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Euroseas Ltd. Reports Results for the Year and Quarter Ended December 31, 2016

MAROUSSI, ATHENS, GREECE -- (Marketwired) -- 02/16/17 -- Euroseas Ltd. (NASDAQ: ESEA) (the "Company" or "Euroseas"), an owner and operator of drybulk and container carrier vessels and provider of seaborne transportation for drybulk and containerized cargoes, announced today its results for the three month period and full year ended December 31, 2016.

Fourth Quarter 2016 Highlights:

  • Total net revenues of $7.3 million. Net loss attributable to common shareholders of $18.1 million or $2.17 loss per share basic and diluted. This loss includes, amongst other items, a $0.4 million of dividend on Series B Preferred Shares, a $5.9 million loss on write-down of M/V Eleni which was held for sale, $3.8 million loss on expected termination of our Kamsarmax newbuilding contract and a $4.7 million impairment loss in our "Other investment" and "Investment in joint venture" ("Euromar investments"). Adjusted net loss attributable to common shareholders(1) for the period was $3.7 million or $0.45 loss per share basic and diluted.
  • Adjusted EBITDA(1) was $(0.4) million.
  • An average of 12.1 vessels were owned and operated during the fourth quarter of 2016 earning an average time charter equivalent rate of $7,666 per day.
  • The Company declared its twelfth dividend of $0.4 million on its Series B Preferred Shares; the dividend was paid in-kind by issuing additional Series B Preferred Shares.

Full year 2016 Highlights:

  • Total net revenues of $28.4 million. Net loss attributable to common shareholders of $45.9 million or $5.63 loss per share basic and diluted. This loss includes, among other items, a $1.7 million of dividend on Series B Preferred Shares, a $5.9 million loss on write-down of M/V Eleni which was held for sale, $7.1 million loss on termination of our Ultramax newbuilding contracts and on expected termination of our Kamsarmax newbuilding contract and a $18.7 million impairment loss in our Euromar investments. Adjusted net loss attributable to common shareholders(1) for the period was $14.2 million or $1.74 loss per share basic and diluted.
  • Adjusted EBITDA(1) was $(1.1) million.
  • An average of 11.52 vessels were owned and operated during the twelve months of 2016 earning an average time charter equivalent rate of $7,331 per day.

(1) Adjusted EBITDA, Adjusted net loss and Adjusted loss per share are not recognized measurements under GAAP. Refer to a subsequent section of the Press Release for the definitions and reconciliation of these measurements to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP.

As previously announced, the Company:

  • Took delivery of its Ultramax newbuilding, M/V Alexandros P, and the Panamax vessel, M/V Tasos in January 2017; also, completed the sale of M/V Eleni P and, in February 2017, sold M/V RT Dagr.
  • Drew a $10.9 million loan collateralized by its new vessel, M/V Alexandros P.
  • Sold to date approximately 1.28 million shares raising about $2.7 million of net proceeds through its at-the-market ("ATM") stock offering.

Aristides Pittas, Chairman and CEO of Euroseas, commented: "During the last quarter of 2016 and the month of January of 2017, we were able to transform the company by resolving its liquidity needs through a combination of equity raisings (through our at-the-market equity program, the contribution of a vessel that was scrapped and a private placement of our common stock), debt rescheduling and new financings. In addition, we added a further drybulk newbuilding to our fleet and replaced certain older vessels with slightly younger ones. We believe all of these steps help position Euroseas to benefit from a potential market recovery. Our fleet now includes two drybulk newbuilding vessels; at the same time, we have no remaining capital commitments since we can opt out of our Kamsarmax newbuilding contract by end of March 2017. We also face a low loan repayment burden in 2017."

"Looking forward, we could see a gradual improvement in the drybulk market if China's commodity appetite continues as supply pressures are expected to subside in the second half of 2017. We are hopeful to also see an improvement in the containership rates on the back of supply correction (increased scrapping and more slippage in new deliveries)."

"We now have the financial capacity to pursue selected acquisitions and take advantage of opportunities to invest while the prices of vessels are still relatively low. And we hope we will be able to continue acting as a platform to consolidate other ownership interests using our stock to pay for acquisitions such as the recent acquisition of M/V RT Dagr."

Tasos Aslidis, Chief Financial Officer of Euroseas, commented: "The operating results of the fourth quarter of 2016 reflect the continuing low level of charter rates in the containership market and the modestly improved (especially during November 2016) drybulk market during the quarter. On average during the fourth quarter of 2016, our vessels earned 0.7% per day per vessel less than in the fourth quarter of 2015."

"Total daily vessel operating expenses, including management fees, general and administrative expenses, but excluding drydocking costs, decreased approximately 3.8% during the fourth quarter of 2016 compared to the same quarter of last year, while for the full year 2016 the decrease was approximately 3.1%. As always, we want to emphasize that cost control remains a key component of our strategy, especially at depressed markets like at present."

"As of December 31, 2016, our outstanding debt was $52.4 million versus restricted and unrestricted cash of approximately $9.3 million. We complied with all our debt covenants as of December 31, 2016."

Fourth Quarter 2016 Results:
For the fourth quarter of 2016, the Company reported total net revenues of $7.3 million representing a 17.0% decrease over total net revenues of $8.8 million during the fourth quarter of 2015. The Company reported a net loss for the period of $17.6 million and a net loss attributable to common shareholders of $18.1 million, as compared to a net loss of $3.9 million and net loss attributable to common shareholders of $4.4 million for the fourth quarter of 2015. On average, 12.1 vessels were owned and operated during the fourth quarter of 2016 earning an average time charter equivalent rate of $7,666 per day compared to 13.97 vessels in the same period of 2015 earning an average time charter equivalent rate of $7,717 per day.

Depreciation expenses for the fourth quarter of 2016 were $2.2 million, compared to the $2.4 million for the same period of 2015. The results for the fourth quarter of 2016 include a $0.1 million net gain on derivatives, a $5.9 million loss on write-down of vessel held for sale, a $3.8 million loss on termination of a newbuilding contract and a $4.7 million impairment loss in other investment and investment in joint venture as compared to a $0.1 million net gain on derivatives, and a $1.2 million net loss resulting from gains on sale of vessels and loss on write-down of vessel held for sale for the same period of 2015.

Adjusted EBITDA for the fourth quarter of 2016 was $(0.4), million compared to $(0.2) million for the same of the fourth quarter of 2015. Please see below for Adjusted EBITDA reconciliation to net loss and cash flow provided by operating activities.

Basic and diluted loss per share attributable to common shareholders for the fourth quarter of 2016 was $2.17 calculated on 8,312,708 basic and diluted weighted average number of shares outstanding, compared to basic and diluted loss per share of $0.54 for the fourth quarter of 2015, calculated on 8,093,610 basic and diluted weighted average number of shares outstanding.

Excluding the effect on the loss attributable to common shareholders for the quarter of the net gain on derivatives, the net gain on sale of vessels, the loss on write-down of vessel held for sale, the loss on termination of a newbuilding contract and impairment loss in other investment and investment in joint venture, the adjusted net loss per share attributable to common shareholders for the quarter ended December 31, 2016 would have been $0.45 per share basic and diluted compared to net loss of $0.41 per share basic and diluted for the quarter ended December 31, 2015. Usually, security analysts do not include the above items in their published estimates of earnings per share.

Full Year 2016 Results:
For the full year of 2016, the Company reported total net revenues of $28.4 million representing a 24.6% decrease over total net revenues of $37.7 million during the twelve months of 2015. The Company reported a net loss for the period of $44.2 million and a net loss attributable to common shareholders of $45.9 million, as compared to a net loss of $14.0 million and a net loss attributable to common shareholders $15.7 million for the twelve months of 2015. On average, 11.52 vessels were owned and operated during 2016 earning an average time charter equivalent rate of $7,331 per day compared to 14.74 vessels in the same period of 2015 earning on average $7,570 per day.

Depreciation expenses for 2016 were $8.8 million compared to $11.0 million during the same period of 2015. The results for the twelve months of 2016 include a $0.1 million net loss on derivatives, a $5.9 million loss on write-down of vessel held for sale, a $7.1 million loss on termination of newbuilding contracts and a $18.7 million impairment loss in other investment and investment in joint venture, as compared to a $0.3 million net loss on derivatives and a $1.2 million net loss resulting from gains on sale of vessels and loss on write-down of vessel held for sale for the same period of 2015.

Adjusted EBITDA for 2016 was $(1.1) million decreasing from the ($0.2) million recorded during 2015. Please see below for Adjusted EBITDA reconciliation to net loss and cash flow provided by operating activities.

Basic and diluted loss per share attributable to common shareholders for 2016 was $5.63 calculated on 8,165,703 basic and diluted weighted average number of shares outstanding, compared to basic and diluted loss per share of $2.45 for 2015, calculated on 6,410,794 basic and diluted weighted average number of shares outstanding.

Excluding the effect on the loss attributable to common shareholders of the net loss on derivatives, the net gain on sale of vessels and loss on write-down of vessel held for sale, the loss on termination of newbuilding contracts and impairment loss in other investment and investment in joint venture, the adjusted net loss per share attributable to common shareholders for 2016 would have been $1.74 compared to a loss of $2.22 per share basic and diluted for 2015. Usually, security analysts do not include the above items in their published estimates of earnings per share.

Fleet Profile:
The Euroseas Ltd. fleet profile as of February 16, 2017 is as follows:

----------------------------------------------------------------------------

                                          Year                    TCE Rate
Name            Type       Dwt     TEU   Built  Employment(*)     ($/day)
----------------------------------------------------------------------------
Dry Bulk
Vessels (**)
----------------------------------------------------------------------------
                                                TC 'till Jan-
                                                     2020
                                                  + 1 year in
                                                  Charterers      $14,100
XENIA         Kamsarmax  82,000           2016      Option         $14,350
----------------------------------------------------------------------------
                                                                 Hire 104%
                                                                 of Average
EIRINI P       Panamax   76,466           2004 TC 'till Jan-18  BPI(***) 4TC
----------------------------------------------------------------------------
TASOS          Panamax   75,100           2000 TC 'till Apr-17     $6,950
----------------------------------------------------------------------------
PANTELIS       Panamax   74,020           2000 TC 'till Feb-17     $5,850
----------------------------------------------------------------------------
ALEXANDROS
P.            Ultramax   63,500           2017    Open(****)
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                                                Voyage Charter TC equivalent
MONICA P      Handymax   46,667           1998   'till Feb-17     of $8,000
----------------------------------------------------------------------------
Total Dry
Bulk Vessels      6      417,753
----------------------------------------------------------------------------

Container
Carriers
----------------------------------------------------------------------------
EVRIDIKI G     Feeder    34,677   2,556   2001 TC 'till Jan-18    $11,000
----------------------------------------------------------------------------
AGGELIKI P     Feeder    30,360   2,008   1998 TC 'till Aug-17     $6,000
----------------------------------------------------------------------------
JOANNA         Feeder    22,301   1,732   1999     Laid up
----------------------------------------------------------------------------
                                               TC 'till Mar-17
                                                 Thereafter TC
                                                    'till          $6,800
MANOLIS P      Feeder    20,346   1,452   1995      Sep-17         $6,000
----------------------------------------------------------------------------
AEGEAN
EXPRESS        Feeder    18,581   1,439   1997 TC 'till Feb-17     $6,300
----------------------------------------------------------------------------
NINOS          Feeder    18,253   1,169   1990 TC 'till Apr-17     $7,000
----------------------------------------------------------------------------
KUO HSIUNG     Feeder    18,154   1,169   1993 TC 'till May-17     $7,000
----------------------------------------------------------------------------
Total
Container
Carriers          7      162,672  11,525
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Fleet Grand
Total            13      580,425  11,525
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(*) Represents the earliest redelivery date
(**) The Company has the option to decide whether to proceed with the construction contract for a Kamsarmax drybulk vessel (Hull Number YZJ 1153) until March 31, 2017 with delivery in 2018.
(***) BPI stands for Baltic Panamax Index; the Average BPI 4TC is an index based on four time charter routes.
(****) M/V Alexandros P is "on sublects" (i.e. awaiting final approval by the charterer) for a charter until Aug-17 at a hire rate of 114% of BSI (BSI stands for Baltic Supramax Index).

Summary Fleet Data:

----------------------------------------------------------------------------
                                         Three     Three
                                       months,   months,      Year      Year
                                         ended     ended     ended     ended
                                      December  December  December  December
                                      31, 2015  31, 2016  31, 2015  31, 2016
----------------------------------------------------------------------------
FLEET DATA
Average number of vessels (1)            13.97      12.1     14.74     11.52
Calendar days for fleet (2)            1,285.0   1,113.0   5,380.0   4,218.0
Scheduled off-hire days incl. laid-
 up (3)                                    0.0      89.8      89.6     147.5
Available days for fleet (4) = (2) -
 (3)                                   1,285.0   1,023.2   5,290.4   4,070.5
Commercial off-hire days (5)             207.0      46.4     324.8     174.3
Operational off-hire days (6)             16.6       1.7      32.2       9.2
Voyage days for fleet (7) = (4) -
 (5) - (6)                             1,061.4     975.1   4,933.4   3,887.0
Fleet utilization (8) = (7) / (4)        82.6%     95.3%     93.3%     95.5%
Fleet utilization, commercial (9) =
 ((4) - (5)) / (4)                       83.9%     95.5%     93.9%     95.7%
Fleet utilization, operational (10)
 = ((4) - (6)) / (4)                     98.7%     99.8%     99.4%     99.8%

AVERAGE DAILY RESULTS
Time charter equivalent rate (11)        7,717     7,666     7,570     7,331
Vessel operating expenses excl.
 drydocking expenses (12)                5,139     4,826     5,456     5,060
General and administrative expenses
 (13)                                      602       699       615       823
Total vessel operating expenses (14)     5,741     5,525     6,071     5,883
----------------------------------------------------------------------------
Drydocking expenses (15)                    23       431       355       523
----------------------------------------------------------------------------

(1) Average number of vessels is the number of vessels that constituted the Company's fleet for the relevant period, as measured by the sum of the number of calendar days each vessel was a part of the Company's fleet during the period divided by the number of calendar days in that period.

(2) Calendar days. We define calendar days as the total number of days in a period during which each vessel in our fleet was in our possession including off-hire days associated with major repairs, drydockings or special or intermediate surveys or days of vessels in lay-up. Calendar days are an indicator of the size of our fleet over a period and affect both the amount of revenues and the amount of expenses that we record during that period.

(3) The scheduled off-hire days including vessels laid-up are days associated with scheduled repairs, drydockings or special or intermediate surveys or days of vessels in lay-up.

(4) Available days. We define available days as the total number of days in a period during which each vessel in our fleet was in our possession net of scheduled off-hire days. We use available days to measure the number of days in a period during which vessels were available to generate revenues.

(5) Commercial off-hire days. We define commercial off-hire days as days waiting to find employment.

(6) Operational off-hire days. We define operational off-hire days as days associated with unscheduled repairs or other off-hire time related to the operation of the vessels.

(7) Voyage days. We define voyage days as the total number of days in a period during which each vessel in our fleet was in our possession net of commercial and operational off-hire days. We use voyage days to measure the number of days in a period during which vessels actually generate revenues.

(8) Fleet utilization. We calculate fleet utilization by dividing the number of our voyage days during a period by the number of our available days during that period. We use fleet utilization to measure a company's efficiency in finding suitable employment for its vessels and minimizing the amount of days that its vessels are off-hire for reasons such as unscheduled repairs or days waiting to find employment.

(9) Fleet utilization, commercial. We calculate commercial fleet utilization by dividing our available days net of commercial off-hire days during a period by our available days during that period.

(10) Fleet utilization, operational. We calculate operational fleet utilization by dividing our available days net of operational off-hire days during a period by our available days during that period.

(11) Time charter equivalent, or TCE, is a measure of the average daily revenue performance of a vessel on a per voyage basis. Our method of calculating TCE is determined by dividing revenue generated from voyage charters net of voyage expenses by voyage days for the relevant time period. Voyage expenses primarily consist of port, canal and fuel costs that are unique to a particular voyage, which would otherwise be paid by the charterer under a time charter contract. TCE is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company's performance despite changes in the mix of charter types (i.e., spot voyage charters, time charters and bareboat charters) under which the vessels may be employed between the periods.

(12) Daily vessel operating expenses, which includes crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs and management fees are calculated by dividing vessel operating expenses by fleet calendar days for the relevant time period. Drydocking expenses are reported separately.

(13) Daily general and administrative expense is calculated by dividing general and administrative expense by fleet calendar days for the relevant time period.

(14) Total vessel operating expenses, or TVOE, is a measure of our total expenses associated with operating our vessels. TVOE is the sum of vessel operating expenses excluding drydocking expenses and general and administrative expenses. Daily TVOE is calculated by dividing TVOE by fleet calendar days for the relevant time period.

(15) Drydocking expenses, which include expenses during drydockings that would have been capitalized and amortized under the deferral method divided by the fleet calendar days for the relevant period. Drydocking expenses could vary substantially from period to period depending on how many vessels underwent drydocking during the period.

Conference Call and Webcast:
Later today, Thursday, February 16, 2017 at 10:30 a.m. EST, the company's management will host a conference call to discuss the results.

Conference Call details:
Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1 (866) 819-7111 (from the US), 0(800) 953-0329 (from the UK) or (+44) (0) 1452 542 301 (from outside the US). Please quote "Euroseas."

A replay of the conference call will be available until Thursday, February 23, 2017. The United States replay number is 1(866) 247-4222; from the UK 0(800) 953-1533; the standard international replay number is (+44) (0) 1452 550 000 and the access code required for the replay is: 6973591#.

Audio Webcast - Slides Presentation:
There will be a live and then archived audio webcast of the conference call, via the internet through the Euroseas website (www.euroseas.gr). Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.

The slide presentation on the fourth quarter ended December 31, 2016, will also be available in PDF format 10 minutes prior to the conference call and webcast, accessible on the company's website (www.euroseas.gr) on the webcast page. Participants to the webcast can download the PDF presentation.


                               Euroseas Ltd.
         Unaudited Consolidated Condensed Statements of Operations
       (All amounts expressed in U.S. Dollars - except share amounts)

----------------------------------------------------------------------------
                     Three Months  Three Months
                        Ended         Ended       Year Ended    Year Ended
                     December 31,  December 31,  December 31,  December 31,
                         2015          2016          2015          2016
----------------------------------------------------------------------------

Revenues
      Voyage revenue    9,298,955     7,677,560    39,656,670    29,789,036
       Related party
             revenue       60,000        60,000       240,000       240,000
         Commissions     (544,270)     (425,111)   (2,216,836)   (1,604,747)
Net revenues            8,814,685     7,312,449    37,679,834    28,424,289

Operating expenses
     Voyage expenses    1,108,193       203,079     2,312,513     1,291,712
    Vessel operating
            expenses    5,629,352     4,553,266    25,204,593    18,161,862
 Drydocking expenses       29,753       479,544     1,912,407     2,204,784
        Depreciation    2,389,247     2,218,143    10,995,023     8,788,121
     Management fees      973,870       817,775     4,151,335     3,179,596
 Loss on termination
      of newbuilding
           contracts            -     3,848,149             -     7,050,179
   Other general and
      administrative
            expenses      793,775       778,170     3,327,061     3,472,422
  Loss on write-down
  of vessel held for
                sale    1,641,885     5,924,668     1,641,885     5,924,668
 Net gain on sale of
             vessels     (461,586)            -      (461,586)      (10,597)
Total operating
 expenses              12,104,489    18,822,794    49,083,231    50,062,747

Operating loss         (3,289,804)  (11,510,345)  (11,403,397)  (21,638,458)

Other
 income/(expenses)
Interest and finance
                cost     (254,244)     (688,585)   (1,486,534)   (2,531,999)
    Gain / (loss) on
    derivatives, net      114,461        96,685      (261,674)     (119,154)
    Other investment
              income      365,063             -     1,212,938     1,024,714
 Impairment of other
          investment            -    (4,421,452)            -    (4,421,452)
    Foreign exchange
        (loss) /gain       (6,952)       (5,610)       22,421       (41,402)
     Interest income        1,744         5,765        26,656        22,330
  Other (expenses) /
         income, net      220,072    (5,013,197)     (486,193)   (6,066,963)
Equity loss in joint
             venture     (879,143)     (832,166)   (2,158,393)   (2,242,487)
 Impairment in joint
             venture            -      (273,215)            -   (14,273,215)
----------------------------------------------------------------------------
Net loss               (3,948,875)  (17,628,923)  (14,047,983)  (44,221,123)
----------------------------------------------------------------------------
Dividend Series B
 preferred shares        (418,767)     (441,891)   (1,639,149)   (1,725,699)
----------------------------------------------------------------------------
Net loss
 attributable to
 common shareholders   (4,367,642)  (18,070,814)  (15,687,255)  (45,946,822)
----------------------------------------------------------------------------
Loss, per share,
 basic and diluted          (0.54)        (2.17)        (2.45)        (5.63)
----------------------------------------------------------------------------
Weighted average
 number of shares,
 basic and diluted      8,093,610     8,312,708     6,410,794     8,165,703
----------------------------------------------------------------------------


                               Euroseas Ltd.
              Unaudited Consolidated Condensed Balance Sheets
       (All amounts expressed in U.S. Dollars - except share amounts)

                                              December 31,    December 31,
                                                   2015           2016
                                             --------------  --------------

ASSETS
Current Assets:
  Cash and cash equivalents                       8,715,636       3,208,092
  Trade accounts receivable                       1,408,272       1,432,114
  Other receivables, net                          1,231,391         870,415
  Inventories                                     1,464,940       1,291,279
  Restricted cash                                 5,916,743         655,739
  Prepaid expenses                                  175,506         172,398
  Vessel held for sale                            2,671,811       2,814,046
Total current assets                             21,584,299      10,444,083

Fixed assets:
  Vessels, net                                   88,957,752     105,584,633
  Advances for vessels under construction
   and vessel acquisition deposits               32,701,867      17,753,737
Long-term assets:
  Restricted cash                                 4,550,000       5,484,268
  Deferred charges, net                             418,034         426,783
  Other investment                                7,396,738       4,000,000
  Investment in joint venture                    16,515,701               -
Total long-term assets                          150,540,092     133,249,421
                                             --------------  --------------
Total assets                                    172,124,391     143,693,504
                                             --------------  --------------
LIABILITIES, MEZZANINE EQUITY AND
 SHAREHOLDERS' EQUITY
Current liabilities:
  Long term debt, current portion                14,685,766       5,549,216
  Loan from related party                                 -       2,000,000
  Trade accounts payable and accrued
   expenses                                       2,597,944       3,176,556
  Liabilities from assets held for sale           1,122,208               -
  Deferred revenue                                  462,124         437,322
  Due to related company                            322,703          11,539
  Derivatives                                        50,402               -
Total current liabilities                        19,241,147      11,174,633

Long-term liabilities:
  Long term debt, net of current portion         25,552,702      44,366,976
  Derivatives                                       202,700         240,181
Total long-term liabilities                      25,755,402      44,607,157
Total liabilities                                44,996,549      55,781,790

Mezzanine equity:
  Series B Preferred shares (par value
   $0,01, 20,000,000 shares authorized,
   33,779 and 35,505 issued and outstanding
   respectively)                                 32,079,249      33,804,948
Shareholders' equity:
  Common stock (par value $0,03, 200,000,000
   shares authorized, 8,195,760 and
   10,876,112, respectively, issued and
   outstanding)                                     245,873         326,283

  Additional paid-in capital                    278,833,156     283,757,739
  Accumulated deficit                          (184,030,436)   (229,977,256)
Total shareholders' equity                       95,048,593      54,106,766
                                             --------------  --------------
Total liabilities, mezzanine equity and
 shareholders' equity                           172,124,391     143,693,504
                                             --------------  --------------


                               Euroseas Ltd.
         Unaudited Consolidated Condensed Statements of Cash Flows
                  (All amounts expressed in U.S. Dollars)

                                                  Year Ended    Year Ended
                                                 December 31,  December 31,
                                                     2015          2016
                                                 ------------  ------------

Cash flows from operating activities:
Net loss                                          (14,047,983)  (44,221,123)
Adjustments to reconcile net loss to net cash
 provided by / (used in) operating activities:
Depreciation of vessels                            10,995,023     8,788,121
Loss on the write down of vessel held for sale      1,641,885     5,924,668
Amortization and write off of deferred charges        150,189       613,326
Equity loss and impairment of investment in
 joint venture                                      2,158,393    16,515,702
Share-based compensation                              306,111       294,341
Gain on sale of vessels                              (461,586)      (10,597)
Loss on termination of newbuilding contracts                -     7,050,179
Unrealized gain on derivatives, net                   (45,669)      (12,921)
Other investment income                            (1,212,938)   (1,024,714)
Impairment on other investment                              -     4,421,452
Changes in operating assets and liabilities        (1,510,997)      829,328
Net cash used in operating activities              (2,027,572)     (832,238)

Cash flows from investing activities:
Proceeds from sale of vessels                       7,345,342     4,196,268
Advance received for vessel held for sale           1,122,208             -
Cash paid for vessels under construction and
 acquisition                                      (16,628,889)  (27,329,825)
Release of restricted cash                          4,102.364     5,675,034
Increase in restricted cash                        (6,575,014)   (1,348,297)
Net cash used in investing activities             (10,633,989)  (18,806,820)

Cash flows from financing activities:
Proceeds from issuance of common stock             10,545,007     3,168,058
Offering expenses paid                               (400,696)      (82,377)
Loan arrangement fees paid                           (442,574)     (790,042)
Proceeds from related party loan                            -     2,000,000
Proceeds from long-term debt                        8,400,000    28,300,000
Repayment of long-term debt                       (22,135,960)  (18,464,125)
Net cash (used in) / provided by financing
 activities                                        (4,034,223)   14,131,514

Net decrease in cash and cash equivalents         (16,695,784)   (5,507,544)
Cash and cash equivalents at beginning of year     25,411,420     8,715,636
Cash and cash equivalents at end of year            8,715,636     3,208,092


                               Euroseas Ltd.
                    Reconciliation of Adjusted EBITDA to
          Net loss and Cash Flow Provided By Operating Activities
                  (All amounts expressed in U.S. Dollars)

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                     Three Months  Three Months
                         Ended         Ended      Year Ended    Year Ended
                     December 31,  December 31,  December 31,  December 31,
                         2015          2016          2015          2016
----------------------------------------------------------------------------
Net loss               (3,948,875)  (17,628,923)  (14,047,983)  (44,221,123)
----------------------------------------------------------------------------
Interest and finance
 costs, net (incl,
 interest income)         252,500       682,820     1,459,878     2,509,669
----------------------------------------------------------------------------
Depreciation            2,389,247     2,218,143    10,995,023     8,788,121
----------------------------------------------------------------------------
Loss on termination
 of newbuilding
 contracts                      -     3,848,149             -     7,050,179
----------------------------------------------------------------------------
Net gain on sale of
 vessels                 (461,586)            -      (461,586)      (10,597)
----------------------------------------------------------------------------
Loss on write-down
 for vessel held for
 sale                   1,641,885     5,924,668     1,641,885     5,924,668
----------------------------------------------------------------------------
Unrealized and
 realized (gain) /
 loss on
 derivatives, net        (114,461)      (96,685)      261,674       119,154
----------------------------------------------------------------------------
Impairment on other
 investment                     -     4,421,452             -     4,421,452
----------------------------------------------------------------------------
Impairment of
 investment in joint
 venture                        -       273,215             -    14,273,215
----------------------------------------------------------------------------
Adjusted EBITDA          (241,290)     (357,161)     (151,109)   (1,145,262)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

                     Three Months  Three Months
                         Ended         Ended      Year Ended    Year Ended
                     December 31,  December 31,  December 31,  December 31,
                         2015          2016          2015          2016
----------------------------------------------------------------------------
Net cash flow used
 in operating
 activities            (2,160,538)   (1,045,657)   (2,027,572)     (832,238)
----------------------------------------------------------------------------
Changes in operating
 assets /
 liabilities            2,198,482       956,199     1,510,997      (829,328)
----------------------------------------------------------------------------
Realized loss on
 derivatives, net          75,687        21,295       307,343       132,075
----------------------------------------------------------------------------
Equity loss in joint
 venture and other
 investment income,
 net                     (514,080)     (832,166)     (945,455)   (1,217,773)
----------------------------------------------------------------------------
Share-based
 compensation             (58,646)      (80,893)     (306,111)     (294,341)
----------------------------------------------------------------------------
Interest, net             217,805       624,061     1,309,689     1,896,343
----------------------------------------------------------------------------
Adjusted EBITDA          (241,290)     (357,161)     (151,109)   (1,145,262)
----------------------------------------------------------------------------

Adjusted EBITDA Reconciliation: Euroseas Ltd. considers Adjusted EBITDA to represent net earnings / (loss) before interest, income taxes, depreciation, amortization, gain / loss in derivatives and loss on termination of a newbuilding contracts, loss on write down of vessel held for sale, impairment of investment in joint venture, net gain on sale of vessels and impairment on other investment. Adjusted EBITDA does not represent and should not be considered as an alternative to net income /(loss) or cash flow from operations, as determined by United States generally accepted accounting principles, or U.S. GAAP, and the Company's calculation of Adjusted EBITDA may not be comparable to that reported by other companies. Adjusted EBITDA is included herein because it is a basis upon which the Company assesses its financial performance and liquidity position and because the Company believes that it presents useful information to investors regarding a company's ability to service and/or incur indebtedness. The Company's definition of Adjusted EBITDA may not be the same as that used by other companies in the shipping or other industries.


                               Euroseas Ltd.
              Reconciliation of Net loss to Adjusted net loss
  (All amounts expressed in U.S. Dollars - except share data and per share
                                  amounts)

----------------------------------------------------------------------------


                     Three Months  Three Months
                         Ended         Ended      Year Ended    Year Ended
                     December 31,  December 31,  December 31,  December 31,
                         2015          2016          2015          2016
----------------------------------------------------------------------------
Net loss               (3,948,875)  (17,628,923)  (14,047,983)  (44,221,123)
----------------------------------------------------------------------------
Unrealized gain on
 derivatives, net        (190,148)     (117,980)      (45,669)      (12,921)
----------------------------------------------------------------------------
Realized loss on
 derivatives, net          75,687        21,295       307,343       132,075
----------------------------------------------------------------------------
Net gain on sale of
 vessels                 (461,586)            -      (461,586)      (10,597)
----------------------------------------------------------------------------
Loss on termination
 of newbuilding
 contracts                      -     3,848,149             -     7,050,179
----------------------------------------------------------------------------
Loss on write-down
 of vessel held for
 sale                   1,641,885     5,924,668     1,641,885     5,924,668
----------------------------------------------------------------------------
Impairment loss of
 other investment
 and investment in
 joint venture                  -     4,694,667             -    18,694,667
----------------------------------------------------------------------------
Adjusted net loss      (2,883,037)   (3,258,124)  (12,606,010)  (12,443,052)
----------------------------------------------------------------------------
Preferred dividends      (418,767)     (441,891)   (1,639,149)   (1,725,699)
----------------------------------------------------------------------------
Adjusted net loss
 attributable to
 common shareholders   (3,301,804)   (3,700,015)  (14,245,159)  (14,168,751)
----------------------------------------------------------------------------
Adjusted net loss
 per share, basic
 and diluted                (0.41)        (0.45)        (2.22)        (1.74)
----------------------------------------------------------------------------
Weighted average
 number of shares,
 basic and diluted      8,093,610     8,312,708     6,410,794     8,165,703
----------------------------------------------------------------------------

"Adjusted net loss" and "Adjusted net loss per share" Reconciliation: Euroseas Ltd. considers "Adjusted net loss" to represent net loss before gain / loss on derivatives, loss on termination of new building contract and gain on sale of a vessel. "Adjusted net loss" and "Adjusted net loss per share" is included herein because we believe it assists our management and investors by increasing the comparability of the Company's fundamental performance from period to period by excluding the potentially disparate effects between periods of gain / loss on derivatives, loss on termination of newbuilding contracts, gain on sale of a vessel and impairment of investment in joint venture, which items may significantly affect results of operations between periods.

"Adjusted Net loss" and "Adjusted net loss per share" do not represent and should not be considered as an alternative to net loss or loss per share, as determined by U.S. GAAP. The Company's definition of "Adjusted net loss" and "Adjusted net loss per share" may not be the same as that used by other companies in the shipping or other industries.

About Euroseas Ltd.
Euroseas Ltd. was formed on May 5, 2005 under the laws of the Republic of the Marshall Islands to consolidate the ship owning interests of the Pittas family of Athens, Greece, which has been in the shipping business over the past 140 years. Euroseas trades on the NASDAQ Capital Market under the ticker ESEA.

Euroseas operates in the dry cargo, drybulk and container shipping markets. Euroseas' operations are managed by Eurobulk Ltd., an ISO 9001:2008 certified affiliated ship management company which is responsible for the day-to-day commercial and technical management and operations of the vessels. Euroseas employs its vessels on spot and period charters and through pool arrangements.

The Company has a fleet of 13 vessels, including one Kamsarmax drybulk carrier, three Panamax drybulk carriers, one Ultramax drybulk carrier, one Handymax drybulk carrier, and seven Feeder containerships. Euroseas six drybulk carriers have a total cargo capacity of 417,753 dwt, its seven containerships have a cargo capacity of 11,525 teu.

Forward Looking Statement
This press release contains forward-looking statements (as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) concerning future events and the Company's growth strategy and measures to implement such strategy; including expected vessel acquisitions and entering into further time charters. Words such as "expects," "intends," "plans," "believes," "anticipates," "hopes," "estimates," and variations of such words and similar expressions are intended to identify forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. These statements involve known and unknown risks and are based upon a number of assumptions and estimates that are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of the Company. Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to changes in the demand for dry bulk vessels and container ships, competitive factors in the market in which the Company operates; risks associated with operations outside the United States; and other factors listed from time to time in the Company's filings with the Securities and Exchange Commission. The Company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based.

Visit the Company's website www.euroseas.gr

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