 Series E Cumulative Perpetual Convertible Preferred shares (the “Series E Preferred Shares”) of Castor having a stated amount of $1,000 each for a total consideration of $60 million, in cash. The distribution rate of the Series E Preferred Shares was 8.75%, paid quarterly, and they were convertible into common shares of Castor from the first anniversary of the issue date at a conversion price equal to the 5-day value weighted average price immediately preceding the conversion, subject to a minimum conversion price of $0.30. On October 13, 2025, we and Castor agreed to the full redemption of the Series E Preferred Shares, for a cash consideration equal to the stated amount of $60.0 million of the Series E Preferred Shares plus 0.523% thereof, including accrued and unpaid distributions.

For the year ended December 31, 2025, our principal sources of funds were cash from operations, the full repayment to us of the Term Loan, the full redemption of Series E Preferred Shares and the proceeds from the sale of the LPG Dream Syrax and LPG Dream Terrax.

As of December 31, 2025, and December 31, 2024, we had cash and cash equivalents of $87.4 million and $37.2 million, respectively. Cash and cash equivalents are primarily held in U.S. dollars.

Working capital is equal to current assets minus current liabilities. As of December 31, 2025 and December 31, 2024, we had a working capital surplus of $54.4 million and $50.6 million, respectively.

We believe that our current sources of funds and those that we anticipate to internally generate for a period of at least the next twelve months from December 31, 2025, will be sufficient to fund the operations of our fleet and meet our normal working capital requirements for that period.

Our medium- and long-term liquidity requirements relate to the funding of cash dividends on our Series A Preferred Shares, when declared, and expenditures relating to the operation and maintenance of our vessels. Sources of funding for our medium- and long-term liquidity requirements include cash flows from operations or new debt financing, if required, and proceeds from equity offerings to the extent available and permitted.

As noted above, routine or strategic acquisitions may require the incurrence of additional indebtedness, including debt issuances, and/or, to the extent available and permitted, additional equity issuances, which may dilute our common shareholders if issued at lower prices than the price they acquired their shares, both of which could lower our available cash. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Company—We may not be able to execute our growth strategy and we may not realize the benefits we expect from acquisitions or other strategic transactions.”

80
For a discussion of our management agreements with our related-party manager and relevant fees charged, see “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions.”

As of December 31, 2025, we had no outstanding indebtedness. On March 30, 2026, our four wholly owning subsidiaries, Starfire Shipping Co., Nightwing Shipping Co., Quicksilver Shipping Co. and Mantis Shipping Co., entered into a $60.0 million revolving credit facility with Hamburg Commercial Bank AG. The facility was partially drawn down for $15.0 million on April 2, 2026. This facility has a term of five years from the first drawdown date, bears interest at Term SOFR plus a margin per annum and is repayable in twenty (20) consecutive quarterly installments (installments 1 to 19 in the amount of $1,420,000, and a balloon installment in the amount of $33,020,000 payable at maturity).

The above facility is secured by a first preferred mortgage over the vessels owned by the borrowers and is guaranteed by Toro. Pursuant to the terms of this facility, the Company is also subject to certain negative covenants customary for this type of facility and a certain minimum liquidity restriction requiring the borrowers to maintain a certain cash collateral deposit in an account held by the lender.

Capital Expenditures

From time to time, we make capital expenditures in connection with vessel acquisitions and vessels upgrades and improvements (either for the purpose of meeting regulatory or legal requirements or for the purpose of complying with requirements imposed by classification societies). We currently finance our capital expenditures using cash from operations and expect to continue to do so in the future, though in the future, we may also utilize, subject to market conditions, debt financing and, to the extent available and permitted, equity issuances as a source of funding. As of December 31, 2025 and as of the date of this Annual Report, we did not have any commitments for capital expenditures related to vessel acquisitions.

A failure to fulfill our capital expenditure commitments generally results in a forfeiture of advances paid with respect to the contracted acquisitions and a write-off of capitalized expenses. In addition, we may also be liable for other damages for breach of contract. Such events could have a material adverse effect on our business, financial condition, and operating results.

Equity Transactions

Under Toro’s initial Articles of Incorporation dated July 29, 2022, Toro’s authorized capital stock consisted of 1,000 shares par value $0.001 per share. On March 2, 2023, the Company’s articles of incorporation were amended and restated and Toro’s authorized capital stock was increased to 3,900,000,000 common shares, par value $0.001 per share and 100,000,000 preferred shares, par value $0.001 per share. In connection with the Spin-Off, on March 7, 2023 Toro issued to Castor (i) 9,461,009 common shares with one vote per share, and (ii) 140,000 Series A Preferred Shares, with a stated value of $1,000 and par value of $0.001 per share, and no voting power, and issued to Pelagos, a company controlled by Toro’s Chairman and Chief Executive Officer, 40,000 Series B Preferred Shares. Such common shares were distributed on March 7, 2023 pro rata to the shareholders of record of Castor as of February 22, 2023 at a ratio of one Toro common share for every ten Castor common shares.

On April 17, 2023, Toro entered into a subscription agreement with Pani, a company controlled by Toro’s Chairman and Chief Executive Officer, pursuant to which Toro issued and sold, and Pani purchased, 8,500,000 common shares, par value $0.001 per share, at a purchase price of $2.29 per share, for gross proceeds of $19,465,000, less issuance costs of $817,764 and was approved by a special committee of our disinterested and independent directors. The 8,500,000 common shares were issued on April 19, 2023 in a private placement pursuant to Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder. The terms of the subscription agreement were negotiated and approved by a special committee of our disinterested and independent directors. See also “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions.”

On September 6, 2023, our Board adopted an Equity Incentive Plan (the “Equity Incentive Plan”) under which directors, officers and employees (including any prospective director, officer or employee) of the Company and/or its subsidiaries and affiliates and consultants and service providers to (including persons who are employed by or provide services to any entity that is itself a consultant or service provider to) the Company and its subsidiaries and affiliates, are eligible to receive awards including (a) non-qualified stock options, (b) stock appreciation rights, (c) restricted stock, (d) restricted stock unit, (e) dividend equivalents, (f) cash awards, (g) unrestricted stock and (h) other equity-based or equity-related awards. The Equity Incentive Plan is administered by the Company’s Board of Directors and the aggregate number of common shares that may be issued with respect to awards granted under the Equity Incentive Plan cannot exceed the 2,000,000 common shares. The Company’s Board of Directors may terminate the Equity Incentive Plan at any time. On September 28, 2023, a total of 1,240,000 restricted common shares had been granted under the Equity Incentive Plan to directors, officers and non-employees. The fair value of each restricted share was $5.83, based on the latest closing price of our common shares on the grant date. On May 31, 2024, 760,000 restricted common shares were further granted under the Equity Incentive Plan to one of our directors. The fair value of each restricted share was $4.52, based on the latest closing price of the Company’s common shares on the grant date. Non-vested restricted common shares granted under the Equity Incentive Plan are entitled to receive dividends, which are not refundable even if such shares are forfeited. See also “Item 6. Directors, Senior Management and Employees—B. Compensation.”

81
On November 6, 2023, our Board approved a share repurchase program (the “Repurchase Program”), authorizing the repurchase of up to $5.0 million of the Company’s common shares commencing November 10, 2023, through to March 31, 2024. Under the terms of the program, shares could be repurchased in open market and/or privately negotiated transactions. The timing, manner and total amount of any share repurchases was determined by management at its discretion and depends upon business, economic and market conditions, corporate and regulatory requirements, prevailing share prices, and other considerations. Such authorization did not obligate the Company to acquire any specific number of common shares. During the year ended December 31, 2023, the Company repurchased under the Repurchase Program 222,600 common shares in open market transactions at an average price of $4.69 per share, for aggregate consideration of approximately $1.0 million. On December 27, 2023, 179,251 repurchased common shares were cancelled and were removed from the Company’s share capital and on January 3, 2024, the remaining 43,349 repurchased common shares were cancelled and removed from the Company’s share capital. During the three months ended March 31, 2024, the Company repurchased under the Repurchase Program an additional 644,556 shares of common stock in open market transactions at an average price of $5.77 per share, for an aggregate consideration of $3.7 million, which were cancelled and removed from the Company’s share capital. This brought the total number of shares repurchased under the program to 867,156 common shares at an average price of $5.50 per share. The Repurchase Program was terminated on March 31, 2024, in accordance with its terms.

On July 10, 2025, we commenced a tender offer to purchase up to 4,500,000 of our common shares, using funds available from cash and cash equivalents on hand, at a price of $2.75 per share. The tender offer expired at the end of the day, on August 7, 2025. The board of directors determined that it was in the Company’s best interest to repurchase shares at such time given the Company’s cash position and stock price. Based on the final count by the depositary for the tender offer, 20,344 shares were properly tendered and not properly withdrawn prior to expiration of the tender offer. The Company accepted all of these shares for purchase in accordance with the terms of the tender offer at a price of $2.75 per share, net to the seller in cash, less any applicable withholding taxes and without interest, for an aggregate cost of $0.3 million including fees relating to the tender offer.

On September 26, 2025, as the Company had no remaining restricted shares available for awards under the Equity Incentive Plan, the Company’s board of directors adopted the new Toro Corp. Equity Incentive Plan (“2025 Equity Incentive Plan”), under which the Company’s Board of Directors may make awards of cash or restricted shares, share options or other share-based awards with respect to up to 3,000,000 of the Company’s common shares to directors, officers and employees of the Company and/or its subsidiaries and affiliates and consultants and service providers to (including persons who are employed by or provide services to any entity that is itself a consultant or service provider to) the Company and its subsidiaries and affiliates. On November 6, 2025, a total of 2,400,000 restricted common shares were granted under the 2025 Equity Incentive Plan to directors, officers and non-employees. The fair value of each restricted share was $3.44, based on the latest closing price of our common shares on the grant date. Non-vested restricted common shares granted under the 2025 Equity Incentive Plan are entitled to receive dividends, which are not refundable even if such shares are forfeited. See also “Item 6. Directors, Senior Management and Employees—B. Compensation.”

On November 13, 2025, we entered into an ATM offering agreement with Maxim. Under the terms of the ATM offering agreement, we may, from time to time, sell our common shares having an aggregate offering value of up to $12.5 million through Maxim, as sales agent. We will determine, at our sole discretion, the timing and number of shares to be sold under the ATM facility. As of December 31, 2025, there were no transactions under the ATM.

On December 5, 2025, the Company's Board of Directors declared a one-time, special dividend of $1.75 per common share, consisting of either cash or the Company’s common shares. The dividend was paid on January 16, 2026 to the Company’s shareholders of record at the close of business on December 16, 2025. For the results of shareholder elections and the payment of special dividend, please refer to Note 19(a) to our consolidated financial statements.

82
As of December 31, 2025 and March 25, 2026, Toro had 21,473,509 common shares and 28,852,084 common shares, respectively, issued and outstanding, in each case including 4,400,000 restricted common shares issued pursuant to the Equity Incentive Plan and 2025 Equity Incentive Plan.

Cash Flows

The following table summarizes our net cash flows provided by/(used in) operating, investing and financing activities for the year ended December 31, 2025 and the year ended December 31, 2024:

​
  
For the year ended
    
For the year
ended
  
​
  
December 31,
2024
    
December
31,
2025
  
Net cash provided by/(used in) operating activities from continuing operations
  
$
10,779,907
    
$
(6,342,733
)
Net cash (used in)/provided by investing activities from continuing operations
  
$
(155,053,733
)
  
$
67,786,489
  
Net cash used in financing activities from continuing operations
  
$
(5,128,008
)
  
$
(11,313,831
)
Net cash provided by operating activities from discontinued operations
  
$
3,783,409
    
$
94,655
  
Net cash provided by investing activities from discontinued operations
  
$
32,488,070
    
$
—
  
Net cash used in financing activities from discontinued operations
  
$
(5,257,200
)
  
$
—
  
Cash, cash equivalents and restricted cash at beginning of period
  
$
155,585,401
    
$
37,197,846
  
Cash, cash equivalents and restricted cash at end of period from continuing and discontinued operations
  
$
37,197,846
    
$
87,422,426
  

Operating Activities (from continuing operations): Net cash used in operating activities amounted to $6.3 million for the year ended December 31, 2025, mainly consisting of net income of $5.6 million, non-cash adjustments related to depreciation and amortization of $4.9 million, a payment of dry-dock costs of $3.5 million, stock compensation cost of $3.6 million and a net decrease of $15.9 million in working capital which was mainly derived from an increase in due from related parties by $15.3 million. Net cash provided by operating activities amounted to $10.8 million for the year ended December 31, 2024, mainly consisting of net income of $5.5 million, non-cash adjustments related to depreciation and amortization of $4.9 million, a payment of dry-dock costs of $1.5 million, stock compensation cost of $5.3 million and a net decrease of $3.4 million in working capital which mainly derived from (i) a decrease in accounts receivable by $0.9 million and (ii) an increase in due from related parties by $5.5 million. The $17.1 million decrease in net cash of operating activities in the year ended December 31, 2025, as compared with the same period of 2024, reflects mainly the (i) the increase in due from related parties as a result of the Robin Spin-Off and (ii) the decrease of interest income for the year ended December 31, 2025 on our available cash that we earned from our time and cash deposits due to lower cash balances compared to the same period of 2024.

Investing Activities (from continuing operations): Net cash provided by investing activities in the year ended December 31, 2025 amounted to $67.8 million and mainly reflects the proceeds from repayment of the $100.0 million plus $0.4 million of interest related to the senior term loan facility to Castor and the proceeds from the sales of LPG Dream Syrax and LPG Dream Terrax amounting to $38.0 million, partially offset by the acquisition of M/T Wonder Altair and M/T Wonder Maia amounting to $66.8 million, the purchase of equity securities of $1.0 million and the purchase of debt securities amounting to $2.9 million.  Net cash used in investing activities in the year ended December 31, 2024 amounted to $155.1 million and mainly reflects (i) the $100.0 million senior term loan facility to Castor, (ii) the purchase of an additional 50,000 5.00% Series D Cumulative Perpetual Convertible Preferred Shares of Castor with a stated amount of $1,000 each for an aggregate purchase price of $50.0 million, (iii) payments of initial vessel and ballast water treatment system (“BWTS”) installation expenses amounting to $0.1 million and  (iv) the purchase of equity securities amounting to $5.2 million, partially offset by $0.2 million of proceeds from the sale of equity securities.

83
Financing Activities (from continuing operations): Net cash used in financing activities during the year ended December 31, 2025 amounted to $11.3 million and mainly relates to (i) the capital contribution of $10.4 million made to Robin in connection to the Robin Spin-Off, (ii) payment for repurchase of common shares under the tender offer amounting to $0.3 million and (iii) payment to Castor of a dividend on the Series A Preferred Shares for the period from October 15, 2024 to October 14, 2025 amounting to $1.4 million, partially offset by cash reimbursement of $0.8 million from Robin relating to the Robin Spin-Off expenses incurred by us on Robin’s behalf during 2024 and up to the completion of the Robin Spin-Off. Net cash used in financing activities during the year ended December 31, 2024 amounted to $5.1 million and relates to (i) payment for repurchase of common shares under the  Repurchase Program amounting to $3.7 million and (ii) payment to Castor of a dividend on the Series A Preferred Shares for the period from October 15, 2023 to October 14, 2024 amounting to $1.4 million.

In the year ended, 2025 and 2024, the parent company (continuing operations) received the amounts of $0 and $64.6 million, respectively, representing return of capital and dividend from discontinued operations, which are eliminated upon consolidation. Also, in year ended December 31, 2025, the treasury manager of the parent company (continuing operations) returned to the discontinued operations the amount of $0, and in the year ended December 31, 2024, the treasury manager of the parent company (continuing operations) returned to the discontinued operations the amount of $29.7 million, which are eliminated in consolidation.

C.
Research and Development, Patents and Licenses, Etc.

Not applicable.

D.
Trend Information

Our results of operations depend primarily on the charter rates that we are able to realize. Charter hire rates paid for tanker vessels and LPG carriers are primarily a function of the underlying balance between vessel supply and demand. For a discussion regarding the market performance, please see “—A. Operating Results—Hire Rates and Cyclical Nature of the Industry.” There can be no assurance as to how long charter rates will remain at their current levels or whether they will improve or deteriorate and, if so, when and to what degree. That may have a material adverse effect on our future growth potential and our profitability.

Furthermore, the Company’s business could be adversely affected by the risks related to the conflict in Ukraine and the severe worsening of Russia’s relations with Western economies that has created significant uncertainty in global markets, including increased volatility in the prices of certain of products which our vessels transport and shifts in the trading patterns for such products which may continue into the future, and the imposition of tariffs and other restrictions to trade. In addition, since November 2023, vessels in and around the Red Sea have faced an increasing number of attempted hijackings and attacks by drones and projectiles launched from Yemen which armed Houthi groups have claimed responsibility for and which have resulted in casualties and sunken or damaged vessels. The instability in Venezuela and the outbreak of war in Iran, including restrictions on transit of ships through the Strait of Hormuz, has and may continue to disrupt the supply of energy products including oil, and shipping of refined petroleum products and LPG.  These circumstances have initially led to an increase in the price of oil, and led to an increase in the length of LPG and oil tanker voyages and sanctions have resulted in elimination of some vessels that are engaged in sanctioned activity from the available fleet. These factors resulted in fleet inefficiencies and support for LPG and tanker charter rates, which may not continue. Refer to “Item 3. Key Information—D. Risk Factors—Geopolitical conditions, such as political instability or conflict, terrorist attacks and international hostilities can affect the seaborne transportation industry, which could adversely affect our business” for further details.

84
We are currently unable to predict with reasonable certainty the potential effects of the ongoing conflict in Ukraine or the Middle East, including due to the attacks on vessels described above, on our future business, financial condition, cash flows or operating results and these events, including the easing of trade patterns and fleet inefficiencies resulting from such events, could have a material adverse effect on any of the foregoing.

Furthermore, during 2024 and 2025 a number of economies worldwide experienced a slowdown in the rate of economic growth and some continued to observe inflationary pressures. For further information see “Item 3. Key Information—D. Risk Factors—The Company is exposed to fluctuating demand and supply for maritime transportation services, as well as fluctuating prices of oil and refined petroleum products, and may be affected by a decrease in the demand for such products and the volatility in their prices.” In particular, inflation has proven stickier in parts of the global economy and above the inflation targets as set by the central banks in the United States of America, United Kingdom and the Eurozone. Inflationary pressures and disruptions could adversely impact our operating costs and demand and supply for products we transport. It remains to be seen whether inflationary pressures will continue, and to what degree. Interventions in the economy by central banks in response to inflationary pressures may slow down economic activity, reducing demand for products we carry, and cause a reduction in trade. As a result, the volumes of products we deliver and/or charter rates for our vessels may be affected. These factors could have an adverse effect on our business, financial condition, cash flows and operating results.

E.
Critical Accounting Estimates

Critical accounting estimates are those estimates made in accordance with generally accepted accounting principles that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations. We prepare our financial statements in accordance with U.S. GAAP. On a regular basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with U.S. GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material. For a description of our significant accounting policies, please read Note 2 to our consolidated financial statements included in this Annual Report and “Item 18. Financial Statements” in this Annual Report.
 
Vessel Impairment

The Company reviews for impairment on its vessels held and used whenever events or changes in circumstances (such as market conditions, obsolescence or damage to the asset, potential sales and other business plans) may result in the fair value of a vessel being less than its carrying amount indicating that the carrying amount of the assets may not be recoverable. When the estimate of undiscounted cash flows, excluding interest charges, expected to be generated by the use of the asset is less than its carrying amount, including the value of unamortized dry-docking costs, we are required to evaluate the asset for an impairment loss. Measurement of the impairment loss is based on the fair value of the asset.

The carrying values of our vessels may not represent their fair market value at any point in time since the market prices of second-hand vessels tend to fluctuate with changes in charter rates and the cost of newbuilds. Historically, both charter rates and vessel values tend to be cyclical, including for the reasons discussed under the headings “—Charter rates for our vessels are volatile and cyclical in nature. A decrease in charter rates may adversely affect our business, financial condition and operating results” and “—Charter rates for LPG carriers and MR tankers are volatile and cyclical in nature. A decrease in LPG carrier and MR tanker charter rates may adversely affect our business, financial condition and operating results” in “Item 3. Key Information—D. Risk Factors”.

Our estimates of basic market value assume that the vessels are all in good and seaworthy condition without need for repair and, if inspected, would be certified in class without notations of any kind. Our estimates are based on the estimated market values for the vessels received from a third-party independent shipbroker approved by our financing providers. Vessel values are highly volatile. Accordingly, our estimates may not be indicative of the current or future basic market value of the vessels or prices that could be achieved if the vessels were to be sold.

85
We perform undiscounted cash flow tests, when necessary, as an impairment analysis, in which we made estimates and assumptions relating to determining the projected undiscounted net operating cash flows by considering the following:


 •
the charter revenues from existing time charters for the fixed fleet days;


•
the estimated vessel operating expenses and voyage expenses;


•
the estimated dry-docking expenditures;


•
an estimated gross daily charter rate for the unfixed days (based on the ten-year average of the historical one-year time charter rates available for each type of vessel) over the remaining economic life of each vessel, excluding estimated days of scheduled off-hires and net of estimated commissions;


•
the residual value of vessels;


•
commercial and technical management fees;


•
an estimated utilization rate; and


•
the remaining estimated lives of our vessels, consistent with those used in our depreciation calculations.

As of December 31, 2024 and December 31, 2025, the charter-free market value of all our vessels exceeded their carrying value. Thus, no undiscounted cash flow tests were deemed necessary to be performed for any of our vessels. Therefore, for the years ended December 31, 2024 and 2025, this is not considered a critical accounting estimate.

86
ITEM 6.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.
Directors and Senior Management

Set forth below are the names, ages and positions of our directors and executive officer. Our Board currently consists of three directors. Our Board is divided into three classes of directors (Class A, Class B and Class C). Our Class C, Class A and Class B directors’ current terms expire at the annual meeting of shareholders to be held in 2026, 2027 and 2028, respectively. Following the expiration of our directors’  terms, directors shall be elected annually on a staggered basis thereafter and each director will hold office until the third succeeding annual general meeting from their election and until his or her successor is elected and has qualified, except in the event of such director’s death, resignation, removal or the earlier termination of his or her term of office. Concurrent with the Distribution, we appointed Petros Zavakopoulos as Class A director, Angelos Rounick Platanias as Class B director and Petros Panagiotidis as Class C director. If the number of directors on our Board is changed, any increase or decrease shall be apportioned among the classes so as to maintain or attain a number of directors in each class as nearly equal as reasonably possible. The business address of each of our directors and executive officer listed below is 223 Christodoulou Chatzipavlou Street, Hawaii Royal Gardens, 3036 Limassol, Cyprus.

Name
Age
Position
Petros Panagiotidis
36
Chairman, Chief Executive Officer and Class C Director
Angelos Rounick Platanias
36
Secretary and Class B Director
Petros Zavakopoulos
34
Class A Director
Theologos Pagiaslis
40
Chief Financial Officer

Certain biographical information with respect to each of our directors and members of senior management listed above is set forth below.

Petros Panagiotidis, Chairman, Chief Executive Officer and Class C Director

Petros Panagiotidis is the founder of the Company. He has been serving as the Chairman of our Board and Chief Executive Officer since we became an independent, publicly listed company in March 2023.  With his expertise in shipping and extensive experience in capital markets he navigates our strategic path and overall management, driving operational excellence and ensuring sustainable growth. Additionally, Mr. Panagiotidis holds the positions of Chairman and Chief Executive Officer of Castor Maritime, a Nasdaq-listed company he founded in 2017. He also holds the same positions at Robin Energy Ltd., another Nasdaq-listed company, since April 14, 2025. Mr. Panagiotidis holds a Bachelor’s degree in International Studies and Mathematics from Fordham University and a Master’s degree in Management and Systems from New York University. In 2023, Mr. Panagiotidis received the Lloyd’s List Next Generation Shipping Award in recognition for his achievements within the maritime sector.

87
Angelos Rounick Platanias, Secretary and Class B Director

Angelos Rounick Platanias has been a non-executive member and Secretary of our Board since we became an independent, publicly listed company in March 2023 and serves as a member of the Company’s Audit Committee.  Mr. Rounick Platanias has also served on the board of directors of Castor Maritime Inc. since February 2025. Mr. Rounick Platanias is currently employed as Senior Director of Development at NextEra Energy Resources, a diversified clean energy company with an emphasis on power generation and a major producer of wind and solar energy globally and has gained experience across various energy sectors, including oil and gas and power. Prior to his current role, Mr. Rounick Platanias was employed by McKinsey & Co. as a strategy and operations consultant with a focus on clients in global energy markets. He holds a Master’s degree in Energy Trade and Finance, from the Costas Grammenos Center for Shipping Trade and Finance at London’s Bayes Business School, as well as a Bachelor’s degree in Robotics Engineering from Worcester Polytechnic Institute.

Petros Zavakopoulos, Class A Director

Petros Zavakopoulos has been a non-executive member of our Board since we became an independent, publicly listed company in March 2023 and serves as Chairman of the Company’s Audit Committee. Mr. Zavakopoulos is the Chairman and Managing Director of Cosmomed S.A., a leading distributor of medical devices in Southeast Europe. He also serves as a member of the boards of directors of F. Bosch International Limited and Leoussis S.A., companies operating in the healthcare sector. Previously, he was based in Florida, USA where he worked at Sempermed USA, Inc., a globally integrated manufacturer of medical devices. Mr. Zavakopoulos holds a Bachelor’s degree in Economics from the University of Amsterdam.

Theologos Pagiaslis, Chief Financial Officer

Mr. Pagiaslis has been our Chief Financial Officer since May 15, 2025. He also holds the same position at Robin Energy Ltd., another Nasdaq-listed company, since April 14, 2025. He brings over 15 years of experience in investment banking, capital markets and corporate strategy. Prior to joining Toro, Mr. Pagiaslis served as an Investment Banking Director at Citigroup in London, where he led origination, capital structuring and advisory efforts for financial institutions and corporates. He has worked on numerous high-profile capital markets and strategic advisory transactions, helping issuers across Europe, Middle East and Africa. Earlier in his career, Mr. Pagiaslis worked at the London Stock Exchange Group where he contributed to corporate strategy development and capital markets pricing. He holds a Bachelor of Engineering from the University of Warwick and a Master’s Degree from the London School of Economics and Political Science.

B.
Compensation

The services rendered by our Chairman and Chief Executive Officer, Petros Panagiotidis, are included in the Master Management Agreement with Castor Ships and we provide no separate compensation to him, except for certain equity incentives provided to Mr. Panagiotidis as set forth under “—Equity Incentive Plan” below. For a full description, please refer to “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions” below. We pay our non-executive directors fees in the aggregate amount of $80,000 per annum, or $40,000 per director per annum, plus reimbursement for their out-of-pocket expenses. Additionally, we pay our Chairman of the Company’s Audit Committee fees amounting to $20,000 per annum and any member of the Company’s Audit Committee fees amounting to $10,000 per annum, plus reimbursement for their out-of-pocket expenses. Our Chief Executive Officer, who also serves as our director, does not receive additional compensation for his service as director.

88
Equity Incentive Plans

On September 6, 2023, our Board adopted the Equity Incentive Plan under which directors, officers and employees (including any prospective director, officer or employee) of the Company and/or its subsidiaries and affiliates and consultants and service providers to (including persons who are employed by or provide services to any entity that is itself a consultant or service provider to) the Company and its subsidiaries and affiliates, are eligible to receive awards including (a) non-qualified stock options, (b) stock appreciation rights, (c) restricted stock, (d) restricted stock unit, (e) dividend equivalents, (f) cash awards, (g) unrestricted stock and (h) other equity-based or equity-related Awards. The purpose of the Equity Incentive Plan is to provide the foregoing persons, whose initiative and efforts are deemed to be important to the successful conduct of our business, with incentives to enter into and remain in service to us and our affiliates and to align such person’s interests with our own and enhance long-term performance. The Equity Incentive Plan is administered by the Board and the aggregate number of common shares that may be issued with respect to awards granted under the Equity Incentive Plan cannot exceed the 2,000,000 common shares. The Board may terminate the Equity Incentive Plan at any time.

On September 28, 2023, a total of 1,240,000 restricted common shares had been granted under the Equity Incentive Plan to directors, officers and non–employees, 1,100,000 restricted common shares of which were awarded to our Chairman and Chief Executive Officer, Petros Panagiotidis, pursuant to the Equity Incentive Plan and the Restricted Stock Award Agreement, dated as of September 28, 2023, between us and Mr. Panagiotidis (the “Restricted Stock Award Agreement”). The remaining 140,000 restricted common shares were awarded to directors, officers and non–employees. The restricted common shares granted to Mr. Panagiotidis under the Restricted Stock Award Agreement are not subject to any performance conditions and will vest in full and their applicable restrictions shall lapse immediately upon (i) Mr. Panagiotidis’ death or Disability or (ii) a Change of Control, in each case as defined in the Equity Incentive Plan. The fair value of each restricted share was $5.83, based on the closing price of our common shares on the grant date. Non-vested restricted common shares granted under the Equity Incentive Plan are entitled to receive dividends, which are not refundable even if such shares are forfeited.

On May 31, 2024, 760,000 restricted common shares were further granted under the Equity Incentive Plan to our Chairman and Chief Executive Officer, Petros Panagiotidis. The fair value of each restricted share was $4.52, based on the latest closing price of our common shares on the grant date.

On September 26, 2025, as the Company had no remaining restricted shares available for awards under the Equity Incentive Plan, the Board adopted the new Toro Corp. Equity Incentive Plan (“2025 Equity Incentive Plan”), under which the Board may make awards of cash or restricted shares, share options or other share-based awards with respect to up to 3,000,000 of our common shares to directors, officers and employees of the Company and/or its subsidiaries and affiliates and consultants and service providers to (including persons who are employed by or provide services to any entity that is itself a consultant or service provider to) the Company and its subsidiaries and affiliates.

On November 6, 2025, a total of 2,400,000 restricted common shares had been granted under the 2025 Equity Incentive Plan to directors, officers and non–employees, 2,340,000 restricted common shares of which were awarded to our Chairman and Chief Executive Officer, Petros Panagiotidis, pursuant to the 2025 Equity Incentive Plan and the Restricted Stock Award Agreement, dated as of November 6, 2025, between us and Mr. Panagiotidis (the “2025 Restricted Stock Award Agreement”). The remaining 60,000 restricted common shares were awarded to directors, officers and non–employees. The restricted common shares granted to Mr. Panagiotidis under the 2025 Restricted Stock Award Agreement are not subject to any performance conditions and will vest in full and their applicable restrictions shall lapse immediately upon (i) Mr. Panagiotidis’ death or Disability or (ii) a Change of Control, in each case as defined in the Equity Incentive Plan. The fair value of each restricted share was $3.44, based on the closing price of our common shares on the grant date. Non-vested restricted common shares granted under the 2025 Equity Incentive Plan are entitled to receive dividends, which are not refundable even if such shares are forfeited.

As of the date of this Annual Report, 1,160,000 shares have vested from the Equity Incentive Plan and 2025 Equity Incentive Plan, of which 1,060,000 shares have vested to Mr. Panagiotidis on September 28, 2024, May 31, 2025 and September 28, 2025. Under the Restricted Stock Award Agreement, 250,000 restricted common shares will vest on May 31, 2026;  300,000 restricted common shares will vest on September 28, 2026; and the remaining 250,000 restricted common shares will vest on May 31, 2027, unless the conditions for vesting set forth in the Restricted Stock Award Agreement are not met prior to each respective vesting date. Under the 2025 Restricted Stock Award Agreement, 780,000 restricted common shares will vest on November 6, 2026;  780,000 restricted common shares will vest on November 6, 2027; and the remaining 780,000 restricted common shares will vest on November 6, 2028, unless the conditions for vesting set forth in the 2025 Restricted Stock Award Agreement are not met prior to each respective vesting date. See “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions” and Note 13 to our consolidated financial statements included elsewhere in this Annual Report for further information.

89
C.
Board Practices

Our Board currently consists of three directors who are elected annually on a staggered basis. Each director holds office for a three-year term or until his successor is duly elected and qualified, except in the event of his death, resignation, removal or the earlier termination of his term of office. Our directors do not have service contracts and do not receive any benefits upon termination of their directorships.

Our audit committee comprises our independent directors, Angelos Rounick Platanias and Petros Zavakopoulos. Our Board has determined that the members of the audit committee meet the applicable independence requirements of the SEC and the Nasdaq Rules. Our Board has determined that Mr. Zavakopoulos is an “Audit Committee Financial Expert” under the SEC’s rules and the corporate governance rules of the Nasdaq Capital Market. The audit committee is responsible for our external financial reporting function as well as for selecting and meeting with our independent registered public accountants regarding, among other matters, audits and the adequacy of our accounting and control systems.

Officers are appointed from time to time by our Board and hold office until a successor is appointed.

D.
Employees

We have no employees. Our vessels are commercially and technically managed by Castor Ships, which subcontracts the technical management of some vessels. For further details, see “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Management, Commercial and Administrative Services.”

E.
Share Ownership

With respect to the total amount of common shares owned by all of our officers and directors individually and as a group, please see “Item 7. Major Shareholders and Related Party Transactions—A. Major Shareholders.” Please also see “Item 10. Additional Information—B. Memorandum and Articles of Association” for a description of the rights of the holder of our Series A Preferred Shares and Series B Preferred Shares relative to the rights of holders of our common shares.

F.
Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation

Not applicable.

ITEM 7.
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.
Major Shareholders

Certain information regarding beneficial ownership of 5% or more of our common shares and equity ownership by our directors and officers is reported below. Information regarding beneficial ownership of our common shares is based on information available to us, including information contained in public filings.

90
The percentage of beneficial ownership and the following discussion is based on 28,852,084 common shares outstanding, as of March 25, 2026.

Name of Beneficial Owner
  
No. of Common Shares
    
Percentage
  
5% Beneficial Owners
            
Pani Corp. (1)
    
18,506,195
      
64.1
%
Executive Officers and Directors
                
Petros Zavakopoulos
    
*
      
*
  
Angelos Rounick Platanias
    
*
      
*
  
Theologos Pagiaslis
    
—
      
—
  
All executive officers and directors as a group(2)
    
*
      
*
  

* Less than 1%.

(1)
Pani Corp. is a corporation organized under the laws of the Republic of Liberia. Pani is controlled by our Chairman and Chief Executive Officer, Petros Panagiotidis. The 18,506,195 common shares represent 64.1% of common shares outstanding, as of March 25, 2026. Mr. Panagiotidis also beneficially owns through Pelagos 40,000 of our Series B Preferred Shares, representing all such Series B Preferred Shares outstanding, each Series B Preferred Share having the voting power of 100,000 common shares. For further information regarding the Series B Preferred Shares, refer to “Item 10. Additional Information—B. Memorandum and Articles of Association.” Mr. Panagiotidis therefore beneficially owns 64.2% of our total outstanding share capital and controls 99.7% of the aggregate voting power of our total issued and outstanding share capital.

(2)
Excluding Petros Panagiotidis, none of the directors and executive officers individually, nor taken as a group, hold more than 1% of the outstanding common shares.

All of our common shareholders are entitled to one vote for each common share held. As of March 25, 2026, there were twelve holders of record of Toro’s common shares, eight of which have a U.S. mailing address. One of these holders is Cede & Co., a nominee company for The Depository Trust Company, which held approximately 88.6% of Toro’s outstanding common shares, as of the same date. The beneficial owners of the common shares held by Cede & Co. may include persons who reside outside the United States.

B.
Related Party Transactions

From time to time, we have entered into agreements and have consummated transactions with certain related parties. We may enter into related party transactions from time to time in the future. Related party transactions are subject to review and approval of a special committee composed solely of independent members of our Board.

Management, Commercial and Administrative Services

Our vessels are commercially and technically managed by Castor Ships, a company controlled by our Chairman and Chief Executive Officer, under the terms of the Master Management Agreement entered into between Toro, Toro’s ship-owning subsidiaries and Castor Ships effective April 26, 2023. Prior to our separation from Castor, the vessels owned by the Toro Subsidiaries were commercially and technically managed by Castor Ships pursuant to the Castor Master Management Agreement, which was in substantially the same form as the Master Management Agreement described herein. The following is a summary of the Master Management Agreement and is qualified in its entirety by reference to the full text of the relevant agreement, which is attached as an exhibit hereto and incorporated by reference into this Annual Report. Refer to Note 4 to our consolidated financial statements included elsewhere in this Annual Report for further information.

91
Castor Ships manages our business overall and provides us with a wide range of shipping services such as crew management, technical management, operational employment management, insurance management, provisioning, bunkering, accounting and audit support services, commercial, chartering and administrative services, including, but not limited to, securing employment for our fleet, arranging and supervising the vessels’ commercial operations, providing technical assistance where requested in connection with the sale of a vessel, negotiating loan and credit terms for new financing upon request and providing cybersecurity and general corporate and administrative services, among other matters. Castor Ships is generally not liable to us for any loss, damage, delay or expense incurred during the provision of the foregoing services, except insofar as such events arise from Castor Ships or its employees’ fraud, gross negligence or willful misconduct (for which our recovery will be limited to two times the Flat Management Fee, as defined below). Notwithstanding the foregoing, Castor Ships is in no circumstances responsible for the actions of the crew of our vessels. We have also agreed to indemnify Castor Ships in certain circumstances. Under the terms of the Master Management Agreement, our ship-owning subsidiaries have also entered into separate management agreements appointing Castor Ships as commercial and technical manager of their vessels (collectively, the “Ship Management Agreements”).

As per the Master Management Agreement, in exchange for these services, until June 30, 2025, Castor Ships charged and collected (i) a flat quarterly management fee for the management and administration of our business (the “Flat Management Fee”), (ii) a daily fee per vessel for the provision of ship management services under the Ship Management Agreements (the “Ship Management Fee”), (iii) a chartering commission for and on behalf of Castor Ships and/or on behalf of any third-party broker(s) involved in the trading of our vessels, on all gross income received by our ship-owning subsidiaries arising out of or in connection with the operation of our vessels for distribution among Castor Ships and any third-party broker(s), which, when calculated together with any address commission that any charterer of any of our vessels is entitled to receive, will not exceed the aggregate rate of 6.25% on each vessel’s gross income, and (iv) a sale and purchase brokerage commission at the rate of 1% on each consummated transaction applicable to the total consideration of acquiring or selling: (a) a vessel or (b) the shares of a ship-owning entity owning vessel(s) or (c) shares and/or other securities with an aggregate purchase or sale value, as the case may be, of an amount equal to, or in excess of, $10,000,000 issued by an entity engaged in the maritime industry.

Effective July 1, 2025, in lieu of the previously applicable commission structure and in addition to the Ship Management Fee and Flat Management Fee, Castor Ships charges and collects (i) a chartering commission for and on behalf of Castor Ships and/or on behalf of any third-party broker(s) involved in the trading of our vessels on all gross income received by our ship-owning subsidiaries arising out of or in connection with the operation of our vessels for distribution among Castor Ships and any third-party broker(s), which, when calculated together with any address commission that any charterer of our vessels is entitled to receive, will not exceed the aggregate rate of 6.25% on each vessel’s gross income, (ii) a sale and purchase brokerage commission at the rate of 1% on each consummated transaction applicable to the total consideration of acquiring or selling: (a) a vessel (secondhand or newbuilt), or (b) the shares of a ship-owning entity owning vessel(s) or (c) shares and/or other securities (including equity, debt and loan instruments), and (iii) a capital raising commission at the rate of 1% on all gross proceeds of each capital raising transaction completed by us including, without limitation, any equity, debt or loan transactions, operating leasing transactions, stand-alone derivative and/or swap agreements, other financing arrangements of a similar nature or any refinancing or restructuring thereof.  Castor Ships may also be reimbursed for extraordinary fees and costs, such as the costs of extraordinary repairs, maintenance or structural changes to our vessels.

Under the terms of the Master Management Agreement, the Ship Management Fee and Flat Management Fee are adjusted annually for inflation on the 1st of July of each year.  As a result of the inflation adjustments, (i) effective July 1, 2023, the daily Ship Management Fee increased from $975 per vessel to $1,039 per vessel day and the quarterly Flat Management Fee increased from $0.75 million to $0.8 million, (ii) effective July 1, 2024, the daily Ship Management Fee increased from $1,039 per vessel to $1,071 per vessel and the quarterly Flat Management Fee increased from $0.8 million to $0.82 million, and (iii) effective July 1, 2025, the daily Ship Management Fee increased from $1,071 per vessel to $1,100 per vessel and the quarterly Flat Management Fee increased from $0.82 million to $0.85 million.

The Master Management Agreement has a term of eight years from its effective date and this term automatically renews for a successive eight-year term on each anniversary of the effective date, starting from the first anniversary of the effective date, unless the agreements are terminated earlier in accordance with the provisions contained therein. In the event that the Master Management Agreement is terminated by us or is terminated by Castor Ships due to a material breach of its provisions by us or a change of control in the Company (including certain business combinations, such as a merger or the disposal of all or substantially all of our assets or changes in key personnel such as our current directors or Chief Executive Officer), Castor Ships is entitled to a termination fee equal to seven times the total amount of the Flat Management Fee calculated on an annual basis. This termination fee is in addition to any termination fees provided for under the Ship Management Agreements.

Castor Ships may choose to subcontract some of its provided services to other parties at its discretion. Castor Ships pays, at its own expense, the third-party management companies a fee for such services, without burdening us with any additional cost. As of the date of this Annual Report, Castor Ships has subcontracted the technical management of all of our vessels to a third-party ship-management company, except for the M/T Wonder Maia and M/T Wonder Altair, which Castor Ships has directly provided technical management services to since September 29, 2025 (date of acquisition) and February 8, 2026, respectively.

92
 Certain resolutions in connection with the Robin Spin-Off and the Spin-Off

On November 15, 2022 and December 30, 2022, in connection with the Spin-Off, our Board resolved among other things, (i) to focus our efforts on our then current business of tanker shipping services, (ii) that we have no interest or expectancy to participate or pursue any opportunity in areas of business outside of such business and (iii) that Petros Panagiotidis, our director, Chairman, Chief Executive Officer and controlling shareholder and his affiliates, such as Castor Ships, are not required to offer or inform us of any such opportunity. The foregoing Toro Spin-Off Resolutions did not and do not preclude us, however, from pursuing opportunities outside of the tanker shipping business if our Board determines to do so.

The terms of the Robin Spin-Off do not preclude us from pursuing opportunities outside of the LPG carrier shipping business, if in the future our Board determines to do so, and do not preclude Robin from pursuing opportunities outside of its declared business focus area, including in the LPG carrier shipping business as Robin did in 2025, if in the future Robin’s board determines to do so.

Notwithstanding the foregoing, focusing our operations on LPG carrier shipping may reduce the scope of opportunities we may exploit. We have since re-entered the product tanker sector.

On November 15, 2022 and December 30, 2022, in connection with the Spin-Off, Castor’s board resolved, among other things, (i) to focus its efforts on its business of dry bulk shipping services, (ii) that Castor has no interest or expectancy to participate or pursue any opportunity in areas of business outside of the dry bulk shipping business and (iii) that Petros Panagiotidis, its director, Chairman, Chief Executive Officer, Chief Financial Officer and controlling shareholder and his affiliates are not required to offer or inform it of any such opportunity. This does not preclude Castor from pursuing opportunities outside of its declared business focus area, including in the tanker shipping business, if in the future Castor’s board determines to do so. Castor has since entered into the container shipping sector.

Mr. Panagiotidis will continue to devote such portion of his business time and attention to our business as is appropriate and will also continue to devote substantial time to Castor’s business, Robin’s business and other business and/or investment activities that Mr. Panagiotidis maintains now or in the future. Mr. Panagiotidis’ intention to provide adequate time and attention to other ventures will preclude him from devoting substantially all his time to our business. Our Board, Castor’s board and Robin’s board have each resolved to accept this arrangement.

Contribution and Spin-Off Distribution Agreement

The following description of the Contribution and Spin-Off Distribution Agreement entered into between us and Castor on February 24, 2023 (the “Contribution and Spin-Off Distribution Agreement”) does not purport to be complete and is subject to, and qualified in its entirety by reference to, the Contribution and Spin-Off Distribution Agreement, which is included as an exhibit to this Annual Report and incorporated by reference herein. The terms of the transactions which are the subject of the Contribution and Spin-Off Distribution Agreement were negotiated and approved by the Special Committee.

We entered into the Contribution and Spin-Off Distribution Agreement with Castor, pursuant to which (i) Castor contributed the Toro Subsidiaries to us in exchange for all our 9,461,009 common shares at the time and 140,000 Series A Preferred Shares and the issue of 40,000 Series B Preferred Shares to Pelagos against payment of their nominal value, (ii) Castor agreed to indemnify us and our vessel-owning subsidiaries for any and all obligations and other liabilities arising from or relating to the operation, management or employment of vessels or subsidiaries it retains after to the Distribution Date and we agreed to indemnify Castor for any and all obligations and other liabilities arising from or relating to the operation, management or employment of the vessels contributed to us or our vessel-owning subsidiaries, and (iii) we agreed to replace and replaced Castor as guarantor under the $18.0 million term loan facility. The Contribution and Spin-Off Distribution Agreement also provided for the settlement or extinguishment of certain liabilities and other obligations between us and Castor.

Under the Contribution and Spin-Off Distribution Agreement, Castor distributed all of our 9,461,009 common shares at the time to holders of its common shares, with one of our common shares being distributed for every ten shares of Castor’s common shares held by Castor stockholders as of the close of business on February 22, 2023.

93
Further, the Contribution and Spin-Off Distribution Agreement provides for certain registration rights to Castor relating to the common shares, if any, issued upon conversion of the Series A Preferred Shares. Such securities will cease to be registrable by us upon the earliest of (i) their sale pursuant to an effective registration statement, (ii) their eligibility for sale or sale pursuant to Rule 144 of the Securities Act, and (iii) the time at which they cease to be outstanding. Subject to Castor timely providing us with all information and documents reasonably requested by us in connection with such filings and to certain blackout periods, we have agreed to file, as promptly as practicable and in any event no later than 30 calendar days after a request by Castor, one or more registration statements to register registrable securities then held by Castor and to use our reasonable best efforts to have each such registration statement declared effective as soon as practicable after such filing and keep such registration statement continuously effective until such registration rights terminate. All fees and expenses incident to our performance of our obligations in connection with such registration rights shall be borne solely by us and Castor shall pay any transfer taxes and fees and expenses of its counsel relating to a sale of registrable securities. These registration rights shall terminate on (i) the date occurring after the seventh anniversary of the original issue date of the Series A Preferred Shares on which Castor owns no registrable securities or (ii) if earlier, the date on which Castor owns no Series A Preferred Shares and no registrable securities.

Any and all agreements and commitments, currently existing between us and our subsidiaries, on the one hand, and Castor and its subsidiaries, on the other hand, terminated as of March 7, 2023. None of these arrangements and commitments is deemed material to the Company. In particular, our vessel-owning subsidiaries ceased to be parties to the Castor Master Management Agreement and entered into the Master Management Agreement with Toro and Castor Ships described above. Our vessel-owning subsidiaries ceased to be party to certain custodial and Cash Pooling Deeds entered into individually by each of such subsidiaries and Castor Maritime SCR Corp. and entered into substantively similar cash management and custodial arrangements with our wholly-owned treasury subsidiary, Toro RBX Corp. Under the Contribution and Spin-Off Distribution Agreement, we also agreed to reimburse Castor for transaction expenses incurred in connection with our separation from Castor, such as adviser and filing fees. Following the Spin-Off, we reimbursed Castor $2,694,646 for expenses related to the Spin-Off that were incurred by Castor. As of December 31, 2023, there were no outstanding expenses to be reimbursed by us under the Contribution and Spin-Off Distribution Agreement.

Robin Contribution and Spin-Off Distribution Agreement

The following description of the Robin Contribution and Spin-Off Distribution Agreement does not purport to be complete and is subject to and qualified in its entirety by reference to the Robin Contribution and Spin-Off Distribution Agreement, which is included as an exhibit to this Annual Report and is incorporated by reference herein. The terms of the transactions which are the subject of the Robin Contribution and Spin-Off Distribution Agreement were negotiated and approved by a special committee of our disinterested and independent directors.

In connection with the Robin Spin-Off, based on the recommendation of a special committee comprised of independent, disinterested directors, we entered into the Robin Contribution and Spin-Off Distribution Agreement with Robin, pursuant to which we contributed to Robin (i) the Robin Subsidiaries and (ii) $10.4 million in cash as a capital contribution in exchange for all issued and outstanding common shares of Robin, 2,000,000 Series A Preferred Shares of Robin and the issue of 40,000 Series B Preferred Shares of Robin to Pelagos against payment of their nominal value and (ii) we agreed to indemnify Robin and its vessel-owning subsidiaries for any and all obligations and other liabilities arising from or relating to the operation, management or employment of vessels or subsidiaries we retain after April 14, 2025 and Robin agreed to indemnify us for any and all obligations and other liabilities arising from or relating to the operation, management or employment of the vessels contributed to Robin or its vessel-owning subsidiaries. The Robin Contribution and Spin-Off Distribution Agreement also provided for the settlement or extinguishment of certain liabilities and other obligations between us and Robin.

Under the Robin Contribution and Spin-Off Distribution Agreement, we  distributed on April 14, 2025, all of Robin’s outstanding common shares to holders of our common shares, with one of Robin’s common shares being distributed for every eight shares of our common shares held by Toro stockholders as of the close of business New York Time on April 7, 2025.

94
Further, the Robin Contribution and Spin-Off Distribution Agreement provides us with certain registration rights relating to Robin’s common shares, if any, issued upon conversion of the Series A Preferred Shares. Such securities will cease to be registrable by us upon the earliest of (i) their sale pursuant to an effective registration statement, (ii) their eligibility for sale or sale pursuant to Rule 144 of the Securities Act, and (iii) the time at which they cease to be outstanding. Subject to our timely provision to Robin of all information and documents reasonably requested by Robin in connection with such filings and to certain blackout periods, Robin has agreed to file, as promptly as practicable and in any event no later than 30 calendar days after our request, one or more registration statements to register registrable securities then held by us and to use our reasonable best efforts to have each such registration statement declared effective as soon as practicable after such filing and keep such registration statement continuously effective until such registration rights terminate. All fees and expenses incident to Robin’s performance of its obligations in connection with such registration rights shall be borne solely by Robin and we shall pay any transfer taxes and fees and expenses of its counsel relating to a sale of Registrable Securities. These registration rights shall terminate on the date on which we own no Series A Preferred Shares and no registrable securities.

Any and all agreements and commitments, currently existing between us and our subsidiaries, on the one hand, and Robin and its subsidiaries upon completion of the Spin-Off, on the other hand, was terminated as of April 14, 2025. None of these arrangements and commitments is deemed material to us. Further, based on the recommendation of a special committee comprised of independent, disinterested directors, Robin’s vessel-owning subsidiaries  ceased to be parties to the Master Management Agreement among us and Castor Ships that is currently in effect and entered into a master management agreement with Robin and Castor Ships, with substantial similar terms to the Master Management Agreement described above. The Handysize tanker vessel-owning subsidiaries contributed to Robin ceased to be party to certain custodial and cash pooling deeds entered into individually by each of the such subsidiaries and Toro RBX Corp. and entered into substantively similar cash management and custodial arrangements with Robin’s wholly-owned treasury subsidiary, ROBIN GMD Corp. Under the Robin Contribution and Spin-Off Distribution Agreement, Robin also agreed to reimburse us for transaction expenses incurred in connection with its separation from us, such as advisor and filing fees.

Purchase of Common Shares by Pani

The following description of the Subscription Agreement (as defined herein) does not purport to be complete and is subject to, and qualified in its entirety by reference to the Subscription Agreement, which is included as an exhibit to this Annual Report and incorporated by reference herein.

On April 17, 2023, Toro entered into a subscription agreement (the “Subscription Agreement”) with Pani, a company controlled by our Chairman and Chief Executive Officer, pursuant to which Toro issued and sold, and Pani purchased, 8,500,000 common shares at a purchase price of $2.29 per share for gross proceeds of $19,465,000, less issuance costs of $817,764. The 8,500,000 common shares were issued on April 19, 2023 in a private placement pursuant to Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder. As of March 25, 2026, our Chairman and Chief Executive Officer beneficially owns through Pani 64.1% of our outstanding common shares, and controls 99.7% of the aggregate voting power of our total issued and outstanding share capital. See “Item 7. Major Shareholders and Related Party Transactions—A. Major Shareholders” for further details.

The Subscription Agreement contains customary representations, warranties, and covenants of each party. We granted Pani certain customary registration rights with respect to the common shares purchased thereunder and, following the exercise of such rights by Pani, we filed on November 13, 2023 a registration statement on Form F-3 relating to the possible offer and sale from time to time of up to 8,500,000 common shares by Pani.

Dividends to Castor on the Series A Preferred Shares

As discussed under “Item 4. Information on the Company—A. History and Development of the Company—Spin-Off from Castor”, which discussion is incorporated by reference herein, in connection with the Spin-Off, Toro issued 140,000 Series A Preferred Shares to Castor on March 7, 2023. As of December 31, 2025, we have paid Castor a dividend amounting to $1,400,000 on the Series A Preferred Shares for the period from October 15, 2024 to October 14, 2025 and the accrued amount for the period from October 15, 2025 to December 31, 2025 (included in the dividend period ended January 14, 2025) amounted to $299,444. As of December 31, 2024, we have paid Castor a dividend amounting to $1,400,000 on the Series A Preferred Shares for the period from October 14, 2023 to October 14, 2024 and the accrued amount for the period from October 15, 2024 to December 31, 2024 (included in the dividend period ended January 14, 2025) amounted to $338,332. Refer to “Item 10. Additional Information—B. Memorandum and Articles of Incorporation—Description of the Series A Preferred Shares” for further information regarding the terms of the Series A Preferred Shares.

95
Purchase by the Company of 5.00% Series D Cumulative Perpetual Convertible Preferred Shares of Castor

On August 7, 2023, we agreed to purchase 50,000 Castor Series D Preferred Shares for aggregate cash consideration of $50.0 million. The distribution rate on the Castor Series D Preferred Shares is 5.00% per annum, which rate will be multiplied by a factor of 1.3 on the seventh anniversary of the issue date of the Series D Preferred Shares and annually thereafter, subject to a maximum distribution rate of 20% per annum in respect of any quarterly dividend period. Dividends on the Castor Series D Preferred Shares are payable quarterly in arrears on the 15th day of January, April, July and October in each year, subject to approval by the board of directors of Castor. The first payment date occurred on October 16, 2023 and we received a dividend on the Castor Series D Preferred Shares amounting to $0.5 million.

The Castor Series D Preferred Shares are convertible, in whole or in part, at our option into common shares of Castor from the first anniversary of the issue date of the Castor Series D Preferred Shares at the lower of (i) $7.00 per common share, which was adjusted from $0.70 per common share following effectiveness of the 1-for-10 reverse stock split, and (ii) the 5 day value weighted average price immediately preceding the conversion. The conversion price of the Castor Series D Preferred Shares is subject to adjustment upon the occurrence of certain events, including the occurrence of splits and combinations (including a reverse stock split) of the common shares. The minimum conversion price is $0.30 per common share of Castor.

On December 12, 2024, Toro agreed to purchase for an aggregate consideration of $50,000,000 in cash, an additional 50,000 of Castor Series D Preferred Shares. The Company owns all 100,000 outstanding Castor Series D Preferred Shares.

In connection with the transaction, Castor amended the terms of the Castor Series D Preferred Shares to, among other things: (i) reset the date from which holders of the Castor Series D Preferred Shares may convert their Series D Preferred Shares into common shares of Castor to January 1, 2027 from August 7, 2024, (ii) require that any holder of the Castor Series D Preferred Shares electing to exercise its optional conversion rights convert not less than 500 Castor Series D Preferred Shares into common shares of Castor, and (iii) introduce an additional redemption feature whereby Castor may, at its option, redeem for cash all remaining outstanding Castor Series D Preferred Shares if the number of Series D Preferred Shares is 30,000 shares or less. Toro may not dispose of any of the Castor Series D Preferred Shares for a period of 180 days after the closing date of the transaction.

On December 23, 2025, Toro and Castor agreed to amend the terms of Castor Series D Preferred Shares and Series A Preferred Shares, in each case to extend the initial conversion date by one-year, which shall be to January 1, 2027 in the case of the Castor Series D Preferred Shares and March 7, 2027 in the case of the Series A Preferred Shares.

These transactions and their terms were approved by the board of directors of each of Castor and Toro at the recommendation of their respective special committees of disinterested and independent directors.

Grant of Restricted Common Shares to our Chairman and Chief Executive Officer

On September 6, 2023, our Board adopted the Equity Incentive Plan, permitting the grant of up to 2,000,000 common shares to eligible participants. On September 26, 2025, our Board adopted the 2025 Equity Incentive Plan, permitting the grant of up to 3,000,000 common shares to eligible participants. See “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Equity Transactions” and “Item 6. Directors, Senior Management and Employees—B. Compensation” for a description of the Equity Incentive Plan. See also Note 13 to our consolidated financial statements included elsewhere in this Annual Report for further information.

96
Purchase by the Company of 8.75% Series E Cumulative Perpetual Convertible Preferred Shares of Castor

On September 29, 2025, the Company agreed to purchase 60,000 Series E Cumulative Perpetual Convertible Preferred shares (the “Series E Preferred Shares”) of Castor having a stated amount of $1,000 each for a total consideration of $60 million, in cash. The distribution rate of the Series E Preferred Shares is 8.75%, paid quarterly, and they are convertible into common shares of Castor from the first anniversary of the issue date at a conversion price equal to the 5-day value weighted average price immediately preceding the conversion, subject to a minimum conversion price of $0.30. Castor may at its option redeem the Series E Preferred Shares, in whole or in part, at any time, on or after October 30, 2025, for a cash consideration equal to 100% of the stated amount plus any accrued and unpaid distributions up until that date. This transaction and its terms were approved by the board of directors of Castor and Toro at the recommendation of their respective independent committees who negotiated the transaction.

On October 13, 2025, the Company and Castor agreed to the full redemption of the Series E Preferred Shares, for a cash consideration equal to the stated amount of $60.0 million of the Series E Preferred Shares plus 0.523% thereof, including accrued and unpaid distributions.

This transaction and its terms were approved by the independent members of the board of directors of each of Castor and Toro at the recommendation of their respective special committees of disinterested and independent directors.

Loan Facility Agreement of $100.0 million to Castor

On December 11, 2024, Toro entered into a facility agreement with Castor to provide a $100.0 million senior term loan facility to Castor (the “Term Loan”) which was drawn down on the same date. The Term Loan has a tenor of 5 years, bears interest at the secured overnight financing rate (“SOFR”) plus 1.80% per annum, is guaranteed by ten ship-owning subsidiaries of Castor and is receivable in (a) twenty (20) consecutive quarterly installments (each of $2,500,000, commencing on March 11, 2025) and (b) a balloon installment in the amount of $50.0 million at its maturity together with the last quarterly installment. The Term Loan was secured by first priority mortgages and first priority general assignments covering insurance policies and requisition compensation over the ten vessels owned by wholly-owned subsidiaries of Castor. The value of these vessels was approximately $235.0 million based on third-party valuations at the time of the drawdown by Castor. Pursuant to the terms of this facility, Castor was also subject to certain negative covenants customary for facilities of this type, which were waivable in Toro’s sole discretion.

During the year ended December 31, 2025, the Term Loan was fully repaid. As result there is no balance as of December 31, 2025. During the year ended December 31, 2025, the interest income under the Term Loan amounted to $1,771,836.

This transaction and its terms were approved by the independent members of the board of directors of each of Castor and Toro at the recommendation of their respective special committees of disinterested and independent directors.

Vessel Disposals

On July 10, 2025, we entered into an agreement with a wholly owned subsidiary of Robin, for the sale of the LPG Dream Syrax, at a price of $18.0 million. The vessel was delivered to its new owner on September 3, 2025.

On September 16, 2025, we entered into an agreement with a wholly owned subsidiary of Robin, for the sale of the LPG Dream Terrax, at a price of $20.0 million. The vessel was delivered to its new owner on September 25, 2025.

The terms of the transactions were approved by the board of directors of Toro and Robin at the recommendation of their respective special committees of disinterested and independent directors and were supported by independent valuations.

C.
Interests of Experts and Counsel

Not applicable.

97
ITEM 8.
FINANCIAL INFORMATION

A.
Consolidated Statements and other Financial Information

Please see “Item 18. Financial Statements.”

Legal Proceedings

To our knowledge, we are not currently a party to any legal proceedings that, if adversely determined, would have a material adverse effect on our financial condition, results of operations or liquidity. As such, we do not believe that pending legal proceedings, taken as a whole, should have any significant impact on our financial statements. We are, and from time to time in the future may be, subject to legal proceedings and claims in the ordinary course of business, principally personal injury and property casualty claims. While we expect that these claims would be covered by our existing insurance policies, those claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources.

Dividend Policy

We are a recently formed company and have a limited performance record and operating history. Accordingly, we cannot assure you that we will be able to pay dividends on our common shares at all, and our ability to pay dividends will be subject to the limitations set forth below and under “Item 3. Risk Factors—Risks Relating to Our Common Shares—We do not have a declared dividend policy and our Board may never declare dividends on our common shares.”

We do not have a declared dividend policy. Under our Bylaws, our Board may declare and pay dividends in cash, stock or other property of the Company. Any dividends declared will be in the sole discretion of the Board and will depend upon factors such as earnings, increased cash needs and expenses, restrictions in any of our agreements (including our current and future credit facilities), overall market conditions, current capital expenditure programs and investment opportunities, and the provisions of Marshall Islands law affecting the payment of distributions to shareholders (as described below), and will be subject to the priority of our Series A Preferred Shares. The foregoing is not an exhaustive list of factors which may impact the payment of dividends.

Dividends on our Series A Preferred Shares accrue and are cumulative from their issue date and are payable quarterly, assuming dividends have been declared by our Board or any authorized committee thereof out of legally available funds for such purpose. From, and including, their issue date to, but excluding, the seventh anniversary of the issue date (the “Reset Date”), the dividend rate for the Series A Preferred Shares is 1.00% per annum of the stated amount of $1,000 per share; for each quarterly dividend period commencing on or after the Reset Date, the dividend rate will be the dividend rate in effect for the prior quarterly dividend period multiplied by a factor of 1.3; provided, however, that the dividend rate will not exceed 20% per annum in respect of any quarterly dividend period. We may redeem the Series A Preferred Shares at any time on or after the Reset Date, in whole or in part, at a redemption price of $1,000 per share plus an amount equal to all accumulated and unpaid dividends thereon to the date of redemption, whether or not declared. The rights of the holders of our Series A Preferred Shares rank senior to the obligations to holders of our common shares. This means that, unless accumulated dividends have been paid or set aside for payment on all of our outstanding Series A Preferred Shares for all past completed dividend periods, no distributions may be declared or paid on our common shares subject to limited exceptions.

The Series A Preferred Shares are convertible, in whole or in part, at their holder’s option, to common shares at any time and from time to time from and after the third anniversary of their issue date and prior to the Reset Date. Subject to certain adjustments, the “Conversion Price” for any conversion of the Series A Preferred Shares shall be the lower of (i) 150% of the VWAP of our common shares over the five consecutive trading day period commencing on and including March 7, 2023, and (ii) the VWAP of our Common Shares over the 10 consecutive trading day period expiring on the trading day immediately prior to the date of delivery of written notice of the conversion; provided, that, in no event shall the Conversion Price be less than $2.50. The number of Common Shares to be issued to a converting holder shall be equal to the quotient of (i) the aggregate stated amount of the Series A Preferred Shares converted plus Accrued Dividends (but excluding any dividends declared but not yet paid) thereon on the date on which the conversion notice is delivered divided by (ii) the Conversion Price.

98
In the event that we declare a dividend of the stock of a subsidiary which we control, the holder(s) of the Series B Preferred Shares are entitled to receive preferred shares of such subsidiary. Such preferred shares will have at least substantially identical rights and preferences to our Series B Preferred Shares and will be issued pro rata to holder(s) of the Series B Preferred Shares. The Series B Preferred Shares have no other dividend or distribution rights.

See “Item 10. Additional Information—B. Memorandum and Articles of Association” for more detailed descriptions of the Series A Preferred Shares and Series B Preferred Shares.

Further, non-vested restricted common shares granted under the Equity Incentive Plan and 2025 Equity Incentive Plan are entitled to receive dividends, which are not refundable even if such shares are forfeited.

Marshall Islands law provides that we may pay dividends on and redeem any shares of capital stock only to the extent that assets are legally available for such purposes. Legally available assets generally are limited to our surplus, which essentially represents our retained earnings and the excess of consideration received by us for the sale of shares above the par value of the shares. In addition, under Marshall Islands law, we may not pay dividends on or redeem any shares of capital stock if we are insolvent or would be rendered insolvent by the payment of such a dividend or the making of such redemption.

Any dividends paid by us may be treated as ordinary income to a U.S. shareholder. Please see the section entitled “Item 10. Additional Information—E. Taxation—U.S. Federal Income Tax Considerations—U.S. Federal Income Taxation of U.S. Holders—Distributions” for additional information relating to the U.S. federal income tax treatment of our dividend payments, if any are declared in the future.

Special Dividend

On December 5, 2025, the Board declared a one-time, special dividend of $1.75 per common share, consisting of either cash or our common shares. The dividend was payable to the Company’s shareholders of record at the close of business on December 16, 2025, and was paid on January 16, 2026. Please see the section entitled “Item 8. Financial Information—B. Significant Changes” for additional information relating to results of shareholder elections and the payment of the special dividend.

B.
Significant Changes

On January 16, 2026, and based on shareholder elections, the special dividend was paid in the form of approximately $9.3 million in cash and 7,378,575 new common shares of our common stock. The number of common shares included for the common share dividend election was calculated based on the 20-day volume weighted average of the trading prices of our common shares on Nasdaq through December 4, 2025, or $3.8386 per share.  For further details on the special dividend, see “Item 8. Financial Information— A. Consolidated Statements and other Financial Information”.

There have been no significant changes since the date of our consolidated financial statements included in this Annual Report, other than those described above and in Note 19 to our consolidated financial statements included elsewhere in this Annual Report.

ITEM 9.
THE OFFER AND LISTING

A.
Offer and Listing Details

Our common shares, including their associated Preferred Share Purchase Rights under the Rights Agreement, currently trade on the Nasdaq Capital Market under the symbol “TORO”.

B.
Plan of Distribution

Not applicable.

C.
Markets

Please see “Item 9. The Offer and Listing—A. Offer and Listing Details.”

99
D.
Selling Shareholders

Not applicable.

E.
Dilution

Not applicable.

F.
Expenses of the Issue

Not applicable.

ITEM 10.
ADDITIONAL INFORMATION

A.
Share Capital

Not applicable.

B.
Memorandum and Articles of Association

Articles of Association and Bylaws

The following is a description of material terms of our Articles of Incorporation and Bylaws. Because this description is a summary, it does not contain all information that you may find useful. For more complete information, you should read our Articles of Incorporation and our Bylaws, as amended, copies of which are filed as exhibits to this Annual Report and are incorporated herein by reference.

Any amendment to our Articles of Incorporation to alter our capital structure requires approval by an affirmative majority of the voting power of the total number of shares issued and outstanding and entitled to vote thereon. Shareholders of any series or class of shares are entitled to vote upon any proposed amendment, whether or not entitled to vote thereon by the Articles of Incorporation, if such amendment would (i) increase or decrease the par value of the shares of such series or class, or (ii) alter or change the powers, preferences or special rights of the shares of such series or class so as to adversely affect them. Such class vote would be conducted in addition to the vote of all shares entitled to vote upon the amendment and requires approval by an affirmative majority of the voting power of the affected series or class.

Purpose

Our purpose is to engage in any lawful act or activity for which corporations may now or hereafter be organized under the BCA. However, in connection with the Spin-Off, our Board has resolved to focus our efforts on our then-current business of tanker shipping services, though we have since expanded into LPG carrier services in accordance with such resolutions. See “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Certain resolutions of the board of directors of Toro, Robin and Castor in connection with the Robin Spin-Off and the Spin-Off” for further details. Our Articles of Incorporation and Bylaws, as amended, do not impose any limitations on the ownership rights of our shareholders.

Shareholders’ Meetings

The time and place of our annual meeting of shareholders is determined by our Board. Our first annual meeting of shareholders was held on November 15, 2022. Special meetings of the shareholders, unless otherwise prescribed by law, may be called for any purpose or purposes permitted under applicable law (i) at any time by the Chairman, Chief Executive Officer or President of the Company or a majority of the Board and (ii) by shareholders holding more than 50% of the voting rights in the Company. No other person or persons are permitted to call a special meeting, unless otherwise prescribed by law. The Board may fix a record date of not more than sixty (60) nor less than fifteen (15) days prior to the date of any meeting of shareholders.

100
Authorized Capitalization

Under our Articles of Incorporation, our authorized capital stock consists of 3,900,000,000 common shares, par value $0.001 per share and 100,000,000 preferred shares, par value $0.001 per share. As of December 31, 2025 and as of March 25, 2026,  21,473,509 and 28,852,084 common shares were issued and outstanding, inclusive of 4,400,000 restricted common shares issued pursuant to  Equity Incentive Plan and 2025 Equity Incentive Plan, 140,000 Series A Preferred Shares were issued and outstanding, 40,000 Series B Preferred Shares were issued and outstanding and no Series C Participating Preferred Shares were authorized, respectively. Authorization for the issuance of Series C Participating Preferred Shares in connection with our Rights Agreement is valid until the expiry of such agreement. See “Item 10. Additional Information—B. Memorandum and Articles of Association—Shareholder Protection Rights Agreement” for additional details.

On November 14, 2022, Castor, in its capacity as our sole shareholder, authorized our Board to effect one or more reverse stock splits of our common shares issued and outstanding at the time of the reverse stock split at a cumulative exchange ratio of between one-for-two and one-for-five hundred shares. Our Board may determine, in its sole discretion, whether to implement any reverse stock split by filing an amendment to our Articles of Incorporation, as well as the specific timing and ratio, within such approved range of ratios; provided that any such reverse stock split or splits are implemented prior to the Company’s annual meeting of shareholders in 2026. This authorization was intended to provide us the means to maintain compliance with the continued listing requirements of the Nasdaq Capital Market, and in particular the minimum bid price requirement, if required, as well as to realize certain beneficial effects of a higher trading price for our common shares, including the ability to appeal to certain investors and potentially increased trading liquidity under appropriate circumstances.

Description of the Common Shares

For a description of our common shares, see “Description of Common Shares” in Exhibit 2.1 (Description of Securities), which description is incorporated by reference herein. As of March 25, 2026, Pani, a corporation controlled by our Chairman and Chief Executive Officer, owned 64.1% of our outstanding common shares, which makes it more difficult to effect a change of control of us.

Preferred Shares

Our Articles of Incorporation authorize our Board to establish one or more series of preferred shares and to determine, with respect to any series of preferred shares, the terms and rights of that series, including:


 •
the designation of the series;


•
the number of shares of the series;


•
the preferences and relative, participating, option or other special rights, if any, and any qualifications, limitations or restrictions of such series; and


•
the voting rights, if any, of the holders of the series.

Description of the Series A Preferred Shares

The number of designated Series A Preferred Shares initially is 140,000 and the “stated amount” per Series A Preferred Share is $1,000. We have issued all Series A Preferred Shares to Castor. The Series A Preferred Shares have the following characteristics:


 •
Ranking. With respect to the payment of dividends and distributions of assets upon any liquidation, dissolution or winding up, the Series A Preferred Shares rank (i) senior to our common shares, the Series B Preferred Shares and any class or series of our stock that ranks junior to the Series A Preferred Shares in the payment of dividends or in the distribution of assets upon our liquidation, dissolution or winding up (together with our common stock, “Junior Stock”); (ii) senior to or on a parity with the Series C Preferred Shares and each other series of our preferred shares we may issue with respect to the payment of dividends and distributions of assets upon any liquidation, dissolution or winding up of the Company; and (iii) junior to all existing and future indebtedness and other non-equity claims on us.

101

 •
Dividends. Holders of Series A Preferred Shares shall be entitled to receive, when, as and if declared by our Board, but only out of funds legally available therefor, cumulative cash dividends at the Annual Rate and no more, payable quarterly in arrears on the 15th day of each January, April, July and October, respectively, in each year, beginning on April 15, 2023 (each, a “Dividend Payment Date”), with respect to the Dividend Period ending on the day preceding such respective Dividend Payment Date, to holders of record on the 15th calendar day before such Dividend Payment Date or such other record date not more than 30 days preceding such Dividend Payment Date fixed for that purpose by our Board (or a duly authorized committee of the Board) in advance of payment of each particular dividend. The amount of the dividend per Series A Preferred Share for each Dividend Period will be calculated on the basis of a 360-day year consisting of twelve 30-day months.

“Annual Rate” means from, and including, the Issue Date to, but excluding, the seventh anniversary of the Issue Date (the “Reset Date”), 1.00% per annum of the stated amount. For each Dividend Period commencing on or after the Reset Date, the Annual Rate shall be the Annual Rate in effect for the prior Dividend Period multiplied by a factor of 1.3; provided, however, that in no event will the Annual Rate on the Series A Preferred Shares exceed 20% per annum in respect of any Dividend Period.

“Dividend Period” means each period commencing on (and including) a Dividend Payment Date and continuing to (but not including) the next succeeding Dividend Payment Date, except that the first Dividend Period for the initial issuance of the Series A Preferred Shares shall commence on (and include) the Issue Date.

“Issue Date” means the Distribution Date.


 •
Restrictions on Dividends, Redemption and Repurchases. So long as any Series A Preferred Share remains outstanding, unless full Accrued Dividends on all outstanding Series A Preferred Shares through and including the most recently completed Dividend Period have been paid or declared and a sum sufficient for the payment thereof has been set aside for payment, no dividend may be declared or paid or set aside for payment, and no distribution may be made, on any Junior Stock, other than a dividend payable solely in stock that ranks junior to the Series A Preferred Shares in the payment of dividends and in the distribution of assets on any liquidation, dissolution or winding up of the Company. “Accrued Dividends” means, with respect to Series A Preferred Shares, an amount computed at the Annual Rate from, as to each share, the date of issuance of such share to and including the date to which such dividends are to be accrued (whether or not such dividends have been declared), less the aggregate amount of all dividends previously paid on such share.

So long as any Series A Preferred Share remains outstanding, unless full Accrued Dividends on all outstanding Series A Preferred Shares through and including the most recently completed Dividend Period have been paid or declared and a sum sufficient for the payment thereof has been set aside for payment, no monies may be paid or made available for a sinking fund for the redemption or retirement of Junior Stock, nor shall any shares of Junior Stock be purchased, redeemed or otherwise acquired for consideration by us, directly or indirectly, other than (i) as a result of (x) a reclassification of Junior Stock, or (y) the exchange or conversion of one share of Junior Stock for or into another share of stock that ranks junior to the Series A Preferred Shares in the payment of dividends and in the distribution of assets on any liquidation, dissolution or winding up of the Company; or (ii) through the use of the proceeds of a substantially contemporaneous sale of other shares of stock that rank junior to the Series A Preferred Shares in the payment of dividends and in the distribution of assets on any liquidation, dissolution or winding up of the Company.


 •
Redemption. The Series A Preferred Shares are perpetual and have no maturity date. We may, at our option, redeem the Series A Preferred Shares in whole or in part, at any time and from time to time after the Reset Date, at a cash redemption price equal to the stated amount, together with an amount equal to all Accrued Dividends to, but excluding, the redemption date.

102

 •
Conversion Rights. The Series A Preferred Shares are convertible, at their holder’s option, to common shares, in whole or in part, at any time and from time to time from and after the third anniversary of the Issue Date until but excluding the Reset Date. Subject to certain adjustments, the “Conversion Price” for any conversion of the Series A Preferred Shares shall be the lower of (i) 150% of the VWAP of our common shares over the five consecutive trading day period commencing on and including the Distribution Date, and (ii) the VWAP of our common shares over the 10 consecutive trading day period expiring on the trading day immediately prior to the date of delivery of written notice of the conversion; provided, that, notwithstanding any adjustment, in no event shall the Conversion Price be less than $2.50. The number of common shares to be issued to a converting holder shall be equal to the quotient of (i) the aggregate stated amount of the Series A Preferred Shares converted plus Accrued Dividends (but excluding any dividends declared but not yet paid) thereon on the date on which the conversion notice is delivered divided by (ii) the Conversion Price. Castor will have registration rights in relation to the common shares issued upon conversion. See “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Contribution and Spin-Off Distribution Agreement.” The Series A Preferred Shares otherwise are not convertible into or exchangeable for property or shares of any other series or class of our capital stock.


•
Liquidation Rights. In the event of any liquidation, dissolution or winding up of the affairs of the Company, whether voluntary or involuntary, before any distribution or payment out of our assets may be made to or set aside for the holders of any Junior Stock, holders of Series A Preferred Shares will be entitled to receive out of our assets legally available for distribution to our shareholders an amount equal to the stated amount per share ($1,000), together with an amount equal to all Accrued Dividends to the date of payment whether or not earned or declared (the “Liquidation Preference”). If the Liquidation Preference has been paid in full to all holders of Series A Preferred Shares and all holders of any class or series of our stock that ranks on a parity with Series A Preferred Shares in the distribution of assets on liquidation, dissolution or winding up of the Company, the holders of Junior Stock will be entitled to receive all of our remaining assets according to their respective rights and preferences.


•
Voting Rights. Except as indicated below or otherwise required by law, the holders of the Series A Preferred Shares do not have any voting rights.


○
Right to Elect Directors on Nonpayment of Dividends. If and whenever dividends payable on Series A Preferred Shares or any class or series of our stock that ranks on a parity with the Series A Preferred Shares in the payment of dividends (“Dividend Parity Stock”) having voting rights equivalent to those described in this paragraph (“Voting Parity Stock”) have not been declared and paid (or, in the case of Series A Preferred Shares and Voting Parity Stock bearing dividends on a cumulative basis, shall be in arrears) in an aggregate amount equal to full dividends for at least six quarterly Dividend Periods or their equivalent (whether or not consecutive) (a “Nonpayment Event”), the number of directors then constituting our Board shall be automatically increased by (i) one, if at such time the Board consists of eight or fewer directors or (ii) two, if at such time the Board consists of nine or more directors, and the holders of Series A Preferred Shares, together with the holders of any outstanding Voting Parity Stock then entitled to vote for additional directors, voting together as a single class in proportion to their respective stated amounts, shall be entitled to elect the additional director or two directors, as the case may be (the “Preferred Share Directors”); provided that our Board shall at no time include more than two Preferred Share Directors (including, for purposes of this limitation, all directors that the holders of any series of voting preferred shares are entitled to elect pursuant to like voting rights). When (i) Accrued Dividends have been paid (or declared and a sum sufficient for payment thereof set aside) in full on the Series A Preferred Shares after a Nonpayment Event, and (ii) the rights of holders of any Voting Parity Stock to participate in electing the Preferred Share Directors shall have ceased, the right of holders of the Series A Preferred Shares to participate in the election of Preferred Share Directors shall cease (but subject always to the revesting of such voting rights in the case of any future Nonpayment Event), the terms of office of all the Preferred Share Directors shall forthwith terminate, and the number of directors constituting our Board shall automatically be reduced accordingly. Any Preferred Share Director may be removed at any time without cause by the holders of record of a majority of the outstanding Series A Preferred Shares and Voting Parity Stock, when they have the voting rights described above (voting together as a single class in proportion to their respective stated amounts). The Preferred Share Directors shall each be entitled to one vote per director on any matter that shall come before our Board for a vote.

103

 ○
Other Voting Rights. So long as any Series A Preferred Shares are outstanding, in addition to any other vote or consent of shareholders required by law or by our Articles of Incorporation, the vote or consent of the holders of at least two thirds of the Series A Preferred Shares at the time outstanding, voting together with any other series of preferred shares that would be adversely affected in substantially the same manner and entitled to vote as a single class in proportion to their respective stated amounts (to the exclusion of all other series of preferred shares), given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, will be necessary for effecting or validating: (i) any amendment, alteration or repeal of any provision of our Articles of Incorporation or Bylaws that would alter or change the voting powers, preferences or special rights of the Series A Preferred Shares so as to affect them adversely; (ii) the issuance of Dividend Parity Stock if the Accrued Dividends on all outstanding Series A Preferred Shares through and including the most recently completed Dividend Period have not been paid or declared and a sum sufficient for the payment thereof has been set aside for payment; (iii) any amendment or alteration of the Articles of Incorporation to authorize or create, or increase the authorized amount of, any shares of any class or series or any securities convertible into shares of any class or series of our capital stock ranking prior to Series A in the payment of dividends or in the distribution of assets on any liquidation, dissolution or winding up of the Company; or (iv) any consummation of (x) a binding share exchange or reclassification involving the Series A Preferred Shares, (y) a merger or consolidation of the Company with another entity (whether or not a corporation), or (z) a conversion, transfer, domestication or continuance of the Company into another entity or an entity organized under the laws of another jurisdiction, unless in each case (A) the Series A Preferred Shares remain outstanding or, in the case of any such merger or consolidation with respect to which we are not the surviving or resulting entity, or any such conversion, transfer, domestication or continuance, the Series A Preferred Shares are converted into or exchanged for preference securities of the surviving or resulting entity or its ultimate parent, and (B) such shares remaining outstanding or such preference securities, as the case may be, have such rights, preferences, privileges and voting powers, and limitations and restrictions, and limitations and restrictions thereof, taken as a whole, as are not materially less favorable to the holders thereof than the rights, preferences, privileges and voting powers, and restrictions and limitations thereof, of the Series A Preferred Shares immediately prior to such consummation, taken as a whole. The foregoing voting rights do not apply in connection with the creation or issuance of Series C Participating Preferred Shares of the Company substantially in the form approved by the Board in connection with the Shareholder Protection Rights Agreement.


•
No Preemptive Rights; No Sinking Fund. Holders of the Series A Preferred Shares do not have any preemptive rights. The Series A Preferred Shares will not be subject to any sinking fund or any other obligation of us for their repurchase or retirement.

The Series A Preferred Shares have been classified in Mezzanine equity as per ASC 480-10-S99 “Distinguishing liabilities from Equity – SEC Materials” as they are in essence redeemable at the option of the holder as our Chairman, Chief Executive Officer and controlling shareholder, Mr. Panagiotidis, can effectively determine the timing of the redemption of the Series A Preferred Shares. For further information, see Note 10 to our Consolidated Financial Statements included elsewhere in this Annual Report.

104
Description of the Series B Preferred Shares

On March 7, 2023, we issued all of our 40,000 authorized Series B Preferred Shares to Pelagos. Pelagos is a company controlled by Petros Panagiotidis, our Chairman and Chief Executive Officer and Castor’s Chairman, Chief Executive Officer and Chief Financial Officer. As a result, we are controlled by Mr. Panagiotidis, making it more difficult to effect a change of control of us.

The Series B Preferred Shares have the following characteristics:


 •
Conversion. The Series B Preferred Shares are not convertible into common shares.


•
Distributions. In the event that we declare a dividend of the stock of a subsidiary which we control, the holder(s) of the Series B Preferred Shares are entitled to receive preferred shares of such subsidiary. Such preferred shares will have at least substantially identical rights and preferences to our Series B Preferred Shares and be issued in an equivalent number to our Series B Preferred Shares. The Series B Preferred Shares have no other dividend or distribution rights.


•
Voting. Each Series B Preferred Share has the voting power of 100,000 common shares and counts for 100,000 votes for purposes of determining quorum at a meeting of shareholders, subject to adjustment to maintain a substantially identical voting interest in Toro following the (i) creation or issuance of a new series of shares of the Company carrying more than one vote per share to be issued to any person other than holders of the Series B Preferred Shares, except for the creation (but not the issuance) of Series C Participating Preferred Shares substantially in the form approved by the Board and included as an exhibit to this Annual Report, without the prior affirmative vote of a majority of votes cast by the holders of the Series B Preferred Shares or (ii) issuance or approval of common shares pursuant to and in accordance with the Shareholder Protection Rights Agreement. The Series B Preferred Shares vote together with the common shares as a single class, except that the Series B Preferred Shares vote separately as a class on amendments to the Articles of Incorporation that would materially alter or change the powers, preference or special rights of the Series B Preferred Shares.


•
Liquidation, Dissolution or Winding Up. Upon any liquidation, dissolution or winding up of the Company, the Series B Preferred Shares shall have the same liquidation rights as and pari passu with the common shares up to their par value of $0.001 per share and, thereafter, the Series B Preferred Shares have no right to participate further in the liquidation, dissolution or winding up of the Company.

Description of the Series C Participating Preferred Shares

As of the date of this Annual Report, no Series C Participating Preferred Shares were authorized in connection with our Rights Agreement (as defined below). See “Item 10. Additional Information—B. Memorandum and Articles—Shareholder Protection Rights Agreement.” If issued, the Series C Participating Preferred Shares will, among other things:


 •
not be redeemable;


•
entitle holders to dividend payments in an amount per share equal to the aggregate per share amount of all cash dividends, and the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions other than a dividend payable in our common shares or a subdivision of our outstanding common shares (by reclassification or otherwise) declared on our common shares; and


•
entitle holders to 1,000 votes per Series C Participating Preferred Share on all matters submitted to a vote of the shareholders of the Company.

Each one one-thousandth of a Series C Participating Preferred Share issued in connection with the Rights Agreement should approximate the value of one common share.

105
Shareholder Protection Rights Agreement

On the Distribution Date, our Board declared a dividend of one preferred share purchase right (a “Right” or the “Rights”) for each outstanding common share and adopted a shareholder rights plan, as set forth in the Shareholder Protection Rights Agreement (the “Rights Agreement”) entered into between the Company and Broadridge Corporate Issuer Solutions, Inc., as Rights Agent on the same date. Each Right trades with, and is inseparable from, our common shares, entitles the holder to purchase from the Company, for $22, one common share (or one one-thousandth of a share of Series C Participating Preferred Shares) and will become exercisable following the earlier of (i) the tenth business day (or other date designated by resolution of the Board) after any person other than our Chairman and Chief Executive Officer, Petros Panagiotidis, or Mr. Panagiotidis’ controlled affiliates commences a tender offer that would result in such person becoming the beneficial owner of a total of 15% or more of the common shares or (ii) the date of the “Flip-in” Trigger, as defined below. For additional details, see the Rights Agreement included as an exhibit to this Annual Report.

The rights plan adopted under the Rights Agreement and the Rights have the following characteristics:


 •
Distribution and Transfer of the Rights. Our Board will declare a dividend of one Right for each share of our common shares outstanding. Prior to the Separation Time referred to below, the Rights would be evidenced by and trade with our common shares and would not be exercisable. After the Separation Time, we would cause the Rights Agent to mail Rights certificates to shareholders and the Rights would trade independent of the common shares. New Rights will accompany any new common shares of the Company issued after the Distribution until the Separation Time.


•
Separation Time. Rights would separate from our common shares and become exercisable following the earlier of (i) the tenth (10) business day (or other date designated by resolution of the Board) after any person (other than Mr. Panagiotidis or his controlled affiliates) commences a tender offer that would result in such person becoming the beneficial owner of a total of 15% or more of the common shares or (ii) the date of the “Flip-in” Trigger.


•
Exercise of the Rights. On or after the Separation Time, each Right would initially entitle the holder to purchase, for $22 (the “Exercise Price”), one common share (or one one-thousandth of a share of Series C Participating Preferred Shares, such portion of a Series C Participating Preferred Share being designed to give the shareholder approximately the same dividend, voting and liquidation rights as would one common share). Prior to exercise, the Right does not give its holder any dividend, voting, or liquidation rights.


•
“Flip-in” Trigger. Upon public announcement by the Company that any person other than Mr. Panagiotidis or his controlled affiliates (an “Acquiring Person”) has acquired 15% or more of our outstanding common shares:


(i)
Rights owned by the Acquiring Person or transferees thereof would automatically be void; and


(ii)
each other Right will automatically become a right to buy, for the Exercise Price, that number of common shares of the Company (or equivalent fractional shares of Series C Participating Preferred Shares) having a market value of twice the Exercise Price.


•
“Flip-over” Trigger. After an Acquiring Person has become such, (i) the Company may not consolidate or merge with any person, if the Company’s Board is controlled by the Acquiring Person or the Acquiring Person is the beneficial owner of 50% or more of the outstanding shares of our common shares, and the transaction is with the Acquiring Person or its affiliate or associate or the shares owned by the Acquiring Person are treated differently from those of other shareholders, and (ii) the Company may not sell 50% or more of its assets if the Company’s Board is controlled by the Acquiring Person unless in either case proper provision is made so that each Right would thereafter become a right to buy, for the Exercise Price, that number of common shares of such other person having a market value of twice the Exercise Price.

106

 •
Redemption. The Rights may be redeemed by the Board, at any time until a “Flip-in” Trigger has occurred, at a redemption price of $0.001 per Right.


•
Power to Amend. Our Board may amend the Rights Agreement in any respect until a “Flip-in” Trigger has occurred. Thereafter, our Board may amend the Rights Agreement in any respect not materially adverse to Rights holders generally.


•
Expiration. The Rights will expire on the tenth anniversary of the Distribution Date.

Furthermore, if any person (other than Mr. Panagiotidis or his controlled affiliates) acquires between 15% and 50% of our outstanding common shares, the Board may, in lieu of allowing Rights to be exercised, require each outstanding Right to be exchanged for one common share of the Company (or one one-thousandth of a share of Series C Participating Preferred Shares). The Board may enter into a trust agreement pursuant to which the Company would deposit into a trust its common shares that would be distributable to shareholders (excluding the Acquiring Person) in the event this exchange option is implemented.

Certain synthetic interests in securities created by derivative positions, whether or not such interests are considered to be ownership of the underlying common shares or are reportable for purposes of Regulation 13D of the Exchange Act, as amended, are treated as beneficial ownership of the number of our common shares equivalent to the economic exposure created by the derivative position, to the extent our actual common shares are directly or indirectly held by counterparties to the derivatives contracts. Swaps dealers unassociated with any control intent or intent to evade the purposes of the Rights Agreement are excepted from such imputed beneficial ownership.

The Rights Agreement “grandfathers” the current level of ownership of persons who, prior to the date of the Rights Agreement, beneficially owned 15% or more of our outstanding common shares, so long as they do not purchase additional shares in excess of certain limitations. Such provisions also “grandfather” our Chairman and Chief Executive Officer, Petros Panagiotidis, and Mr. Panagiotidis’ controlled affiliates.

The Rights may have anti-takeover effects. The Rights will cause substantial dilution to any person or group that attempts to acquire us without the approval of our Board. As a result, the overall effect of the Rights may be to render more difficult or discourage any attempt to acquire us. Because our Board can approve a redemption of the Rights for a permitted offer, the Rights should not interfere with a merger or other business combination approved by our Board.

The foregoing description of the Rights Agreement does not purport to be complete and is subject to, and qualified in its entirety by reference to the Rights Agreement, which is included as an exhibit to this Annual Report.

Transfer Agent

The registrar and transfer agent for our common shares is Broadridge Corporate Issuer Solutions, Inc.

Exclusive Forum

Our Bylaws provide that unless we consent in writing to the selection of an alternative forum, the High Court of the Republic of Marshall Islands shall be the sole and exclusive forum for any internal corporate claim, intra-corporate claim, or claim governed by the internal affairs doctrine and that the United States District Court for the Southern District of New York shall be the sole and exclusive forum for any claim arising under the Securities Act or Exchange Act. If the United States District Court for the Southern District of New York does not have jurisdiction over the claims assigned to it by our exclusive forum provisions, any other federal district court of the United States may hear such claims. Any person or entity purchasing or otherwise acquiring or holding any interest in shares of capital stock of the Company shall be deemed to have notice of and consented to this exclusive forum provision.

The exclusive forum provision in our Bylaws will not relieve us of our duties to comply with federal securities laws and the rules and regulations thereunder, and our shareholders will not be deemed to have waived our compliance with these laws, rules and regulations. In particular, Section 27 of the Exchange Act creates exclusive federal jurisdiction over all claims brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder, and Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.

107
Marshall Islands Company Law Considerations

For a description of significant differences between the statutory provisions of the BCA and the General Corporation Law of the State of Delaware relating to shareholders’ rights, refer to Exhibit 2.1 (Description of Securities).

C.
Material Contracts

We refer you to “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources” and “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions” for a discussion of certain material contracts to which we are a party.

D.
Exchange Controls

The Marshall Islands impose no exchange controls on non-resident corporations.

E.
Taxation

The following is a discussion of the material Marshall Islands and U.S. federal income tax considerations relevant to a U.S. Holder and a Non-U.S. Holder, each as defined below, with respect to the common shares. This discussion does not purport to deal with the tax consequences of owning common shares to all categories of investors, such as dealers in securities or commodities, traders in securities that elect to use a mark-to-market method of accounting for securities holdings, financial institutions, insurance companies, tax-exempt organizations, U.S. expatriates, persons liable for the Medicare contribution tax on net investment income, persons liable for the alternative minimum tax, persons who hold common shares as part of a straddle, hedge, conversion transaction or integrated investment, persons that purchase or sell common shares as part of a wash sale for tax purposes, U.S. Holders whose functional currency is not the United States dollar, and investors that own, actually or under applicable constructive ownership rules, 10% or more of our common shares. This discussion deals only with holders who hold our common shares as a capital asset. You are encouraged to consult your own tax advisers concerning the overall tax consequences arising in your own particular situation under U.S. federal, state, local or foreign law of the ownership of common shares. The discussion below is based, in part, on the description of our business in this Annual Report above and assumes that we conduct our business as described in that section. Except as otherwise noted, this discussion is based on the assumption that we will not maintain an office or other fixed place of business within the United States.

Marshall Islands Tax Consequences

We are incorporated in the Republic of the Marshall Islands. Under current Marshall Islands law, we are not subject to tax on income or capital gains, and no Marshall Islands withholding tax will be imposed upon payments of dividends by us to our shareholders, and holders of our common shares that are not residents of or domiciled or carrying on any commercial activity in the Republic of the Marshall Islands will not be subject to Marshall Islands tax on the sale or other disposition of our common shares.

U.S. Federal Income Taxation of Our Company

Taxation of Operating Income: In General

Unless exempt from U.S. federal income taxation under the rules discussed below, a foreign corporation is subject to U.S. federal income taxation in respect of any income that is derived from the use of vessels, from the hiring or leasing of vessels for use on a time, voyage or bareboat charter basis, from the participation in a pool, partnership, strategic alliance, joint operating agreement, cost sharing arrangements or other joint venture it directly or indirectly owns or participates in that generates such income, or from the performance of services directly related to those uses, which we refer to collectively as “shipping income,” to the extent that the shipping income is derived from sources within the United States. For these purposes, 50% of shipping income that is attributable to transportation that begins or ends, but that does not begin and end, in the United States constitutes income from sources within the United States, which we refer to as “U.S. source gross shipping income” or USSGTI.

108
Shipping income attributable to transportation that begins and ends in the United States is U.S. source income. We are not permitted by law to engage in such transportation and thus will not earn income that is considered to be 100% derived from sources within the United States.

Shipping income attributable to transportation between non-U.S. ports is considered to be derived from sources outside the United States. Such income is not subject to U.S. tax.

If not exempt from tax under Section 883 of the Code, our USSGTI would be subject to a tax of 4% without allowance for any deductions (“the 4% tax”) as described below.

Exemption of Operating Income from U.S. Federal Income Taxation

Under Section 883 of the Code and the regulations thereunder, we will be exempt from the 4% tax on our USSGTI if:


 (1)
we are organized in a foreign country that grants an “equivalent exemption” to corporations organized in the United States; and


(2)
either


(a)
more than 50% of the value of our stock is owned, directly or indirectly, by individuals who are “residents” of a foreign country that grants an “equivalent exemption” to corporations organized in the United States (each such individual is a “qualified shareholder” and collectively, “qualified shareholders”), which we refer to as the “50% Ownership Test,” or


(b)
our stock is “primarily and regularly traded on an established securities market” in our country of organization, in another country that grants an “equivalent exemption” to U.S. corporations, or in the United States, which we refer to as the “Publicly Traded Test.”

The Marshall Islands, the jurisdiction in which we and our ship-owning subsidiaries are incorporated, grants an “equivalent exemption” to U.S. corporations. Therefore, we will be exempt from the 4% on our USSGTI if we meet either the 50% Ownership Test or the Publicly Traded Test.

Due to the widely dispersed nature of the ownership of our common shares, it is highly unlikely that we will satisfy the requirements of the 50% Ownership Test. Therefore, we expect to be exempt from the 4% tax on our USSGTI only if we can satisfy the Publicly Traded Test.

Treasury Regulations provide, in pertinent part, that stock of a foreign corporation must be “primarily and regularly traded on an established securities market in the U.S. or in a qualified foreign country.” To be “primarily traded” on an established securities market, the number of shares of each class of our stock that are traded during any taxable year on all established securities markets in the country where they are listed must exceed the number of shares in each such class that are traded during that year on established securities markets in any other country. Our common shares, which are traded on the Nasdaq Capital Market, meet the test of being “primarily traded.”

To be “regularly traded” one or more classes of our stock representing more than 50% of the total combined voting power of all classes of stock entitled to vote and of the total value of the stock that is listed must be listed on an established securities market (“the vote and value” test) and meet certain other requirements. Our common shares are listed on the Nasdaq Capital Market but do not represent more than 50% of the voting power of all classes of stock entitled to vote. Our Series B Preferred Shares, which have super voting rights and have voting control but are not entitled to dividends, are not listed. Thus, based on a strict reading of the vote and value test described above, our stock is not “regularly traded.”

109
Treasury Regulations provide, in pertinent part, that a class of stock will not be considered to be “regularly traded” on an established securities market for any taxable year in which 50% or more of such class of the outstanding shares of the stock is owned, actually or constructively under specified stock attribution rules, on more than half the days during the taxable year by persons who each own 5% or more of the value of such class of the outstanding stock, which we refer to as the “5% Override Rule.” When more than 50% of the shares are owned by 5% shareholders, then we will be subject to the 5% Override Rule unless we can establish that among the shares included in the closely-held block of stock are a sufficient number of shares in that block to “prevent nonqualified shareholders in the closely held block from owning 50 percent or more of the stock.”

We satisfy the Publicly Traded Test because we obtained an ownership statement from a qualified shareholder who is the ultimate beneficial owner directly and indirectly of 59.2% of our common shares as of the tax period ended December 31, 2025. The shares owned by this qualified shareholder precluded non-qualified shareholders from owning more than 50% of the Company’s issued and outstanding shares during the 2025 tax year. Accordingly, the Company qualifies for the closely held block exception to the Publicly Traded Test as provided for in Treasury Regulation §1.883-2(d)(3)(ii) and will therefore be exempt from the 4% tax.

Taxation in the Absence of Exemption under Section 883 of the Code

If contrary to our position described above the IRS determines that we do not qualify for the benefits of Section 883 of the Code, USSGTI, 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.”

To the extent the benefits of the exemption under Section 883 of the Code are unavailable and USSGTI 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 a rate of 21%. In addition, we may be subject to the 30% “branch profits” tax on earnings effectively connected with the conduct of such 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.

USSGTI would be considered “effectively connected” with the conduct of a U.S. trade or business only if:


 •
We have, or are considered to have, a fixed place of business in the United States involved in the earning of shipping income; and


•
substantially all our USSGTI is attributable to regularly scheduled transportation, such as the operation of a vessel that follows a published schedule with repeated sailings at regular intervals between the same points for voyages that begin or end in the United States.

We do not currently have, nor do we intend to have or permit circumstances that would result in us having, any vessel operating to the United States on a regularly scheduled basis. Based on the foregoing and on the expected mode of our shipping operations and other activities, we believe that none of our USSGTI will be “effectively connected” with the conduct of a U.S. trade or business.

U.S. Taxation of Gain on Sale of Vessels

Regardless of whether we qualify for exemption under Section 883 of the Code, we do not expect to 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.

110
U.S. Federal Income Taxation of U.S. Holders

As used herein, the term “U.S. Holder” means a beneficial owner of our common shares that is a U.S. citizen or resident, 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 (i) 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 (ii) it has in place an election to be treated as a United States person for U.S. federal income tax purposes.

If a partnership holds our common shares, the tax treatment of a partner of such partnership 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 tax adviser.

No ruling has been or will be requested from the IRS regarding any matter affecting the Company or its shareholders. The statements made here may not be sustained by a court if contested by the IRS.

Distributions

Subject to the discussion of the PFIC rules, below, any distributions made by us with respect to our common shares to a U.S. Holder will generally constitute dividends to the extent of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess of such 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. However, we do not expect to calculate earnings and profits in accordance with U.S. federal income tax principles. Accordingly, you should expect to generally treat the distributions we make as dividends. 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 with respect to our common shares will generally be treated as “passive category income” for purposes of computing allowable foreign tax credits for U.S. foreign tax credit purposes.

Dividends paid on our common shares to a U.S. non-corporate holder will generally be treated as ordinary income. However, if you are a U.S. non-corporate holder, dividends that constitute qualified dividend income will be taxable to you at the preferential rates applicable to long-term capital gains provided that you hold the shares for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date and meet other holding period requirements. Dividends paid with respect to the shares generally will be qualified dividend income provided that, in the year that you receive the dividend, the shares are readily tradable on an established securities market in the United States. Our common shares are listed on the Nasdaq Capital Market, and we therefore expect that dividends will be qualified dividend income.

Special rules may apply to any “extraordinary dividend,” generally, a dividend paid by us in an amount which is equal to or in excess of 10% of a shareholder’s adjusted tax basis (or fair market value in certain circumstances) or dividends received within a one-year period that, in the aggregate, equal or exceed 20% of a shareholder’s adjusted tax basis (or fair market value upon the shareholder’s election) in a common share. If we pay an “extraordinary dividend” on our common shares that is treated as “qualified dividend income,” then any loss derived by a U.S. non-corporate holder from the sale or exchange of such common shares will be treated as long-term capital loss to the extent of such dividend.

Sale, Exchange or other Disposition of Common Shares

Subject to the discussion of our status as a PFIC below, 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 from such sale, exchange or other disposition and the U.S. Holder’s tax basis in such stock. Subject to the discussion of the PFIC rules below, such gain or loss will be treated as long-term capital gain or loss if the U.S. Holder’s holding period is greater than one year at the time of the sale, exchange or other disposition. Such capital gain or loss will generally be treated as U.S.-source income or loss, as applicable, for U.S. foreign tax credit purposes. A U.S. Holder’s ability to deduct capital losses is subject to certain limitations.

111
Passive Foreign Investment Company Status and Significant Tax Consequences

Special U.S. 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 (generally determined by reference to the corporation’s assets on the last day of each calendar quarter) 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 subsidiaries’ 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” for these purposes. 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.

In general, income derived from the bareboat charter of a vessel will be treated as “passive income” for purposes of determining whether we are a PFIC, and such vessel will be treated as an asset which produces or is held to produce “passive income.” On the other hand, income derived from the time charter of a vessel should not be treated as “passive income” for such purpose, but rather should be treated as services income; likewise, a time chartered vessel should generally not be treated as an asset which produces or is held for the production of “passive income.”

Based on our current assets and activities, we do not believe that we will be a PFIC for the current taxable year and do not expect to be a PFIC for subsequent taxable years. Although there is no legal authority directly on point, and we are not relying upon an opinion of counsel on this issue, our belief is based principally on the position that, for purposes of determining whether we are a PFIC, we take the position that the gross income we derive or are deemed to derive from the time and voyage chartering activities and pool arrangements of our wholly owned subsidiaries should constitute services income, rather than rental income. Correspondingly, such income should 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, particularly the vessels, should not constitute passive assets for purposes of determining whether we were a PFIC. We believe there is substantial legal authority supporting our position consisting of case law and IRS pronouncements concerning the characterization of income derived from time charters and voyage charters as services income for other tax purposes. However, in the absence of any legal authority specifically relating to the statutory provisions governing PFICs, the IRS or a court could disagree with our position.

In addition, in concluding that we do not believe we were a PFIC for our 2025 taxable year, we are relying on the application of certain “look-through” rules, taking into account certain intercompany items (including our interest in Castor and Robin).  The application of these rules can be complex and can depend on facts that may change in the future.

PFIC status is also determined annually, and further depends upon the composition of our gross income and assets, both of which are subject to change. Therefore, there can be no assurance as to our PFIC status for the current taxable year or for future taxable years, nor any assurance that the IRS or a court will agree with our determination of our PFIC status.

Notwithstanding any election that a U.S. Holder makes with regard to our shares, dividends received from the Company will not constitute qualified dividend income to such U.S. Holder if the Company is a PFIC (or is treated as a PFIC ) either in the taxable year of the distribution or the preceding taxable year.  Dividends that such U.S. Holder receives that do not constitute qualified dividend income are not eligible for taxation at the preferential rates applicable to qualified dividend income.  Instead, a U.S. Holder must include the gross amount of any such dividend paid by the Company out of the Company’s accumulated earnings and profits (as determined for U.S. federal income tax purposes) in such U.S. Holder’s gross income, and it will be subject to tax at rates applicable to ordinary income.

112
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 U.S. federal income taxation rules depending on whether the U.S. Holder makes an election to treat us as a “Qualified Electing Fund,” which election is referred to as a “QEF Election.” As discussed below, 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, which election is referred to as a “Mark-to-Market Election.” A U.S. Holder holding PFIC shares that does not make either a “QEF Election” or “Mark-to-Market Election” will be subject to the Default PFIC Regime, as defined and discussed below in “—Taxation of U.S. Holders Not Making a Timely QEF or “Mark-to-Market” Election.”

If the Company were to be treated as a PFIC, a U.S. Holder would be required to file IRS Form 8621 to report certain information regarding the Company. If you are a U.S. Holder who held our common shares during any period in which we are a PFIC, you are strongly encouraged to consult your tax adviser.

The QEF Election

If 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 his 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 made by us to 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. An Electing Holder would generally recognize capital gain or loss on the sale, exchange or other disposition of our common shares. It should be noted that if any of our subsidiaries is treated as a corporation for U.S. federal income tax purposes, a U.S. Holder must make a separate QEF Election with respect to each such subsidiary.
 
Taxation of U.S. Holders Making a “Mark-to-Market” Election

If we are a PFIC in a taxable year and our shares are treated as “marketable stock” in such year, you may make a Mark-to-Market Election with respect to your shares. As long as our common shares are traded on the Nasdaq Capital Market, as they currently are and as they may continue to be, our common shares should be considered “marketable stock” for purposes of making the Mark-to-Market Election. However, a Mark-to-Market Election generally cannot be made for equity interests in any lower-tier PFICs that we own, unless shares of such lower-tier PFIC are themselves “marketable.” As a result, even if a U.S. Holder validly makes a Mark-to-Market Election with respect to our common shares, the U.S. Holder may continue to be subject to the Default PFIC Regime (described below) with respect to the U.S. Holder’s indirect interest in any of our subsidiaries that are treated as an equity interest in a PFIC. U.S. Holders are urged to consult their own tax advisers in this regard.

Taxation of U.S. Holders Not Making a Timely QEF or “Mark-to-Market” Election

Finally, a U.S. Holder who does not make either a QEF Election or a Mark-to-Market Election with respect to any taxable year in which we are treated as a PFIC, or a U.S. Holder whose QEF Election is invalidated or terminated (or a “Non-Electing Holder”), would be subject to special rules, or the Default PFIC Regime, with respect to (1) any excess distribution (i.e., the portion of any distributions received by the Non-Electing Holder on the common shares in a taxable year (other than the taxable year in which such Non-Electing Holder’s holding period in the common shares begins) 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, redemption or other disposition of the common shares.

Under the Default PFIC Regime:


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

113

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


•
the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed tax deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year.

Any distributions other than “excess distributions” by us to a Non-Electing Holder will be treated as discussed above under “—Distributions.”

If a Non-Electing Holder who is an individual dies while owning the common shares, such Non-Electing Holder’s successor generally would not receive a step-up in tax basis with respect to the common shares, in relation to their ownership of our shares.

Shareholder Reporting

A U.S. Holder that owns “specified foreign financial assets” with an aggregate value in excess of $50,000 (and in some circumstances, a higher threshold) may be required to file an information report with respect to such assets with its tax return. “Specified foreign financial assets” may include financial accounts maintained by foreign financial institutions, as well as the following, but only if they are held for investment and not held in accounts maintained by financial institutions: (i) stocks and securities issued by non-United States persons, (ii) financial instruments and contracts that have non-United States issuers or counterparties, and (iii) interests in foreign entities. Significant penalties may apply for failing to satisfy this filing requirement. U.S. Holders are urged to contact their tax advisors regarding this filing requirement.

U.S. Federal Income Taxation of “Non-U.S. Holders”

A beneficial owner of our common shares (other than a partnership) that is not a U.S. Holder is referred to herein as a “Non-U.S. Holder.”

Dividends on Common Shares

Non-U.S. Holders generally will not be subject to U.S. federal income tax or withholding tax on dividends received from us with respect to our common shares, unless that income is effectively connected with a trade or business conducted by the Non-U.S. Holder 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 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

Non-U.S. Holders generally will not be subject to U.S. federal income tax 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 a trade or business conducted by the Non-U.S. Holder 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 that gain, that gain is taxable only if it is attributable to a permanent establishment maintained by the Non-U.S. Holder in the United States; or


•
the Non-U.S. Holder is an individual who is present in the United States for 183 days or more 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 stock that is effectively connected with the conduct of that trade or business will generally be subject to U.S. federal income tax in the same manner as discussed in the previous section relating to the taxation of U.S. Holders. In addition, in the case of a corporate Non-U.S. Holder, the earnings and profits of such Non-U.S. Holder that are attributable to 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 U.S. income tax treaty.

114
Backup Withholding and Information Reporting

If you are a U.S. Individual Holder, information reporting requirements on IRS Form 1099 generally will apply to dividend payments or other taxable distributions made to you within the United States, and the payment of proceeds to you from the sale of common shares effected at a United States office of a broker.

Additionally, backup withholding may apply to such payments if you fail to comply with applicable certification requirements or (in the case of dividend payments) are notified by the IRS that you have failed to report all interest and dividends required to be shown on your federal income tax returns.

If you are a Non-U.S. Holder, you are generally exempt from backup withholding and information reporting requirements with respect to dividend payments made to you outside the United States by us or another non-United States payor. You are also generally exempt from backup withholding and information reporting requirements in respect of dividend payments made within the United States and the payment of the proceeds from the sale of common shares effected at a United States office of a broker, as long as either (i) you have furnished a valid IRS Form W-8 or other documentation upon which the payor or broker may rely to treat the payments as made to a non-United States person, or (ii) you otherwise establish an exemption.

Payment of the proceeds from the sale of common shares effected at a foreign office of a broker generally will not be subject to information reporting or backup withholding. However, a sale effected at a foreign office of a broker could be subject to information reporting in the same manner as a sale within the United States (and in certain cases may be subject to backup withholding as well) if (i) the broker has certain connections to the United States, (ii) the proceeds or confirmation are sent to the United States or (iii) the sale has certain other specified connections with the United States.

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

Other Tax Considerations

In addition to the income tax consequences discussed above, the Company may be subject to tax, including tonnage taxes, in one or more other jurisdictions where the Company conducts activities. All our vessel-owning subsidiaries are subject to tonnage taxes. Generally, under a tonnage tax, a company is taxed based on the net tonnage of qualifying vessels such company operates, independent of actual earnings. The amount of any tonnage tax imposed upon our operations may be material.

F.
Dividends and Paying Agents

Not applicable.

G.
Statement by Experts

Not applicable.

H.
Documents on Display

We are subject to the informational requirements of the Exchange Act. In accordance with these requirements we file reports and other information with the SEC, including annual reports on Form 20-F and periodic reports on Form 6-K. The SEC maintains an Internet website that contains reports and other information about issuers, like us, that file electronically with the SEC. The address of that website is www.sec.gov. Our filings will also be available on our website at www.torocorp.com. This web address is provided as an inactive textual reference only. Information contained on, or that can be accessed through, these websites, does not constitute part of, and is not incorporated into, this Annual Report.

115
As a foreign private issuer, we are exempt under the Exchange Act from, among other things, the rules prescribing the furnishing and content of proxy statements, and our executive officers, directors and principal shareholders are exempt from the short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. However, we intend to furnish or make available to our shareholders annual reports containing our financial statements prepared in accordance with GAAP.

Shareholders may also request a copy of our filings at no cost, by writing or telephoning us at the following address:

Toro Corp.
223 Christodoulou Chatzipavlou Street
Hawaii Royal Gardens
3036 Limassol, Cyprus
Tel: + 357 25 357 768

I.
Subsidiary Information

Not applicable.

J.
Annual Report to Security Holders

Not applicable.

ITEM 11.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to various market risks, including foreign currency fluctuations, changes in interest rates and credit risk. Our activities expose us primarily to the financial risks of changes in foreign currency exchange rates and credit risk as described below.
 
Foreign Currency Exchange Rate Risk

We generate all of our revenues in U.S. dollars. A minority of our vessels’ operating expenses, from continuing and discontinued operations, (approximately 4.6% for the year ended December 31, 2024 and 5.4% for the year ended December 31, 2025) and of our general and administrative expenses (approximately 2.8% for the year ended December 31, 2024 and 5.5% for the year ended December 31, 2025) are in currencies other than the U.S. dollar, primarily Euro. For accounting purposes, expenses incurred in other currencies are converted into U.S. dollars at the exchange rate prevailing on the date of each transaction. We do not consider the risk from exchange rate fluctuations to be material for our results of operations because as of December 31, 2024 and as of December 31, 2025, these non-U.S. dollar expenses represented 3.1% and 5.1% our revenues, from continuing and discontinued operations, respectively. However, the portion of our business conducted in other currencies could increase in the future, which could increase our exposure to losses arising from exchange rate fluctuations.

Credit Risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. Financial instruments that potentially subject the Company to credit risk consists of a revolving credit facility, namely the $60.0 million revolving credit facility which was entered into on March 30, 2026 and partially drawn down on April 2, 2026. The carrying amount of financial assets recorded in the financial statements, net of any allowance for credit losses, represents the maximum exposure to credit risk. To reduce credit risk, the Company evaluates its credit risk by performing ongoing credit evaluation on the borrower’s financial condition and establishes an allowance for credit losses based on its best estimate of potentially uncollectible amounts. As per the Company’s assessment, no such case was identified as at December 31, 2025.

Interest Rate Risk

As of December 31, 2025, the Company had no outstanding indebtedness. On March 30, 2026, the Company entered into a $60.0 million senior secured revolving credit facility with a leading European Bank, which bears interest at Term SOFR plus a margin per annum. Our interest expense has been affected by changes in the general level of interest rates, particularly SOFR. As an indication of the extent of our sensitivity to interest rate changes and based on $15.0 million drawn, an increase in SOFR of 1% would increase the Company's annual interest expense by approximately $0.2 million. The Company currently has no interest rate hedging instruments in place. Management monitors interest rate developments and may enter into derivative instruments in the future to manage this exposure.

Inflation Risk

Inflation has not had a material effect on our expenses in the preceding fiscal year. In the event that significant global inflationary pressures appear, these pressures would increase our operating costs.

ITEM 12.
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.
116
PART II

ITEM 13.
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not applicable.

ITEM 14.
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

 We have adopted the Stockholders Protection Rights Agreement, pursuant to which each of our common shares includes one right that entitles the holder to purchase from us a unit consisting of one-thousandth of a share of our Series C Participating Preferred Shares if any third party seeks to acquire control of a substantial block of our common shares without the approval of our Board. See “Item 10. Additional Information—B. Memorandum and Articles of Association—Stockholders Rights Agreement” included in this Annual Report and Exhibit 2.1 (Description of Securities) to this Annual Report for a description of our Stockholders Rights Agreement.

Please also see “Item 10. Additional Information—B. Memorandum and Articles of Association” for a description of the rights of holders of our Series A Preferred Shares and Series B Preferred Shares relative to the rights of holders of our common shares.

ITEM 15.
CONTROLS AND PROCEDURES

A.
Disclosure Controls and Procedures

As of December 31, 2025, our management conducted an evaluation pursuant to Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act, as amended, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act.

The term disclosure controls and procedures is defined under SEC rules as controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer’s management or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.

Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the partnership have been detected. Further, in the design and evaluation of our disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Based upon that evaluation, our management concluded that, as of December 31, 2025 our disclosure controls and procedures which include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to management, as appropriate to allow timely decisions regarding required disclosure, were effective in providing reasonable assurance that information that was required to be disclosed by us in reports we file or submit under the Exchange Act was recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC.

117
B.
Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) promulgated under the Exchange Act. Our internal controls were designed to provide reasonable assurance as to the reliability of our financial reporting and the preparation and presentation of our financial statements for external purposes in accordance with accounting principles generally accepted in the United States.

Our internal controls over financial reporting includes those policies and procedures that:


 •
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;


•
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of the Company’s management and directors; and


•
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Our management conducted an evaluation of the effectiveness of our internal control over financial reporting based upon the 2013 framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management believes that our internal control over financial reporting was effective as of December 31, 2025.

However, because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate.

C.
Attestation Report of the Registered Public Accounting Firm

This Annual Report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm, since, as an “emerging growth company”, we are exempt from having our independent auditor assess our internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act.

D.
Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the period covered by this Annual Report that have materially affected, or are reasonably likely to affect, our internal control over financial reporting.

ITEM 16.
[RESERVED]

ITEM 16A.
AUDIT COMMITTEE FINANCIAL EXPERT

The Board has determined that Mr. Petros Zavakopoulos, who serves as Chairman of the Audit Committee, qualifies as an “audit committee financial expert” under SEC rules, and that Mr. Zavakopoulos is “independent” under applicable Nasdaq rules and SEC standards.

118
ITEM 16B.
CODE OF ETHICS

On March 7, 2023, we adopted a code of ethics that applies to any of our employees, including our Chief Executive Officer and Chief Financial Officer. The code of ethics may be downloaded from our website (www.torocorp.com). None of the information contained on, or that can be accessed through, the Company’s website is incorporated into or forms a part of this Annual Report. Additionally, any person, upon request, may receive a hard copy or an electronic file of the code of ethics at no cost. If we make any substantive amendment to the code of ethics or grant any waivers, including any implicit waiver, from a provision of our code of ethics, we will disclose the nature of that amendment or waiver on our website. No such amendment was made, or waiver granted, since the adoption of our code of ethics.

ITEM 16C.
PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

Aggregate audit fees billed during the years ended December 31, 2024 and 2025 represent fees billed by our principal accounting firm, Deloitte Certified Public Accountants S.A., an independent registered public accounting firm and member of Deloitte Touche Tohmatsu Limited. For the year ended December 31, 2025, audit fees represent compensation for professional services rendered for the audit of the consolidated financial statements of the Company and for the review of the quarterly financial information, as well as for the audit of predecessor Robin Energy Ltd.’s financial statements for the year ended December 31, 2024. For the year ended December 31, 2024, audit fees represent compensation for professional services rendered for the audit of the consolidated financial statements of the Company and for the review of the quarterly financial information, as well as for the audit of predecessor Robin Energy Ltd.’s financial statements for the year ended December 31, 2022 and 2023 and for the review of the financial information for the six and nine months ended June 30 and September 30, 2024.

Audit fees also include fees billed in connection with the review of registration statements and issuance of related consents and comfort letters and other audit services required for SEC or other regulatory filings.

   
For the year ended
  
In U.S. dollars
  
December
31,
2024
    
December
31,
2025
  
Audit Fees
  
$
320,053
    
$
335,602
  

Audit-Related Fees

Not applicable.

Tax Fees

During 2024 and 2025, tax fees amounted to $16,000 and $10,000, respectively, representing fees for professional services provided in connection with various U.S. income tax advisory services.

All Other Fees

Not applicable.

Audit Committee’s Pre-Approval Policies and Procedures

Our audit committee pre-approves all audit, audit-related and non-audit services not prohibited by law to be performed by our independent auditors and associated fees prior to the engagement of the independent auditor with respect to such services. Prior to the Spin-Off and establishment of our audit committee, the audit committee of Castor pre-approved all such services.

ITEM 16D.
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.

119
ITEM 16E.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PERSONS

Share Repurchase Program

On November 6, 2023, our Board approved a share repurchase program, authorizing the repurchase of up to $5.0 million of our common shares commencing November 10, 2023 through to March 31, 2024. In accordance with the program, shares could be repurchased in open market and/or privately negotiated transactions. The timing, manner and total amount of any share repurchases could be determined by management at its discretion and was dependent upon business, economic and market conditions, corporate and regulatory requirements, prevailing share prices, and other considerations. Such authorization did not obligate us to acquire any specific amount of common shares.

As of March 31, 2024, the termination date of the share repurchase program, we had repurchased the following common shares:

Period
  
Total Number of
Shares Purchased(1),(2)
    
Average Price
Paid per Share(3)
    
Total Number
of Shares Purchased
as part of Publicly
Announced Plans
or Programs
    
Maximum Number
(or Approximate Dollar
Value) of Shares that
May Yet Be Purchased
Under the Plans
or Programs
  
November 10-30, 2023
    
60,176
    
$
4.1901
      
60,176
    
$
4,747,856
  
December 1-31, 2023
    
162,424
    
$
4.8794
      
162,424
    
$
3,955,318
  
January 1-31, 2024
    
258,990
    
$
5.6152
      
258,990
    
$
2,501,045
  
February 1-29, 2024
    
217,980
    
$
6.0008
      
217,980
    
$
1,193,001
  
March 1-31, 2024
    
167,586
    
$
5.7239
      
167,586
    
$
233,756
  
Total
    
867,156
      
N/A
      
867,156
      
N/A
  

(1)
On November 11, 2023, we announced the launch of the Repurchase Program authorizing the repurchase of up to $5.0 million of our common shares commencing November 10, 2023 through to March 31, 2024. The Repurchase Program was approved by the Board on November 6, 2023. The Repurchase Program may be suspended or terminated at any time by the Board.
(2)
Common shares were repurchased by Toro in open market transactions.
(3)
The average price paid per share does not include commissions paid for each transaction.

On December 27, 2023, 179,251 repurchased common shares were cancelled and were removed from the Company’s share capital. The remaining 43,349 repurchased common shares were classified as treasury shares as they were not cancelled as of December 31, 2023. These 43,349 repurchased common shares were subsequently cancelled and removed from our share capital on January 3, 2024. Between January 1, 2024 and March 31, 2024, the Company also repurchased 644,556 shares of common stock which were cancelled for aggregate consideration of $3.7 million under its share repurchase program. This brought the total number of shares repurchased under the program to 867,156 common shares which were cancelled at an average price of $5.50 per share.

Tender Offer

On July 10, 2025, our Board approved a tender offer to purchase up to 4,500,000 of our common shares, using funds available from cash and cash equivalents on hand, at a price of $2.75 per share. The tender offer expired at the end of the day, on August 7, 2025. The Board determined that it was in the Company’s best interest to repurchase shares at such time given the Company’s cash position and stock price. Based on the final count by the depositary for the tender offer, 20,344 shares were tendered. The Company accepted all of these shares for purchase in accordance with the terms of the tender offer at a price of $2.75 per share, net to the seller in cash, less any applicable withholding taxes and without interest, for an aggregate cost of $0.3 million including fees relating to the tender offer, and these repurchase shares were cancelled.

120
ITEM 16F.
CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

Not applicable.

ITEM 16G.
CORPORATE GOVERNANCE

Pursuant to an exception under the Nasdaq listing standards available to foreign private issuers, we are not required to comply with all of the corporate governance practices followed by U.S. companies under the Nasdaq listing standards, which are available at www.nasdaq.com, because in certain cases we follow our home country (Marshall Islands) practice. Pursuant to Section 5600 of the Nasdaq Listed Company Manual, we are required to list the significant differences between our corporate governance practices that comply with and follow our home country practices and the Nasdaq standards applicable to listed U.S. companies. Set forth below is a list of those differences:


 •
Independence of Directors. The Nasdaq requires that a U.S. listed company maintain a majority of independent directors. Although our Board is currently composed of three directors a majority of whom are independent, we cannot assure you that in the future we will have a majority of independent directors.


•
Executive Sessions. The Nasdaq requires that non-management directors meet regularly in executive sessions without management. The Nasdaq also requires that all independent directors meet in an executive session at least once a year. As permitted under Marshall Islands law and our bylaws, our non-management directors do not regularly hold executive sessions without management.


•
Nominating/Corporate Governance Committee. The Nasdaq requires that a listed U.S. company have a nominating/corporate governance committee of independent directors and a committee charter specifying the purpose, duties and evaluation procedures of the committee. As permitted under Marshall Islands law and our bylaws, we do not currently have a nominating or corporate governance committee, nor do we expect to establish such committees.


•
Compensation Committee. The Nasdaq requires U.S. listed companies to have a compensation committee composed entirely of independent directors and a committee charter addressing the purpose, responsibility, rights and performance evaluation of the committee. As permitted under Marshall Islands law, we do not currently have a compensation committee. To the extent we establish such committee in the future, it may not consist of independent directors, entirely or at all.


•
Audit Committee. The Nasdaq requires, among other things, that a listed U.S. company have an audit committee with a minimum of three members, all of whom are independent. As permitted by Nasdaq Rule 5615(a)(3), we follow home country practice regarding audit committee composition. Therefore, our audit committee is composed of two independent directors, Mr. Angelos Rounick Platanias and Mr. Petros Zavakopoulos. Although the members of our audit committee are independent, we are not required to ensure their independence under Nasdaq Rule 5605(c)(2)(A) subject to compliance with Rules 10A-3(b)(1) and 10A-3(c) under the Securities Exchange Act of 1934.


•
Shareholder Approval Requirements. The Nasdaq requires that a listed U.S. company obtain prior shareholder approval for certain issuances of authorized stock or the approval of, and material revisions to, equity compensation plans. As permitted under Marshall Islands law and our bylaws, we do not intend seek shareholder approval prior to issuances of authorized stock or the approval of and material revisions to equity compensation plans.


•
Corporate Governance Guidelines. The Nasdaq requires U.S. companies to adopt and disclose corporate governance guidelines. The guidelines must address, among other things: director qualification standards, director responsibilities, director access to management and independent advisers, director compensation, director orientation and continuing education, management succession and an annual performance evaluation of the Board. We are not required to adopt such guidelines under Marshall Islands law and we have not and do not intend to adopt such guidelines.

121
ITEM 16H.
MINE SAFETY DISCLOSURE

Not applicable.

ITEM 16I.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

ITEM 16J.
INSIDER TRADING POLICIES

We have adopted an insider trading policy governing the purchase, sale, and other dispositions of our securities by directors, officers, and employees that are reasonably designed to promote compliance with applicable insider trading laws, rules and regulations, and any applicable listing standards. A copy of our insider trading policy is included in the exhibits to this Annual Report on Form 20-F.

ITEM 16K.
CYBERSECURITY

 We maintain various cybersecurity measures and protocols to safeguard our systems and data and continuously monitor and assess potential threats to pre-emptively address any emerging cyber risks. We have implemented various processes for assessing, identifying, and managing material risks from cybersecurity threats, which are integrated into our overall risk management framework. These processes include access controls to organizational systems, data encryption, cybersecurity training and security awareness campaigns through direct mail, and are designed to systematically evaluate potential vulnerabilities and cybersecurity threats and minimize their potential impact on our organization’s operations, assets, and stakeholders. Our cybersecurity risk management processes share common methodologies, reporting channels and governance processes with our broader risk management processes. By embedding cybersecurity risk management into and aligning it with our broader risk management processes, we aim to ensure a comprehensive and proactive approach to safeguarding our assets and operations.

We engage assessors, consultants, auditors, and other third-party specialists to enhance the effectiveness of our cybersecurity processes, augment our internal capabilities, validate our controls, and stay abreast of evolving cybersecurity risks and best practices.


We have not detected any cybersecurity incidents that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition.


Responsibility for overseeing cybersecurity risks is integrated into the purview of the Information Technology and Cybersecurity Department of Castor Ships (the “ITC Department”), our commercial and technical co-manager. The ITC Department is responsible for monitoring, detecting and assessing cybersecurity risks and incidents at the parent company, subsidiary and vessel level. The ITC Department provides these services to us pursuant to the Master Management Agreement.


We also utilize third-party service providers for certain IT-related and other services, where appropriate, to assess, test or otherwise assist with aspects of our security controls. Accordingly, we also implement processes to oversee and identify material cybersecurity risks associated with our utilization of third-party service providers on whom we have a material dependency, such as conducting due diligence assessments to evaluate their cybersecurity measures, data protection practices, and compliance with relevant regulatory requirements.


The ITC Department currently comprises a senior IT professional who has approximately 15 years’ experience in risk management, cybersecurity, and information technology. This individual has, and any future members of the ITC Department are expected to have, credentials relevant to their role, which includes prior experience working in similar roles and formal education (e.g., a Bachelor of Science in information technology fields). The ITC Department is also expected to keep abreast of cybersecurity best practices and procedures. The ITC Department is responsible for assessing, identifying and mitigating material cybersecurity risks, including at a strategic level, monitoring for, defending against and remediating cybersecurity incidents and implementing and making improvements to our overall cybersecurity strategy. The ITC Department utilizes key performance indicators and metrics to monitor their performance and track progress towards goals established by the ITC Department.


As we do not have a dedicated board committee solely focused on cybersecurity, our full Board oversees the implementation of our cybersecurity strategy, as well as cybersecurity risks, with the aim of protecting our interests and assets. Our cybersecurity strategy was developed by the ITC Department and approved by senior management. The Board receives periodic reports and presentations on cybersecurity risks from the ITC Department, including regarding recent incidents or breaches (if any), vulnerabilities, mitigation strategies and the overall effectiveness of our cybersecurity program. These reports highlight significant or emerging cybersecurity threats, their potential impact on the organization, ongoing initiatives to mitigate risks and any proposed actions or investments required to enhance our cybersecurity posture.

122
PART III

ITEM 17.
FINANCIAL STATEMENTS

See Item 18.

ITEM 18.
FINANCIAL STATEMENTS

The financial information required by this Item is set forth on pages F-2 to F-35 filed as part of this Annual Report.

ITEM 19.
EXHIBITS

Amended & Restated Articles of Incorporation of Toro (incorporated by reference to Exhibit 1.1 to Toro’s registration statement on Form 20-F filed with the SEC on December 30, 2022).
   
Amended & Restated Bylaws of Toro (incorporated by reference to Exhibit 1.2 to Toro’s registration statement on Form 20-F filed with the SEC on December 30, 2022).
   
Statement of Designation of the Rights, Preferences and Privileges of the 1.00% Series A Fixed Rate Cumulative Perpetual Convertible Preferred Shares of Toro (incorporated by reference to Exhibit 1.3 to Toro’s registration statement on Form 20-F filed with the SEC on December 30, 2022).
   
1.3.1
Amendment To Statement Of Designation of Rights, Preferences And Privileges of 1.00% Series A Fixed Rate Cumulative Perpetual Convertible Preferred Shares of Toro Corp.
   
Statement of Designation of the Rights, Preferences and Privileges of the Series B Preferred Shares of Toro (incorporated by reference to Exhibit 1.4 to Toro’s registration statement on Form 20-F filed with the SEC on November 16, 2022).
   
Statement of Designation of the Rights, Preferences and Privileges of the Series C Participating Preferred Shares of Toro (incorporated by reference to Exhibit 1.5 to Toro’s registration statement on Form 20-F filed with the SEC on November 16, 2022).
   
Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.
   
Shareholder Protection Rights Agreement by and between Toro and Broadridge Corporate Issuer Solutions, Inc., as rights agent (incorporated by reference to Exhibit 4.1 to Toro’s registration statement on Form 20-F filed with the SEC on December 1, 2022).
   
Contribution and Spin-Off Distribution Agreement between Toro and Castor Maritime Inc. (incorporated by reference to Exhibit 4.2 to Toro’s annual report on Form 20-F filed with the SEC on March 8, 2023).
   
Master Management Agreement by and among Toro, its shipowning subsidiaries and Castor Ships S.A. (incorporated by reference to Exhibit 4.3 to Toro’s registration statement on Form 20-F filed with the SEC on November 16, 2022).

123
Subscription Agreement by and between Toro Corp. and Pani Corp., dated as of April 17, 2023 (incorporated by reference to Exhibit 4.2 of Toro’s registration statement on Form F-3 (File No. 333-275478) filed with the SEC on November 13, 2023).
   
Share Purchase Agreement by and between Toro Corp. and Castor Maritime Inc., dated as of August 7, 2023 (incorporated by reference to Exhibit 99.1 of Toro’s report on Form 6-K furnished to the SEC on August 8, 2023).
   
Share Purchase Agreement by and between Castor Maritime Inc. and Toro Corp., dated as of December 12, 2024 (incorporated by reference to Exhibit 99.1 of Toro’s report on Form 6-K furnished to the SEC on December 12, 2024).
   
Robin Contribution and Spin-Off Distribution Agreement by and between Toro Corp and Robin Energy Ltd., dated as of April 14, 2025 (incorporated by reference to Exhibit 4.8 of Toro’s annual report on Form 20-F filed with the SEC on April 15, 2025).
   
4.8
Loan Agreement by and between Starfire Shipping Co., Nightwing Shipping Co., Quicksilver Shipping Co., Mantis Shipping Co. and Hamburg Commercial Bank AG, dated as of March 30, 2026.
   
List of Subsidiaries.
   
Toro Insider Trading Policy.
   
Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer.
   
Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer.
   
Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
   
Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
   
Consent of Independent Registered Public Accounting Firm.
   
Policy Regarding the Recovery of Erroneously Awarded Incentive-Based Compensation (incorporated by reference to Exhibit 97.1 of Toro’s annual report on Form 20-F filed with the SEC on March 12, 2024).
   
101.INS
Inline XBRL Instance Document.
   
101.SCH
Inline XBRL Taxonomy Extension Schema Document.
   
101.CAL
Inline XBRL Taxonomy Extension Schema Calculation Linkbase Document.
   
101.DEF
Inline XBRL Taxonomy Extension Schema Definition Linkbase Document.
   
101.LAB
Inline XBRL Taxonomy Extension Schema Label Linkbase Document.
   
101.PRE
Inline XBRL Taxonomy Extension Schema Presentation Linkbase Document.
   
104
Cover Page Interactive Data File (Inline XBRL included in Exhibit 101).

124
SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and has duly caused and authorized the undersigned to sign this Annual Report on its behalf.

TORO CORP.    
     
/s/ Petros Panagiotidis
April 15, 2026
  
Name: Petros Panagiotidis
    
Title: Chairman and Chief Executive Officer
    

125
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Toro Corp.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Toro Corp. and subsidiaries (the “Company”) as of December 31, 2024 and 2025, the related consolidated statements of comprehensive income, shareholders’ equity and mezzanine equity, and cash flows, for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2025, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
 
Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
 
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
 
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Deloitte Certified Public Accountants S.A.
Athens, Greece
April 15, 2026

We have served as the Company’s auditor since 2022.
F-2
TORO CORP.
CONSOLIDATED BALANCE SHEETS
December 31, 2024 and December 31, 2025
(Expressed in U.S. Dollars – except for share data)

​
        
December 31,
    
December 31,
  
ASSETS
  
Note
    
2024
    
2025
  
CURRENT ASSETS:
                  
Cash and cash equivalents
        
$
37,193,010
    
$
87,418,906
  
Due from related parties, current
    
4
      
6,072,800
      
7,431,696
  
Accounts receivable trade, net
            
416,300
      
69,900
  
Inventories
            
194,981
      
200,395
  
Prepaid expenses and other assets
            
291,832
      
548,774
  
Investment in equity securities, current
    7       226,566       209,486  
Loan to related party, current
     4       10,364,205       —  
Accrued charter revenue
            19,590       9,113  
Current assets of discontinued operations
    3       495,003       416,159  
Total current assets
            
55,274,287
      
96,304,429
  
​
                        
NON-CURRENT ASSETS:
                        
Vessels, net
    
4,6
      
72,767,793
      
96,180,562
  
Due from related parties, non-current
    
4
      
1,590,501
      
1,341,549
  
Prepaid expenses and other assets, non-current
            
357,769
      
—
  
Deferred charges, net
    
5
      
1,081,481
      
1,835,981
  
Investment in equity securities, non-current
    7
       4,647,853       5,647,853  
Investment in related party
     4
       100,687,500       127,118,569  
Investment in debt securities
             —       2,918,353  
Loan to related party, non-current
     4
       90,000,000       —  
Total non-current assets
            
271,132,897
      
235,042,867
  
Total assets
          
$
326,407,184
    
$
331,347,296
  
​
                        
LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY
                        
CURRENT LIABILITIES:
                        
Due to related parties
    
4
      
338,333
      
299,444
  
Accounts payable
            770,826       1,127,638  
Deferred revenue
            
984,000
      
768,785
  
Accrued liabilities
            
982,636
      
848,998
  
Dividend payable
     9,19
       —       37,578,641  
Current liabilities of discontinued operations
    3       1,619,763       1,315,502  
Total current liabilities
            
4,695,558
      
41,939,008
  
​
                        
NON-CURRENT LIABILITIES:
                        
Total non-current liabilities
             —       —  
​
                        
Commitments and contingencies
    
12
              
​
                        
MEZZANINE EQUITY:
                        
1.00% Series A fixed rate cumulative perpetual convertible preferred shares: 140,000 shares issued and outstanding as of December 31, 2024, and December 31, 2025, respectively, aggregate liquidation preference of $140,000,000 as of December 31, 2024, and December 31, 2025, respectively
     10
       122,665,819       125,809,233  
Total mezzanine equity
             122,665,819       125,809,233  
 
                        
SHAREHOLDERS’ EQUITY:
                        
Common shares, $0.001 par value: 3,900,000,000 shares authorized; 19,093,853 and 21,473,509 shares issued and outstanding as of December 31, 2024, and December 31, 2025, respectively
     9,13
       19,094       21,474  
Preferred shares, $0.001 par value: 100,000,000 shares authorized; Series B preferred shares: 40,000 shares issued and outstanding as of December 31, 2024, and December 31, 2025, respectively
     9
       40       40  
Additional paid-in capital
             58,605,224       59,304,814  
Retained Earnings
             140,421,449       104,272,727  
Total shareholders’ equity
             199,045,807       163,599,055  
Total liabilities, mezzanine equity and shareholders’ equity
           $ 326,407,184     $ 331,347,296  

The accompanying notes are an integral part of these consolidated financial statements.

F-3
TORO CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the years ended December 31, 2023, 2024 and 2025
(Expressed in U.S. Dollars – except for share data)

       
Year ended
December 31,
    
Year ended
December 31,
    
Year ended
December 31,
  
​
  
Note
    
2023
    
2024
     2025
  
REVENUES:
                        
Time charter revenues
    
15
    
$
3,439,356
    
$
14,315,299
     $ 19,013,061  
Voyage charter revenues
    
15
      
3,253,385
      
1,310,312
       —  
Pool revenues
    
15
      
15,611,872
      
6,768,672
       2,068,779  
Total vessel revenues
            
22,304,613
      
22,394,283
       21,081,840  
​
                                
EXPENSES:
                                
Voyage expenses (including $279,719, $418,070 and $641,813 to related party for the year ended December 31, 2023, 2024 and 2025, respectively)
   
4,16
      
(2,505,152
)
    
(1,594,751
)
     (1,307,290 )
Vessel operating expenses (including, $0, $0 and $190,000 to related party for the year ended December 31, 2023, 2024 and 2025, respectively)
    
16
      
(9,392,960
)
    
(9,300,399
)
     (9,079,838 )
Management fees to related parties
    
4
      
(1,710,651
)
    
(1,930,810
)
     (1,807,089 )
Provision for doubtful accounts
     2      
—
      
(25,369
)
     —  
Depreciation and amortization
    
5,6
      
(3,364,618
)
    
(4,901,246
)
     (4,934,655 )
General and administrative expenses (including $4,007,215, $8,670,424 and $7,044,340 to related party for the year ended December 31, 2023, 2024 and 2025, respectively)
    
4,13
      
(5,357,265
)
    
(10,198,863
)
     (8,602,749 )
Gain on sale of vessel
    
6
      
8,226,258
      
—
       —  
Total expenses
          
$
(14,104,388
)
  
$
(27,951,438
)
   $ (25,731,621 )
​
                                
Operating income/(loss)           $ 8,200,225     $ (5,557,155 )   $ (4,649,781 )
​
                                
OTHER (EXPENSES)/INCOME:
                                
Interest and finance costs
            
(31,815
)
    
(230,531
)
     (68,116 )
Interest income
            
2,053,749
      
8,354,608
       2,812,933  
Interest income from related party
     4
       —       364,205       1,771,836  
Dividend income from related party
     4,17
       1,020,833       2,645,833       5,651,212  
Foreign exchange (losses)/gains            
(14,978
)
    
(21,019
)
     35,352  
Dividend income on equity securities
     7
       —       4,136       4,623  
(Loss)/ Income on equity securities
     7       —       (48,542 )     54,999  
Total other income, net
          
$
3,027,789
    
$
11,068,690
     $ 10,262,839  
​
                                
Net income and comprehensive income from continuing operations, before taxes
          
$
11,228,014
    
$
5,511,535
     $ 5,613,058  
Income taxes
            
(47,071
)
    
—
       —  
Net income and comprehensive income from continuing operations, net of taxes
           $ 11,180,943     $ 5,511,535     $ 5,613,058  
Net income and comprehensive income from discontinued operations, net of taxes
     3
     $ 129,456,050     $ 19,695,969     $ 321,387  
Net income and comprehensive income
          
$
140,636,993
    
$
25,207,504
     $ 5,934,445  
Dividend on Series A Preferred Shares
    
4,14
       (1,166,667 )     (1,423,333 )     (1,361,112 )
Deemed dividend on Series A Preferred Shares
    
9,14
       (2,429,275 )     (3,064,409 )     (3,143,414 )
Net income attributable to common shareholders
           $ 137,041,051     $ 20,719,762     $ 1,429,919  
Earnings/(loss) per common share, basic, continuing operations
     14       0.31       (0.04 )     0.06  
Earnings/(loss) per common share, diluted, continuing operations
     14       0.21       (0.04 )     0.06  
Earnings per common share, basic, discontinued operations
     14
       8.38       1.13       0.02  
Earnings per common share, diluted, discontinued operations
     14
       2.66       1.13       0.02  
Earnings per common share, basic, total
    
14
       8.69       1.09       0.08  
Earnings per common share, diluted, total
    
14
       2.87       1.09       0.08  
Weighted average number of common shares, basic
    
14
       15,443,485       17,399,772       17,886,372  
Weighted average number of common shares, diluted
    
14
       48,659,725       17,399,772       17,886,372  

The accompanying notes are an integral part of these consolidated financial statements.

F-4
TORO CORP.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY AND MEZZANINE EQUITY
For the years ended December 31, 2023, 2024 and 2025
(Expressed in U.S. Dollars – except for share data)

                                  Treasury stock                            
Mezzanine equity
  
   
# of
Series B
Preferred
Shares
    
Par
Value of
Preferred
Series B shares
    
# of
Common
shares
    
Par
Value of
Common
Shares
    
Additional
Paid-in
capital
     # of shares
    Amount
    
Due from
Stockholder
    
Former
Parent
Company
Investment
    
(Accumulated
deficit)/
Retained
Earnings
    
Total
Shareholders’
Equity
    
# of
Series A
Preferred
Shares
    
Mezzanine
Equity
  
Balance, December 31, 2022
     —       —       1,000       1       —       —       —       (1 )     140,496,912       (32 )     140,496,880       —       —  
Net income and comprehensive income
     —       —       —       —       —       —       —       —       17,339,332       123,297,661       140,636,993       —       —  
Net increase in Former Parent Company investment
     —       —       —       —       —       —       —       —       211,982       —       211,982       —       —  
Cancellation of common shares due to spin-off
    
—
      
—
      
(1,000
)
    
(1
)
    
—
       —
       —      
1
      
—
      
—
      
—
      
—
      
—
  
Capitalization at spin off, including Issuance of capital and preferred stock, net of costs (Note 9)
    
40,000
      
40
      
9,461,009
      
9,461
      
38,156,985
       —
       —      
—
      
(158,048,226
)
    
—
      
(119,881,740
)
    
140,000
      
117,172,135
  
Issuance of common shares pursuant to private placement
    
—
      
—
      
8,500,000
      
8,500
      
18,638,736
       —
       —      
—
      
—
      
—
      
18,647,236
      
—
      
—
  
Issuance of restricted stock and compensation cost
    
—
      
—
      
1,240,000
      
1,240
      
1,271,458
       —
       —      
—
      
—
      
—
      
1,272,698
      
—
      
—
  
Repurchase of common shares (Note 9)
     —       —       (179,251 )     (179 )     (822,889 )     (43,349 )     (223,840 )     —       —       —       (1,046,908 )     —       —  
Dividend on Series A preferred shares (Note 10)
    
—
      
—
      
—
      
—
      
—
       —
       —      
—
      
—
      
(1,166,667
)
    
(1,166,667
)
    
—
      
—
  
Deemed dividend on Series A preferred shares (Note 10)
    
—
      
—
      
—
      
—
      
—
       —
       —      
—
      
—
      
(2,429,275
)
    
(2,429,275
)
    
—
      
2,429,275
  
Balance, December 31, 2023
    
40,000
      
40
      
19,021,758
      
19,022
      
57,244,290
       (43,349 )     (223,840 )    
—
      
—
      
119,701,687
      
176,741,199
      
140,000
      
119,601,410
  
Net income and comprehensive income
     —
       —
       —
       —
       —
       —
       —
       —
       —
       25,207,504
       25,207,504
       —
       —
  
Issuance of restricted stock and compensation cost (Note 13)
     —       —       760,000       760       5,312,094       —
       —       —       —       —       5,312,854       —          
Repurchase of common shares (Note 9)
     —       —       (687,905 )     (688 )     (3,951,160 )     43,349
       223,840       —       —       —       (3,728,008 )     —       —  
Dividend on Series A preferred shares (Note 10)
     —       —       —       —       —       —
       —       —       —       (1,423,333 )     (1,423,333 )     —       —  
Deemed dividend on Series A preferred shares (Note 10)
     —       —       —       —       —       —
       —       —       —       (3,064,409 )     (3,064,409 )     —       3,064,409  
Balance, December 31, 2024     40,000       40       19,093,853       19,094       58,605,224       —
       —       —       —       140,421,449       199,045,807       140,000       122,665,819  
Net income and Comprehensive income
     —
       —
       —
       —
       —
       —
       —
       —
       —
       5,934,445
       5,934,445
       —
       —
  
Issuance of restricted stock and compensation cost (Note 13)
     —       —       2,400,000       2,400       3,591,606       —       —       —       —       —       3,594,006       —       —  
Distribution of net assets of Robin Energy to Shareholders (Note 1 and 9)
     —       —       —
       —       (5,639,637 )     —       —       —       —       —       (5,639,637 )     —       —  
Repurchase of common shares pursuant to Tender Offer (Note 9)
     —       —       (20,344 )     (20 )     (343,921 )     —       —       —       —       —       (343,941 )     —       —  
Excess of consideration over carrying value of sold assets (Note 4)
     —       —       —       —       3,091,542       —       —       —       —       —       3,091,542       —       —  
Dividend declared ($1.75 per common share) (Note 9,19)
     —       —       —       —       —       —       —       —       —       (37,578,641 )     (37,578,641 )     —       —  
Dividend on Series A preferred shares (Note 10)
     —       —       —       —       —       —       —       —       —       (1,361,112 )     (1,361,112 )     —       —  
Deemed dividend on Series A preferred shares (Note 10)
     —       —       —       —       —       —       —       —       —       (3,143,414 )     (3,143,414 )     —       3,143,414  
Balance, December 31, 2025     40,000       40       21,473,509       21,474       59,304,814       —       —       —       —       104,272,727       163,599,055       140,000       125,809,233  

The accompanying notes are an integral part of these consolidated financial statements.

F-5
TORO CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the year ended December 31, 2023, 2024 and 2025
(Expressed in U.S. Dollars)

​
  
Note
    
Year ended
December 31,
2023
    
Year ended
December 31,
2024
    
Year ended
December 31,
2025
  
Cash Flows (used in)/provided by Operating Activities of Continuing Operations:
                        
Net income
  
   
$
140,636,993
    
$
25,207,504
     $ 5,934,445  
Less: Net income from discontinued operations, net of taxes
           (129,456,050 )     (19,695,969 )     (321,387 )
Net income from continuing operations, net of taxes
         $ 11,180,943     $ 5,511,535     $ 5,613,058  
Adjustments to reconcile net income from Continuing operations to net cash provided by/(used in) operating activities:
                              
Depreciation and amortization
    
5,6
      
3,364,618
      
4,901,246
       4,934,655  
Amortization of investment in debt securities
     8       —       —       (8,353 )
Fair value of below market amortization
             —       —       (1,028,716 )
Gain on sale of vessel
    
5
      
(8,226,258
)
    
—
       —  
Provision for doubtful accounts
             —      
25,369
       —  
Stock based compensation cost
     4,13
       1,272,698       5,312,854       3,594,006  
Straight line amortization of hire
             —       (19,590 )     10,477  
Unrealized (loss)/gain on equity securities
     7
       —       57,641       (84,677 )
Realized loss on sale of equity securities
     7       —       2,369       344  
Changes in operating assets and liabilities:
                                
Accounts receivable trade, net
            
(726,349
)
    
961,651
       (726,947 )
Inventories
            
(1,397
)
    
(22,265
)
     (81,346 )
Due from/to related parties
            
(2,413,795
)
    
(5,563,634
)
     (15,275,906 )
Prepaid expenses and other assets
            
(605,580
)
    
820,530
       (323,248 )
Accounts payable
            
1,219,876
      
(978,030
)
     526,463  
Accrued liabilities
            
338,695
      
560,154
       177,245  
Deferred revenue
            
310,000
      
674,000
       (215,217 )
Dry-dock costs paid
            
(1,051,313
)
    
(1,463,923
)
     (3,454,571 )
Net Cash provided by/(used in) Operating Activities from Continuing Operations
            
4,662,138
      
10,779,907
       (6,342,733 )
​
                                
Cash flow (used in)/provided by Investing Activities of Continuing Operations:
                                
Vessel acquisitions and other vessel improvements
    
6
      
(72,217,988
)
    
(119,304
)
     (66,769,128 )
Investment in related party
     4
       (50,000,000 )     (50,000,000 )     (60,000,000 )
Proceeds from investment in related party
     4       —       —       60,000,000  
Loan to related party
    4
       —       (100,000,000 )     100,364,205  
Net proceeds from sale of vessel
     6      
17,189,804
      
—
       38,000,000  
Purchase of equity securities
     7       —       (5,183,767 )     (1,000,000 )
Purchase of debt securities
             —       —       (2,910,000 )
Proceeds from sale of equity securities
     7       —       249,338       101,412  
Net cash (used in)/provided by Investing Activities from Continuing Operations
            
(105,028,184
)
    
(155,053,733
)
     67,786,489  
​
                                
Cash flows (used in)/provided by Financing Activities of Continuing Operations:
                                
Net increase in Former Parent Company Investment
             211,982       —       —  
Issuance of Series B Preferred shares
    
9
       40       —       —  
Issuance of common shares pursuant to private placement
             18,647,236       —       —  
Payment for repurchase shares pursuant to Tender offer
     9
       —       —       (343,382 )
Proceeds received from Robin related to Robin Spin-Off (Note 4)
             —       —       786,001  
Cash contribution related to Spin-off (Note 1)
             —       —       (10,356,450 )
Payment of Dividend on Series A Preferred Shares
     10
       (851,667 )     (1,400,000 )     (1,400,000 )
Payment for repurchase of common shares
    9
       (1,046,908 )     (3,728,008 )     —  
Payments related to Spin-Off from Castor
     4
       (2,694,646 )     —       —  
Net cash provided by/(used in) Financing Activities from continuing operations
            
14,266,037
      
(5,128,008
)
     (11,313,831 )

                               
Cash flows of discontinued operations:
                                
Net cash provided by Operating Activities from discontinued operations
             51,464,181       3,783,409       94,655  
Net cash provided by Investing Activities from discontinued operations
             155,734,435       32,488,070       —  
Net cash used in Financing Activities from discontinued operations
            (7,992,800 )     (5,257,200 )     —  
Net cash provided by discontinued operations
             199,205,816       31,014,279       94,655  
 
                                
Net increase/(decrease) in cash, cash equivalents, and restricted cash
            
113,105,807
      
(118,387,555
)
     50,224,580  
Cash, cash equivalents and restricted cash at the beginning of the period from continuing and discontinued operations 
           
42,479,594
      
155,585,401
       37,197,846  
Cash, cash equivalents and restricted cash at the end of the period from continuing and discontinued operations
          
$
155,585,401
    
$
37,197,846
     $ 87,422,426  
​
                                
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
                                
Cash and cash equivalents from continuing and discontinued operations
          
$
155,235,401
    
$
37,197,846
     $ 87,422,426  
Restricted cash, non-current from discontinued operations
            
350,000
      
—
       —  
Cash, cash equivalents, and restricted cash from continuing and discontinued operations
          
$
155,585,401
    
$
37,197,846
     $ 87,422,426  
​
                                
SUPPLEMENTAL CASH FLOW INFORMATION
                                
Unpaid vessel acquisition and other vessel improvement costs (included in Accounts payable and Accrued liabilities)
            
68,815
      
—
       13,318  
Unpaid capital issuance costs (included in Accounts payable and Accrued Liabilities)
             —       —       559  
Dividend on Series A Preferred Shares declared but unpaid
            315,000       338,333       299,444  
Deemed dividend on Series A Preferred Shares
            2,429,275       3,064,409       3,143,414  
Dividend on common shares declared but unpaid
             —       —       37,578,641  
Distribution of net assets of Robin Energy Ltd
             —       —       5,639,637  

The accompanying notes are an integral part of these consolidated financial statements.

F-6
TORO CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars – except for share data unless otherwise stated)

1.
Basis of Presentation and General information:


Toro Corp. (“Toro”) was formed on July 29, 2022 as a wholly owned subsidiary of Castor Maritime Inc. (“Castor”, or the “Former Parent Company”) under the laws of the Republic of the Marshall Islands under the name Tankco Shipping Inc. and changed its name to Toro Corp. on September 29, 2022. On March 7, 2023 (the “Distribution Date”), Castor completed the Spin-Off (as defined herein) of Toro based on the terms approved by the independent disinterested directors of Castor following the recommendation of its special committee of independent disinterested directors. In the Spin-Off, Castor separated its tanker fleet from its dry bulk and container fleet by, among other actions, contributing to Toro its interest in the subsidiaries comprising its tanker fleet, each owning one tanker vessel and Elektra Shipping Co. (the “Toro Subsidiaries”) in exchange for (i) 9,461,009 common shares of Toro, (ii) the issuance to Castor of 140,000 1.00% Series A fixed rate cumulative perpetual convertible preferred shares of Toro (the “Series A Preferred Shares”) having a stated amount of $1,000 per share and a par value of $0.001 per share and (iii) the issuance at par to Pelagos Holdings Corp, a company controlled by the Toro’s Chairman and Chief Executive Officer, of 40,000 Series B preferred shares of Toro, par value $0.001 per share (the “Series B Preferred Shares”). Toro’s common shares were distributed on March 7, 2023, pro rata to the shareholders of record of Castor as of February 22, 2023 at a ratio of one Toro common share for every ten Castor common shares. The foregoing transactions are referred to collectively herein as the “Spin-Off”. Toro began trading on the Nasdaq Capital Market (the “Nasdaq”), under the symbol “TORO”.



In addition, Toro entered into various agreements effecting the separation of its business from Castor including a Contribution and Spin-Off Distribution Agreement entered into by Toro and Castor on February 24, 2023 (the “Contribution and Spin-Off Distribution Agreement”), pursuant to which, among other things, (i) Castor agreed to indemnify Toro and the Toro Subsidiaries for any and all obligations and other liabilities arising from or relating to the operation, management or employment of vessels or subsidiaries that Castor retained after the Distribution Date and Toro agreed to indemnify Castor for any and all obligations and other liabilities arising from or relating to the operation, management or employment of the vessels contributed to it or the Toro Subsidiaries, and (ii) Toro agreed to replace Castor as guarantor under the $18.0 million senior secured credit facility with Alpha Bank S.A. (the “$18.0 Million Term Loan Facility”) upon completion of the Spin-Off. The Contribution and Spin-Off Distribution Agreement also provided for the settlement or extinguishment of certain liabilities and other obligations between Castor and Toro and provides Castor with certain registration rights relating to Toro’s common shares, if any, issued upon conversion of the Series A Preferred Shares issued to Castor in connection with the Spin-Off. Following the successful completion of the Spin-Off on March 7, 2023, Toro reimbursed Castor for expenses related to the Spin-Off that were incurred by Castor, except for any of these expenses that were incurred or paid by any of Toro’s subsidiaries, after March 7, 2023.


The Spin-off has been accounted for as a transfer of business among entities under common control. Accordingly, these accompanying consolidated financial statements of the Company have been presented as if the Toro Subsidiaries were consolidated subsidiaries of the Company for all periods presented and using the historical carrying costs of the assets and the liabilities of the subsidiaries listed below, from their dates of incorporation. As a result, the accompanying consolidated financial statements include the accounts of Toro and its wholly owned subsidiaries (collectively, the “Company”).


On April 14, 2025 (the “Robin Distribution Date”), the Company contributed (a) the subsidiaries constituting the Company’s Handysize tanker segment and (b) $10.4 million in cash to the Company’s wholly owned subsidiary, Robin Energy Ltd. (“Robin”) as a capital contribution, in exchange for (i) the issuance by Robin to Toro of all 2,386,732 of Robin’s issued and outstanding common shares, and 2,000,000 1.00% Series A fixed rate cumulative perpetual convertible preferred shares of Robin, having a stated amount of $25 and a par value of $0.001 per share and (ii) the issuance of 40,000 Series B preferred shares of Robin, par value $0.001 per share, to Pelagos Holdings Corp, a company controlled by the Company’s Chairman and Chief Executive Officer. On the same day, the Company distributed all the then issued and outstanding common shares of Robin to its common shareholders of record as of April 7, 2025, on a pro rata basis (such transactions collectively, the “Robin Spin-Off”).

F-7
TORO CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
1.
Basis of Presentation and General information: (continued)


Robin’s shares commenced trading on the Nasdaq Capital Market on April 15, 2025 under the symbol “RBNE”. As part of the Robin Spin-Off, Robin entered into various other agreements effecting the separation of Robin’s business from the Company, including a master management agreement with Castor Ships dated April 14, 2025, with respect to its vessels in substantially the same form as the Company’s Master Management Agreement for its vessels and a Contribution and Spin-Off Distribution Agreement dated April 14, 2025 (the “Robin Contribution and Spin-Off Distribution Agreement”), pursuant to which, among other things, the Company agreed to indemnify Robin and its vessel-owning subsidiaries for any and all obligations and other liabilities arising from or relating to the operation, management or employment of vessels or subsidiaries the Company retains after the Robin Distribution Date and Robin agreed to indemnify the Company for any and all obligations and other liabilities arising from or relating to the operation, management or employment of the vessels contributed to it or its vessel-owning subsidiaries. The Robin Contribution and Spin-Off Distribution Agreement also provided for the settlement or extinguishment of certain liabilities and other obligations between the Company and Robin and provides the Company with certain registration rights relating to Robin’s common shares, if any, issued upon conversion of the Robin Series A Preferred Shares issued to the Company in connection with the Robin Spin-Off.


The assets and liabilities of Robin on April 14, 2025, were as follows:

   
April 14, 2025
  
Cash and cash equivalents
  
$
186
  
Accounts receivable trade, net
    
1,073,346
  
Due from related parties, current
    
12,463,643
  
Inventories
    
75,932
  
Prepaid expenses and other assets, current
    
66,305
  
Vessels, net
    
6,713,140
  
Due from related parties, non-current
    
388,542
  
Prepaid expenses and other assets, non-current
    
357,769
  
Deferred charges, net
    
823,411
  
Accounts payable
    
(241,481
)
Accrued liabilities
    
(495,426
)
Net assets of Robin
    
21,225,367
  
Plus Capital contribution as part of Robin Spin-Off
    
10,356,450
  
Less Investment in Preferred Shares of Robin issued as part of Robin Spin-Off (refer Note 4(e))
    
(25,942,180
)
Distribution of net assets of Robin to shareholders
  
$
5,639,637
  


The Company is currently engaged in the worldwide transportation of refined petroleum products and liquefied petroleum gas through its vessel-owning subsidiaries.


As a result of the sale of the M/T Wonder Sirius on January 8, 2024, the Company no longer has any Aframax/LR2 vessels. The results of operations and cash flows of the Aframax/LR2 tanker segment, as well as its assets and liabilities, are reported as discontinued operations for all periods presented (Note 3).

F-8
TORO CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
1.
Basis of Presentation and General information: (continued)



Castor Ships S.A., a corporation incorporated under the laws of the Republic of the Marshall Islands (“Castor Ships”), a related party controlled by Toro’s Chairman and Chief Executive Officer, Petros Panagiotidis, provides commercial ship management services, ship management and chartering services to the vessels owned by the Company’s vessel-owning subsidiaries. Such services are provided through subcontracting agreements with unrelated third-party managers, entered into with the Company’s consent, for the Company’s vessels. Castor Ships had subcontracted to third-party ship management companies the technical management of all the Company’s vessels, except the LPG Dream Syrax and M/T Wonder Maia, for which Castor Ships has provided the technical management since November 5, 2024 until the sale date, and September 29, 2025, respectively. As a part of the Spin-Off, the Company entered into a master management agreement with Castor Ships with respect to its vessels in substantially the same form as Castor’s Master Management Agreement previously in place for its vessels. The vessel management agreements with Castor Ships previously entered into for each of the vessels by the applicable vessel-owning subsidiary remain in effect for each such vessel. Upon the acquisition of the LPG carrier vessels in the second and third quarters of 2023, the relevant vessel-owning subsidiaries entered into management agreements with Castor Ships on substantially the same terms as the existing vessel-owning subsidiaries.

As of December 31, 2025, Toro had 18 wholly owned subsidiaries incorporated in the Republic of Marshall Islands.

Charterer concentration:


Charterers or pool managers that individually accounted for more than 10% of the Company’s total vessel revenues (as percentages of total vessel revenues), all derived from the Company’s Eco tanker, Non-Eco tanker and LPG carrier segments (continuing operations), were as follows:

Charterer/Pool manager
  
Year Ended
December 31,
2023
    
Year Ended
December 31,
2024
    
Year Ended
December 31,
2025
  
A
    
70
%
    
30
%
     10 %
B
    
—
 %    
18
%
     25 %
C
    
—
 %    
17
%
     17 %
D
    
—
 %    
17
%
     18 %
E
     — %     — %     20 %
F
     — %     — %     10 %
Total
    
70
%
    
82
%
     100 %

F-9
TORO CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
2.
Significant Accounting Policies and Recent Accounting Pronouncements:

Principles of consolidation


The consolidated financial statements include the accounts of Toro and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation. Toro, as the holding company, determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity or a variable interest entity. Under Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 810 “Consolidation”, a voting interest entity is an entity in which the total equity investment at risk is deemed sufficient to absorb the expected losses of the entity, the equity holders have all the characteristics of a controlling financial interest and the legal entity is structured with substantive voting rights. The holding company consolidates voting interest entities in which it owns all, or at least a majority (generally, greater than 50%) of the voting interest. Variable interest entities (“VIE”) are entities, as defined under ASC 810, that in general either have equity investors with non-substantive voting rights or that have equity investors that do not provide sufficient financial resources for the entity to support its activities. The holding company has a controlling financial interest in a VIE and is, therefore, the primary beneficiary of a VIE if it has the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. A VIE should have only one primary beneficiary which is required to consolidate the VIE. A VIE may not have a primary beneficiary if no party meets the criteria described above. The Company evaluates all arrangements that may include a variable interest in an entity to determine if it is the primary beneficiary, and would therefore be required to include assets, liabilities, and operations of a VIE in its consolidated financial statements. The Company has identified it has variable interests in Castor and Robin, but are not the primary beneficiaries. The Company reconsiders the initial determination of whether an entity is a VIE if certain types of events (“reconsideration events”) occur. If the Company holds a variable interest in an entity that previously was not a VIE, it reconsiders whether the entity has become a VIE. The Company’s maximum exposure to loss as a result of its involvement with this VIE is the Company’s carrying value in this investment.

Use of estimates


The preparation of the accompanying consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include vessel valuations, the valuation of amounts due from charterers, residual value and the useful life of the vessels. Actual results may differ from these estimates.

Other comprehensive income


The Company follows the accounting guidance relating to comprehensive income, which requires separate presentation of certain transactions that are recorded directly as components of shareholders’ equity. The Company has no other comprehensive income items and, accordingly, comprehensive income equals net income for the periods presented.

Foreign currency translation


The Company’s reporting and functional currency is the U.S. Dollar (“USD”). Transactions incurred in other currencies are translated into USD using the exchange rates in effect at the time of the transactions. At the balance sheet date, monetary assets and liabilities that are denominated in other currencies are translated into USD to reflect the end-of-period exchange rates and any gains or losses are included in the statement of comprehensive income.

F-10
TORO CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
2.
Significant Accounting Policies and Recent Accounting Pronouncements: (continued)

Cash and cash equivalents


The Company considers highly liquid investments such as time deposits and certificates of deposit with an original maturity of three months or less to be cash equivalents.

Restricted cash


Restricted cash may comprise (i) minimum liquidity collateral requirements or minimum required cash deposits that are required to be maintained under the Company’s financing arrangements, (ii) cash deposits in so-called “retention accounts” which may only be used as per the Company’s borrowing arrangements for the purpose of serving the loan installments coming due or, (iii) other cash deposits required to be retained until other specified conditions prescribed in the Company’s debt agreements are met. In the event that the obligation to maintain such deposits is expected to elapse within the next operating cycle, these deposits are classified as current assets. Otherwise, they are classified as non-current assets.

Accounts receivable trade, net


The amount shown as trade receivables, net, at the balance sheet date, includes receivables from charterers for hire, freight, pool revenue, and other potential sources of income (such as ballast bonus compensation and/or holds cleaning compensation, etc.) under the Company’s charter contracts and/or pool arrangements, net of any provision for doubtful accounts. At each balance sheet date, all potentially uncollectible accounts are assessed individually for purposes of determining the appropriate provision for doubtful accounts.  Provision for doubtful accounts recorded as of December 31, 2024 and 2025 amounted to $25,369 and $0, respectively.

Inventories


Inventories consist of bunkers, lubricants and provisions on board each vessel. Inventories are stated at the lower of cost or net realizable value. Net realizable value is the estimated selling price less reasonably predictable costs of disposal and transportation. Cost is determined by the first in, first out method. Inventories consist of bunkers during periods when vessels are unemployed, undergoing dry-docking or special survey or under voyage charters.


Intangible assets/liabilities related to time charters acquired


When and where the Company identifies any assets or liabilities associated with the acquisition of a vessel, the Company records such identified assets or liabilities at fair value. Fair value is determined by reference to market data obtained from independent broker’s valuations. The valuations reflect the fair value of the vessel with and without the attached time charter and the cost of the acquisition is then allocated to the vessel and the intangible asset or liability on the basis of their relative fair values. The intangible asset or liability is amortized as an adjustment to revenues over the assumed remaining term of the acquired time charter and is classified as a non-current asset or liability, as applicable, in the accompanying balance sheet.

Insurance claims


The Company records insurance claim recoveries for insured losses incurred on damage to fixed assets, for insured crew medical expenses and for loss of hire for certain of its vessels that maintain such kind of insurance. Insurance claim recoveries are recorded, net of any deductible amounts, at the time when (i) the Company’s vessels suffer insured damages or at the time when crew medical expenses are incurred, (ii) recovery is probable under the related insurance policies, (iii) the Company can estimate the amount of such recovery following submission of the insurance claim and (iv) provided that the claim is not subject to litigation.

F-11
TORO CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
2.
Significant Accounting Policies and Recent Accounting Pronouncements: (continued)

Vessels, net


Vessels, net are stated at cost net of accumulated depreciation. The cost of a vessel consists of the contract price plus any direct expenses incurred upon acquisition, including improvements, delivery expenses and other expenditures to prepare the vessel for its intended use which is to provide worldwide integrated transportation services. Subsequent expenditures for conversions and major improvements are also capitalized when they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of a vessel; otherwise, these amounts are charged to expense as incurred.

Vessels’ depreciation


Depreciation is computed using the straight-line method over the estimated useful life of a vessel, after considering the estimated salvage value. Each vessel’s salvage value is equal to the product of its lightweight tonnage and estimated scrap rate. Salvage values are periodically reviewed and revised, if needed, to recognize changes in conditions, new regulations or for other reasons. Revisions of salvage value affect the depreciable amount of the vessels and affect depreciation expense in the period of the revision and future periods. Management estimates the useful life of its vessels to be 25 years from the date of initial delivery from the shipyard, whereas secondhand vessels are depreciated from the date of their acquisition through their remaining estimated useful life.

Impairment of vessels


The Company reviews its vessels for impairment whenever events or changes in circumstances indicate that the carrying amount of a vessel may not be recoverable. When the estimate of future undiscounted cash flows expected to be generated by the use of a vessel is less than its carrying amount, the Company evaluates the vessel for an impairment loss. Measurement of the impairment loss is based on the fair value of the vessel in comparison to its carrying value, including any related intangible assets and liabilities. In this respect, management regularly reviews the carrying amount of its vessels in connection with their estimated recoverable amount.

Dry-docking and special survey costs


Dry-docking and special survey costs are accounted for under the deferral method whereby the actual costs incurred are deferred and are amortized on a straight-line basis over the period through the date the next survey is scheduled to become due. Costs deferred are limited to actual costs incurred at the yard and parts used in the dry-docking or special survey. Costs deferred include expenditures incurred relating to shipyard costs, hull preparation and painting, inspection of hull structure and mechanical components, steelworks, machinery works, and electrical works as well as lodging and subsistence of personnel sent to the yard site to supervise. If a dry-dock and/or a special survey is performed prior to its scheduled date, the remaining unamortized balance is immediately expensed. Unamortized balances of vessels that are sold are written off and included in the calculation of the resulting gain or loss in the period of a vessel’s sale. The amortization charge related to dry-docking costs and special survey costs is presented within Depreciation and amortization in the accompanying consolidated statements of comprehensive income.

Revenue and expenses recognition



The Company currently generates its revenues from time charter contracts. In past periods, the Company also generated revenues from pool arrangements and voyage charter contracts. Under a time charter agreement, a contract is entered into for the use of a vessel for a specific period of time and a specified daily charter hire rate. Under a voyage charter agreement, a contract is made for the use of a vessel for a specific voyage to transport a specified agreed upon cargo at a specified freight rate per ton or occasionally a lump sum amount. Until the Robin Spin-Off, a part of the Company’s revenues was also generated from pool arrangements, determined in accordance with the profit-sharing mechanism specified within each pool agreement. The Company recognizes pool revenue based on quarterly reports from the pools which identifies the number of days the vessel participated in the pool, the total pool points for the period, the total pool revenue for the period, and the calculated share of pool revenue for the vessel.

F-12
TORO CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
2.
Significant Accounting Policies and Recent Accounting Pronouncements: (continued)


Revenues related to time charter contracts


The Company accounts for its time charter contracts as operating leases pursuant to ASC 842 “Leases”. The Company has determined that the non-lease component in its time charter contracts relates to services for the operation of the vessel, which comprises crew, technical and safety services, among others. The Company further elected to adopt the practical expedient that provides it with the discretion to recognize lease revenue as a combined single lease component for all time charter contracts (operating leases) since it determined that the related lease component and non-lease component have the same timing and pattern of transfer and the predominant component is the lease. The Company qualitatively assessed that more value is ascribed to the use of the asset (i.e., the vessel) rather than to the services provided under the time charter agreements.



Lease revenues are recognized on a straight-line basis over the non-cancellable rental periods of such charter agreements, as rental service is provided, beginning when a vessel is delivered to the charterer until it is redelivered back to the Company, and is recorded as part of vessel revenues in the Company’s statement of comprehensive income. Revenues generated from variable lease payments are recognized in the period when changes in facts and circumstances on which the variable lease payments are based occur. Deferred revenue includes (i) cash received prior to the balance sheet date for which all criteria to recognize as lease revenue have not yet been met as at the balance sheet date and, accordingly, is related to revenue earned after such date and (ii) deferred contract revenue such as deferred ballast compensation earned as part of a lease contract. Lease revenue is shown net of commissions payable directly to charterers under the relevant time charter agreements. Charterers’ commissions represent discount on services rendered by the Company and no identifiable benefit is received in exchange for the consideration provided to the charterer. Apart from the agreed hire rate, the owner may be entitled to additional income, such as ballast bonus, which is considered as reimbursement of owner’s expenses and is recognized together with the lease component over the duration of the charter. The Company made an accounting policy election to recognize the related ballast costs, which mainly consist of bunkers, incurred over the period between the charter party date or the prior redelivery date (whichever is latest) and the delivery date to the charterer, as contract fulfillment costs (please also refer to Voyage expenses below).




Revenues related to voyage charter contracts


The Company accounts for its voyage charter contracts following the provisions of ASC 606, Revenue from contracts with customers. The Company has determined that its voyage charter agreements do not contain a lease because the charterer under such contracts does not have the right to control the use of the vessel since the Company retains control over the operations of the vessel, the terms of the voyage charter are predetermined, and any change requires the Company’s consent and are therefore considered service contracts.


The Company assessed the provisions of ASC 606 and concluded that there is one single performance obligation when accounting for its voyage charters, which is to provide the charterer with an integrated cargo transportation service within a specified period of time. In addition, the Company has concluded that voyage charter contracts meet the criteria to recognize revenue over time as the charterer simultaneously receives and consumes the benefits of the Company’s performance. As a result of the foregoing, voyage revenue derived from voyage charter contracts is recognized from the time when a vessel arrives at the load port until completion of cargo discharge. Demurrage income, which is considered a form of variable consideration, is included in voyage revenues, and represents payments by the charterer to the vessel owner when loading or discharging time exceeds the stipulated time in the voyage charter agreements. Demurrage income is recognized starting from the point that is determined that the amount can be estimated, and its collection is probable and on a straight-line basis until the end of the voyage.


Under a voyage charter agreement, the Company incurs and pays for certain voyage expenses, primarily consisting of bunkers consumption, brokerage commissions, port and canal costs.



F-13
TORO CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
2.
Significant Accounting Policies and Recent Accounting Pronouncements: (continued)

Revenues related to pool contracts


Pool revenue for each vessel is determined in accordance with the profit-sharing mechanism specified within each pool agreement. In particular, the Company’s pool managers aggregate the revenues and expenses of all of the pool participants and distribute the net earnings to participants, as applicable:


•
based on the pool points attributed to each vessel (which are determined by vessel attributes such as cargo carrying capacity, speed, fuel consumption, and construction and other characteristics); or
 

•
by making adjustments to account for the cost of performance, the bunkering fees and the trading capabilities of each vessel and the number of days the vessel participated in the pool in the period (excluding off-hire days).


The Company records revenue generated from the pools in accordance with ASC 842, Leases, since it assesses that a vessel pool arrangement is a variable time charter with the variable lease payments recorded as income in profit or loss in the period in which the changes in facts and circumstances on which the variable lease payments are based occur.

Voyage expenses


Voyage expenses consist of: (a) port, canal and bunker expenses unique to a particular charter that the Company incurs primarily when its vessels operate under voyage charter arrangements or during repositioning periods, and (b) brokerage commissions. All voyage expenses are expensed as incurred, except for contract fulfilment costs which are capitalized to the extent the Company, in its reasonable judgement, determines that they (i) are directly related to a contract, (ii) will be recoverable and (iii) enhance the Company’s resources by putting the Company’s vessel in a location to satisfy its performance obligation under a contract pursuant to the provisions of ASC 340-40 “Other assets and deferred costs”. These capitalized contract costs are amortized on a straight-line basis as the related performance obligations are satisfied. Costs to fulfill the contract prior to arriving at the load port primarily consist of bunkers which are deferred and amortized during the voyage period. These capitalized contract fulfilment costs are recorded under “Deferred charges, net” in the accompanying balance sheet. At the inception of a time charter, the Company records the difference between the cost of bunker fuel delivered by the terminating charterer and the bunker fuel sold to the new charterer as a bunker gain or loss within voyage expenses.

Accounting for financial instruments


The principal financial assets of the Company consist of cash and cash equivalents, amounts due from related parties, trade receivables, net, investment in related parties and loan to related party. The principal financial liabilities of the Company consist of trade and other payables, accrued liabilities, and amounts due to related parties.
 
Fair value measurements


The Company follows the provisions of ASC 820, “Fair Value Measurements and Disclosures” which defines, and provides guidance as to the measurement of fair value. ASC 820 creates a hierarchy of measurement and indicates that, when possible, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The fair value hierarchy gives the highest priority (Level 1) to quoted prices in active markets and the lowest priority (Level 3) to unobservable data, for example, the reporting entity’s own data. Under the standard, fair value measurements are separately disclosed by level within the fair value hierarchy.
 

F-14
TORO CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
2.
Significant Accounting Policies and Recent Accounting Pronouncements: (continued)


Repairs and maintenance


All repair and maintenance expenses including underwater inspection expenses are expensed in the period incurred. Such costs are included in Vessel operating expenses in the accompanying consolidated statements of comprehensive income.

Segment reporting


Prior to the Robin Spin-Off, the Company engaged in the operation of Handysize tanker vessels and LPG carrier vessels which were identified as two reportable segments as a result of the different characteristics of these two asset classes. The Company determined that, as of December 31, 2025, it operated under three reportable segments: Eco tanker segment, Non-Eco tanker segment and LPG carrier segment (Note 17). The reportable segments reflect the internal organization of the Company and the way the chief operating decision maker reviews the operating results and allocates capital within the Company. The accounting policies applied to the reportable segments are the same as those used in the preparation of the Company’s financial statements. When the Company charters a vessel to a charterer, the charterer is free to trade the vessel worldwide and, as a result, the disclosure of geographic information is impracticable.

Commitments, contingencies and provisions


Commitments are recognized when the Company has a present legal or constructive obligation as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to settle this obligation, and a reliable estimate of the amount of the obligation can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the present value of the expenditure expected to be required to settle the obligation. Contingent liabilities are not recognized in the financial statements but are disclosed unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are not recognized in the financial statements but are disclosed when an inflow of economic benefits is probable.

Assets held for sale



The Company classifies a group of assets as being held for sale when all of the following criteria, enumerated under ASC 360 “Property, Plant, and Equipment”, are met: (i) management has committed to a plan to sell the assets; (ii) the assets are available for immediate sale in their present condition; (iii) an active program to locate a buyer and other actions required to complete the plan to sell the assets have been initiated; (iv) the sale of the assets is probable, and transfer of the assets is expected to qualify for recognition as a completed sale within one year; (v) the assets are being actively marketed for sale at a price that is reasonable in relation to their current fair value; and (vi) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Long-lived assets classified as held for sale are measured at the lower of their carrying amount or fair value less cost to sell. The resulting difference, if any, is recorded under “Impairment loss” in the consolidated statements of comprehensive income. An asset ceases being depreciated once it meets the held for sale classification criteria.

Earnings/(Loss) per common share


Basic earnings/(loss) per common share are computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the relevant period. Non-vested shares granted under the Company’s incentive plan, are entitled to receive dividends, which are not refundable even if such shares are forfeited, and therefore are considered participating securities for basic earnings/(loss) per share calculation purposes, using the two-class method. Dividends and deemed dividends on cumulative redeemable perpetual preferred shares reduce the income available to common shareholders (whether or not earned). Diluted earnings per common share reflect the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted at the beginning of the periods presented, or issuance date, if later. Diluted earnings attributable to common shareholders per common share is computed by dividing the net income attributable to common shareholders by the weighted average number of common shares outstanding plus the dilutive effect of convertible securities and shares issued and outstanding under the Company’s equity incentive plan during the applicable periods. The if converted method is used to compute the dilutive effect of shares which could be issued upon conversion of the convertible preferred shares. For purposes of the if converted calculation, the conversion price of convertible preferred shares is based on the fixed conversion price or on the average market price when the number of shares that may be issued is variable. The treasury stock or the two-class method is used to compute the dilutive effect of shares issued under the Company’s equity incentive plan. The two-class method is used for diluted earnings per common share when such is the most dilutive method, considering anti–dilution sequencing as per ASC 260. Potential common shares that have an anti-dilutive effect (i.e. those that increase income per share or decrease loss per share) are excluded from the calculation of diluted earnings per share. For dividends or other distributions that may be settled in cash or in the Company’s common shares at the election of either the Company or the shareholder, the Company applies as per ASC 260, under which, when an instrument or declared distribution permits or requires settlement in common shares, the Company assumes settlement in common shares for purposes of calculating diluted earnings per share, regardless of whether the election is at the option of the Company or the shareholder, and includes the resulting incremental shares in the diluted weighted average shares outstanding, if dilutive.

F-15
TORO CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
2.
Significant Accounting Policies and Recent Accounting Pronouncements: (continued)

Investment in related party (Financial Instruments, Recognition and Measurement):


The Company has elected to measure equity securities without a readily determinable fair value that do not qualify for the practical expedient in ASC 820 Fair Value Measurement to estimate fair value using the NAV per share (or its equivalent) at its cost minus impairment, if any. At each reporting period, the Company also evaluates indicators such as the investee’s performance and its ability to continue as going concern and market conditions, to determine whether an investment is impaired, in which case the Company will estimate the fair value of the investment to determine the amount of the impairment loss.

Stock based compensation


Stock based compensation includes vested and non-vested shares that may be granted to directors, officers and employees of the Company and/or its subsidiaries and affiliates and consultants and service providers to the Company and its subsidiaries and affiliates and is included in ‘General and administrative expenses’ in the accompanying consolidated statements of comprehensive income. These shares are measured at their fair value, which is equal to the market value of the Company’s common shares on the grant date. The shares that do not contain any future service-vesting conditions are considered vested shares, and the total fair value of such shares is recognized in full on the grant date. The shares that contain a time-based service vesting condition are considered non-vested shares on the grant date and a total fair value of such shares is recognized using the accelerated attribution method, which treats an award with multiple vesting dates as multiple awards and results in a front-loading of the costs of the award. The fair value is recognized (as compensation expense) over the requisite service period for all awards that vest. The Company accounts for forfeitures as they occur (Note 13).

Share repurchases


The Company records the repurchase of its common shares at cost. The Company retires its repurchased common shares and reduces its common stock accordingly. Any excess of the cost of the shares over their par value is allocated in additional paid-in capital, in accordance with ASC 505-30-30, Treasury Stock. Until their retirement these common shares are classified as treasury stock, which is a reduction to shareholders’ equity. Treasury shares are included in authorized and issued shares but excluded from outstanding shares.

Investment in equity securities


The Company measures equity securities with readily determinable fair values (including other ownership interests, such as partnerships, unincorporated joint ventures, and limited liability companies, but excluding equity investments that are accounted for under the equity method of accounting or result in consolidation of an investee) at fair value with changes in the fair value recognized through net income, in accordance with ASC 321 “Investments–Equity Securities” and the provisions enumerated under ASC 825 “Financial Instruments”. Any dividends subsequently distributed by the investee to the Company are recognized as income when received. Equity investments with readily determinable fair values are investments in publicly traded companies for which the Company does not exercise significant influence.

F-16
TORO CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
2.
Significant Accounting Policies and Recent Accounting Pronouncements: (continued)



The Company has elected to measure equity securities without a readily determinable fair value, that do not qualify for the practical expedient in ASC 820 Fair Value Measurement to estimate fair value using the NAV per share (or its equivalent), at its cost minus impairment, if any. At each reporting period, the Company also evaluates indicators such as the investee’s performance and its ability to continue as a going concern and market conditions, to determine whether an investment is impaired, in which case the Company will estimate the fair value of the investment to determine the amount of the impairment loss. Equity investments without readily determinable fair values are non-marketable equity securities, which are investments in privately held companies for which the Company does not exercise significant influence.


Discontinued Operations


The Company classifies as discontinued operations a component of an entity or group of components that has been disposed of by sale, disposed of other than by sale or is classified as held for sale and will have a major effect on the Company’s operations and financial results (Note 3).

Loan to related party


Loan to related party is recorded at amortized cost and the accrued interest income based on the contract rate, less an allowance for credit losses, if applicable. At each balance sheet date, all potentially uncollectible accounts are assessed for purposes of determining the appropriate allowance for credit losses. No allowance for credit losses was recorded as of December 31, 2024 and 2025, respectively.

Investment in debt securities



The Company classifies the investments in debt securities as “held-to-maturity”, “trading” or “available-for-sale”, whose classification determines the respective accounting methods stipulated by ASC 320, Investments—Debt Securities. All investments with original maturities of greater than three months not exceeding twelve months are classified as short-term investments, while those of more than twelve months are classified as long-term investments. Investments that are expected to be realized in cash during the next twelve months are also included in short-term investments. Dividend and interest income, including amortization of the premium and discount arising at acquisition, for all categories of investments in securities, are included in earnings. The securities that the Company has the positive intent and the ability to hold to maturity are classified as held-to-maturity securities and stated at amortized cost.



Held‑to‑maturity investments are initially measured at their transaction price, including applicable transaction costs. In many cases, the transaction price approximates the fair value at the acquisition date. Debt securities may be purchased at a discount or premium to their par or face value. The Company measures expected credit losses on held-to-maturity debt securities in accordance with ASC 326, Financial Instruments—Credit Losses. The estimate of expected credit losses is based on historical credit loss experience, current economic conditions, and reasonable and supportable forecasts. The Company evaluates credit quality indicators, including credit ratings, payment history, and other relevant factors. Changes in the allowance for credit losses are recorded in earnings. If a security is deemed uncollectible, the amortized cost basis is written off against the allowance. As of December 31, 2025, the Company evaluated its held-to-maturity debt securities and determined that no allowance for credit losses was required.
F-17
TORO CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
2.
Significant Accounting Policies and Recent Accounting Pronouncements: (continued)

Recent Accounting Pronouncements:


In November 2023, the FASB issued ASU 2023-07, which requires the disclosure of significant segment expenses that are part of an entity’s segment measure of profit or loss and regularly provided to the chief operating decision maker. In addition, it adds or makes clarifications to other segment-related disclosures, such as clarifying that the disclosure requirements in ASC 280 are required for entities with a single reportable segment and that an entity may disclose multiple measures of segment profit and loss. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods beginning after December 15, 2024. Early adoption is permitted. The amendments should be adopted retrospectively. The Company adopted ASU 2023-07 as of January 1, 2024 and considers that the adoption of ASU 2023-07 did not have a significant impact on its consolidated financial statements and related disclosures.


In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses”. The standard is intended to require more detailed disclosure about specified categories of expenses (including employee compensation, depreciation, and amortization) included in certain expense captions presented on the face of the income statement. This ASU is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to all prior periods presented in the financial statements. The Company is currently assessing the impact this standard will have on its consolidated financial statements.



In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient for estimating expected credit losses. The amendments are effective for annual reporting periods beginning after December 15, 2025, including interim periods within those annual periods. Early adoption is permitted. The Company is in the process of assessing the impact of ASU 2025-05 on its consolidated financial statements.



In November 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): The amendments in this update clarify interim disclosure requirements and the applicability of Topic 270 and are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, for public business entities and for interim reporting periods within annual reporting 3 periods beginning after December 15, 2028, for entities other than public business entities. Early adoption is permitted. The Company is currently assessing the impact this standard will have on its consolidated financial statements.
3.
Discontinued operations:



Following the sale of the M/T Wonder Sirius (Note 1), the Company no longer has any Aframax/LR2 vessels. The Company has determined that the disposal of all of its Aframax/LR2 vessels constituted a disposal of an entity’s segment that will have a major effect on the Company’s operations and financial results. In this respect, the results of operations and cash flows of the Aframax/LR2 segment, as well as its assets and liabilities, are reported as discontinued operations for all periods presented in the accompanying consolidated financial statements. The comparative figures in these consolidated financial statements have been adjusted on the basis of presenting separately the discontinued operations’ figures.


The components of assets and liabilities of discontinued operations in the consolidated balance sheet at December 31, 2024 and December 31, 2025 consisted of the following:

   
December 31,
    
December 31,
  
   
2024
    
2025
  
CURRENT ASSETS:
            
Cash and cash equivalents
  
$
4,836
    
$
3,520
  
Due from related parties, current
    
467,701
      
411,496
  
Accounts receivable trade, net
    
—
      
—
  
Inventories
    
—
      
—
  
Prepaid expenses and other assets
    
22,466
      
1,143
  
Total current assets of discontinued operations
    
495,003
      
416,159
  
​
                
NON-CURRENT ASSETS:
                
Vessels, net
    
—
      
—
  
Restricted cash
    
—
      
—
  
Deferred charges, net
    
—
      
—
  
Total non-current assets of discontinued operations
    
—
      
—
  
​
                
CURRENT LIABILITIES:
                
Current portion of long-term debt, net
    
—
      
—
  
Accounts payable
    
65,117
      
1,436
  
Accrued liabilities
    
1,554,646
      
1,314,066
  
Total current liabilities of discontinued operations
    
1,619,763
      
1,315,502
  
​
                
NON-CURRENT LIABILITIES:
                
Long-term debt, net
    
—
      
—
  
Total non-current liabilities of discontinued operations
    
—
      
—
  


The components of the income from discontinued operations for the years ended December 31, 2023, 2024 and 2025 in the consolidated statements of comprehensive income consisted of the following:


   
Year Ended
December 31,
    
Year Ended
December 31,
    
Year Ended
December 31,
  
   
2023
    
2024
    
2025
  
REVENUES:
                  
Time charter revenues
    
8,709,215
      
1,355
      
—
  
Voyage charter revenues
    
552,859
      
—
      
—
  
Pool revenues
    
46,901,887
      
604,486
      
—
  
Total vessel revenues
    
56,163,961
      
605,841
      
—
  
 
                        
EXPENSES:
                        
Voyage expenses (including $724,316, $8,140 and $0 to related party for the year ended December 31, 2023, 2024 and 2025, respectively)
    
(1,939,564
)
    
(23,675
)
    
133,973
  
Vessel operating expenses
    
(11,691,675
)
    
(343,833
)
    
(11,116
)
Management fees to related parties
    
(1,443,009
)
    
(24,936
)
    
—
  
Depreciation and amortization
    
(3,475,084
)
    
(35,305
)
    
—
  
Recovery of provision for doubtful accounts
    
266,732
      
—
      
—
  
Gain on sale of vessels
    
90,800,434
      
19,559,432
      
—
  
Total expenses
    
72,517,834
      
19,131,683
      
122,857
  
                         
Operating income
    
128,681,795
      
19,737,524
      
122,857
  
                         
OTHER INCOME/(EXPENSES):
                        
Interest and finance costs
    
(932,438
)
    
(82,878
)
    
(7,656
)
Interest income
    
2,018,804
      
40,134
      
—
  
Foreign exchange (losses)/gains
    
(8,515
)
    
1,189
      
13
  
Total other income/(expenses), net
    
1,077,851
      
(41,555
)
    
(7,643
)
                         
Net income and comprehensive income from discontinued operations, before taxes
  
$
129,759,646
    
$
19,695,969
    
$
115,214
  
Income taxes
    
(303,596
)
    
—
      
206,173
  
Net income and comprehensive income from discontinued operations, net of taxes
  
$
129,456,050
    
$
19,695,969
    
$
321,387
  

F-18
TORO CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
4.
Transactions with Related Parties:

(a)
Castor Ships:

Before the completion of the Spin-off on March 7, 2023 and pursuant to an amended and restated master management agreement entered into between Castor,  the Company’s subsidiaries, and Castor Ships (as amended or supplemented from time to time, the “Castor Amended and Restated Master Management Agreement”), Castor Ships  managed the Company’s business overall and provided the vessel-owning Toro Subsidiaries with a wide range of shipping services such as crew management, technical management, operational employment management, insurance management, provisioning, bunkering, accounting and audit support services, commercial, chartering and administrative services, including, but not limited to, securing employment for the Company’s fleet, arranging and supervising the vessels’ commercial operations, providing technical assistance where requested in connection with the sale of a vessel, negotiating loan and credit terms for new financing upon request and providing cybersecurity and general corporate and administrative services, among other matters. Castor Ships generally is not liable to the Company for any loss, damage, delay, or expense incurred during the provision of the foregoing services, except insofar as such events arise from Castor Ships or its employees’ fraud, gross negligence, or willful misconduct (for which the Company’s recovery will be limited to two times the Flat Management Fee, as defined below). Notwithstanding the foregoing, Castor Ships is in no circumstances responsible for the actions of the crew of the Company’s vessels. The Company has also agreed to indemnify Castor Ships in certain circumstances. Under the terms of the Castor Amended and Restated Master Management Agreement, the Company’s ship-owning subsidiaries have also entered into separate management agreements appointing Castor Ships as commercial and technical manager of their vessels (collectively, the “Ship Management Agreements”).



Until March 6, 2023, in exchange for these services, Castor Ships charged and collected (i) a flat quarterly management fee in the amount of $0.75 million for the management and administration of its business (the “Flat Management Fee”), (ii) a daily management fee of $975 per vessel for ship management services provided under the Ship Management Agreements (the “Ship Management Fee”), (iii) a commission of 1.25% on all gross income received from the operation of its vessels, and (iv) a commission of 1% on each consummated vessel sale and purchase transaction.



As part of the Spin-off, on March 7, 2023, Toro and its subsidiaries entered into a master management agreement with Castor Ships with respect to its vessels (and as further amended and supplemented effective April 26, 2023, the “Master Management Agreement”) in substantially the same form as Castor Amended and Restated Master Management Agreement.



Effective July 1, 2024, in lieu of the previously applicable commission structure and in addition to the Ship Management Fee and Flat Management Fee, Castor Ships charged and collected (i) a chartering commission for and on behalf of Castor Ships and/or on behalf of any third-party broker(s) involved in the trading of the Company’s vessels, on all gross income received by the Company’s ship-owning subsidiaries arising out of or in connection with the operation of the Company’s vessels for distribution among Castor Ships and any third-party broker(s), which, when calculated together with any address commission that any charterer of any of the Company’s vessels is entitled to receive, will not exceed the aggregate rate of 6.25% on each vessel’s gross income and (ii) a sale and purchase brokerage commission at the rate of 1% on each consummated transaction applicable to the total consideration of acquiring or selling: (a) a vessel or (b) the shares of a ship owning entity owning vessel(s) or (c) shares and/or other securities with an aggregate purchase or sale value, as the case may be, of an amount equal to, or in excess of, $10,000,000 issued by an entity engaged in the maritime industry.



Effective July 1, 2025, in lieu of the previously applicable commission structure and in addition to the Ship Management Fee and Flat Management Fee, Castor Ships charges and collects (i) a chartering commission for and on behalf of Castor Ships and/or on behalf of any third-party broker(s) involved in the trading of the Company’s vessels, on all gross income received by the Company’s ship-owning subsidiaries arising out of or in connection with the operation of the Company’s vessels for distribution among Castor Ships and any third-party broker(s), which, when calculated together with any address commission that any charterer of any of the Company’s vessels is entitled to receive, will not exceed the aggregate rate of 6.25% on each vessel’s gross income, (iii) a sale and purchase brokerage commission at the rate of 1% on each consummated transaction applicable to the total consideration of acquiring or selling: (a) a vessel (secondhand or newbuilt),  or (b) the shares of a ship-owning entity owning vessel(s) or (c) shares and/or other securities (including equity, debt and loan instruments), and (iv) a capital raising commission at the rate of 1% on all gross proceeds of each capital raising transaction completed by the Company including, without limitation, any equity, debt or loan transactions, operating leasing transactions,  stand-alone derivative and/or swap agreements, other financing arrangements of a similar nature or any refinancing or restructuring thereof. Castor Ships may also be reimbursed for extraordinary fees and costs, such as the costs of extraordinary repairs, maintenance, or structural changes to the Company’s vessels.



The Ship Management Fee and Flat Management Fee are adjusted annually for inflation on the 1st of July of each year in accordance with the terms of the Master Management Agreement, and (i) effective July 1, 2023, the daily Ship Management Fee increased from $975 per vessel to $1,039 per vessel and the quarterly Flat Management Fee increased from $0.75 million to $0.8 million, (ii) effective July 1, 2024, the daily Ship Management Fee increased from $1,039 per vessel to $1,071 per vessel and the quarterly Flat Management Fee increased from $0.8 million to $0.82 million and (iii) effective July 1, 2025, the daily Ship Management Fee increased from $1,071 per vessel to $1,100 per vessel and the quarterly Flat Management Fee increased from $0.82 million to $0.85 million. 



The Master Management Agreement has a term of eight years from its effective date and this term automatically renews for a successive eight-year term on each anniversary of the effective date, starting from the first anniversary of its effective date, unless the agreements are terminated earlier in accordance with the provisions contained therein. In the event that the Master Management Agreement is terminated by the Company or is terminated by Castor Ships due to a material breach of its provisions by the Company or a change of control in the Company (including certain business combinations, such as a merger or the disposal of all or substantially all of the Company’s assets or changes in key personnel such as the Company’s current directors or Chief Executive Officer), Castor Ships is entitled to a termination fee equal to seven times the total amount of the Flat Management Fee calculated on an annual basis. This termination fee is in addition to any termination fees provided for under the Ship Management Agreements.



F-19
TORO CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
4.
Transactions with Related Parties: (continued)


Castor Ships may choose to subcontract some of its provided services to other parties at its discretion. Castor Ships pays, at its own expense, the third-party management companies a fee for such services, without burdening the Company with any additional cost. As of December 31, 2025, in accordance with the provisions of the Master Management Agreement, Castor Ships had subcontracted to a third-party ship management company the technical management of all the Company’s vessels, except the LPG Dream Syrax and M/T Wonder Maia, for which Castor Ships has provided the technical management since November 5, 2024 and September 29, 2025, respectively.



During the years ended December 31, 2023, 2024 and 2025, Castor Ships charged and collected the following fees and commissions: (i) management fees amounting to $1,710,651, $1,930,810 and $1,807,089, respectively, (ii) charter hire commissions amounting to $279,719, $418,070 and $641,813, respectively, (iii) a sale and purchase commission from continuing operations in the year ended December 31,2023 amounting to $887,050 comprising (a) $707,150 related to the acquisition of the vessels LPG Dream Terrax, LPG Dream Arrax, LPG Dream Syrax and LPG Dream Vermax, which is included in ‘Vessels, net’ in the accompanying consolidated balance sheet and (b) $179,900 related to the sale of M/T Wonder Formosa which is included in ‘Gain on sale of vessel’ in the accompanying consolidated statements of comprehensive income, $855,500 in the year ended December 31, 2025 comprising (a) $665,500 related to the acquisition of the vessels M/T Wonder Altair and M/T Wonder Maia,  which is included in ‘Vessels, net’ in the accompanying consolidated balance sheet and (b) $190,000 (due to the sales under common control of the vessels LPG Dream Terrax and LPG Dream Syrax (Note 5), which are included in ‘Vessel operating expenses’ in the accompanying consolidated statements of comprehensive income, respectively, (iv) sale and purchase commissions from discontinued operations amounting to $1,611,000 in the year ended December 31, 2023, related to the sale of the vessel M/T Wonder Bellatrix, M/T Wonder Polaris, M/T Wonder Musica, M/T Wonder Avior and M/T Wonder Vega and $338,000 in the year ended December 31, 2024, related to the sale of the vessel M/T Wonder Sirius which are included in ‘Gain on sale of vessels’ in the accompanying consolidated statements of comprehensive income from discontinued operations and (v) a sale and purchase brokerage commission applicable to the total consideration of acquiring or selling shares and/or other securities (including equity and debt instruments), amounting to $0, $0 and $41,892, respectively. 



In addition, until March 7, 2023, part of the general and administrative expenses incurred by Castor has been allocated on a pro rata basis within General and administrative expenses of the Company based on the proportion of the number of ownership days of the Toro Subsidiaries’ vessels to the total ownership days of Castor’s fleet. These expenses consisted mainly of administration costs charged by Castor Ships, investor relations, legal, audit and consultancy fees. During the period from January 1 through March 7, 2023, the above-mentioned administration fees charged by Castor Ships to Castor that were allocated to the Company amounted to $144,445 and are included in ‘General and administrative expenses’ in the accompanying consolidated statements of comprehensive income. For the period of March 7, 2023 through December 31, 2023, the Company recognized as pro rata allocation of days of Flat Management Fee in the amount of $2,557,332, which is included in ‘General and administrative expenses’ in the accompanying consolidated statements of comprehensive income. As a result, in each of the years ended December 31, 2023, 2024 and 2025, the aggregate amounts of $2,701,777, $3,247,570 and $3,340,334, respectively, are included in ‘General and administrative expenses’ in the accompanying consolidated statements of comprehensive income.



The Master Management Agreement also provides for advance funding equal to two months of vessel daily operating costs to be deposited with Castor Ships as a working capital guarantee, refundable in case a vessel is no longer under Castor Ship’s management. As of each of December 31, 2024 and December 31, 2025, the working capital guarantee advances to Castor Ships amounted to $1,590,501 and $1,341,549, respectively, which are presented in ‘Due from related parties, non-current’ in the accompanying consolidated balance sheets. As of December 31, 2024 and December 31, 2025, the amounts of $6,072,800 and $7,431,696 of ‘Due from related parties, current’, respectively, represent operating expense payments made on behalf of the Company to the third-party managers and Castor Ships in excess of amounts advanced and advances of expected scheduled drydocking repairs.

F-20
TORO CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
4.
Transactions with Related Parties: (continued)


(b)
Former Parent Company:


In connection with the Spin-Off as discussed in Note 1, on March 7, 2023, Toro issued 140,000 1.00% Series A Preferred Shares to Castor having a stated amount of $1,000 per share and a par value of $0.001 per share (Note 9). The amount of accrued dividend on Series A Preferred Shares due to Castor as of December 31, 2024 and December 31, 2025 was $338,333 and $299,444, respectively and is presented net in ‘Due to related parties, current’ in the accompanying consolidated balance sheet.



In the period ended December 31, 2023, the Company reimbursed Castor $2,694,646 for expenses related to the Spin-Off that were incurred by Castor. As of December 31, 2024 and 2025, there are no outstanding expenses to be reimbursed by the Company.



On August 7, 2023, the Company agreed to purchase 50,000 5.00% Series D Cumulative Perpetual Convertible Preferred Shares of Castor, having a stated value of $1,000 and par value of $0.001 per share (the “Castor Series D Preferred Shares”), for aggregate cash consideration of $50.0 million. The distribution rate on the Castor Series D Preferred Shares is 5.00% per annum, which rate will be multiplied by a factor of 1.3 on the seventh anniversary of the issue date of the Castor Series D Preferred Shares and annually thereafter, subject to a maximum distribution rate of 20% per annum in respect of any quarterly dividend period. Dividends are payable quarterly in arrears on the 15th day of January, April, July and October in each year, subject to Castor’s Board of Directors’ approval.



The Series D Preferred Shares are convertible, in whole or in part, at the Company’s option to common shares of Castor from the first anniversary of their issue date at the lower of (i) $7.00 per common share, and (ii) the 5-day-value-weighted average price immediately preceding the conversion. On March 27, 2024, Castor effected a 1-for-10 reverse stock split of its common stock without any change in the number of authorized common shares. As a result of the reverse stock split, the number of Castor’s outstanding shares as of March 27, 2024, decreased to 9,662,354 while the par value of its common shares remained unchanged at $0.001 per share. The conversion price of the Castor Series D Preferred Shares is subject to adjustment upon the occurrence of certain events, including the occurrence of splits and combinations (including a reverse stock split) of the common shares and was adjusted to $7.00 per common share on March 27, 2024 from $0.70 per common share following effectiveness of the 1-for-10 reverse stock split. The minimum conversion price of the Series D Preferred Shares is $0.30 per common share.


On December 12, 2024, Toro agreed to purchase for an aggregate consideration of $50,000,000 in cash, an additional 50,000 Castor Series D Preferred Shares. The Company owns all 100,000 outstanding Castor Series D Preferred Shares.


In connection with the transaction, Castor amended the terms of the Castor Series D Preferred Shares to, among other things: (i) reset the date from which holders of the Castor Series D Preferred Shares may convert their Series D Preferred Shares into common shares of Castor to January 1, 2026 from August 7, 2024, (ii) require that any holder of the Castor Series D Preferred Shares electing to exercise its optional conversion rights convert not less than 500 Castor Series D Preferred Shares into common shares of Castor, and (iii) introduce an additional redemption feature whereby Castor may, at its option, redeem for cash all remaining outstanding Castor Series D Preferred Shares if the number of Series D Preferred Shares outstanding is 30,000 or less. Toro may not dispose of any of the Castor Series D Preferred Shares for a period of 180 days after the closing date of the transaction.


F-21
TORO CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars – except for share data unless otherwise stated)

4.
Transactions with Related Parties: (continued)


On December 23, 2025, Toro and Castor agreed to amend the terms of Castor Series D Preferred Shares and Series A Preferred Shares, in each case to extend the initial conversion date by one-year, which shall be to January 1, 2027 in the case of the Castor Series D Preferred Shares and March 7, 2027 in the case of the Series A Preferred Shares.


For the years ended December 31, 2024 and 2025, the Company received a dividend on the Castor Series D Preferred Shares, amounting to $2.5 million and $4.6 million, respectively. As of December 31, 2024 and 2025, the aggregate value of the investment in Castor amounted to $100,687,500 and $101,069,444, respectively, including $687,500 and $1,069,444 of accrued dividends, respectively, and is presented as ‘Investment in related party’ in the accompanying  consolidated balance sheet. As of December 31, 2025, the Company did not identify any impairment or any observable prices for identical or similar investments of the same issuer.


F-22
TORO CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars – except for share data unless otherwise stated)

On December 11, 2024, Toro entered into a facility agreement with Castor to provide a $100.0 million senior term loan facility to Castor (the “Term Loan”) which was drawn down on the same date. The Term Loan has a tenor of 5 years, bears interest at the secured overnight financing rate (“SOFR”) plus 1.80% per annum, is guaranteed by ten ship-owning subsidiaries of Castor and is receivable in (a) twenty (20) consecutive quarterly installments, each of  $2,500,000, commencing on March 11, 2025, and (b) a balloon installment in the amount of $50.0 million at its maturity together with the last quarterly installment. The Term Loan is secured by first priority mortgages and first priority general assignments covering insurance policies and requisition compensation over the ten vessels owned by wholly owned subsidiaries of Castor. The value of these vessels was approximately $235.0 million based on third-party valuations at the time of the drawdown by Castor. Pursuant to the terms of this facility, Castor is also subject to certain negative covenants customary for facilities of this type, which may be waived in Toro’s sole discretion. During the year ended December 31, 2025, the Term Loan was fully repaid. As result there is no balance under ‘Loan to related party’ as of December 31, 2025 in the accompanying consolidated balance sheet. During the year ended December 31, 2025, the interest income under the Term Loan amounted to $1,771,836 and is presented in ‘Interest income from related party’ in the consolidated statements of comprehensive income.


On September 29, 2025, the Company agreed to purchase 60,000 Series E Cumulative Perpetual Convertible Preferred shares (the “Series E Preferred Shares”) of Castor having a stated amount of $1,000 each for a total consideration of $60 million, in cash. The distribution rate of the Series E Preferred Shares is 8.75%, paid quarterly, and they are convertible into common shares of Castor from the first anniversary of the issue date at a conversion price equal to the 5-day value weighted average price immediately preceding the conversion, subject to a minimum conversion price of $0.30. This transaction and its terms were approved by the Board of Directors of Castor and Toro at the recommendation of their respective independent committees who negotiated the transaction.



On October 13, 2025, the Company and Castor agreed to the full redemption of the Series E Preferred Shares, for a cash consideration equal to the stated amount of $60.0 million of the Series E Preferred Shares plus 0.523% thereof, including accrued and unpaid distributions.


The above transactions and their terms were approved by the Board of Directors of Toro and Castor at the recommendation of their respective special committees of disinterested and independent directors.

F-23
TORO CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
4.
Transactions with Related Parties: (continued)

(c)
Equity incentive plan:


As of December 31, 2025, the Company maintains the Equity Incentive Plan and 2025 Equity Incentive Plan (as defined and discussed in Note 13) under which the Company’s Board of Directors has made and may make awards of certain securities of the Company or cash to directors, officers and employees of the Company and/or its subsidiaries and affiliates and consultants and service providers to (including persons who are employed by or provide services to any entity that is itself a consultant or service provider to) the Company and its subsidiaries and affiliates.


The stock-based compensation cost for the non-vested shares under the Equity Incentive Plan for the years ended December 31, 2023, 2024 and 2025, amounted to $1,272,698, $5,312,854 and $3,594,006, respectively, and is included in ‘General and administrative expenses’ in the accompanying consolidated statements of comprehensive income.


(d)
Pani Corp. Subscription Agreement:


On April 17, 2023, Toro entered into a subscription agreement with Pani Corp. (“Pani”), a company controlled by the Company’s Chairman and Chief Executive Officer, pursuant to which Toro issued and sold, and Pani purchased, 8,500,000 common shares, par value $0.001 per share, at a purchase price of $2.29 per share, for gross proceeds of $19,465,000, less issuance costs of $817,764. The transaction was approved by a special committee of the Company’s disinterested and independent directors. See Note 9 for further details.

(e)
Robin Energy Ltd.



As discussed in Note 1, as part of the Robin Spin-Off Toro received 2,000,000 Series A Preferred Shares of Robin, having a stated amount of $25 and a par value of $0.001 per share. The Company is the holder of all of the issued and outstanding Series A Preferred Shares (Note 1). The Series A Preferred Shares do not have voting rights. The Series A Preferred Shares are convertible, at their holder’s option, to common shares at any time and from time to time from and after the second anniversary of April 14, 2025. The conversion price for any conversion of the Series A Preferred Shares shall be the lower of (i) 200% of the volume-weighted average price (“VWAP”) of Robin’s common shares over the five consecutive trading day period commencing on and including April 14, 2025, and (ii) the VWAP of Robin’s common shares over the five consecutive trading day period expiring on the trading day immediately prior to the date of delivery of written notice of the conversion.


As there was no observable market for the Series A Preferred Shares, these were recognized at $25,942,180, being the fair value of the shares determined through Level 2 inputs of the fair value hierarchy by taking into consideration a third-party valuation. The fair value on the initial recognition is deemed to be the cost. The applied valuation methodology was comprised the trifurcation of the value of the Series A Preferred Shares in three components namely, the “straight” preferred stock component, the embedded option component, while an incremental value was also ascribed to the conversion at the variable conversion price. The sum of these components was used to estimate the value for the Series A Preferred Shares at $25,942,180. The valuation methodology and the significant other observable inputs used for each component are set out below:

 
Valuation Technique
Unobservable Input
  
Range (Weighted average)
  
“Straight” Preferred stock component
Discounted Cash Flow model
• Weighted average cost of Capital
  
11.88%
  
Embedded Option Component
Black Scholes
• Volatility
  
107.92%
  


• Risk free rate
  
4.02%
  


• Weighted average cost of Capital
  
11.88%
  


Strike price
  
$10.546
  


Share price (April 14, 2025)
  
$5.80
  
Incremental value at variable conversion price
Probability adjusted method
5-day VWAP and discount to conversion day closing price (5th day)
  
$4.50 (10% discount)
  


     
$4.00 (20% discount)
  


Probability ascribed for 10% lower 5-day VWAP
  
75%



Probability ascribed for 20% lower 5-day VWAP
   25%


Assumed share price
  
$5.00
  


As of December 31, 2025, the aggregate value of investments in Robin amounted to $26,049,125, including $106,945 of accrued dividends and are separately included as ‘Investments in related party’ in the accompanying  consolidated balance sheet. As of December 31, 2025, the Company did not identify any indications for impairment or any observable prices for identical or similar investments of the same issuer.


Furthermore, Toro is entitled to receive cumulative cash dividends, at the annual rate of 1.00% on the stated amount of $25 per share, of the 2,000,000 Series A Preferred Shares, receivable quarterly in arrears on the 15th day of January, April, July and October in each year, subject to Robin’s Board of Directors approval. For the year ended December 31, 2025, the Company received a dividend on the Robin Series A Preferred Shares, amounting to $251,389. During the year ended December 31, 2025, dividend income derived from the Company’s investment in Robin amounted to $358,333 and is presented in ‘Dividend income from related party’ in the accompanying consolidated statements of comprehensive income.


Following the successful completion of the Robin Spin-Off, Robin also reimbursed Toro $786,001 for transaction expenses that Toro incurred in relation to the Robin Spin-Off. As of December 31, 2025, there were no outstanding expenses to be reimbursed to Toro by Robin under the Robin Contribution and Spin-Off Distribution Agreement.

F-24
TORO CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
4.
Transactions with Related Parties: (continued)
(f)
Vessel disposals:


On July 10, 2025, the Company entered into an agreement with a wholly owned subsidiary of Robin, for the sale of the LPG Dream Syrax, at a price of $18.0 million. The vessel was delivered to its new owner on September 3, 2025.


On September 16, 2025, the Company entered into an agreement with a wholly owned subsidiary of Robin, for the sale of the LPG Dream Terrax, at a price of $20.0 million. The vessel was delivered to its new owner on September 25, 2025.


The terms of the transactions were approved by the board of directors of Toro and Robin at the recommendation of their respective special committees of disinterested and independent directors and were supported by independent valuations.


Both entities are controlled by the same controlling shareholder, Mr. Panagiotidis, and accordingly the transaction is considered to be between entities under common control. The transactions were accounted for as a transfer of assets between entities under common control in accordance with ASC 805-50, “Business Combinations – Related Issues.” As such, the vessels and their dry docking related amounts (Notes 5 and 6), were recognized by Robin at the historical carrying amount recorded by Toro as of the date of transfer, which was $34,871,669. No gain or loss was recognized in the statement of operations as a result of the transactions. The difference between the consideration received and the historical carrying amount of the vessels, amounting to $3,091,542, was presented as ‘Excess of consideration over carrying value of sold assets’ in the accompanying consolidated statements of Shareholders’ equity and Mezzanine equity.



(h)
Non-executive directors’ compensation:



During the years ended December 31, 2023, 2024 and 2025, the non-executive directors’ compensation was $32,740, $110,000 and $110,000 and is included in ‘General and administrative expenses’ in the accompanying consolidated statements of comprehensive income.

5.
Deferred Charges, net:


The movement in deferred charges net, which represents deferred dry-docking costs, in the accompanying consolidated balance sheets is as follows:

​
  
Dry-docking costs
  
Balance December 31, 2023
  
$
178,700
  
Additions
    
1,495,637
  
Amortization
    
(592,856
)
Balance December 31, 2024
  
$
1,081,481
  
Additions
    
3,698,982
  
Spin-off of Handysize tanker vessel (Note 1)
     (823,410 )
Disposals
     (1,624,527 )
Amortization
    
(496,545
)
Balance December 31, 2025
  
$
1,835,981
  



During the year ended December 31, 2024, the M/T Wonder Mimosa initiated and completed its scheduled drydocking repairs. During the year ended December 31, 2025, the LPG Dream Arrax, LPG Dream Vermax and LPG Dream Terrax initiated and completed their scheduled dry-dock repairs. During the year ended December 31, 2025, the LPG Dream Syrax initiated its scheduled dry-dock repairs and was sold prior to its completion(Note 6 (c)).

F-25
TORO CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
6.
Vessels, net:

(a)
Vessels, net:



The amounts in the accompanying consolidated balance sheets are analyzed as follows:

​
  
Vessel Cost
    
Accumulated
depreciation
    
Net Book Value
  
Balance December 31, 2023
  
$
80,360,967
    
$
(3,335,273
)
  
$
77,025,694
  
Improvements, and other vessel costs
    
50,489
      
—
      
50,489
  
Depreciation
    
—
      
(4,308,390
)
    
(4,308,390
)
Balance December 31, 2024
  
$
80,411,456
    
$
(7,643,663
)
  
$
72,767,793
  
Acquisitions, improvements and other vessel costs     67,811,161       —       67,811,161  
Spin-off of Handysize tanker vessel (Note 1)
     (8,912,837 )     2,199,697       (6,713,140 )
Vessel disposals
     (37,139,899 )     3,892,757       (33,247,142 )
Depreciation
     —       (4,438,110 )     (4,438,110 )
Balance December 31, 2025
   $ 102,169,881     $ (5,989,319 )   $ 96,180,562  

(b)
Vessel Acquisitions:



On May 3, 2025, the Company entered into an agreement to purchase a 2021-built MR (MR2 class) tanker vessel from an unaffiliated third party for a purchase price of $36.25 million. The M/T Wonder Altair was delivered to the Company on July 11, 2025.



On September 19, 2025, the Company, through a wholly owned subsidiary, entered into an agreement with an unaffiliated third-party to acquire a 2014-built MR (MR2 class) tanker vessel for a purchase price of $30.3 million. The M/T Wonder Maia was delivered to the Company on September 29, 2025.


During the year ended December 31, 2024, there were no vessel acquisitions.


The Company reviewed all its vessels for impairment and none were found to have an indication of impairment as the fair value was in excess of carrying value at December 31, 2023, 2024 and 2025.

(c)
Vessel Disposals:


Continuing operations:


On July 10, 2025, the Company entered into an agreement with a wholly owned subsidiary of Robin, for the sale of the LPG Dream Syrax, at a price of $18.0 million. The vessel was delivered to its new owner on September 3, 2025 (Note 4).



On September 16, 2025, the Company entered into an agreement with a wholly owned subsidiary of Robin, for the sale of the LPG Dream Terrax, at a price of $20.0 million. The vessel was delivered to its new owner on September 25, 2025 (Note 4).



Discontinued operations:



On January 8, 2024, the Company entered into an agreement with an unaffiliated third party for the sale of the M/T Wonder Sirius for a gross sale price of $33.8 million. The vessel was delivered to its new owners on January 24, 2024. In connection with this sale, the Company recognized during the first quarter of 2024 a gain of $19.6 million which is presented in ‘Gain on sale of vessel’ in the accompanying unaudited interim condensed consolidated statements of comprehensive income from discontinued operations (Note 3). 



The respective sales of the above vessels took place due to favorable offers in each case.

F-26
TORO CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
7.
Investment in equity securities:



The amounts of our investment in equity securities in the accompanying consolidated balance sheets are presented in the table below:


   
December 31,
2024
    
December 31,
2025
  
Investment in equity securities with readily determinable fair values (a)
  
$
226,566
    
$
209,486
  
Investment in equity securities without readily determinable fair values (b)
  
$
4,647,853
    
$
5,647,853
  

(a)
Investment in equity securities with readily determinable fair values


A summary of the movement in equity securities with readily determinable fair values for the year ended December 31, 2024 and 2025 is presented in the table below:


   
Equity securities
with readily
determinable
fair values
  
Balance December 31, 2023
  
$
—
  
Equity securities acquired
    
535,914
  
Proceeds from sale of equity securities
    
(249,338
)
Realized loss from sale of equity securities
    
(2,369
)
Unrealized loss on equity securities revalued at fair value at end of the period
    
(46,173
)
Unrealized foreign exchange loss
    
(11,468
)
Balance December 31, 2024
  
$
226,566
  
Proceeds from sale of equity securities
     (101,412 )
Realized loss from sale of equity securities
     (344 )
Unrealized gain on equity securities revalued at fair value at end of the period
     55,343  
Unrealized foreign exchange gain
     29,333  
Balance December 31, 2025
   $ 209,486  



During the years ended December 31, 2024 and 2025, the Company received dividends of $4,136 and $4,623, respectively, from its investments in equity securities with readily determinable fair values. As of December 31, 2024 and 2025, the investment in equity securities with readily determinable fair values with amount of $226,566 and $209,486, respectively and is presented in ‘Investment in equity securities, current’ in the accompanying consolidated balance sheet.

F-27
TORO CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
7.
Investment in equity securities: (continued)

(b)
Investment in equity securities without readily determinable fair values



A summary of the movement in equity securities without readily determinable fair values for the year ended December 31, 2024 and 2025 is presented in the table below:

 
  
Equity securities
without readily
determinable
fair values
  
Balance December 31, 2023
   $
 —
  
Equity securities acquired
     4,647,853
  
Balance December 31, 2024
  
$
4,647,853
  
Equity securities acquired
    
1,000,000
  
Balance December 31, 2025
  
$
5,647,853
  


During the years ended December 31, 2024 and 2025, the Company received no dividends from its investments in equity securities without readily determinable fair values. As of December 31, 2024 and 2025, the investment in equity securities without readily determinable fair values amounting to $4,647,853 and $5,647,853, respectively, is presented in ‘Investment in equity securities, non-current’ in the accompanying consolidated balance sheet.



As of December 31, 2025, the Company did not identify any impairment or any observable prices for identical or similar investments of the same issuer.

8.
Investment in debt securities:


On July 17, 2025, the Company entered a four-year investment in debt securities amounting to $2,910,000. Interest income is earned on a semi-annual basis on the 20th day of January and July in each year starting from January 20, 2026.


The Company’s held to maturity investments comprise of corporate bonds with maturity of more than twelve months. The maturity schedule of the outstanding investments in debt securities as of December 31, 2025, is as follows:

Maturity date
   Carrying amount
  
Due within 1 year
  
$
—
  
Due in 1-5 years
  

2,918,353
  
Due in 5-10 years
     —  
Total
   $ 2,918,353  


As of December 31, 2024 and 2025, the investment in debt securities amounting to $0 and $2,918,353, respectively, is presented in ‘Investment in debt securities’ in the accompanying consolidated balance sheet. No allowance for credit losses was warranted on investments as of December 31, 2025.


9.
Equity Capital Structure:



Under Toro’s initial Articles of Incorporation dated July 29, 2022, Toro’s authorized capital stock consisted of 1,000 shares par value $0.001 per share. On March 2, 2023, the Company’s articles of incorporation were amended and restated and Toro’s authorized capital stock was increased to 3,900,000,000 common shares, par value $0.001 per share and 100,000,000 preferred shares, par value $0.001 per share. In connection with the Spin-Off (Note 1), on March 7, 2023, Toro issued to Castor (Note 10) (i) 9,461,009 common shares with one vote per share, and (ii) 140,000 Series A Preferred Shares, with a stated value of $1,000 and par value of $0.001 per share, and no voting power, and issued to Pelagos Holdings Corp, a company controlled by Toro’s Chairman and Chief Executive Officer, 40,000 Series B Preferred Shares. Such common shares were distributed on March 7, 2023 pro rata to the shareholders of record of Castor as of February 22, 2023 at a ratio of one Toro common share for every ten Castor common shares. Refer to Note 1 for further details on the Spin-Off and issuance of such shares.



Each Series B Preferred Share has the voting power of 100,000 common shares and counts for 100,000 votes for purposes of determining quorum at a meeting of shareholders. Upon any liquidation, dissolution or winding up of the Company, the Series B preferred shares shall have the same liquidation rights as and pari passu with the common shares up to their par value of $0.001 per share and, thereafter, the Series B Preferred Shares have no right to participate further in the liquidation, dissolution or winding up of the Company.

Private Placement of Common Shares


On April 17, 2023, Toro entered into a subscription agreement with Pani, a company controlled by Toro’s Chairman and Chief Executive Officer, pursuant to which Toro issued and sold, and Pani purchased, 8,500,000 common shares, par value $0.001 per share, at a purchase price of $2.29 per share, for gross proceeds of $19,465,000, less issuance costs of $817,764. The 8,500,000 common shares were issued on April 19, 2023 in a private placement pursuant to Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder.

F-28
TORO CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
9.
Equity Capital Structure: (continued)



Share Repurchase Program



On November 6, 2023, the Board of Directors of the Company approved a share repurchase program, authorizing the repurchase of up to $5.0 million of the Company’s common shares commencing November 10, 2023, to March 31, 2024. Shares were repurchased in open market and/or privately negotiated transactions. The timing, manner and total amount of any share repurchases was determined by management at its discretion and depended  on business, economic and market conditions, corporate and regulatory requirements, prevailing share prices, and other considerations. The authorization did not obligate the Company to acquire any specific amount of common shares. During the year ended December 31, 2023, the Company repurchased under its share repurchase program 222,600 shares of common stock in open market transactions at an average price of $4.69 per share, for an aggregate consideration of $1.0 million. On December 27, 2023, 179,251 of these repurchased common shares were cancelled and removed from the Company’s share capital and on January 3, 2024, the remaining 43,349 repurchased common shares were cancelled and removed from the Company’s share capital.



The share repurchase program was terminated on March 31, 2024 in accordance with its terms. During the three months ended March 31, 2024, the Company repurchased under its share repurchase program an additional 644,556 shares of common stock in open market transactions at an average price of $5.77 per share, for an aggregate consideration of $3.7 million, which were cancelled and removed from the Company’s share capital. This brought the total number of shares repurchased under the program to 867,156 common shares at an average price of $5.50 per share.

Tender Offer



On July 10, 2025, the Company commenced a tender offer to purchase up to 4,500,000 of our common shares, using funds available from cash and cash equivalents on hand, at a price of $2.75 per share. The tender offer expired at the end of the day, on August 7, 2025. The Board of Directors determined that it was in the Company’s best interest to repurchase shares at such time given the Company’s cash position and stock price. Based on the final count by the depositary for the tender offer, 20,344 shares were properly tendered. The Company accepted all of these shares for purchase in accordance with the terms of the tender offer at a price of $2.75 per share, net to the seller in cash, less any applicable withholding taxes and without interest, for an aggregate cost of $0.3 million including fees relating to the tender offer, and these repurchase shares were cancelled.


At the Market (“ATM”) Offering Agreement


On November 13, 2025, the Company entered into an “at-the-market” (“ATM”) offering agreement with Maxim Group LLC (“Maxim”). Under the terms of the ATM offering agreement, Toro may, from time to time, sell its common shares having an aggregate offering value of up to $12.5 million through Maxim, as sales agent. The Company will determine, at its sole discretion, the timing and number of shares to be sold under the ATM facility. As of December 31, 2025, there were no transactions under the ATM.

F-29
TORO CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
9.
Equity Capital Structure: (continued)


Special Dividend


On December 5, 2025, the Company’s Board of Directors declared a one-time, special dividend of $1.75 per common share, consisting of either cash or the Company’s common shares. The dividend was paid on January 16, 2026 to shareholders of record as of December 16, 2025.


The results of shareholder elections and the payment of special dividend were announced on January 16, 2026 (Note 19(a).



As of December 31, 2025, Toro had 21,473,509 common shares issued and outstanding including 4,400,000 restricted common shares issued pursuant to the Equity Incentive Plan and 2025 Equity Incentive Plan (as defined and discussed in Note 13).


10.
Mezzanine equity:



Series A Preferred Shares



The Company issued as part of the Spin-Off to Castor 140,000 Series A Preferred Shares with par value of $0.001 and a stated value of $1,000 each. The Series A Preferred Shares have the following characteristics:



Holders of Series A Preferred Shares shall be entitled to receive, when, as and if declared by the Company’s Board of Directors, cumulative cash dividends at 1.00% per annum of the stated amount, payable quarterly in arrears on the 15th day of each January, April, July and October, respectively, in each year, beginning on April 15, 2023. For each dividend period commencing on or after the seventh anniversary of March 7, 2023, the rate shall be the rate in effect for the prior dividend period multiplied by a factor of 1.3; but the rate cannot exceed 20% per annum in respect of any dividend period.



So long as any Series A Preferred Share remains outstanding, unless full Accrued Dividends on all outstanding Series A Preferred Shares through and including the most recently completed dividend period have been paid or declared and a sum sufficient for the payment thereof has been set aside for payment, no dividend may be declared or paid or set aside for payment, and no distribution may be made, on any junior stock, other than a dividend payable solely in stock that ranks junior to the Series A Preferred Shares in the payment of dividends and in the distribution of assets on any liquidation, dissolution or winding up of the Company. “Accrued Dividends” means, with respect to Series A Preferred Shares, an amount computed at the annual rate stated above from, as to each share, the date of issuance of such share to and including the date to which such dividends are to be accrued (whether or not such dividends have been declared), less the aggregate amount of all dividends previously paid on such share.


F-30
TORO CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
10.
Mezzanine equity: (continued)



Further, so long as any Series A Preferred Share remains outstanding, unless full Accrued Dividends on all outstanding Series A Preferred Shares through and including the most recently completed dividend period have been paid or declared and a sum sufficient for the payment thereof has been set aside for payment, no monies may be paid or made available for a sinking fund for the redemption or retirement of junior stock, nor shall any shares of junior stock be purchased, redeemed or otherwise acquired for consideration by us, directly or indirectly, other than (i) as a result of (x) a reclassification of junior stock, or (y) the exchange or conversion of one share of junior stock for or into another share of stock that ranks junior to the Series A Preferred Shares in the payment of dividends and in the distribution of assets on any liquidation, dissolution or winding up of the Company; or (ii) through the use of the proceeds of a substantially contemporaneous sale of other shares of stock that rank junior to the Series A Preferred Shares in the payment of dividends and in the distribution of assets on any liquidation, dissolution or winding up of the Company.



The Series A Preferred Shares are convertible, at their holder’s option, to common shares after the third anniversary of March 7, 2023, which the holder agreed to extend for one additional year, to March 7, 2027, in December 2025 (Note 4), until but excluding the seventh anniversary of March 7, 2023. The conversion price for any conversion of the Series A Preferred Shares shall be the lower of (i) 150% of the volume-weighted average price (“VWAP”) of our common shares over the five consecutive trading day period commencing on and including March 7, 2023, and (ii) the VWAP of our common shares over the 10 consecutive trading day period expiring on the trading day immediately prior to the date of delivery of written notice of the conversion; provided, that, in no event shall the conversion price be less than $2.50.



The Company may, at its option, redeem the Series A Preferred Shares in whole or in part, at any time and from time to time after the seventh anniversary of March 7, 2023 (the Series A Preferred Shares issue date), at a cash redemption price equal to the stated amount, together with an amount equal to all accrued dividends.



Holders of the Series A Preferred Shares do not have any voting rights except for a right to elect directors in the event of nonpayment of dividends and a vote or consent of the holders of at least two thirds of the Series A Preferred Shares at the time outstanding, voting together with any other series of preferred shares that would be adversely affected in substantially the same manner and entitled to vote as a single class in proportion to their respective stated amounts, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, for effecting or validating: (i) any amendment, alteration or repeal of any provision of our Articles of Incorporation or Bylaws that would alter or change the voting powers, preferences or special rights of the Series A Preferred Shares so as to affect them adversely; (ii) the issuance of dividend parity stock if the accrued dividends on all outstanding Series A Preferred Shares through and including the most recently completed dividend period have not been paid or declared and a sum sufficient for the payment thereof has been set aside for payment; (iii) any amendment or alteration of the Articles of Incorporation to authorize or create, or increase the authorized amount of, any shares of any class or series or any securities convertible into shares of any class or series of our capital stock ranking prior to Series A in the payment of dividends or in the distribution of assets on any liquidation, dissolution or winding up of the Company; or (iv) any consummation of (x) a binding share exchange or reclassification involving the Series A Preferred Shares, (y) a merger or consolidation of the Company with another entity (whether or not a corporation), or (z) a conversion, transfer, domestication or continuance of the Company into another entity or an entity organized under the laws of another jurisdiction, unless in each case (A) the Series A Preferred Shares remain outstanding or, in the case of any such merger or consolidation with respect to which Toro is not the surviving or resulting entity, or any such conversion, transfer, domestication or continuance, the Series A Preferred Shares are converted into or exchanged for preference securities of the surviving or resulting entity or its ultimate parent, and (B) such shares remaining outstanding or such preference securities, as the case may be, have such rights, preferences, privileges and voting powers, and limitations and restrictions, and limitations and restrictions thereof, taken as a whole, as are not materially less favorable to the holders thereof than the rights, preferences, privileges and voting powers, and restrictions and limitations thereof, of the Series A Preferred Shares immediately prior to such consummation, taken as a whole.

F-31
TORO CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
10.
Mezzanine equity: (continued)



In the event of any liquidation, dissolution or winding up of the affairs of the Company, whether voluntary or involuntary, before any distribution or payment out of the Company’s assets may be made to or set aside for the holders of any junior stock, holders of Series A Preferred Shares will be entitled to receive out of our assets legally available for distribution to our shareholders an amount equal to the stated amount per share of $1,000, together with an amount equal to all accrued dividends to the date of payment whether or not earned or declared.



The Series A Preferred Shares have been classified in Mezzanine equity as per ASC 480-10-S99 “Distinguishing liabilities from Equity – SEC Materials” as they are in essence redeemable at the option of the holder as Mr. Panagiotidis, the Chief Executive Officer and controlling shareholder of Castor and Toro, who can effectively determine the timing of the redemption of the Series A Preferred Shares.



The Company uses an effective interest rate of 3.71% over the expected life of the preferred stock (being nine years) which is the expected earliest redemption date. This is consistent with the interest method, taking into account the discount between the issuance price and liquidation preference and the stated dividends, including “step-up” amounts. The amounts accreted during the period March 7, 2023 through December 31, 2023, the year ended December 31, 2024 and December 31, 2025, were $2,429,275, $3,064,409 and $3,143,414, respectively, and are presented as ‘Deemed dividend on Series A Preferred Shares’ in the accompanying consolidated statements of comprehensive income.



On December 23, 2025, Toro and Castor agreed to amend the terms of Series A Preferred Shares to extend the initial conversion date by one-year, which shall be March 7, 2027. Following the extension of the initial conversion date and the amendments to the terms of the Series A Preferred Shares, the Company followed the provisions of ASC 470-50 “Modifications and Extinguishments” to determine whether the amendment to the preferred stock should be accounted for as a modification or extinguishment. The Company treated that amendment as modification. In assessing the accounting impact, the Company analogized to the guidance in ASC 718 on equity modifications and compared the fair value of the instrument immediately before and after the amendment. As the fair value of the preferred stock after the modification was lower than its fair value immediately prior to the modification, no incremental fair value was recognized and, accordingly, no adjustment was recorded to retained earnings. The Company continues to account for the Series A under its existing measurement model as discussed above.



As of December 31, 2024, the net value of Mezzanine Equity amounted to $122,665,819, including the amount of $3,064,409 of deemed dividend on the Series A Preferred Shares in the year ended December 31, 2024, and is presented as ‘Mezzanine Equity’ in the accompanying consolidated balance sheet. During the year ended December 31, 2024, the Company paid to Castor a dividend amounting to $1,400,000 on the Series A Preferred Shares for the period from October 15, 2023 to October 14, 2024. The accrued amount for the period from October 15, 2024 to December 31, 2024 (included in the dividend period ended January 14, 2025) amounted to $338,333 (Note 4(b)).


As of December 31, 2025, the net value of Mezzanine Equity amounted to $125,809,233, including the amount of $3,143,414 of deemed dividend on the Series A Preferred Shares in the year ended December 31, 2025, and is presented as ‘Mezzanine Equity’ in the accompanying consolidated balance sheet. During the year ended December 31, 2025, the Company paid to Castor a dividend amounting to $1,400,000 on the Series A Preferred Shares for the period from October 15, 2024 to October 14, 2025. The accrued amount for the period from October 15, 2025 to December 31, 2025 (included in the dividend period ended January 14, 2026) amounted to $299,444 (Notes 4(c) and 19(d)).

11.
Financial Instruments and Fair Value Disclosures:


As of December 31, 2025, the principal financial assets of the Company consist of cash at banks, trade accounts receivable, investment in equity securities, investment in debt securities, investments in related parties, Castor and Robin, and amounts due from related parties. As of December 31, 2025, the principal financial liabilities of the Company consist of trade accounts payable and amounts due to related parties.


The following methods and assumptions were used to estimate the fair value of each class of financial instruments:


•
Cash and cash equivalents, accounts receivable trade, net, amounts due from/to related party/(ies) and accounts payable: The carrying values reported in the consolidated balance sheets for those financial instruments are reasonable estimates of their fair values due to their short-term maturity nature. Cash and cash equivalents are considered Level 1 items as they represent liquid assets with short-term maturities.
 

• Investment in related parties: Investment in related parties is initially measured at the transaction price and subsequently assessed for the existence of any observable market for the Castor Series D Preferred Shares and Robin Series A Preferred Shares, any observable price changes for identical or similar investments and the existence of any indications for impairment. As per the Company’s assessment, no such case was identified as at June 30, 2025.

F-32
TORO CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
11.
Financial Instruments and Fair Value Disclosures: (continued)


•
Investment in equity securities: The carrying value reported in the accompanying consolidated balance sheet for investment in equity securities with readily determinable fair values represents its fair value and is considered a Level 1 item of the fair value hierarchy as it is determined though quoted prices in an active market. Investment in equity securities without a readily determinable fair value is initially measured at the transaction price and subsequently assessed for the existence of any observable market and any observable price changes for identical or similar investments and the existence of any indications for impairment. As per the Company’s assessment, no such case was identified as at December 31, 2025.


•
Investment in debt securities: The carrying value reported in the accompanying consolidated balance sheet for investment in debt securities is at amortized cost. The fair value of the investment in debt securities (Note 8), is determined through Level 1 of the fair value hierarchy as defined in FASB guidance for Fair Value Measurements, as it is determined though quoted prices in an active market.



The estimated fair value of the Company’s investment in debt securities at December 31, 2025 is as follows:


   
2025
  
   
Carrying amount
  
Fair value
  
Investment in debt securities
  
$
2,918,353
    
$
3,088,068
  

  •
Concentration of credit risk: Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist principally of cash and cash equivalents, due from related parties, trade accounts receivable and loan to related party. The Company places its cash and cash equivalents, consisting mostly of deposits, with high credit qualified financial institutions. The Company performs periodic evaluations of the relative credit standing of the financial institutions in which it places its deposits. The Company limits its credit risk with accounts receivable by performing ongoing credit evaluations of its customers’ financial condition. The Company evaluated its credit risk with the loan to related party by performing ongoing credit evaluation on the borrower’s financial condition.

12.
Commitments and Contingencies:


Various claims, lawsuits, and complaints, including those involving government regulations and product liability, arise in the ordinary course of the shipping business. In addition, losses may arise from disputes with charterers, pool operators, agents, insurance and other claims with suppliers relating to the operations of the Company’s vessels. Currently, management is not aware of any such claims or contingent liabilities, which should be disclosed, or for which a provision should be established in the accompanying consolidated financial statements.


The Company accrues for the cost of environmental liabilities when management becomes aware that a liability is probable and is able to reasonably estimate the probable exposure. As of the date of these consolidated financial statements, management was not aware of any such claims or contingent liabilities that should be disclosed or for which a provision should be established in the accompanying consolidated financial statements. The Company is covered for liabilities associated with the vessels’ actions to the maximum limits as provided by Protection and Indemnity (P&I) Clubs, members of the International Group of P&I Clubs.

F-33
TORO CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
12.
Commitments and Contingencies: (continued)

(a)  Commitments under long-term lease contracts


The following table sets forth the future minimum contracted lease payments to the Company (gross of charterers’ commissions), based on the Company’s vessels’ commitments to non-cancelable time charter contracts as of December 31, 2025. Non-cancellable time charter contracts include fixed-rate time charters.

Twelve-month period ending December 31,
  
Amount
  
2026
  
$
 9,763,299
  
Total
  
$
9,763,299
 


13.
Equity Incentive Plan:



On September 6, 2023, the Company’s Board of Directors adopted an Equity Incentive Plan (the “Equity Incentive Plan”) under which directors, officers and employees (including any prospective director, officer or employee) of the Company and/or its subsidiaries and affiliates and consultants and service providers to (including persons who are employed by or provide services to any entity that is itself a consultant or service provider to) the Company and its subsidiaries and affiliates, are eligible to receive awards including (a) non-qualified stock options, (b) stock appreciation rights, (c) restricted stock, (d) restricted stock unit, (e) dividend equivalents, (f) cash awards, (g) unrestricted stock and (h) other equity-based or equity-related Awards. The Equity Incentive Plan is administered by the Company’s Board of Directors and the aggregate number of common shares that may be issued with respect to awards granted under the Equity Incentive Plan cannot exceed the 2,000,000 common shares. The Company’s Board of Directors may terminate the Equity Incentive Plan at any time. On September 28, 2023, a total of 1,240,000 restricted common shares had been granted under the Plan to directors, officers and non-employees. The fair value of each restricted share was $5.83, based on the latest closing price of the Company’s common shares on the grant date.



On May 31, 2024, 760,000 restricted common shares were further granted under the Equity Incentive Plan to one of our directors. The fair value of each restricted share was $4.52, based on the latest closing price of the Company’s common shares on the grant date.



On September 26, 2025, as the Company had no remaining shares available for awards under the Equity Incentive Plan, the Company’s Board of Directors adopted the new Toro Corp. Equity Incentive Plan (“2025 Equity Incentive Plan”), under which the Company’s Board of Directors may make awards of cash or restricted shares, share options or other share-based awards with respect to up to 3,000,000 of the Company’s common shares to directors, officers and employees of the Company and/or its subsidiaries and affiliates and consultants and service providers to (including persons who are employed by or provide services to any entity that is itself a consultant or service provider to) the Company and its subsidiaries and affiliates.


On November 6, 2025, 2,400,000 restricted common shares were granted under the 2025 Equity Incentive Plan to directors, officers and non-employees. The fair value of each restricted share was $3.44, based on the latest closing price of the Company’s common shares on the grant date.



The stock based compensation cost for the non-vested shares under the Equity Incentive Plan for the years ended December 31, 2023, 2024 and 2025 amounted to $1,272,698, $5,312,854 and $3,594,006 respectively, and is included in ‘General and administrative expenses’ in the accompanying  consolidated statements of comprehensive income.


F-34
TORO CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
13.
Equity Incentive Plan: (continued)



A summary of the status of the Company’s non-vested restricted shares as of December 31, 2024 and 2025, and the movement during the years ended December 31, 2024 and 2025, is presented below:


   
Number of
restricted shares
    
Weighted average grant
date fair value per
non-vested share
  
Non-vested, December 31, 2023
    
1,240,000
     $
5.83
  
Granted     760,000       4.52  
Vested     (560,000 )     5.83  
Non-vested, December 31, 2024
     1,440,000       5.14  
Granted
     2,400,000       3.44  
Vested
     (600,000 )     5.26  
Non-vested, December 31, 2025
     3,240,000     $
 5.81  



For the year ended December 31, 2024 and 2025, 560,000 and 600,000 restricted common shares were vested, respectively. The remaining unrecognized compensation cost relating to the shares granted amounting to $8,740,841 as of December 31, 2025, is expected to be recognized over the remaining period of three years, according to the contractual terms of those non-vested share awards.

14.
Earnings/(Loss) Per Common Share:


The computation of earnings/(loss) per share is based on the weighted average number of common shares outstanding during that period and gives retroactive effect to the shares issued  in connection with the Spin-Off.


The Company calculates earnings/(loss) per common share by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the relevant period.


The Company calculates basic earnings/(loss) per share in conformity with the two-class method required for companies with participating securities. The calculation of basic earnings/(loss) per share does not consider the non-vested shares as outstanding until the time-based vesting restrictions have lapsed.


F-35
TORO CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
14.
Earnings/(Loss) Per Common Share: (continued)


Diluted earnings/(loss) per common share, if applicable, reflects the potential dilution that could occur if potentially dilutive instruments were exercised, resulting in the issuance of additional shares that would then share in the Company’s net income. For the purpose of calculating diluted earnings/(loss) per common share, the weighted average number of diluted shares outstanding includes (i) the conversion of outstanding Series A Preferred Shares (Note 10) calculated with the “if converted” method by using the average closing market price over the reporting periods and (ii) the incremental shares assumed to be issued, determined under the two-class method weighted for the periods the non-vested shares were outstanding, if the two-class method was more dilutive than the treasury stock method. If there is a loss from continuing operations, diluted earnings per common share (EPS) would be computed in the same manner as basic EPS is computed, even if the entity has net income after adjusting for discontinued operations. Thus, the inclusion of the potential common shares from the conversion of outstanding Series A Preferred Shares and the incremental shares assumed to be issued, determined under the two-class or treasury stock method weighted for the periods the non-vested shares were outstanding, in diluted EPS from continuing operations would have an anti-dilutive effect. Therefore, basic EPS and diluted EPS are the same for continuing operations, discontinued operations and net income. The components of the calculation of basic and diluted earnings/(loss) per common share in each of the periods comprising the accompanying consolidated statements of comprehensive income are as follows:

   
Year ended
December 31,
    
Year ended
December 31,
    
Year ended
December 31,
  
 
  
2023
    
2024
     2025
  
Net income and comprehensive income from continuing operations, net of taxes
   $ 11,180,943     $ 5,511,535     $ 5,613,058  
Net income and comprehensive income from discontinued operations, net of taxes
     129,456,050       19,695,969       321,387  
Net income and comprehensive income
  
$
140,636,993
    
$
25,207,504
     $ 5,934,445  
Dividend on Series A Preferred Shares
    
(1,166,667
)
    
(1,423,333
)
     (1,361,112 )
Deemed dividend on Series A Preferred Shares
    
(2,429,275
)
    
(3,064,409
)
     (3,143,414 )
Undistributed earnings to non-vested participating securities
     (2,805,275 )     (1,685,830 )     (115,265 )
Net income attributable to common shareholders, basic
  
$
134,235,776
    
$
19,033,932
     $ 1,314,654  
Undistributed earnings to non-vested participating securities
    
2,805,275
      
—
       —  
Undistributed earnings reallocated to non-vested participating securities
    
(926,641
)
    
—
       —  
Dividend on Series A Preferred Shares
    
1,166,667
      
—
       —  
Deemed dividend on Series A Preferred Shares
    
2,429,275
      
—
       —  
Net income attributable to common shareholders, diluted
  
$
139,710,352
    
$
19,033,932
     $ 1,314,654  
Weighted average number of common shares outstanding, basic
    
15,443,485
      
17,399,772
       17,886,372  
Effect of dilutive shares
    
33,216,240
      
—
       —  
Weighted average number of common shares outstanding, diluted
    
48,659,725
      
17,399,772
       17,886,372  
Earnings/(loss) per common share, basic, continuing operations   $ 0.31     $ (0.04 )   $ 0.06  
Earnings/(loss) per common share, diluted, continuing operations   $ 0.21     $ (0.04 )   $ 0.06  
Earnings per common share, basic, discontinued operations   $ 8.38     $ 1.13     $ 0.02  
Earnings per common share, diluted, discontinued operations   $ 2.66     $ 1.13     $ 0.02  
Earnings per common share, basic, total
  
$
8.69
    
$
1.09
     $ 0.08  
Earnings per common share, diluted, total
  
$
2.87
    
$
1.09
     $ 0.08  

15.
Vessel Revenues:



The following table includes the voyage revenues earned by the Company by type of contract (time charters, voyage charters and pool agreements) in each of the years ended December 31, 2023, 2024 and 2025, as presented in the accompanying consolidated statements of comprehensive income:



​
  
Year ended
December 31,
    
Year ended
December 31,
    
Year ended
December 31,
  

 
2023
    
2024
     2025
  
Time charter revenues
    
3,439,356
      
14,315,299
       19,013,061  
Voyage charter revenues
    
3,253,385
      
1,310,312
       —  
Pool revenues
    
15,611,872
      
6,768,672
       2,068,779  
Total Vessel Revenues
  
$
22,304,613
    
$
22,394,283
     $
21,081,840  


The Company generates its revenues from time charters, voyage contracts and pool arrangements.



The Company typically enters into time charters ranging from one month to twelve months, and, in isolated cases, for longer terms, depending on market conditions. The charterer has the full discretion over the ports visited, shipping routes and vessel speed, subject to the owner’s protective restrictions set forth in the agreed charterparty’s terms. Time charter agreements may have extension options that range over certain time periods, which are usually periods of months. The time charter party generally provides, among others, typical warranties regarding the speed and the performance of the vessel as well as owner protective restrictions such that the vessel is sent only to safe ports by the charterer, subject always to compliance with applicable sanction laws and war risks, and carry only lawful and non-hazardous cargo.

F-36
TORO CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars – except for share data unless otherwise stated)

15.
Vessel Revenues: (continued)


Vessels are also chartered under voyage charters, where a contract is made for the use of a vessel under which the Company is paid freight on the basis of transporting cargo from a loading port to a discharge port. Depending on charterparty terms, freight can be fully prepaid, or be paid upon reaching the discharging destination upon delivery of the cargo, at the discharging destination but before discharging, or during a ship’s voyage.



Prior to the Robin Spin-Off, the Company employed its Handysize vessel in a pool. The main objective of pools is to enter into arrangements for the employment and operation of the pool vessels, so as to secure for the pool participants the highest commercially available earnings per vessel on the basis of pooling the revenue and expenses of the pool vessels and dividing it between the pool participants based on the terms of the pool agreement. The Company typically enters into pool arrangements for a minimum period of six months, subject to certain rights of suspension and/or early termination.



As of December 31, 2024, and December 31, 2025, there were no ‘Trade accounts receivable, net’, related to voyage charters, respectively.



As of December 31, 2024, and December 31, 2025, there were no deferred assets and no deferred liabilities related to voyage charters, respectively.

F-37
TORO CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
16.
Vessel Operating and Voyage Expenses:


The amounts in the accompanying consolidated statements of comprehensive income are analyzed as follows:

​
  
Year ended
December 31,
    
Year ended
December 31,
    
Year ended
December 31,
  
Voyage expenses
  
2023
    
2024
     2025
  
Brokerage commissions
    
137,344
      
312,605
       320,164  
Brokerage commissions- related party
    
279,719
      
418,070
       641,813  
Port & other expenses
    
422,115
      
273,152
       287,538  
Bunkers consumption
    
1,659,761
      
589,412
       57,775  
Loss on bunkers
    
6,213
   
1,512
    —
Total Voyage expenses
  
$
2,505,152
    
$
1,594,751
     $
1,307,290  
​
 
Year ended
December 31,
    
Year ended
December 31,
    
Year ended
December 31,
  
Vessel Operating Expenses
  
2023
    
2024
     2025
  
Crew & crew related costs
    
5,322,589
      
6,169,695
       5,849,156  
Repairs & maintenance, spares, stores, classification, chemicals & gases, paints, victualling
    
1,910,363
      
1,514,348
       1,581,057  
Lubricants
    
316,672
      
221,788
       182,080  
Insurance
    
373,244
      
412,407
       377,459  
Tonnage taxes
    
59,300
      
66,392
       70,825  
Other
    
1,410,792
      
915,769
       1,019,261  
Total Vessel operating expenses
  
$
9,392,960
    
$
9,300,399
     $ 9,079,838  

17.
Segment Information:


In the second quarter of 2023, the Company established its LPG carrier operations through the acquisition of two LPG carrier vessels. With effect from the second quarter of 2023, the Company operated in two reportable segments: (i) the Handysize tanker segment and (ii) the LPG carrier segment, each on a continued operations basis. Following the Robin Spin-Off of the Handysize tanker vessel (Note 1) and the acquisition of the new MR (MR2 class) tanker vessel, M/T Wonder Altair (built in 2021) on July 11, 2025 (Note 6), the former Handysize segment was renamed “MR (Handysize/MR2)” to reflect both the updated fleet composition and the strategic continuity of the segment. In addition, following the acquisition of the MR (MR2 class) tanker vessel, M/T Wonder Maia (built in 2014) on September 29, 2025 (Note 6) and considering the tanker vessels’ eco-design technical characteristics, the Company reassessed its segments and the MR (Handysize/MR2) segment was replaced with the Eco tanker segment and an additional Non-Eco tanker segment was created. As a result, Toro operated in three reportable segments: (i) the Eco tanker segment (comprising of M/T Wonder Altair as discussed above), (ii) the Non-Eco tanker segment (comprising of M/T Wonder Maia) and (iii) LPG carrier segment (comprising of LPG Dream Arrax and LPG Dream Vermax), each on a continuing operations basis. For comparative historical reporting periods, the former MR (Handysize/MR2 segment) is reflected in the results of the Eco tanker segment. The reportable segments reflect the internal organization of the Company and the way the chief operating decision maker (“CODM”), who is the Chief Executive Officer of the Company, reviews the operating results and allocates capital within the Company. The CODM assesses segment performance using key financial measures, including revenues, operating expenses, segment operating income and net income. These metrics help the CODM assess segment profitability, optimize fleet deployment, control costs and determine capital allocation. Based on these segment performance trends, the CODM makes resource allocation decisions such as adjusting chartering strategies, prioritizing fleet expansion or disposals, and optimizing cost efficiencies to enhance profitability and overall segment performance. In addition, the CODM separately reviews discrete financial information for tanker vessels with different eco-design technical characteristics, as these are subject to distinct operational strategies, maintenance profiles and capital allocation decisions. Further, the transport of refined petroleum products (carried by MR tanker vessels) and liquefied petroleum gas (carried by LPG carriers) have different characteristics. In addition, the nature of trade, trading routes, charterers and cargo handling of liquefied petroleum gas and refined petroleum products differs.

F-38
TORO CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
17.
Segment Information: (continued)




The table below presents information about the Company’s reportable segments comprising its continuing operations for the years ended December 31, 2023, 2024 and 2025. The accounting policies followed in the preparation of the reportable segments are the same as those followed in the preparation of the Company’s consolidated financial statements. Segment results are evaluated based on income from operations.

   
Year ended December 31, 2023
     Year ended December 31, 2024    
Year ended December 31, 2025
  
   
Eco tanker
segment
    
LPG carrier
segment
     Total    
Eco tanker
segment
    
LPG carrier
segment
     Total     Eco tanker
segment (1)
    
Non-Eco
tanker
segment
    
LPG carrier
segment
     Total  
Time charter revenues
  
$
—
    
$
3,439,356
    
3,439,356     $ —     $ 14,315,299    
$
14,315,299
    
$
4,162,618
     $ 2,047,250    

12,803,193
     $ 19,013,061  
Voyage charter revenues
    
—
      
3,253,385
       3,253,385       —       1,310,312       1,310,312      
—
       —      
—
       —  
Pool revenues
    
15,611,872
      
—
       15,611,872       6,768,672       —       6,768,672      
2,068,779
       —      
—
       2,068,779  
Total vessel revenues
  
$
15,611,872
    
$
6,692,741
    
22,304,613     $ 6,768,672     $ 15,625,611    
$
22,394,283
    
$
6,231,397
     $ 2,047,250    

12,803,193
     $
 21,081,840  
Voyage expenses (including charges from related parties)
    
(198,730
)
    
(2,306,422
)
     (2,505,152 )     (315,055 )     (1,279,696 )     (1,594,751 )    
(489,741
)
     (127,361 )    
(690,188
)
     (1,307,290 )
Vessel operating expenses
    
(5,164,248
)
    
(4,228,712
)
     (9,392,960 )     (2,310,289 )     (6,990,110 )     (9,300,399 )    
(1,759,149
)
     (679,547 )    
(6,641,142
)
     (9,079,838 )
Management fees to related parties
    
(688,547
)
    
(1,022,104
)
     (1,710,651 )     (386,162 )     (1,544,648 )     (1,930,810 )    
(347,485
)
     (114,400 )    
(1,345,204
)
     (1,807,089 )
Provision for doubtful accounts
    
—
      
—
       —       —       (25,369 )     (25,369 )    
—
       —      
—
       —  
Depreciation and amortization
    
(1,490,577
)
    
(1,874,041
)
     (3,364,618 )     (1,168,558 )     (3,732,688 )     (4,901,246 )    
(1,176,038
)
     (493,712 )    
(3,264,905
)
     (4,934,655 )
Gain on sale of vessel
    
8,226,258
      
—
       8,226,258       —       —       —      
—
       —       —       —  
Segments operating (loss)/income
  
$
16,296,028
    
$
(2,738,538
)
  
13,557,490     $ 2,588,608     $ 2,053,100    
$
4,641,708
    
$
2,458,984
     $ 632,230    

861,754
     $ 3,952,968  
Interest and finance costs
                     (31,815 )                     (230,531 )                             (68,116 )
Interest income
                     2,053,749
                       8,354,608
                               2,812,933
  
Interest income from related party
                     —
                       364,205
                               1,771,836
  
Dividend income from related party
                     1,020,833
                       2,645,833
                               5,651,212
  
Foreign exchange (losses)/gains
                     (14,978 )                     (21,019 )                             35,352
  
Dividend income on equity securities
                     —
                       4,136
                               4,623
  
(Loss)/Gain on equity securities
                     —
                       (48,542 )                             54,999
  
Less: Unallocated corporate general and administrative expenses (including related parties)
                     (5,357,265 )                     (10,198,863 )                             (8,602,749 )
Net income and comprehensive income from continuing operations, before taxes
                   $ 11,228,014
                     $ 5,511,535                             $ 5,613,058
  
Net income and comprehensive income from discontinued operations, before taxes
                   $ 129,759,646
                     $ 19,695,969                             $ 115,214
  
Net income and comprehensive income, before taxes
                   $ 140,987,660
                     $ 25,207,504                             $ 5,728,272
 

(1) For the year ended December 31, 2025, the Eco tanker segment includes (i) time charter revenues of $4,162,618 from M/T Wonder Altair (delivered July 11, 2025) and (ii) pool revenues of $2,068,779 from M/T Wonder Mimosa operating in a pool arrangement prior to its contribution to Robin on April 14, 2025. The M/T Wonder Mimosa is a 2010-built Handysize vessel that does not have eco-design characteristics, but its results are included within the Eco tanker segment as the successor to the former Handysize tanker segment.



A reconciliation of total segment assets to total assets presented in the accompanying consolidated balance sheets of December 31, 2024, and December 31, 2025, is as follows:

   
As of December 31,
2024
    
As of December 31,
2025
  
Eco tanker segment
    
9,666,777
      
40,437,114
  
Non-Eco tanker segment
     —       31,342,180  
LPG carrier segment     72,241,241       34,704,050  
Cash and cash equivalents(1)     37,191,906       87,417,921  
Prepaid expenses and other assets(1)     206,812,257       137,029,872  
Total assets from continuing operations
   $ 325,912,181     $ 330,931,137  
Total assets from discontinued operations
   $ 495,003     $ 416,159  
Total consolidated assets
  
$
326,407,184
    
$
331,347,296
  

(1)
Refers to assets of other, non-vessel owning, entities included in the consolidated financial statements.

F-39
TORO CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars – except for share data unless otherwise stated)
18.
Income Taxes:


Toro and its subsidiaries are incorporated under the laws of the Republic of the Marshall Islands, but are not subject to income taxes in the Republic of the Marshall Islands. Toro’s ship-owning subsidiaries are subject to registration and tonnage taxes, which have been included in Vessel operating expenses in the accompanying consolidated statements of comprehensive income.


Pursuant to §883 of the Internal Revenue Code of the United States (the “Code”), U.S. source income from the international operation of ships is generally exempt from U.S. Federal income tax on such income if the company meets the following requirements: (a) the company is organized in a foreign country that grants an equivalent exception to corporations organized in the U. S. and (b) either (i) more than 50 percent of the value of the company’s stock is owned, directly or indirectly, by individuals who are “residents” of the company’s country of organization or of another foreign country that grants an “equivalent exemption” to corporations organized in the U.S. (the “50% Ownership Test”) or (ii) the company’s stock is “primarily and regularly traded on an established securities market” in its country of organization, in another country that grants an “equivalent exemption” to U.S. corporations, or in the U.S. (the “Publicly Traded Test”). Marshall Islands, the jurisdiction where the Company and its ship-owning subsidiaries are incorporated, grants an equivalent exemption to United States corporations. Therefore, the Company is exempt from United States federal income taxation with respect to U.S.-source shipping income if either the 50% Ownership Test or the Publicly Traded Test is met.



In the Company’s case, it satisfies the Publicly Traded Test because it has obtained an ownership statement from a qualified shareholder who is the ultimate beneficial owner directly and indirectly of 59.2% of its common shares as of the tax period ending December 31, 2025. The shares owned by this qualified shareholder precluded non-qualified shareholders from owning more than 50% of the Company’s issued and outstanding shares during the 2025 tax year. Accordingly, the Company qualifies for the closely held block exception to the Publicly Traded Test as provided for in Treasury Regulation §1.883-2(d)(3)(ii) and has recorded no provision for U.S. source gross transportation income tax in the accompanying consolidated statements of comprehensive income for the year ended December 31, 2025. For the years ended December 31, 2023 and 2024, the Company has recorded a provision of $47,071 and $0 respectively, from continuing operations, respectively, for U.S. source gross transportation income tax in the accompanying consolidated statements of comprehensive income.

19.
Subsequent Events:

(a)
Elections Results and Payment of Special Dividend: On January 16, 2026, and based on shareholder elections, the dividend was paid in the form of approximately $9.3 million in cash and 7,378,575 shares of the Company’s common stock, as result the number of shares increased to 28,852,084. The number of common shares included for the common share dividend election was calculated based on the 20-day volume weighted average of the trading prices of the Company’s common shares on the Nasdaq Stock Market through December 4, 2025, or $3.8386 per share. As a result, the recognized Dividend payable of $37.6 million as presented in the accompanying balance sheets, was fully settled, with a corresponding increase in Additional paid-in capital of $28.3 million and a decrease in Cash and cash equivalents of $9.3 million.

(b)
Dividend from Castor Series D Preferred Shares: On January 15, 2026, the Company received from Castor a dividend from the Castor Series D Preferred Shares, amounting to $1,250,000 for the dividend period from October 15, 2025 to January 14, 2026.

(c)
Dividend from Robin Series A Preferred Shares: On January 15, 2026, the Company received from Robin a dividend from the Robin Series A Preferred Shares, amounting to $125,000 for the dividend period from October 15, 2025 to January 14, 2026.

(d)
Dividend on Series A Preferred Shares: On January 15, 2026, the Company paid to Castor a dividend on the Series A Preferred Shares, which was declared on December 30, 2025, amounting to $350,000 for the dividend period from October 15, 2025 to January 14, 2026.

(e)
Revolving Credit Facility: On March 30, 2026, four wholly-owned subsidiaries of the Company entered into a $60.0 million revolving credit facility (the "Facility") with a leading European Financial Institution. The Facility was partially drawn down by $15 million on April 2, 2026. The Facility has a tenor of five years from the first drawdown date, bears interest at Term SOFR plus a margin per annum, and is secured by first priority mortgages over the vessels M/T Wonder Altair, M/T Wonder Maia, LPG Dream Arrax and LPG Dream Vermax. The Company is required to maintain a security cover ratio of not less than 125%, a minimum liquidity amount of $250,000 in each mortgaged vessel's pledged deposit account and a quarterly dry-dock reserve of $20,000 per mortgaged vessel. The net proceeds are intended for general corporate purposes.


F-40
Exhibit 1.3.1

AMENDMENT TO STATEMENT OF DESIGNATION OF RIGHTS, PREFERENCES AND PRIVILEGES OF 1.00% SERIES A FIXED RATE CUMULATIVE PERPETUAL CONVERTIBLE PREFERRED SHARES OF TORO CORP.
 
TORO CORP., a corporation organized and existing under the Business Corporations Act (the “BCA”) of the Republic of the Marshall Islands (the “Company”), in accordance with the provisions of Section 35 thereof and the Amended and Restated Articles of Incorporation of the Company (the “Articles”), does hereby certify:
 
The Board of Directors of the Company has previously adopted resolutions fixing the designation and certain terms, powers, preferences and other rights of the series of preferred shares of the Company, designated as “1.00% Series A Fixed Rate Cumulative Perpetual Preferred Convertible Shares”, and certain qualifications, limitations and restrictions thereon. Capitalized terms shall have the same meaning as in the Articles, unless otherwise specified in the Statement of Designation of the Rights, Preferences and Privileges of 1.00% Series A Fixed Rate Cumulative Perpetual Convertible Preferred Shares or this Amendment to Statement of Designation or unless the context otherwise requires.
 
All of the holders of the 1.00% Series A Fixed Rate Cumulative Perpetual Preferred Convertible Shares have agreed to and the Board of Directors of the Company has adopted the following resolution amending the Statement of Designations of the 1.00% Series A Fixed Rate Cumulative Perpetual Preferred Convertible Shares series of preferred shares of the Company.
 
RESOLVED, that Section 6(b) of the Statement of Designation of the Rights, Preferences and Privileges of 1.00% Series A Fixed Rate Cumulative Perpetual Preferred Convertible Shares be and hereby is amended and restated in its entirety as follows:
 
“(b)  Optional Conversion Right of the Holders. Subject to the terms and conditions of this Section 6 (including the conversion procedures set forth below), at any time and from time to time on or after the fourth anniversary of the Original Issue Date until but excluding the Reset Date, each holder of this Series may elect to convert, in whole or in part, without the payment of additional consideration by such holder, its shares of this Series into, subject to Section 6(c) below, a number of validly issued, fully paid and non-assessable Common Shares equal to the quotient of (i) the aggregate Stated Amount of the shares of this Series converted plus Accrued Dividends (but excluding any dividends declared but not yet paid) thereon on the date on which the Conversion Notice is delivered divided by (ii) the Conversion Price, as defined in the following sentence. The “Conversion Price” for any conversion hereunder shall be the lower of (I) 150% of the Initial VWAP and (II) the Ten-Day VWAP; provided, that, notwithstanding anything to the contrary herein, the Conversion Price shall not be less than $2.50.”
 
IN WITNESS WHEREOF, the undersigned, being duly authorized thereto, does hereby affirm that this certificate is the act and deed of the Company and that the facts herein stated are true, and accordingly has hereunto set his hand this 29th day of December, 2025.
 
 
 By:
/s/ Petros Zavakopoulo
 
 
 Name: Mr. Petros Zavakopoulos
 
 
 Title: Member of the Board of Directors

       
Exhibit 2.1

DESCRIPTION OF THE REGISTRANT’S SECURITIES REGISTERED PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934

As of the date of the annual report to which this exhibit is being filed, Toro Corp. (the “Company”) had two classes of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”):

(1) Common shares, par value $0.001 per share (the “common shares”); and

(2) Preferred Share Purchase Rights under the Rights Agreement, as defined below (a “Right” or the “Rights”).

The following description sets forth certain material provisions of these securities. The following summary does not purport to be complete and is subject to, and is qualified in its entirety by reference to, the applicable provisions of (i) the Company’s Amended and Restated Articles of Incorporation (the “Articles of Incorporation”), (ii) the Company’s Amended and Restated Bylaws (the “Bylaws”), and (iii) the Shareholder Protection Rights Agreement, dated as of March 7, 2023 (the “Rights Agreement”), by and between the Company and Broadridge Corporate Issuer Solutions, LLC, as rights agent (the “Rights Agent”), each of which is an exhibit to the annual report on Form 20-F for the fiscal year ended December 31, 2025 (the “Annual Report”) of which this Exhibit is a part. We encourage you to refer to our Articles of Incorporation, Bylaws and the Rights Agreement for additional information.

Capitalized terms used but not defined herein have the meanings given to them in our Annual Report.

OUR SHARE CAPITAL

Under our Articles of Incorporation our authorized capital stock consists of 4,000,000,000 registered shares, of which 3,900,000,000 are designated as common shares, par value $0.001 per share, and 100,000,000 are designated as preferred shares, par value $0.001 per share. As of December 31, 2025 and March 31, 2026, we had 21,473,509 common shares issued and outstanding and 28,852,084 common shares issued and outstanding, respectively, 140,000 1.00% Series A Fixed Rate Cumulative Perpetual Convertible Preferred Shares issued and outstanding and 40,000 Series B Preferred Shares issued and outstanding. No Series C Participating Preferred Shares were authorized as of the same time. Our common shares and associated Rights are listed on the Nasdaq Capital Market under the symbol “TORO”.

Any amendment to our Articles of Incorporation to alter our capital structure requires approval by an affirmative majority of the voting power of the total number of shares issued and outstanding and entitled to vote thereon. Shareholders of any series or class of shares are entitled to vote upon any proposed amendment, whether or not entitled to vote thereon by the Articles of Incorporation, if such amendment would (i) increase or decrease the par value of the shares of such series or class, or, (ii) alter or change the powers, preferences or special rights of the shares of such series or class so as to adversely affect them. Such class vote would be conducted in addition to the vote of all shares entitled to vote upon the amendment and requires approval by an affirmative majority of the voting power of the affected series or class.

DESCRIPTION OF COMMON SHARES

Holders of common shares do not have conversion, sinking fund, redemption or pre-emptive rights to subscribe to any of our securities. There are no restrictions under Marshall Islands law on the transferability of our common shares. The rights, preferences and privileges of holders of our common shares are subject to the rights of the holders of any preferred shares, which we have issued in the past or which we may issue in the future.

Voting Rights

Each outstanding common share entitles the holder to one (1) vote on all matters submitted to a vote of shareholders. Our directors are elected by a plurality of the votes cast by shareholders entitled to vote and serve for three-year terms. There is no provision for cumulative voting. Our common shares and Series B Preferred Shares vote together as a class on most matters submitted to a vote of shareholders of the Company, though our Articles of Incorporation provide for a separate vote of the Series B Preferred Shares for certain matters adversely impacting such shares rights and preferences. Series B Preferred Shares have one hundred thousand (100,000) votes per share and currently have a controlling vote over the matters put to a vote of the Company’s shareholders over which they are entitled to vote together with the common shares as a single class.

All of our 40,000 Series B Preferred Shares were issued to Pelagos Holdings Corp (“Pelagos”). Pelagos is a company controlled by Petros Panagiotidis, our Chairman and Chief Executive Officer. Further, as of March 25, 2026, Pani, a corporation controlled by Mr. Panagiotidis, owned 64.1% of our 28,852,084 outstanding common shares. As a result, we are controlled by Mr. Panagiotidis, which makes it more difficult to effect a change of control of us.

Dividend Rights

Subject to preferences that may be applicable to any outstanding preferred shares, including the Series A Preferred Shares, holders of common shares are entitled to receive ratably all dividends, if any, declared by our Board of Directors (the “Board”) out of funds legally available for dividends.

Our Series A Preferred Shares provide that holders of Series A Preferred Shares are entitled to receive, when, as and if declared by our Board, but only out of funds legally available therefor, cumulative cash dividends at the Annual Rate and no more, payable quarterly in arrears on the 15th day of each January, April, July and October, respectively, in each year, beginning on April 15, 2023 (each, a “Dividend Payment Date”), with respect to the Dividend Period ending on the day preceding such respective Dividend Payment Date. So long as any Series A Preferred Share remains outstanding, unless full Accrued Dividends on all outstanding Series A Preferred Shares through and including the most recently completed Dividend Period have been paid or declared and a sum sufficient for the payment thereof has been set aside for payment, no dividend may be declared or paid or set aside for payment, and no distribution may be made, on any Junior Stock, other than a dividend payable solely in stock that ranks junior to the Series A Preferred Shares in the payment of dividends and in the distribution of assets on any liquidation, dissolution or winding up of the Company.

For purposes of the Series A Preferred Shares:

(i) “Accrued Dividends” means an amount computed at the Annual Rate from, as to each share, the date of issuance of such share to and including the date to which such dividends are to be accrued (whether or not such dividends have been declared), less the aggregate amount of all dividends previously paid on such share;

(ii) “Annual Rate” means (A) from, and including, March 7, 2023 to, but excluding, the seventh anniversary of such date (the “Reset Date”), 1.00% per annum of the stated amount and (B) for each Dividend Period commencing on or after the Reset Date, the Annual Rate in effect for the prior Dividend Period multiplied by a factor of 1.3; provided, however, that in no event will the Annual Rate on the Series A Preferred Shares exceed 20% per annum in respect of any Dividend Period;

(iii) “Dividend Period” means each period commencing on (and including) a Dividend Payment Date and continuing to (but not including) the next succeeding Dividend Payment Date; and

(iv) “Junior Stock” means our common shares, the Series B Preferred Shares and any class or series of our stock that ranks junior to the Series A Preferred Shares in the payment of dividends or in the distribution of assets upon our liquidation, dissolution or winding up.

So long as any Series A Preferred Share remains outstanding, unless full Accrued Dividends on all outstanding Series A Preferred Shares through and including the most recently completed Dividend Period have been paid or declared and a sum sufficient for the payment thereof has been set aside for payment, no monies may be paid or made available for a sinking fund for the redemption or retirement of Junior Stock, nor shall any shares of Junior Stock be purchased, redeemed or otherwise acquired for consideration by us, directly or indirectly, other than (i) as a result of (x) a reclassification of Junior Stock, or (y) the exchange or conversion of one share of Junior Stock for or into another share of stock that ranks junior to the Series A Preferred Shares in the payment of dividends and in the distribution of assets on any liquidation, dissolution or winding up of the Company; or (ii) through the use of the proceeds of a substantially contemporaneous sale of other shares of stock that rank junior to the Series A Preferred Shares in the payment of dividends and in the distribution of assets on any liquidation, dissolution or winding up of the Company.

Liquidation Rights

Upon our dissolution or liquidation or winding up of our affairs, whether voluntary or involuntary, after payment in full of all amounts required to be paid to creditors and to the holders of preferred shares having liquidation preferences, including the Series A Preferred Shares, the holders of our common shares are entitled to receive pro rata our remaining assets available for distribution.

Our Series A Preferred Shares provide that in the event of any liquidation, dissolution or winding up of the affairs of the Company, whether voluntary or involuntary, before any distribution or payment out of our assets may be made to or set aside for the holders of any Junior Stock, holders of Series A Preferred Shares will be entitled to receive out of our assets legally available for distribution to our shareholders an amount equal to the stated amount per Series A Preferred Share ($1,000), together with an amount equal to all Accrued Dividends to the date of payment whether or not earned or declared (the “Liquidation Preference”). If the Liquidation Preference has been paid in full to all holders of Series A Preferred Shares and all holders of any class or series of our stock that ranks on a parity with Series A Preferred Shares in the distribution of assets on liquidation, dissolution or winding up of the Company, the holders of Junior Stock will be entitled to receive all of our remaining assets according to their respective rights and preferences.

Limitations on Ownership

Under Marshall Islands law generally and our Articles of Incorporation, there are no limitations on the right of persons who are not citizens or residents of the Marshall Islands to hold or vote our common shares.

DESCRIPTION OF THE RIGHTS UNDER THE STOCKHOLDERS RIGHTS AGREEMENT

Preferred Shares and the Rights

Our Articles of Incorporation authorize our Board to establish one or more series of preferred shares and to determine, with respect to any series of preferred shares, the terms and rights of that series, including:

•
the designation of the series;

•
the number of shares of the series;

•
the preferences and relative, participating, option or other special rights, if any, and any qualifications, limitations or restrictions of such series; and

•
the voting rights, if any, of the holders of the series.

On March 7, 2023, our Board declared a dividend of one preferred share purchase right for each outstanding common share and adopted a rights plan, as set forth in the Rights Agreement. Each Right entitles the holder to purchase from the Company, for $22, one common share (or one one-thousandth of a share of Series C Participating Preferred Shares) and will become exercisable following the earlier of (i) the tenth business day (or other date designated by resolution of the Board) after any person other than our Chairman and Chief Executive Officer, Petros Panagiotidis, or Mr. Panagiotidis’ controlled affiliates commences a tender offer that would result in such person becoming the beneficial owner of a total of 15% or more of the common shares or (ii) the date of the “Flip-in” Trigger, as defined below.

The rights plan adopted under the Rights Agreement and the Rights have the following characteristics:

•
Distribution and Transfer of the Rights. Our Board will declare a dividend of one Right for each share of our common shares outstanding. Prior to the Separation Time referred to below, the Rights would be evidenced by and trade with our common shares and would not be exercisable. After the Separation Time, we would cause the Rights Agent to mail Rights certificates to shareholders and the Rights would trade independent of the common shares. New Rights will accompany any new common shares of the Company issued after the Distribution until the Separation Time.

•
Separation Time. Rights would separate from our common shares and become exercisable following the earlier of (i) the tenth (10) business day (or other date designated by resolution of the Board) after any person (other than Mr. Panagiotidis or his controlled affiliates) commences a tender offer that would result in such person becoming the beneficial owner of a total of 15% or more of the common shares or (ii) the date of the “Flip-in” Trigger.

•
Exercise of the Rights. On or after the Separation Time, each Right would initially entitle the holder to purchase, for $22 (the “Exercise Price”), one common share (or one one-thousandth of a share of Series C Participating Preferred Shares, such portion of a Series C Participating Preferred Share being designed to give the shareholder approximately the same dividend, voting and liquidation rights as would one common share). Prior to exercise, the Right does not give its holder any dividend, voting, or liquidation rights.

•
“Flip-in” Trigger. Upon public announcement by the Company that any person other than Mr. Panagiotidis or his controlled affiliates (an “Acquiring Person”) has acquired 15% or more of our outstanding common shares:

(i)
Rights owned by the Acquiring Person or transferees thereof would automatically be void; and

(ii)
each other Right will automatically become a right to buy, for the Exercise Price, that number of common shares of the Company (or equivalent fractional shares of Series C Participating Preferred Shares) having a market value of twice the Exercise Price.

•
“Flip-over” Trigger. After an Acquiring Person has become such, (i) the Company may not consolidate or merge with any person, if the Company’s Board is controlled by the Acquiring Person or the Acquiring Person is the beneficial owner of 50% or more of the outstanding shares of our common shares, and the transaction is with the Acquiring Person or its affiliate or associate or the shares owned by the Acquiring Person are treated differently from those of other shareholders, and (ii) the Company may not sell 50% or more of its assets if the Company’s Board is controlled by the Acquiring Person unless in either case proper provision is made so that each Right would thereafter become a right to buy, for the Exercise Price, that number of common shares of such other person having a market value of twice the Exercise Price.

•
Redemption. The Rights may be redeemed by the Board, at any time until a “Flip-in” Trigger has occurred, at a redemption price of $0.001 per Right.

•
Power to Amend. Our Board may amend the Rights Agreement in any respect until a “Flip-in” Trigger has occurred. Thereafter, our Board may amend the Rights Agreement in any respect not materially adverse to Rights holders generally.

•
Expiration. The Rights will expire on the tenth anniversary of the Distribution Date.

Furthermore, if any person (other than Mr. Panagiotidis or his controlled affiliates) acquires between 15% and 50% of our outstanding common shares, the Board may, in lieu of allowing Rights to be exercised, require each outstanding Right to be exchanged for one common share of the Company (or one one-thousandth of a share of Series C Participating Preferred Shares). The Board may enter into a trust agreement pursuant to which the Company would deposit into a trust its common shares that would be distributable to shareholders (excluding the Acquiring Person) in the event this exchange option is implemented.

Certain synthetic interests in securities created by derivative positions, whether or not such interests are considered to be ownership of the underlying common shares or are reportable for purposes of Regulation 13D of the Exchange Act, as amended, are treated as beneficial ownership of the number of our common shares equivalent to the economic exposure created by the derivative position, to the extent our actual common shares are directly or indirectly held by counterparties to the derivatives contracts. Swaps dealers unassociated with any control intent or intent to evade the purposes of the Rights Agreement are excepted from such imputed beneficial ownership.

The Rights Agreement “grandfathers” the current level of ownership of persons who, prior to the date of the Rights Agreement, beneficially owned 15% or more of our outstanding common shares, so long as they do not purchase additional shares in excess of certain limitations. Such provisions also “grandfather” our Chairman and Chief Executive Officer, Petros Panagiotidis, and Mr. Panagiotidis’ controlled affiliates.

The Rights may have anti-takeover effects. The Rights will cause substantial dilution to any person or group that attempts to acquire us without the approval of our Board. As a result, the overall effect of the Rights may be to render more difficult or discourage any attempt to acquire us. Because our Board can approve a redemption of the Rights for a permitted offer, the Rights should not interfere with a merger or other business combination approved by our Board.

Anti-Takeover Provisions in our Articles of Incorporation and Bylaws

Several provisions of the Articles of Incorporation and Bylaws could make it difficult for shareholders to change the composition of our Board in any one year, preventing them from changing the composition of management. In addition, the same provisions may discourage, delay or prevent a merger or acquisition that shareholders may consider favorable. These provisions are:

•
authorizing our Board to issue “blank check” preferred shares without shareholder approval;

•
providing for a classified Board with staggered, three-year terms for three classes of directors;

•
establishing certain advance notice requirements for nominations for election to our Board or for proposing matters that can be acted on by shareholders at shareholder meetings;

•
prohibiting cumulative voting in the election of directors;

•
limiting the persons who may call special meetings of shareholders; and

•
establishing supermajority voting provisions with respect to amendments to certain provisions of our Articles of Incorporation and Bylaws.

The Articles of Incorporation also prohibit any Interested Shareholder from engaging in a Business Combination (as defined in the Articles of Incorporation) with us within three years after the owner acquired such ownership, except where:

•
the Board approved either the Business Combination or the transaction which resulted in the shareholder becoming an Interested Shareholder;

•
upon consummation of the transaction which resulted in the shareholder becoming an Interested Shareholder, the Interested Shareholder owned at least 85% of the voting stock of the Company outstanding at the time the transaction commenced, excluding for purposes of determining the number of voting stock outstanding those shares or equity interests owned (i) by persons who are directors and also officers and (ii) employee stock plans in which employee participants do not have the right to determine confidentially whether shares or equity interests held subject to the plan will be tendered in a tender or exchange offer; or

•
at or subsequent to such time, the Business Combination is approved by the Board and authorized at an annual or special meeting of shareholders, and not by written consent, by the affirmative vote of the holders of at least two-thirds of the outstanding voting stock that is not owned by the Interested Shareholder.

The foregoing restrictions do not apply if:

•
A shareholder becomes an Interested Shareholder inadvertently and (i) as soon as practicable divests itself of ownership of sufficient shares or equity interests so that the shareholder ceases to be an Interested Shareholder; and (ii) would not, at any time within the three-year period immediately prior to a Business Combination between the Company and such shareholder, have been an Interested Shareholder but for the inadvertent acquisition of ownership; or

•
The Business Combination is proposed prior to the consummation or abandonment of and subsequent to the earlier of the public announcement or the notice required hereunder of a proposed transaction which (i) constitutes one of the transactions described in the following sentence; (ii) is with or by a person who either was not an Interested Shareholder during the previous three years or who became an Interested Shareholder with the approval of the Board; and (iii) is approved or not opposed by a majority of the members of the Board then in office (but not less than one) who were directors prior to any person becoming an Interested Shareholder during the previous three years or were recommended for election or elected to succeed such directors by a majority of such directors. The proposed transactions referred to in the preceding sentence are limited to:

o
a merger or consolidation of the Company (except for a merger in respect of which, pursuant to the BCA, no vote of the shareholders of the Company is required);

o
a sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), whether as part of a dissolution or otherwise, of assets of the Company or of any direct or indirect majority-owned subsidiary of the Company (other than to any direct or indirect wholly-owned subsidiary or to the Company) having an aggregate market value equal to 50% or more of either the aggregate market value of all of the assets of the Company determined on a consolidated basis or the aggregate market value of all the outstanding common shares of the Company; or

o
a proposed tender or exchange offer for 50% or more of the outstanding common shares of the Company.

For the purposes of the foregoing, “Interested Shareholder” means any person (other than the Company and any direct or indirect majority-owned subsidiary of the Company) that (i) is the owner of 15% or more of the outstanding voting stock of the Company, or (ii) is an affiliate or associate of the Company and was the owner of fifteen percent (15%) or more of the outstanding voting stock of the Company at any time within the three-year period immediately prior to the date on which it is sought to be determined whether such person is an Interested Shareholder; and the affiliates and associates of such person; provided, however, that the term “Interested Shareholder” shall not include any person whose ownership of shares in excess of the fifteen percent (15%) limitation set forth herein is the result of action taken solely by the Company; provided that such person shall be an Interested Shareholder if thereafter such person acquires additional shares of voting stock of the Company, except as a result of further Company action not caused, directly or indirectly, by such person. For the purpose of determining whether a person is an Interested Shareholder, the voting stock of the Company deemed to be outstanding shall include voting stock deemed to be owned by the person, but shall not include any other unissued shares which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise. Notwithstanding the foregoing, Petros Panagiotidis, his affiliates and associates shall not be considered an Interested Shareholder.

Marshall Islands Company Considerations

Our corporate affairs are governed by our Articles of Incorporation and Bylaws and by the BCA. The provisions of the BCA resemble provisions of the corporation laws of a number of states in the United States. While the BCA provides that its provisions shall be applied and construed in a manner to make them uniform with the laws of the State of Delaware and other states of the United States of America with substantially similar legislative provisions, there have been few, if any, court cases interpreting the BCA in the Marshall Islands and we cannot predict whether Marshall Islands courts would reach the same conclusions as courts in the United States. As a result, you may have more difficulty protecting your interests in the face of actions by our management, directors or controlling shareholders than would shareholders of a corporation incorporated in a U.S. jurisdiction which has developed a substantial body of case law. The following table outlines significant differences between the statutory provisions of the BCA and the General Corporation Law of the State of Delaware relating to shareholders’ rights.

 
Marshall Islands
  
Delaware
  
 
Shareholders’ Voting Rights
  
 
Unless otherwise provided in the articles of incorporation, any action required to be taken at a meeting of shareholders may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, is signed by all the shareholders entitled to vote with respect to the subject matter thereof, or if the articles of incorporation so provide, by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.

Any person authorized to vote may authorize another person or persons to act for him by proxy.

Unless otherwise provided in the articles of incorporation or bylaws, a majority of shares entitled to vote constitutes a quorum. In no event shall a quorum consist of fewer than one-third of the shares entitled to vote at a meeting.
 
    
Any action required to be taken at a meeting of shareholders may be taken without a meeting if a consent for such action is in writing and is signed by shareholders having not fewer than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.

Any person authorized to vote may authorize another person or persons to act for him by proxy.

For stock corporations, the certificate of incorporation or bylaws may specify the number of shares required to constitute a quorum but in no event shall a quorum consist of less than one-third of shares entitled to vote at a meeting. In the absence of such specifications, a majority of shares entitled to vote shall constitute a quorum.
 
  

 
Marshall Islands
  
Delaware
  
 
When a quorum is once present to organize a meeting, it is not broken by the subsequent withdrawal of any shareholders.

The articles of incorporation may provide for cumulative voting in the election of directors.
    
When a quorum is once present to organize a meeting, it is not broken by the subsequent withdrawal of any shareholders.

The certificate of incorporation may provide for cumulative voting in the election of directors.
  
 
Merger or Consolidation
  
 
Any two or more domestic corporations may merge or consolidate into a single corporation if approved by the board of each constituent corporation and if authorized by a majority vote at a shareholder meeting of each such corporation by the holders of outstanding shares.
    
Any two or more corporations existing under the laws of the state may merge into a single corporation pursuant to a board resolution and upon the majority vote by shareholders of each constituent corporation at an annual or special meeting.
  
           
 
Any sale, lease, exchange or other disposition of all or substantially all the assets of a corporation, if not made in the corporation’s usual or regular course of business, once approved by the board of directors (and notice of the meeting shall be given to each shareholder of record, whether or not entitled to vote), shall be authorized by the affirmative vote of two-thirds of the shares of those entitled to vote at a shareholder meeting, unless any class of shares is entitled to vote thereon as a class, in which event such authorization shall require the affirmative vote of the holders of a majority of the shares of each class of shares entitled to vote as a class thereon and of the total shares entitled to vote thereon.
    
Every corporation may at any meeting of the board sell, lease or exchange all or substantially all of its property and assets as its board deems expedient and for the best interests of the corporation when so authorized by a resolution adopted by the holders of a majority of the outstanding stock of the corporation entitled to vote.
  
           
 
Upon approval by the board, any domestic corporation owning at least 90% of the outstanding shares of each class of another domestic corporation may merge such other corporation into itself without the authorization of the shareholders of any such corporation.
    
Any corporation owning at least 90% of the outstanding shares of each class of another corporation may merge the other corporation into itself and assume all of its obligations without the vote or consent of shareholders; however, in case the parent corporation is not the surviving corporation, the proposed merger shall be approved by a majority of the outstanding stock of the parent corporation entitled to vote at a duly called shareholder meeting.
  

 
Marshall Islands
  
Delaware
  
 
Any mortgage, pledge of or creation of a security interest in all or any part of the corporate property may be authorized without the vote or consent of the shareholders, unless otherwise provided for in the articles of incorporation.
 
    
Any mortgage or pledge of a corporation’s property and assets may be authorized without the vote or consent of shareholders, except to the extent that the certificate of incorporation otherwise provides.
 
  
 
Director
 
The board of directors must consist of at least one member.

The number of directors may be fixed by the bylaws, by the shareholders, or by action of the board under the specific provisions of a bylaw. The number of board members may be changed by an amendment to the bylaws, by the shareholders, or by action of the board under the specific provisions of a bylaw.
 
If the board is authorized to change the number of directors, it can only do so by a majority of the entire board and so long as no decrease in the number shall shorten the term of any incumbent director.
    
The board of directors must consist of at least one member.

The number of board members shall be fixed by, or in a manner provided by, the bylaws and amended by an amendment to the bylaws, unless the certificate of incorporation fixes the number of directors, in which case a change in the number shall be made only by an amendment to the certificate of incorporation.
 
If the number of directors is fixed by the certificate of incorporation, a change in the number shall be made only by an amendment of the certificate.
  
 
Removal:
    
Removal:
  
 
Any or all of the directors may be removed for cause by vote of the shareholders. The articles of incorporation or the bylaws may provide for such removal by board action, except in the case of any director elected by cumulative voting, or by shareholders of any class or series when entitled by the provisions of the articles of incorporation. 
    
Any or all of the directors may be removed, with or without cause, by the holders of a majority of the shares entitled to vote unless the certificate of incorporation otherwise provides.
  
 
If the articles of incorporation or bylaws provide any or all of the directors may be removed without cause by vote of the shareholders.
    
In the case of a classified board, shareholders may effect removal of any or all directors only for cause unless the certificate of incorporation provides otherwise.
  

 
Marshall Islands
  
Delaware
  
 
Dissenters’ Rights of Appraisal
 
Shareholders have a right to dissent from any plan of merger, consolidation or sale of all or substantially all assets not made in the usual course of business, and receive payment of the fair value of their shares. However, the right of a dissenting shareholder under the BCA to receive payment of the appraised fair value of his shares shall not be available for the shares of any class or series of stock, which shares or depository receipts in respect thereof, at the record date fixed to determine the shareholders entitled to receive notice of and to vote at the meeting of the shareholders to act upon the agreement of merger or consolidation, were either (i) listed on a securities exchange or admitted for trading on an interdealer quotation system or (ii) held of record by more than 2,000 holders. The right of a dissenting shareholder to receive payment of the fair value of his or her shares shall not be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the shareholders of the surviving corporation.
    
Appraisal rights shall be available for the shares of any class or series of stock of a corporation in a merger or consolidation, subject to limited exceptions, such as a merger or consolidation of corporations listed on a national securities exchange in which listed stock is offered for consideration which is (i) listed on a national securities exchange or (ii) held of record by more than 2,000 holders. Notwithstanding those limited exceptions, appraisal rights will be available if shareholders are required by the terms of an agreement of merger or consolidation to accept certain forms of uncommon consideration.
  
 
A holder of any adversely affected shares who does not vote on or consent in writing to an amendment to the articles of incorporation has the right to dissent and to receive payment for such shares if the amendment:
• alters or abolishes any preferential right of any outstanding shares having preference; or
• creates, alters, or abolishes any provision or right in respect to the redemption of any outstanding shares; or
• alters or abolishes any preemptive right granted by law and not disseated by the articles of incorporation of such holder to acquire shares or other securities; or
• excludes or limits the right of such holder to vote on any matter, except as such right may be limited by the voting rights given to new shares then being authorized of any existing or new class.
        

 
Marshall Islands
  
Delaware
  
 
Shareholder’s Derivative Actions
 
An action may be brought in the right of a corporation to procure a judgment in its favor, by a holder of shares or of voting trust certificates or of a beneficial interest in such shares or certificates. It shall be made to appear that the plaintiff is such a holder at the time of bringing the action and that he was such a holder at the time of the transaction of which he complains, or that his shares or his interest therein devolved upon him by operation of law.
    
In any derivative suit instituted by a shareholder of a corporation, it shall be averred in the complaint that the plaintiff was a shareholder of the corporation at the time of the transaction of which he complains or that such shareholder’s stock thereafter devolved upon such shareholder by operation of law.
  
           
 
A complaint shall set forth with particularity the efforts of the plaintiff to secure the initiation of such action by the board or the reasons for not making such effort.

Such action shall not be discontinued, compromised or settled, without the approval of the High Court of the Republic of the Marshall Islands.

Reasonable expenses including attorney’s fees may be awarded if the action is successful.

A corporation may require a plaintiff bringing a derivative suit to give security for reasonable expenses if the plaintiff owns less than 5% of any class of outstanding shares or holds voting trust certificates or a beneficial interest in shares representing less than 5% of any class of such shares and the shares, voting trust certificates or beneficial interest of such plaintiff has a fair value of $50,000 or less.
    
Other requirements regarding derivative suits have been created by judicial decision, including that a shareholder may not bring a derivative suit unless he or she first demands that the corporation sue on its own behalf and that demand is refused (unless it is shown that such demand would have been futile).
  


Exhibit 4.8
 
Dated March 30, 2026
 
STARFIRE SHIPPING CO.
NIGHTWING SHIPPING CO.
QUICKSILVER SHIPPING CO.
MANTIS SHIPPING CO.
as joint and several Borrowers

THE BANKS AND FINANCIAL INSTITUTIONS
listed in Schedule 1
as Lenders
 
and
 
HAMBURG COMMERCIAL BANK AG
as Agent, Mandated Lead Arranger
and Security Trustee
 
LOAN AGREEMENT
 
relating to
a senior secured reducing revolving credit facility of up to US$60,000,000
secured on m.vs. "DREAM ARRAX", "DREAM VERMAX",
"WONDER ALTAIR" and "WONDER MAIA"

Index
 
Clause
  
Page
1
Interpretation
1
2
Facility
28
3
Position of the Lenders
28
4
Drawdown
29
5
Interest
30
6
Interest Periods
31
7
Changes to the Calculation of Interest
32
8
Repayment and Prepayment
34
9
Conditions Precedent
38
10
Representations and Warranties
39
11
General Undertakings
44
12
Corporate Undertakings
52
13
Insurance
54
14
Ship Covenants
61
15
Security Cover
68
16
Payments and Calculations
70
17
Application of Receipts
73
18
Application of Earnings
74
19
Events of Default
77
20
Fees and Expenses
82
21
Indemnities
84
22
No Set-Off or Tax Deduction
87
23
Illegality, etc.
89
24
Increased Costs
90
25
Set-Off
92
26
Transfers and Changes in Lending Offices
93
27
Variations and Waivers
99
28
Notices
102
29
Joint and Several Liability
105
30
Supplemental
106
31
Bail-In
107
32
Confidential Information
108
33
Law and Jurisdiction
111

Schedules

Schedule 1 Lenders and Commitments
112
Schedule 2 Form of Drawdown Notice
113
Schedule 3 Condition Precedent Documents
114
Part A
114
Part B
116
Part C
118
Schedule 4 Transfer Certificate
119
Schedule 5 Power of Attorney
123
Schedule 6 Form of Compliance Certificate
124
Schedule 7 Timetables
125
Schedule 8 Rollover Advance Notice
126
Schedule 9 Details of Ships
128
Execution
  
   
Execution Pages
129

THIS AGREEMENT is made on March 30, 2026
 
BETWEEN
 
(1)
STARFIRE SHIPPING CO., NIGHTWING SHIPPING CO., QUICKSILVER SHIPPING CO. and MANTIS SHIPPING CO., each a corporation incorporated in the Republic of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960, as joint and several Borrowers;
 
(2)
THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 1 (Lenders and Commitments), as Lenders;
 
(3)
HAMBURG COMMERCIAL BANK AG acting through its office at Gerhart-Hauptmann-Platz 50, 20095 Hamburg, Germany, as Agent;
 
(4)
HAMBURG COMMERCIAL BANK AG acting through its office at Gerhart-Hauptmann-Platz 50, 20095 Hamburg, Germany, as Mandated Lead Arranger; and
 
(5)
HAMBURG COMMERCIAL BANK AG acting through its office at Gerhart-Hauptmann-Platz 50, 20095 Hamburg, Germany, as Security Trustee.
 
BACKGROUND
 
The Lenders have agreed to make available to the Borrowers a senior secured reducing revolving credit facility of up to US$60,000,000 for providing general working capital to the other members of the Group.
 
IT IS AGREED as follows:
 
1
INTERPRETATION
 
1.1
Definitions
 
Subject to Clause 1.5 (General Interpretation), in this Agreement:
 
"Account" means each of the Earnings Accounts, the Liquidity Account, the Dry Dock Reserve Accounts and the Retention Account and, in the plural, means all of them.
 
"Account Bank" means Hamburg Commercial Bank AG, acting in such capacity through its office at Gerhart-Hauptmann-Platz 50, 20095 Hamburg, Germany, or any successor.
 
"Account Pledge" means, in relation to each Account, a pledge agreement creating security in respect of that Account in the Agreed Form and, in the plural, means all of them.
 
"Advance" means a borrowing by the Borrowers under this Agreement, including any Rollover Advance.
 
"Agency and Trust Agreement" means the agency and trust agreement executed or to be executed between the Borrowers and the Creditor Parties in the Agreed Form.
 
"Agent" means Hamburg Commercial Bank AG, acting in such capacity through its office at Gerhart-Hauptmann-Platz 50, D-20095 Hamburg, Germany, or any successor of it appointed under clause 5 (Appointment of a new Servicing Bank) of the Agency and Trust Agreement.
 
1
"Aggregate Insurable Amount" has the meaning given to it in Clause 13.16 (Mortgagee's interest and additional perils insurances).
 
"Agreed Form" means in relation to any document, that document in the form approved in writing by the Agent (acting on the instructions of the Majority Lenders) or as otherwise approved in accordance with any other approval procedure specified in any relevant provisions of any Finance Document.
 
"Annex VI" means Annex VI of the Protocol of 1997 to amend the International Convention for the Prevention of Pollution from Ships 1973 (Marpol), as modified by the Protocol of 1978 relating thereto.
 
"Approved Broker" means each of Arrow Valuations Ltd, Barry Rogliano Salles, H. Clarkson & Co. Ltd., Fearnleys A/S, MB Shipbrokers and SSY Valuations Services Ltd (or any affiliate of such person through which valuations are commonly issued) and, in the plural, means all of them.
 
"Approved Flag" means, in relation to a Ship, the Republic of the Marshall Islands flag or such other flag as the Agent may approve (in its sole and absolute discretion) as the flag on which that Ship is or, as the case may be, shall be registered, being as at the date of this Agreement, the flag specified as the Approved Flag in relation to that Ship in Schedule 9 (Details of the Ships).
 
"Approved Flag State" means, in relation to a Ship, the Republic of the Marshall Islands or any other country in which the Agent may approve that that Ship is or, as the case may be, shall be registered.
 
"Approved Head Manager" means, in relation to a Ship:
 

 (a)
Castor Ships; or
 

 (b)
any other company which the Agent (acting on the instructions of the Majority Lenders) may approve from time to time as the commercial and/or technical manager of that Ship,
 
being as at the date of this Agreement, the manager specified as an approved manager in relation to that Ship in Schedule 9 (Details of the Ships).
 
"Approved Manager" means, in relation to a Ship, the Approved Head Manager or the Approved Technical Manager of that Ship.
 
"Approved Manager's Undertaking" means, in relation to each Ship, a letter of undertaking including, inter alia, an assignment of each Approved Manager's rights, title and interest in the Insurances of that Ship executed or to be executed by that Approved Manager in favour of the Security Trustee in the Agreed Form agreeing certain matters in relation to that Approved Manager serving as the commercial and/or technical manager of that Ship and subordinating its rights against that Ship and the Borrower which is the owner thereof to the rights of the Creditor Parties under the Finance Documents and, in the plural, means all of them.
 
"Approved Technical Manager" means, in relation to a Ship:
 

 (a)
Castor Ships; or
 
2

 (b)
Columbia Shipmanagement (Deutschland) GmbH, a company incorporated under the laws of Germany with its registered office at Große Elbstr. 275, 22767 Hamburg, Germany; or
 

 (c)
any other company which the Agent (acting on the instructions of the Majority Lenders) may approve from time to time as the commercial and/or technical manager of that Ship,
 
being as at the date of this Agreement, the manager specified as an approved technical manager in relation to that Ship in Schedule 9 (Details of the Ships).
 
"Article 55 BRRD" means Article 55 of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms.
 
"Assignable Charter" means, in relation to a Ship, any time charterparty, consecutive voyage charter or contract of affreightment in respect of such Ship having a duration (or capable of exceeding a duration) of 13 months or more and any guarantee of the obligations of the charterer under such charter or any bareboat charter in respect of that Ship and any guarantee of the obligations of the charterer under such bareboat charter, entered or to be entered into by the Borrower which is the owner thereof and a charterer or, as the context may require, bareboat charterer and, in the plural, means all of them.
 
"Availability Period" means, in relation to each Advance, the period commencing on the date of this Agreement and ending on:
 

 (a)
the date falling 3 months prior to the Final Repayment Date; or
 

 (b)
if earlier, the date on which the Total Commitments are fully cancelled or terminated.
 
"Available Commitment" means, at any time in relation to an Advance, a Lender's Commitment minus the amount of its Contribution in the Loan. For the purposes of calculating a Lender's Available Commitment in relation to any proposed Advance, that Lender's Contribution in any part of the Loan that is due to be repaid or prepaid on or before the proposed Drawdown Date shall not be deducted from that Lender's Revolving Commitment.
 
"Bail-In Action" means the exercise of any Write-down and Conversion Powers.
 
"Bail-In Legislation" means in relation to:
 

 (a)
an EEA Member Country which has implemented, or which at any time implements, Article 55 BRRD, the relevant implementing law or regulation as described in the EU Bail-In Legislation Schedule from time to time;
 

 (b)
any state other than such an EEA Member Country and the United Kingdom, any analogous law or regulation from time to time which requires contractual recognition of any Write-down and Conversion Powers contained in that law or regulation; and
 

 (c)
the United Kingdom, the UK Bail-In Legislation.
 
3
"Basel III" means, together:
 

 (a)
the agreements on capital requirements, a leverage ratio and liquidity standards contained in "Basel III: A global regulatory framework for more resilient banks and banking systems", "Basel III: International framework for liquidity risk measurement, standards and monitoring" and "Guidance for national authorities operating the countercyclical capital buffer" published by the Basel Committee on Banking Supervision in December 2010, each as amended, supplemented or restated;
 

 (b)
the rules for global systemically important banks contained in "Global systemically important banks: assessment methodology and the additional loss absorbency requirement - Rules text" published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented or restated; and
 

 (c)
any further guidance or standards published by the Basel Committee on Banking Supervision relating to "Basel III".
 
"Borrower" means each of Borrower A, Borrower B, Borrower C and Borrower D, and, in the plural, means all of them.
 
"Borrower A" means Starfire Shipping Co., a corporation incorporated and existing in the Republic of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960.
 
"Borrower B" means Nightwing Shipping Co., a corporation incorporated and existing in the Republic of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960.
 
"Borrower C" means Quicksilver Shipping Co., a corporation incorporated and existing in the Republic of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960.
 
"Borrower D" means Mantis Shipping Co., a corporation incorporated and existing in the Republic of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960.
 
"Break Costs" means the amount (if any) by which:
 

 (a)
the interest (excluding the Margin) which a Lender should have received for the period from the date of receipt of all or any part of its participation in the Loan or that Unpaid Sum to the last day of the current Interest Period in relation to the Loan, the relevant part of the Loan or that Unpaid Sum, had the principal amount or Unpaid Sum received been paid on the last day of that Interest Period;
 
exceeds
 

 (b)
the amount which that Lender would be able to obtain by placing an amount equal to the principal amount or Unpaid Sum received by it on deposit with a leading bank for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period.
 
"Business Day" means:
 

 (a)
a day (other than a Saturday or Sunday) on which banks are open for general business:
 

 (i)
in Hamburg, London and Piraeus regarding the fixing of any interest rate which is required to be determined under this Agreement or any Finance Document;
 
4

 (ii)
in Hamburg, New York and Piraeus in respect of any payment which is required to be made under a Finance Document; and
 

 (iii)
in Hamburg and in Piraeus regarding any other action to be taken under this Agreement or any other Finance Document; and
 

 (b)
in relation to the fixing of an interest rate:
 

 (i)
a day which is a US Government Securities Business Day; and
 

 (ii)
a day (other than a Saturday or Sunday) on which banks are open for general business in any other place which the Agent may select in its absolute discretion and notify in writing to the Borrowers.
 
"Cancellation Notice" has the meaning given in Clause 8.6 (Optional facility cancellation).
 
"Castor Ships" means Castor Ships S.A. a corporation incorporated and existing in the Republic of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 and having established a branch office in Greece at 10 Seneka Street, 145 64 Kifissia, Greece.
 
"Change of Control" means:
 

 (a)
in relation to a Security Party (other than the Corporate Guarantor) or a Borrower, a change in:
 

 (i)
the ultimate beneficial ownership of any of the shares in that Security Party or that Borrower; or
 

 (ii)
the ultimate control of the voting rights attaching to any of those shares; or
 

 (iii)
the legal ownership of any of those shares, if such change results in that Security Party or that Borrower ceasing to be a direct or indirect wholly-owned subsidiary of the Corporate Guarantor; and
 

 (b)
in relation to the Corporate Guarantor, a change which results in any person or group of persons acting in concert gaining directly or indirectly control of the Corporate Guarantor other than the Permitted Holder;
 
For the purpose of sub-paragraph (b) above:
 

 (i)
"control" means the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to:
 

 (A)
cast, or control the casting of, more than 50 per cent. of the maximum number of votes that might be cast at a general meeting of the Corporate Guarantor; or
 

 (B)
appoint or remove all, or the majority, of the directors or other equivalent officers of the Corporate Guarantor; or
 
5

 (C)
give directions with respect to the operating and financial policies of the Corporate Guarantor with which the directors or other equivalent officers of the Corporate Guarantor are obliged to comply; and/or
 

 (ii)
"acting in concert" means a group of persons who, pursuant to an agreement or understanding (whether formal or informal), actively co-operate, through the acquisition directly or indirectly of shares in the Corporate Guarantor by any of them, either directly or indirectly, to obtain or consolidate control of the Corporate Guarantor.
 
"Charterparty Assignment" means, in relation to a Ship, an assignment of the rights of the Borrower who is the owner of that Ship under any Assignable Charter relative thereto and any guarantee of such Assignable Charter executed or to be executed by that Borrower in favour of the Security Trustee in the Agreed Form and, in the plural, means all of them.
 
"Code" means the US Internal Revenue Code of 1986.
 
"Commitment" means, in relation to a Lender, the amount set opposite its name in Schedule 1 (Lenders and Commitments), or, as the case may require, the amount specified in the relevant Transfer Certificate, as that amount may be reduced, cancelled or terminated in accordance with this Agreement.
 
"Compliance Certificate" means a certificate in the form set out in Schedule 6 (Form of Compliance Certificate) (or in any other form which the Agent approves or requires) to be provided at the times and in the manner set out in Clause 11.20 (Compliance Certificate).
 
"Confidential Information" means all information relating to any Borrower, any Security Party, the Group, the Finance Documents or the Loan of which a Creditor Party becomes aware in its capacity as, or for the purpose of becoming, a Creditor Party or which is received by a Creditor Party in relation to, or for the purpose of becoming a Creditor Party under, the Finance Documents or the Loan from either:
 

 (a)
any member of the Group or any of its advisers; or
 

 (b)
another Creditor Party, if the information was obtained by that Creditor Party directly or indirectly from any member of the Group or any of its advisers,
 
in whatever form, and includes information given orally and any document, electronic file or any other way of representing or recording information which contains or is derived or copied from such information but excludes information that:
 

 (i)
is or becomes public information other than as a direct or indirect result of any breach by that Creditor Party of Clause 32 (Confidential Information); or
 

 (ii)
is identified in writing at the time of delivery as non-confidential by any member of the Group or any of its advisers; or
 

 (iii)
is lawfully obtained by that Creditor Party after that date, from a source which is, as far as that Creditor Party is aware, after having made due enquiry, unconnected with the Group and which, in either case, as far as that Creditor Party is aware, has not been obtained in breach of, and is not otherwise subject to, any obligation of confidentiality.
 
6
"Confidentiality Undertaking" means a confidentiality undertaking in substantially the appropriate form recommended by the LMA from time to time or in any other form agreed between the Borrowers and the Agent.
 
"Contractual Currency" has the meaning given in Clause 21.6 (Currency indemnity).
 
"Contribution" means, in relation to a Lender, the part of the Loan which is owing to that Lender.
 
"Corporate Guarantee" means a guarantee of the obligations of the Borrowers under this Agreement and the other Finance Documents to which each Borrower is a party, in the Agreed Form.
 
"Corporate Guarantor" means Toro Corp., a corporation incorporated in the Republic of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960.
 
"Creditor Party" means the Agent, the Security Trustee, the Mandated Lead Arranger or any Lender, whether as at the date of this Agreement or at any later time and, in the plural, means all of them.
 
"Deed of Covenant" means, in relation to a Ship and if required by the laws of the Approved Flag, a deed of covenant collateral to the Mortgage on that Ship, in the Agreed Form.
 
"Defaulting Lender" means any Lender:
 

 (a)
which has failed to make available the relevant proportion of its Commitment in respect of the Loan or has given notice to the Agent that it will not make such amount available by the Drawdown Date pursuant to Clause 4.5 (Lenders to make available Contributions); or
 

 (b)
which has otherwise rescinded or repudiated a Finance Document; or
 

 (c)
with respect to which an Insolvency Event has occurred and is continuing,
 
unless, in the case of paragraph (a) above:
 

 (i)
its failure to pay is caused by:
 

 (A)
an administrative or technical error; or
 

 (B)
a Disruption Event; and
 
payment is made within five (5) Business Days of its due date; or
 

 (ii)
that Lender is disputing in good faith whether it is contractually obliged to make the relevant payment.
 
"Disruption Event" means either or both of:
 

 (a)
a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments to be made in connection with the Loan (or otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which disruption is not caused by, and is beyond the control of, any of the Parties or, if applicable, any Security Party; or
 
7

 (b)
the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to the treasury or payments operations of a Party or, if applicable, any Security Party preventing that, or any other, Party or, if applicable, any Security Party:
 

 (i)
from performing its payment obligations under the Finance Documents; or
 

 (ii)
from communicating with other Parties or, if applicable, any Security Party in accordance with the terms of the Finance Documents,
 
and which (in either such case) is not caused by, and is beyond the control of, the Party or, if applicable, any Security Party whose operations are disrupted.
 
"Dollars" and "$" means the lawful currency for the time being of the United States of America.
 
"Drawdown Date" means, in respect of each Advance or a Rollover Advance, the date requested by the Borrowers for that Advance or that Rollover Advance to be borrowed, or (as the context requires) the date on which that Advance or that Rollover Advance is actually borrowed.
 
"Drawdown Notice" means a notice substantially in the form set out in Schedule 2 (Form of Drawdown Notice) (or in any other form which the Agent approves or reasonably requires).
 
"Dry Dock Reserve Account" means each of:
 

 (a)
the account in the joint names of Borrower A and Borrower B with the Account Bank designated "Starfire Shipping Co. et al - Dry Dock Account"; and
 

 (b)
the account in the joint names of Borrower B and Borrower C with the Account Bank designated "Quicksilver Shipping Co. et al - Dry Dock Account",
 
or any other accounts (with that or another office of the Account Bank) which replaces these accounts and are designated by the Agent as a Dry Dock Reserve Account for the purposes of this Agreement and, in the plural, means all of them.
 
"Dry Docking Reserve Amount" has the meaning given to it in Clause 11.19 (Dry Docking Reserve Amount).
 
"Earnings" means, in relation to a Ship, all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Borrower owning that Ship or the Security Trustee and which arise out of the use or operation of that Ship, including (but not limited to):
 

 (a)
except to the extent that they fall within paragraph (b);
 

 (i)
all freight, hire and passage moneys;
 

 (ii)
compensation payable to that Borrower or the Security Trustee in the event of requisition of a Ship for hire;
 

 (iii)
remuneration for salvage and towage services;
 
8

 (iv)
demurrage and detention moneys;
 

 (v)
damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of that Ship; and
 

 (vi)
all moneys which are at any time payable under any Insurances in respect of loss of hire; and
 

 (b)
if and whenever that Ship is employed on terms whereby any moneys falling within paragraphs (a)(i) to (vi) are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to that Ship.
 
"Earnings Account" means, in relation to a Ship, an account in the name of the Borrower owning that Ship with the Account Bank designated "name of relevant Borrower - Earnings Account", or any other account (with that or another office of the Account Bank) which replaces such account and is designated by the Agent as that Earnings Account for the purposes of this Agreement.
 
"EEA Member Country" means any member state of the European Union, Iceland, Liechtenstein and Norway.
 
"Environmental Claim" means:
 

 (a)
any claim by any governmental, judicial or regulatory authority which arises out of an Environmental Incident or which relates to any Environmental Law; or
 

 (b)
any claim by any other person which relates to an Environmental Incident,
 
and "claim" means a claim for damages, compensation, fines, penalties or any other payment of any kind whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset.
 
"Environmental Incident" means, in relation to each Ship:
 

 (a)
any release of Environmentally Sensitive Material from that Ship; or
 

 (b)
any incident in which Environmentally Sensitive Material is released from a vessel other than that Ship and which involves a collision between that Ship and such other vessel or some other incident of navigation or operation, in either case, in connection with which that Ship is liable to be arrested, attached, detained or injuncted and/or that Ship and/or the Borrower which is the owner thereof and/or any operator or manager of that Ship is at fault or otherwise liable to any legal or administrative action; or
 

 (c)
any other incident in which Environmentally Sensitive Material is released otherwise than from that Ship and in connection with which that Ship is liable to be arrested and/or where the Borrower which is the owner thereof and/or any operator or manager of that Ship is at fault or otherwise liable to any legal or administrative action.
 
9
"Environmental Law" means any law, regulation, convention and agreement relating to pollution or protection of the environment, to the carriage of Environmentally Sensitive Material or to releases of Environmentally Sensitive Material.
 
"Environmentally Sensitive Material" means oil, oil products and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous.
 
"EU Bail-In Legislation Schedule" means the document described as such and published by the LMA from time to time.
 
"EU Ship Recycling Regulation" means Regulation (EU) No 1257/2013 of the European Parliament and of the Council of 20 November 2013 on ship recycling and amending Regulation (EC) No 1013/2006 and Directive 2009/16/EC.
 
"Event of Default" means any of the events or circumstances described in Clause 19.1 (Events of Default).
 
"Facility" means the reducing revolving credit loan facility made available under this Agreement as described in Clause 2 (Facility).
 
"FATCA" means:
 

 (a)
sections 1471 to 1474 of the Code or any associated regulations;
 

 (b)
any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of any law or regulation referred to in paragraph (a) above; or
 

 (c)
any agreement pursuant to the implementation of any treaty, law or regulation referred to in paragraphs (a) or (b) above with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction.
 
"FATCA Deduction" means a deduction or withholding from a payment under a Finance Document required by FATCA.
 
"FATCA Exempt Party" means a Party that is entitled to receive payments free from any FATCA Deduction.
 
"Final Repayment Date" means the date falling on the earlier of (i) the fifth anniversary of the first Drawdown Date and (ii) 20 February 2031.
 
"Finance Documents" means together:
 

 (a)
this Agreement;
 

 (b)
the Agency and Trust Agreement;
 

 (c)
the Account Pledges;
 

 (d)
the Corporate Guarantee;
 

 (e)
any Subordination Agreement;
 
10

 (f)
any Subordinated Debt Security;
 

 (g)
the Mortgages;
 

 (h)
the General Assignments;
 

 (i)
any Charterparty Assignments;
 

 (j)
the Approved Manager's Undertakings; and
 

 (k)
any other document (whether creating a Security Interest or not) which is executed at any time by a Borrower, the Corporate Guarantor, any Approved Manager or any other person as security for, or to establish any form of subordination or priorities arrangement in relation to, any amount payable to the Lenders under this Agreement or any of the other documents referred to in this definition and, in the singular, means any of them.
 
"Financial Indebtedness" means, in relation to a person (the "debtor"), any actual or contingent liability of the debtor:
 

 (a)
for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the debtor;
 

 (b)
under any loan stock, bond, note or other security issued by the debtor;
 

 (c)
under any acceptance credit, guarantee or letter of credit facility made available to the debtor;
 

 (d)
under a financial lease, a deferred purchase consideration arrangement (in each case, other than in respect of assets or services obtained on normal commercial terms in the ordinary course of business) or any other agreement having the commercial effect of a borrowing or raising of money by the debtor;
 

 (e)
under any foreign exchange transaction, any interest or currency swap, exchange or any other kind of derivative transaction entered into by the debtor or, if the agreement under which any such transaction is entered into requires netting of mutual liabilities, the liability of the debtor for the net amount;
 

 (f)
under receivables sold or discounted (other than any receivables to the extent that they are sold on a non-recourse basis); or
 

 (g)
under a guarantee, indemnity or similar obligation entered into by the debtor in respect of a liability of another person which would fall within (a) to (f) if the references to the debtor referred to the other person.
 
"Financial Year" means, in relation to each of the Borrowers and the Corporate Guarantor, each period of one year commencing on 1 January in respect of which its individual or, as the case may be, consolidated accounts are or ought to be prepared.
 
"Fleet Vessels" means all of the vessels (including, but not limited to, the Ships) from time to time wholly owned by members of the Group (each a "Fleet Vessel").
 
11
"Funding Rate" means any individual rate notified by a Lender to the Agent pursuant to sub-paragraph (ii) of paragraph (a) of Clause 7.3 (Cost of funds).
 
"General Assignment" means, in relation to a Ship, a general assignment of (inter alia) the Earnings, the Insurances and any Requisition Compensation relative to that Ship in the Agreed Form and, in the plural, means all of them.
 
"Group" means the Corporate Guarantor and its direct and indirect subsidiaries from time to time, including, without limitation, the Borrowers and "member of the Group" shall be construed accordingly.
 
"Historic Term SOFR" means, in relation to the Loan or any part of the Loan, the most recent applicable Term SOFR for a period equal in length to the Interest Period of the Loan or that part of the Loan and which is as of a day which is no more than three US Government Securities Business Days before the Quotation Day.
 
"Hong Kong Convention" means Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships, 2009.
 
"IACS" means the International Association of Classification Societies.
 
"Impaired Agent" means the Agent at any time when:
 

 (a)
it has failed to make (or has notified a party to a Finance Document that it will not make) a payment required to be made by it under the Finance Documents by the due date for payment;
 

 (b)
the Agent otherwise rescinds or repudiates a Finance Document;
 

 (c)
(if the Agent is also a Lender), it is a Defaulting Lender under paragraph (a) or (b) of the definition of "Defaulting Lender"; or
 

 (d)
an Insolvency Event has occurred and is continuing with respect to the Agent;
 
unless, in the case of paragraph (a) above:
 

 (i)
its failure to pay is caused by:
 

 (A)
an administrative or technical error; or
 

 (B)
a Disruption Event; and
 

 (ii)
payment is made within ten (10) Business Days of its due date; or
 

 (iii)
the Agent is disputing in good faith whether it is contractually obliged to make the payment in question.
 
"Initial Market Value" means, in relation to each Ship, the Market Value thereof calculated in accordance with the valuation relative thereto referred to in paragraph 4 of Schedule 3 (Condition Precedent Documents), Part B.
 
"Insurances" means, in relation to a Ship:
 
12

 (a)
all policies and contracts of insurance (including without limitation any loss of hire insurance) and reinsurance, policies or contracts, including entries of that Ship in any protection and indemnity or war risks association, effected in respect of that Ship, its Earnings or otherwise in relation to it whether before, on or after the date of this Agreement; and
 

 (b)
all rights (including, without limitation, any and all rights or claims which the Borrower owning that Ship may have under or in connection with any cut-through clause relative to any reinsurance contract relating to the aforesaid policies or contracts of insurance) and other assets relating to, or derived from, any of the foregoing, including any rights to a return of a premium and any rights in respect of any claim whether or not the relevant policy, contract of insurance or entry has expired on or before the date of this Agreement.
 
"Interest Period" means each period determined in accordance with Clause 6 (Interest Periods).
 
"Interpolated Historic Term SOFR" means, in relation to the Loan or any part of the Loan, the rate (rounded to the same number of decimal places as Term SOFR) which results from interpolating on a linear basis between:
 

 (a)
either:
 

 (i)
the most recent applicable Term SOFR (as of a day which is not more than three US Government Securities Business Days before the Quotation Day) for the longest period (for which Term SOFR is available) which is less than the Interest Period of the Loan or that part of the Loan; or
 

 (ii)
if no such Term SOFR is available for a period which is less than the Interest Period of the Loan or that part of the Loan, the most recent SOFR for a day which is no more than five US Government Securities Business Days (and no less than three US Government Securities Business Days) before the Quotation Day; and
 

 (b)
the most recent applicable Term SOFR (as of a day which is not more than three US Government Securities Business Days before the Quotation Day) for the shortest period (for which Term SOFR is available) which exceeds the Interest Period of the Loan or that part of the Loan.
 
"Interpolated Term SOFR" means, in relation to the Loan or any part of the Loan, the rate (rounded to the same number of decimal places as Term SOFR) which results from interpolating on a linear basis between:
 

 (a)
either:
 

 (i)
the applicable Term SOFR (as of the Quotation Day) for the longest period (for which Term SOFR is available) which is less than the Interest Period of the Loan or that part of the Loan; or
 

 (ii)
if no such Term SOFR is available for a period which is less than the Interest Period of the Loan or that part of the Loan, SOFR for the day which is two US Government Securities Business Days before the Quotation Day; and
 
13

 (b)
the applicable Term SOFR (as of the Quotation Day) for the shortest period (for which Term SOFR is available) which exceeds the Interest Period of the Loan or that part of the Loan.
 
"Inventory of Hazardous Materials" means, in relation to a Ship, the inventory of any material or substance which is liable to create hazards to human health and/or the environment issued by that Ship's approved classification society (prepared in accordance with the requirements of the Hong Kong Convention  and/or the EU Ship Recycling Regulation)  which includes a list of any and all materials known to be potentially hazardous utilised in the construction of that Ship along with their respective location and approximate quantities, also referred to as List of Hazardous Materials.
 
"ISM Code" means the International Safety Management Code (including the guidelines on its implementation), adopted by the International Maritime Organisation as the same may be amended or supplemented from time to time (and the terms "safety management system", "Safety Management Certificate" and "Document of Compliance" have the same meanings as are given to them in the ISM Code).
 
"ISPS Code" means the International Ship and Port Facility Security Code as adopted by the International Maritime Organisation, as the same may be amended or supplemented from time to time.
 
"ISSC" means a valid and current International Ship Security Certificate issued under the ISPS Code.
 
"Lender" means, subject to Clause 26.6 (Lender re-organisation), a bank or financial institution listed in Schedule 1 (Lenders and Commitments) and acting through its branch indicated in Schedule 1 (Lenders and Commitments) (or through another branch notified to the Agent under Clause 26.14 (Change of lending office)) or its transferee, successor or assign.
 
"Liquidity Account" means, an account in the joint name of the Borrowers with the Account Bank designated "Starfire Shipping Co. et al – Liquidity Account", or any other account (with that or another office of the Account Bank) which replaces such account and is designated by the Agent as that Liquidity Account for the purposes of this Agreement.
 
"LMA" means the Loan Market Association or any successor organisation.
 
"Loan" means the loan to be made available under this Agreement or the aggregate principal amount outstanding for the time being of the borrowings under this Agreement and a "part of the Loan" means any part of the Loan as the context may require.
 
"LSW 1189" means the London Standard Wording for marine insurances which incorporates the German Direct Mortgage Clause.
 
"Major Casualty" means, in relation to a Ship, any casualty to that Ship in respect of which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds $1,000,000 or the equivalent in any other currency.
 
"Majority Lenders" means:
 

 (a)
before an Advance is made, Lenders whose Commitments total 66 2/3 per cent. of the Total Commitments; and
 
14

 (b)
after an Advance is made, Lenders whose Contributions total 66 2/3 per cent. of the Loan.
 
"Management Agreement" means, in relation to a Ship, the agreement between the Borrower owning that Ship and the Approved Manager in relation to the commercial and/or technical management of that Ship, and in the plural means all of them.
 
"Mandated Lead Arranger" means Hamburg Commercial Bank AG, acting in such capacity through its office at Gerhart-Hauptmann-Platz 50, D-20095 Hamburg, Germany, or any successor.
 
"Margin" means 1.90 per cent. per annum.
 
"Market Disruption Rate" means the percentage rate per annum which is the Reference Rate.
 
"Market Value" means, in relation to each Ship, the market value thereof determined in accordance with Clause 15.3 (Valuation of Ships).
 
"Material Adverse Change" means any event or series of events which, in the reasonable opinion of the Majority Lenders, is likely to have a Material Adverse Effect.
 
"Material Adverse Effect" means a material adverse effect on:
 

 (a)
the business, property, assets, liabilities, operations or condition (financial) of a Borrower and/or any Security Party taken as a whole;
 

 (b)
the ability of a Borrower and/or any Security Party to (i) comply with or perform any of its payment obligations or (ii) discharge any of its liabilities, under any Finance Document as they fall due; or
 

 (c)
the validity, legality or enforceability of any Finance Document.
 
"Maximum Advance Amount" means:
 

 (a)
in respect of the first Advance, an amount up to the lesser of (i) the Total Commitments; and (ii) 60 per cent. of the aggregate Market Value of the Mortgaged Ships; and
 

 (b)
in respect of each subsequent Advance, an amount up to the lesser of (i) the aggregate Available Commitments; and (ii) 62.50 per cent. of the aggregate Market Value of the Mortgaged Ships.
 
"Minimum Liquidity" has the meaning given in Clause 11.18 (Minimum Liquidity).
 
"Mortgage" means, in relation to each Ship, the first preferred or, as the case may be, priority ship mortgage on that Ship in the Agreed Form and, in the plural, means all of them.
 
"Mortgaged Ship" means a Ship which is subject to a Mortgage at the relevant time and, in the plural, means all of them.
 
"Notifying Lender" has the meaning given in Clause 21.2 (Break Costs), Clause 23.1 (Illegality) or Clause 24.1 (Increased costs) as the context requires.
 
15
"Participating Member State" means any member state of the European Union that has the Euro as its lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union.
 
"Party" means a party to this Agreement.
 
"Paying Party" has the meaning given in Clause 16.12 (Impaired Agent).
 
"Payment Currency" has the meaning given in Clause 21.6 (Currency indemnity).
 
"Permitted Holder" the person disclosed in the 20-F as being the person having control (as such term is defined in the definition of "Change of Control") of the Corporate Guarantor as at the date of this Agreement.
 
"Permitted Security Interests" means:
 

 (a)
Security Interests created by the Finance Documents;
 

 (b)
liens for unpaid master's and crew's wages in accordance with usual maritime practice;
 

 (c)
liens for salvage;
 

 (d)
liens arising by operation of law for not more than one month's prepaid hire under any charter in relation to a Ship not prohibited by this Agreement;
 

 (e)
liens for master's disbursements incurred in the ordinary course of trading and any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of a Ship, provided such liens do not secure amounts more than thirty (30) days overdue (unless the overdue amount is being contested by the relevant Borrower in good faith by appropriate steps) and subject, in the case of liens for repair or maintenance, to Clause 14.13(d) (Restrictions on chartering, appointment of managers etc);
 

 (f)
any Security Interest created in favour of a plaintiff or defendant in any proceedings or arbitration as security for costs and expenses while a Borrower is actively prosecuting or defending such proceedings or arbitration in good faith; and
 

 (g)
Security Interests arising by operation of law in respect of taxes which are not overdue for payment or in respect of taxes being contested in good faith by appropriate steps and in respect of which appropriate reserves have been made.
 
"Pertinent Document" means:
 

 (a)
any Finance Document;
 

 (b)
any policy or contract of insurance contemplated by or referred to in Clause 13 (Insurance) or any other provision of this Agreement or another Finance Document;
 

 (c)
any other document contemplated by or referred to in any Finance Document; and
 
16

 (d)
any document which has been or is at any time sent by or to a Servicing Bank in contemplation of or in connection with any Finance Document or any policy, contract or document falling within paragraphs (a) or (c).
 
"Pertinent Jurisdiction" in relation to a company, means:
 

 (a)
England and Wales;
 

 (b)
the country under the laws of which the company is incorporated or formed;
 

 (c)
a country in which the company has the centre of its main interests or which the company's central management and control is or has recently been exercised;
 

 (d)
a country in which the overall net income of the company is subject to corporation tax, income tax or any similar tax;
 

 (e)
a country in which assets of the company (other than securities issued by, or loans to, related companies) having a substantial value are situated, in which the company maintains a branch or permanent place of business, or in which a Security Interest created by the company must or should be registered in order to ensure its validity or priority; and
 

 (f)
a country the courts of which have jurisdiction to make a winding up, administration or similar order in relation to the company, whether as a main or territorial or ancillary proceedings, or which would have such jurisdiction if their assistance were requested by the courts of a country referred to in paragraphs (b) or (c).
 
"Pertinent Matter" means:
 

 (a)
any transaction or matter contemplated by, arising out of, or in connection with a Pertinent Document; or
 

 (b)
any statement relating to a Pertinent Document or to a transaction or matter falling within paragraph (a),
 
and covers any such transaction, matter or statement, whether entered into, arising or made at any time before the signing of this Agreement or on or at any time after that signing.
 
"Potential Event of Default" means an event or circumstance which, with the giving of any notice, the lapse of time, a reasonable determination of the Majority Lenders and/or the satisfaction of any other condition, would constitute an Event of Default.
 
"Prepayment Date" has the meaning given in Clause 15.2 (Prepayment; provision of additional security).
 
"Prepayment Notice" has the meaning given in Clause 8.5(b) (Conditions for voluntary prepayment).
 
"Quotation Day" means, in relation to any period for which an interest rate is to be determined, two US Government Securities Business Days before the first day of that period (unless market practice differs in the relevant syndicated loan market, in which case the Quotation Day will be determined by the Agent (acting on the instructions of the Majority Lenders which will act in accordance with that market practice) (and if quotations would normally be given on more than one day, the Quotation Day will be the last of those days)).
 
17
"Recipient Party" has the meaning given in Clause 16.12 (Impaired Agent).
 
"Reduction Date" has the meaning given to it in paragraph (a) of Clause 8.2 (Reduction of Commitment).
 
"Reduction Instalment" has the meaning given to in paragraph (a) of Clause 8.2 (Reduction of Commitment).
 
"Reference Rate" means, in relation to the Loan or any part of the Loan:
 

 (a)
the applicable Term SOFR as of the Quotation Day and for a period equal in length to the Interest Period of the Loan or that part of the Loan; or
 

 (b)
as otherwise determined pursuant to Clause 7.1 (Unavailability of Term SOFR),
 
and if, in either case, that rate is less than zero, the Reference Rate shall be deemed to be zero.
 
"Related Fund" in relation to a fund (the "first fund"), means a fund which is managed or advised by the same investment manager or investment adviser as the first fund or, if it is managed by a different investment manager or investment adviser, a fund whose investment manager or investment adviser is an affiliate of the investment manager or investment adviser of the first fund.
 
"Relevant Reduction Amount" has the meaning given to it in Clause 8.8 (Mandatory prepayment and reduction).
 
"Relevant Repayment Amount" has the meaning given to it in Clause 8.8 (Mandatory prepayment and reduction).
 
"Relevant Date" has the meaning given to it in Clause 8.8 (Mandatory prepayment and reduction).
 
"Relevant Person" has the meaning given in Clause 19.9 (Relevant Persons).
 
"Repayment Date" means a date on which a repayment is required to be made under Clause 7 (Repayment and Prepayment).
 
"Requisition Compensation" includes all compensation or other moneys payable by reason of any act or event such as is referred to in paragraph (b) of the definition of "Total Loss".
 
"Resolution Authority" means any body which has authority to exercise any Write-down and Conversion Powers.
 
"Restricted Party" means a person that is:
 

 (a)
listed on, or owned or controlled by a person listed on any Sanctions List;
 

 (b)
located in, organised under the laws of, or owned or controlled by, or acting on behalf of, a person located in or organised under the laws of a country or territory which is a subject of country-wide or territory-wide Sanctions (any such country or territory, a "Sanctioned Country"); or
 
18

 (c)
otherwise a subject of Sanctions.
 
"Retention Account" means an account in the joint names of the Borrowers with the Account Bank designated "Starfire Shipping Co. et al - Retention Account", or any other account (with that or another office of the Account Bank) which replaces this account and is designated by the Agent as the Retention Account for the purposes of this Agreement.
 
"Rollover Advance" means one or more Advances under the Facility:
 

 (a)
made or to be made on the same day that a maturing Advance is due to be repaid;
 

 (b)
the aggregate amount of which is equal to or less than the amount of the maturing Advance;
 

 (c)
made or to be made for the purpose of refinancing that maturing Advance; and
 

 (d)
which may be utilised by the service of a Rollover Advance Notice pursuant to paragraph (b) of Clause 4.1 (Request for an Advance).
 
"Rollover Advance Notice" means the notice of a Rollover Advance in the form set out in Schedule 8 (Rollover Advance Notice).
 
"Russian Oil Price Cap Measures" means the Russian oil price cap restrictions and requirements imposed by law or regulation of the United Kingdom, the Council of the European Union and the United States of America and any other similar restrictions on the supply or delivery or maritime transportation of Russian Oil Products applicable to any Security Party.
 
"Russian Oil Products" means oil and oil products falling within commodity codes 2709 or 2710 which originate in or are consigned from Russia.
 
"Sanctions" means any applicable trade, economic or financial sanctions laws (including US "secondary sanctions" or any laws or regulations binding on the Borrowers or a Security Party or to which the Borrowers or a Security Party is subject which shall include, without limitation, any extra-territorial sanctions imposed by law or regulation of the United States of America), regulations, embargoes or restrictive measures administered, enacted or enforced by:
 

 (a)
the Security Council of the United Nations;
 

 (b)
the United States;
 

 (c)
the United Kingdom;
 

 (d)
the European Union;
 

 (e)
any member state of the European Union;
 

 (f)
any country to which any Security Party or any Borrower or any affiliate of any of them is bound; or
 

 (g)
the governments and official institutions or agencies of any of the foregoing, including without limitation, the Office of Foreign Assets Control of the US Department of Treasury ("OFAC"), the United States Department of State, and His Majesty's Treasury ("HMT")
 
19
((a) to (g) together "Sanctions Authorities" and each a "Sanctions Authority").
 
"Sanctions List" means the "Specially Designated Nationals and Blocked Persons" list maintained by OFAC, the "Consolidated List of Financial Sanctions Targets and Investment Ban List" maintained by HMT, or any similar list maintained by, or public announcement of a Sanctions designation made by, a Sanctions Authority, each as amended, supplemented or substituted from time to time.
 
"Secured Liabilities" means all liabilities which the Borrowers, the Security Parties or any of them have, at the date of this Agreement or at any later time or times, under or in connection with any Finance Document or any judgment relating to any Finance Document; and for this purpose, there shall be disregarded any total or partial discharge of these liabilities, or variation of their terms, which is effected by, or in connection with, any bankruptcy, liquidation, arrangement or other procedure under the insolvency laws of any country.
 
"Security Cover Ratio" means, at any relevant time, the aggregate of:
 

 (a)
the aggregate of the Market Value of the Mortgaged Ships;
 

 (b)
any Dry Docking Reserve Amounts standing to the credit of the relevant Dry Dock Reserve Account and any amount standing to the credit of the Retention Account (but excluding, for the avoidance of doubt, the Minimum Liquidity); and
 

 (c)
the net realisable value of any additional security provided at that time under Clause 15 (Security Cover),
 
at that time, expressed as a percentage of the Loan.
 
"Security Interest" means:
 

 (a)
a mortgage, charge (whether fixed or floating) or pledge, any maritime or other lien or any other security interest of any kind;
 

 (b)
the rights of a plaintiff under an action in rem; and
 

 (c)
any arrangement entered into by a person (A) the effect of which is to place another person (B) in a position which is similar, in economic terms, to the position in which B would have been had he held a security interest over an asset of A; but paragraph (c) does not apply to a right of set off or combination of accounts conferred by the standard terms of business of a bank or financial institution.
 
"Security Party" means:
 

 (a)
the Corporate Guarantor; and
 

 (b)
any other person (except a Creditor Party and any other manager which is not a member of the Group) who, as a surety or mortgagor, as a party to any subordination or priorities arrangement, or in any similar capacity, executes a document falling within the final paragraph of the definition of "Finance Documents".
 
20
"Security Period" means the period commencing on the date of this Agreement and ending on the date on which the Agent notifies the Borrowers, the Security Parties and the other Creditor Parties that:
 

 (a)
all amounts which have become due for payment by a Borrower or any Security Party under the Finance Documents have been paid;
 

 (b)
no amount is owing or has accrued (without yet having become due for payment) under any Finance Document;
 

 (c)
neither a Borrower nor any Security Party has any future or contingent liability under Clauses 20 (Fees and Expenses), 21 (Indemnities) or 22 (No Set-Off or Tax Deduction) or any other provision of this Agreement or another Finance Document; and
 

 (d)
the Agent, the Mandated Lead Arranger, the Security Trustee and the Majority Lenders do not consider that there is a significant risk that any payment or transaction under a Finance Document would be set aside, or would have to be reversed or adjusted, in any present or possible future bankruptcy of a Borrower or a Security Party or in any present or possible future proceeding relating to a Finance Document or any asset covered (or previously covered) by a Security Interest created by a Finance Document.
 
"Security Trustee" means Hamburg Commercial Bank AG, acting in such capacity through its office at Gerhart-Hauptmann-Platz 50, D-20095, Hamburg, Germany, or any successor of it appointed under clause 5 (Appointment of a New Servicing Bank) of the Agency and Trust Agreement.
 
"Servicing Bank" means the Agent or the Security Trustee.
 
"Shareholder" means TWI CORP., a corporation incorporated and existing in the Republic of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960.
 
"Ship" means each of Ship A, Ship B, Ship C and Ship D and, in the plural, means all of them.
 
"Ship A" means the LPG carrier vessel of 5,030 cbm currently registered in the ownership of Borrower A with IMO number 9713545 under the Marshall Islands flag in accordance with the laws of the relevant Approved Flag State with the name "DREAM ARRAX".
 
"Ship B" means the LPG carrier vessel of 5,019 cbm currently registered in the ownership of Borrower B with IMO number 9719525 under the Marshall Islands flag in accordance with the laws of the relevant Approved Flag State with the name "DREAM VERMAX".
 
"Ship C" means the MR2 tanker vessel of 50,303 dwt currently registered in the ownership of Borrower C with IMO number 9884825 under the Marshall Islands flag in accordance with the laws of the relevant Approved Flag State with the name "WONDER ALTAIR".
 
"Ship D" means the MR2 carrier vessel of 50,880 dwt currently registered in the ownership of Borrower D with IMO number 9676515 under the Marshall Islands flag in accordance with the laws of the relevant Approved Flag State with the name "WONDER MAIA".
 
"SOFR" means the secured overnight financing rate (SOFR) administered by the Federal Reserve Bank of New York (or any other person which takes over the administration of that rate) published (before any correction, recalculation or republication by the administrator) by the Federal Reserve Bank of New York (or any other person which takes over the publication of that rate).
 
21
"Subordinated Creditor" means a Borrower, a Security Party or any other person who becomes a Subordinated Creditor in accordance with this Agreement.
 
"Subordinated Debt" in relation to a Subordinated Creditor, has the meaning given to it in the Subordination Agreement entered into by that Subordinated Creditor.
 
"Subordinated Debt Security" means a document creating a Security Interest in relation to any Subordinated Debt in the Agreed Form.
 
"Subordination Agreement" means a subordination agreement entered into or to be entered into by a Subordinated Creditor, a Borrower, a Security Party and the Security Trustee in the Agreed Form.
 
"Term SOFR" means the term SOFR reference rate administered by CME Group Benchmark Administration Limited (or any other person which takes over the administration of that rate) for the relevant period published (before any correction, recalculation or republication by the administrator) by CME Group Benchmark Administration Limited (or any other person which takes over the publication of that rate).
 
"Total Commitments" means the aggregate of the Commitments of all the Lenders, being $60,000,000 at the date of this Agreement.
 
"Total Loss" means, in relation to a Ship:
 

 (a)
actual, constructive, compromised, agreed or arranged total loss of that Ship;
 

 (b)
any expropriation, confiscation, requisition or acquisition of that Ship, whether for full or part consideration, a consideration less than its proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority unless it is within ninety (90) days from the date of such occurrence redelivered to the full control of the Borrower owning that Ship;
 

 (c)
any condemnation of that Ship by any tribunal; and
 

 (d)
any arrest, capture, seizure, confiscation or detention of that Ship (including any hijacking or theft) unless it is within ninety (90) days redelivered to the full control of the Borrower owning that Ship.
 
"Total Loss Date" means, in relation to a Ship:
 

 (a)
in the case of an actual loss of that Ship, the date on which it occurred or, if that is unknown, the date when that Ship was last heard of;
 

 (b)
in the case of a constructive, compromised, agreed or arranged total loss of that Ship, the earlier of:
 

 (i)
the date on which a notice of abandonment is given to the insurers; and
 
22

 (ii)
the date of any compromise, arrangement or agreement made by or on behalf of the Borrower owning that Ship with that Ship's insurers in which the insurers agree to treat that Ship as a total loss; and
 

 (c)
in the case of any other type of Total Loss of that Ship not falling within paragraphs (a) or (b) above, on the date which is the earlier of:
 

 (i)
the date on which the Agent, acting on the instructions of the Majority Lenders and in consultation with the Borrower, reasonably determines, on the basis of objectively verifiable evidence (including any survey report, casualty report or written confirmation from the relevant insurers), that the Ship has suffered a total loss (whether actual, constructive, compromised, agreed or arranged) for the purposes of the Insurances; and
 

 (ii)
the date on which the Ship is treated as a total loss (whether actual, constructive, compromised, agreed or arranged) under the Insurances or any settlement or compromise of the relevant insurance claim is formally agreed in writing with the insurers.
 
"Transfer Certificate" has the meaning given in Clause 26.2 (Transfer by a Lender).
 
"Trust Property" has the meaning given in clause 3.1 (Definition of Trust Property) of the Agency and Trust Agreement.
 
"UK Bail-In Legislation" means Part 1 of the United Kingdom Banking Act 2009 and any other law or regulation applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutes or their affiliates (otherwise than through liquidation, administration or other insolvency proceedings).
 
"Unpaid Sum" means any sum due and payable but unpaid by the Borrowers or a Security Party under the Finance Documents.
 
"US" means the United States of America.
 
"US GAAP" means generally accepted accounting principles in the Unites States.
 
"US Government Securities Business Day" means any day other than:
 

 (a)
a Saturday or a Sunday; and
 

 (b)
a day on which the Securities Industry and Financial Markets Association (or any successor organisation) recommends that the fixed income departments of its members be closed for the entire day for the purposes of trading in the US Government securities.
 
"US Tax Obligor" means:
 

 (a)
a Borrower which is resident for tax purposes in the US; or
 

 (b)
a Borrower or a Security Party some or all whose payments under the Finance Documents are from sources within the US for US federal income tax purposes.
 
23
"Write-down and Conversion Powers" means:
 

 (a)
in relation to any Bail-In Legislation described in the EU Bail-In Legislation Schedule from time to time, the powers described as such in relation to that Bail-In Legislation in the EU Bail-In Legislation Schedule;
 

 (b)
in relation to any other applicable Bail-In Legislation other than the UK Bail-In Legislation:
 

 (i)
any powers under that Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers; and
 

 (ii)
any similar or analogous powers under that Bail-In Legislation; and
 

 (c)
in relation to the UK Bail-In Legislation, any powers under that UK Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that UK Bail-In Legislation that are related to or ancillary to any of those powers.
 
1.2
Construction of certain terms
 
In this Agreement:
 

 (a)
a reference to:
 
"administration notice" means a notice appointing an administrator, a notice of intended appointment and any other notice which is required by law (generally or in the case concerned) to be filed with the court or given to a person prior to, or in connection with, the appointment of an administrator;
 
"affiliate" means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company;
 
"approved" means, for the purposes of Clause 13 (Insurance), approved in writing by the Agent at its discretion;
 
"asset" includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment;
 
24
"company" includes any partnership, joint venture and unincorporated association;
 
"consent" includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration, notarisation and legalisation;
 
"contingent liability" means a liability which is not certain to arise and/or the amount of which remains unascertained;
 
a Potential Event of Default or an Event of Default that is "continuing" refers to a Potential Event of Default or an Event of Default that it has not been remedied or waived;
 
a Lender's "cost of funds" in relation to its participation in an Advance or any part of an Advance is a reference to the average cost (determined either on an actual or a notional basis) which that Lender would incur if it were to fund, from whatever source(s) it may reasonably select, an amount equal to the amount of that participation in an Advance or the relevant part of such Advance for a period equal in length to the Interest Period of an Advance or the relevant part of such Advance;
 
"document" includes a deed; also a letter or fax;
 
"excess risks" means, in relation to a Ship, the proportion of claims for general average, salvage and salvage charges not recoverable under the hull and machinery policies in respect of that Ship in consequence of its insured value being less than the value at which that Ship is assessed for the purpose of such claims;
 
"expense" means any kind of cost, charge or expense (including all legal costs, charges and expenses) and any applicable value added or other tax;
 
"gross negligence" means a form of negligence which is distinct from ordinary negligence, in which the due diligence and care which are generally to be exercised have been disregarded to a particularly high degree, in which the plainest deliberations have not been made and that which should be most obvious to everybody has not been followed;
 
"Holding Company" means, in relation to a person, any other person in relation to which it is a Subsidiary;
 
"law" includes any order or decree, any form of delegated legislation, any treaty or international convention and any regulation or resolution of the Council of the European Union, the European Commission, the United Nations or its Security Council;
 
"legal or administrative action" means any legal proceeding or arbitration and any administrative or regulatory action or investigation;
 
"liability" includes every kind of debt or liability (present or future, certain or contingent), whether incurred as principal or surety or otherwise;
 
"months" shall be construed in accordance with Clause 1.3 (Meaning of "month");
 
"obligatory insurances" means, in relation to a Ship, all insurances effected, or which the Borrower owning that Ship is obliged to effect, under Clause 13 (Insurance) or any other provision of this Agreement or another Finance Document;
 
"parent company" has the meaning given in Clause 1.4 (Meaning of "subsidiary");
 
25
"person" includes any individual, any partnership, any company; any state, political sub-division of a state and local or municipal authority; and any international organisation;
 
"policy" in relation to any insurance, includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms;
 
"protection and indemnity risks" means the usual risks covered by a protection and indemnity association being a member of the International Group of P&I Clubs (or any successor organisation), including pollution risks and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in them of clause 1 of the Institute Time Clauses (Hulls) (1/10/82) or clause 8 of the Institute Time Clauses (Hulls) (1/11/1995) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision;
 
"regulation" includes any regulation, rule, official directive, request or guideline (whether or not having the force of law) of any governmental, intergovernmental or supranational body, agency (monetary or otherwise), department, central bank, regulatory, self-regulatory or other authority or organisation;
 
"subsidiary" has the meaning given in Clause 1.4 (Meaning of "subsidiary");
 
"successor" includes any person who is entitled (by assignment, novation, merger or otherwise) to any person's rights under this Agreement or any other Finance Document (or any interest in those rights) or who, as administrator, liquidator or otherwise, is entitled to exercise those rights; and in particular references to a successor include a person to whom those rights (or any interest in those rights) are transferred or pass as a result of a merger, division, reconstruction or other reorganisation of it or any other person;
 
"tax" includes any present or future tax, duty, impost, levy or charge of any kind which is imposed by any state, any political sub-division of a state or any local or municipal authority (including any such imposed in connection with exchange controls), and any connected penalty, interest or fine; and
 
"war risks" includes the risk of mines and all risks excluded by clause 29 of the International Hull Clauses (1/11/02 or 1/11/03), clause 24 of the Institute Time Clauses (Hulls)(1/11/95) or clause 23 of the Institute Time Clauses (Hulls) (1/10/83).
 
1.3
Meaning of "month"
 
A period of one or more "months" ends on the day in the relevant calendar month numerically corresponding to the day of the calendar month on which the period started ("the numerically corresponding day"), but:
 
(a)
on the Business Day following the numerically corresponding day if the numerically corresponding day is not a Business Day or, if there is no later Business Day in the same calendar month, on the Business Day preceding the numerically corresponding day; or
 
(b)
on the last Business Day in the relevant calendar month, if the period started on the last Business Day in a calendar month or if the last calendar month of the period has no numerically corresponding day,
 
and "month" and "monthly" shall be construed accordingly.
 
26
1.4
Meaning of "subsidiary"
 
A company (S) is a subsidiary of another company (P) if:
 
(a)
a majority of the issued shares in S (or a majority of the issued shares in S which carry unlimited rights to capital and income distributions) are directly owned by P or are indirectly attributable to P; or
 
(b)
P has direct or indirect control over a majority of the voting rights attaching to the issued shares of S; or
 
(c)
P has the direct or indirect power to appoint or remove a majority of the directors of S; or
 
(d)
P otherwise has the direct or indirect power to ensure that the affairs of S are conducted in accordance with the wishes of P,
 
and any company of which S is a subsidiary is a parent company of S.
 
1.5
General Interpretation
 
In this Agreement:
 
(a)
references to, or to a provision of, a Finance Document or any other document are references to it as amended or supplemented, whether before the date of this Agreement or otherwise;
 
(b)
references to, or to a provision of, any law include any amendment, extension, re-enactment or replacement, whether made before the date of this Agreement or otherwise;
 
(c)
words denoting the singular number shall include the plural and vice versa;
 
(d)
in relation to each Creditor Party that is incorporated in Germany or otherwise notifies the Agent that it has become subject to the regulation below (each a "Restricted Lender"), each Clause referring to Sanctions and/or Restricted Party shall only apply for the benefit of that Restricted Lender to the extent that the relevant sanctions provisions would not result in (i) any violation of, conflict with or liability under EU Regulation (EC) 2271/96 or (ii) a violation or conflict with section 7 foreign trade rules (AWV) (Auβenwirtschaftsverordnung) (in connection with section 2 paragraph 15 trade law (AWG) (Auβenwirtschaftsgesetz)) or a similar anti-boycott statute (the "Mandatory Restrictions"). In connection with any determination or direction relating to any part of a Clause of which a Restricted Lender does not have the benefit due to a Mandatory Restriction, and any consequential determinations to be made or actions to be taken as a result of the initial determination or action relating to any part of that Clause, for so long as they remain subject to a Mandatory Restriction, the commitments of that Restricted Lender will be excluded for the purpose of determining whether the consent of the Lenders has been obtained or whether the determination or direction by the Lenders has been made; and
 
(e)
Clauses 1.1 (Definitions) to 1.5 (General Interpretation) apply unless the contrary intention appears.
 
27
1.6
Headings
 
In interpreting a Finance Document or any provision of a Finance Document, all clause, sub-clause and other headings in that and any other Finance Document shall be entirely disregarded.
 
2
FACILITY
 
2.1
Amount of facility
 
Subject to the other provisions of this Agreement, the Lenders shall make available to the Borrowers a reducing revolving credit facility in an amount not exceeding the Total Commitments for the purpose stated in the preamble to this Agreement.
 
2.2
Lenders' participations in Advances
 
Subject to the other provisions of this Agreement, each Lender shall participate in each Advance in the proportion which, as at the relevant Drawdown Date, its Commitment bears to the Total Commitments.
 
2.3
Purpose of Advances
 
The Borrowers undertake with each Creditor Party to use each Advance only for the purpose stated in the preamble to this Agreement.
 
3
POSITION OF THE LENDERS
 
3.1
Interests several
 
The rights of the Lenders under this Agreement are several.
 
3.2
Individual right of action
 
Each Lender shall be entitled to sue for any amount which has become due and payable by the Borrowers to it under this Agreement without joining the Agent, the Security Trustee or any other Lender as additional parties in the proceedings.
 
3.3
Proceedings requiring Majority Lender consent
 
Except as provided in Clause 3.2 (Individual right of action), no Lender may commence proceedings against the Borrowers or any Security Party in connection with a Finance Document without the prior consent of the Majority Lenders.
 
3.4
Obligations several
 
The obligations of the Lenders under this Agreement are several; and a failure of a Lender to perform its obligations under this Agreement shall not result in:
 
(a)
the obligations of the other Lenders being increased; nor
 
(b)
a Borrower, any Security Party or any other Lender being discharged (in whole or in part) from its obligations under any Finance Document;
 
and in no circumstances shall a Lender have any responsibility for a failure of another Lender to perform its obligations under this Agreement.
 
28
4
DRAWDOWN
 
4.1
Request for an Advance
 
(a)
Subject to the following conditions, the Borrowers may request an Advance to be borrowed by ensuring that the Agent receives a completed Drawdown Notice not later than 11.00 a.m. (Hamburg time) two (2) Business Days prior to the relevant Drawdown Date.
 
(b)
After the drawdown of the first Advance, the Borrowers may borrow a Rollover Advance by delivery to the Agent of a duly completed Rollover Advance Notice not later than 11.00 a.m. (Hamburg time) two (2) Business Days prior to the expiry of the then applicable Interest Period. For the avoidance of doubt, no separate Drawdown Notice will need to be served for a Rollover Advance.
 
4.2
Availability
 
The conditions referred to in Clause 4.1 (Request for an Advance) are that:
 
(a)
a Drawdown Date has to be a Business Day during the Availability Period;
 
(b)
the amount of:
 

 (i)
the first Advance must be an amount which:
 

 (A)
does not exceed the lower of:
 

 (1)
the relevant Maximum Advance Amount; and
 

 (2)
the Total Commitments;
 

 (B)
is not lower than 25 per cent. of the Total Commitments;
 

 (ii)
any subsequent Advance (other than a Rollover Advance) must be an amount which:
 

 (A)
does not exceed the relevant Maximum Advance Amount; and
 

 (B)
is equal to at least $5,000,0000 (except where the Available Commitment is a lower amount); and
 

 (iii)
the minimum average utilisation of the Facility equals to 25 per cent. of the Available Commitments.
 
4.3
Notification to Lenders of receipt of a Drawdown Notice
 
The Agent shall promptly notify the Lenders that it has received a Drawdown Notice or Rollover Advance Notice and shall inform each Lender of:
 
(a)
the amount of the Advance to which that Drawdown Notice or Rollover Advance Notice relates and the relevant Drawdown Date;
 
(b)
the amount of that Lender's participation in that Advance; and
 
29
(c)
the duration of the first Interest Period in respect of that Advance.
 
4.4
Drawdown Notice irrevocable
 
A Drawdown Notice and any Rollover Advance Notice must be signed by a duly authorised signatory of the Borrowers; and once served, a Drawdown Notice and any Rollover Advance Notice cannot be revoked without the prior consent of the Agent, acting on the authority of the Lenders.
 
4.5
Lenders to make available Contributions
 
Subject to the provisions of this Agreement, each Lender shall, on and with value on each Drawdown Date, make available to the Agent for the account of the Borrowers the amount due from that Lender on that Drawdown Date under Clause 2.2 (Lenders' participations in Advances).
 
4.6
Disbursement of Advance
 
Subject to the provisions of this Agreement, the Agent shall on each Drawdown Date pay to the Borrowers the amounts which the Agent receives from the Lenders under Clause 4.5 (Lenders to make available Contributions) and that payment to the Borrowers shall be made:
 
(a)
to the account which the Borrowers specify in the Drawdown Notice; and
 
(b)
in like funds as the Agent received the payments from the Lenders.
 
The payment by the Agent under this Clause 4.6 (Disbursement of Advance) shall constitute the making of the Advance and the Borrowers shall at that time become indebted, as principal and direct obligors, to each Lender in an amount equal to that Lender's participation in the Advance.
 
4.7
Cancellation of Commitments
 
Any undrawn Commitments shall be automatically cancelled at the end of the Availability Period.
 
5
INTEREST
 
5.1
Calculation of Interest
 
Subject to the provisions of this Agreement, the rate of interest on each Advance in respect of each Interest Period relative to that Advance is the percentage rate per annum which is the aggregate of the applicable:
 
(a)
Margin; and
 
(b)
Reference Rate.
 
5.2
Payment of normal interest
 
(a)
Subject to the provisions of Clause 5.4 (Notifications), the Borrowers shall pay accrued interest on each Advance in respect of each Interest Period relative to that Advance on the last day of each Interest Period (each an "Interest Payment Date").
 
30
(b)
If an Interest Period is longer than three (3) months, the Borrowers shall also pay interest then accrued on each Advance in respect of each Interest Period relative to that Advance on the dates falling at three (3) monthly intervals after the first day of that Interest Period.
 
5.3
Default interest
 
(a)
If a Security Party fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on the Unpaid Sum from the due date up to the date of actual payment (both before and after judgment) at a rate which, subject to paragraph (b) below, is 2 per cent. per annum higher than the rate which would have been payable if the Unpaid Sum had, during the period of non-payment, constituted part of the Loan in the currency of the Unpaid Sum for successive Interest Periods, each of a duration selected by the Agent (acting on the instructions of the Majority Lenders). Any interest accruing under this Clause 5.3 (Default interest) shall be immediately payable by the Borrowers on demand by the Agent (acting on the instructions of the Majority Lenders).
 
(b)
If an Unpaid Sum consists of all or part of the Loan which became due on a day which was not the last day of an Interest Period relating to the Loan or that part of the Loan:
 

 (i)
the first Interest Period for that Unpaid Sum shall have a duration equal to the unexpired portion of the current Interest Period relating to the Loan or that part of the Loan; and
 

 (ii)
the rate of interest applying to that Unpaid Sum during that first Interest Period shall be 2 per cent. per annum higher than the rate which would have applied if that Unpaid Sum had not become due.
 
(c)
Default interest (if unpaid) arising on an Unpaid Sum will be compounded with the Unpaid Sum at the end of each Interest Period applicable to that Unpaid Sum but will remain immediately due and payable.
 
5.4
Notifications
 
(a)
The Agent shall promptly notify the Lenders and the Borrowers of the determination of a rate of interest under this Agreement.
 
(b)
The Agent shall notify the Borrowers of each Funding Rate relating to the Loan, any part of the Loan or any Unpaid Sum.
 
(c)
This Clause 5.4 (Notifications) shall not require the Agent to make any notification to any Party on a day which is not a Business Day.
 
6
INTEREST PERIODS
 
6.1
Commencement of Interest Periods
 
(a)
The first Interest Period applicable to the Loan shall commence on the first Drawdown Date and end on the next applicable Reduction Date and each subsequent Interest Period shall commence on the expiry of the preceding Interest Period.
 
(b)
The first Interest Period for the second and any subsequent Advance shall start on the Utilisation Date of such Advance and end on the last day of the Interest Period applicable to the Loan on the date on which such Advance is made.
 
31
6.2
Duration of normal Interest Periods
 
Subject to Clauses 6.3 (Changes to Interest Periods) and 6.4 (Non-availability of matching deposits for Interest Period selected), each Interest Period in respect of the Loan shall be:
 
(a)
3 months; or
 
(b)
such other period (as proposed by the Borrowers to the Agent not later than 11:00 a.m. (Hamburg time) five (5) Business Days before the commencement of the Interest Period in respect of that Advance (the "Final Date")) as the Agent may, with the authorisation of the Majority Lenders (at their sole discretion), agree with the Borrowers by not later than 5:00 p.m. (Hamburg time) on the Final Date (failing which agreement, the Interest Period shall be 3 months).
 
6.3
Changes to Interest Periods
 
(a)
Before the commencement of an Interest Period for an Advance, the Agent may shorten the Interest Period for any Advance to ensure that, when aggregated with the remaining part of the Loan, there are sufficient Advances (with an aggregate amount equal to or greater than the Reduction Instalment) which have an Interest Period ending on a Reduction Date for the scheduled reduction to occur.
 
(b)
If the Agent makes any change to an Interest Period referred to in this Clause 6.3 (Changes to Interest Periods), it shall promptly notify the Borrowers and the Lenders.
 
6.4
Non-availability of matching deposits for Interest Period selected
 
If, after the Borrowers have proposed and the Lenders have agreed an Interest Period longer than three months, any Lender notifies the Agent by 11.00 a.m. (Hamburg time) on the third Business Day before the commencement of the Interest Period that it is not satisfied that deposits in Dollars for a period equal to the Interest Period will be available to it in the relevant market when the Interest Period commences, the Interest Period shall be of three months.
 
7
CHANGES TO THE CALCULATION OF INTEREST
 
7.1
Unavailability of Term SOFR
 
(a)
Interpolated Term SOFR: If no Term SOFR is available for the Interest Period of the Loan or any part of the Loan, the applicable Reference Rate shall be the Interpolated Term SOFR for a period equal in length to the Interest Period of the Loan or that part of the Loan.
 
(b)
Historic Term SOFR: If no Term SOFR is available for the Interest Period of the Loan or any part of the Loan and it is not possible to calculate the Interpolated Term SOFR, the applicable Reference Rate shall be the Historic Term SOFR for the Loan or that part of the Loan.
 
(c)
Interpolated Historic Term SOFR: If paragraph (b) above applies but no Historic Term SOFR is available for the Interest Period of the Loan or any part of the Loan, the applicable Reference Rate shall be the Interpolated Historic Term SOFR for a period equal in length to the Interest Period of the Loan or that part of the Loan.
 
(d)
Cost of funds: If paragraph (c) above applies but it is not possible to calculate the Interpolated Historic Term SOFR, then Clause 7.3 (Cost of funds) shall apply to the Loan or that part of the Loan (as applicable) for the relevant Interest Period.
 
32
7.2
Market disruption
 
If before the close of business in Hamburg on the Quotation Day for the relevant Interest Period, the Agent receives notification from a Lender or Lenders (whose participations in the Loan or the relevant part of the Loan exceed 33 per cent. of the Loan or the relevant part of the Loan as appropriate) that its cost of funds relating to its participation in the Loan or that part of the Loan would be in excess of that Market Disruption Rate, then Clause 7.3 (Cost of funds) shall apply to the Loan or that part of the Loan (as applicable) for the relevant Interest Period.
 
7.3
Cost of funds
 
(a)
If this Clause 7.3 (Cost of funds) applies, the rate of interest on each Lender's share of the Loan or the relevant part of the Loan for the relevant Interest Period shall be the percentage rate per annum which is the sum of:
 

 (i)
the Margin; and
 

 (ii)
the rate notified to the Agent by that Lender as soon as practicable and in any event before interest is due to be paid in respect of that Interest Period to be that which expresses as a percentage rate per annum its cost of funds relating to its participation in the Loan or that part of the Loan.
 
(b)
If this Clause 7.3 (Cost of funds) applies and the Agent or the Borrowers so require, the Agent and the Borrowers shall enter into negotiations (for a period of not more than thirty (30) days) with a view to agreeing a substitute basis for determining the rate of interest or (as the case may be) an alternative basis for funding.
 
(c)
Subject to Clause 27.4 (Changes to reference rates), any substitute or alternative basis agreed pursuant to paragraph (b) above shall, with the prior consent of all the Lenders and the Borrower, be binding on all Parties.
 
(d)
If paragraph (e) below does not apply and any rate notified to the Agent under sub-paragraph (ii) of paragraph (a) above is less than zero, the relevant rate shall be deemed to be zero.
 
(e)
If this Clause 7.3 (Cost of funds) applies pursuant to Clause 7.2 (Market disruption) and:
 

 (i)
a Lender's Funding Rate is less than the Market Disruption Rate; or
 

 (ii)
a Lender does not notify a rate to the Agent by the time specified in sub-paragraph (ii) of paragraph (a) above,
 
that Lender's cost of funds relating to its participation the Loan or the relevant part of the Loan for that Interest Period shall be deemed, for the purposes of sub-paragraph (ii) of paragraph (a) above, to be the Market Disruption Rate.
 
7.4
Break Costs
 
(a)
The Borrowers shall, within five (5) Business Days of demand by a Creditor Party, pay to that Creditor Party its Break Costs attributable to all or any part of the Loan or Unpaid Sum being paid by the Borrowers on a day prior to the last day of an Interest Period for the Loan, the relevant part of the Loan or that Unpaid Sum.
 
33
(b)
Each Lender shall, as soon as reasonably practicable after a demand by the Agent, provide a certificate confirming the amount of its Break Costs for any Interest Period in respect of which they become or may become payable.
 
8
REPAYMENT AND PREPAYMENT
 
8.1
Repayment of Advances
 
(a)
The Borrowers shall repay each Advance on the last day of its Interest Period.
 
(b)
Without prejudice to the Borrowers' obligation under paragraph (a) above, if:
 

 (i)
an Advance is to be made available:
 

 (A)
on the same day that a maturing Advance is due to be repaid; and
 

 (B)
in whole or in part for the purpose of refinancing the maturing Advance; and
 

 (ii)
the proportion borne by each Lender's participation in the maturing Advance to the amount of that maturing Advance is the same as the proportion borne by that Lender's participation in the new Advance to the amount of the new Advance,
 
the amount of the new Advance shall, unless the Borrowers notify the Agent to the contrary in the relevant Drawdown Notice, be treated as if applied in or towards repayment of the maturing Advance so that:
 

 (A)
if the amount of the maturing Advance exceeds the amount of the new Advance:
 

 (1)
the Borrowers will only be required to make a payment under Clause 16 (Payments and Calculations) in an amount equal to that excess; and
 

 (2)
each Lender's participation in the new Advance shall be treated as having been made available and applied by the Borrowers in or towards repayment of that Lender's participation in the maturing Advance and that Lender will not be required to make a payment under Clause 16 (Payments and Calculations) in respect of its participation in the new Advance; and
 

 (B)
if the amount of the maturing Advance is equal to or less than the amount of the new Advance:
 

 (1)
the Borrowers will not be required to make a payment under Clause 16 (Payments and Calculations); and
 

 (2)
each Lender will be required to make a payment under Clause 16 (Payments and Calculations) in respect of its participation in the new Advance only to the extent that its participation in the new Advance exceeds that Lender's participation in the maturing Advance and the remainder of that Lender's participation in the new Advance shall be treated as having been made available and applied by the Borrowers in or towards repayment of that Lender's participation in the maturing Advance.
 
34
8.2
Reduction of Commitment
 
(a)
The Total Commitments shall be reduced by twenty (20) quarterly consecutive reduction instalments (each a "Reduction Instalment"), each in an amount equal to:
 

 (i)
in respect of the 1st to the 19th such instalment, $1,420,000; and
 

 (ii)
in respect of the 20th and last such instalment, $33,020,000 (comprising a payment in the amount of $1,420,000 and a balloon payment in the amount of $31,600,000),
 
with the first reduction to occur on the date falling 3 months after the date of this Agreement and thereafter at 3-monthly intervals (each a "Reduction Date").
 
(b)
The Borrowers shall ensure that such part of the Loan is repaid on a Reduction Date to the extent necessary so that the aggregate of the outstanding Loan (after that repayment) is equal to or less than the reduced amount of the Total Commitments.
 
(c)
Each reduction of the Total Commitments shall be a permanent reduction.
 
(d)
Any reduction of the Total Commitments in accordance with this Clause shall reduce rateably the Commitment of each Lender.
 
8.3
Final Repayment Date
 
On the Final Repayment Date, the Borrowers shall additionally pay to the Agent for the account of the Creditor Parties all other sums then accrued or owing under any Finance Document.
 
8.4
Voluntary prepayment
 
Subject to the following conditions, the Borrowers may prepay the whole or any part of the Loan on the last day of an Interest Period, subject to payment of any Break Costs, if applicable.
 
8.5
Conditions for voluntary prepayment
 
The conditions referred to in Clause 8.4 (Voluntary prepayment) are that:
 
(a)
a partial prepayment shall be in an amount of not less than $5,000,000 or a higher integral multiple thereof (or such other amount acceptable to the Agent in its sole discretion);
 
(b)
the Agent has received from the Borrowers at least five Business Days' prior irrevocable written notice (each, a "Prepayment Notice") specifying the amount to be prepaid and the date on which the prepayment is to be made;
 
(c)
the Borrowers have provided evidence reasonably satisfactory to the Agent that any consent required by any Borrower or any Security Party in connection with the prepayment has been obtained and remains in force, and that any regulation relevant to this Agreement which affects any Borrower or any Security Party has been complied with; and
 
(d)
the Borrowers are in compliance with Clauses 8.10 (Amounts payable on prepayment) and 8.13 (Right of cancellation in relation to a Defaulting Lender) on or prior to the date of prepayment.
 
35
8.6
Optional facility cancellation
 
The Borrowers shall be entitled, upon giving to the Agent not less than five Business Days' prior written notice, to cancel, in whole or in part (and, if in part, by an amount not less than a multiple integral amount of $5,000,000 (or such other amount acceptable to the Agent in its sole discretion)), the undrawn balance of the Total Commitments (the "Cancellation Notice") which notice shall be irrevocable. Upon such cancellation taking effect on expiry of a Cancellation Notice the several obligations of the Lenders to make their respective Commitments available in relation to the portion of the Total Commitments to which such Cancellation Notice relates shall terminate.
 
8.7
Cancellation Notice or Prepayment Notice
 
The Agent shall notify the Lenders promptly upon receiving a Cancellation Notice or Prepayment Notice, and shall provide, in the case of a Prepayment Notice, any Lender which so requests with a copy of any document delivered by the Borrowers under Clause 8.5(c) (Conditions for voluntary prepayment).
 
8.8
Mandatory prepayment and reduction
 
(a)
If a Ship is sold or becomes a Total Loss (the "Relevant Ship"):
 

 (i)
the Borrowers shall prepay on the Relevant Date the Relevant Repayment Amount (if any); and
 

 (ii)
the Total Commitments shall be reduced on the Relevant Date by an amount equal to the Relevant Reduction Amount.
 
(b)
Any surplus, after the prepayment of the Relevant Repayment Amount (plus any additional costs due pursuant to Clause 8.10 (Amounts payable on prepayment)), shall be for the account of the Borrowers Provided that no Event of Default has occurred and is continuing at the relevant time or will occur as a result of the release of such surplus to the Borrowers.
 
(c)
In this Agreement:
 
"Relevant Date" means:
 

 (a)
where the Relevant Ship is being sold, on or before the date on which the sale is completed by delivery of that Ship to the buyer; and
 

 (b)
where the Relevant Ship has become a Total Loss, on the earlier of the date falling one hundred and eighty (180) days after the Total Loss Date and the date of receipt by the Security Trustee of the proceeds of insurance relating to such Total Loss.
 
"Relevant Reduction Amount" means the amount by which the Available Commitments on the Relevant Date exceed 62.50 per cent. of the aggregate Market Value of the Mortgaged Ships on that date.
 
"Relevant Repayment Amount" means the amount by which the amount of the Loan on the Relevant Date exceeds the then Available Commitments immediately after the occurrence of the reduction pursuant to paragraph (a)(ii) of this Clause 8.8 (Mandatory prepayment and reduction).
 
36
8.9
Effect of Prepayment Notice and Cancellation Notice
 
Neither a Prepayment Notice nor a Cancellation Notice may be withdrawn or amended without the consent of the Agent, given with the authorisation of the Majority Lenders, and:
 
(a)
in the case of a Prepayment Notice, the amount specified in that Prepayment Notice shall become due and payable by the Borrowers on the date for prepayment specified in that Prepayment Notice; and
 
(b)
in the case of a Cancellation Notice, the amount cancelled shall be permanently cancelled and may not be borrowed.
 
8.10
Amounts payable on prepayment
 
(a)
A prepayment shall be made, subject to paragraph (b) below, together with accrued interest (and any other amount payable under Clause 21 (Indemnities) or otherwise) in respect of the amount prepaid and, if the prepayment is not made on the last day of an Interest Period, together with any sums payable under Clause 21.2 (Break Costs) but without premium or penalty.
 
(b)
Any accrued interest on the amount prepaid shall be paid:
 

 (i)
in case of partial prepayment of the Loan, on the last day of the then current Interest Period; and
 

 (ii)
in case of full prepayment of the Loan, on the date of such prepayment.
 
8.11
Application of partial prepayment or cancellation
 
If:
 
(a)
any part of the Loan is prepaid pursuant to Clauses 8.4 (Voluntary prepayment), 8.8 (Mandatory prepayment and reduction), 15.2 (Prepayment; provision of additional security), 19.2 (Actions following an Event of Default), 23.3 (Prepayment; termination of Commitment) or 24.6 (Prepayment; termination of Commitment); or
 
(b)
any Commitment is cancelled pursuant to Clauses 8.6 (Optional facility cancellation), 8.8 (Mandatory prepayment and reduction), 19.2 (Actions following an Event of Default), 23.3 (Prepayment; termination of Commitment) or 24.6 (Prepayment; termination of Commitment),
 
the amount of each of the Reduction Instalments for each Reduction Date falling after that cancellation will reduce pro rata the amount so prepaid or cancelled.
 
8.12
Reborrowing permitted
 
Subject to the terms of this Agreement, any amount repaid or voluntarily prepaid pursuant to Clause 8.4 (Voluntary prepayment) may be reborrowed in accordance with and subject to the terms of Clause 4 (Drawdown) and the conditions referred to in Clauses 9.1(c) and 9.1(d) (Documents, fees and no default) herein, unless permanently reduced pursuant to, as the case may be, Clause 8.2 (Reduction of Commitment) or Clause 8.8 (Mandatory prepayment and reduction) or permanently cancelled pursuant to Clause 8.6 (Optional facility cancellation).
 
37
8.13
Right of cancellation in relation to a Defaulting Lender
 
(a)
If any Lender becomes a Defaulting Lender, the Borrowers may, at any time whilst that Lender continues to be a Defaulting Lender, give the Agent five (5) Business Days' notice of cancellation of the undrawn Commitment of that Lender.
 
(b)
On the notice referred to in paragraph (a) above becoming effective, the undrawn Commitment of the Defaulting Lender shall immediately be reduced to zero.
 
(c)
The Agent shall as soon as practicable after receipt of a notice referred to in paragraph (a) above, notify all the Lenders.
 
9
CONDITIONS PRECEDENT
 
9.1
Documents, fees and no default
 
Each Lender's obligation to contribute to an Advance is subject to the following conditions precedent:
 
(a)
that, on or before the service of the first Drawdown Notice, the Agent receives the documents described in Part A of Schedule 3 (Condition Precedent Documents) in form and substance satisfactory to the Agent and its lawyers;
 
(b)
that, on the Drawdown Date of the first Advance to be made but prior to the making of such Advance, the Agent receives:
 

 (i)
the documents described in Part B of Schedule 3 (Condition Precedent Documents) in form and substance satisfactory to the Agent and its lawyers;
 

 (ii)
the structuring fee payable pursuant to Clause 20.1(a) (Structuring and commitment fees);
 

 (iii)
payment of any commitment fee payable pursuant to Clause 20.1(b) (Structuring and commitment fees); and
 

 (iv)
payment of any expenses payable pursuant to Clause 20.2 (Costs of negotiation, preparation etc.) which are due and payable on the Drawdown Date to which that Drawdown Notice relates;
 
(c)
that, on the Drawdown Date of the second and any subsequent Advance (other than a Rollover Advance):
 

 (i)
the Agent receives the documents described in Part C of Schedule 3 (Condition Precedent Documents) in form and substance satisfactory to the Agent and its lawyers unless otherwise agreed by the Agent acting reasonably; and
 

 (ii)
payment of any expenses payable pursuant to Clause 20.2 (Costs of negotiation, preparation etc.) which are due and payable on that Drawdown Date;
 
(d)
that both at the date of each Drawdown Notice and at the relevant Drawdown Date in relation to an Advance or a Rollover Advance:
 
38

 (i)
no Event of Default or Potential Event of Default has occurred which is continuing or would result from the borrowing of the relevant Advance or Rollover Advance;
 

 (ii)
the representations and warranties in Clause 10 (Representations and Warranties) and those of any Borrower or any Security Party which are set out in the other Finance Documents would be true and not misleading if repeated on each of those dates with reference to the circumstances then existing;
 

 (iii)
none of the circumstances contemplated by Clause 7.2 (Market disruption) has occurred and is continuing; and
 

 (iv)
there has been no Material Adverse Change;
 
(e)
that, if the Security Cover Ratio were applied immediately following the making of an Advance, the Borrowers would not be obliged to provide additional security or prepay part of the Loan under that Clause; and
 
(f)
that the Agent has received, and found to be acceptable to it, any further opinions, consents, agreements and documents in connection with the Finance Documents which the Agent may, with the authorisation of the Majority Lenders, request by notice to the Borrowers prior to the relevant Drawdown Date.
 
9.2
Waiver of conditions precedent
 
If the Majority Lenders, at their discretion, permit an Advance to be borrowed before certain of the conditions referred to in Clause 9.1 (Documents, fees and no default) are satisfied, the Borrowers shall ensure that those conditions are satisfied within five (5) Business Days after the relevant Drawdown Date (or such longer period as the Agent may, with the authorisation of the Majority Lenders, specify).
 
10
REPRESENTATIONS AND WARRANTIES
 
10.1
General
 
Each Borrower represents and warrants to each Creditor Party as follows.
 
10.2
Status
 
Each Borrower is duly incorporated, validly existing and in good standing under the laws of the Republic of the Marshall Islands and no Borrower or Security Party is a US Tax Obligor.
 
10.3
Share capital and ownership
 
(a)
Each of Borrower A, Borrower B and Borrower C is authorised to issue 500 registered shares of one US Dollar (US$1.00) common stock, all of which shares have been issued, and the legal title and beneficial ownership of all those shares is held, free of any Security Interest or other claim, by the Shareholder.
 
(b)
Borrower D is authorised to issue 1,000 registered shares of one US Dollar (US$1.00) common stock, all of which shares have been issued, and the legal title and beneficial ownership of all those shares is held, free of any Security Interest or other claim, by the Shareholder.
 
39
10.4
Corporate power
 
Each Borrower has the corporate capacity, and has taken all corporate action and obtained all consents necessary for it:
 
(a)
to execute the Assignable Charter documentation to which it is a party and to maintain its Ship in its ownership under the applicable Approved Flag;
 
(b)
to execute the Finance Documents to which that Borrower is a party; and
 
(c)
to borrow under this Agreement and to make all the payments contemplated by, and to comply with, those Finance Documents to which that Borrower is a party.
 
10.5
Consents in force
 
All the consents referred to in Clause 10.4 (Corporate power) remain in force and nothing has occurred which makes any of them liable to revocation.
 
10.6
Legal validity; effective Security Interests
 
The Finance Documents to which each Borrower is a party, do now or, as the case may be, will, upon execution and delivery (and, where applicable, registration as provided for in the Finance Documents):
 
(a)
constitute that Borrower's legal, valid and binding obligations enforceable against that Borrower in accordance with their respective terms subject to applicable bankruptcy, insolvency, reorganisation, moratorium and similar laws affecting creditors' rights generally and general principles of equity; and
 
(b)
create legal, valid and binding Security Interests (having the priority specified in the relevant Finance Document) enforceable in accordance with their respective terms over all the assets to which they, by their terms, relate,
 
subject to any relevant insolvency laws affecting creditors' rights generally.
 
10.7
No third-party Security Interests
 
Without limiting the generality of Clause 10.6 (Legal validity; effective Security Interests), at the time of the execution and delivery of each Finance Document to which each Borrower is a party:
 
(a)
that Borrower will have the right to create all the Security Interests which that Finance Document purports to create; and
 
(b)
no third party will have any Security Interest (except for Permitted Security Interests) or any other interest, right or claim over, in or in relation to any asset to which any such Security Interest, by its terms, relates.
 
10.8
No conflicts
 
The execution by each Borrower and each other Security Party of each Finance Document and each Assignable Charter documentation to which it is a party, and the borrowing by that Borrower (together with any other Borrower) of the Loan (or any part thereof), and its compliance with each Finance Document and each Assignable Charter documentation to which it is a party:
 
40
(a)
will not lead to a contravention of:
 

 (i)
any law or regulation; or
 

 (ii)
the constitutional documents of that Borrower or other Security Party; or
 

 (iii)
any contractual or other obligation or restriction which is binding on that Borrower or other Security Party or any of its assets, and
 
(b)
will not, to the best of its knowledge, have a Material Adverse Effect; and
 
(c)
is for the corporate benefit of that Borrower or each other Security Party.
 
10.9
No withholding taxes
 
All payments which each Borrower is liable to make under the Finance Documents to which it is a party may be made without deduction or withholding for or on account of any tax payable under any law of any Pertinent Jurisdiction.
 
10.10
No default
 
No Event of Default has occurred and is continuing.
 
10.11
Information
 
All information which has been provided in writing by or on behalf of the Borrowers or any Security Party to any Creditor Party in connection with any Finance Document satisfied the requirements of Clause 11.5 (Information provided to be accurate); all audited and unaudited accounts and financial statements which have been so provided satisfied the requirements of Clause 11.7 (Form of financial statements) and are true and correct in all material respects (in the opinion of the Agent acting on the instructions of the Majority Lenders) and not misleading in any material respect (in the opinion of the Agent acting on the instructions of the Majority Lenders) and present fairly and accurately the financial position of the Borrowers the Corporate Guarantor or the Group (as the case may be).
 
10.12
No litigation
 
No legal or administrative action involving any Borrower or any Security Party (including action relating to any alleged or actual breach of the ISM Code or the ISPS Code) has been commenced or taken or, to any Borrower's knowledge, is likely to be commenced to the best of the Borrowers' knowledge (having made due and careful enquiry) or taken which would, in either case, be likely to have a Material Adverse Effect.
 
10.13
Validity and completeness of the Assignable Charter documentation
 
Each of the Assignable Charter documentation constitutes valid, binding and enforceable obligations of the parties thereto in accordance with its terms and:
 
(a)
each of the copies of the Assignable Charter documentation delivered to the Agent before the date of this Agreement is a true and complete copy; and
 
41
(b)
no amendments or additions to any Assignable Charter documentation have been agreed nor has any party which is the party to any Assignable Charter documentation waived any of its respective rights thereunder other than disclosed to and agreed in writing with the Agent (acting reasonably).
 
10.14
Compliance with certain undertakings
 
At the date of this Agreement, the Borrowers are in compliance with Clauses 11.2 (Title and negative pledge), 11.4 (No other liabilities or obligations to be incurred), 11.8 (Consents), 11.12 (Principal place of business), 13 (Insurance), 14.3 (Repair and classification) and 14.10 (Compliance with laws etc).
 
10.15
Taxes paid
 
Each Borrower has paid all taxes applicable to, or imposed on or in relation to that Borrower, its business or the Ship owned by it, other than taxes being contested in good faith and adequately reserved for.
 
10.16
ISM Code and ISPS Code compliance
 
All requirements of the ISM Code and the ISPS Code as they relate to the Borrowers, the Corporate Guarantor, the Approved Managers and the Ships have been complied with.
 
10.17
No Money laundering
 
(a)
No Borrower and, to the extent applicable, no Security Party has, in connection with this Agreement or any of the other Finance Documents, contravened, or permitted any subsidiary to contravene, any law, official requirement or other regulatory measure or procedure implemented to combat "money laundering" (as defined in Article 1 of the Directive 2015/849/EC of the European Parliament and of the Council of the European Union of 20 May 2015) and any comparable US federal and state laws.
 
(b)
Each Borrower confirms to the Agent that it is the beneficiary within the meaning of the German Anti Money Laundering Act (Gesetz über das Aufspüren von Gewinnen aus schweren Straftaten (Geldwäschegesetz)), acting for its own account and not for or on behalf of any other person for each part of the Loan made or to be made available to it under this Agreement (that is to say, it acts for its own account and not for or on behalf of anyone else).
 
10.18
No immunity
 
No Borrower nor any of its assets is entitled to immunity on grounds of sovereignty or otherwise from any legal action or proceeding (including, without limitation, suit, attachment prior to judgement, execution or other enforcement).
 
10.19
Choice of law
 
The choice of the laws of England to govern this Agreement and those other Finance Documents which are expressed to be governed by the laws of England, the laws of Germany to govern the Account Pledges and the laws of the applicable Approved Flag State to govern the Mortgages, constitutes a valid choice of law and the submission by the Borrowers or, as the case may be, the relevant Security Parties thereunder to the exclusive jurisdiction of the Courts of England and, in the case of each Account Pledge, Germany or, in the case of the Mortgages, the applicable Approved Flag State is a valid submission and does not contravene the laws of England or, in the case of each Account Pledge, Germany or, in the case of the Mortgages, the applicable Approved Flag State or the laws of any other Pertinent Jurisdiction, will be applied by the courts of any Pertinent Jurisdiction if this Agreement or those other Finance Documents or any claim thereunder comes under their jurisdiction upon proof of the relevant provisions of the laws of England or, in the case of each Account Pledge, Germany or, in the case of the Mortgages, the applicable Approved Flag State.
 
42
10.20
Pari passu ranking
 
The obligations of each Borrower and Security Party under the Finance Documents to which it is a party are direct, general and unconditional obligations and rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors except for obligations mandatorily preferred by law applying to companies generally.
 
10.21
Sanctions
 
(a)
Neither the Borrowers, nor any Security Party, nor any member of the Group or any of their respective directors or officers or, to the Borrowers' or the relevant Security Party's or the relevant member of the Group's best knowledge (after due and careful inquiry), any of the Borrowers' or such Security Party's or such member of the Group's employees, affiliates, agents or representatives:
 

 (i)
is a Restricted Party;
 

 (ii)
has been engaged in any transaction, activity or conduct that could reasonably be expected to result in its becoming a Restricted Party;
 

 (iii)
has or intends to have any business operations or other dealings:
 

 (A)
in any Sanctioned Country which may result in a violation of any Sanctions applicable to it;
 

 (B)
with any Specially Designated National (SDN) on OFAC's SDN list or with a designated person targeted by asset freeze sanctions imposed by the UN, EU, Switzerland or HMT or owned or controlled by any such SDN or designated person; or
 

 (C)
involving commodities or services of a Sanctioned Country origin or shipped to, through, or from a Sanctioned Country, or on Sanctioned Country-owned or registered vessels or aircraft, or finance or subsidise any of the foregoing exceeding 5% aggregated in comparison to the Borrowers' or Corporate Guarantor's total assets or revenues;
 

 (iv)
has received notice of, or is otherwise aware of, any claim, action, suit, proceedings or investigation involving it with respect to Sanctions; and/or
 

 (v)
is acting on behalf of or at the direction of any Restricted Party.
 
(b)
Each member of the Group and each Security Party has taken, to the extent applicable to it, measures to ensure compliance with any Sanctions and will not use any part of the proceeds from the Loan or any part of the Loan in a manner which may result in a violation of any Sanctions by any person.
 
43
(c)
The representations and warranties provided for in this Clause 10.21 (Sanctions) are only given by, and/or (as applicable) shall only apply to, any Borrower, each Security Party and any member of the Group which is a German Relevant Person (as defined in Clause 19.9 (Relevant Persons)) or any Borrower and/or any Security Party and/or any other member of the Group bound by any applicable statutory anti-boycott law or regulation insofar as the giving of and compliance with such representations and warranties do not and will not result in a violation of or conflict with or liability under section 7 of the German Foreign Trade Regulation (Außenwirtschaftsverordnung, AWV) (in conjunction with section 4 and section 19 paragraph 3 no. 1 a) of the German Foreign Trade Act (Außenwirtschaftsgesetz, AWG)), any provision of Council Regulation (EC) 2271/96 or any similar applicable anti-boycott law or regulation.
 
(d)
In relation to a Restricted Lender, the representations and warranties provided for in this Clause 10.21 (Sanctions) shall only apply for the benefit of that Restricted Lender to the extent that such benefit and the exercise of any rights based on such representations and warranties will not result in a violation of or conflict with or liability under section 7 of the German Foreign Trade Regulation (Außenwirtschaftsverordnung, AWV) (in conjunction with section 4 and section 19 paragraph 3 no. 1 a) of the German Foreign Trade Act (Außenwirtschaftsgesetz, AWG)), any provision of Council Regulation (EC) 2271/96 or any similar applicable anti-boycott law or regulation. In connection with any amendment, waiver, determination or direction relating to any part of this Clause 10.21 (Sanctions) of which a Restricted Lender does not have the benefit, the commitments of that Restricted Lender will be disregarded for all purposes when determining whether the consent of the Majority Lenders or such other applicable quorum has been obtained or whether the determination or direction by the Majority Lenders or such other applicable quorum has been made.
 
10.22
Repetition
 
The representations and warranties in this Clause 10 (Representations and Warranties) shall be deemed to be repeated by the Borrowers other than those which are expressly stated to be given by reference to a specific date or which relate solely to historical facts:
 
(a)
on the date of service of each Drawdown Notice;
 
(b)
on each Drawdown Date; and
 
(c)
with the exception of Clauses 10.9 (No withholding taxes) and 10.14, (Compliance with certain undertakings) on the first day of each Interest Period and on the date of any Compliance Certificate issued pursuant to Clause 11.20 (Compliance Certificate),
 
as if made with reference to the facts and circumstances existing on each such day.
 
11
GENERAL UNDERTAKINGS
 
11.1
General
 
Each Borrower undertakes with each Creditor Party to comply with the following provisions of this Clause 11 (General Undertakings) at all times during the Security Period except as the Agent, acting with the authorisation of the Majority Lenders, may otherwise permit in writing.
 
11.2
Title and negative pledge
 
Each Borrower will:
 
44
(a)
hold the legal title to, and own the entire beneficial interest in its Ship, her Insurances and Earnings, free from all Security Interests and other interests and rights of every kind, except for those created by the Finance Documents and the effect of assignments contained in the Finance Documents and except for Permitted Security Interests; and
 
(b)
not create or permit to arise any Security Interest (except for Permitted Security Interests) over any other asset, present or future.
 
11.3
No disposal of assets
 
No Borrower will transfer, lease or otherwise dispose of:
 
(a)
all or a substantial part of its assets, whether by one transaction or a number of transactions, whether related or not; or
 
(b)
any debt payable to it or any other right (present, future or contingent right) to receive a payment, including any right to damages or compensation,
 
but paragraph (a) does not apply to any charter of a Ship.
 
11.4
No other liabilities or obligations to be incurred
 
No Borrower will enter into any investments, any sale or leaseback agreements or any off-balance sheet transactions, or incur any liability or obligation (including, without limitation, any Financial Indebtedness or any obligations under a guarantee) except:
 
(a)
liabilities and obligations under the Finance Documents and the Assignable Charter documentation to which it is or, as the case may be, will be a party; and
 
(b)
liabilities or obligations reasonably incurred in the normal course of its business of trading, operating and chartering, maintaining and repairing the Ship owned by it (including, without limitation, any Financial Indebtedness and other indebtedness owing to its shareholders subject to the relevant Borrower ensuring on or prior to the relevant Drawdown Date or, as the case may be, prior to the incurrence of any such Financial Indebtedness, that the rights of each creditor thereunder are fully subordinated in writing pursuant to a Subordination Agreement and assigned in favour of the Creditor Parties pursuant to a Subordination Debt Security).
 
11.5
Information provided to be accurate
 
All financial and other information, including but not limited to factual information, exhibits and reports, which is provided in writing by or on behalf of a Borrower under or in connection with any Finance Document will be true and correct in all material respects and not misleading and will not omit any material fact or consideration.
 
11.6
Provision of financial statements
 
Each Borrower will send or procure that there are sent to the Agent:
 
(a)
as soon as possible, but in no event later than one hundred eighty (180) days after the end of each Financial Year of that Borrower and the Corporate Guarantor, the individual unaudited annual management accounts of that Borrower and the consolidated audited annual financial statements of the Corporate Guarantor (commencing with the financial statements for the Financial Year which ended on 31 December 2025); and
 
45
(b)
as soon as possible, but in no event later than ninety (90) days after the first 6-month period ending on 30 June in each Financial Year of that Borrower or, as the case may be, the Corporate Guarantor, the semi-annual individual unaudited management accounts in respect of that Borrower or, in the case of the Corporate Guarantor, the semi-annual consolidated unaudited management accounts of the Group, in each case, for that 6-month period (commencing with the financial statements for the 6-month period ending on 30 June 2026), duly certified as to their correctness by the chief financial officer of the Corporate Guarantor; and
 
(c)
promptly after each request by the Agent, such further financial or other information in respect of that Borrower, each Ship and the Corporate Guarantor (including, without limitation, any information regarding any sale and purchase agreements, investment brochures, shipbuilding contracts, charter agreements and operational expenditures for the Ships) as may be requested by the Agent.
 
11.7
Form of financial statements
 
All accounts delivered under Clause 11.6 (Provision of financial statements) will:
 
(a)
be prepared in accordance with all applicable laws and US GAAP and, in the case of any audited financial statements, be certified by an independent and reputable auditor selected and appointed by the relevant Borrower or the Corporate Guarantor;
 
(b)
give a true and fair view of the state of affairs of each Borrower, the Corporate Guarantor and the Group at the date of those accounts and of their profits for the period to which those accounts relate; and
 
(c)
fully disclose or provide for all significant liabilities of each Borrower, the Corporate Guarantor and the Group and each of its subsidiaries.
 
11.8
Consents
 
Each Borrower will maintain in force and promptly obtain or renew, and will promptly send certified copies to the Agent of, all material consents required:
 
(a)
for that Borrower to perform its obligations under any Finance Document or any Assignable Charter documentation to which it is a party;
 
(b)
for the validity or enforceability of any Finance Document or any Assignable Charter documentation to which it is a party;
 
(c)
for that Borrower to continue to own and operate the Ship owned by it,
 
and that Borrower will comply with the terms of all such material consents.
 
11.9
Maintenance of Security Interests
 
Each Borrower will:
 
(a)
at its own cost, do all that it reasonably can to ensure that any Finance Document validly creates the obligations and the Security Interests which it purports to create; and
 
46
(b)
without limiting the generality of paragraph (a), at its own cost, promptly register, file, record or enrol any Finance Document with any court or authority in all Pertinent Jurisdictions, pay any stamp, registration or similar tax in all Pertinent Jurisdictions in respect of any Finance Document, give any notice or take any other step which, in the opinion of the Majority Lenders acting reasonably, is or has become necessary or desirable for any Finance Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which it creates.
 
11.10
Notification of litigation
 
Each Borrower will provide the Agent with details of any legal or administrative action involving that Borrower, the Ship owned by it, the Earnings or the Insurances in respect of that Ship, any Security Party or the Approved Managers (only in relation to any Ship managed by them), as soon as such action is instituted or it becomes apparent to that Borrower that it is likely to be instituted, unless it is clear that the legal or administrative action cannot reasonably be expected to have a Material Adverse Effect, and each Borrower shall procure that all reasonable measures are taken to defend any such legal or administrative action.
 
11.11
No amendment to the Assignable Charter documentation
 
The Borrowers will not waive or fail to enforce, the Assignable Charter documentation to which it is a party or any of its provisions and promptly notify the Agent of any amendment or supplement to any Assignable Charter documentation.
 
11.12
Principal place of business
 
Each Borrower will maintain its registered office at the address referred to in the Recitals; and will not establish, or do anything as a result of which it would be deemed to have, a place of business in the United Kingdom or the United States of America.
 
11.13
Confirmation of no default
 
Each Borrower will, within two (2) Business Days after service by the Agent of a written request, serve on the Agent a notice which is signed by an officer of that Borrower and which:
 
(a)
states that no Event of Default has occurred which is continuing; or
 
(b)
states that no Event of Default has occurred which is continuing, except for a specified event or matter, of which all material details are given.
 
The Agent may serve requests under this Clause 11.13 (Confirmation of no default) from time to time but only if asked to do so by a Lender or Lenders having Contributions exceeding 10 per cent. of the Loan or (if no Advances have been made) Commitments exceeding 10 per cent. of the Total Commitments; and this Clause 11.13 (Confirmation of no default) does not affect the Borrowers' obligations under Clause 11.14 (Notification of default).
 
11.14
Notification of default
 
Each Borrower will notify the Agent as soon as that Borrower becomes aware of, having made reasonable enquiries:
 
(a)
the occurrence of an Event of Default; or
 
47
(b)
any matter which indicates that an Event of Default may have occurred,
 
and will keep the Agent fully up-to-date with all developments.
 
11.15
Provision of further information
 
Each Borrower will, as soon as practicable after receiving the request, provide the Agent with any additional financial or other information relating:
 
(a)
to that Borrower, the Ship owned by it, the Earnings or the Insurances; or
 
(b)
to any other matter relevant to, or to any provision of, a Finance Document,
 
which may be reasonably requested by the Agent, the Security Trustee or any Lender at any time.
 
11.16
Provision of copies and translation of documents
 
Each Borrower will supply the Agent with a sufficient number of copies of the documents referred to above to provide one copy for each Creditor Party; and if the Agent so requires in respect of any of those documents, the Borrowers will provide a certified English translation prepared by a translator approved by the Agent.
 
11.17
"Know your customer" checks
 
If:
 
(a)
the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation or change in the internal policy of any Creditor Party made after the date of this Agreement;
 
(b)
any change in the composition of the shareholders of the Borrowers or any Security Party after the date of this Agreement; or
 
(c)
a proposed assignment or transfer by a Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,
 
obliges the Agent or any Lender (or, in the case of paragraph (c), any prospective new Lender) to comply with "know your customer" or similar identification procedures in circumstances where the necessary information is not already available to it, the Borrowers shall promptly upon the request of the Agent or the Lender concerned supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself or on behalf of any Lender) or the Lender concerned (for itself or, in the case of the event described in paragraph (c), on behalf of any prospective new Lender) in order for the Agent, the Lender concerned or, in the case of the event described in paragraph (c), any prospective new Lender to carry out and be satisfied it has complied with all necessary "know your customer" or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.
 
11.18
Minimum Liquidity
 
The Borrowers shall maintain in the Liquidity Account credit balances in an aggregate amount of not less than $250,000 in respect of each Mortgaged Ship ($1,000,000 in aggregate) ("Minimum Liquidity") commencing from the first Drawdown Date and at all times thereafter throughout the remainder of the Security Period.
 
48
11.19
Dry Docking Reserve Amount
 
(a)
Each Borrower undertakes with each Creditor Party that, from the date falling three months after the first Drawdown Date and at quarterly intervals thereafter during the Security Period, in respect of each Mortgaged Ship, an amount of $20,000 per Ship ($80,000 in aggregate) (collectively, the "Dry Docking Reserve Amount") is deposited to the relevant Dry Dock Reserve Account.
 
(b)
The Dry Docking Reserve Amount in respect of a Ship shall be released to the Borrower owning that Ship only for the payment of any costs incurred in relation to the next dry docking and special survey of that Ship (such costs, together, the "Dry Docking Expenses") and subject to, in each case:
 

 (A)
the Borrowers previously delivering to the Agent, in form and substance satisfactory to the Agent, copies of the invoices and/or proforma invoices to be paid (partially or in full out of the Dry Docking Reserve Amount) in respect of the Dry Docking Expenses; and
 

 (B)
no Event of Default or Potential Event of Default having occurred and being continuing at the relevant time or resulting from the release of the Dry Docking Reserve Amount.
 
Upon completion of each of the dry docking and special survey referred to in paragraph (b) above, the Borrowers shall promptly deliver to the Agent evidence satisfactory to it that such dry docking and special survey has been completed.
 
(c)
If a Ship is sold and all amounts payable pursuant to Clause 8.8 (Mandatory prepayment and reduction) in connection with such sale have been paid by the Borrowers or the Advance relating to that Ship has been fully prepaid before the completion of the dry docking and special survey in respect of that Ship, the relevant portion of the Dry Docking Reserve Amount in relation to that dry docking and special survey will be released to the Borrowers Provided that no Event of Default or Potential Event of Default has occurred and is continuing at the relevant time or will result from such release.
 
11.20
Compliance Certificate
 
(a)
The Borrowers shall supply to the Agent, together with each set of financial statements delivered pursuant to paragraphs (a) and (b) of Clause 11.6 (Provision of financial statements), a Compliance Certificate (commencing with the financial statements for the period ending on 31 December 2025).
 
(b)
Each Compliance Certificate shall be duly signed by a senior officer of the Borrowers, evidencing (inter alia) the Borrower's compliance (or not, as the case may be) with the provisions of Clause 11.18 (Minimum Liquidity), 11.19 (Dry Docking Reserve Amount) and Clause 15.1 (Minimum required security cover).
 
11.21
No Money laundering
 
(a)
Each Borrower:
 
49

 (i)
will not, and will procure that no Security Party, to the extent applicable, will, in connection with this Agreement or any of the other Finance Documents, contravene, or permit any subsidiary to contravene, any law, official requirement or other regulatory measure or procedure implemented to combat "money laundering" (as defined in Article 1 of the Directive 2015/849/EC of the European Parliament and of the Council of the European Union of 20 May 2015) and any comparable US federal and state laws; and
 

 (ii)
shall further submit any documents and declarations on request, if such documents or declarations are required by any Creditor Party to comply with its domestic money laundering and/or legal identification requirements.
 
(b)
Each Borrower:
 

 (i)
shall confirm to the Agent that it is the beneficiary within the meaning of the German Anti Money Laundering Act (Gesetz über das Aufspüren von Gewinnen aus schweren Straftaten (Geldwäschegesetz)), acting for its own account and not for or on behalf of any other person for each part of the relevant Advance made or to be made available to it under this Agreement (that is to say, it acts for its own account and not for or on behalf of anyone else); and
 

 (ii)
will promptly inform the Agent by written notice, if it is not or ceases to be the beneficiary and will provide in writing the name and address of the beneficiary.
 
(c)
The Agent shall promptly notify the Lenders of any written notice it receives under sub-paragraph (b)(ii) above.
 
11.22
Sanctions
 
(a)
Each Borrower undertakes that neither it nor its subsidiaries will, directly or indirectly,
 

 (i)
engage in any activities in conflict with or in violation of any Sanctions and, in particular,
 

 (ii)
use the proceeds of the Loan or any part of the Loan to lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person that is a Restricted Party;
 

 (iii)
directly or indirectly fund all or part of any repayment or prepayment of the Loan with funds that are the property of, are beneficially owned directly or indirectly by, or are derived from any transaction with or action involving a Restricted Party; or
 

 (iv)
otherwise act in any manner with respect to such proceeds which would result in a violation by any person (including any Creditor Party or any person participating in the transaction, whether as initial purchaser, advisor, investor or otherwise) of Sanctions.
 
(b)
The undertakings provided for in this Clause 11.22 (Sanctions) are only given by, and/or (as applicable) shall only apply to, any member of the Group which is a German Relevant Person or any other member of the Group bound by any applicable statutory anti-boycott law or regulation insofar as the giving of and compliance with such undertakings do not and will not result in a violation of or conflict with or liability under section 7 of the German Foreign Trade Regulation (Außenwirtschaftsverordnung, AWV) (in conjunction with section 4 and section 19 paragraph 3 no. 1 a) of the German Foreign Trade Act (Außenwirtschaftsgesetz, AWG)), any provision of Council Regulation (EC) 2271/96 or any other applicable anti-boycott or similar applicable laws or regulation.
 
50
(c)
In relation to a Restricted Lender, the undertakings provided for in this Clause 11.22 (Sanctions) shall only apply for the benefit of that Restricted Lender to the extent that such benefit and the exercise of any rights based on such undertakings will not result in a violation of or conflict with or liability under section 7 of the German Foreign Trade Regulation (Außenwirtschaftsverordnung, AWV) (in conjunction with section 4 and section 19 paragraph 3 no. 1 a) of the German Foreign Trade Act (Außenwirtschaftsgesetz, AWG)), any provision of Council Regulation (EC) 2271/96 or any similar applicable anti-boycott law or regulation. In connection with any amendment, waiver, determination or direction relating to any part of this Clause 11.22 (Sanctions) of which a Restricted Lender does not have the benefit, the Commitments of that Restricted Lender will be disregarded for all purposes when determining whether the consent of the Majority Lenders (or such other applicable quorum) has been obtained or whether the determination or direction by the Majority Lenders (or such other applicable quorum) has been made.
 
11.23
Russian Oil price cap
 
(a)
Each Borrower undertakes that it will, at all times comply, and to require compliance by:
 

 (i)
all charterers and sub-charterers of the Ship owned by it; and
 

 (ii)
all parties with whom a Security Party, a charterer or a sub-charterer enters into a contract of carriage in respect of the Ship owned by it,
 
with the Russian Oil Price Cap Measures as applicable to the Borrowers and the Creditor Parties.
 
(b)
Without prejudice to the generality of paragraph 11.23(a) above, each Borrower undertakes that it will, prior to the Ship owned by it commencing loading (including any ship-to-ship or similar transfer) of Russian Oil Products obtain:
 

 (i)
price information demonstrating that the Russian Oil Products were purchased at or below the applicable price cap; or
 

 (ii)
a signed attestation from its applicable counterparty that the Russian Oil Products were purchased at or below the applicable price cap; or
 

 (iii)
documentary evidence that the purchase of the Russian Oil Products was pursuant to a licence or an exception granted by the relevant authority in each applicable jurisdiction.
 
(c)
Without prejudice to the generality of paragraph 11.23(a) above, each Borrower shall as soon as reasonably practicable, and in any event no later than thirty (30) days after the Ship owned by it commencing loading (including any ship-to-ship or similar transfer) of Russian Oi Products provide to the Agent (at the Agent's option):
 

 (i)
price information demonstrating that the Russian Oil Products were purchased at or below the applicable price cap; and/or
 

 (ii)
an attestation signed by an authorised signatory in such form as may be agreed by the Agent confirming that it has complied in all respect with the Russian Oil Price Cap Measures; and/or
 
51

 (iii)
documentary evidence that the purchase of the Russian Oil Products was pursuant to a licence or an exception granted by the relevant authority in each applicable jurisdiction.
 
(d)
Without prejudice to the generality of paragraph 11.23(a) above, each Borrower undertakes to the Agent that it will use reasonable endeavours to ensure that each charterparty or contract of carriage in respect of the Ship owned by it will include for the benefit of that Borrower provisions requiring the charterer, sub-charterer or person with whom that Borrower has entered into a contract of carriage to comply with the Russian Oil Price Cap Measures and to provide such information and documentation at such times as is necessary for that Borrower to comply with this Clause 11.23 (Russian oil price cap).
 
(e)
Each Borrower undertakes that it will:
 

 (i)
provide the Agent with such information, and at such times, as it may require for the purposes of the Agent or any Creditor Party satisfying any record keeping obligations applicable to it under the Russian Oil Price Cap Measures;
 

 (ii)
as soon as reasonably practicable and in any event within thirty (30) days of any request provide the Agent with such other information in relation to compliance with the Russian Oil Price Cap Measures as the Agent may from time to time reasonably request including without limitation any information relating to ancillary costs as may be specified from time to time pursuant to the Russian Oil Price Cap Measures; and
 

 (iii)
comply with such further or additional requirements as the Agent may from time to time require in writing, acting reasonably, in response to changes to any of the Russian Oil Price Cap Measures, or the introduction of similar measures relating to Russian Oil Products, or changes to any guidance, application, interpretation or market practice in respect of the Russian Oil Price Cap Measures.
 
The obligations in this paragraph (e) are continuing and, in particular, shall survive and remain binding on that Borrower until all attestations and such other information as may be requested pursuant to this paragraph (e) have been received in satisfactory form by the Agent.
 
(f)
Each Borrower shall undertake appropriate due diligence on its counterparties to satisfy itself, based on the information available, of the reliability and accuracy of any information provided by such counterparties for the purposes of or relating to satisfying the requirements of paragraph 11.23(b) above.
 
(g)
Each Borrower agrees that each Creditor Party may forward all attestations and other documents which that Borrower may from time to time deliver to the Agent or such Creditor Party pursuant to paragraphs 11.23(c) and 11.23(e) above to any applicable regulators to which the Agent or such Creditor Party may be required to forward or disclose such attestations or other documents in accordance with the Russian Oil Price Cap Measures.
 
12
CORPORATE UNDERTAKINGS
 
12.1
General
 
Each Borrower also undertakes with each Creditor Party to comply with the following provisions of this Clause 12 (Corporate Undertakings) at all times during the Security Period except as the Agent, acting with the authorisation of the Majority Lenders, may otherwise permit in writing.
 
52
12.2
Maintenance of status
 
Each Borrower will maintain its separate corporate existence and remain in good standing under the laws of the Republic of the Marshall Islands.
 
12.3
Negative undertakings
 
No Borrower will:
 
(a)
change the nature of its business or carry on any business other than the ownership, chartering and operation of the Ship owned by it;
 
(b)
pay any dividend or make any other form of distribution if:
 

 (i)
an Event of Default has occurred and is continuing at the relevant time or will result from the payment of such dividend or the making of any such other form of distribution; or
 

 (ii)
there is a material breach of the obligations of the Borrowers under Clause 11.18 (Minimum Liquidity), 11.19 (Dry Docking Reserve Amount), 15.2 (Prepayment; provision of additional security);
 
(c)
effect any form of redemption, purchase or return of its issued shares;
 
(d)
repay any Subordinated Debt;
 
(e)
provide any form of credit or financial assistance (including any guarantee or indemnity) to:
 

 (i)
a person who is directly or indirectly interested in that Borrower's share or loan capital; or
 

 (ii)
any company in or with which such a person is directly or indirectly interested or connected,
 
or enter into any transaction with or involving such a person or company on terms which are, in any respect, less favourable to that Borrower than those which it could obtain in a bargain made at arms' length;
 
(f)
enter into any material agreement outside the ordinary course of business other than:
 

 (i)
the Finance Documents and the Assignable Charter documentation; or
 

 (ii)
any other agreement expressly allowed under any other term of this Agreement;
 
(g)
open or maintain any account with any bank or financial institution except accounts with the Agent, the Account Bank and the Security Trustee for the purposes of the Finance Documents;
 
(h)
issue, allot or grant any person a right to any shares in its capital or repurchase or reduce its issued shares and/or number of shares it is authorised to issue or change the par value of such shares or create any new class of shares;
 
(i)
change its Financial Year;
 
53
(j)
acquire any shares or other securities other than short term debt obligations or Treasury bills issued by the US, the UK or a Participating Member State and certificates of deposit issued by major North American or European banks, or enter into any transaction in a derivative; or
 
(k)
enter into any form of amalgamation, merger or de-merger, acquisition, divestiture, split-up or any form of reconstruction or reorganisation, without the prior written consent of the Agent.
 
12.4
Corporate Guarantor's subsidiaries
 
The Borrowers shall, upon request, provide the Agent on or before the date of this Agreement with a list of material subsidiaries of the Group at the date of this Agreement and shall promptly advise the Agent in writing of any amendments to such list.
 
For the purposes of this Clause 12.4, "material subsidiaries" means any subsidiaries which own material assets, incur material indebtedness or are otherwise relevant to the performance of the Finance Documents.
 
13
INSURANCE
 
13.1
General
 
Each Borrower also undertakes with each Creditor Party to comply with the following provisions of this Clause 13 (Insurance) at all times during the Security Period except as the Agent, acting with the authorisation of the Majority Lenders, may otherwise permit in writing.
 
13.2
Maintenance of obligatory insurances
 
Each Borrower shall keep the Ship owned by it insured at the expense of that Borrower against:
 
(a)
fire and usual marine risks (including hull and machinery and excess risks);
 
(b)
war risks (including, without limitation, protection and indemnity war risks with a separate limit not less than hull value of the relevant Ship, piracy and terrorism);
 
(c)
protection and indemnity risks (including, without limitation, protection and indemnity war risks in excess of the amount for war risks (hull) and oil pollution liability risks) in each case in the highest amount available in the international insurance market (currently up to $1,000,000,000); and
 
(d)
any other risks the insurance of which the Security Trustee reasonably (acting on the instructions of the Majority Lenders), having regard to practices, recommendations and other circumstances prevailing at the relevant time, may from time to time require by notice to that Borrower.
 
13.3
Terms of obligatory insurances
 
Each Borrower shall effect such insurances in such amounts in such currency and upon such terms and conditions (including, without limitation, any LSW 1189 or any other, in the opinion of the Security Trustee, comparable mortgage clause) as shall from time to time be approved in writing by the Security Trustee (such approval not to be unreasonably conditioned, withheld or delayed) in its sole discretion, but in any event as follows:
 
54
(a)
in Dollars;
 
(b)
in the case of fire and usual marine risks and war risks, on an agreed value basis in an amount equal to at least the higher of:
 

 (i)
an amount which is equal to 120 per cent. of the aggregate of:
 

 (A)
the amount of the Loan multiplied by a fraction whose:
 

 (1)
numerator is the Market Value of that Ship; and
 

 (2)
denominator is the aggregate Market Value of all Mortgaged Ships; and
 

 (B)
the aggregate principal amount secured by Permitted Security Interests over that Ship which have an equal or prior ranking to the Security Interests created by the Finance Documents; and
 

 (ii)
the Market Value of that Ship;
 
(c)
in the case of oil pollution liability risks, for an amount equal to the highest level of cover from time to time available under basic protection and indemnity club entry (with the International Group of Protection and Indemnity Clubs) and the international marine insurance market (currently $1,000,000,000 for any one accident or occurrence);
 
(d)
in relation to protection and indemnity risks in respect of the full value and tonnage of that Ship;
 
(e)
in relation to war risks insurance, extended to cover piracy and terrorism where excluded under the fire and usual marine risks insurance;
 
(f)
on terms and conditions customary in the marine insurance market and otherwise reasonably approved by the Agent;
 
(g)
such other risks of whatever nature and howsoever arising in respect of which insurance would be maintained by a prudent owner of a vessel similar to that Ship; and
 
(h)
through approved brokers and with approved insurance companies and/or underwriters which have a Standard & Poor's rating of at least BBB- or a comparable rating by Moody's or A.M. Best or any other rating agency reasonably acceptable to the Security Trustee (acting on the instructions of the Majority Lenders) or, in the case of war risks and protection and indemnity risks, in approved war risks and protection and indemnity risks associations which are members of the International Group of Protection and Indemnity Clubs.
 
13.4
Further protections for the Creditor Parties
 
In addition to the terms set out in Clause 13.3 (Terms of obligatory insurances), each Borrower shall and shall procure that:
 
(a)
it and any and all third parties who are named assured or co-assured under any obligatory insurance shall assign their interest in any and all obligatory insurances and other Insurances if so required by the Agent and hereby the Borrowers consent to the assignment of any Insurances by any and all third parties who are named assureds or co-assureds under any obligatory insurance to the Security Trustee;
 
55
(b)
whenever the Security Trustee requires, the obligatory insurances name (or be amended to name) the Security Trustee as additional named assured for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation they may have under any applicable law against the Security Trustee but without the Security Trustee thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance;
 
(c)
the interest of the Security Trustee as assignee and as loss payee shall be duly endorsed on all slips, cover notes, policies, certificates of entry or other instruments of insurance in respect of the obligatory insurances;
 
(d)
the obligatory insurances shall name the Security Trustee as sole loss payee with such directions for payment as the Security Trustee may specify;
 
(e)
the obligatory insurances shall provide that all payments by or on behalf of the insurers under the obligatory insurances to the Security Trustee shall be made without set-off, counterclaim or deductions or condition whatsoever;
 
(f)
the obligatory insurances shall provide that the insurers shall waive, to the fullest extent permitted by English law, their entitlement (if any) (whether by statute, common law, equity, or otherwise) to be subrogated to the rights and remedies of the Security Trustee in respect of any rights or interests (secured or not) held by or available to the Security Trustee in respect of the Secured Liabilities, until the Secured Liabilities shall have been fully repaid and discharged, except that the insurers shall not be restricted by the terms of this paragraph (f) from making personal claims against persons (other than any Borrower or any Creditor Party) in circumstances where the insurers have fully discharged their liabilities and obligations under the relevant obligatory insurances;
 
(g)
the obligatory insurances shall provide that the obligatory insurances shall be primary without right of contribution from other insurances effected by the Security Trustee or any other Creditor Party;
 
(h)
the obligatory insurances shall provide that the Security Trustee may make proof of loss if that Borrower fails to do so; and
 
(i)
the obligatory insurances shall provide that if any obligatory insurance is cancelled, or if any substantial change is made in the coverage which adversely affects the interest of the Security Trustee, or if any obligatory insurance is allowed to lapse for non-payment of premium, such cancellation, charge or lapse shall only be effective against the Security Trustee fourteen (14) days (or seven (7) days in the case of war risks) after receipt by the Security Trustee of prior written notice from the insurers of such cancellation, change or lapse.
 
13.5
Renewal of obligatory insurances
 
Each Borrower shall:
 
(a)
at least seven (7) days before the expiry of any obligatory insurance effected by it notify the Security Trustee of the brokers, underwriters, insurance companies and any protection and indemnity or war risks association through or with whom that Borrower proposes to renew that obligatory insurance and of the proposed terms and conditions of renewal;
 
56
(b)
at least seven (7) days before the expiry of any obligatory insurance, renew that obligatory insurance; and
 
(c)
procure that the approved brokers and/or the war risks and protection and indemnity associations with which such a renewal is effected shall promptly after the renewal notify the Security Trustee in writing of the terms and conditions of the renewal.
 
13.6
Copies of policies; letters of undertaking
 
Each Borrower shall ensure that all approved brokers provide the Security Trustee with pro forma copies of all cover notes and policies relating to the obligatory insurances which they are to effect or renew and of a letter or letters of undertaking in a form of standard market and including undertakings by the approved brokers that:
 
(a)
they will have endorsed on each policy, immediately upon issue, a loss payable clause and a notice of assignment complying with the provisions of Clause 13.4 (Further protections for the Creditor Parties);
 
(b)
they will hold such policies, and the benefit of such insurances, to the order of the Security Trustee in accordance with the said loss payable clause;
 
(c)
they will advise the Security Trustee immediately of any material change to the terms of the obligatory insurances;
 
(d)
they will notify the Security Trustee, not less than fourteen (14) days before the expiry of the obligatory insurances, in the event of their not having received notice of renewal instructions from that Borrower or its agents and, in the event of their receiving instructions to renew, they will promptly notify the Security Trustee of the terms of the instructions; and
 
(e)
they will not set off against any sum recoverable in respect of a claim relating to the Ship owned by that Borrower under such obligatory insurances any premiums or other amounts due to them or any other person whether in respect of that Ship or otherwise, they waive any lien on the policies, or any sums received under them, which they might have in respect of such premiums or other amounts, and they will not cancel such obligatory insurances by reason of non-payment of such premiums or other amounts, and will arrange for a separate policy to be issued in respect of that Ship forthwith upon being so requested by the Security Trustee, to the extent permitted under applicable law.
 
13.7
Copies of certificates of entry; letters of undertaking
 
Each Borrower shall ensure that any protection and indemnity and/or war risks associations in which the Ship owned by that Borrower is entered provides the Security Trustee with:
 
(a)
a certified copy of the certificate of entry for that Ship;
 
(b)
a letter or letters of undertaking in such form as may be required by the Security Trustee;
 
(c)
where required to be issued under the terms of insurance/indemnity provided by that Borrower's protection and indemnity association, a certified copy of each United States of America voyage quarterly declaration (or other similar document or documents) made by that Borrower in accordance with the requirements of such protection and indemnity association; and
 
57
(d)
a certified copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifying authority or, as the case may be, protection and indemnity associations in relation to that Ship (if applicable).
 
13.8
Deposit of original policies
 
Each Borrower shall ensure that all policies relating to obligatory insurances effected by it are deposited with the approved brokers through which the insurances are effected or renewed.
 
13.9
Payment of premiums
 
Each Borrower shall punctually pay all premiums or other sums payable in respect of the obligatory insurances effected by it and produce all relevant receipts when so required by the Security Trustee.
 
13.10
Guarantees
 
Each Borrower shall ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect.
 
13.11
Compliance with terms of insurances
 
Each Borrower shall not do or omit to do (nor permit to be done or not to be done) any act or thing which would or might render any obligatory insurance invalid, void, voidable or unenforceable or render any sum payable under an obligatory insurance repayable in whole or in part; and, in particular it shall:
 
(a)
take all necessary action and comply with all requirements which may from time to time be applicable to the obligatory insurances, and (without limiting the obligation contained in Clause 13.6(c) (Copies of policies; letters of undertaking)) ensure that the obligatory insurances are not made subject to any exclusions or qualifications to which the Security Trustee has not given its prior approval;
 
(b)
not make any changes relating to the classification or classification society or manager or operator of the Ship owned by it approved by the underwriters of the obligatory insurances;
 
(c)
make (and promptly supply copies to the Agent) of all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which that Ship is entered to maintain cover for trading to the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990 or any other applicable legislation) and, if applicable, shall procure that each Approved Manager complies with this requirement; and
 
(d)
not employ that Ship, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the obligatory insurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify.
 
13.12
Alteration to terms of insurances
 
Each Borrower shall neither make nor agree to any alteration to the terms of any obligatory insurance or waive any right relating to any obligatory insurance other than alterations to the allocation of the hull and machinery cover between approved insurance companies and/or underwriters at a percentage not exceeding 5%.
 
58
13.13
Settlement of claims
 
No Borrower shall, without the prior written consent of the Security Trustee (such consent not to be unreasonably withheld, conditioned or delayed), settle, compromise or abandon any claim under any obligatory insurance for Total Loss or for a Major Casualty, and shall do all things necessary and provide all documents, evidence and information to enable the Security Trustee to collect or recover any moneys which at any time become payable in respect of the obligatory insurances and shall do all things necessary to ensure such collection or recovery is made.
 
13.14
Provision of copies of communications
 
Each Borrower shall provide the Security Trustee upon request, copies of all written communications between that Borrower and:
 
(a)
the approved insurance brokers;
 
(b)
the approved protection and indemnity and/or war risks associations; and
 
(c)
the approved insurance companies and/or underwriters, which relate directly or indirectly to:
 

 (i)
that Borrower's obligations relating to the obligatory insurances including, without limitation, all requisite declarations and payments of additional premiums or calls;
 

 (ii)
any credit arrangements made between that Borrower and any of the persons referred to in paragraphs (a) or (b) relating wholly or partly to the effecting or maintenance of the obligatory insurances; and
 

 (iii)
a claim under any Insurances.
 
13.15
Provision of information and further undertakings
 
In addition, each Borrower shall promptly provide the Security Trustee (or any persons which it may designate) with any information which the Security Trustee (or any such designated person) requests for the purpose of:
 
(a)
obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the obligatory insurances effected or proposed to be effected; and/or
 
(b)
effecting, maintaining or renewing any such insurances as are referred to in Clause 13.16 (Mortgagee's interest and additional perils insurances) or dealing with or considering any matters relating to any such insurances,
 
and that Borrower shall:
 

 (i)
do all things necessary and provide the Agent and the Security Trustee with all documents and information to enable the Security Trustee to collect or recover any moneys in respect of the Insurances which are payable to the Security Trustee pursuant to the Finance Documents; and
 
59

 (ii)
promptly provide the Agent with full information regarding any Major Casualty in consequence whereof the Ship owned by that Borrower has become or may become a Total Loss and agree to any settlement of such Major Casualty to that Ship only with the Agent's prior written consent,
 
and that Borrower shall, forthwith upon demand, indemnify the Security Trustee in respect of all fees and other expenses incurred by or for the account of the Security Trustee in connection with any such report as is referred to in paragraph (a).
 
13.16
Mortgagee's interest and additional perils insurances
 

 (a)
The Security Trustee shall be entitled from time to time to effect, maintain and renew all or any of the following insurances in such amounts, on such terms, through such insurers and generally in such manner as the Majority Lenders may from time to time consider appropriate:
 

 (i)
a mortgagee's interest insurance in respect of each Ship providing for the indemnification of the Creditor Parties for any losses under or in connection with any Finance Document which directly or indirectly result from loss of or damage to a Ship or a liability of such Ship or of the Borrower owning that Ship, such loss or damage being prima facie covered by an obligatory insurance but in respect of which there is a non-payment (or reduced payment) by the underwriters by reason of, or on the basis of, an allegation concerning:
 

 (A)
any act or omission on the part of that Borrower, of any operator, charterer, manager or sub-manager of that Ship or of any officer, employee or agent of that Borrower or of any such person, including any breach of warranty or condition or any non-disclosure relating to such obligatory insurance;
 

 (B)
any act or omission, whether deliberate, negligent or accidental, or any knowledge or privity of that Borrower, any other person referred to in paragraph (A) above, or of any officer, employee or agent of that Borrower or of such a person, including the casting away or damaging of that Ship and/or that Ship being unseaworthy; and/or
 

 (C)
any other matter capable of being insured against under a mortgagee's interest marine insurance policy, whether or not similar to the foregoing,
 
in an amount of up to 120 per cent. of the Aggregate Insurable Amount.
 

 (ii)
a mortgagee's interest additional perils insurance in respect of each Ship providing for the indemnification of the Creditor Parties against, amongst other things, any possible losses or other consequences of any Environmental Claim, including the risk of expropriation, arrest or any form of detention of that Ship, the imposition of any Security Interest over that Ship and/or any other matter capable of being insured against under a mortgagee's interest additional perils policy, whether or not similar to the foregoing, and in an amount of up to 110 per cent. of the Aggregate Insurable Amount in respect of that Ship,
 
and the Borrowers shall upon demand fully indemnify the Security Trustee in respect of all premiums and other reasonably documented expenses which are incurred in connection with, or with a view to, effecting, maintaining or renewing any such insurance or dealing with, or considering, any matter arising out of any such insurance.
 
60

 (b)
For the purposes of paragraph (a) above "Aggregate Insurable Amount" means, in relation to each Ship the aggregate of:
 

 (i)
the amount of the Loan multiplied by a fraction whose:
 

 (A)
numerator is the Market Value of that Ship; and
 

 (B)
denominator is the aggregate Market Value of all Mortgaged Ships; and
 

 (ii)
the aggregate principal amount secured by Permitted Security Interests over that Ship which have an equal to or prior ranking to the Security Interests created by the Finance Documents.
 

 (c)
The Agent shall (without notification to, or the consent of, the Borrowers) provide the insurers with whom a mortgagee's interest insurance and an additional perils insurance is placed with all documents and information which any such insurers may, at any time, request.
 
13.17
Review of insurance requirements
 
The Security Trustee shall be entitled to review the requirements of this Clause 13 (Insurance) from time to time in order to take account of any changes in circumstances after the date of this Agreement which are, in the opinion of the Agent (acting on the instructions of the Majority Lenders), significant and capable of affecting the Borrowers, each Ship and its Insurances (including, without limitation, changes in the availability or the cost of insurance coverage or the risks to which the Borrower owning that Ship may be subject) and the Borrowers shall upon demand fully indemnify the Agent in respect of all fees and other expenses incurred by or for the account of the Agent in appointing an independent marine insurance broker or adviser to conduct such review.
 
14
SHIP COVENANTS
 
14.1
General
 
Each Borrower also undertakes with each Creditor Party to comply with the following provisions of this Clause 14 (Ship Covenants) at all times during the Security Period except as the Agent, acting with the authorisation of the Majority Lenders, may otherwise permit in writing.
 
14.2
Ship's name and registration
 
Each Borrower shall keep the Ship owned by it registered in its name under an Approved Flag; shall not do, omit to do or allow to be done anything as a result of which such registration might be cancelled or imperilled; and shall not change the name or port of registry of that Ship.
 
14.3
Repair and classification
 
Each Borrower shall, and shall procure that each Approved Manager shall, keep the Ship owned by that Borrower in a good and safe condition and state of repair, sea and cargo worthy in all respects:
 
(a)
consistent with first-class ship ownership and management practice;
 
61
(b)
so as to maintain the highest class free of overdue recommendations and conditions, with a classification society which is a member of IACS (other than the China Classification Society, the Russian Maritime Registry of Shipping, the Polish Register of Shipping, the Indian Register of Shipping, Türk Loydu and the Croatian Register of Shipping) and acceptable to the Agent; and
 
(c)
so as to comply with all laws and regulations applicable to vessels registered at ports in the applicable Approved Flag State or to vessels trading to any jurisdiction to which that Ship may trade from time to time, including but not limited to the ISM Code and the ISPS Code,
 
and the Agent shall be given power of attorney in the form attached as Schedule 5 (Power of Attorney) to act on behalf of that Borrower in order to, inspect the class records and any files held by the classification society and to require the classification society to provide the Agent or any of its nominees with any information, document or file, it might request and the classification society shall be fully entitled to rely hereon without any further inquiry, provided that the power of attorney constituted by this Clause 14.3 (Repair and classification) shall be exercisable only on the occurrence of an Event of Default which is continuing.
 
14.4
Classification society undertaking
 
Each Borrower shall instruct the classification society referred to in Clause 14.3 (Repair and classification) (and procure that the classification society undertakes with the Security Trustee) in relation to its Ship:
 
(a)
to send to the Security Trustee, following receipt of a written request from the Security Trustee, certified true copies of all original class records and any other related records held by the classification society in relation to the Ship owned by that Borrower;
 
(b)
to allow the Security Trustee (or its agents), at any time and from time to time, to inspect the original class and related records of that Ship at the offices of the classification society and to take copies of them;
 
(c)
to notify the Security Trustee immediately in writing if the classification society:
 

 (i)
receives notification from that Borrower or any person that that Ship's classification society is to be changed; or
 

 (ii)
becomes aware of any facts or matters which may result in or have resulted in a change, suspension, discontinuance, withdrawal or expiry of that Ship's class under the rules or terms and conditions of that Borrower's or that Ship's membership of the classification society;
 
(d)
following receipt of a written request from the Security Trustee:
 

 (i)
to confirm that that Borrower is not in default of any of its contractual obligations or liabilities to the classification society and, without limiting the foregoing, that it has paid in full all fees or other charges due and payable to the classification society; or
 

 (ii)
if that Borrower is in default of any of its contractual obligations or liabilities to the classification society, to specify to the Security Trustee in reasonable detail the facts and circumstances of such default, the consequences thereof, and any remedy period agreed or allowed by the classification society.
 
62
14.5
Modification
 
No Borrower shall make any modification or repairs to, or replacement of, its Ship or equipment installed on it which would or might materially alter the structure, type or performance characteristics of that Ship or materially reduce its value, except any such modification, repair or replacement which:
 
(a)
is mandatory under any applicable law, regulation, class requirement or international convention; or
 
(b)
increases that Ship's value, efficiency, safety, or environmental performance and does not adversely affect its class, or trading.
 
14.6
Removal of parts
 
No Borrower shall remove any material part of its Ship, or any item of equipment installed on that Ship unless the part or item so removed is forthwith replaced by a suitable part or item which is in the same condition as or better condition than the part or item removed, is free from any Security Interest or any right in favour of any person other than the Security Trustee and becomes on installation on that Ship the property of that Borrower and subject to the security constituted by the relevant Mortgage and any Deed of Covenant Provided that a Borrower may install equipment owned by a third party if the equipment can be removed without any risk of damage to the Ship owned by it.
 
14.7
Surveys
 
Each Borrower shall submit the Ship owned by it regularly to all periodical or other surveys which may be required for classification purposes and, if so required by the Security Trustee provide the Security Trustee, with copies of all survey reports.
 
14.8
Inspection
 
Each Borrower shall, at reasonable times and on reasonable notice, permit the Security Trustee (by surveyors or other persons appointed by it for that purpose) to board the Ship owned by that Borrower, on or prior to the first Drawdown Date and thereafter once during each calendar year throughout the remainder of the Security Period, to inspect its condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections at the Borrowers' expense, and if the inspector or surveyor appointed by the Security Trustee under this Clause is of the opinion that there are any technical, commercial or operational actions being undertaken or omitted to be undertaken by the Borrower which is the owner of that Ship or the relevant Approved Manager which adversely affect the operation or value of that Ship, the Borrowers shall forthwith (at their reasonable expense) on the Security Trustee's demand remedy such action or inaction and provide the Security Trustee with evidence that it has taken such remedial action Provided that the Security Trustee shall be permitted to board each Ship to inspect its condition (at the relevant Borrower's reasonable expense):
 
(a)
at any time if an Event of Default has occurred and is continuing; and
 
(b)
at all reasonable times with reasonable notice to the relevant Borrower (after taking into consideration the relevant Ship's schedule), in connection with a potential syndication of the Loan to be effected in accordance with Clause 26 (Transfers and Changes in Lending Offices).
 
63
14.9
Prevention of and release from arrest
 
Each Borrower shall as soon as reasonably practicable discharge:
 
(a)
all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against the Ship owned by it, the Earnings or the Insurances;
 
(b)
all taxes, dues and other amounts charged in respect of that Ship, the Earnings or the Insurances; and
 
(c)
all other outgoings whatsoever in respect of that Ship, the Earnings or the Insurances,
 
and, forthwith upon receiving notice of the arrest of that Ship, or of its detention in exercise or purported exercise of any lien or claim, that Borrower shall procure its release by providing bail, guarantee or otherwise as the circumstances may require.
 
14.10
Compliance with laws etc.
 
Each Borrower shall:
 
(a)
comply, or procure compliance with the ISM Code, the ISPS Code, all Environmental Laws and all other laws or regulations relating to the Ship owned by it, its ownership, operation and management or to the business of that Borrower;
 
(b)
not employ the Ship owned by it nor allow its employment in any manner contrary to any law or regulation in any relevant jurisdiction including but not limited to the ISM Code and the ISPS Code; and
 
(c)
in the event of hostilities in any part of the world (whether war is declared or not), not cause or permit that Ship to enter or trade to any zone which is declared a war zone by any government or by that Ship's war risks insurers unless that Borrower has (at its expense) effected any special, additional or modified insurance cover which the Security Trustee may require.
 
14.11
Provision of information
 
Each Borrower shall promptly provide the Security Trustee with any information which it requests regarding:
 
(a)
the Ship owned by it, its employment, position and engagements;
 
(b)
the Earnings and payments and amounts due to the master and crew of that Ship;
 
(c)
any expenses incurred, or likely to be incurred, in connection with the operation, maintenance or repair of that Ship and any payments made in respect of that Ship;
 
(d)
any towages and salvages;
 
(e)
its compliance with the Energy Efficiency Existing Ship Index (EEXI) of that Ship;
 
(f)
its annual operational Carbon Intensity Indicator (CII) as well as its annual CII rating of that Ship;
 
64
(g)
the Group's strategy in relation to the Sulphur oxide (SOx) emissions' regulation in respect of that Ship and each other Fleet Vessel; and
 
(h)
its compliance, each Approved Manager's compliance and the compliance of that Ship with the ISM Code and the ISPS Code,
 
and, upon the Security Trustee's request, provide copies of any current charter relating to that Ship, of any current charter guarantee and copies of that Borrower's or the relevant Approved Manager's Document of Compliance, Safety Management Certificate and the ISSC.
 
14.12
Notification of certain events
 
Each Borrower shall:
 
(a)
before entering into:
 

 (i)
any demise charter for any period in respect of its Ship; or
 

 (ii)
any other Assignable Charter,
 
notify the Agent and provide copies of any draft charter relating to its Ship and, if applicable, any draft charter guarantee and that Borrower shall be entitled to enter into such charter Provided that:
 

 (A)
that Borrower executes in favour of the Security Trustee a specific assignment of all its rights, title and interest in and to such charter and any charter guarantee in the form of a Charterparty Assignment;
 

 (B)
that Borrower shall use reasonable endeavours to procure that the charterer and any charter guarantor agree to acknowledge to the Security Trustee (1) the specific assignment of such charter and charter guarantee by executing an acknowledgement substantially in the form included in the relevant Charterparty Assignment and (2) that the Mortgage over that Ship has been registered prior to the entry into such charter and the charterer provides to the Security Trustee a letter of undertaking pursuant to which the charterer subordinates all its claims against the relevant Borrower and its Ship to the claims of the Creditor Parties under or in connection with the Finance Documents in the Agreed Form;
 

 (C)
in the case where such charter is a demise charter the charterer undertakes to the Security Trustee (1) to comply with all of that Borrower's undertakings with regard to the employment, insurances, operation, repairs and maintenance of its Ship contained in this Agreement, the Mortgage and the General Assignment in relation to that Ship and (2) to provide an assignment of its interest in the insurances of that Ship in the Agreed Form;
 

 (D)
the relevant Borrower provides certified true and complete copies of the charter relating to its Ship and of any current charter guarantee, if any, immediately after its execution;
 
65

 (E)
the Agent's receipt of a copy of the charter and its failure or neglect to act, delay or acquiescence in connection with the relevant Borrower's entering into such charter shall not in any way constitute an acceptance by the Agent of whether or not the Earnings under the charter are sufficient to meet the debt service requirements under this Agreement nor shall it in any way affect the Agent's or the Security Trustee's entitlement to exercise its rights under the Finance Documents pursuant to Clause 19 (Events of Default) upon the occurrence of an Event of Default arising as a result of an act or omission of the charterer; and
 

 (F)
the relevant Borrower delivers to the Agent such other documents equivalent to those referred to at paragraphs 1(f), 3, 4, 5, 7, 8 and 9 of Schedule 3 (Condition Precedent Documents), Part A as the Agent may require; and
 
(b)
immediately notify the Security Trustee by letter, of:
 

 (i)
its entry into any agreement or arrangement for the postponement of any date on which any Earnings are due, the reduction of the amount of any Earnings or otherwise for the release or adverse alteration of any right of that Borrower to any Earnings;
 

 (ii)
its entry into any time or consecutive voyage charter in respect of that Ship for a term which exceeds, or which by virtue of any optional extensions may exceed, six months;
 

 (iii)
any casualty which is or is likely to be or to become a Major Casualty;
 

 (iv)
any occurrence as a result of which the Ship owned by it has become or is, by the passing of time or otherwise, likely to become a Total Loss;
 

 (v)
any requirement, condition or recommendation made by any insurer or classification society or by any competent authority which is not immediately complied with;
 

 (vi)
any arrest or detention of that Ship, any exercise or purported exercise of any lien on that Ship or its Earnings or any requisition of that Ship for hire;
 

 (vii)
any intended dry docking of that Ship;
 

 (viii)
any Environmental Claim which exceeds $1,000,000 and made against that Borrower or in connection with that Ship, or any Environmental Incident;
 

 (ix)
any claim for breach of the ISM Code or the ISPS Code being made against that Borrower, any Approved Manager or otherwise in connection with that Ship;
 

 (x)
its intention to de-activate or lay up its Ship; or
 

 (xi)
any other matter, event or incident, actual or threatened, the effect of which will or could lead to the ISM Code or the ISPS Code not being complied with,
 
and that Borrower shall keep the Security Trustee advised in writing on a regular basis and in such detail as the Security Trustee shall require of that Borrower's, any Approved Manager's or any other person's response to any of those events or matters.
 
14.13
Restrictions on chartering, appointment of managers etc.
 
No Borrower shall, in relation to the Ship owned by it:
 
66
(a)
enter into any charter in relation to that Ship under which more than two months' hire (or the equivalent) is payable in advance;
 
(b)
charter that Ship otherwise than on bona fide arm's length terms at the time when that Ship is fixed;
 
(c)
appoint a manager of that Ship other than the Approved Managers or agree to any alteration to the terms of any Approved Manager's appointment; or
 
(d)
put that Ship into the possession of any person for the purpose of work being done upon it in an amount exceeding or likely to exceed $1,000,000 (or the equivalent in any other currency) unless (i) that person has first given to the Security Trustee and in terms satisfactory to it a written undertaking not to exercise any lien on that Ship or its Earnings for the cost of such work or for any other reason or (ii) that person has entered into an agreement with that Borrower pursuant to which that person agrees that that Ship may depart the relevant shipyard or repair yard in consideration of a payment of part, but not all, of the costs of the relevant work in amount not exceeding $1,000,000 (or the equivalent in any other currency) or (iii) that Borrower provides evidence satisfactory to the Agent that it has adequate cash reserves to pay the cost of such work in full.
 
14.14
Notice of Mortgage
 
Each Borrower shall keep the Mortgage relative to its Ship registered against that Ship as a valid first preferred or, as the case may be, priority mortgage, carry on board that Ship a certified copy of that Mortgage and place and maintain in a conspicuous place in the navigation room and the Master's cabin of that Ship a framed printed notice stating that that Ship is mortgaged by that Borrower to the Security Trustee.
 
14.15
Sharing of Earnings
 
No Borrower shall enter into any agreement or arrangement for the sharing of any Earnings (other than (i) any profit sharing agreement with a charterer which takes effect above an agreed minimum charter hire rate payable to the relevant Borrower under a charter to which that Borrower is a party and (ii) any pool agreement, in either case, on bona fide arm's length terms).
 
14.16
ISPS Code
 
Each Borrower shall comply with the ISPS Code and in particular, without limitation, shall:
 
(a)
procure that the Ship owned by it and the company responsible for that Ship's compliance with the ISPS Code comply with the ISPS Code; and
 
(b)
maintain for that Ship an ISSC; and
 
(c)
notify the Agent immediately in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC.
 
14.17
IHM and green scrapping
 
Each Borrower shall:
 
67
(a)
obtain and maintain throughout the Security Period an Inventory of Hazardous Material in respect of the Ship owned by it;
 
(b)
provide the Agent with a copy of the Inventory of Hazardous Materials for the Ship owned by it and each update to, or amendment of, such Inventory of Hazardous Materials from time to time during the Security Period;
 
(c)
maintain a safe, sustainable and socially responsible policy with respect to the dismantling of the Ship owned by it and that Ship being taken out of service;
 
(d)
ensure that, if during the Security Period, the Ship owned by it is sold for scrapping or sold to an intermediary with the intention of being scrapped, that Ship is recycled at a recycling yard which conducts its recycling business in a socially and environmentally responsible manner, in accordance with the provisions of:
 

 (i)
the Hong Kong Convention for the Safe and Environmentally Sound Recycling of Ships 2009 in relation to non-EU flagged vessels;
 

 (ii)
the International Maritime Organisation's Guidelines for the development of the Inventory of Hazardous Materials (Resolution MEPC.269(68)) in relation to non-EU flagged vessels;
 

 (iii)
Regulation (EU) No. 1257/2013 adopted by the EU Parliament and the Council of the European Union on 20 November 2013 in relation to EU flagged vessels;
 

 (iv)
any other applicable laws or regulations relating to ship scrapping or ship recycling; and
 
(e)
comply with Annex VI or any replacement of Annex VI and shall in particular, without limitation:
 

 (i)
procure that the relevant Ship's master and crew are familiar with, and that the Ship owned by it complied with, Annex VI;
 

 (ii)
maintain for the Ship owned by it throughout the Security Period a valid and current IAPPC and provide a copy to the Agent; and
 

 (iii)
gather and maintain annual SEEMP Part II Data in respect of the Ship owned by it according to the IMO Data Collection System and provide such annual data to the Agent latest by 30 June of the year following the year which such data collection applies to.
 
15
SECURITY COVER
 
15.1
Minimum required security cover
 
Clause 15.2 (Prepayment; provision of additional security) applies if the Agent notifies the Borrowers that the Security Cover Ratio is below 125 per cent.
 
68
15.2
Prepayment; provision of additional security
 
If the Agent serves a notice on the Borrowers under Clause 15.1 (Minimum required security cover), the Borrowers shall prepay such part at least of the Loan as will eliminate the shortfall on or before the date falling thirty (30) days after the date on which the Agent's notice is served under Clause 15.1 (Minimum required security cover) (the "Prepayment Date") unless at least five (5) calendar days before the Prepayment Date the Borrowers have provided, or ensured that a third party has provided, additional security which, in the opinion of the Majority Lenders acting reasonably, has a net realisable value at least equal to the shortfall and is documented in such terms as the Agent may reasonably require, with the authorisation of the Majority Lenders.
 
15.3
Valuation of Ships
 
(a)
The Market Value of a Mortgaged Ship or other vessel at any date is that shown by a valuation issued by an Approved Broker selected and appointed by the Agent, such valuation to be prepared:
 

 (i)
as at a date not more than thirty (30) days previously;
 

 (ii)
with or without physical inspection of that Ship (at the Agent's reasonable discretion); and
 

 (iii)
on the basis of a sale for prompt delivery for cash on normal arm's length commercial terms as between a willing seller and a willing buyer, free of any existing charter or other contract of employment.
 
(b)
If a Borrower disagrees with the valuation obtained by the Agent in accordance with paragraph (a) above, it shall be entitled to obtain a second valuation from an Approved Broker selected by the Borrowers and appointed by the Agent, and prepared in accordance with sub-paragraphs (i) to (iii) of paragraph (a) above. In that case the Market Value of the Mortgaged Ship shall be the arithmetic mean of the two valuations issued provided that if the Borrowers do not elect to appoint an Approved Broker within fourteen (14) days after the Agent's request to receive a valuation of a Mortgaged Ship, the Market Value of that Mortgaged Ship shall be that shown in the sole valuation obtained by the Agent in accordance with paragraph (a) above.
 
15.4
Value of additional vessel security
 
The net realisable value of any additional security which is provided under Clause 15.2 (Prepayment; provision of additional security) and which consists of a Security Interest over a vessel shall be that shown by a valuation complying with the requirements of Clause 15.3 (Valuation of Ships).
 
15.5
Valuations binding
 
Any valuation under Clause 15.2 (Prepayment; provision of additional security), 15.3 (Valuation of Ships) or 15.4 (Value of additional vessel security) shall be binding and conclusive as regards the Borrowers, as shall be any valuation which the Majority Lenders make of any additional security which does not consist of or include a Security Interest.
 
15.6
Provision of information
 
The Borrowers shall promptly provide the Agent and any Approved Broker or expert acting under Clause 15.3 (Valuation of Ships) or 15.4 (Value of additional vessel security)with any information which the Agent or that Approved Broker or expert may request for the purposes of the valuation; and, if the Borrowers fail to provide the information by the date specified in the request, the valuation may be made on any basis and assumptions as are reasonable in the circumstances.
 
69
15.7
Payment of valuation expenses
 
Without prejudice to the generality of the Borrowers' obligations under Clauses 20.2 (Costs of negotiation, preparation etc.), 20.3 (Costs of variations, amendments, enforcement etc.) and 21.3 (Other breakage costs), the Borrowers shall, on demand, pay the Agent the amount of the fees and expenses of any Approved Broker or expert instructed by the Agent under this Clause and all legal and other documented expenses incurred by any Creditor Party in connection with any matter arising out of this Clause Provided that so long as no Event of Default has occurred which is continuing the Borrowers shall not be obliged to pay any such fees and expenses in respect of more than two sets of valuations of each Ship in any calendar year (in addition to the set of valuations to determine the Initial Market Value of each Ship obtained prior to the Drawdown Date).
 
15.8
Frequency of valuations
 
The Borrowers acknowledge and agree that the Agent may commission valuation(s) of any Ship at such times as the Agent (acting on the instructions of the Lenders) shall deem necessary and, in any event, not less than once during each 6-month period of the Security Period.
 
16
PAYMENTS AND CALCULATIONS
 
16.1
Currency and method of payments
 
All payments to be made by the Lenders or by any Borrower under a Finance Document shall be made to the Agent or to the Security Trustee, in the case of an amount payable to it:
 
(a)
by not later than 11.00 a.m. (New York City time) on the due date;
 
(b)
in same day Dollar funds settled through the New York Clearing House Interbank Payments System (or in such other Dollar funds and/or settled in such other manner as the Agent shall specify as being customary at the time for the settlement of international transactions of the type contemplated by this Agreement);
 
(c)
in the case of an amount payable by a Lender to the Agent or by any Borrower to the Agent or any Lender, to the account of the Agent at J.P. Morgan Chase Bank (SWIFT Code CHASUS33) (Account No. 001 1331 808 in favour of Hamburg Commercial Bank AG, SWIFT Code HSHNDEHH; Reference "Starfire Shipping Co. et al") or to such other account with such other bank as the Agent may from time to time notify to the Borrowers and the other Creditor Parties; and
 
(d)
in the case of an amount payable to the Security Trustee, to such account as it may from time to time notify to the Borrowers and the other Creditor Parties.
 
16.2
Payment on non-Business Day
 
If any payment by any Borrower under a Finance Document would otherwise fall due on a day which is not a Business Day:
 
(a)
the due date shall be extended to the next succeeding Business Day; or
 
70
(b)
if the next succeeding Business Day falls in the next calendar month, the due date shall be brought forward to the immediately preceding Business Day,
 
and interest shall be payable during any extension under paragraph (a) at the rate payable on the original due date.
 
16.3
Basis for calculation of periodic payments
 
(a)
Any interest, commission or fee accruing under a Finance Document will accrue from day to day and the amount of any such interest, commission or fee is calculated:
 

 (i)
on the basis of the actual number of days elapsed and a year of three hundred sixty (360) days or, in any case where the practice in the relevant market differs, in accordance with that market practice; and
 

 (ii)
subject to paragraph (b) below, without rounding.
 
(b)
The aggregate amount of any accrued interest, commission or fee which is, or becomes, payable by the Borrowers or any Security Party under a Finance Document shall be rounded to two decimal places.
 
16.4
Distribution of payments to Creditor Parties
 
Subject to Clauses 16.5 (Permitted deductions by Agent), 16.6 (Agent only obliged to pay when monies received) and 16.7 (Refund to Agent of monies not received):
 
(a)
any amount received by the Agent under a Finance Document for distribution or remittance to a Lender or the Security Trustee shall be made available by the Agent to that Lender or, as the case may be, the Security Trustee by payment, with funds having the same value as the funds received, to such account as the Lenders or the Security Trustee may have notified to the Agent not less than five (5) Business Days previously; and
 
(b)
amounts to be applied in satisfying amounts of a particular category which are due to the Lenders generally shall be distributed by the Agent to each Lender pro rata to the amount in that category which is due to it.
 
16.5
Permitted deductions by Agent
 
Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent may, before making an amount available to a Lender, deduct and withhold from that amount any sum which is then due and payable to the Agent from that Lender under any Finance Document or any sum which the Agent is then entitled under any Finance Document to require that Lender to pay on demand.
 
16.6
Agent only obliged to pay when monies received
 
Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent shall not be obliged to make available to any Borrower or any Lender any sum which the Agent is expecting to receive for remittance or distribution to that Borrower or that Lender until the Agent has satisfied itself that it has received that sum.
 
71
16.7
Refund to Agent of monies not received
 
If and to the extent that the Agent makes available a sum to a Borrower or a Lender without first having received that sum, that Borrower or (as the case may be) the Lender concerned shall, on demand:
 
(a)
refund the sum in full to the Agent; and
 
(b)
pay to the Agent the amount (as certified by the Agent) which will indemnify the Agent against any funding or other loss, liability or expense incurred by the Agent as a result of making the sum available before receiving it.
 
16.8
Agent may assume receipt
 
Clause 16.7 (Refund to Agent of monies not received) shall not affect any claim which the Agent has under the law of restitution, and applies irrespective of whether the Agent had any form of notice that it had not received the sum which it made available.
 
16.9
Creditor Party accounts
 
Each Creditor Party shall maintain accounts showing the amounts owing to it by the Borrowers and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrowers and any Security Party.
 
16.10
Agent's memorandum account
 
The Agent shall maintain a memorandum account showing the amounts advanced by the Lenders and all other sums owing to the Agent, the Security Trustee and each Lender from the Borrowers and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrowers and any Security Party.
 
16.11
Accounts prima facie evidence
 
If any accounts maintained under Clauses 16.9 (Creditor Party accounts) and 16.10 (Agent's memorandum account) show an amount to be owing by a Borrower or a Security Party to a Creditor Party, those accounts shall be prima facie evidence in the absence of manifest error that that amount is owing to that Creditor Party.
 
16.12
Impaired Agent
 
(a)
If, at any time, the Agent becomes an Impaired Agent, the Borrowers or a Lender which is required to make a payment under the Finance Documents to the Agent in accordance with Clause 16.1 (Currency and method of payments) may instead either:
 

 (i)
pay that amount direct to the required recipient(s); or
 

 (ii)
if in its absolute discretion it considers that it is not reasonably practicable to pay that amount direct to the required recipient(s), pay the relevant part of that amount to an interest-bearing account held with an Acceptable Bank and in relation to which no Insolvency Event has occurred and is continuing, in the name of the Borrowers or the Lender making the payment (the "Paying Party") and designated as a trust account for the benefit of the party or parties under this Agreement beneficially entitled to that payment under the Finance Documents (the "Recipient Party" or "Recipient Parties").
 
72
In each case such payments must be made on the due date for payment under the Finance Documents;
 
(b)
all interest accrued on the amount standing to the credit of the trust account shall be for the benefit of the Recipient Party or the Recipient Parties pro rata to their respective entitlements;
 
(c)
a party to this Agreement which has made a payment in accordance with paragraphs (a) and shall be discharged of the relevant payment obligation under the Finance Documents and shall not take any credit risk with respect to the amounts standing to the credit of the trust account;
 
(d)
promptly upon the appointment of a successor Agent in accordance with the Finance Documents, each Paying Party shall (other than to the extent that that party has given an instruction pursuant to paragraph (e) below) give all requisite instructions to the bank with whom the trust account is held to transfer the amount (together with any accrued interest) to the successor Agent for distribution to the relevant Recipient Party or Recipient Parties in accordance with Clause 16.4 (Distribution of payments to Creditor Parties); and
 
(e)
a Paying Party shall, promptly upon request by a Recipient Party and to the extent:
 

 (i)
that it has not given an instruction pursuant to paragraph (d) above; and
 

 (ii)
that it has been provided with the necessary information by that Recipient Party,
 
give all requisite instructions to the bank with whom the trust account is held to transfer the relevant amount (together with any accrued interest) to that Recipient Party.
 
17
APPLICATION OF RECEIPTS
 
17.1
Normal order of application
 
Except as any Finance Document may otherwise provide, any sums which are received or recovered by any Creditor Party under or by virtue of any Finance Document shall be applied:
 
(a)
FIRST: in or towards satisfaction of any amounts then due and payable under the Finance Documents in the following order and proportions:
 

 (i)
firstly, in or towards satisfaction pro rata of all amounts then due and payable to the Creditor Parties under the Finance Documents (including, but without limitation, all amounts payable by any Borrower under Clauses 20 (Fees and Expenses), 21  (Indemnities) and 22 (No Set-Off or Tax Deduction) of this Agreement or by any Borrower or any Security Party under any corresponding or similar provision in any other Finance Document) other than those amounts referred to at paragraphs (ii) and (iii);
 

 (ii)
secondly, in or towards satisfaction pro rata of any and all amounts of interest or default interest payable to the Creditor Parties under the Finance Documents; and
 

 (iii)
thirdly, in or towards satisfaction of the Loan;
 
(b)
SECONDLY: if an Event of Default has occurred and while is continuing, in retention of an amount equal to any amount not then due and payable under any Finance Document but which the Agent, by notice to the Borrowers (or any of them), the Security Parties and the other Creditor Parties, states in its reasonable opinion will either or may become due and payable in the future and, upon those amounts becoming due and payable, in or towards satisfaction of them in accordance with the provisions of Clause 17.1(a) (Normal order of application); and
 
73
(c)
THIRDLY: any surplus shall be paid to the Borrowers or to any other person appearing to be entitled to it.
 
17.2
Application by any covered bond Lender
 
If and to the extent that any Lender includes the Loan and/or a Mortgage in its covered bond register, any enforcement proceeds recovered under the Finance Documents and attributable to it under the relevant Finance Document shall, notwithstanding the provisions of Clause 17.1(a) (Normal order of application), be applied by it first to the part of the Loan that corresponds to that Lender's Contribution registered in its covered bond register and thereafter in the following order:
 
(a)
firstly, in or towards satisfaction of the amounts set out under Clause 17.1(a)(i) (Normal order of application);
 
(b)
secondly, in or towards satisfaction of the amounts set out under Clause 17.1(a)(ii) (Normal order of application); and
 
(c)
thirdly, in or towards satisfaction of any part of the Loan that corresponds to any unregistered part of that Lender's contribution.
 
17.3
Variation of order of application
 
The Agent may, with the authorisation of the Majority Lenders, by notice to the Borrowers, the Security Parties and the other Creditor Parties provide for a different manner of application from that set out in Clause 17.1 (Normal order of application) (but not, for the avoidance of doubt, that set out in Clause 17.2 (Application by any covered bond Lender)) either as regards a specified sum or sums or as regards sums in a specified category or categories.
 
17.4
Notice of variation of order of application
 
The Agent may give notices under Clause 17.3 (Variation of order of application) from time to time; and such a notice may be stated to apply not only to sums which may be received or recovered in the future, but also to any sum which has been received or recovered on or after the third Business Day before the date on which the notice is served.
 
17.5
Appropriation rights overridden
 
This Clause 17 (Application of Receipts) and any notice which the Agent gives under Clause 17.3 (Variation of order of application) shall override any right of appropriation possessed, and any appropriation made, by any Borrower or any Security Party.
 
18
APPLICATION OF EARNINGS
 
18.1
Payment of Earnings
 
Each Borrower undertakes with each Creditor Party that, throughout the Security Period (and subject only to the provisions of the General Assignment to which it is a party):
 
74
(a)
it shall maintain the Accounts with the Account Bank;
 
(b)
it shall ensure that all Earnings of the Ship owned by it are paid to the Earnings Account for that Ship;
 
(c)
the Minimum Liquidity required pursuant to Clause 11.18 (Minimum Liquidity) shall be maintained in the Liquidity Account; and
 
(d)
the Dry Docking Reserve Amount required pursuant to Clause 11.19 (Dry Docking Reserve Amount) shall be maintained in the Dry Dock Reserve Accounts.
 
18.2
Monthly retentions to Retention Account
 
The Borrowers undertake with each Creditor Party to ensure that, on and from the date falling one month after each Drawdown Date and at monthly intervals thereafter during the Security Period, there are transferred to the Retention Account out of the Earnings received in the relevant Earnings Account during the preceding month, one-third of the amount (if any) which would be required to be repaid pursuant to paragraph (b)(ii)(A)(1) of Clause 8.1 (Repayment of Advances), on the next Repayment Date and the Borrowers irrevocably authorise the Agent to make those transfers (acting reasonably and without any obligation) if the Borrowers fail to do so.
 
18.3
Shortfall in Earnings
 
If the aggregate Earnings received in the Earnings Accounts are insufficient at any time for the required amount to be transferred to the Retention Account under Clause 18.2 (Monthly retentions to Retention Account), the Borrowers shall immediately pay the amount of the insufficiency into the Retention Account.
 
18.4
Application of retentions
 
Until an Event of Default occurs which is continuing, the Agent shall, to the extent there are sufficient funds standing to the credit of the Retention Account, on each Repayment Date in respect of the Loan and on each due date for the payment of interest in respect of that Advance under this Agreement distribute to the Lenders in accordance with Clause 16.4 (Distribution of payments to Creditor Parties) so much of the then balance on the Retention Account as equals:
 
(a)
any amount due required to be reduced and repaid pursuant to Clause 8.1 (Repayment of Advances) and Clause 8.2 (Reduction of Commitment), respectively; or
 
(b)
the amount of interest in respect of the relevant Advance payable on that interest payment date,
 
in discharge of the Borrowers' liability for any such amount required to be reduced and repaid pursuant to Clause 8.1 (Repayment of Advances) and Clause 8.2 (Reduction of Commitment), respectively, or that interest.
 
18.5
Interest accrued on the Accounts
 
Any credit balance on each Account shall bear interest at the rate from time to time offered by the Agent to its customers for Dollar deposits of similar amounts and for periods similar to those for which such balances appear to the Agent likely to remain on that Account.
 
75
18.6
Release of accrued interest
 
Interest accruing under Clause 18.5 (Interest accrued on the Accounts) shall be credited to the relevant Account and may be released to a Borrower pursuant to Clause 18.10 (Restriction on withdrawal).
 
18.7
Location of Accounts
 
Each Borrower shall promptly:
 
(a)
comply with any requirement of the Agent as to the location or re-location of the Accounts (or any of them); and
 
(b)
execute any documents which the Agent specifies to create or maintain in favour of the Security Trustee a Security Interest over (and/or rights of set-off, consolidation or other rights in relation to) the Accounts.
 
18.8
Debits for fees, expenses etc.
 
The Agent shall be entitled (but not obliged) from time to time to debit any Earnings Account without prior notice in order to discharge any amount due and payable under Clauses 20 (Fees and Expenses) or 21 (Indemnities) to a Creditor Party or payment of which any Creditor Party has become entitled to demand under Clauses 20 (Fees and Expenses) or 21 (Indemnities).
 
18.9
Borrowers' obligations unaffected
 
The provisions of this Clause 18 (Application of Earnings) (as distinct from a distribution effected under Clause 18.4 (Application of retentions)) do not affect:
 
(a)
the liability of the Borrowers to make payments of principal and interest on the due dates; or
 
(b)
any other liability or obligation of the Borrowers or any Security Party under any Finance Document.
 
18.10
Restriction on withdrawal
 
(a)
During the Security Period no sum may be withdrawn by a Borrower from the Liquidity Account, the Dry Dock Reserve Accounts or the Retention Account (other than interest pursuant to Clause 18.6 (Release of accrued interest) and/or any sums withdrawn in accordance with, and pursuant to, the terms of Clauses 11.18 (Minimum Liquidity) and/or 11.19(c) (Dry Docking Reserve Amount)), provided that no Event of Default has occurred which is continuing, without the prior written consent of the Agent.
 
(b)
The Borrowers may, in any calendar month, after having transferred and/or after having taken into account all amounts due or which will become due to the Retention Account in such calendar month in accordance with Clause 18.2 (Monthly retentions to Retention Account), withdraw any surplus (a "Surplus") from the Earnings Accounts as they may think fit for purposes permitted by this Agreement and the other Finance Documents Provided always no Event of Default has occurred which is continuing in which case any Surplus shall remain on the Earnings Accounts.
 
76
19
EVENTS OF DEFAULT
 
19.1
Events of Default
 
An Event of Default occurs if:
 
(a)
any Borrower or any Security Party fails to pay when due or (if so payable) on demand any sum payable under a Finance Document or under any document relating to a Finance Document unless:
 

 (i)
its failure to pay is caused by administrative or technical error or a Disruption Event; and
 

 (ii)
payment is made within five (5) Business Days; or
 
(b)
any breach occurs of Clause 2.3 (Purpose of Advances), 9.2 (Waiver of conditions precedent), 11.2 (Title and negative pledge), 11.3 (No disposal of assets), 11.17 ("Know your customer" checks), 11.18 (Minimum Liquidity), 11.20 (Compliance Certificate), 11.22 (Sanctions), 12.2 (Maintenance of status), 12.3 (Negative undertakings) or 15.2 (Prepayment; provision of additional security); or
 
(c)
any breach by any Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraphs (a) or (b)) which, is, in the opinion of the Majority Lenders, is capable of remedy by the relevant Borrower or Security Party acting reasonably, and such default continues unremedied fifteen (15) Business Days after written notice from the Agent requesting action to remedy the same; or
 
(d)
(subject to any applicable grace period specified in the Finance Documents) any breach by any Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach falling within paragraphs (a), (b) or (c)); or
 
(e)
any representation, warranty or statement made or repeated by, or by an officer of, a Borrower or a Security Party in a Finance Document or in a Drawdown Notice or any other notice or document relating to a Finance Document is untrue or misleading in any material respect (in the opinion of the Agent acting on the instructions of the Majority Lenders) when it is made or repeated and the effect of which will be adverse to the validity or enforcement of any Security Interests created pursuant to the Finance Documents, the exercise or enforcement of any right of the Creditor Parties under the Finance Documents or will have an adverse effect on the performance of the obligations undertaken by that Borrower and the other Security Parties pursuant to this Agreement or any of the other Finance Documents; or
 
(f)
any of the following occurs in relation to any Financial Indebtedness which, (other than in the case of the Borrowers) exceeds in aggregate $10,000,000 (or its equivalent in any other currency) of a Relevant Person:
 

 (i)
any Financial Indebtedness of a Relevant Person is not paid when due or, if so payable, on demand; or
 

 (ii)
any Financial Indebtedness of a Relevant Person becomes due and payable or declared due and payable prior to its stated maturity date as a consequence of any event of default; or
 
77

 (iii)
a lease, hire purchase agreement or charter creating any Financial Indebtedness of a Relevant Person is terminated by the lessor or owner or becomes capable of being terminated as a consequence of any termination event; or
 

 (iv)
any overdraft, loan, note issuance, acceptance credit, letter of credit, guarantee, foreign exchange or other facility, or any swap or other derivative contract or transaction, relating to any Financial Indebtedness of a Relevant Person ceases to be available or becomes capable of being terminated as a result of any event of default, or cash cover is required, or becomes capable of being required, in respect of such a facility as a result of any event of default; or
 

 (v)
any Security Interest securing any Financial Indebtedness of a Relevant Person becomes enforceable; or
 
(g)
any of the following occurs in relation to a Relevant Person:
 

 (i)
a Relevant Person becomes unable to pay its debts as they fall due; or
 

 (ii)
any assets of a Relevant Person are subject to any form of execution, attachment, arrest, sequestration or distress or any form of freezing order provided that, in the case of arrest of a Ship which is manifestly unlawful and is being contested in good faith and with due diligence by the relevant Borrower, such arrest shall not constitute an Event of Default if, within fifteen (15) Business Days of such arrest, the Borrower prepays all amounts then due and payable in respect of the Loan attributable to such Ship; or
 

 (iii)
any administrative or other receiver is appointed over any asset of a Relevant Person; or
 

 (iv)
an administrator is appointed (whether by the court or other judicial authority) in respect of a Relevant Person; or
 

 (v)
any formal declaration of bankruptcy or any formal statement to the effect that a Relevant Person is insolvent or likely to become insolvent is made by a Relevant Person or by the directors or officers of a Relevant Person or, in any proceedings, by a lawyer acting for a Relevant Person; or
 

 (vi)
a provisional liquidator is appointed in respect of a Relevant Person, a winding up order is made in relation to a Relevant Person or a winding up resolution is passed by a Relevant Person; or
 

 (vii)
a resolution is passed, an administration notice is given or filed, an application or petition to a court is made or presented or any other step is taken by (aa) a Relevant Person, (bb) the members or directors or officers of a Relevant Person, (cc) a holder of Security Interests which together relate to all or substantially all of the assets of a Relevant Person, or (dd) a government minister or public or regulatory authority of a Pertinent Jurisdiction for or with a view to the winding up of that or another Relevant Person or the appointment of a provisional liquidator or administrator in respect of that or another Relevant Person, or that or another Relevant Person ceasing or suspending business operations or payments to creditors, save that this paragraph does not apply to a fully solvent winding up of a Relevant Person other than the Borrowers or the Corporate Guarantor which is, or is to be, effected for the purposes of an amalgamation or reconstruction previously approved by the Majority Lenders and effected not later than three months after the commencement of the winding up; or
 
78

 (viii)
an administration notice is given or filed, an application or petition to a court is made or presented or any other step is taken by a creditor of a Relevant Person (other than a holder of Security Interests which together relate to all or substantially all of the assets of a Relevant Person) for the winding up of a Relevant Person or the appointment of a provisional liquidator or administrator in respect of a Relevant Person in any Pertinent Jurisdiction, unless the proposed winding up, appointment of a provisional liquidator or administration is being contested in good faith, on substantial grounds and not with a view to some other insolvency law procedure being implemented instead and either (aa) the application or petition is dismissed or withdrawn within sixty (60) days of being made or presented, or (bb) within sixty (60) days of the administration notice being given or filed, or the other relevant steps being taken, other action is taken which will ensure that there will be no administration and (in both cases (aa) or (bb)) the Relevant Person will continue to carry on business in the ordinary way and without being the subject of any actual, interim or pending insolvency law procedure; or
 

 (ix)
a Relevant Person or its directors or officers take any steps (whether by making or presenting an application or petition to a court, or submitting or presenting a document setting out a proposal or proposed terms, or otherwise) with a view to obtaining, in relation to that or another Relevant Person, any form of moratorium, suspension or deferral of payments, reorganisation of debt (or certain debt) or arrangement with all or a substantial proportion (by number or value) of creditors or of any class of them or any such moratorium, suspension or deferral of payments, reorganisation or arrangement is effected by court order, by the filing of documents with a court, by means of a contract or in any other way at all provided that (i) mere negotiations or discussions or (ii) any moratorium, suspension or deferral of payments with a single creditor or creditors in aggregate not representing a substantial proportion of that Relevant Person's creditors shall not constitute an Event of Default under this paragraph; or
 

 (x)
any meeting of the members or board of directors, or of any committee of the board or senior management, of a Relevant Person is held or summoned for the purpose of considering a resolution or proposal to authorise or take any action of a type described in paragraphs (iv) to (ix) or a step preparatory to such action, or (with or without such a meeting) the members, directors or such a committee resolve or agree that such an action or step should be taken or should be taken if certain conditions materialise or fail to materialise; or
 

 (xi)
in a country other than England, any event occurs, any proceedings are opened or commenced, or any step is taken which, in the opinion of the Majority Lenders is similar to any of the foregoing; or
 
(h)
any Borrower ceases or suspends carrying on its business or a part of its business which, in the opinion of the Majority Lenders, is material in the context of this Agreement; or
 
(i)
it becomes unlawful in any Pertinent Jurisdiction or impossible:
 
79

 (i)
for any Borrower or any Security Party to discharge any liability under a Finance Document or to comply with any other obligation which the Majority Lenders consider material under a Finance Document; or
 

 (ii)
for the Agent, the Security Trustee or the Lenders to exercise or enforce any right under, or to enforce any Security Interest created by, a Finance Document; or
 
(j)
any official consent necessary to enable any Borrower to own, operate or charter the Ship owned by it or to enable any Borrower or any Security Party to comply with any provision which the Majority Lenders consider material of a Finance Document or any Assignable Charter is not granted, expires without being renewed, is revoked or becomes liable to revocation or any condition of such a consent is not fulfilled unless that Borrower or any other Security Party has obtained a waiver thereof from the relevant authorities; or
 
(k)
a Change of Control without their prior consent has occurred after the date of this Agreement in respect of a Borrower or a Security Party; or
 
(l)
any provision which the Majority Lenders consider material of a Finance Document proves to have been or becomes invalid or unenforceable, or a Security Interest created by a Finance Document proves to have been or becomes invalid or unenforceable and such invalidity or unenforceability is not capable of remedy within fifteen (15) Business Days or such a Security Interest proves to have ranked after, or loses its priority to, another Security Interest or any other third party claim or interest; or
 
(m)
a Relevant Person rescinds or repudiates a Finance Document or evidences an intention to rescind or repudiate a Finance Document;
 
(n)
the security constituted by a Finance Document is in any way imperilled or in jeopardy; or
 
(o)
any other event occurs or any other circumstances arise or develop including, without limitation:
 

 (i)
a change in the financial position or state of affairs of any Borrower, the Corporate Guarantor or any other Security Party; or
 

 (ii)
any accident or other event involving any Ship or another vessel owned, chartered or operated by a Relevant Person; or
 

 (iii)
the commencement of legal or administrative action involving a Borrower, a Ship, any of the Approved Managers or any Security Party; or
 

 (iv)
the withdrawal of any material license or governmental or regulatory approval in respect of a Ship, a Borrower, any Approved Manager or any Borrower's or Approved Manager's business (unless such withdrawal can be contested with the effect of suspension and is in fact so contested in good faith by the Borrowers or any Approved Manager),
 
which constitutes a Material Adverse Change.
 
19.2
Actions following an Event of Default
 
Subject to any applicable cure or grace period under Clause 19.1 (Events of Default), on, or at any time after, the occurrence of an Event of Default which is continuing:
 
80
(a)
the Agent may, and if so instructed by the Majority Lenders, the Agent shall:
 

 (i)
serve on the Borrowers a notice stating that all or part of the Commitments and of the other obligations of each Lender to the Borrowers under this Agreement are cancelled; and/or
 

 (ii)
serve on the Borrowers a notice stating that all or part of the Loan together with accrued interest and all other amounts accrued or owing under this Agreement are immediately due and payable or are due and payable on demand; and/or
 

 (iii)
take any other action which, as a result of the Event of Default or any notice served under paragraph (i) or (ii), the Agent and/or the Lenders are entitled to take under any Finance Document or any applicable law; and/or
 
(b)
the Security Trustee may, and if so instructed by the Agent, acting with the authorisation of the Majority Lenders, the Security Trustee shall take any action which, as a result of the Event of Default or any notice served under paragraph 19.2(a)(i) or 19.2(a)(ii) (Actions following an Event of Default), the Security Trustee, the Agent, the Mandated Lead Arranger and/or the Lenders are entitled to take under any Finance Document or any applicable law.
 
19.3
Termination of Commitments
 
On the service of a notice under Clause 19.2(a)(i) (Actions following an Event of Default), the Commitments and all other obligations of each Lender to the Borrowers under this Agreement shall be cancelled.
 
19.4
Acceleration of Loan
 
On the service of a notice under Clause 19.2(a)(ii) (Actions following an Event of Default), all or, as the case may be, the part of the Loan specified in the notice together with accrued interest and all other amounts accrued or owing from the Borrowers or any Security Party under this Agreement and every other Finance Document shall become immediately due and payable or, as the case may be, payable on demand.
 
19.5
Multiple notices
 
The Agent may serve notices under Clauses 19.2(a)(i) (Actions following an Event of Default) or 19.2(a)(ii) (Actions following an Event of Default) simultaneously or on different dates and it and/or the Security Trustee may take any action referred to in Clause 19.2 (Actions following an Event of Default) if no such notice is served (but subject to the Agent having given notice to the effect that an Event of Default has occurred and is continuing) or otherwise simultaneously with or at any time after the giving of both or either of such notices.
 
19.6
Notification of Creditor Parties and Security Parties
 
The Agent shall send to each Lender, the Security Trustee and each Security Party a copy or the text of any notice which the Agent serves on the Borrowers under Clause 19.2 (Actions following an Event of Default); but the notice shall become effective when it is served on the Borrowers, and no failure or delay by the Agent to send a copy or the text of the notice to any other person shall invalidate the notice or provide any Borrower or any Security Party with any form of claim or defence.
 
81
19.7
Creditor Party rights unimpaired
 
Nothing in this Clause shall be taken to impair or restrict the exercise of any right given to individual Lenders under a Finance Document or the general law; and, in particular, this Clause is without prejudice to Clause 3.1 (Interests several).
 
19.8
Exclusion of Creditor Party liability
 
No Creditor Party, and no receiver or manager appointed by the Security Trustee, shall have any liability to a Borrower or a Security Party:
 
(a)
for any loss caused by an exercise of rights under, or enforcement of a Security Interest created by, a Finance Document or by any failure or delay to exercise such a right or to enforce such a Security Interest; or
 
(b)
as mortgagee in possession or otherwise, for any income or principal amount which might have been produced by or realised from any asset comprised in such a Security Interest or for any reduction (however caused) in the value of such an asset,
 
except that this does not exempt a Creditor Party or a receiver or manager from liability for losses shown to have been directly and mainly caused by the gross negligence or the wilful misconduct of such Creditor Party's own officers and employees or (as the case may be) such receiver's or manager's own partners or employees.
 
19.9
Relevant Persons
 
In this Clause 19 (Events of Default), a "Relevant Person" means a Borrower, the Corporate Guarantor, any Security Party and any other member of the Group.
 
19.10
Interpretation
 
In Clause 19.1(f) (Events of Default) references to an event of default or a termination event include any event, howsoever described, which is similar to an event of default in a facility agreement or a termination event in a finance lease; and in Clause 19.1(g) (Events of Default) "petition" includes an application.
 
20
FEES AND EXPENSES
 
20.1
Structuring and commitment fees
 
The Borrowers shall pay to the Agent:
 
(a)
on the date of this Agreement, a non-refundable structuring fee in an amount equal to $540,000 (representing 0.90 per cent. of the Total Commitments as at the date of this Agreement) for distribution among the Lenders pro rata to their Commitments; and
 
(b)
a non-refundable commitment fee, at the rate of 0.65 per cent. per annum on the undrawn or uncancelled amount of the Total Commitments, payable quarterly in arrears for distribution among the Lenders pro rata to their Commitments, during the period commencing from (and including) the date of this Agreement and ending on the last day of the Availability Period.
 
82
20.2
Costs of negotiation, preparation etc.
 
The Borrowers shall pay to the Agent on its demand the amount of all legal and other expenses incurred by the Agent or the Security Trustee in connection with the negotiation, preparation, execution, registration or translation of any Finance Document or any related document or with any transaction contemplated by a Finance Document or a related document.
 
20.3
Costs of variations, amendments, enforcement etc.
 
The Borrowers shall pay to the Agent, on the Agent's demand, for the account of the Creditor Party concerned, the amount of all legal and other expenses incurred by a Creditor Party in connection with:
 
(a)
the response to, or the evaluation, negotiation or implementation of, any amendment or supplement (or any proposal for such an amendment or supplement) requested (or, in the case of a proposal, made) by or on behalf of the Borrowers and relating to a Finance Document or any other Pertinent Document;
 
(b)
any consent, waiver or suspension of rights by the Lenders, the Majority Lenders or the Creditor Party concerned or any proposal for any of the foregoing requested (or, in the case of a proposal, made) by or on behalf of the Borrowers under or in connection with a Finance Document or any other Pertinent Document;
 
(c)
the valuation of any security provided or offered under and pursuant to Clause 15 (Security Cover) or any other matter relating to such security; or
 
(d)
any step taken by the Lender concerned with a view to the preservation, protection, exercise or enforcement of any rights or Security Interest created by a Finance Document or for any similar purpose including, without limitation, any proceedings to recover or retain proceeds of enforcement or any other proceedings following enforcement proceedings until the date all outstanding indebtedness to the Creditor Parties under the Finance Documents and any other Pertinent Document is repaid in full.
 
There shall be recoverable under paragraph (d) the full amount of all legal expenses, whether or not such as would be allowed under rules of court or any taxation or other procedure carried out under such rules.
 
20.4
Reference rate transition costs
 
The Borrowers shall on demand reimburse each of the Agent and the Security Trustee for the amount of all costs and expenses (including legal fees) reasonably incurred by each Creditor Party in connection with any change arising as a result of an amendment required under Clause 27.4 (Changes to reference rates).
 
20.5
Documentary taxes
 
The Borrowers shall promptly pay any tax payable on or by reference to any Finance Document, and shall, on the Agent's demand, fully indemnify each Creditor Party against any proven claims, expenses, liabilities and losses resulting from any failure or delay by the Borrowers to pay such a tax.
 
83
20.6
Certification of amounts
 
A notice which is signed by two officers of a Creditor Party, which states that a specified amount, or aggregate amount, is due to that Creditor Party under this Clause 20 (Fees and Expenses) and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due.
 
21
INDEMNITIES
 
21.1
Indemnities regarding borrowing and repayment of the Loan
 
The Borrowers shall fully indemnify the Agent and each Lender on the Agent's demand and the Security Trustee on its demand but only in respect of losses caused as a result of or in connection with the Borrowers' breach, default, or failure, in respect of all proven claims, expenses, liabilities and losses caused as a result of or in connection with the Borrowers' actions or inaction which are made or brought against or incurred by that Creditor Party, or which that Creditor Party reasonably and with due diligence estimates that it will incur, as a result of, or in connection with:
 
(a)
an Advance not being borrowed on the date specified in the relevant Drawdown Notice for any reason other than a default by the Lender claiming the indemnity after the relevant Drawdown Notice has been served in accordance with the provisions of this Agreement;
 
(b)
the receipt or recovery of all or any part of the Loan or an overdue sum otherwise than on the last day of an Interest Period or other relevant period;
 
(c)
any failure (for whatever reason) by the Borrowers (or any of them) to make payment of any amount due under a Finance Document on the due date or, if so payable, on demand (after giving credit for any default interest paid by the Borrowers on the amount concerned under Clause 5.3 (Default Interest)) including but not limited to any costs and expenses of enforcing any Security Interests created by the Finance Documents and any proven claims, liabilities and losses caused by the Borrowers' actions or inactions which may be brought against, or incurred by, a Creditor Party when enforcing any Security Interests created by the Finance Documents; and
 
(d)
the occurrence and/or continuance of an Event of Default or a Potential Event of Default and/or the acceleration of repayment of the Loan under Clause 19 (Events of Default),
 
and in respect of any tax (other than tax on its overall net income (and a FATCA Deduction)) for which a Creditor Party is liable in connection with any amount paid or payable to that Creditor Party (whether for its own account or otherwise) under any Finance Document.
 
21.2
Break Costs
 
If a Lender (the "Notifying Lender") notifies the Agent that as a consequence of receipt or recovery of all or any part of the Loan (a "Payment") on a day other than the last day of an Interest Period applicable to the sum received or recovered the Notifying Lender has or will, with effect from a specified date, incur Break Costs:
 
(a)
the Agent shall promptly notify the Borrowers of a notice it receives from a Notifying Lender under this Clause 21.2 (Break Costs);
 
84
(b)
the Borrowers shall, within five (5) Business Days of the Agent's demand, pay to the Agent for the account of the Notifying Lender the amount of such Break Costs; and
 
(c)
the Notifying Lender shall, as soon as reasonably practicable (and in any event within five (5) Business Days), following a request by the Borrowers, provide a certificate confirming the amount of the Notifying Lender's Break Costs for the Interest Period in which they accrue, such certificate to be, in the absence of manifest error, conclusive and binding on the Borrowers.
 
21.3
Other breakage costs
 
Without limiting its generality, Clause 21.1 (Indemnities regarding borrowing and repayment of the Loan) covers any claim, expense, liability or loss, including (without limitation) a proven loss of a prospective profit, incurred by a Lender in borrowing, liquidating or re-employing deposits from third parties acquired, contracted for or arranged to fund, effect or maintain all or any part of its Contribution and/or any overdue amount (or an aggregate amount which includes its Contribution or any overdue amount) other than proven claims, expenses, liabilities and losses which are shown to have been directly and mainly caused by the gross negligence or wilful misconduct of the officers or employees of the Creditor Party concerned.
 
21.4
Miscellaneous indemnities
 
The Borrowers shall fully indemnify each Creditor Party severally on their respective demands, without prejudice to any of their other rights under any of the Finance Documents, in respect of all proven claims, documented expenses, liabilities and losses which may be made or brought against or sustained or incurred by a Creditor Party, in any country, as a result of or in connection with:
 
(a)
any action taken, or omitted or neglected to be taken, under or in connection with any Finance Document by the Agent, the Security Trustee or any other Creditor Party or by any receiver appointed under a Finance Document;
 
(b)
acting or relying on any notice, request or instruction which the Creditor Party concerned reasonably believes to be genuine, correct and appropriately authorised;
 
(c)
if an Event of Default has occurred and while same is continuing, any insurance arranged by any Creditor Party in relation to a Ship and/or that Creditor Party's own risk by way of taking out any obligatory insurances or port risk, crew liability or any other type of insurance (as may it in its sole discretion determine) on its own account and/or in its own name; or
 
(d)
any other Pertinent Matter,
 
other than proven claims, expenses, liabilities and losses which are shown to have been directly and mainly caused by the dishonesty, gross negligence or wilful misconduct of the officers or employees or representatives of the Creditor Party concerned.
 
21.5
Environmental Indemnity
 
Without prejudice to the generality of Clause 21.4 (Miscellaneous indemnities), this Clause 21.5 (Environmental Indemnity) covers any proven claims, demands, proceedings, liabilities, taxes, losses, liabilities or expenses of every kind which arise, or are asserted, under or in connection with any applicable law relating to safety at sea, pollution or the protection of the environment, the ISM Code or the ISPS Code or any Environmental Law.
 
85
21.6
Currency indemnity
 
If any sum due from a Borrower or any Security Party to a Creditor Party under a Finance Document or under any order, award or judgment relating to a Finance Document (a "Sum") has to be converted from the currency in which the Finance Document provided for the Sum to be paid (the "Contractual Currency") into another currency (the "Payment Currency") for the purpose of:
 
(a)
making or filing any claim or proof against a Borrower or any Security Party, whether in its liquidation, any arrangement involving it or otherwise; or
 
(b)
obtaining an order, judgment or award from any court or other tribunal in relation to any litigation or arbitration proceedings; or
 
(c)
enforcing any such order, judgment or award,
 
the Borrowers shall as an independent obligation, within five (5) Business Days of demand, indemnify the Creditor Party to whom that Sum is due against any reasonably incurred cost, loss or liability arising when the payment actually received by that Creditor Party is converted at the available rate of exchange back into the Contractual Currency including any discrepancy between (A) the rate of exchange actually used to convert the Sum from the Payment Currency into the Contractual Currency and (B) the available rate of exchange.
 
In this Clause 21.6 (Currency indemnity), the "available rate of exchange" means the rate at which the Creditor Party concerned is able at the opening of business (London time) on the Business Day after it receives the Sum to purchase the Contractual Currency with the Payment Currency.
 
Each Borrower waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency other than that in which it is expressed to be payable.
 
If any Creditor Party receives any Sum in a currency other than the Contractual Currency, the Borrowers shall indemnify in full the Creditor Party concerned against any cost, loss or liability arising directly or indirectly from any conversion of such Sum to the Contractual Currency.
 
This Clause 21.6 (Currency indemnity) creates a separate liability of that Borrower which is distinct from its other liabilities under the Finance Documents and which shall not be merged in any judgment or order relating to those other liabilities.
 
21.7
Certification of amounts
 
A notice which is signed by two officers of a Creditor Party, which states that a specified amount, or aggregate amount, is due to that Creditor Party under this Clause 21 (Indemnities) and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due.
 
21.8
Sums deemed due to a Lender
 
For the purposes of this Clause 21 (Indemnities), a sum payable by the Borrowers to the Agent or the Security Trustee for distribution to a Lender shall be treated as a sum due to that Lender.
 
86
22
NO SET-OFF OR TAX DEDUCTION
 
22.1
No deductions
 
All amounts due from the Borrowers under a Finance Document shall be paid:
 
(a)
without any form of set-off, counter-claim, cross-claim or condition; and
 
(b)
free and clear of any tax deduction except a tax deduction which a Borrower is required by law to make.
 
22.2
Grossing-up for taxes
 
If, at any time, a Borrower is required by law, regulation or regulatory requirement to make a tax deduction from any payment due under a Finance Document:
 
(a)
that Borrower shall notify the Agent as soon as it becomes aware of the requirement;
 
(b)
the amount due in respect of the payment shall be increased by the amount necessary to ensure that, after the making of such tax deduction, each Creditor Party receives on the due date for such payment (and retains free from any liability relating to the tax deduction) a net amount which is equal to the full amount which it would have received had no such tax deduction been required to be made; and
 
(c)
that Borrower shall pay the full amount of the tax required to be deducted to the appropriate taxation authority promptly in accordance with the relevant law, regulation or regulatory requirement, and in any event before any fine or penalty arises.
 
22.3
Indemnity and evidence of payment of taxes
 
The Borrowers shall fully indemnify each Creditor Party on the Agent's demand in respect of all proven claims, documented expenses, liabilities and losses incurred by any Creditor Party by reason of any failure of the Borrowers (or any of them) to make any tax deduction or by reason of any increased payment not being made on the due date for such payment in accordance with Clause 22.2 (Grossing-up for taxes). Within thirty (30) days after making any tax deduction, the Borrowers or, as the case may be, the relevant Borrower shall deliver to the Agent any receipts, certificates or other documentary evidence satisfactory to the Agent that the tax had been paid to the appropriate taxation authority.
 
22.4
Exclusion of tax on overall net income
 
In this Clause 22 (No Set-Off or Tax Deduction) "tax deduction" means any deduction or withholding from any payment due under a Finance Document for or on account of any present or future tax except:
 
(a)
tax on a Creditor Party's overall net income; and
 
(b)
a FATCA Deduction.
 
22.5
FATCA Information
 
(a)
Subject to paragraph (c) below, each Party shall, within ten (10) Business Days of a reasonable request by another Party:
 
87

 (i)
confirm to that other Party whether it is:
 

 (A)
a FATCA Exempt Party; or
 

 (B)
not a FATCA Exempt Party; and
 

 (ii)
supply to that other Party such forms, documentation and other information relating to its status under FATCA as that other Party reasonably requests for the purposes of that other Party's compliance with FATCA; and
 

 (iii)
supply to that other Party such forms, documentation and other information relating to its status as that other Party reasonably requests for the purposes of that other Party's compliance with any other law, regulation or exchange of information regime.
 
(b)
If a Party confirms to another Party pursuant to sub-paragraph (i) of paragraph (a) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, that Party shall notify that other Party reasonably promptly.
 
(c)
Paragraph (a) above shall not oblige any Creditor Party to do anything and sub-paragraph (iii) of paragraph (a) above shall not oblige any other Party to do anything which would or might in its reasonable opinion constitute a breach of:
 

 (i)
any law or regulation;
 

 (ii)
any fiduciary duty; or
 

 (iii)
any duty of confidentiality.
 
(d)
If a Party fails to confirm whether or not it is a FATCA Exempt Party or to supply forms, documentation or other information requested in accordance with sub-paragraphs (i) or (ii) of paragraph (a) above (including, for the avoidance of doubt, where paragraph (c) above applies), then such Party shall be treated for the purposes of the Finance Documents (and payments under them) as if it is not a FATCA Exempt Party until such time as the Party in question provides the requested confirmation, forms, documentation or other information.
 
(e)
If a Lender knows or has reason to know that a Borrower is a US Tax Obligor, or where the Agent reasonably believes that its obligations under FATCA require it, each Lender shall, within ten (10) Business Days of:
 

 (i)
where the Lender knows or has reason to know that a Borrower is a US Tax Obligor and the relevant Lender is a Party as at the date of this Agreement, the date of this Agreement;
 

 (ii)
where the Lender knows or has reason to know that a Borrower is a US Tax Obligor and the relevant Lender became a Party after the date of this Agreement, the date on which the relevant Transfer Certificate became effective; or
 

 (iii)
the date of a request from the Agent,
 
supply to the Agent:
 

 (iv)
a withholding certificate on US Internal Revenue Service Form W-8 or Form W-9 (or any successor form) (as applicable); or
 
88

 (v)
any withholding statement and other documentation, authorisations and waivers as the Agent may require to certify or establish the status of such Lender under FATCA.
 
The Agent shall provide any withholding certificate, withholding statement, documentation, authorisations and waivers it receives from a Lender pursuant to this paragraph (e) to the Borrowers, to the extent required for compliance with FATCA or any other law or regulation, and shall be entitled to rely on any such withholding certificate, withholding statement, documentation, authorisations and waivers provided without further verification. The Agent shall not be liable for any action taken by it under or in connection with this paragraph (e).
 
(f)
Each Lender agrees that if any withholding certificate, withholding statement, documentation, authorisations and waivers provided to the Agent pursuant to paragraph (e) above is or becomes materially inaccurate or incomplete, it shall promptly update such withholding certificate, withholding statement, documentation, authorisations and waivers or promptly notify the Agent in writing of its legal inability to do so.  The Agent shall provide any such updated withholding certificate, withholding statement, documentation, authorisations and waivers to the Borrowers, to the extent required for compliance with FATCA or any other law or regulation.  The Agent shall not be liable for any action taken by it under or in connection with this paragraph (f).
 
22.6
FATCA Deduction
 
(a)
Each Party may make any FATCA Deduction as it reasonably determines it is required to make by FATCA, and any payment required in connection with that FATCA Deduction, and no Party shall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction.
 
(b)
Each Party shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction), notify the Party to whom it is making the payment and, in addition, shall notify each Borrower and the Agent and the Agent shall notify the other Creditor Parties.
 
23
ILLEGALITY, ETC.
 
23.1
Illegality
 
This Clause 23 (Illegality, etc.) applies if a Lender (the "Notifying Lender") notifies the Agent that it has become, or will with effect from a specified date, become:
 
(a)
unlawful or prohibited as a result of the introduction of a new law, an amendment to an existing law or a change in the manner in which an existing law is or will be interpreted or applied; or
 
(b)
contrary to, or inconsistent with, any regulation,
 
for the Notifying Lender to perform, maintain or give effect to any of its obligations under this Agreement in the manner contemplated by this Agreement or to fund or maintain the Loan.
 
23.2
Notification of illegality
 
The Agent shall promptly notify the Borrowers, the Security Parties, the Security Trustee and the other Lenders of the notice under Clause 23.1 (Illegality) which the Agent receives from the Notifying Lender.
 
89
23.3
Prepayment; termination of Commitment
 
On the Agent notifying the Borrowers under Clause 23.2 (Notification of illegality), the Notifying Lender's Commitment shall be immediately cancelled; and thereupon or, if later, on the date specified in the Notifying Lender's notice under Clause 23.1 (Illegality) as the date on which the notified event would become effective the Borrowers shall prepay the Notifying Lender's Contribution on the earlier of (a) the date specified by the relevant law or regulation in accordance with Clause 23.1 (Illegality) and (b) the last day of the then current Interest Period in accordance with Clauses 8.10 (Amounts payable on prepayment) and 8.11 (Application of partial prepayment or cancellation).
 
24
INCREASED COSTS
 
24.1
Increased costs
 
This Clause 24 (Increased costs) applies if a Lender (the "Notifying Lender") notifies the Agent that the Notifying Lender considers that as a result of:
 
(a)
the introduction or alteration after the date of this Agreement of a law or an alteration after the date of this Agreement in the manner in which a law is interpreted or applied; or
 
(b)
complying with any regulation (including any which relates to capital adequacy or liquidity controls or which affects the manner in which the Notifying Lender allocates capital resources to its obligations under this Agreement) which is introduced, or altered, or the interpretation or application of which is altered, after the date of this Agreement; or
 
(c)
the implementation or application of or compliance with Basel III or any law or regulation which implements or applies Basel III (regardless of the date on which it is enacted, adopted or issued and regardless of whether any such implementation, application or compliance is by a government, regulator, the Notifying Lender or any of its affiliates),
 
(disregarding any effect which relates to the application to payments under this Agreement of a tax on the Lender's overall net income),
 
the Notifying Lender (or a parent company of it) has incurred or will incur an "increased cost".
 
24.2
Meaning of "increased cost"
 
In this Clause 24 (Increased costs), "increased cost" means, in relation to a Notifying Lender:
 
(a)
an additional or increased cost incurred as a result of, or in connection with, the Notifying Lender having entered into, or being a party to, this Agreement or a Transfer Certificate, of funding or maintaining its Commitment or Contribution or performing its obligations under this Agreement, or of having outstanding all or any part of its Contribution or other unpaid sums;
 
(b)
a reduction in the amount of any payment to the Notifying Lender under this Agreement or in the effective return which such a payment represents to the Notifying Lender or on its capital;
 
(c)
a liability to make a payment, or a return foregone, which is calculated by reference to any amounts received or receivable by the Notifying Lender under this Agreement,

90
but not (aa) an item attributable to a change in the rate of tax on the overall net income of the Notifying Lender (or a parent company of it) or (bb) an item covered by the indemnity for tax in Clause 21.1 (Indemnities regarding borrowing and repayment of Loan) or by Clause 22 (No Set-Off or Tax Deduction) or (cc) a FATCA Deduction required to be made by a Party or (dd) an item:


 (i)
arising from a decision by the Notifying Lender to adopt or implement a law or regulation which is not mandatorily applicable to it at the time it adopts such law or regulation; or
 

 (ii)
arising from a law or regulation applicable only to the Notifying Lender if the imposition of such law or regulation arises from the Notifying Lender's own behaviour,
 
but only to the extent that the Notifying Lender determines it did or would have occurred the same level of increased costs as at the date of this Agreement and by reference to the facts and circumstances prevailing at that time.
 
24.3
Notification to Borrowers of claim for increased costs
 
The Agent shall promptly notify the Borrowers and the Security Parties of the notice which the Agent received from the Notifying Lender under Clause 24.1 (Increased costs), together with any supporting calculations where practical.
 
24.4
Payment of increased costs
 
The Borrowers shall pay to the Agent, within five (5) days of the Agent's written demand, supported by a certificate of the Notifying Lender, for the account of the Notifying Lender the amounts which the Agent from time to time notifies the Borrowers that the Notifying Lender has specified to be necessary to compensate the Notifying Lender for the increased cost.
 
To the extent practical, any such certificate shall set out in reasonable detail the basis of calculation of the increased cost, the regulatory change giving rise to it and the casual link thereto (excluding confidential internal information), and shall, absent manifest error, be prima facie evidence of the amount claimed.
 
24.5
Notice of prepayment
 
If the Borrowers are not willing to continue to compensate the Notifying Lender for the increased cost under Clause 24.4 (Payment of increased costs), the Borrowers may give the Agent not less than fourteen (14) days' notice of their intention to prepay the Notifying Lender's Contribution at the end of an Interest Period. For the avoidance of doubt, prepayment under this clause shall not trigger any additional fees, penalties, or indemnities beyond accrued interest and the Margin.
 
24.6
Prepayment; termination of Commitment
 
A notice under Clause 24.5 (Notice of prepayment) shall be irrevocable; the Agent shall promptly notify the Notifying Lender of the Borrowers' notice of intended prepayment; and:
 
(a)
on the date on which the Agent serves that notice, the Commitment of the Notifying Lender shall be cancelled; and
 
91
(b)
on the date specified in its notice of intended prepayment, the Borrowers shall prepay (without premium or penalty) the Notifying Lender's Contribution, together with accrued interest thereon at the applicable rate plus the Margin.
 
After such prepayment and cancellation of the Notifying Lender's Commitment, the Borrowers shall have no further obligation to compensate the Notifying Lender under this Clause 24 (Increased Costs), except for increased costs accrued prior to the date of such prepayment.
 
24.7
Application of prepayment
 
Clause 7 (Repayment and prepayment) shall apply in relation to the prepayment.
 
25
SET-OFF
 
25.1
Application of credit balances
 
Each Creditor Party may without prior notice to the Borrowers but with prior notice to the Agent:
 
(a)
apply any balance (after the occurrence of an Event of Default which is continuing) (whether or not then due) which at any time stands to the credit of any account in the name of a Borrower at any office in any country of that Creditor Party in or towards satisfaction of any sum then due from that Borrower to that Creditor Party under any of the Finance Documents; and
 
(b)
for that purpose:
 

 (i)
break, or alter the maturity of, all or any part of a deposit of that Borrower;
 

 (ii)
convert or translate all or any part of a deposit or other credit balance into Dollars; and
 

 (iii)
enter into any other transaction or make any entry with regard to the credit balance which the Creditor Party concerned considers appropriate.
 
25.2
Existing rights unaffected
 
No Creditor Party shall be obliged to exercise any of its rights under Clause 25.1 (Application of credit balances); and those rights shall be without prejudice and in addition to any right of set-off, combination of accounts, charge, lien or other right or remedy to which a Creditor Party is entitled (whether under the general law or any document on Creditor Parties' general terms and conditions).
 
25.3
Sums deemed due to a Lender
 
For the purposes of this Clause 25 (Set-Off), a sum payable by the Borrowers to the Agent or the Security Trustee for distribution to, or for the account of, a Lender shall be treated as a sum due to that Lender; and each Lender's proportion of a sum so payable for distribution to, or for the account of, the Lenders shall be treated as a sum due to such Lender.
 
92
25.4
No Security Interest
 
This Clause 25 (Set-Off) gives the Creditor Parties a contractual right of set-off only, and does not create any equitable charge or other Security Interest over any credit balance of any Borrower.
 
26
TRANSFERS AND CHANGES IN LENDING OFFICES
 
26.1
Transfer by Borrowers
 
No Borrower may assign or transfer any of its rights, liabilities or obligations under any Finance Document.
 
26.2
Transfer by a Lender
 
(a)
Subject to this Clause 26 (Transfers and Changes in Lending Offices), a Lender (the "Transferor Lender") may at any time, with the Borrowers' prior written consent or approval, cause:
 

 (i)
its rights in respect of all or part of its Contribution; or
 

 (ii)
its obligations in respect of all or part of its Commitment; or
 

 (iii)
a combination of (i) and (ii); or
 

 (iv)
all or part of its credit risk under this Agreement and the other Finance Documents,
 
to be syndicated to or (in the case of its rights) assigned, pledged or transferred to, or (in the case of its obligations) pledged or assumed by, any other bank or financial institution or to a trust, fund or other entity, provided such other entity is regularly engaged in, or established for the purpose of, making, purchasing or investing in loans, securities or other financial assets,
 
(each, a "Transferee Lender") by delivering to the Agent a completed certificate in the form set out in Schedule 4 (Transfer Certificate) with any modifications approved or required by the Agent (a "Transfer Certificate") executed by the Transferor Lender and the Transferee Lender.
 
However, any rights and obligations of the Transferor Lender in its capacity as Agent or Security Trustee will have to be dealt with separately in accordance with the Agency and Trust Agreement.
 
(b)
The prior consent of the Borrowers (such consent not to be unreasonably withheld, delayed or conditioned) is required for a syndication or, (in the case of its rights) assignment, pledge or transfer, or (in the case of its obligations) pledge or assumption pursuant to this Clause 26.2 (Transfer by a Lender), unless:
 

 (i)
the Transferee Lender is another Lender or an affiliate or a company or financial institution which is in the same ownership or control as one of the Lenders; or
 

 (ii)
the Transferee Lender is a member of the European System of Central Banks, the KFW Development Bank, the European Investment Bank and other development banks included within the meaning of Section 5 para. 1 no.2 of the German Corporate Income Tax Act; or
 

 (iii)
an Event of Default has occurred which is continuing at the relevant time.
 
93
(c)
The Borrowers will be deemed to have given their consent seven (7) Business Days after the Transferor Lender has requested it unless consent is expressly refused by the Borrowers within that time.
 
26.3
Transfer Certificate, delivery and notification
 
As soon as reasonably practicable after a Transfer Certificate is delivered to the Agent, it shall (unless it has reason to believe that the Transfer Certificate may be defective):
 
(a)
sign the Transfer Certificate on behalf of itself, the Borrowers, the Security Parties, the Security Trustee and each of the other Lenders;
 
(b)
on behalf of the Transferee Lender, send to each Borrower and each Security Party letters or faxes notifying them of the Transfer Certificate and attaching a copy of it; and
 
(c)
send to the Transferee Lender copies of the letters or faxes sent under paragraph (b) above.
 
26.4
Effective Date of Transfer Certificate
 
A Transfer Certificate becomes effective on the date, if any, specified in the Transfer Certificate as its effective date Provided that it is signed by the Agent under Clause 26.3 (Transfer Certificate, delivery and notification) on or before that date.
 
26.5
No transfer without Transfer Certificate
 
Except as provided in Clause 26.16 (Security over Lenders' rights), no assignment or transfer of any right or obligation of a Lender under any Finance Document is binding on, or effective in relation to, any Borrower, any Security Party, the Agent or the Security Trustee unless it is effected, evidenced or perfected by a Transfer Certificate.
 
26.6
Lender re-organisation
 
However, if a Lender enters into any merger, de-merger or other reorganisation as a result of which all its rights or obligations vest in another person (the "successor"), the successor shall become a Lender with the same Commitment and Contribution as were held by the predecessor Lender only upon receipt by the Agent of a notice to this effect and evidence that all rights and obligations have automatically and by operation of law vested in the successor by virtue of the merger, de-merger or other reorganisation, without the need for the execution and delivery of a Transfer Certificate; the Agent shall in that event inform the Borrowers and the Security Trustee accordingly.
 
26.7
Effect of Transfer Certificate
 
A Transfer Certificate takes effect in accordance with English law as follows:
 
(a)
to the extent specified in the Transfer Certificate, all rights and interests (present, future or contingent) which the Transferor Lender has under or by virtue of the Finance Documents are assigned to the Transferee Lender absolutely, free of any defects in the Transferor Lender's title and of any rights or equities which any Borrower or any Security Party had against the Transferor Lender;
 
(b)
the Transferor Lender's Commitment is discharged to the extent specified in the Transfer Certificate;
 
94
(c)
the Transferee Lender becomes a Lender with the Contribution previously held by the Transferor Lender and a Commitment of an amount specified in the Transfer Certificate;
 
(d)
the Transferee Lender becomes bound by all the provisions of the Finance Documents which are applicable to the Lenders generally, including those about pro-rata sharing and the exclusion of liability on the part of, and the indemnification of, the Agent and the Security Trustee and, to the extent that the Transferee Lender becomes bound by those provisions (other than those relating to exclusion of liability), the Transferor Lender ceases to be bound by them;
 
(e)
any part of the Loan which the Transferee Lender advances after the Transfer Certificate's effective date ranks in point of priority and security in the same way as it would have ranked had it been advanced by the transferor, assuming that any defects in the transferor's title and any rights or equities of any Borrower or any Security Party against the Transferor Lender had not existed;
 
(f)
the Transferee Lender becomes entitled to all the rights under the Finance Documents which are applicable to the Lenders generally, including but not limited to those relating to the Majority Lenders and those under Clause 7.2 (Market disruption) and Clause 20 (Fees and Expenses), and to the extent that the Transferee Lender becomes entitled to such rights, the Transferor Lender ceases to be entitled to them; and
 
(g)
in respect of any breach of a warranty, undertaking, condition or other provision of a Finance Document or any misrepresentation made in or in connection with a Finance Document, the Transferee Lender shall be entitled to recover damages by reference to the loss incurred by it as a result of the breach or misrepresentation, irrespective of whether the original Lender would have incurred a loss of that kind or amount.
 
The rights and equities of any Borrower or any Security Party referred to above include, but are not limited to, any right of set off and any other kind of cross-claim.
 
26.8
Maintenance of register of Lenders
 
During the Security Period the Agent shall maintain a register in which it shall record the name, Commitment, Contribution and administrative details (including the lending office) from time to time of each Lender holding a Transfer Certificate and the effective date (in accordance with Clause 26.4 (Effective Date of Transfer Certificate)) of the Transfer Certificate; and the Agent shall make the register available for inspection by any Lender, the Security Trustee and the Borrowers during normal banking hours, subject to receiving at least three (3) Business Days' prior notice.
 
26.9
Reliance on register of Lenders
 
The entries on that register shall, in the absence of manifest error, be conclusive in determining the identities of the Lenders and the amounts of their Commitments and Contributions and the effective dates of Transfer Certificates and may be relied upon by the Agent and the other parties to the Finance Documents for all purposes relating to the Finance Documents.
 
26.10
Authorisation of Agent to sign Transfer Certificates
 
The Borrowers, the Security Trustee and each Lender irrevocably authorises the Agent to sign Transfer Certificates on its behalf. The Borrowers and each Security Party irrevocably agree to the transfer procedures set out in this Clause 26 (Transfers and Changes in Lending Offices) and to the extent the cooperation of the Borrowers and/or any Security Party shall be required to effect any such transfer, the Borrowers and such Security Party shall take all necessary steps to afford such cooperation Provided that this shall not result in any additional costs to the Borrowers or such Security Party.
 
95
26.11
Registration fee
 
In respect of any Transfer Certificate, the Agent shall be entitled to recover a registration fee of $2,500 from the Transferor Lender or (at the Agent's option) the Transferee Lender.
 
26.12
Sub-participation; subrogation assignment
 
(a)
A Lender may sub-participate or include in a securitisation or similar transaction all or any part of its rights and/or obligations under or in connection with the Finance Documents:
 

 (i)
in circumstances where the Lender may, without responsibility to the sub-participant, exercise or refrain from exercising any or all of its rights, powers and discretions arising under or in connection with the Finance Documents, without the Borrowers' prior consent but after giving fifteen (15) days' notice to the Borrowers and without serving a notice thereon; and
 

 (ii)
in all other cases, subject to the same conditions set out in Clause 26.2 (Transfer by a Lender).
 
(b)
The Lenders may assign without the Borrowers' prior consent but after giving fifteen (15) days' notice to the Borrowers and without serving a notice thereon all or any part of the rights referred to in the preceding sentence to an insurer or surety who has become subrogated to them.
 
26.13
Sub-division, split, modification or re-tranching
 
Any Lender may, in its sole discretion, sub-divide, split, sever, modify or re-tranche its Contribution into one or more parts subject to the overall cost of its Contribution to the Borrowers remaining unchanged, if such changes are necessary in order to achieve a successful execution of a securitisation, syndication or any other capital market exit in respect of its Contribution (or any applicable part thereof).
 
26.14
Change of lending office
 
A Lender may change its lending office by giving notice to the Agent and the change shall become effective on the later of:
 
(a)
the date on which the Agent receives the notice; and
 
(b)
the date, if any, specified in the notice as the date on which the change will come into effect.
 
26.15
Notification
 
On receiving such a notice, the Agent shall notify the Borrowers and the Security Trustee; and, until the Agent receives such a notice, it shall be entitled to assume that a Lender is acting through the lending office of which the Agent last had notice.
 
96
26.16
Security over Lenders' rights
 
In addition to the other rights provided to Lenders under this Clause 26 (Transfers and Changes in Lending Offices), each Lender may without consulting with or obtaining consent from, any Borrower or any Security Party, at any time charge, assign or otherwise create a Security Interest in or over (whether by way of collateral or otherwise) all or any of its rights under any Finance Document to secure obligations of that Lender including, without limitation:
 
(a)
any charge, assignment or other Security Interest to secure obligations to a federal reserve or central bank; and
 
(b)
in the case of any Lender which is a fund, any charge, assignment or other Security Interest granted to any holders (or trustee or representatives of holders) of obligations owed, or securities issued, by that Lender as security for those obligations or securities;
 
except that no such charge, assignment or Security Interest shall:
 

 (i)
release a Lender from any of its obligations under the Finance Documents or substitute the beneficiary of the relevant charge, assignment or Security Interest for the Lender as a party to any of the Finance Documents; or
 

 (ii)
require any payments to be made by any Borrower or any Security Party other than or in excess of, or grant to any person any more extensive rights than those required to be made or granted to the relevant Lender under the Finance Documents.
 
26.17
Securitisation
 
Each Borrower shall, and the Borrowers shall procure that each Security Party will, assist the Agent and/or any Lender in achieving a successful securitisation (or similar transaction) subject always to any confidentiality obligations pursuant to Clause 32 (Confidential Information) and applicable law, in respect of the Loan and the Finance Documents and such Security Party's reasonable costs for providing such assistance shall be met by the relevant Lender.  The Borrowers shall not be liable to make any additional payment under this Agreement and the other Finance Documents as a result of any such securitisation (or similar transaction). The Borrowers, if requested by the Agent, shall provide documentation evidencing the purchase price of each Ship when acquired by the relevant Borrower.
 
26.18
No additional costs
 
If a Transferor Lender assigns or transfers any of its rights or obligations under the Finance Documents and as a result of circumstances existing at the date the assignment or transfer occurs, a Borrower or a Security Party would be obliged to make a payment to the Transferee Lender under Clause 22.2 (Grossing up for taxes) or under that clause as incorporated by reference or in full in any other Finance Document, then the Transferee Lender is only entitled to receive payment under that clause to the same extent as the Transferor Lender would have been if the assignment or transfer had not occurred.
 
97
26.19
Replacement of a Defaulting Lender
 
(a)
The Borrowers may, at any time a Lender has become and continues to be a Defaulting Lender, by giving five (5) Business Days' prior written notice to the Agent and such Lender replace such Lender by requiring such Lender to (and, to the extent permitted by law, such Lender shall) transfer pursuant to this Clause 26 (Transfers and Changes in Lending Offices) all (and not part only) of its rights and obligations under this Agreement to a Lender or other bank or financial institution (or any of their respective affiliates or subsidiaries) or to a trust, fund or other entity (a "Replacement Lender") selected by the Borrowers, and which confirms its willingness to assume and does assume all the obligations, or all the relevant obligations, of the transferring Lender in accordance with this Clause 26 (Transfers and Changes in Lending Offices) for a purchase price in cash payable at the time of transfer which is either:
 

 (i)
in an amount equal to the outstanding principal amount of such Lender's Contribution and all accrued interest, Break Costs and other amounts payable in relation thereto under the Finance Documents; or
 

 (ii)
in an amount agreed between that Defaulting Lender, the Replacement Lender and the Borrowers and which does not exceed the amount described in paragraph (i) above.
 
(b)
Any transfer of rights and obligations of a Defaulting Lender pursuant to this Clause 26.21 (Disenfranchisement of Defaulting Lenders) shall be subject to the following conditions:
 

 (i)
the Borrowers shall have no right to replace the Agent or Security Trustee;
 

 (ii)
neither the Agent nor the Defaulting Lender shall have any obligation to the Borrowers to find a Replacement Lender;
 

 (iii)
the transfer must take place no later than seven (7) Business Days after the notice referred to in paragraph (a) above;
 

 (iv)
in no event shall the Defaulting Lender be required to pay or surrender to the Replacement Lender any of the fees received by the Defaulting Lender pursuant to the Finance Documents; and
 

 (v)
the Defaulting Lender shall only be obliged to transfer its rights and obligations pursuant to paragraph (a) above once it is satisfied that it has complied with all necessary "know your customer" or other similar checks under all applicable laws and regulations in relation to that transfer to the Replacement Lender.
 
(c)
The Defaulting Lender shall perform the checks described in paragraph (b)(v) above as soon as reasonably practicable following delivery of a notice referred to in paragraph (a) above and shall notify the Agent and the Borrowers when it is satisfied that it has complied with those checks.
 
26.20
Excluded Commitments
 
If any Defaulting Lender fails to respond to a request for a consent, waiver, amendment of or in relation to any term of any Finance Document or any other vote of Lenders under the terms of this Agreement within ten (10) Business Days of that request being made (unless the Borrowers and the Agent agree to a longer time period in relation to any request):
 
(a)
its Commitment shall not be included for the purpose of calculating the Total Commitments under the Loan when ascertaining whether any relevant percentage (including, for the avoidance of doubt, unanimity) of Total Commitments has been obtained to approve that request; and
 
98
(b)
its status as a Lender shall be disregarded for the purpose of ascertaining whether the agreement of any specified group of Lenders has been obtained to approve that request.
 
26.21
Disenfranchisement of Defaulting Lenders
 
(a)
For so long as a Defaulting Lender has any undrawn Commitment, in ascertaining:
 

 (i)
the Majority Lenders; or
 

 (ii)
whether:
 

 (A)
any given percentage (including, for the avoidance of doubt, unanimity) of the Total Commitments under the Loan; or
 

 (B)
the agreement of any specified group of Lenders,
 
has been obtained to approve any request for a consent, waiver, amendment or other vote of Lenders under the Finance documents,
 
that Defaulting Lender's Commitment under the Loan will be reduced by the amount of its undrawn Commitment under the Loan and, to the extent that that reduction results in that Defaulting Lender's Commitment being zero, that Defaulting Lender shall be deemed not to be a Lender for the purposes of paragraphs (i) and (ii) above.
 
(b)
For the purposes of this Clause 26.21 (Disenfranchisement of Defaulting Lenders) the Agent may assume that the following Lenders are Defaulting Lenders:
 

 (i)
any Lender which has notified the Agent that it has become a Defaulting Lender;
 

 (ii)
any Lender in relation to which it is aware that any of the events or circumstances referred to in paragraphs (a) or (b) of the definition of "Defaulting Lender" has occurred,
 
unless it has received notice to the contrary from the Lender concerned (together with any supporting evidence reasonably requested by the Agent) or the Agent is otherwise aware that the Lender has ceased to be a Defaulting Lender.
 
27
VARIATIONS AND WAIVERS
 
27.1
Required consents
 
(a)
Subject to Clause 27.2 (Exceptions) and Clause 27.4 (Changes to reference rates), any term of the Finance Documents may be amended or waived only with the consent of the Majority Lenders and the Borrowers and any such amendment or waiver will be binding on all Creditor Parties and the Borrowers.
 
(b)
Any instructions given by the Majority Lenders will be binding on all the Creditor Parties.
 
(c)
The Agent may effect on behalf of any Creditor Party, any amendment or waiver permitted by any other provision of this Clause 27 (Variations and Waivers).
 
27.2
Exceptions
 
(a)
An amendment or waiver that has the effect of changing or which relates to:
 
99

 (i)
the definition of "Majority Lenders" or "Finance Documents" in Clause 1.1 (Definitions);
 

 (ii)
an extension to the date of payment of any amount under the Finance Documents;
 

 (iii)
a reduction in the Margin or a reduction in the amount of any payment of principal, interest fees, commission or other amount payable under any of the Finance Documents;
 

 (iv)
an increase in or an extension of any Lender's Commitment;
 

 (v)
any provision which expressly requires the consent of all the Lenders;
 

 (vi)
Clause 3 (Position of the Lenders), Clause 11.5 (Information provided to be accurate), Clause 11.6 (Provision of financial statements), Clause 11.7 (Form of financial statements), Clause 11.15 (Provision of Further Information), Clause 26 (Transfers and Changes in Lending Offices), this Clause 27.2 (Exceptions) or Clause 27.4 (Changes to reference rates);
 

 (vii)
the definitions of "Restricted Party", "Sanctions Authorities" or "Sanctions List" in Clause 1.1 (Definitions) or Clause 11.22 (Sanctions);
 

 (viii)
any release of any Security Interest, guarantee, indemnities or subordination arrangement created by any Finance Document;
 

 (ix)
any change of the currency in which the Loan is provided or any amount is payable under any of the Finance Documents;
 

 (i)
an extension of the Availability Period; or
 

 (ii)
a change in Clause 16.4 (Distribution of payment to Creditor Parties) or 22.2 (Grossing-up for taxes),
 
may not be effected without the prior written consent of all Lenders.
 
(b)
An amendment or waiver which relates to the rights or obligations of the Agent, the Mandated Lead Arranger or the Security Trustee may not be effected without the consent of the Agent, the Mandated Lead Arranger or the Security Trustee, as the case may be.
 
27.3
Exclusion of other or implied variations
 
Except for a document which satisfies the requirements of any of Clauses 27.1 (Required consents), 27.2 (Exceptions) and 27.4 (Changes to reference rates), no document, no act, course of conduct, failure or neglect to act, delay or acquiescence on the part of the Creditor Parties or any of them (or any person acting on behalf of any of them) shall result in the Creditor Parties or any of them (or any person acting on behalf of any of them) being taken to have varied, waived, suspended or limited, or being precluded (permanently or temporarily) from enforcing, relying on or exercising:
 
(a)
a provision of this Agreement or another Finance Document; or
 
(b)
an Event of Default; or
 
100
(c)
a breach by a Borrower or a Security Party of an obligation under a Finance Document or the general law; or
 
(d)
any right or remedy conferred by any Finance Document or by the general law,
 
and there shall not be implied into any Finance Document any term or condition requiring any such provision to be enforced, or such right or remedy to be exercised, within a certain or reasonable time.
 
27.4
Changes to reference rates
 
(a)
Any amendment or waiver which relates to:
 

 (i)
providing for the use of a Replacement Reference Rate; and
 

 (ii)
 

 (A)
aligning any provision of any Finance Document to the use of that Replacement Reference Rate;
 

 (B)
enabling that Replacement Reference Rate to be used for the calculation of interest under this Agreement (including, without limitation, any consequential changes required to enable that Replacement Reference Rate to be used for the purposes of this Agreement);
 

 (C)
implementing market conventions applicable to that Replacement Reference Rate;
 

 (D)
providing for appropriate fallback (and market disruption) provisions for that Replacement Reference Rate; or
 

 (E)
adjusting the pricing to reduce or eliminate, to the extent reasonably practicable, any transfer of economic value from one Party to another as a result of the application of that Replacement Reference Rate (and if any adjustment or method for calculating any adjustment has been formally designated, nominated or recommended by the Relevant Nominating Body, the adjustment shall be determined on the basis of that designation, nomination or recommendation),
 
may be made with the consent of the Agent (acting on the instructions of the Majority Lenders) and the Borrowers.
 
(b)
If any Lender fails to respond to a request for an amendment or waiver described in, or for any of the vote of the Lenders in relation to, paragraph (a) above within 5 Business Days (or such longer time period in relation to any request which the Borrowers and the Agent may agree) of that request being made:
 

 (i)
its Commitment or its participation in the Loan (as the case may be) shall not be included for the purpose of calculating the Total Commitments or the amount of the Loan (as applicable) when ascertaining whether any relevant percentage of Total Commitments or the aggregate of participations in the Loan (as applicable) has been obtained to approve that request; and
 
101

 (ii)
its status as a Lender shall be disregarded for the purpose of ascertaining whether the agreement of any specified group of Lenders has been obtained to approve that request.
 
(c)
In this Clause 27.4 (Changes to reference rates):
 
"Published Rate" means:
 

 (a)
SOFR; or
 

 (b)
Term SOFR for any Quoted Tenor.
 
"Quoted Tenor" means, in relation to Term SOFR, any period for which that rate is customarily displayed on the relevant page or screen of an information service.
 
"Relevant Nominating Body" means any applicable central bank, regulator or other supervisory authority or a group of them, or any working group or committee sponsored or chaired by, or constituted at the request of, any of them or the Financial Stability Board.
 
"Replacement Reference Rate" means a reference rate which is:
 

 (a)
formally designated, nominated or recommended as the replacement for a Published Rate by:
 

 (i)
the administrator of that Published Rate (provided that the market or economic reality that such reference rate measures is the same as that measured by that Published Rate); or
 

 (ii)
any Relevant Nominating Body,
 
and if replacements have, at the relevant time, been formally designated, nominated or recommended under both paragraphs, the "Replacement Reference Rate" will be the replacement under sub-paragraph (ii) above;
 

 (b)
in the opinion of the Majority Lenders and the Borrowers, generally accepted in the international or any relevant domestic syndicated loan markets as the appropriate successor or alternative to a Published Rate; or
 

 (c)
in the opinion of the Majority Lenders and the Borrowers, an appropriate successor or alternative to a Published Rate.
 
28
NOTICES
 
28.1
General
 
Unless otherwise specifically provided, any notice under or in connection with any Finance Document shall be given by letter or fax; and references in the Finance Documents to written notices, notices in writing and notices signed by particular persons shall be construed accordingly.
 
28.2
Addresses for communications
 
A notice by letter or fax shall be sent:
 
102
(a)
to the Borrowers:
[name of the Borrower]
c/o Castor Ships S.A.
10 Seneka Street,
Kifissia 145 64, GreeceAttention of: Mr. Efstratios
Kalantzis/Mrs. Myrsini Rafaela Chiotelli/ Mr. Georgios Aridas
Email: legal@castorships.com and
finance@castorships.com
 
(b) to a Lender: At the address next to its name in Schedule 1 (Lenders and Commitments) or (as the case may require) in the relevant Transfer Certificate.

(c)
to the Agent and Security Trustee:
 
for general matters:
Hamburg Commercial Bank AG
UB Asset Based Finance 25 Shipping
Shipping Clients International
Gerhart-Hauptmann-Platz 50
20095 Hamburg
Germany
 
Attention of: Mr Loukas Lagaras / Mr Ioannis Passas
Fax No: +30 210 4295-323
Email: Loukas.Lagaras@hcob-bank.com/ Ioannis.Passas@hcob-bank.com
 
for credit administrative matters:
Hamburg Commercial Bank AG
BU Business Operations
Loan & Collateral Operations
Gerhart-Hauptmann-Platz 50
20095 Hamburg
Germany
 
Attention of: Mr Ioannis Passas
Email: Ioannis.Passas@hcob-bank.com
 
or to such other address as the relevant Party may notify the Agent or, if the relevant Party is the Agent or the Security Trustee, the Borrowers, the Lenders and the Security Parties.
 
28.3
Effective date of notices
 
Subject to Clauses 28.4 (Service outside business hours) and 28.5 (Illegible notices):
 
(a)
a notice which is delivered personally or posted shall be deemed to be served, and shall take effect, at the time when it is delivered; and
 
(b)
a notice which is sent by fax shall be deemed to be served, and shall take effect, two hours after its transmission is completed.
 
103
28.4
Service outside business hours
 
However, if under Clause 28.3 (Effective date of notices) a notice would be deemed to be served:
 
(a)
on a day which is not a business day in the place of receipt; or
 
(b)
on such a business day, but after 5 p.m. local time,
 
the notice shall (subject to Clause 28.5 (Illegible notices)) be deemed to be served, and shall take effect, at 9 a.m. on the next day which is such a business day.
 
28.5
Illegible notices
 
Clauses 28.3 (Effective date of notices) and 28.4 (Service outside business hours) do not apply if the recipient of a notice notifies the sender within one hour after the time at which the notice would otherwise be deemed to be served that the notice has been received in a form which is illegible in a material respect.
 
28.6
Valid notices
 
A notice under or in connection with a Finance Document shall not be invalid by reason that its contents or the manner of serving it do not comply with the requirements of this Agreement or, where appropriate, any other Finance Document under which it is served if:
 
(a)
the failure to serve it in accordance with the requirements of this Agreement or other Finance Document, as the case may be, has not caused any party to suffer any significant loss or prejudice; or
 
(b)
in the case of incorrect and/or incomplete contents, it should have been reasonably clear to the party on which the notice was served what the correct or missing particulars should have been.
 
28.7
Electronic communication
 
(a)
Any communication from the Agent or the other Creditor Parties made by electronic means will be sent unsecured and without electronic signature, however, the Borrowers may request the Agent and the other Creditor Parties at any time in writing to change the method of electronic communication from unsecured to secured electronic mail communication.
 
(b)
The Borrowers hereby acknowledge and accept the risks associated with the use of unsecured electronic mail communication including, without limitation, risk of delay, loss of data, confidentiality breach, forgery, falsification and malicious software.  The Agent and the other Creditor Parties shall not be liable in any way for any loss or damage or any other disadvantage suffered by the Borrowers resulting from such unsecured electronic mail communication.
 
(c)
If the Borrowers (or any of them) or any other Security Party wish to cease all electronic communication, they shall give written notice to the Agent and the other Creditor Parties accordingly after receipt of which notice the Parties shall cease all electronic communication.
 
(d)
For as long as electronic communication is an accepted form of communication, the Parties shall:
 
104

 (i)
notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and
 

 (ii)
notify each other of any change to their respective addresses or any other such information supplied to them.
 
(e)
Each Borrower undertakes and declares that any documents to fulfil the disclosure of the financial circumstances according to Sec. 18 of the German Banking Act (KWG) that were or are hereinafter submitted to the Hamburg Commercial Bank AG electronically or on data carriers through the Borrowers or any other Security Party or any of them or a third party are complete and correct. It further agrees and declares that:
 

 (i)
it is irrelevant whether such documents were submitted with or without signature;
 

 (ii)
documents submitted to Hamburg Commercial Bank AG electronically or on data carriers according to Sec. 18 of the German Banking Act (KWG) have the same legal significance as documents with signature in paper form; and
 

 (iii)
until written revocation, the declaration under this Clause 28.7 (Electronic communication) shall remain valid.
 
28.8
English language
 
Any notice under or in connection with a Finance Document shall be in English.
 
28.1
Communication when Agent is Impaired Agent
 
If the Agent is an Impaired Agent the parties to this Agreement may, instead of communicating with each other through the Agent, communicate with each other directly and (while the Agent is an Impaired Agent) all the provisions of the Finance Documents which require communications to be made or notices to be given to or by the Agent shall be varied so that communications may be made and notices given to or by the relevant parties directly. This provision shall not operate after a replacement Agent has been appointed.
 
28.2
Meaning of "notice"
 
In this Clause 28 (Notices), "notice" includes any demand, consent, authorisation, approval, instruction, waiver or other communication.
 
29
JOINT AND SEVERAL LIABILITY
 
29.1
General
 
All liabilities and obligations of the Borrowers under this Agreement shall, whether expressed to be so or not, be several and, if and to the extent consistent with Clause 29.2 (No impairment of Borrower's obligations), joint.
 
29.2
No impairment of Borrowers' obligations
 
The liabilities and obligations of a Borrower shall not be impaired by:
 
105
(a)
this Agreement being or later becoming void, unenforceable or illegal as regards any other Borrower;
 
(b)
any Lender or the Security Trustee entering into any rescheduling, refinancing or other arrangement of any kind with any other Borrower;
 
(c)
any Lender or the Security Trustee releasing any other Borrower or any Security Interest created by a Finance Document; or
 
(d)
any combination of the foregoing.
 
29.3
Principal debtors
 
Each Borrower declares that it is and will, throughout the Security Period, remain a principal debtor for all amounts owing under this Agreement and the Finance Documents and no Borrower shall in any circumstances be construed to be a surety for the obligations of any other Borrower under this Agreement.
 
29.4
Subordination
 
Subject to Clause 29.5 (Borrowers' required action), during the Security Period, no Borrower shall:
 
(a)
claim any amount which may be due to it from any other Borrower whether in respect of a payment made, or matter arising out of, this Agreement or any Finance Document, or any matter unconnected with this Agreement or any Finance Document provided that in respect of any unconnected claims such may be permitted in relation to liabilities between the Borrowers in the normal course of business up to an amount of $150,000 for so long as no Event of Default has occurred and is continuing; or
 
(b)
take or enforce any form of security from any other Borrower for such an amount, or in any other way seek to have recourse in respect of such an amount against any asset of any other Borrower; or
 
(c)
set off such an amount against any sum due from it to any other Borrower; or
 
(d)
prove or claim for such an amount in any liquidation, administration, arrangement or similar procedure involving any other Borrower or other Security Party; or
 
(e)
exercise or assert any combination of the foregoing.
 
29.5
Borrowers' required action
 
If during the Security Period, the Agent, by notice to a Borrower, requires it to take any action referred to in paragraphs (a) to (d) of Clause 29.4 (Subordination), in relation to any other Borrower, that Borrower shall take that action as soon as practicable after receiving the Agent's notice.
 
30
SUPPLEMENTAL
 
30.1
Rights cumulative, non-exclusive
 
The rights and remedies which the Finance Documents give to each Creditor Party are:
 
106
(a)
cumulative;
 
(b)
may be exercised as often as appears expedient; and
 
(c)
shall not, unless a Finance Document explicitly and specifically states so, be taken to exclude or limit any right or remedy conferred by any law.
 
30.2
Severability of provisions
 
If any provision of a Finance Document is or subsequently becomes void, unenforceable or illegal, that shall not affect the validity, enforceability or legality of the other provisions of that Finance Document or of the provisions of any other Finance Document.
 
30.3
Counterparts
 
A Finance Document may be executed in any number of counterparts.
 
30.4
Third party rights
 
A person who is not a Party has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.
 
30.5
Benefit and binding effect
 
The terms of this Agreement shall be binding upon, and shall enure to the benefit of, the Parties and their respective (including subsequent) successors and permitted assigns and transferees.
 
31
BAIL-IN
 
Notwithstanding any other term of any Finance Document or any other agreement, arrangement or understanding between the parties to a Finance Document, each Party acknowledges and accepts, to the extent required by applicable law, that any liability of any party to a Finance Document under or in connection with the Finance Documents may be subject to Bail-In Action by the relevant Resolution Authority and acknowledges and accepts to be bound by the effect of:
 
(a)
any Bail-In Action in relation to any such liability, including (without limitation):
 

 (i)
a reduction, in full or in part, in the principal amount, or outstanding amount due (including any accrued but unpaid interest) in respect of any such liability;
 

 (ii)
a conversion of all, or part of, any such liability into shares or other instruments of ownership that may be issued to, or conferred on, it; and
 

 (iii)
a cancellation of any such liability; and
 
(b)
a variation of any term of any Finance Document to the extent necessary to give effect to any Bail-In Action in relation to any such liability.
 
107
32
CONFIDENTIAL INFORMATION
 
32.1
Confidentiality
 
Each Creditor Party agrees to keep all Confidential Information confidential and not to disclose it to anyone, save to the extent permitted by Clause 32.2 (Disclosure of Confidential Information) and to ensure that all Confidential Information is protected with security measures and a degree of care that would apply to its own confidential information.
 
32.2
Disclosure of Confidential Information
 
Any Creditor Party may disclose:
 
(a)
to any of its affiliates and Related Funds and any of its or their officers, directors, employees, professional advisers, auditors and representatives such Confidential Information as that Creditor Party shall consider appropriate if any person to whom the Confidential Information is to be given pursuant to this paragraph (a) is informed in writing of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no such requirement to so inform if the recipient is subject to professional obligations to maintain the confidentiality of the information or is otherwise bound by requirements of confidentiality in relation to the Confidential Information;
 
(b)
to any person:
 

 (i)
to (or through) whom it assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under one or more Finance Documents or which succeeds (or which may potentially succeed) it as Agent or Security Trustee and, in each case, to any of that person's affiliates, Related Funds, representatives and professional advisers;
 

 (ii)
with (or through) whom it enters into (or may potentially enter into), whether directly or indirectly, any sub-participation in relation to, or any other transaction under which payments are to be made or may be made by reference to, one or more Finance Documents and/or the Borrowers and/or any Security Party and to any of that person's affiliates, Related Funds, representatives and professional advisers;
 

 (iii)
appointed by any Creditor Party or by a person to whom sub-paragraph (i) or (ii) of paragraph (b) above applies to receive communications, notices, information or documents delivered pursuant to the Finance Documents on its behalf;
 

 (iv)
who invests in or otherwise finances (or may potentially invest in or otherwise finance), directly or indirectly, any transaction referred to in sub-paragraph (i) or (ii) of paragraph (b) above;
 

 (v)
to whom information is required or requested to be disclosed by any court of competent jurisdiction or any competent governmental, banking, taxation or other competent regulatory authority or similar body, the rules of any relevant stock exchange or pursuant to any applicable law or regulation;
 

 (vi)
to whom information is required to be disclosed in connection with, and for the purposes of, any litigation, arbitrations, administrative or other investigations, proceedings or disputes;
 

 (vii)
to whom or for whose benefit that Creditor Party charges, assigns or otherwise creates Security (or may do so) pursuant to Clause 26.16 (Security over Lenders' rights);
 
108

 (viii)
who is a Party, a member of the Group or any related entity of the Borrowers and/or any Security Party;
 

 (ix)
as a result of the registration of any Finance Document as contemplated by any Finance Document or any legal opinion obtained in connection with any Finance Document; or
 

 (x)
with the prior written consent of the Borrowers provided that if the Borrowers fail to respond within seven (7) days of the Agent's request, it will be deemed to have consented;
 
in each case, such Confidential Information as that Creditor Party shall consider appropriate if:
 

 (A)
in relation to sub-paragraphs (i), (ii) and (iii) of paragraph (b) above, the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking except that there shall be no requirement for a Confidentiality Undertaking if the recipient is a professional adviser and is subject to professional obligations to maintain the confidentiality of the Confidential Information;
 

 (B)
in relation to sub-paragraph (iv) of paragraph (b) above, the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking or is otherwise bound by requirements of confidentiality in relation to the Confidential Information they receive and is informed that some or all of such Confidential Information may be price-sensitive information;
 

 (C)
in relation to sub-paragraphs (v), (vi) and (vii) of paragraph (b) above, the person to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no requirement to so inform if, in the reasonable opinion of that Creditor Party, it is not practicable so to do in the circumstances;
 
(c)
to any person appointed by that Creditor Party or by a person to whom sub-paragraph (i) or (ii) of paragraph (b) above applies to provide administration or settlement services in respect of one or more of the Finance Documents including without limitation, in relation to the trading of participations in respect of the Finance Documents, such Confidential Information as may be required to be disclosed to enable such service provider to provide any of the services referred to in this paragraph (c) if the service provider to whom the Confidential Information is to be given has entered in to a confidentiality agreement substantially in the form of the LMA Master Confidentiality Undertaking for Use With Administration/Settlement Service Providers or such other form of confidentiality undertaking agreed between the Borrowers and the relevant Creditor Party;
 
(d)
to any rating agency (including its professional advisers) such Confidential Information as may be required to be disclosed to enable such rating agency to carry out its normal rating activities in relation to the Finance Documents and/or the Borrowers and/or any Security Party.
 
32.3
Entire agreement
 
This Clause 32 (Confidential Information) constitutes the entire agreement between the Parties in relation to the obligations of the Creditor Parties under the Finance Documents regarding Confidential Information and supersedes any previous agreement, whether express or implied, regarding Confidential Information.
 
109
32.4
Inside information
 
Each of the Creditor Parties acknowledges that some or all of the Confidential Information is or may be price-sensitive information and that the use of such information may be regulated or prohibited by applicable legislation including securities law relating to insider dealing and market abuse and each of the Creditor Parties undertakes not to use any Confidential Information for any unlawful purpose.
 
32.5
Notification of disclosure
 
Each of the Creditor Parties agrees (to the extent permitted by law and regulation) to inform the Borrowers:
 
(a)
of the circumstances of any disclosure of Confidential Information made pursuant to sub-paragraph (v) of paragraph (b) of Clause 32.2 (Disclosure of Confidential Information) except where such disclosure is made to any of the persons referred to in that paragraph during the ordinary course of their supervisory or regulatory function; and
 
(b)
upon becoming aware that Confidential Information has been disclosed in breach of this Clause 32 (Confidential Information).
 
32.6
Continuing obligations
 
The obligations in this Clause 32 (Confidential Information) are continuing and, in particular, shall survive and remain binding on each Creditor Party for a period of 12 months from the earlier of:
 
(a)
the date on which all amounts payable by the Borrowers under or in connection with this Agreement have been paid in full and all Commitments have been cancelled or otherwise cease to be available; and
 
(b)
the date on which such Creditor Party otherwise ceases to be a Creditor Party.
 
32.7
Disclosure by the Borrowers
 
The Borrowers shall not, and shall ensure that no Security Party will, publish any details regarding the Loan or any of the Finance Documents without the Agent's prior written consent.
 
32.8
DS_GVO
 
The permission of disclosure set out in this Clause 32 (Confidential Information) is granted for the purposes of providing relief from banking secrecy and confidentiality requirements. It is not intended as, and is no declaration of, consent in accordance with the DS_GVO (EU Regulation 2016/679, General Data Protection Regulation).
 
110
33
LAW AND JURISDICTION
 
33.1
English law
 
This Agreement and any non-contractual obligations arising out of or in connection with it shall be governed by, and construed in accordance with, English law.
 
33.2
Exclusive English jurisdiction
 
Subject to Clause 33.3 (Choice of forum for the exclusive benefit of the Creditor Parties), the courts of England shall have exclusive jurisdiction to settle any Dispute.
 
33.3
Choice of forum for the exclusive benefit of the Creditor Parties
 
Clause 33.2 (Exclusive English jurisdiction) is for the exclusive benefit of the Creditor Parties, each of which reserves the right:
 
(a)
to commence proceedings in relation to any Dispute in the courts of any country other than England and which have or claim jurisdiction to that Dispute; and
 
(b)
to commence such proceedings in the courts of any such country or countries concurrently with or in addition to proceedings in England or without commencing proceedings in England.
 
No Borrower shall commence any proceedings in any country other than England in relation to a Dispute.
 
33.4
Process agent
 
Each Borrower irrevocably appoints Hill Dickinson Services (London) Limited at its registered office from time to time, presently at The Broadgate Tower 7th Floor, 20 Primrose Street, London, EC2A 2EW, England to act as its agent to receive and accept on its behalf any process or other document relating to any proceedings in the English courts which are connected with a Dispute.
 
33.5
Creditor Party rights unaffected
 
Nothing in this Clause 33 (Law and Jurisdiction) shall exclude or limit any right which any Creditor Party may have (whether under the law of any country, an international convention or otherwise) with regard to the bringing of proceedings, the service of process, the recognition or enforcement of a judgment or any similar or related matter in any jurisdiction.
 
33.6
Meaning of "proceedings" and "Dispute"
 
In this Clause 33 (Law and Jurisdiction), "proceedings" means proceedings of any kind, including an application for a provisional or protective measure and a "Dispute" means any dispute arising out of or in connection with this Agreement (including a dispute relating to the existence, validity or termination of this Agreement) or any non-contractual obligation arising out of or in connection with this Agreement.
 
THIS AGREEMENT has been entered into on the date stated at the beginning of this Agreement.
 
111
SCHEDULE 1
 
LENDERS AND COMMITMENTS
 
 
Lender
 
  
Lending Office
 
  
Total Commitment
(US Dollars)
           
 
Hamburg Commercial Bank AG
 
  
Gerhart-Hauptmann-Platz 50
20095 Hamburg
Germany
  
$60,000,000
 
           

112
SCHEDULE 2
 
FORM OF DRAWDOWN NOTICE
 
To:
Hamburg Commercial Bank AG
Gerhart-Hauptmann-Platz 50
20095 Hamburg
Germany
Attention: Loans Administration
 
[●] 2026
 
DRAWDOWN NOTICE
 
1
We refer to the loan agreement dated [●] 2026 (the "Loan Agreement") and made between ourselves, as joint and several Borrowers, the Lenders referred to therein, and yourselves as Agent, Mandated Lead Arranger and Security Trustee in connection with a facility of up to US$60,000,000. Terms defined in the Loan Agreement have their defined meanings when used in this Drawdown Notice.
 
2
We request to borrow as follows:
 
(a)
Amount of Advance: US$[●];
 
(b)
Drawdown Date: [●];
 
(c)
Duration of the Interest Period for the Advance shall be [●] months; and
 
(d)
Payment instructions: account in our name and numbered [●] with [●] of [●].
 
3
We represent and warrant that:
 
(a)
the representations and warranties in Clause 10 (Representations and Warranties) of the Loan Agreement would remain true and not misleading if repeated on the date of this Drawdown Notice with reference to the circumstances now existing; and
 
(b)
no Event of Default or Potential Event of Default has occurred or will result from the borrowing of that Advance.
 
4
This Drawdown Notice cannot be revoked without the prior consent of the Majority Lenders.
 
5
We authorise you to deduct the [●] fees payable pursuant to Clause 20.1(a) and (b) (Structuring and commitment fees).
 
[Name of Signatory]
[Attorney-in-fact]
for and on behalf of
STARFIRE SHIPPING CO.
NIGHTWING SHIPPING CO.
QUICKSILVER SHIPPING CO. and
MANTIS SHIPPING CO.

113
SCHEDULE 3
 
CONDITION PRECEDENT DOCUMENTS
 
PART A
 
The following are the documents referred to in Clause 9.1(a) (Documents, fees and no default) required on or before service of the first Drawdown Notice.
 
1
A duly executed original of:
 
(a)
this Agreement;
 
(b)
the Corporate Guarantee;
 
(c)
the Agency and Trust Agreement;
 
(d)
any Subordination Agreement;
 
(e)
any Subordinated Debt Security;
 
(f)
the Account Pledges; and
 
(g)
any other Finance Document (unless such other Finance Document is referred to elsewhere in this Schedule),
 
(and of each document required to be delivered under each of them).
 
2
Copies of the certificate of incorporation and constitutional documents of each Borrower, the Corporate Guarantor and any other Security Party and any company registration documents in respect of each Borrower, the Corporate Guarantor or, any other Security Party (including, without limitation, any corporate register excerpts) required by the Agent and a list of all members of the Group.
 
3
Copies of resolutions of the shareholders and the board of directors of each Borrower, the Corporate Guarantor and any other Security Party authorising the execution of each of the Finance Documents to which that Borrower, the Corporate Guarantor or that Security Party is a party and, in the case of each Borrower, authorising named officers to give a Drawdown Notice(s) and other notices under this Agreement.
 
4
The original of any power of attorney under which any Finance Document is executed on behalf of a Borrower, the Corporate Guarantor or any other Security Party.
 
5
Copies of all consents which each Borrower, the Corporate Guarantor or any other Security Party requires to enter into, or make any payment under, any Finance Document or any Assignable Charter.
 
6
The originals of any mandates or other documents required in connection with the opening or operation of the Accounts.
 
7
Documentary evidence that the agent for service of process named in Clause 32 (Law and Jurisdiction) has accepted its appointment.
 
114
8
Copies of each Assignable Charter documentation and of all documents signed or issued by the Borrowers or any party thereto (or any of them) under or in connection with such documents together, with such documentary evidence as the Agent and its legal advisers may require in relation to the due authorisation and execution of all such documents by the parties thereto.
 
9
Any documents required by the Agent in respect of each Borrower, the Corporate Guarantor and any other Security Party (including statements of beneficial ownership of each company) to satisfy the Lenders' "know your customer" and money laundering requirements.
 
10
Favourable legal opinions from lawyers appointed by the Agent on such matters concerning the laws of the Republic of the Marshall Islands and such other relevant jurisdictions as the Agent may require.
 
11
Documents establishing that each Ship is managed by the relevant Approved Manager on terms acceptable to the Lenders.
 
12
If the Agent so requires, in respect of any of the documents referred to above, a certified English translation prepared by a translator approved by the Agent at the Borrowers' expense.
 
115
PART B
 
The following are the documents referred to in Clause 9.1(b) (Documents, fees and no default) required before each Drawdown Date.
 
1
A duly executed original of the Mortgage, the General Assignment and any Charterparty Assignment relating to any Assignable Charter (and of each document to be delivered by each of them) each in respect of each Ship.
 
2
Documentary evidence that:
 
(a)
each Ship is definitively and permanently registered in the name of the relevant Borrower under an Approved Flag in accordance with the laws of the applicable Approved Flag State;
 
(b)
each Ship is in the absolute and unencumbered ownership of the relevant Borrower save as contemplated by the Finance Documents;
 
(c)
each Ship maintains the class specified in Clause 14.3(b) (Repair and classification) with a first class classification society which is a member of IACS (being one of Lloyd's Registry, American Bureau of Shipping, Det Norske Veritas, Bureau Veritas, Korean Register of Shipping, Nippon Kaiji Kyoykai or Registro Italiano Navale) as the Agent may approve free of all overdue recommendations and conditions of such classification society (in a form of a class certificate of each Ship with all applicable endorsements up to date and a class maintenance certificate issued on a date falling at a maximum of five (5) days prior to the drawdown date);
 
(d)
the Mortgage relating to each Ship has been duly registered or recorded against that Ship as a valid first preferred or, as the case may be, priority mortgage in accordance with the laws of the applicable Approved Flag State;
 
(e)
each Ship is insured in accordance with the provisions of this Agreement and all requirements therein in respect of insurances have been complied with; and
 
(f)
if applicable, each Ship has been delivered to the relevant charterer under an Assignable Charter after the registration or recordation of the relevant Mortgage and that any charterer has acknowledged such prior registration or recordation or has subordinated in writing all its claims against that Ship and the relevant Borrower to the rights of the Creditor Parties.
 
3
In relation to an Approved Manager and each Ship:
 
(a)
the Approved Manager's Undertaking relative thereto;
 
(b)
copies of the Approved Manager's Document of Compliance and of that Ship's Safety Management Certificate and ISSC (together with any other details of the applicable safety management system which the Agent requires); and
 
(c)
copies of the Inventory of Hazardous Material of each Ship and each other certificate required to be provided to the Creditor Parties pursuant to Clause 14.17 (IHM and green scrapping).
 
4
One, or as the case may be, more valuations of each Ship, prepared pursuant to paragraphs 15.3(a) and 15.3(b) of Clause 15.3 (Valuation of Ships), at a date not earlier than thirty (30) days prior to the Drawdown Date, stated to be for the purposes of this Agreement.
 
116
5
Favourable legal opinions from lawyers appointed by the Agent on such matters concerning the laws of the relevant Approved Flag State and such other relevant jurisdictions as the Agent may require.
 
6
A favourable opinion from an independent insurance consultant acceptable to the Agent on such matters relating to the insurances for each Ship as the Agent may require.
 
7
Evidence satisfactory to the Agent that the Minimum Liquidity is standing to the credit of the Liquidity Account pursuant to Clause 11.18 (Minimum Liquidity).
 
8
If the Agent so requires, in respect of any of the documents referred to above, a certified English translation prepared by a translator approved by the Agent at the Borrowers' expense.
 
9
Evidence satisfactory to the Agent of payment of all fees due and payable in accordance with Clause 9 (Conditions Precedent) of this Agreement.
 
10
A most recent survey report or other comparable document in respect of the physical condition of each Ship.
 
Each of the documents specified in paragraph 4 of Part A shall be notarised or legalised by a competent authority acceptable to the Agent and every other copy document delivered under this Schedule shall be certified as a true and up to date copy by the secretary (or equivalent officer), or attorney-at-law of the relevant Borrower.
 
117
PART C
 
The following are the documents referred to in Clause 9.1(c)(i) (Documents, fees and no default) required on or before the second and any subsequent Drawdown Date:
 
1
Evidence satisfactory to the Agent that each document provided under paragraphs 2 to 5 of Part A of Schedule 3 (Condition Precedent Documents) is correct, complete and in full force and effect as at the relevant Drawdown Date.
 
2
Evidence satisfactory to the Agent of payment of all fees due and payable in accordance with Clause 20 (Fees and expenses) of this Agreement.
 
3
A valuation of each Ship prepared at a date not earlier than thirty (30) days prior to the relevant Drawdown Date and otherwise pursuant to Clause 15.3 (Valuation of Ships), stated to be for the purposes of this Agreement.
 
4
Any other documents or evidence as the Agent may reasonably request from the Borrowers.
 
118
SCHEDULE 4
 
TRANSFER CERTIFICATE
 
The Transferor and the Transferee accept exclusive responsibility for ensuring that this Certificate and the transaction to which it relates comply with all legal and regulatory requirements applicable to them respectively.
 
To:
Hamburg Commercial Bank AG for itself and for and on behalf of each Borrower, each Security Party, the Security Trustee and each Lender, as defined in the Loan Agreement referred to below.

[●]

1
This Certificate relates to a loan agreement dated [●] 2026 (the "Loan Agreement") and made between (1) Starfire Shipping Co., Nightwing Shipping Co., Quicksilver Shipping Co. and Mantis Shipping Co. (together, the "Borrowers") as joint and several Borrowers, (2) the banks and financial institutions named therein as Lenders, (3) Hamburg Commercial Bank AG as Agent, (4) Hamburg Commercial Bank AG as Mandated Lead Arranger and (5) Hamburg Commercial Bank AG as Security Trustee for a loan facility of up to US$60,000,000.
 
2
In this Certificate, terms defined in the Loan Agreement shall, unless the contrary intention appears, have the same meanings and:
 
"Relevant Parties" means the Agent, each Borrower, each Security Party, the Security Trustee and each Lender;
 
"Transferor" means [full name] of [lending office]; and
 
"Transferee" means [full name] of [lending office].
 
3
The effective date of this Certificate is [●] Provided that this Certificate shall not come into effect unless it is signed by the Agent on or before that date.
 
4
[The Transferor assigns to the Transferee absolutely all rights and interests (present, future or contingent) which the Transferor has as Lender under or by virtue of the Loan Agreement and every other Finance Document in relation to [●] per cent. of its Contribution, which percentage represents $[●].
 
5
[By virtue of this Certificate and Clause 26 (Transfers and Changes in Lending Offices) of the Loan Agreement, the Transferor is discharged [entirely from its Commitment which amounts to $[●]] [from [●] per cent. of its Commitment, which percentage represents $[●]] and, subject to Clause 26.7 (Effect of Transfer Certificate) of the Loan Agreement, from all obligations connected therewith, the Transferee acquires a Commitment of $[●].]
 
6
The Transferee undertakes with the Transferor and each of the Relevant Parties that the Transferee will observe and perform all the obligations under the Finance Documents which Clause 26 (Transfers and Changes in Lending Offices) of the Loan Agreement provides will become binding on it upon this Certificate taking effect.
 
7
The Agent, at the request of the Transferee (which request is hereby made) accepts, for the Agent itself and for and on behalf of every other Relevant Party, this Certificate as a Transfer Certificate taking effect in accordance with Clause 26 (Transfers and Changes in Lending Offices) of the Loan Agreement.
 
119
8
The Transferor:
 
(a)
warrants to the Transferee and each Relevant Party that:
 

 (i)
the Transferor has full capacity to enter into this transaction and has taken all corporate action and obtained all consents which are in connection with this transaction; and
 

 (ii)
this Certificate is valid and binding as regards the Transferor;
 
(b)
warrants to the Transferee that the Transferor is absolutely entitled, free of encumbrances, to all the rights and interests covered by the assignment in paragraph 4 above; and
 
(c)
undertakes with the Transferee that the Transferor will, at its own expense, execute any documents which the Transferee reasonably requests for perfecting in any relevant jurisdiction the Transferee's title under this Certificate or for a similar purpose.
 
9
The Transferee:
 
(a)
confirms that it has received a copy of the Loan Agreement and each of the other Finance Documents;
 
(b)
agrees that it will have no rights of recourse on any ground against either the Transferor, the Agent, the Mandated Lead Arranger, the Security Trustee or any Lender in the event that:
 

 (i)
any of the Finance Documents prove to be invalid or ineffective;
 

 (ii)
any Borrower or any Security Party fails to observe or perform its obligations, or to discharge its liabilities, under any of the Finance Documents;
 

 (iii)
it proves impossible to realise any asset covered by a Security Interest created by a Finance Document, or the proceeds of such assets are insufficient to discharge the liabilities of the Borrowers or any Security Party under the Finance Documents;
 
(c)
agrees that it will have no rights of recourse on any ground against the Agent, the Mandated Lead Arranger, the Security Trustee or any Lender in the event that this Certificate proves to be invalid or ineffective;
 
(d)
warrants to the Transferor and each Relevant Party that:
 

 (i)
it has full capacity to enter into this transaction and has taken all corporate action and obtained all consents which it needs to take or obtain in connection with this transaction; and
 

 (ii)
this Certificate is valid and binding as regards the Transferee; and
 
(e)
confirms the accuracy of the administrative details set out below regarding the Transferee.
 
120
10
The Transferor and the Transferee each undertake with the Agent, the Mandated Lead Arranger and the Security Trustee severally, on demand, fully to indemnify the Agent and/or the Security Trustee and/or the Mandated Lead Arranger in respect of any claim, proceeding, liability or expense (including all legal expenses) which they or either of them may incur in connection with this Certificate or any matter arising out of it, except such as are shown to have been mainly and directly caused by the gross and culpable negligence or dishonesty of the Agent's, the Mandated Lead Arranger's or the Security Trustee's own officers or employees.
 
11
The Transferee shall repay to the Transferor on demand so much of any sum paid by the Transferor under paragraph 10 as exceeds one-half of the amount demanded by the Agent, the Mandated Lead Arranger or the Security Trustee in respect of a claim, proceeding, liability or expense which was not reasonably foreseeable at the date of this Certificate; but nothing in this paragraph shall affect the liability of each of the Transferor and the Transferee to the Agent, the Mandated Lead Arranger or the Security Trustee for the full amount demanded by it.
 
[Name of Transferor]
[Name of Transferee]
   
By:
By:
Date:
Date:

Agent
 
Signed for itself and for and on behalf of itself
as Agent and for every other Relevant Party
Hamburg Commercial Bank AG
 
By:
 
Date:

121
Administrative Details of Transferee
 

Name of Transferee:
  
   
Lending Office:
  
   
Contact Person
  
   
(Loan Administration Department):
  
   
Telephone:
  
   
Fax:
  
   
Contact Person
  
   
(Credit Administration Department):
  
   
Telephone:
  
   
Fax:
  
   
Account for payments:
  
   
Notes:
  

This Transfer Certificate alone may not be sufficient to transfer a proportionate share of the Transferor's interest in the security constituted by the Finance Documents in the Transferor's or Transferee's jurisdiction. It is the responsibility of each Lender to ascertain whether any other documents are required for this purpose.
 
Paragraph 4 deals with assignment of rights and can be used together with paragraph 5 if the parties have agreed to a combination of assignment of rights and transfer of obligations.
 
Paragraph 5 deals with transfer of obligations and should be removed if the parties have agreed to an assignment only.
 
122
SCHEDULE 5
 
POWER OF ATTORNEY
 
Know all men by these presents that [Starfire Shipping Co.][Nightwing Shipping Co.][Quicksilver Shipping Co.][Mantis Shipping Co.] (the "Corporation"), a corporation incorporated in the Republic of the Marshall Islands and having its registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 irrevocably and by way of security appoints Hamburg Commercial Bank AG (the "Attorney") of Gerhart-Hauptmann-Platz 50, D-20095 Hamburg, Germany its attorney, to act in the name of the Corporation and to exercise any right, entitlement or power of the Company in relation to [name of classification society] (the "Classification Society") and/or to the classification records of any vessel owned, controlled or operated by the Company including, without limitation, such powers or entitlement as the Company may have to inspect the class records and any files held by the Classification Society in relation to any such vessel and to require the Classification Society to provide to the Attorney or to any of its nominees any information, document or file which the Attorney may request.
 
Ratification of actions of attorney. For the avoidance of doubt and without limiting the generality of the above, it is confirmed that the Company hereby ratifies any action which the Attorney takes or purports to take under this Power of Attorney and the Classification Society shall be entitled to rely hereon without further enquiry.
 
Delegation. The Attorney may exercise its powers hereunder through any officer or through any nominee and/or may sub-delegate to any person or persons (including a receiver and persons designated by him) all or any of the powers (including the discretions) conferred on the Attorney hereunder, and may do so on terms authorising successive sub-delegations.
 
This Power of Attorney was executed by the Company as a Deed on [●] 2026.
 
EXECUTED as a DEED by
)
[STARFIRE SHIPPING CO.]
)
[NIGHTWING SHIPPING CO.]
)
 
[QUICKSILVER SHIPPING CO.]
)
 
[MANTIS SHIPPING CO.]
)
 
acting by its President
)

)
in the presence of:
)

 
123
SCHEDULE 6
 
FORM OF COMPLIANCE CERTIFICATE
 
To:
Hamburg Commercial Bank AG
Gerhart-Hauptmann-Platz 50
D-20095 Hamburg
Germany
 
[●]
 
Dear Sirs
 
We refer to a loan agreement dated [●] 2026 (the "Loan Agreement") made between (amongst others) yourselves and ourselves in relation to a revolving credit facility of up to $60,000,000.
 
Words and expressions defined in the Loan Agreement shall have the same meaning when used in this Compliance Certificate.
 
We enclose with this certificate a copy of the [semi-annual individual unaudited management accounts of the Borrowers and the semi-annual individual unaudited management accounts of the Corporate Guarantor for the 6-month period ended [30 June] 20[●]]/[the individual unaudited annual management accounts of the Borrowers and the consolidated audited annual financial statements of the Corporate Guarantor for the financial year ended 31 December 20[●]]. The financial statements (i) have been prepared in accordance with all applicable laws and US GAAP consistently applied, (ii) give a true and fair view of the state of affairs of the Borrowers, the Corporate Guarantor and the Group at the date of those accounts and of their profits for the period to which those accounts relate and (iii) fully disclose or provide for all significant liabilities of the Borrowers, the Corporate Guarantor and the Group and each of its subsidiaries.
 
Each Borrower represents that no Event of Default has occurred as at the date of this certificate [except for the following matter or event [set out all material details of matter or event]]. In addition as of [●], each Borrower confirms compliance with the minimum liquidity requirements set out in Clause 11.18 (Minimum Liquidity) [,] [and] the minimum security cover requirement set out in Clause 15.1 (Minimum required security cover) [and][list here any other financial covenants which are applicable to the relevant transaction], of the Loan Agreement for the [6-month] period ending on the date of this certificate.
 
We now certify that, as at [30 June] [31 December] 20[●]:
 
(a)
the aggregate amount of the Minimum Liquidity standing to the credit of the Liquidity Account is $[●];
 
(b)
the aggregate amount standing to the credit of the Dry Dock Reserve Accounts is $[●]; and
 
(c)
the Security Cover Ratio is above 125 per cent..
 
This Compliance Certificate shall be governed by, and construed in accordance with, English law.
 
Name: [●]
Title: [senior officer]
 
[●]
 

124
SCHEDULE 7
 
TIMETABLES
 
Reference Rate is fixed
Quotation Day

125
SCHEDULE 8
 
ROLLOVER ADVANCE NOTICE
 
From:
STARFIRE SHIPPING CO.
NIGHTWING SHIPPING CO.
QUICKSILVER SHIPPING CO.
MANTIS SHIPPING CO.
Trust Company Complex
Ajeltake Road, Ajeltake Island
Majuro, Marshall Islands
MH96960

To:
Hamburg Commercial Bank AG
Gerhart-Hauptmann-Platz 50
20095 Hamburg
Germany
Attention: Loans Administration
 
Dated: [●]
 
Dear Sirs
 
We refer to the loan agreement dated [●] 2026 (the "Loan Agreement") and made between ourselves, as joint and several borrowers, the Lenders referred to therein, and yourselves as Agent, Mandated Lead Arranger and Security Trustee in connection with a senior secured reducing revolving credit facility of up to US$60,000,000.
 
This is a Rollover Advance Notice. Terms defined in the Loan Agreement have the same meaning in this Rollover Advance Notice unless given a different meaning in this Rollover Advance Notice.
 
1
We request to borrow a Rollover Advance on the following terms:
 
(a) Amount: $[●]

(b) Duration of Interest Period: [3] months

2
We represent and warrant that:
 
(a)
the representations and warranties in Clause 10 (Representations and Warranties) of the Loan Agreement would remain true and not misleading if repeated on the date of this Rollover Advance Notice with reference to the circumstances now existing; and
 
(b)
no Event of Default or Potential Event of Default has occurred or will result from the borrowing of that Advance.
 
3
This Rollover Advance Notice cannot be revoked without the prior consent of the Majority Lenders.
 
126
[Name of Signatory]
[Attorney-in-fact]
for and on behalf of
STARFIRE SHIPPING CO.
NIGHTWING SHIPPING CO.
QUICKSILVER SHIPPING CO. and
MANTIS SHIPPING CO.

127
SCHEDULE 9
 
DETAILS OF SHIPS
 
 
Ship
  
Ship name
  
Type
  
IMO
  
Approved Flag
  
Approved Head Manager
  
Approved Technical Manager
                           
 
Ship A
  
DREAM ARRAX
  
LPG Carrier
  
9713545
  
Marshall Islands
  
Castor Ships
  
Columbia Shipmanagement (Deutschland) GmbH
                           
 
Ship B
  
DREAM VERMAX
  
LPG Carrier
  
9719525
  
Marshall Islands
  
Castor Ships
  
Columbia Shipmanagement (Deutschland) GmbH
                           
 
Ship C
  
WONDER ALTAIR
  
MR2 tanker
  
9884825
  
Marshall Islands
  
Castor Ships
  
Castor Ships
                           
 
Ship D
  
WONDER MAIA
  
MR2 tanker
  
9676515
  
Marshall Islands
  
Castor Ships
  
Castor Ships
                           

128
EXECUTION PAGES
 
BORROWERS
    
     
SIGNED by
)
  
/s/ Georgia Liopi
)
  
Its attorney-in-fact
)
  
for and on behalf of
)
  
STARFIRE SHIPPING CO.
)
  
in the presence of: Aikaterina Dimitrou
)
  
     
SIGNED by
)
  
/s/ Georgia Liopi
)
  
Its attorney-in-fact
)
  
for and on behalf of
)
  
NIGHTWING SHIPPING CO.
)
  
in the presence of: Aikaterina Dimitrou
)
  
     
SIGNED by
)
  
/s/ Georgia Liopi
)
  
Its attorney-in-fact
)
  
for and on behalf of
)
  
QUICKSILVER SHIPPING CO.
 )
in the presence of: Aikaterina Dimitrou
)
  
     
SIGNED by
)
  
/s/ Georgia Liopi
)
  
Its attorney-in-fact
)
  
for and on behalf of
)
  
MANTIS SHIPPING CO.
)
  
in the presence of: Aikaterina Dimitrou
)
  
     
LENDERS
    
     
SIGNED by
)
  
/s/ Konstantinos Mexias
)
  
for and on behalf of
)
  
HAMBURG COMMERCIAL BANK AG
)
  
in the presence of: Aikaterina Dimitrou
)
  

129
AGENT
    
     
SIGNED by
)
  
/s/ Konstantinos Mexias
)
  
for and on behalf of
)
  
HAMBURG COMMERCIAL BANK AG
)
  
in the presence of: Aikaterina Dimitrou
)
  
     
MANDATED LEAD ARRANGER
    
     
SIGNED by
)
  
/s/ Konstantinos Mexias
)
  
for and on behalf of
)
  
HAMBURG COMMERCIAL BANK AG
)
  
in the presence of: Aikaterina Dimitrou
)
  
     
SECURITY TRUSTEE
    
     
SIGNED by
)
  
/s/ Konstantinos Mexias
)
  
for and on behalf of
)
  
HAMBURG COMMERCIAL BANK AG
)
  
in the presence of: Aikaterina Dimitrou
)
  


130
Exhibit 8.1
 
SUBSIDIARY LIST

 
Subsidiary
  
Jurisdiction of Incorporation
 
Colossus Shipping Co.
  
Marshall Islands
 
Cyborg Shipping Co.
  
Marshall Islands
 
Drax Shipping Co.
  
Marshall Islands
 
Elektra Shipping Co.
  
Marshall Islands
 
Gamora Shipping Co.
  
Marshall Islands
 
Hawkeye Shipping Co.
  
Marshall Islands
 
Mantis Shipping Co.
  
Marshall Islands
 
Nightwing Shipping Co.
  
Marshall Islands
 
Quicksilver Shipping Co.
  
Marshall Islands
 
Rocket Shipping Co.
  
Marshall Islands
 
Starfire Shipping Co.
  
Marshall Islands
 
Starlord Shipping Co.
  
Marshall Islands
 
TDI Corp.
  
Marshall Islands
 
Toro Finance Corp.
  
Marshall Islands
 
Toro RBX Corp.
  
Marshall Islands
 
TPI Corp.
  
Marshall Islands
 
TWI Corp.
  
Marshall Islands
 
Zatanna Shipping Co.
  
Marshall Islands


1/1
Exhibit 11.1

INSIDER TRADING POLICY
 
As amended and adopted by TORO CORP., on March 11, 2026
 
Version 2

-1-
A.
INSIDER TRADING POLICY
 
1.     General
 
The common shares of Toro Corp. (the “Company”) are listed on the Nasdaq Capital Market and registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Pursuant to the Exchange Act, the Company files annual and other reports with the US Securities and Exchange Commission (the “SEC”).
 
The Exchange Act prohibits the misuse of material, non-public information and also requires that Section 16 Insiders of the Company (as defined below) report their beneficial ownership of all equity securities of the Company and changes in that ownership. In order to avoid even the appearance of impropriety, the Company has instituted procedures to prevent the misuse of non-public information and promote compliance with Section 16(a) of the Exchange Act.
 
The Policy extends to each Insider’s activities within and/or outside their duties at the Company. Each Insider must read and retain this statement.
 
This policy (the “Policy”) will be administered and supervised by the Head of the Legal Department of Castor Ships S.A. (the “HoL”) or, in any case in which the HoL (or any of the persons or entities described in Sections 2(b) and 2(c) of this Policy with respect to the HoL) proposes to trade in securities covered by this Policy, by the Company’s Chief Financial Officer.  Please pay special attention to the “Blackout”, “Trading Window”, “Pre-Clearance of Trades” and “Post-Trade Reporting” policies discussed in this memorandum.
 
In addition to any other consequences under applicable law, failure to comply with the Policy may result in severe consequences, including employee termination and disciplinary action. See “Penalties for insider trading” below.
 
2.     Whom does the policy cover?
 
The Policy covers the persons listed below (collectively, the “Insiders”):
 

 (a)
all of the Company’s and its subsidiaries’ officers, directors and employees, and persons performing similar functions, including for the avoidance of doubt any employees, officers or directors of the Company’s manager, Castor Ships S.A. of these, the Company’s Chief Executive Officer, Chief Financial Officer, such other executive officers of the Company that have been advised that they are an “officer” for purposes of Section 16(a) of the Exchange Act and each director of the Company are referred to as “Section 16 Insiders”;
 

 (b)
relatives who are members of the same household, the spouse, partner equivalent to a spouse under national law and anyone else who resides with any of the individuals identified in (a) above, as well as family members who do not reside with the individuals identified in (a) but whose transactions in Securities (as defined in Section 5 below) are directed by, or are subject to the influence or control of, the foregoing (such as parents or children who consult with an insider before they trade in Securities);
 

 (c)
any other natural or legal person, trust or partnership (i) whose managerial responsibilities are discharged by, (ii) which is directly or indirectly controlled by, or (iii) whose economic interests are substantially equivalent to, an insider referred to under (a) or (b).
 
In addition, from time to time a person can become a “temporary insider” and be subject to this Policy if they are given access to material non-public information or receive material non-public information from an Insider. A temporary insider can include, among others, third-parties, the Company’s attorneys, accountants, consultants, bank lending officers, and the employees of those organizations. The Company will seek to notify these persons when they become Insiders, but all persons nonetheless have a duty not to trade in Securities (as defined below) if they are in possession of material non-public information.
 
For the avoidance of doubt, the Company shall not be deemed an Insider for purposes of this Policy.
 
The Company forbids any Insider from trading, either for their personal account or on behalf of others, while in possession of material non-public information, or communicating material non-public information to others in violation of the law. This prohibited conduct is often referred to as “insider trading.”
 
3.     What is insider trading?
 
Although “insider trading” is not defined in the securities laws, the term “insider trading” is generally used to refer to trading while in possession of material non-public information (whether or not one is an Insider) and/or to communications of material non-public information to others.  The law in this area is generally understood to prohibit, among other things:
 

 ■
trading by an Insider while in possession of material non-public information;
 

 ■
trading by a non-Insider while in possession of material non-public information, where the information either was disclosed to the non-Insider in violation of an Insider’s duty to keep it confidential or the information was misappropriated;
 

 ■
wrongfully communicating, or “tipping”, material non-public information to other persons who may use such information to trade in Securities;
 

 ■
recommending or inducing third parties to trade in Securities while in possession of material non-public information.
 
As used in this Policy, “trading” includes placing Securities in margin accounts or pledging Securities and gifts of Securities.
 
4.     Elements of insider trading
 
As a general guide, certain components of what amounts to “insider trading” are described below.
 
The term “material non-public information” refers to information about the Company, its subsidiaries or the Securities that is not known to persons outside the Company or is otherwise non-public and that could be considered material to an investor in making an investment decision relating to the Securities (including a decision to buy or sell Securities).
 
What information is material?
 
Information generally is considered “material” if:
 

 ■
there is a substantial likelihood that an investor would reasonably consider the information important in making an investment decision, or
 

 ■
the information is reasonably certain to have a substantial effect on the price of the Securities.
 
Information may be material whether it is negative or positive . You should assume that information is material unless it is trivial or of no interest to the public. It is not possible to identify every type of information that could be material, or every context in which otherwise ordinary information might become material. For that reason, if you have any concern that information within your possession may be material, it is your responsibility to seek appropriate advice from the HoL (or, in the case of the HoL (or any of the persons or entities described in Sections 2(b) and 2(c) of this Policy with respect to the HoL), from the Chief Financial Officer)  before trading in Securities.
 
Examples of material information typically include, but are not limited to:
 

 ■
the Company’s financial results, earnings estimates not previously disseminated and material changes in previously-released earnings estimates or forecasts;
 

 ■
vessel acquisitions or dispositions and other significant asset purchases or sales;
 

 ■
dividend policy changes and share buybacks;
 

 ■
tender offers, mergers, business combinations or acquisition proposals or agreements;
 

 ■
major litigation developments and significant regulatory actions;
 

 ■
status of covenants compliance and communications with lenders and investment banks;
 

 ■
material changes in liquidity including both challenges and improvements;
 

 ■
major changes in management or the board of directors;
 

 ■
material amendments to the constitutional documents of the Company; and
 

 ■
investments or prospective investments in securities (including but not limited to bonds, debentures, shares or stocks or derivatives thereof) by the Company.
 
What information is non-public?
 
Information is non-public if it has not been disseminated in a manner reasonably designed to make it available to the investing public generally.  Information becomes public when it is disseminated to the public and there has been adequate time for the public to digest that information. The amount of time since the information was first disseminated ordinarily is a factor regarding whether the information is considered “public”.
 
The belief that material information was public at the time an Insider trades does not relieve that Insider from liability.
 
5.     What securities are covered by this Policy?
 
This Policy applies not only to the Company’s common shares, but also any other securities issued by the Company, including any preferred shares, bonds and notes and the shares, bonds and notes of any of the Company’s subsidiaries and derivative securities of such securities (such as options, puts, calls or warrants or any other financial instrument by which the above securities can be acquired or subscribed or the value of which is derived from the value of the Company’s securities) whether or not issued by the Company (and whether or not settled in such securities or in cash) (collectively, the “Securities”).
 
In addition, this Policy applies to securities of a third party to the extent that an Insider acquires material non-public information in relation to that third party or the securities of that third party as a result of the Insider’s employment with, or service to, the Company.
 
For purposes of reporting by Section 16 Insiders under Section 16(a) of the Exchange Act only, “Securities” means common shares and any other equity securities of the Company, including derivative securities.
 
6.     Penalties for insider trading
 
Penalties for insider trading are severe both for the individuals involved as well as for their employers.  The Company requires all Insiders to comply with the law and with this Policy. A person can be subject to some or all of the penalties listed below, even if they do not personally benefit from the violation.  Penalties may include:
 

 ■
Jail sentences;
 

 ■
Civil injunctions;
 

 ■
Civil treble (3x) damages;
 

 ■
Disgorgement of profits;
 

 ■
Criminal fines of up to three times the profit gained or loss avoided, whether or not the person actually benefited from the trading; and
 

 ■
Fines for the employers or other controlling person of up to the greater of $1 million or three times the amount of the profit gained or loss avoided.
 
In addition, under some circumstances, people who trade on inside information may be subjected to civil liability in private lawsuits.
 
Importantly, in the event of violation of this Policy, employees may also be subject to disciplinary action, including termination of employment for cause.
 
It is in the Company’s and its Insiders’ best interests to implement robust  procedures to prevent unlawful or improper trading and to ensure adherence to applicable laws and regulations.
 
7.     Procedures to prevent insider trading
 
The following procedures have been established to aid in the prevention of insider trading.  Every Insider must follow these procedures or risk sanctions, including: dismissal, substantial personal liability and criminal penalties.
 
8.     Questions to Ask
 
Prior to trading in Securities, and if you think you may have material non-public information, ask yourself the following questions:
 

 ■
Is the information material? Is this information that an investor would consider important in making an investment decision? Would you take it into account in deciding whether to buy or sell? Is this information that would affect the market price of the Securities, if generally disclosed?
 

 ■
Is the information non-public? To whom has this information been provided?  Has it been effectively communicated to the marketplace? Has enough time gone by?
 
9.    Action Required
 
If you are at all uncertain as to whether any information you have is “inside information,” you must:
 

 ■
immediately report the matter to the HoL (or, in case of the HoL reporting, to the Chief Financial Officer);
 

 ■
refrain from trading the Securities; and
 

 ■
not communicate the information inside or outside the Company.
 
After the Insider and the HoL (or the Chief Financial Officer, if applicable) have reviewed the issue and consulted with in-house or outside counsel to the extent appropriate, the Insider will be instructed as to whether they may trade and/or communicate that information.
 
10.   Blackout Policy and Trading Window
 
To assure compliance with the Policy and applicable securities laws, the Company requires that all Insiders refrain from conducting transactions involving the purchase or sale of Securities during the period commencing fifteen (15) calendar days prior to the release of quarterly, semi-annual or annual results, as applicable, and ending at 12pm EST on the first trading day following such public disclosure. In addition, from time-to-time material non-public information regarding the Company may be pending. While such information is pending, the Company may impose a special “blackout” period during which the same prohibitions and recommendations shall apply.
 
Remember:  Even during any period of time wherein trading is permissible (a “Trading Window”), any person possessing material non-public information must not engage in any transactions in the Securities until the information has been made public and absorbed by the market.
 
11.   Pre-Clearance of Trades
 
All insiders must refrain from trading in Securities, even during a Trading Window, without first complying with the following “pre-clearance” process: Each such person must contact the HoL (or, in the case of the HoL (or any of the persons or entities described in Sections 2(b) and 2(c) of this Policy with respect to the HoL), the Chief Financial Officer) prior to commencing any trade and cannot proceed without their written confirmation.
 
12.   Post-Trade Reporting
 
Absent an exemption, all changes in beneficial ownership of Securities of a Section 16 Insider (or any of the persons or entities described in Sections 2(b) and 2(c) of this Policy with respect to a Section 16 Insider) must be reported under Section  16(a) of the Exchange Act. Accordingly, in addition to obtaining pre-clearance for a trade, as described above, all Section 16 Insiders are required to provide the Company with trade information as follows.
 
A Section 16 Insider is deemed to beneficially own any security from which they can derive a direct or indirect pecuniary benefit, other than in certain limited circumstances. A Section 16 Insider is considered the direct beneficial owner of all Securities held in their own name or held jointly with others. A Section 16 Insider is considered the indirect beneficial owner of any Securities from which they obtain benefits substantially equivalent to those of ownership.
 
A Section 16 Insider must inform all broker-dealers that may trade in Securities on such Section 16 Insider’s behalf of their status as a Section 16 Insider and arrange for such transaction information to be provided to the HoL on the day of any executed transaction.
 
The details of any transactions in Securities (including any purchases, sales, gifts, donations or charitable contributions) by a Section 16 Insider must be reported to the HoL by such Section 16 Insider on the same day on which a trade order is placed or such a transaction otherwise is entered into. Such report shall include the date of the transaction, quantity of Securities, the price and the name of any broker-dealer through which the transaction was effected.
 
13.   Questions or concerns
 
Any questions or concerns regarding the Company’s Policy to detect and prevent insider trading should be directed to the HoL (or, in the case of the HoL (or any of the persons or entities described in Sections 2(b) and 2(c) of this Policy with respect to the HoL), to the Chief Financial Officer, as may be applicable).
 
Addendum A
 
INSIDER TRADING POLICY
CERTIFICATION FORM
 
I acknowledge that I have read and understood the policy to detect and prevent insider trading of Toro Corp. in its entirety and agree to abide by it.

CERTIFIED BY:

     
NAME:
(PRINT)
     
SIGNATURE:
    
     
DATE:
    
 

Exhibit 12.1

CERTIFICATIONS

I, Petros Panagiotidis, certify that:

(1)
I have reviewed this annual report on Form 20-F of Toro Corp.;

(2)
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3)
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

(4)
The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)
Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)
Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

(5)
The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: April 15, 2026
By:
/s/ Petros Panagiotidis
 
Name:
Petros Panagiotidis
 
Title:
Chairman and Chief Executive Officer


Exhibit 12.2

CERTIFICATIONS

I, Theologos Pagiaslis, certify that:

(1)
I have reviewed this annual report on Form 20-F of Toro Corp.;

(2)
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3)
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

(4)
The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)
Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)
Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

(5)
The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: April 15, 2026
By:
/s/ Theologos Pagiaslis
 
Name:
Theologos Pagiaslis
 
Title:
Chief Financial Officer


Exhibit 13.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned officer of Toro Corp. (the “Company”), hereby certifies, to such officer’s knowledge, that:

1.
the Annual Report on Form 20-F for the year ended December 31, 2025 (the “Form 20-F”) of the Company fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934; and

2.
the information contained in the Form 20-F fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: April 15, 2026
By:
/s/ Petros Panagiotidis
 
Name:
Petros Panagiotidis
 
Title:
Chairman and Chief Executive Officer


Exhibit 13.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned officer of Toro Corp. (the “Company”), hereby certifies, to such officer’s knowledge, that:

1.
the Annual Report on Form 20-F for the year ended December 31, 2025 (the “Form 20-F”) of the Company fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934; and

2.
the information contained in the Form 20-F fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: April 15, 2026
By:
/s/ Theologos Pagiaslis
 
Name:
Theologos Pagiaslis
 
Title:
Chief Financial Officer


Exhibit 15.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement Nos. 333-275477 and 333-275478 on Form F-3 and Registration Statement Nos. 333-274652 and 333-290645 on Form S-8  of our report dated April 15, 2026, relating to the financial statements of Toro Corp. appearing in this Annual Report on Form 20-F for the year ended December 31, 2025.

/s/ Deloitte Certified Public Accountants
  
Athens, Greece
  
April 15, 2026