NNA Navios Maritime Acquisition Corporation

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

OF THE SECURITIES EXCHANGE ACT OF 1934

Dated: August 26, 2021

Commission File No. 001-34104

--12-31

NAVIOS MARITIME ACQUISITION CORPORATION  

Strathvale House, 90 N Church Street,

P.O. Box 309, Grand Cayman,

KY1-1104 Cayman Islands

(Address of Principal Executive Offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F:   Form 20-F  ☒     Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):    Yes  ☐    No  ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):    Yes  ☐    No  ☒

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes  ☐      No  ☒

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):   N/A 

Table of Contents

NAVIOS MARITIME ACQUISITION CORPORATION

FORM 6-K

TABLE OF CONTENTS

This Report on Form 6-K is hereby incorporated by reference into the Navios Maritime Acquisition Corporation Registration Statement on Form F-3, File No. 333-235369.

Operating and Financial Review and Prospects

The following is a discussion of the financial condition and results of operations for the three and six month periods ended June 30, 2021 and 2020 of Navios Maritime Acquisition Corporation (referred to herein as “we,” “us” or “Navios Acquisition”). The financial statements have been stated in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). You should read this section together with the consolidated financial statements and the accompanying notes included in Navios Acquisition’s 2020 Annual Report filed on Form 20-F with the U.S. Securities and Exchange Commission (the “SEC”).

This Report 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 expectations, including Navios Acquisition’s future dividends, ability to refinance its Ship Mortgage Notes (as defined herein), expected cash flow generation and Navios Acquisition’s growth strategy and measures to implement such strategy, including expected vessel acquisitions and entering into further employment contracts. Words such as “may,” “expects,” “intends,” “plans,” “believes,” “anticipates,” “hopes,” “estimates,” and variations of such words and similar expressions are intended to identify forward-looking statements. Such statements include comments regarding expected revenue and employment contracts. These forward-looking statements are based on the information available to, and the expectations and assumptions deemed reasonable by, Navios Acquisition at the time these statements were made. Although Navios Acquisition 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 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 Navios Acquisition. 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, risks relating to: global and regional economic and political conditions including the impact of the COVID-19 pandemic and efforts throughout the world to contain its spread, including effects on global economic activity, demand for seaborne transportation of the products we ship, the ability and willingness of charterers to fulfill their obligations to us and prevailing charter rates, shipyards performing scrubber installations, drydocking and repairs, changing vessel crews and availability of financing, potential disruption of shipping routes due to accidents, diseases, pandemics, political events, piracy or acts by terrorists, including the impact of the COVID-19 pandemic and the ongoing efforts throughout the world to contain it, uncertainty relating to global trade, including prices of seaborne commodities and continuing issues related to seaborne volume and ton miles, our continued ability to enter into longterm employment contracts, our ability to maximize the use of our vessels, expected demand in the tanker sector, the ability of our contract counterparties to fulfill their obligations to us; tanker industry trends, including fluctuations in charter rates and vessel values and factors affecting vessel supply and demand; the aging of our fleet and resultant increases in operation and dry docking costs; the loss of any customer or charter or vessel; our ability to repay outstanding indebtedness, to obtain additional financing and to obtain replacement charters for our vessels, in each case, at commercially acceptable rates or at all; the financial condition of our customers, changes in the availability and costs of funding due to conditions in the bank market, capital markets and other factors; increases in costs and expenses, including but not limited to crew, insurance, provisions, port expenses, lube oil, bunkers, repairs, maintenance and general and administrative expenses; the expected cost of, and our ability to comply with, governmental regulations and maritime self-regulatory organization standards, as well as standard regulations imposed by our charterers applicable to our business; potential liability from litigation and our vessel operations, including discharge of pollutants; general domestic and international political conditions; competitive factors in the market in which Navios Acquisition operates; risks associated with operations outside the United States; and other factors listed from time to time in Navios Acquisition’s filings with the Securities and Exchange Commission, including its annual and interim reports filed on Form 20-F and Form 6-K. Navios Acquisition 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 Navios Acquisition’s expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based. Navios Acquisition makes no prediction or statement about the performance of its common stock.

Recent Developments

Merger

On August 25, 2021, Navios Acquisition entered into an Agreement and Plan of Merger with Navios Maritime Partners L.P. (“Navios Partners”) and Navios Partners’ direct wholly owned subsidiary, Navios Acquisition Merger Sub. Inc. (“Merger Sub”) (the “Merger Agreement”). Pursuant to the Merger Agreement, Merger Sub will be merged with and into Navios Acquisition, with the Company being the surviving entity (the “Merger”). Upon consummation of the Merger, the Company will become wholly owned by Navios Partners. The Merger Agreement was negotiated and unanimously approved by a special committee of the board of directors of the Company consisting of independent directors. The Merger Agreement was also unanimously approved by the Company’s full board of directors.

Under the terms of the Merger Agreement, upon consummation of the Merger, each outstanding share of common stock of the Company that is held by a holder other than Navios Partners, the Company and their respective subsidiaries (such shares, the “Company Common Stock”) will be converted into the right to receive 0.1275 of a common unit of Navios Partners.

Pursuant to the Merger Agreement, Navios Partners will file with the SEC a registration statement on Form F-4, which will include a proxy statement/prospectus describing the Merger and Navios Partners’s common units to be issued in the Merger. After the registration statement is declared effective by the SEC, the proxy statement/prospectus will be mailed to holders of Company Common Stock and the Company will hold of a special meeting of the holders of Company Common Stock (the “Company Stockholders’ Meeting”) to vote on the Merger Agreement and the Merger. Under the terms of the Merger Agreement, Navios Partners, which, subsequent to the Equity Issuance described below, beneficially owns 44,117,647 shares of Company Common Stock, or approximately 62.4% of the outstanding shares of Company Common Stock, has agreed to vote those shares of Company Common Stock in favor of the Merger and the Merger Agreement at the Company Stockholders’ Meeting.  The closing of the Merger is conditioned upon, customary terms and conditions.

Redemption and Discharge of Ship Mortgage Notes

Pursuant to the Merger Agreement, on August 26, 2021, the Company called for redemption by delivery all of its outstanding 8 1/8% First Priority Ship Mortgages due November 15, 2021 (the “Ship Mortgage Notes” or “2021 Notes”) by delivery of a Redemption Notice to the registered holders of the Ship Mortgage Notes (the “Ship Mortgage Redemption Notice”) and remitted to the indenture trustee the aggregate redemption price payable to the holders of the Ship Mortgage Notes to satisfy and discharge the Company’s obligations under the indenture relating to the Ship Mortgage Notes.  The redemption date for the Ship Mortgage Notes will be September 25, 2021.

The Company funded the approximately $397.5 million aggregate redemption price with net proceeds from (i) the sale by the Company pursuant to the Merger Agreement (in a private placement in reliance on the exemption from registration provided for under Section 4(a)(2) of the Securities Act) of 44,117,647 shares of Company Common Stock to Navios Partners for an aggregate purchase price of $150.0 million, or $3.40 per share (the “Equity Issuance”), and (ii) borrowings under the HCB Loan Agreement and BNP Loan Agreement described below. The shares of Company Common Stock issued to Navios Partners pursuant to the Equity Issuance will be cancelled in the Merger for no consideration.

NSM Loan Amendment

In connection with the execution of the Merger Agreement, on August 25, 2021, the Company and a subsidiary of N Shipmanagement Acquisition Corp., an entity affiliated with Navios Acquisition’s Chairman and Chief Executive Officer, (“NSM”) entered into a supplemental agreement (the “Supplemental Loan Agreement”) to amend an existing loan agreement dated March 19, 2021 by and among the Company and NSM, among others (the “NSM Loan Agreement”).  Under the NSM Loan Agreement, NSM had made available to the Company a secured term loan (the “NSM Loan”) of up to $100.0 million, of which a balance of approximately $98.1 million was outstanding at the time of the execution of the Supplemental Loan Agreement.  The Supplemental Loan Agreement has amended the NSM Loan Agreement to, among other things, release all of the collateral securing the NSM Loan (which has been granted as collateral to secure Navios Acquisition and/or its subsidiaries’ obligations under the HCB Loan Agreement and BNP Loan Agreement described below); eliminate NSM’s option under the NSM Loan Agreement to exchange all or a portion of the NSM Loan for equity of the Company’s material subsidiary, Navios Maritime Midstream Partners L.P.; cancel $30.0 million of the outstanding balance of the NSM Loan in exchange for 8,823,529 newly-issued shares of Company Common Stock ($3.40 per share), which shares of Company Common Stock will be converted into common units of Navios Partners in the Merger on the same terms as is applicable to other outstanding shares of Company Common Stock; and provide for the repayment of $35.0 million of the outstanding balance of the NSM Loan in cash as of the date of the Supplemental Loan Agreement and the repayment of the remainder of the outstanding balance of the NSM Loan, of approximately $33.1 million, in cash on January 7, 2022.

Hamburg Commercial Bank Loan Agreement

In connection with the execution of the Merger Agreement, on August 23, 2021, the Company and Hamburg Commercial Bank AG (“HCB”), among other lenders, entered into a loan agreement (the “HCB Loan Agreement”) under which HCB and other lenders, agreed to make available to the Company a secured term loan facility of up to $195.4 million to provide financing on seven tankers, all of which secure the loan (the “HCB Loan”) of which $190.2 million was borrowed by the Company. The first advance is repayable in fifteen quarterly installments of $4.7 million each beginning on October 29, 2021 with the final repayment to be made on April 29, 2025. The second advance is repayable in eleven quarterly installments of $2.8 million beginning on October 29, 2021 with the final repayment to be made on April 29, 2024.  The first advance bears interest at LIBOR plus 3.9% per annum and the second advance bears interest at LIBOR plus 7.0% per annum.  

In connection with HCB Loan Agreement, the Company fully prepaid two of its existing facilities of a total amount of $40.7 million.

BNP Loan Agreement

In connection with the execution of the Merger Agreement, on August 25 2021, certain subsidiaries of the Company and BNP Paribas (“BNP”), among other lenders, entered into a loan agreement (the “BNP Loan Agreement”) under which BNP, and other lenders, agreed to make available to such Company subsidiaries a secured term loan facility of up to $96.0 million (the “BNP Loan”), secured by five vessels owned by the Company of which the full amount was borrowed by the subsidiaries of the Company.  The BNP Loan is repayable in eight quarterly installments of $4.6 million beginning three months from the date of the initial drawdown, with the final repayment to be made on the earlier of two years after the date of the initial drawdown or December 30, 2023. The BNP Loan bears interest at LIBOR plus 3.55% per annum.

NMM Loan Agreement

In connection with the execution of the Merger Agreement, on August 24, 2021, the Company and Navios Partners entered into a loan agreement (the “NMM Loan Agreement”) under which Navios Partners agreed to make available to the Company a working capital facility of up to $45.0 million. As of the date hereof, the full amount of the facility has been drawn. The full amounts borrowed, including accrued and unpaid interest are due and payable on the date that is one year following the date hereof. The facility bears interest at the rate of 11.50% per annum. 

Continuous Offering Program

On November 29, 2019, Navios Acquisition entered into a Continuous Offering Program Sales Agreement, pursuant to which Navios Acquisition may issue and sell from time to time through the sales agent shares of common stock having an aggregate offering price of up to $25.0 million. As of August 25, 2021, Navios Acquisition has issued 2,132,595 shares of common stock and received net proceeds of $9.2 million.

Fleet

As of August 18, 2021 our fleet consists of a total of 45 double-hulled tanker vessels, aggregating approximately 5.4 million deadweight tons, or dwt. The fleet includes 12 Very Large Crude Carriers (“VLCC”) tankers (over 200,000 dwt per ship) which transport crude oil, including the two bareboat chartered-in VLCCs expected to be delivered in each of the third quarter of 2021 and the third quarter of 2022, ten Long Range 1 (“LR1”) product tankers (60,000-85,000 dwt per ship), 18 Medium Range 2 (“MR2”) product tankers (47,000-52,000 dwt per ship), three Medium Range one (“MR1”) product tankers (35,000-45,000 dwt per ship) and two chemical tankers (25,000 dwt per ship), which transport refined petroleum products and bulk liquid chemicals. All of our vessels are currently chartered-out to quality counterparties with an average remaining charter period of approximately one year. . As of August 18, 2021 the Company has 8,033 and 16,244 available days for the second half of 2021 and for the 2022 and has currently contracted out (excluding fixed days with floating rate) 5,535 and 3,588, respectively, expecting to generate revenues (excluding any potential profit sharing) of approximately $96.3 million and $87.3 million, respectively. The average base contractual net daily charter-out rate for the fleet is $17,407 for the second half of 2021 and $24,339 for 2022. As of August 18, 2021, the Company has total contracted revenue of $466.0 million.

Charter Policy and Industry Outlook

Our core fleet currently consists of 45 vessels, of which 12 are VLCCs (including two bareboat chartered-in VLCCs expected to be delivered in each of the third quarter of 2021 and the third quarter of 2022), 31 are product tankers, and two are chemical tankers. All of our vessels are currently chartered-out to quality counterparties with an average remaining charter period of approximately one year. Many of our contracts have profit sharing arrangements (see fleet table above). While all of our vessels are currently chartered-out, we intend to deploy any vessels that would become open—not chartered-out—to leading charterers in a mix of long, medium and short-term time charters, depending on the vessels’ positions, seasonality and market outlook. This chartering strategy is intended to allow us to capture increased profits during strong charter markets, while developing relatively stable cash flows from longer-term time charters. We will also seek profit sharing arrangements in our employment contracts, to provide us with potential incremental revenue above the contracted minimum charter rates.

Using Navios Tankers Management Inc.’s (the “Manager”) global network of relationships in the maritime transportation industry, coupled with its commercial, financial and operational expertise, we plan to opportunistically grow our fleet through the timely and selective acquisition of high-quality newbuilding or secondhand vessels when we believe those acquisitions will result in attractive returns on invested capital and increased cash flow. We also intend to engage in opportunistic dispositions where we can achieve attractive values for our vessels as we assess the market cycle. We believe our diverse and versatile fleet, combined with the experience and long-standing relationships of Manager’s with participants in the maritime transportation industry, position us to identify and take advantage of attractive acquisition opportunities.

Factors Affecting Navios Acquisition’s Results of Operations

We believe the principal factors that will affect our future results of operations are the economic, regulatory, political and governmental conditions that affect the shipping industry generally and that affect conditions in countries and markets in which our vessels engage in business. Other key factors that will be fundamental to our business, future financial condition and results of operations include:

In addition to the factors discussed above, we believe certain specific factors will impact our consolidated results of operations. These factors include:

Voyage, Time Charter and Pooling Arrangements

Revenues are driven primarily by the number of vessels in the fleet, the number of days during which such vessels operate and the amount of daily charter hire rates that the vessels earn under charters, which, in turn, are affected by a number of factors, including:

Time charters are available for varying periods, ranging from a single trip (spot charter) to long-term which may be many years. In general, a long-term time charter assures the vessel owner of a consistent stream of revenue. Operating the vessel in the spot market affords the owner greater spot market opportunity, which may result in high rates when vessels are in high demand or low rates when vessel availability exceeds demand. Vessel charter rates are affected by world economics, international events, weather conditions, strikes, governmental policies, supply and demand, and many other factors that might be beyond the control of management.

For vessels operating in pooling arrangements, the Company earns a portion of total revenues generated by the pool, net of expenses incurred by the pool. The amount allocated to each pool participant vessel, including the Company’s vessels, is determined in accordance with an agreed-upon formula, which is determined by the points awarded to each vessel in the pool based on the vessel’s age, design and other performance characteristics.

The cost to maintain and operate a vessel increases with the age of the vessel. Older vessels are less fuel efficient, cost more to insure and require upgrades from time to time to comply with new regulations. The average age of Navios Acquisition’s owned fleet is currently 9.4 years. But, as such fleet ages or if Navios Acquisition expands its fleet by acquiring previously owned and older vessels the cost per vessel would be expected to rise and, assuming all else, including rates, remains constant, vessel profitability would be expected to decrease.

Navios Acquisition reports financial information and evaluates its operations by charter revenues. Navios Acquisition does not use discrete financial information to evaluate operating results for each type of charter. As a result, management reviews operating results solely by revenue per day and operating results of the fleet and thus Navios Acquisition has determined that it operates under one reportable segment.

Set forth below are selected historical and statistical data for Navios Acquisition for each of the three and six month periods ended June 30, 2021 and 2020 that the Company believes may be useful in better understanding the Company’s financial position and results of operations.

Navios Acquisition believes that the important measures for analyzing trends in its results of operations consist of the following:

Period-over-Period Comparisons

The Three Month Period ended June 30, 2021 compared to the Three Month Period ended June 30, 2020

The following table presents consolidated revenue and expense information for the three month periods ended June 30, 2021 and 2020. This information was derived from the unaudited consolidated statements of operations of Navios Acquisition for the respective periods.

Revenue: Revenue for the three month period ended June 30, 2021 decreased by $53.0 million, or 47.2%, to $59.2 million, as compared to $112.2 million for the same period of 2020. The decrease was mainly attributable to a decrease in market rates during the three month period ended June 30, 2021 as compared to the same period of 2020; partially mitigated by an increase in revenue by $7.3 million due to the acquisition of seven containerships from Navios Europe II in June 2020 and the delivery of two bareboat charter-in vessels, one in each in October 2020 and February 2021, respectively. Available days of the fleet increased to 4,002 days for the three month period ended June 30, 2021, as compared to 3,859 days for the three month period ended June 30, 2020, mainly due to the reasons mentioned above. The time charter equivalent rate, or TCE Rate per day, decreased to $14,754 for the three month period ended June 30, 2021, from $28,187 for the three month period ended June 30, 2020.

Time charter and voyage expenses: Time charter and voyage expenses for the three month period ended June 30, 2021 increased by $2.5 million, or 71.4%, to $6.0 million, as compared to $3.5 million for the same period of 2020. The increase was mainly attributable to a $4.1 million increase in charter-in expenses; partially mitigated by a (i) $0.6 million decrease in brokers’ commission costs; (ii) $0.5 million decrease in bunkers and voyage expenses related to the spot voyages incurred in the period; and (iii) $0.5 million decrease in port expenses.

Direct vessel expenses: Direct vessel expenses, comprised of the amortization of dry dock and special survey costs, of certain vessels of our fleet amounted to $4.5 million for the three month period ended June 30, 2021, as compared to $3.5 million for the three month period ended June 30, 2020.

Vessel operating expenses (management fees): Vessel operating expenses amounted to $29.8 million for each of the three month periods ended June 30, 2021 and June 30, 2020.

General and administrative expenses: Total general and administrative expenses for the three month period ended June 30, 2021 decreased by $0.9 million to $5.4 million compared to $6.3 million for the three month period ended June 30, 2020. For the three month periods ended June 30, 2021 and 2020, the expenses charged by the Manager for administrative services were $3.4 million and $3.0 million, respectively.

Depreciation and amortization: Depreciation and amortization amounted to $16.1 million for the three month period ended June 30, 2021, as compared to $16.6 million for the three month period ended June 30, 2020. Depreciation of a vessel is calculated using an estimated useful life of 25 years from the date the vessel was originally delivered from the shipyard.

Interest income: Interest income for the three month period ended June 30, 2021 decreased to $0, as compared to $0.4 million for the three month period ended June 30, 2020.

Interest expense and finance cost: Interest expense and finance cost for the three month period ended June 30, 2021 decreased by $3.2 million to $18.5 million, as compared to $21.7 million for the three month period ended June 30, 2020. The decrease was mainly due to the decrease in interest expense attributable to the repurchase of the 2021 Notes (as defined herein) and the decrease in the average outstanding balances of our credit facilities and sale and leaseback agreements. The decrease was also due to the decrease of the weighted average interest rate for the three month period ended June 30, 2021 to 6.31% compared to 6.61% in the same period in 2020 and the decrease of the average outstanding balance. The average outstanding balance of our credit facilities (other than the 2021 Notes, as defined in “Long-Term Debt Obligations and Credit Arrangements – Ship Mortgage Notes”) decreased to $464.7 million for the three month period ended June 30, 2021 as compared to $495.3 million for the three month period ended June 30, 2020. As of June 30, 2021 and 2020, the outstanding balance under Navios Acquisition’s total borrowings was $969.3 million and $1,174 million, respectively, excluding loan payable to affiliate company.

Gain on sale of vessels and Impairment loss: Gain on sale of vessels and Impairment loss for the three month period ended June 30, 2021 amounted to $14.4 million, as compared to $0 for the three month period ended June 30, 2020. For the three month period ended June 30, 2021, there was $20.6 million gain on sale of three containership vessels, the Ete N, the Fleur N, and the Spectrum N that was partially mitigated by a $6.2 million loss on sale of vessel the Nave Neutrino for the three month period ended June 30, 2021.

Other income: Other income for the three month period ended June 30, 2021 was $0.9 million. For the comparative period of 2020 other income was $0.2 million.

Other expense: Other expense for the three month period ended June 30, 2021 was $0.7 million. For the comparative period of 2020 other expense was $0 million.

The Six Month Period ended June 30, 2021 compared to the Six Month Period ended June 30, 2020

The following table presents consolidated revenue and expense information for the six month periods ended June 30, 2021 and 2020. This information was derived from the unaudited consolidated statements of income of Navios Acquisition for the respective periods.

Revenue: Revenue for the six month period ended June 30, 2021 decreased by $78.4 million, or 37.3%, to $131.7 million, as compared to $210.1 million for the same period of 2020. The decrease was mainly attributable to a decrease in market rates during the six month period ended June 30, 2021 as compared to the same period of 2020; partially mitigated by an increase in revenue by $16.9 million due to the acquisition of seven containerships from Navios Europe II in June 2020 and the delivery of two bareboat charter-in vessels, one in each in October 2020 and February 2021, respectively. Available days of the fleet increased to 8,495 days for the six month period ended June 30, 2021, as compared to 7,614 days for the six month period ended June 30, 2020, mainly due to the reasons mentioned above. The TCE Rate per day, decreased to $15,309 for the six month period ended June 30, 2021, from $26,339 for the six month period ended June 30, 2020.

Time charter and voyage expenses: Time charter and voyage expenses for the six month period ended June 30, 2021 increased by $2.3 million, or 24.2%, to $11.8 million, as compared to $9.5 million for the same period of 2020. The increase was mainly attributable to a $7.1 million increase in charter-in expenses; partially mitigated by a (i) $3.3 million decrease in bunkers and voyage expenses related to the spot voyages incurred in the period; (ii) $0.9 million decrease in brokers’ commission costs; and (iii) $0.6 million decrease in port expenses.

Direct vessel expenses: Direct vessel expenses, comprised of the amortization of dry dock and special survey costs, of certain vessels of our fleet amounted to $8.5 million for the six month period ended June 30, 2021, as compared to $6.6 million for the six month period ended June 30, 2020.

Vessel operating expenses (management fees): Vessel operating expenses amounted to $62.3 million for the six month period ended June 30, 2021, as compared to $59.7 million for the six month period ended June 30, 2020. The increase was primarily due to the increase in the size of our fleet as discussed above. Please see Related Party Transactions for discussion on the management fees.

General and administrative expenses: Total general and administrative expenses for the six month period ended June 30, 2021 increased by $0.3 million to $10.5 million compared to $10.2 million for the six month period ended June 30, 2020, mainly due to the increase in legal and professional fees and the increase in the size of our fleet as discussed above. For the six month periods ended June 30, 2021 and 2020, the expenses charged by the Manager for administrative services were $7.1 million and $6.0 million, respectively.

Depreciation and amortization: Depreciation and amortization amounted to $32.7 million for the six month period ended June 30, 2021, as compared to $33.2 for the six month period ended June 30, 2020, respectively. Depreciation of a vessel is calculated using an estimated useful life of 25 years from the date the vessel was originally delivered from the shipyard.

Interest expense and finance cost: Interest expense and finance cost for the six month period ended June 30, 2021 decreased by $6.7 million to $36.8 million, as compared to $43.5 million for the six month period ended June 30, 2020. The decrease was mainly due to the decrease in interest expense attributable to the repurchase of the 2021 Notes (as defined herein) and the decrease in the average outstanding balances of our credit facilities and sale and leaseback agreements. The weighted average interest rate for the six month period ended June 30, 2021 increase to 6.24% compared to 4.40% in the same period in 2020. The average outstanding balance of our credit facilities (other than the 2021 Notes, as defined in “Long-Term Debt Obligations and Credit Arrangements – Ship Mortgage Notes”) decreased to $480.6 million for the six month period ended June 30, 2021 as compared to $508.4 million for the six month period ended June 30, 2020. As of June 30, 2021 and 2020, the outstanding balance under Navios Acquisition’s total borrowings was $969.3 million and $1,174 million, respectively, excluding loan payable to affiliate company.

Gain on sale of vessels and Impairment loss: Gain on sale of vessels amounted to $14.4 million for the six month period ended June 30, 2021 as compared to impairment loss amounted to $13.9 million for the six month period ended June 30, 2020. For the six month period ended June 30, 2021, there was a $22.3 million gain on sale of five containership vessels, the Solstice N, the Allegro N, the Ete N, the Fleur N, and the Spectrum N that was mitigated by a $7.9 million loss on sale of vessels the Nave Neutrino and the Nave Celeste for the six month period ended June 30, 2021. The gain on sale of vessels and impairment loss for the six month period ended June 30, 2020 resulted from $13.9 million related to the other-than-temporary impairment recognized in the Navios Acquisition’s receivable from Navios Europe II.

Other income: Other income for the six month period ended June 30, 2021 was $1.7 million. For the comparative period of 2020 other income was $0.

Other expense: Other expense for the six month period ended June 30, 2021 was $1.4 million. For the comparative period of 2020 other expense was $1.5 million.

Liquidity and Capital Resources

Our primary short-term liquidity needs are to fund general working capital requirements, dry docking expenditures, minimum cash balance maintenance as per our credit facility agreements and debt repayment, and other obligations from time to time, while our long-term liquidity needs primarily relate to expansion and investment capital expenditures and other maintenance capital expenditures and debt repayment. Expansion capital expenditures are primarily for the purchase or construction of vessels to the extent the expenditures increase the operating capacity of or revenue generated by our fleet, while maintenance capital expenditures primarily consist of dry docking expenditures and expenditures to replace vessels in order to maintain the operating capacity of or revenue generated by our fleet. We anticipate that our primary sources of funds for our short-term liquidity needs will be cash flows from operations, long-term borrowings and proceeds from asset sales.

In February 2018, the Board of Directors of Navios Acquisition authorized a stock repurchase program for up to $25.0 million of Navios Acquisition’s common stock, for two years. Stock repurchases were made from time to time for cash in open market transactions at prevailing market prices or in privately negotiated transactions. The timing and amount of repurchases under the program were determined by management based upon market conditions and other factors. Repurchases were made pursuant to a program adopted under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. The program did not require any minimum repurchase or any specific number or amount of shares of common stock and was suspended or reinstated at any time in Navios Acquisition’s discretion and without notice. Repurchases were subject to restrictions under Navios Acquisition’s credit facilities and indenture. Up to the expiration of the stock repurchase program in February 2020, Navios Acquisition had repurchased 735,251 shares since the program was initiated for approximately $7.5 million.

On November 29, 2019, Navios Acquisition entered into a Continuous Offering Program Sales Agreement for the issuance and sale from time to time shares of Navios Acquisition’s common stock having an aggregate offering price of up to $25.0 million. An amended Sales Agreement was entered into on December 23, 2019. As before, the Sales Agreement contains, among other things, customary representations, warranties and covenants by Navios Acquisition and indemnification obligations of the parties thereto as well as certain termination rights for such parties. As of August 25, 2021, Navios Acquisition has issued 2,132,595 shares of common stock and received net proceeds of $9.2 million.

Going Concern

As of December 31, 2020, Navios Acquisition’s current assets totaled $140.6 million, while current liabilities totaled $805.7 million, resulting in a negative working capital position of $665.3 million, primarily related to the classification as current of the $602.6 million of 2021 Notes (as defined herein) which mature on November 15, 2021, balloon payments due under its credit facilities and financial liabilities under the sale and leaseback transactions. These conditions raised substantial doubt about the Company's ability to continue as a going concern.

During the first semester of 2021, Navios Acquisition sold the Solstice N, the Allegro N, the Acrux N, the Vita N, the Ete N, the Fleur N, the Spectrum N, the Nave Celeste and the Nave Neutrino for an aggregate net sale price of $146.1 million. In the first semester of 2021, Navios Acquisition repurchased $53.3 million of its Ship Mortgage Notes for a cash consideration of $42.5 million.

In addition, during the first quarter of 2021, Navios Acquisition entered into a secured loan agreement with NSM for a loan of up to $100.0 million to be used for general corporate purposes. To date, Navios Acquisition has drawn down the total amount of $100.0 million of the loan.

During the third quarter of 2021, Navios Acquisition repurchased additional $151.8 million of its Ship Mortgage Notes for a cash consideration of $131.9 million. The balance of the remaining $397.5 million of 2021 Notes has been satisfied subsequently to June 30, 2021, as described in the Note 19 to the condensed consolidated financial statements

Following the above and based on internal forecasts and projections that take into account reasonably possible changes in Company’s trading performance, management believes that the Company has adequate financial resources to continue in operation and meet its financial commitments, including but not limited to capital expenditures and debt service obligations, for a period of at least twelve months from the date of issuance of these consolidated financial statements. Accordingly, substantial doubt about the Company’s ability to continue as a going concern has been alleviated.

Cash Flow

Cash flows for the six month period ended June 30, 2021 compared to the six month period ended June 30, 2020:

The following table presents cash flow information for the six month periods ended June 30, 2021 and 2020.

Cash (used in)/ provided by operating activities for the six month period ended June 30, 2021 as compared to the six month period ended June 30, 2020:

Net cash (used in)/ provided by operating activities decreased by $57.2 million to $6.5 million outflow for the period ended June 30, 2021 as compared to $50.7 million inflow for the period ended June 30, 2020. The decrease is analyzed as follows:

The net loss for the six month period ended June 30, 2021 was $5.4 million compared to net income of $31.9 million for the six month period ended June 30, 2020. In determining net cash used in operating activities for the six month period ended June 30, 2021, net loss was adjusted for the effect of depreciation and amortization of $32.7 million, $14.4 million for gain on sale of vessels and Impairment loss, $10.7 million for gain on bond repurchase, $7.8 million for the amortization of drydock and special survey costs, $3.0 million for amortization and write-off of deferred finance fees and bond premium, and $0.1 million for stock based compensation.

The net cash outflow resulting from the change in operating assets, liabilities and payments for drydock and special survey costs of $26.1 million for the six month period ended June 30, 2021 mainly resulted from (i) an $8.9 million payment for drydock and special survey costs; (ii) a $6.0 million decrease in deferred revenue; (iii) a $4.9 million increase in prepaid expenses and other current assets; (iv) a $3.9 million decrease in accounts payable; (v) a $2.3 million decrease in accrued expenses; (vi) a $1.5 million increase in other long term assets; (vii) a $0.6 million increase in due from related parties, long-term; and (viii) a $0.2 million decrease in operating lease liabilities short and long-term. These were partially offset by a: (i) $4.7 million decrease in accounts receivable; (ii) $2.4 million decrease in inventories; and (iii) $1.6 million increase in due to related parties, short-term.

In determining net cash provided by operating activities for the six month period ended June 30, 2020, the net income was adjusted for the effect of depreciation and amortization of $33.2 million, $13.9 million impairment of receivable in affiliated company, $6.2 million for the amortization of drydock and special survey costs, $3.0 million for amortization and write-off of deferred finance fees and bond premium, and $0.2 million for stock based compensation.

The net cash inflow resulting from the change in operating assets, liabilities and payments for drydock and special survey costs of $37.6 million for the six month period ended June 30, 2020 mainly resulted from a $5.9 million increase in deferred revenue, a $3.8 million decrease in accounts receivable, a $2.9 million decrease in prepaid expenses, a $2.5 million decrease in inventories and a $0.9 million increase in accrued expenses. These were partially offset by a $20.4 million payment for drydock and special survey costs, a $20.1 million decrease in the balance due to related parties short-term, a $5.4 million decrease in accounts payable, a $3.9 million increase in other long term assets, a $2.0 million increase in the balance due from related parties, short-term and a $1.8 million increase in the balance due from related parties, long-term.

Cash provided by/ (used in) investing activities for the six month period ended June 30, 2021 as compared to the six month period ended June 30, 2020:

Net cash provided by/ (used in) investing activities increased by $187.5 million to $142.9 million inflow for the six month period ended June 30, 2021 from $44.6 million outflow for the six month period ended June 30, 2020.

Net cash provided by investing activities for the six month period ended June 30, 2021, resulted from $146.1 million net cash proceeds from sale of vessels, partially offset by $3.2 million for vessels improvements.

Net cash used in investing activities for the six month period ended June 30, 2020, resulted from $44.6 million from Acquisition of vessels/ vessels improvements.

Cash (used in)/ provided by financing activities for the six month period ended June 30, 2021 as compared to the six month period ended June 30, 2020:

Net cash (used in)/ provided by financing activities decreased by $111.0 million to $92.7 million outflow for the six month period ended June 30, 2021 from $18.3 million inflow for the six month period ended June 30, 2020.

Net cash used in financing activities for the six month period ended June 30, 2021 resulted from: (i) $140.6 million of loan repayments; (ii) $1.2 million of debt issuance costs; and (iii) $0.8 million of dividends paid; partially mitigated by a (i) $47.2 million loan proceeds from an affiliate company; and (ii) $2.8 million net proceeds from equity offerings.

Net cash provided by financing activities for the six month period ended June 30, 2020 resulted from: (i) $133.1 million loan proceeds, net of deferred finance costs; and (ii) $0.9 million in equity offering proceeds; and was partially mitigated by: (a) $106.1 million of loan repayments; and (b) $9.6 million of dividends paid.

EBITDA in this document represents net income/ (loss) before interest and finance costs, before depreciation and amortization and before income taxes. Adjusted EBITDA in this document represents EBITDA excluding certain items, such as stock-based compensation, gain on sale of vessels, gain/ (loss) on debt repayment and other than temporary investment loss on equity investment.

We use Adjusted EBITDA as liquidity measure and reconcile EBITDA and Adjusted EBITDA to net cash provided by/ (used in) operating activities, the most comparable U.S. GAAP liquidity measure. EBITDA is calculated as follows: net cash provided by/(used in) operating activities adding back, when applicable and as the case may be, the effect of: (i) net increase/(decrease) in operating assets; (ii) net (increase)/decrease in operating liabilities; (iii) net interest cost; (iv) amortization of deferred finance costs and other related expenses; (v) equity/ (loss) in net earnings of affiliates, net of dividends received; (vi) payments for dry dock and special survey costs; (vii) impairment charges; (viii) gain/ (loss) on sale of assets; (ix) gain/ (loss) on debt repayment; (x) stock- based compensation and (xi) transaction costs. Navios Acquisition believes that EBITDA and Adjusted EBITDA are each the basis upon which liquidity can be assessed and present useful information to investors regarding Navios Acquisition’s ability to service and/or incur indebtedness, pay capital expenditures, meet working capital requirements and pay dividends. Navios Acquisition also believes that EBITDA and Adjusted EBITDA are used: (i) by potential lenders to evaluate potential transactions; (ii) to evaluate and price potential acquisition candidates; and (iii) by securities analysts, investors and other interested parties in the evaluation of companies in our industry.

EBITDA and Adjusted EBITDA have limitations as an analytical tool, and should not be considered in isolation or as a substitute for the analysis of Navios Acquisition’s results as reported under U.S. GAAP. Some of these limitations are: (i) EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, working capital needs; and (ii) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future. EBITDA and Adjusted EBITDA do not reflect any cash requirements for such capital expenditures. Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as a principal indicator of Navios Acquisition’s performance. Furthermore, our calculation of EBITDA and Adjusted EBITDA may not be comparable to that reported by other companies due to differences in methods of calculation.

Adjusted EBITDA affected by the items described in the table above, for the three month period ended June 30, 2021 decreased by $54.9 million to $17.8 million, as compared to $72.7 million for the same period of 2020. The decrease in Adjusted EBITDA was mainly due to a: (i) $53.0 million decrease in revenue; (ii) $2.5 million increase in time charter and voyage charter expenses; and (iii) $0.4 million increase in direct vessel expenses (other than amortization of dry dock and special survey cost); partially mitigated by a: (i) $0.9 million decrease in general and administrative expenses (excluding stock-based compensation); and (ii) $0.1 million increase in other income/ (expense), net.

Adjusted EBITDA affected by the items described in the table above, for the six month period ended June 30, 2021 decreased by $82.1 million to $46.9 million, as compared to $129.0 million for the same period of 2020. The decrease in Adjusted EBITDA was mainly due to a: (i) $78.4 million decrease in revenue; (ii) $2.6 million increase in vessel operating expenses primarily due to the increase in the size of our fleet as discussed above; (iii) $2.3 million increase in time charter and voyage charter expenses; (iv) $0.3 million increase in direct vessel expenses (other than amortization of dry dock and special survey cost); and (v) $0.3 million increase in general and administrative expenses (excluding stock-based compensation) mainly due to the increase in the size of our fleet as discussed above; partially mitigated by a: (i) $1.7 million increase in other income; and (ii) $0.1 million decrease in other expense.

Long-Term Debt Obligations and Credit Arrangements

Ship Mortgage Notes

8 1/8% First Priority Ship Mortgages: On November 13, 2013, the Company and its wholly owned subsidiary, Navios Acquisition Finance (US) Inc. (“Navios Acquisition Finance” and together with the Company, the “2021 Co-Issuers”) issued $610.0 million in first priority ship mortgage notes (the “Existing Notes”) due on November 15, 2021 at a fixed rate of 8.125%.

On March 31, 2014, the Company completed a sale of $60.0 million of its first priority ship mortgage notes due in 2021 (the “Additional Notes,” and together with the Existing Notes, the “2021 Notes”or the “Ship Mortgage Notes”). The terms of the Additional Notes are identical to the Existing Notes and were issued at 103.25% plus accrued interest from November 13, 2013.

The 2021 Co-Issuers currently have the option to redeem the 2021 Notes in whole or in part, at a fixed price of 106.094% of the principal amount, which price declined ratably until it reached par in 2019, plus accrued and unpaid interest, if any.

In addition, upon the occurrence of certain change of control events, the holders of the 2021 Notes will have the right to require the 2021 Co-Issuers to repurchase some or all of the 2021 Notes at 101% of their face amount, plus accrued and unpaid interest to the repurchase date.

The 2021 Notes contain covenants which, among other things, limit the incurrence of additional indebtedness, issuance of certain preferred stock, the payment of dividends, redemption or repurchase of capital stock or making restricted payments and investments, creation of certain liens, transfer or sale of assets, entering in transactions with affiliates, merging or consolidating or selling all or substantially all of the 2021 Co-Issuers’ properties and assets and creation or designation of restricted subsidiaries.

In connection with the release of the Nave Celeste and the Nave Neutrino from the 2021 Notes, the Nave Spherical and an amount of $5.2 million were added as collateral.

In the second quarter of 2021, Navios Acquisition repurchased $53.3 million of its Ship Mortgage Notes for a cash consideration of $42.5 million resulting in a gain on bond repurchase of $10.7 million net of deferred fees written-off.

Subsequently to June 30, 2021 to date, Navios Acquisition repurchased $151,8 million of its Ship Mortgage Notes for a cash consideration of $131.9 million.

The balance of the remaining $397.5 million of 2021 Notes has been repaid subsequently to the second quarter of 2021, as described in the Note 19 to the condensed consolidated financial statements.

The 2021 Co-Issuers were in compliance with the covenants as of June 30, 2021.

The Existing Notes and the Additional Notes are treated as a single class for all purposes under the indenture including, without limitation, waivers, amendments, redemptions and other offers to purchase and the Additional Notes rank evenly with the Existing Notes. The Additional Notes and the Existing Notes have different CUSIP numbers.

Guarantees

The Company’s 2021 Notes are fully and unconditionally guaranteed on a joint and several basis by all of the Company’s subsidiaries with the exception of (i) Navios Acquisition Finance (a co-issuer of the 2021 Notes), (ii) Navios Maritime Midstream Partners GP LLC (“NAP General Partner”), (iii) Letil Navigation Ltd., and (iv) Navios Maritime Midstream Partners L.P. and its subsidiaries. The Company’s 2021 Notes are unregistered. The guarantees of the Company’s subsidiaries that own mortgaged vessels are senior secured guarantees and the guarantees of Company’s subsidiaries that do not own mortgaged vessels are senior unsecured guarantees. All subsidiaries, including Navios Acquisition Finance and Navios Midstream and its subsidiaries are 100% owned.

Credit Facilities

As of June 30, 2021, the Company had secured credit facilities with various banks with a total outstanding balance of $115.9 million. The purpose of the facilities was to finance the construction or acquisition of vessels or refinance existing indebtedness. All of the facilities are denominated in U.S. dollars and bear interest based on LIBOR plus spread ranging from 230 bps to 390 bps per annum. The facilities are repayable in either semi-annual or quarterly installments, followed by balloon payments with maturities, ranging from September 2021 to October 2024. See also the Contractual Obligations maturity table below.

Amounts drawn under the facilities are secured by first preferred mortgages on Navios Acquisition’s vessels and other collateral and are guaranteed by each vessel-owning subsidiary. The credit facilities contain a number of restrictive covenants that prohibit or limit Navios Acquisition from, among other things: incurring or guaranteeing indebtedness; entering into affiliate transactions; changing the flag, class, management or ownership of Navios Acquisition’s vessels; changing the commercial and technical management of Navios Acquisition’s vessels; selling Navios Acquisition’s vessels; and subordinating the obligations under each credit facility to any general and administrative costs relating to the vessels, including the fixed daily fee payable under the Management Agreement. The credit facilities also require Navios Acquisition and the Manager to comply with the ISM Code and ISPS Code and to maintain valid safety management certificates and documents of compliance at all times.

As of June 30, 2021, no amount was available to be drawn from the Company’s facilities.

Please also see section “Recent Developments” and Note 19 to condensed consolidated financial statements.

Sale and Leaseback Agreements

As of June 30, 2021, the Company had sale and leaseback agreements with various unrelated third parties with a total outstanding balance of $0.3 billion.

As of June 30, 2021 and December 31, 2020, the deposits under the sale and leaseback agreements were $9.1 million, and are presented under “Other long term assets” in the condensed consolidated balance sheets.

Amounts drawn under the facilities are secured by first preferred mortgages on Navios Acquisition’s vessels and other collateral and are guaranteed by each vessel-owning subsidiary. The sale and leaseback agreements contain a number of restrictive covenants that prohibit or limit Navios Acquisition from, among other things: incurring or guaranteeing indebtedness; entering into affiliate transactions; changing the flag, class, management or ownership of Navios Acquisition’s vessels; changing the commercial and technical management of Navios Acquisition’s vessels; selling Navios Acquisition’s vessels; and subordinating the obligations under each credit facility to any general and administrative costs relating to the vessels, including the fixed daily fee payable under the Management Agreement. The sale and leaseback agreements also require Navios Acquisition and the Manager to comply with the ISM Code and ISPS Code and to maintain valid safety management certificates and documents of compliance at all times.

The majority of the Company’s senior secured credit facilities require compliance with maintenance covenants, including: (i) value-to-loan ratio covenants, based on charter-free valuations, ranging from over 120% to 135%; (ii) minimum liquidity at a)$10.0 million to $40.0 million or b) $0.5 million to $1.0 million and a certain number of vessels as defined in the Company’s credit facilities and sale and leaseback agreements; (iii) minimum net worth ranging from $75.0 million to $ 125.0 million; and (iv) total liabilities divided by total assets, adjusted for market values, ranging from a maximum of 75% to 80%. It is an event of default under the financing arrangements if such covenants are not complied with, including the loan to value ratios for which the Company may provide sufficient additional security or prepay part of the facility, to prevent such an event.

As of June 30, 2021, the Company was in compliance with its covenants.

Off-Balance Sheet Arrangements – Legal Proceedings

The Company is involved in various disputes and arbitration proceedings arising in the ordinary course of business. Provisions have been recognized in the financial statements for all such proceedings where the Company believes that a liability may be probable, and for which the amounts are reasonably estimable, based upon facts known at the date of the financial statements were prepared. In the opinion of the management, the ultimate disposition of these matters individually and in aggregate will not materially affect the Company’s financial position, results of operations or liquidity.

Navios Acquisition leased office space in Monaco pursuant to a lease agreement, dated July 1, 2018, for a monthly rent of approximately $0.01 million. The lease agreement was terminated on April 16, 2021. The Company currently utilizes office space that is provided by the Manager in the Cayman Islands.

Related Party Transactions

Vessel operating expenses (management fees): Pursuant to the Management Agreement dated May 28, 2010 and as amended in September 10, 2010; May 04, 2012; May 14, 2014; May 19, 2016; and May 03, 2018, the Manager provided commercial and technical management services to Navios Acquisition’s vessels for a fixed daily fee of: (a) $6,500 per MR2 product tanker and chemical tanker vessel; (b) $7,150 per LR1 product tanker vessel; and (c) the current daily fee of $9,500 per VLCC, through May 2020.

On August 29, 2019, Navios Acquisition entered into a sixth amendment (the “Sixth Amendment”) to the Management Agreement (as amended, the “Management Agreement”) with Navios Tankers Management Inc. The Sixth Amendment, among other changes, extends the duration of the Management Agreement until January 1, 2025, with an automatic renewal for an additional five years, unless earlier terminated by either party. It provides for payment of a termination fee by Navios Acquisition in the event the Management Agreement is terminated on or before December 31, 2024, equal to the fees charged for the full calendar year preceding the termination date, by Navios Acquisition. The Sixth Amendment also sets forth the vessel operating expenses for the period through December 31, 2019 and the two-year period commencing January 1, 2020, which exclude dry-docking expenses, reimbursed at cost by Navios Acquisition, as follows: (a) $7,150 and $7,225, respectively, daily rate per owned LR1 product tanker vessel; (b) $6,500 and $6,825, respectively, daily rate per owned MR2 product tanker vessel and chemical tanker vessel; (c) $9,500 and $9,650, respectively, daily rate per VLCC tanker vessel; and (d) a $50 daily rate per vessel for technical and commercial management services. Commencing January 1, 2022, the fees described in subsections (a) through (c) are subject to an annual increase of 3%, unless otherwise agreed by the parties. The Management Agreement also provides for a technical and commercial management fee of $50 per day per vessel and an annual increase of 3% after January 1, 2022 for the remaining period unless agreed otherwise.

Following the Liquidation of Navios Europe I, which resulted in the acquisition of three MR1 product tankers and two LR1 product tankers, as per the terms of the Management Agreement as amended in December 2019, vessel operating expenses are fixed for two years commencing from January 1, 2020 at: (a) $6,825 per day per MR1, MR2 product tanker and chemical tanker; (b) $7,225 per day per LR1 product tanker vessel; and (c) $9,650 per VLCC.

Following the Liquidation of Navios Europe II, Navios Acquisition acquired seven containerships on June 29, 2020. As per a further amendment to the Management Agreement dated June 26, 2020, the vessel operating expenses are fixed at: (a) $5,250 per day per Container vessel of 1,500 TEU up to 1,999 TEU; and (b) $6,100 per day per Container vessel of 2,000 TEU up to 3,450 TEU. All other terms and conditions of the Management Agreement remain in full force and effect.

Drydocking expenses are reimbursed at cost for all vessels.

For the six month periods ended June 30, 2021 and 2020, certain extraordinary fees and costs related to regulatory requirements, including ballast water treatment system installation and exhaust gas cleaning system installation and under Company’s Management Agreement amounted to $3.2 million and $3.7 million, respectively, and are presented under “Acquisition of vessels/ vessels improvements” in the condensed Consolidated Statements of Cash Flows.

Total vessel operating expenses for the three month periods ended June 30, 2021 and 2020 amounted to $29.8 million and $29.8 million, respectively. Total vessel operating expenses for the six month periods ended June 30, 2021 and 2020 amounted to $62.3 million and $59.7 million, respectively.

General and administrative expenses: Pursuant to the Administrative Services Agreement which the Manager provides certain administrative management services to Navios Acquisition which include: bookkeeping, audit and accounting services, legal and insurance services, administrative and clerical services, banking and financial services, advisory services, client and investor relations and other services. The Manager is reimbursed for reasonable costs and expenses incurred in connection with the provision of these services.

In August 2019, Navios Acquisition extended the duration of its existing Administrative Services Agreement with the Manager until January 1, 2025, to be automatically renewed for another five years. The Administrative Service Agreement also provides for payment of a termination fee, equal to the fees charged for the full calendar year preceding the termination date, by Navios Acquisition in the event the Administrative Services Agreement is terminated on or before December 31, 2024.

Following the Liquidation of Navios Europe I and the Liquidation of Navios Europe II, the Administrative Services Agreement also covers the vessels acquired.

For the three month periods ended June 30, 2021 and 2020, the expense arising from administrative services rendered by the Manager amounted to $3.4 million and $3.0 million, respectively. For the six month periods ended June 30, 2021 and 2020, the expense arising from administrative services rendered by the Manager amounted to $7.1 million and $6.0 million, respectively.

Balance due from/ (to) related parties: Balance due to related parties was $17.9 million as of June 30, 2021 (December 31, 2020: $15.4 million). The balances mainly consisted of administrative expenses, costs related to regulatory requirements including ballast water treatment system, special survey and dry docking expenses, as well as operating expenses and working capital deposits, in accordance with the Management Agreement. As of June 30, 2021, the amount of $0 million (December 31, 2020: $1.8 million) related to seven containerships acquired after the liquidation of Navios Europe II and is included under “Assets held for sale” in the condensed consolidated balance sheets.

Omnibus Agreements

Acquisition Omnibus Agreement: Navios Acquisition entered into an omnibus agreement (the “Acquisition Omnibus Agreement”) with Navios Maritime Holdings Inc. (“Navios Holdings”) Navios Partners in connection with the closing of Navios Acquisition’s initial vessel acquisition, pursuant to which, among other things, Navios Holdings and Navios Partners agreed not to acquire, charter-in or own liquid shipment vessels, except for container vessels and vessels that are primarily employed in operations in South America without the consent of an independent committee of Navios Acquisition. In addition, Navios Acquisition, under the Acquisition Omnibus Agreement, agreed to cause its subsidiaries not to acquire, own, operate or charter-in drybulk carriers under specific exceptions. Under the Acquisition Omnibus Agreement, Navios Acquisition and its subsidiaries grant to Navios Holdings and Navios Partners a right of first offer on any proposed sale, transfer or other disposition of any of its drybulk carriers and related charters owned or acquired by Navios Acquisition. Likewise, Navios Holdings and Navios Partners agreed to grant a similar right of first offer to Navios Acquisition for any liquid shipment vessels they might own. These rights of first offer will not apply to a: (a) sale, transfer or other disposition of vessels between any affiliated subsidiaries, or pursuant to the existing terms of any charter or other agreement with a counterparty; or (b) merger with or into, or sale of substantially all of the assets to, an unaffiliated third party.

Midstream Omnibus Agreement: Navios Acquisition entered into an omnibus agreement (the “Midstream Omnibus Agreement”), with Navios Midstream, Navios Holdings and Navios Partners in connection with the Navios Midstream IPO, pursuant to which Navios Acquisition, Navios Midstream, Navios Holdings, Navios Partners and their controlled affiliates generally have agreed not to acquire or own any VLCCs, crude oil tankers, refined petroleum product tankers, liquefied petroleum gas (“LPG”) tankers or chemical tankers under time charters of five or more years without the consent of the Navios Midstream General Partner. The Midstream Omnibus Agreement contains significant exceptions that have allowed Navios Acquisition, Navios Holdings, Navios Partners or any of their controlled affiliates to compete with Navios Midstream under specified circumstances.

Under the Midstream Omnibus Agreement, Navios Midstream and its subsidiaries have granted to Navios Acquisition a right of first offer on any proposed sale, transfer or other disposition of any of its VLCCs or any crude oil tankers, refined petroleum product tankers, LPG tankers or chemical tankers and related charters owned or acquired by Navios Midstream. Likewise, Navios Acquisition have agreed (and will cause its subsidiaries to agree) to grant a similar right of first offer to Navios Midstream for any of the VLCCs, crude oil tankers, refined petroleum product tankers, LPG tankers or chemical tankers under charter for five or more years it might own. These rights of first offer do not apply to a: (a) sale, transfer or other disposition of vessels between any affiliated subsidiaries, or pursuant to the terms of any charter or other agreement with a charter party, or (b) merger with or into, or sale of substantially all of the assets to, an unaffiliated third-party.

Navios Containers Omnibus Agreement: In connection with the Navios Maritime Containers Inc. (“Navios Containers”) private placement and listing on the Norwegian over-the-counter market effective June 8, 2017, Navios Acquisition entered into an omnibus agreement with Navios Containers, Navios Midstream, Navios Holdings and Navios Partners, pursuant to which Navios Acquisition, Navios Holdings, Navios Partners and Navios Midstream have granted to Navios Containers a right of first refusal over any container vessels to be sold or acquired in the future. The omnibus agreement contains significant exceptions that will allow Navios Acquisition, Navios Holdings, Navios Partners and Navios Midstream to compete with Navios Containers under specified circumstances.

Navios Midstream General Partner Option Agreement with Navios Holdings: Navios Acquisition entered into an option agreement, dated November 18, 2014, with Navios Holdings under which Navios Acquisition grants Navios Holdings the option to acquire any or all of the outstanding membership interests in Navios Midstream General Partner and all of the incentive distribution rights in Navios Midstream representing the right to receive an increasing percentage of the quarterly distributions when certain conditions are met. The option shall expire on November 18, 2024. Any such exercise shall relate to not less than twenty-five percent of the option interest and the purchase price for the acquisition of all or part of the option interest shall be an amount equal to its fair market value.

Balance due from Navios Europe II: Navios Holdings, Navios Acquisition and Navios Partners have made available to Navios Europe II revolving loans up to $43.5 million to fund working capital requirements. In March 2017, the availability under the Navios Revolving Loans II was increased by $14.0 million.

Following the Liquidation of Navios Europe II, the balance due from Navios Europe II as of June 30, 2021 and December 31, 2020 was $0.

The decline in the fair value of the investment was considered as other-than-temporary and, therefore, an aggregate loss of $13.9 million was recognized and included in the accompanying condensed consolidated statements of operations for the three month period ended March 31, 2020 and the six month period ended June 30, 2020. The fair value of the Company’s investment was determined based on the liquidation value of Navios Europe II, determined on the individual fair values assigned to the assets and liabilities of Navios Europe II. The fair value of the investment in Navios Europe II is considered to be determined through Level 3 inputs of fair value hierarchy.

Loan payable to affiliate company: On March 19, 2021, Navios Acquisition entered into a secured loan agreement with NSM, for a loan of up to $100.0 million to be used for general corporate purposes. The loan will be repayable in two years and bears interest at a rate of 11% per annum, payable quarterly, and arrangement fees of amount $1.2 million paid at closing. Navios Acquisition may elect to defer all scheduled capital and interest payments, in which case the applicable interest rate is 12.5% per annum. For the six month period ended June 30, 2021, Navios Acquisition drew $47.2million. Subsequently to June 30, 2021 to date, Navios Acquisition drew an additional amount of $52.8 million. In August 2021, Navios Acquisition entered into a supplemental agreement. See section “Recent Developments” and Note 19 to the condensed consolidated financial statements.

In August 2021, the Navios Acquisition and Navios Partners entered into a loan agreement under which Navios Partners agreed to make available to the Company a working capital facility of up to $45.0 million.

Dividend Policy

On November 2, 2020, the Board of Directors declared a quarterly cash dividend in respect of the third quarter of 2020 of $0.05 per share of common stock of amount $0.8 million which was paid on February 10, 2021 to stockholders of record as of January 12, 2021.

In April 2021, the Board decided to suspend its quarterly dividend to its stockholders including the payment for the quarter ended December 31, 2020.

The declaration and payment of any further dividends remain subject to the discretion of the Board of Directors and will depend on, among other things, Navios Acquisition’s cash requirements as measured by market opportunities and restrictions under its credit agreements and other debt obligations and such other factors as the Board of Directors may deem advisable.

Quantitative and Qualitative Disclosures about Market Risks

Foreign Exchange Risk

Our functional and reporting currency is the U.S. dollar. We engage in worldwide commerce with a variety of entities. Although our operations may expose us to certain levels of foreign currency risk, our transactions are predominantly U.S. dollar denominated. Transactions in currencies other than U.S. dollars are translated at the exchange rate in effect at the date of each transaction. Differences in exchange rates during the period between the date a transaction denominated in a foreign currency is consummated and the date on which it is either settled or translated, are recognized in the statements of income.

Interest Rate Risk

As of June 30, 2021, Navios Acquisition had a total of $969.3 million in long-term and short-term indebtedness. Borrowings under our credit facilities bear interest at rates based on a premium over LIBOR in U.S dollars except for the interest rate on the Loan payable to affiliate company, Existing Notes and the Additional Notes which is fixed. Therefore, we are exposed to the risk that our interest expense may increase if interest rates rise. For the three month period ended June 30, 2021, we paid interest on our outstanding debt at a weighted average interest rate of 6.31%. A 1% increase in LIBOR would have increased our interest expense for the three month period ended June 30, 2021 by $1.2 million. For the six month period ended June 30, 2021, we paid interest on our outstanding debt at a weighted average interest rate of 6.24%. A 1% increase in LIBOR would have increased our interest expense for the six month period ended June 30, 2021 by $2.4 million.

Concentration of Credit Risk

Financial instruments, which potentially subject us to significant concentrations of credit risk, consist principally of trade accounts receivable. We closely monitor our exposure to customers for credit risk. We have policies in place to ensure that we trade with customers with an appropriate credit history. For the six month period ended June 30, 2021, Shell and Saudi Aramco Products Trading accounted for 14.2% and 10.6%, respectively, of Navios Acquisition’s revenue. For the year ended December 31, 2020, Navig8, China ZhenHua and China Shipping Development, accounted for 25.5%, 11.4% and 10.7%, respectively, of Navios Acquisition’s revenue.

Cash and Cash Equivalents

Cash deposits and cash equivalents in excess of amounts covered by government-provided insurance are exposed to loss in the event of non-performance by financial institutions. Navios Acquisition does maintain cash deposits and equivalents in excess of government-provided insurance limits. Navios Acquisition also minimizes exposure to credit risk by dealing with a diversified group of major financial institutions.

Inflation

Inflation has had a minimal impact on vessel operating expenses and general and administrative expenses. Our management does not consider inflation to be a significant risk to expenses in the current and foreseeable economic environment.

Recent Accounting Pronouncements

These financial statements should be read in conjunction with the consolidated financial statements and related notes included in Navios Acquisition’s Annual Report on Form 20-F for the year ended December 31, 2020.

Critical Accounting Policies

Navios Acquisition’s interim consolidated financial statements have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires Navios Acquisition to make estimates in the application of our accounting policies based on the best assumptions, judgments and opinions of management. Actual results may differ from these estimates under different assumptions or conditions.

Critical accounting policies are those that reflect significant judgments or uncertainties, and potentially result in materially different results under different assumptions and conditions. All significant accounting policies are as described in Note 2 to the consolidated financial statements included in the Company’s Annual Report on Form 20-F for the year ended December 31, 2020 filed with the SEC on April 28, 2021.

NAVIOS MARITIME ACQUISITION CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of U.S. Dollars except share data)

See unaudited notes to the condensed consolidated financial statements.

NAVIOS MARITIME ACQUISITION CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Expressed in thousands of U.S. dollars- except share and per share data)

See unaudited notes to the condensed consolidated financial statements.

NAVIOS MARITIME ACQUISITION CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of U.S. dollars)

See unaudited notes to the condensed consolidated financial statements.

NAVIOS MARITIME ACQUISITION CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Expressed in thousands of U.S. dollars, except share data)

See unaudited notes to the condensed consolidated financial statements.

NOTE 1: DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS

Description of Organization and Business Operations 

Navios Maritime Acquisition Corporation (“Navios Acquisition” or the “Company”) (NYSE: NNA) owns a large fleet of modern crude oil, refined petroleum product and chemical tankers providing world-wide marine transportation services. The Company’s strategy is to charter its vessels to international oil companies, refiners and large vessel operators under long, medium and short-term contracts. The Company is committed to providing quality transportation services and developing and maintaining long-term relationships with its customers. The operations of Navios Acquisition are managed by Navios Tankers Management Inc. (the “Manager”).

Navios Acquisition was incorporated in the Republic of the Marshall Islands on March 14, 2008. On July 1, 2008, Navios Acquisition completed its initial public offering (“IPO”). On May 28, 2010, Navios Acquisition consummated the vessel acquisition which constituted its initial business combination. Following such transaction, Navios Acquisition commenced its operations as an operating company.

On November 22, 2019, an agreement was reached to liquidate Navios Europe I. As a result of the liquidation, which was completed in December 2019 (“Liquidation of Navios Europe I”), Navios Acquisition acquired five vessel owning companies.

On November 29, 2019, Navios Acquisition entered into a Continuous Offering Program Sales Agreement for the issuance and sale from time to time shares of Navios Acquisition’s common stock having an aggregate offering price of up to $25,000. The sales were being made pursuant to a prospectus supplement as part of a shelf registration statement which was set to expire in December 2019. Navios Acquisition went effective on a new shelf registration statement which was declared effective on December 23, 2019. Accordingly, an updated Continuous Offering Program Sales Agreement (the “Sales Agreement”) was entered into on December 23, 2019. As before, the Sales Agreement contains, among other things, customary representations, warranties and covenants by Navios Acquisition and indemnification obligations of the parties thereto as well as certain termination rights for such parties. As of June 30, 2021, since the commencement of the program, Navios Acquisition has issued 1,776,017 shares of common stock and received net proceeds of $8,112.

On April 21, 2020, an agreement was reached to liquidate Navios Europe II. As a result of the liquidation, which was completed in June 2020 (“Liquidation of Navios Europe II”), Navios Acquisition acquired seven vessel owning companies. The vessels are containerships and meet the criteria to be accounted for as assets held for sale.

As of June 30, 2021, Navios Maritime Holdings Inc. (“Navios Holdings”) had 28.0% of the voting power and 28.1% of the economic interest in Navios Acquisition.

As of June 30, 2021, Navios Acquisition had outstanding: 17,379,388 shares of common stock outstanding.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Summary of Significant Accounting Policies 

Summary of Significant Accounting Policies 

(a) Basis of presentation:

The accompanying interim condensed consolidated financial statements are unaudited, but, in the opinion of management, reflect all adjustments for a fair statement of Navios Acquisition’s unaudited condensed consolidated balance sheets, statement of changes in equity, statements of operations and cash flows for the periods presented. The results of operations for the interim periods are not necessarily indicative of results for the full year. The footnotes are condensed as permitted by the requirements for interim financial statements and accordingly, do not include information and disclosures required under accounting principles generally accepted in the United States of America (“U.S. GAAP”) for complete financial statements. All such adjustments are deemed to be of a normal recurring nature. These interim financial statements should be read in conjunction with the Company’s consolidated financial statements and notes included in Navios Acquisition’s 2020 Annual Report filed on Form 20-F with the Securities and Exchange Commission (SEC)

Going Concern

As of December 31, 2020, Navios Acquisition’s current assets totaled $140,605, while current liabilities totaled $805,860, resulting in a negative working capital position of $665,255, primarily related to the classification as current of the $602,600 of 2021 Notes (as defined herein) which mature on November 15, 2021, balloon payments due under its credit facilities and financial liabilities under the sale and leaseback transactions. These conditions raised substantial doubt about the Company's ability to continue as a going concern.

During the first semester of 2021, Navios Acquisition sold the Solstice N, the Allegro N, the Acrux N, the Vita N, the Ete N, the Fleur N, the Spectrum N, the Nave Celeste and the Nave Neutrino for an aggregate net sale price of $146,078. In the first semester of 2021, Navios Acquisition repurchased $53,297 of its Ship Mortgage Notes (as defined herein) for a cash consideration of $42,479.

In addition, during the first quarter of 2021, Navios Acquisition entered into a secured loan agreement with NSM (as defined herein), for a loan of up to $100,000 to be used for general corporate purposes. To date, Navios Acquisition has drawn down the total amount of $100,000 of the loan.

During the third quarter of 2021, Navios Acquisition repurchased additional $151,825 of its Ship Mortgage Notes for a cash consideration of $131,898. The balance of the remaining $397,478 of 2021 Notes has been satisfied subsequently to June 30, 2021, as described in the Note 19 to the condensed consolidated financial statements

Following the above and based on internal forecasts and projections that take into account reasonably possible changes in Company’s trading performance, management believes that the Company has adequate financial resources to continue in operation and meet its financial commitments, including but not limited to capital expenditures and debt service obligations, for a period of at least twelve months from the date of issuance of these consolidated financial statements. Accordingly, substantial doubt about the Company’s ability to continue as a going concern has been alleviated.

(b) Recent accounting pronouncements

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in Navios Acquisition’s Annual Report on Form 20-F for the year ended December 31, 2020.

 (c) Principles of consolidation:

The accompanying condensed consolidated financial statements include the accounts of Navios Acquisition, a Marshall Islands corporation, and its majority owned subsidiaries. All significant intercompany balances and transactions have been eliminated in the condensed consolidated statements.

The Company also consolidates entities that are determined to be variable interest entities (“VIEs”) as defined in the accounting guidance, if it determines that it is the primary beneficiary. A variable interest entity is defined as a legal entity where either (a) equity interest holders as a group lack the characteristics of a controlling financial interest, including decision making ability and an interest in the entity’s residual risks and rewards, or (b) the equity holders have not provided sufficient equity investment to permit the entity to finance its activities without additional subordinated financial support, or (c) the voting rights of some investors are not proportional to their obligations to absorb the expected losses of the entity, their rights to receive the expected residual returns of the entity, or both and substantially all of the entity’s activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights.

(d) Subsidiaries:

Subsidiaries are those entities in which the Company has an interest of more than one half of the voting rights and/or otherwise has power to govern the financial and operating policies. The acquisition method of accounting is used to account for the acquisition of subsidiaries if deemed to be a business combination. The cost of an acquisition is measured as the fair value of the assets given up, shares issued or liabilities undertaken at the date of acquisition. The excess of the cost of acquisition over the fair value of the net assets acquired and liabilities assumed is recorded as goodwill.

As of June 30, 2021, the entities included in these condensed consolidated financial statements were: