EUROSEAS LTD.

Euroseas Ltd. operates as a pure containership company, focusing on the feeder and intermediate containership sectors within the global ocean-going transportation industry. The company's business model revolves around chartering out its fleet of containerships, primarily on time charter contracts, to liner companies for scheduled services. Revenue generation is largely recurring due to the prevalence of time charters, which provide relatively steady income streams. The primary customer segments are major containership charterers, with the top five customers accounting for approximately 87% ¹ of revenues in 2025, including OOCL (32% ²), Maersk (23% ³), ASYAD (15% ⁴), CMA (10% ⁵), and ZIM (7% ⁶). The company leverages its affiliated ship management company, Eurobulk, for commercial and technical management, including crewing, maintenance, and chartering arrangements through Eurochart S.A.

As of April 15, 2026, Euroseas' fleet consists of 21 containerships with a total cargo carrying capacity of 786,362 dwt ⁷ or 61,144 teu ⁸. The fleet is diversified across feeder and intermediate containership types. The company has a strategy of fleet renewal and expansion, evidenced by six newbuilding containerships on order, which upon delivery will expand the fleet to 27 containerships with a total cargo carrying capacity of 1,081,626 dwt ⁹ or 84,676 teu ¹⁰. The company also actively manages its fleet through selective acquisitions and sales of vessels based on market opportunities.

For the fiscal year ended December 31, 2025, Euroseas reported total time charter revenue of $234,439,224 ¹¹, an increase of 6.9% ¹² from $218,912,526 ¹³ in 2024. Voyage charter revenue was nil in 2025, down from $473,055 ¹⁴ in 2024. Net revenue for 2025 was $227,873,562 ¹⁵, up from $212,897,313 ¹⁶ in 2024. The average TCE rate increased by 3.8% ¹⁷ to $29,107 ¹⁸ per day per vessel in 2025, compared to $28,054 ¹⁹ in 2024. Vessel operating expenses were $46,846,903 ²⁰ in 2025, a slight increase from $46,685,920 ²¹ in 2024, but daily vessel operating expenses per vessel decreased to $5,777 ²² per day in 2025 from $5,886 ²³ per day in 2024, primarily due to lower operating costs of newbuilding vessels. Related party management fees increased to $7,995,498 ²⁴ in 2025 from $7,067,408 ²⁵ in 2024, driven by an increased average number of vessels and an unfavorable euro/dollar exchange rate. General and administrative expenses rose to $6,802,563 ²⁶ in 2025 from $5,938,870 ²⁷ in 2024, mainly due to increased stock incentive plan costs and professional fees related to the Euroholdings spin-off.

Dry-docking expenses decreased significantly to $6,607,677 ²⁸ in 2025 from $10,537,928 ²⁹ in 2024, as three vessels completed extensive repairs afloat and one completed a special survey with drydock in 2025, compared to six special surveys with drydock and three intermediate surveys in water in 2024. Vessel depreciation increased to $28,612,080 ³⁰ in 2025 from $26,367,517 ³¹ in 2024 due to the larger average fleet size. The company recorded a net gain on sale of vessels of $19,429,726 ³² in 2025, stemming from the sale of M/V "Diamantis" ($10.23 million ³³ gain) and M/V "Marcos V" ($9.20 million ³⁴ gain), compared to a $5,692,653 ³⁵ gain in 2024 from the sale of M/V "Astoria." Other operating income of $120,000 ³⁶ was recognized in 2025 from loss of hire insurance.

Operating income for 2025 was $149,499,413 ³⁷, a substantial increase from $120,016,754 ³⁸ in 2024. Interest and other financing costs increased to $14,992,987 ³⁹ in 2025 from $10,620,703 ⁴⁰ in 2024, primarily due to higher debt levels. The company recognized a $238,624 ⁴¹ loss on derivatives, net, in 2025, compared to a $1,001,754 ⁴² gain in 2024, reflecting an unrealized loss on its interest rate swap. Interest income increased to $2,819,232 ⁴³ in 2025 from $2,359,240 ⁴⁴ in 2024 due to higher cash balances. Net income for 2025 was $136,967,349 ⁴⁵, up from $112,775,678 ⁴⁶ in 2024. Basic EPS was $19.73 ⁴⁷ in 2025, compared to $16.25 ⁴⁸ in 2024, and diluted EPS was $19.72 ⁴⁹ in 2025, up from $16.20 ⁵⁰ in 2024. Cash and cash equivalents and restricted cash totaled $183.32 million ⁵¹ at December 31, 2025, an increase of $102.65 million ⁵² from $80.67 million ⁵³ at December 31, 2024. Total debt as of December 31, 2025, was approximately $218.62 million ⁵⁴.

During 2025, Euroseas completed the spin-off of Euroholdings Ltd. on March 17, 2025, distributing one Euroholdings Ltd. share for every two and a half shares ⁵⁵ of Euroseas owned. This involved contributing three subsidiaries owning M/V "Diamantis P," M/V "Joanna," and M/V "Aegean Express" to Euroholdings. The company also took delivery of two newbuilding vessels, M/V "Dear Panel" and M/V "Symeon P," in January 2025. Additionally, Euroseas sold M/V "Diamantis P" in January 2025 for approximately $13.15 million ⁵⁶ and M/V "Marcos V" in October 2025 for approximately $50.0 million ⁵⁷. The company signed two new contracts on December 16, 2025, for the construction of two eco-design fuel-efficient containerships with a capacity of about 2,800 teu each ⁵⁸, scheduled for delivery in the second and third quarters of 2028, for a total contracted consideration of approximately $92.7 million ⁵⁹.

Management expects to continue its fleet renewal strategy, with six newbuilding containerships on order. These include two 4,300 teu ⁶⁰ vessels scheduled for delivery in Q3 and Q4 2027, two additional 4,300 teu ⁶¹ vessels for Q1 and Q2 2028, and two 2,800 teu ⁶² vessels for Q2 and Q3 2028. The total contracted consideration for the two 4,300 teu vessels ordered in June 2024 is approximately $120.5 million ⁶³, for the two additional 4,300 teu vessels ordered by subsidiaries in June 2024 is approximately $118.50 million ⁶⁴, and for the two 2,800 teu vessels ordered in December 2025 is approximately $92.7 million ⁶⁵. The company plans to finance these newbuilding costs with a combination of debt and equity. An amount of $27.34 million ⁶⁶ is payable in the twelve-month period ending December 31, 2026, for these shipbuilding contracts.

The company intends to maintain a balanced employment strategy, utilizing both longer-term and shorter-term time charters or spot charters. As of April 15, 2026, approximately 86% ⁶⁷ of the ship capacity days for the remainder of 2026, 65% ⁶⁸ for 2027, 44% ⁶⁹ for 2028, 22% ⁷⁰ for 2029, 16% ⁷¹ for 2030, 13% ⁷² for 2031, and 4% ⁷³ for 2032 are under time charter contracts. This strategy aims to provide predictable operating cash flows and downside protection while allowing participation in potential upside during periods of rising charter rates.

Regarding operational costs, the daily management fee per vessel paid to Eurobulk was adjusted to 840 Euros ⁷⁴ (approximately $991 ⁷⁵) starting January 1, 2025, and further adjusted to 875 Euros ⁷⁶ (approximately $1033 ⁷⁷) starting January 1, 2026, to reflect inflation. This fee is reduced by half for vessels laid up or under construction. The fixed annual management fee for executive services was adjusted to $2,300,000 ⁷⁸ from January 1, 2025, and to $2,360,000 ⁷⁹ from January 1, 2026, with an assumed annual increase of 2.0% ⁸⁰ for inflation thereafter until the agreement expires on January 1, 2028. The company is also implementing technical and operational measures to improve energy efficiency and reduce its carbon footprint, in line with ESG practices and new environmental regulations.

Planned capital allocation includes funding vessel acquisitions, drydockings, and debt repayment. The company expects to rely on available cash, operating cash flows, shareholder funds, equity offerings, and long-term borrowings to meet liquidity needs and finance capital expenditures in 2026 and beyond. The debt repayment schedule as of December 31, 2025, calls for a reduction of approximately 9% ⁸¹ of total debt by the end of 2026 and an additional 17% ⁸² by the end of 2027, totaling a 26% ⁸³ reduction over the next two years, excluding new debt. The company has ten vessels scheduled for drydocking over the next 12 months.

Management has increased the quarterly dividend to $0.75 ⁸⁴ per share for the fourth quarter of 2025, paid on March 17, 2026. Future dividend payments will depend on earnings, financial condition, cash requirements, loan agreement restrictions, growth strategy, Marshall Islands law, and charter rates.

The company acknowledges structural headwinds and execution risks, including the cyclical nature of the shipping industry and volatile charter rates. Geopolitical events, such as the ongoing conflicts in Ukraine, Palestine, and Iran, and disruptions in the Red Sea and Strait of Hormuz, are expected to continue impacting the container shipping market in 2026. These disruptions have supported container rates due to rerouting, but their resolution could exert downward pressure. The company has diverted its fleet from the Red Sea region due to heightened security risks. The U.S. Supreme Court's ruling against tariffs imposed via the IEEPA and President Trump's subsequent implementation of a new global 15% ⁸⁵ tariff under the Trade Act of 1974, set to expire on July 24, 2026 ⁸⁶, create uncertainty regarding future trade policies and their impact on global trade volumes and shipping demand.

The company faces material risks from the volatile container shipping market, including unpredictable charter rates influenced by global economic conditions, geopolitical events such as the ongoing conflicts in Ukraine, Palestine, and Iran, and attacks on commercial vessels in the Red Sea and Strait of Hormuz, which have led to rerouting and increased costs. An over-supply of containership capacity, with approximately 36.58% ⁸⁷ of the current fleet capacity on order as of April 15, 2026, could lead to reduced charter rates and profitability. Customer concentration risk is significant, with the top five charterers accounting for approximately 87% ⁸⁸ of revenues in 2025. Compliance with evolving and increasingly stringent environmental regulations, including IMO's EEXI, CII, and the EU ETS, may require substantial capital expenditures and operational changes, potentially increasing costs. The company's secured loan agreements contain financial covenants, including security cover ratios, which if breached due to declining vessel market values, could require additional collateral or debt repayment, potentially leading to foreclosure. Exposure to fluctuating SOFR interest rates on approximately $218.62 million ⁸⁹ of floating rate debt as of December 31, 2025, poses a financial risk, with a hypothetical 100 basis point increase potentially decreasing net income and increasing cash outflows by approximately $2,246,544 ⁹⁰ in 2025. Cybersecurity threats, as evidenced by a detected incident in 2024, could disrupt operations and lead to data loss, and the company does not carry cyber-attack insurance. Reliance on Eurobulk for management services creates dependence, and potential conflicts of interest exist due to shared officers and affiliations.

Management's overall tone emphasizes a disciplined approach to fleet expansion and operational efficiency, aiming for consistent shareholder returns. They highlight a strategy of carefully timing and structuring containership acquisitions and reliably operating vessels through their affiliate, Eurobulk. Key strategic priorities include renewing and expanding the fleet through selective acquisitions of quality vessels, including newbuildings, and maintaining a balanced employment strategy between longer-term and shorter-term charters to secure predictable cash flows while participating in market upside. Management also focuses on optimizing financial leverage through bank debt, with a projected debt reduction of approximately 9% ⁹¹ by the end of 2026 and an additional 17% ⁹² by the end of 2027. They are actively managing ESG initiatives, implementing technical and operational measures for energy savings and reduced carbon footprint, and ensuring compliance with evolving environmental regulations. The Board of Directors declared a quarterly dividend of $0.75 ⁹³ per share for the fourth quarter of 2025, paid on March 17, 2026, demonstrating a commitment to shareholder returns, while acknowledging that future dividends are subject to various financial and market factors.