Euroseas Ltd. Reports Results for the Nine-Month Period and Quarter Ended September 30, 2016

MAROUSSI, ATHENS, GREECE--(Marketwired - Nov 10, 2016) - Euroseas Ltd. (NASDAQ: ESEA), 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 and nine month periods ended September 30, 2016.

Third Quarter 2016 Highlights:

• Total net revenues of $7.2 million. Net loss of $4.6 million; net loss attributable to common shareholders (after a $0.4 million dividend on Series B Preferred Shares) of $5.0 million or $0.61 loss per share basic and diluted. Adjusted net loss attributable to common shareholders¹ for the period was $0.40¹ per share basic and diluted.
  
  
• Adjusted EBITDA¹ was $0.3 million.
  
  
• An average of 11.0 vessels were owned and operated during the third quarter of 2016 earning an average time charter equivalent rate of $7,737 per day.
  
  
• The Company declared its eleventh dividend of $0.4 million on its Series B Preferred Shares; the dividend was paid in-kind by issuing additional Series B Preferred Shares.
  
  

First Nine Monthss 2016 Highlights:

• Total net revenues of $21.1 million. Net loss of $26.6 million; net loss attributable to common shareholders (after a $1.3 million dividend on Series B Preferred Shares) of $27.9 million or $3.43 loss per share basic and diluted. Adjusted net loss per share attributable to common shareholders¹ for the period was $1.29¹.
  
  
•  Adjusted EBITDA¹ was $(0.8) million.
  
  
• An average of 11.3 vessels were owned and operated during the first nine months of 2016 earning an average time charter equivalent rate of $7,220 per day.
  

¹Adjusted EBITDA, Adjusted net loss, Adjusted net loss attributable to common shareholders and Adjusted loss per share attributable to common shareholders are not recognized measurements under U.S. 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.

Aristides Pittas, Chairman and CEO of Euroseas, commented: "In early September, we cancelled the second of our Ultramax newbuildings due to excessive construction delays. Along with our other Ultramax contract cancelled in June, we have requested and are pursuing return of our deposits and other expenses plus interest as specified in the newbuilding contracts and secured by refund guarantees. On the operating front, the markets remain challenging. Both of the market segments we operate in, continue being at depressed levels despite a modest recovery of drybulk charter rates. Containership rates remained depressed and the idle fleet is increasing. We have been able to extend the employment for 3 of our containerships whose charter was expiring but another onehas been idle for almost two months. As we are entering the cyclically slow season till the end of the Chinese New Year we decided to lay the vessel up till the market improves thus saving on costs.

"Thus, our focus over the next twelve months is to manage our liquidity effectively until receiving our newbuilding deposits and exploit to the extent possible market opportunities to renew our fleet. We continue to expect that the supply and demand balance will shift in favor of demand for both sectors over the next two years. We want to take advantage of such a development for the benefit of our shareholders. To this end we are evaluating various financing alternatives."

Tasos Aslidis, Chief Financial Officer of Euroseas commented: "The results of the third quarter of 2016 reflect the continued depressed state of the drybulk and container markets. Comparing our results for the third quarter of 2016 with the same period of 2015, our net revenues declined by about $4.1 million and we incurred $0.1 million lower voyage expenses."

"Total daily vessel operating expenses, including management fees, general and administrative expenses but excluding drydocking costs, were at about the same level compared to the third quarter of 2016 and registered a decrease of about 2.7% for the nine month period ended September 30, 2016 over the same period of 2015. Drydocking expenses expressed on a per vessel per day basis were higher by 20.9% in the nine month period of 2016 and 16.0% lower for the third quarter of 2016, respectively, as compared to the same periods in 2015. As always, we want to emphasize that cost control remains a key component of our strategy. The results for the nine months 2016, also include a loss of $3.2 million on termination of two newbuilding contracts, one terminated in June and the other in September 2016. This loss relates to expenses that cannot be refunded as a result of the cancelations (like management and supervision costs). Also, our results for the first nine months of 2016 include an impairment charge of $14.0 million taken in June 2016 on our equity minority investment in Euromar LLC, our joint venture with two private equity firms, as a result of continuing depressed containership markets and new debt restructuring agreements between Euromar LLC and its banks.

"As of September 30, 2016, our net outstanding debt was $52.4 million versus restricted and unrestricted cash of about $8.8 million."

Third Quarter 2016 Results:
For the third quarter of 2016, the Company reported total net revenues of $7.2 million representing a 36.1% decrease over total net revenues of $11.3 million during the third quarter of 2015. The Company reported net loss for the period of $4.6 million and a net loss attributable to common shareholders of $5.0 million, as compared to a net loss of $1.4 million and $1.8 million respectively, for the third quarter of 2015. The results for the third quarter of 2016 include a $0.05 million gain on derivatives, a $1.8 million loss on contract termination of a newbuilding contract as compared to $0.2 million loss on derivatives for the same period of 2015. Drydocking expenses amounted to $0.6 million during the third quarter of the year 2016 as one vessel underwent drydocking compared to two vessels that underwent drydocking during the end of the second quarter and the beginning of the third quarter of 2015 for a total amount of $0.89 million. Depreciation expense for the third quarter of 2016 was $2.2 million compared to $2.8 million during the same period of 2015. On average, 11.0 vessels were owned and operated during the third quarter of 2016 earning an average time charter equivalent rate of $7,737 per day compared to 15.0 vessels in the same period of 2015 earning on average $8,929 per day.

Adjusted EBITDA¹ for the third quarter of 2016 was $0.3 million compared to $2.0 million achieved during the third 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 third quarter of 2016 was $0.61 calculated on 8,139,060 basic and diluted weighted average number of shares outstanding, compared to basic and diluted loss per share of $0.29 for the third quarter of 2015, calculated on 6,140,438 basic and diluted weighted average number of shares outstanding.

Excluding the effect, on the loss attributable to common shareholders, for the quarter of the unrealized gain, the realized loss on derivatives and the loss on termination of one newbuilding contracts, the adjusted net loss per share attributable to common shareholders for the quarter ended September 30, 2016 would have been $0.40 per share basic and diluted compared to net loss of $0.26 per share basic and diluted for the quarter ended September 30, 2015. Usually, security analysts do not include the above items in their published estimates of earnings per share.

First Nine Months 2016 Results:
For the first nine months of 2016, the Company reported total net revenues of $21.1 million representing a 26.9% decrease over total net revenues of $28.9 million during the first nine months of 2015. The Company reported a net loss for the period of $26.6 million and a net loss attributable to common shareholders of $27.9 million, as compared to net loss of $10.1 million and $11.33 million respectively, for the first nine months of 2015. The results for the first nine months of 2016 include a $0.2 million loss on derivatives, a $0.01 million gain on sale of a vessel, $3.2 million loss on termination of two newbuilding contracts and a $14.0 million impairment of investment in joint venture as compared to $0.4 million loss on derivatives for the same period of 2015. Depreciation expense for the first nine months of 2016 was $6.6 million compared to $8.6 million during the same period of 2015. On average, 11.3 vessels were owned and operated during the first nine months of 2016 earning an average time charter equivalent rate of $7,220 per day compared to 15.0 vessels in the same period of 2015 earning on average $7,529 per day.

Adjusted EBITDA¹ for the first nine months of 2016 was $(0.8) million compared to $0.1 million achieved during the first nine months 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 first nine months of 2016 was $3.43, calculated on 8,116,343 basic and diluted weighted average number of shares outstanding compared to basic and diluted loss per share of $1.92 for the first nine months of 2015, calculated on 5,903,609 basic and diluted weighted average number of shares outstanding.

Excluding the effect, on the loss attributable to common shareholders, for the first nine months of 2016 of the unrealized and realized loss on derivatives, the loss on termination of two newbuilding contracts, the gain on sale of a vessel and the impairment of investment in a joint venture, the adjusted net loss per share attributable to common shareholders for the nine-month period ended September 30, 2016 would have been $1.29 compared to loss of $1.85 per share basic and diluted for the same period in 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 is as follows:

Name	Type	Dwt	TEU	Year Built	Employment(*)	TCE Rate ($/day)
Dry Bulk Vessels
XENIA	Kamsarmax	82,000		2016	TC until Jan 2020 + 1 year at charterer's option	$14,100 Option @  $14,350
EIRINI P	Panamax	76,466		2004	TC until Jan-17	104% of average BPI** 4TC
PANTELIS	Panamax	74,020		2000	TC until Dec-16	$6,800
ELENI P	Panamax	72,119		1997	TC until Nov-16	$7,500
MONICA P	Handymax	46,667		1998	TC until Nov-16	$4,500
Vessels under construction(*)
Hull Number YZJ 1153	Kamsarmax	82,000		2018	N/A
Total Dry Bulk Vessels	6	433,272
Container Carriers
EVRIDIKI G	Intermediate	34,677	2,556	2001	TC until Jan-18	$11,000
AGGELIKI P	Intermediate	30,360	2,008	1998	TC until Jan-17 +  6 months Option	$7,000 $9,000
JOANNA	Handy size	22,301	1,732	1999	open
MANOLIS P	Handy size	20,346	1,452	1995	TC until Feb-17	$6,800
AEGEAN EXPRESS	Feeder	18,581	1,439	1997	TC until Feb-17	$6,300
NINOS (ex-YM QINGDAO I)	Feeder	18,253	1,169	1990	TC until Apr-17	$7,000
KUO HSIUNG	Feeder	18,154	1,169	1993	TC until May-17	$7,000
Total Container Carriers	7	162,672	11,525
Fleet Grand Total	13	595,944	11,525

Note: (*) Hull Number YZJ 1153 is due to be delivered in the first quarter of 2018.
(**) BPI is the Baltic Panamax Index.

Summary Fleet Data:

	Three Months, Ended September 30, 2015		Three Months, Ended September 30, 2016		Nine Months, Ended September 30, 2015		Nine Months, Ended September 30, 2016
FLEET DATA
Average number of vessels (1)	15.00		11.02		15.00		11.33
Calendar days for fleet (2)	1,380.0		1,014.0		4,095.0		3,105.0
Scheduled off-hire days incl. laid-up (3)	42.50		26.42		89.58		57.69
Available days for fleet (4) = (2) - (3)	1,337.50		987.58		4,005.42		3,047.31
Commercial off-hire days (5)	26.68		32.93		117.82		127.83
Operational off-hire days (6)	12.0		-		15.62		7.5
Voyage days for fleet (7) = (4) - (5) - (6)	1,298.82		954.65		3,871.98		2,911.98
Fleet utilization (8) = (7) / (4)	97.1%		96.7%		96.7%		95.6%
Fleet utilization, commercial (9) = ((4) - (5)) / (4)	98.0%		96.7%		97.1%		95.8%
Fleet utilization, operational (10) = ((4) - (6)) / (4)	99.1%		100.0%		99.6%		99.8%
AVERAGE DAILY RESULTS
Time charter equivalent rate (11)	8,929		7,737		7,529		7,220
Vessel operating expenses excl. drydocking expenses (12)	5,251		5,020		5,556		5,143
General and administrative expenses (13)	595		818		619		867
Total vessel operating expenses (14)	5,846		5,838		6,175		6,010
Drydocking expenses (15)	647		544		460		556

(1) Average number of vessels is the number of vessels that constituted our fleet for the relevant period, as measured by the sum of the number of calendar days each vessel was a part of our 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, November 10, 2016 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, November 17, 2016. 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 third quarter ended September 30, 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 number of shares)
	Three Months Ended September 30,			Three Months Ended September 30,			Nine Months Ended September 30,			Nine Months Ended September 30,
	2015			2016			2015			2016
Revenues
Voyage revenue	11,882,933			7,567,000			30,357,715			22,111,476
Related party revenue	60,000			60,000			180,000			180,000
Commissions	(628,276	)		(400,922	)		(1,672,566	)		(1,179,636	)
Net revenues	11,314,657			7,226,078			28,865,149			21,111,840
Operating expenses
Voyage expenses	285,887			180,908			1,204,320			1,088,633
Vessel operating expenses	6,190,657			4,313,089			19,575,241			13,608,596
Drydocking expenses	893,345			551,407			1,882,654			1,725,240
Depreciation	2,824,824			2,188,438			8,605,776			6,569,978
Management fees	1,055,430			777,436			3,177,465			2,361,821
Gain on sale of vessel	-			-			-			(10,597	)
Loss on termination of newbuilding contracts	-			1,753,762			-			3,202,030
Other general and administrative expenses	821,201			825,031			2,533,286			2,694,252
Total operating expenses	12,071,344			10,590,071			36,978,742			31,239,953
Operating loss	(756,687	)		(3,363,993	)		(8,113,593	)		(10,128,113	)
Other income/(expenses)
Interest and finance cost	(382,906	)		(927,639	)		(1,232,290	)		(1,843,413	)
(Loss) / gain on derivatives, net	(210,863	)		49,048			(376,135	)		(215,839	)
Other investment income	282,625			341,571			847,875			1,024,712
Foreign exchange (loss) / gain	(4,089	)		(8,660	)		29,373			(35,792	)
Interest income	2,707			6,960			24,912			16,565
Other expenses, net	(312,526	)		(538,720	)		(706,265	)		(1,053,767	)
Equity loss and impairment in joint venture	(323,710	)		(657,765	)		(1,279,250	)		(15,410,321	)
Net loss	(1,392,923	)		(4,560,478	)		(10,099,108	)		(26,592,201	)
Dividend Series B preferred shares	(411,858	)		(436,391	)		(1,220,382	)		(1,283,808	)
Net loss available to common shareholders	(1,804,781	)		(4,996,869	)		(11,319,490	)		(27,876,009	)
Loss, per share, basic and diluted	(0.29	)		(0.61	)		(1.92	)		(3.43	)
Weighted average number of shares basic and diluted	6,140,438			8,139,060			5,903,609			8,116,343

Euroseas Ltd.
Unaudited Consolidated Condensed Balance Sheets
(All amounts expressed in U.S. Dollars - except number of shares)
		December 31, 2015			September 30, 2016
ASSETS		(unaudited)
Current Assets:
	Cash and cash equivalents	8,715,636			1,728,226
	Trade accounts receivable	1,408,272			797,225
	Other receivables, net	1,231,391			17,598,113
	Inventories	1,464,940			1,347,128
	Restricted cash	5,916,743			1,889,065
	Prepaid expenses	175,506			242,771
	Vessel held for sale	2,671,811			-
Total current assets		21,584,299			23,602,528
Fixed assets:
	Vessels, net	88,957,752			114,628,730
	Advances for vessels under construction	32,701,867			3,847,759
Long-term assets:
	Restricted cash	4,550,000			5,184,267
	Deferred charges, net	418,034			472,195
	Other investments	7,396,738			8,421,452
	Investment in joint venture	16,515,701			1,105,381
Total long-term assets		150,540,092			133,659,784
Total assets		172,124,391			157,262,312
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
	Long term debt, current portion	14,685,766			15,797,351
	Trade accounts payable	1,394,874			2,066,214
	Accrued expenses	1,203,070			847,662
	Liabilities from assets held from sale	1,122,208			-
	Deferred revenue	462,124			778,538
	Due to related company	322,703			139,640
	Derivatives	50,402			-
Total current liabilities		19,241,147			19,629,405
Long-term liabilities:
	Long term debt, net of current portion	25,552,702			36,530,657
	Derivatives	202,700			358,161
Total long-term liabilities		25,755,402			36,888,818
Total liabilities		44,996,549			56,518,223
Mezzanine equity:
	Series B Preferred shares (par value $0.01, 20,000,000 preferred shares authorized, 33,779 and 35,063 shares issued and outstanding, respectively)	32,079,249			33,363,057
Shareholders' equity:
	Common stock (par value $0.03, 200,000,000 shares authorized, 8,195,760 issued and outstanding)	245,873			246,899
	Additional paid-in capital	278,833,156			279,040,578
	Accumulated deficit	(184,030,436	)		(211,906,445	)
	Total shareholders' equity	95,048,593			67,381,032
	Total liabilities and shareholders' equity	172,124,391			157,262,312

Euroseas Ltd.
Unaudited Consolidated Condensed Statements of Cash Flows
(All amounts expressed in U.S. Dollars)
	Nine Months Ended September 30,			Nine Months Ended September 30,
	2015			2016
Cash flows from operating activities:
Net loss	(10,099,108	)		(26,592,201	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation of vessels	8,605,776			6,569,978
Amortization and write off of deferred charges	115,494			554,566
Gain on sale of a vessel				(10,597	)
Loss on termination of newbuilding contracts	-			3,202,030
Equity loss and impairment of investment in joint venture	1,279,250			15,410,321
Share-based compensation	247,465			213,448
Unrealized loss on derivatives	144,479			105,059
Other income accrued	(847,875	)		(1,024,712	)
Changes in operating assets and liabilities	687,485			1,785,527
Net cash provided by operating activities	132,966			213,419
Cash flows from investing activities:
Advances for vessels under construction	(10,674,779	)		(23,264,490	)
Vessel acquisition	-			(3,017,015	)
Release of restricted cash	3,200,000			5,325,014
Increase in restricted cash	(1,126,658	)		(1,931,603	)
Proceeds from sale of vessels	-			4,196,268
Net cash used in investing activities	(8,601,437	)		(18,691,826	)
Cash flows from financing activities:
Proceeds from issuance of common stock, net	10,545,008			-
Loan fees paid	(346,411	)		(727,501	)
Offering expenses paid	(135,463	)		(47,377	)
Proceeds from long term debt	5,000,000			28,300,000
Repayment of long-term debt	(11,444,000	)		(16,034,125	)
Net cash provided by financing activities	3,619,134			11,490,997
Net decrease in cash and cash equivalents	(4,849,337	)		(6,987,410	)
Cash and cash equivalents at beginning of period	25,411,420			8,715,636
Cash and cash equivalents at end of period	20,562,083			1,728,226

Euroseas Ltd,
Reconciliation of Adjusted EBITDA to
Net loss and Cash Flow Provided By / (Used In) Operating Activities
(All amounts expressed in U.S. Dollars)
	Three Months Ended September 30, 2015			Three Months Ended September 30, 2016			Nine Months Ended September 30, 2015			Nine Months Ended September 30, 2016
Net loss	(1,392,923	)		(4,560,478	)		(10,099,108	)		(26,592,201	)
Depreciation	2,824,824			2,188,438			8,605,776			6,569,978
Loss on termination of newbuilding contracts	-			1,753,762			-			3,202,030
Impairment of investment in joint venture	-			-			-			14,000,000
Gain on sale of a vessel	-			-			-			(10,597	)
Interest and finance costs, net (incl, interest income)	380,199			920,679			1,207,378			1,826,848
Unrealized and realized loss / (gain) on derivatives, net	210,863			(49,048	)		376,135			215,839
Adjusted EBITDA	2,022,963			253,353			90,181			(788,103	)
	Three Months Ended September 30, 2015			Three Months Ended September 30, 2016			Nine Months Ended September 30, 2015			Nine Months Ended September 30, 2016
Net cash flow provided by operating activities	927,971			185,357			132,966			213,419
Changes in operating assets / liabilities	719,388			(64,309	)		(687,485	)		(1,785,527	)
Loss on derivatives, realized	102,329			27,600			231,656			110,780
Share-based compensation	(25,397	)		(73,317	)		(247,465	)		(213,448	)
Equity loss in joint venture and other investment income, net	(41,085	)		(316,194	)		(431,375	)		(385,609	)
Interest, net	339,757			494,216			1,091,884			1,272,282
Adjusted EBITDA	2,022,963			253,353			90,181			(788,103	)

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, impairment of investment in joint venture and gain on sale of a vessel. 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 number of shares)
	Three Months Ended September 30, 2015			Three Months Ended September 30, 2016			Nine Months Ended September 30, 2015			Nine Months Ended September 30, 2016
Net loss	(1,392,923	)		(4,560,478	)		(10,099,108	)		(26,592,201	)
Unrealized loss / (gain) on derivatives	108,534			(76,648	)		144,479			105,059
Realized loss on derivatives	102,329			27,600			231,656			110,780
Gain on sale of a vessel	-			-			-			(10,597	)
Loss on termination of newbuilding contracts	-			1,753,762			-			3,202,030
Impairment of investment in joint venture	-			-			-			14,000,000
Adjusted net loss	(1,182,060	)		(2,855,764	)		(9,722,973	)		(9,184,929	)
Preferred dividends	(411,858	)		(436,391	)		(1,220,382	)		(1,283,808	)
Adjusted net loss available to common shareholders	(1,593,918	)		(3,292,155	)		(10,943,355	)		(10,468,737	)
Adjusted net loss per share, basic and diluted	(0.26	)		(0.40	)		(1.85	)		(1.29	)
Weighted average number of shares, basic and diluted	6,140,438			8,139,060			5,903,609			8,116,343

"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 136 years. Euroseas trades on the NASDAQ Global Market under the ticker ESEA since January 31, 2007.

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 and Eurobulk (FE) Ltd. Inc., also an affiliated ship management company, which are 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 12 vessels, including 3 Panamax drybulk carriers, 1 Handymax drybulk carrier and 1 Kamsarmax drybulk carrier, 2 Intermediate containerships, 2 Handysize containerships, 3 Feeder containerships. Euroseas 5 drybulk carriers have a total cargo capacity of 351,272 dwt, its 7 containerships have a cargo capacity of 11,525 teu. The Company has also signed contracts for the construction of one Kamsarmax (82,000 dwt) fuel efficient drybulk carrier. Including the new-building, the total cargo capacity of the Company's drybulk vessels will be 433,272 dwt.

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.

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