IMPP · Imperial Petroleum Inc.

IMPERIAL PETROLEUM INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Overview

twenty-one

Our Fleet

As of September 10, 2026, the profile and deployment of our fleet is the following:

 

 

1

 

Fleet Developments

On April 3, 2026 we took delivery of the dry bulk carrier, Eco Crossfire (2012 built).

On July 10, 2026, we entered into a memorandum of agreement for the disposal of the vessel “Suez Enchanted” to an unaffiliated third party for an aggregate consideration of $48.5 million. The vessel was delivered to her new owners on August 7, 2026.

 

2

On August 21, 2026 we took delivery of the drybulk carrier, Outrider (2016 built).

Following these deliveries and disposal, the Company’s fleet counts a total of 21 vessels with an aggregate capacity of 1.2 million dwt, with agreements to acquire an additional three handysize drybulk carriers of 107,400 dwt aggregate capacity and a product tanker of 50,000 dwt capacity, with deliveries scheduled in 2026.

Selected Financial Data

(in US Dollars except for Fleet Data)

 

 

3

Selected Financial Data (continued)

 

 

Results of Operations

Six-month

six-month

REVENUES

 

4

VOYAGE EXPENSES-

VESSELS’ OPERATING EXPENSES-

DRYDOCKING COSTS

MANAGEMENT FEES – RELATED PARTY -

GENERAL AND ADMINISTRATIVE EXPENSES

DEPRECIATION

INTEREST AND FINANCE COSTS

INTEREST INCOME

FOREIGN EXCHANGE (LOSS)/GAIN

NET INCOME

 

5

Cash Flows

Net cash provided by operating activities

non-cash

Net cash used in investing activities —

Net cash used in financing activities

Liquidity and Capital Resources

As of June 30, 2026 and the date of this report, we had repurchased an aggregate of 1,713,469 shares of common stock for an aggregate of $10.6 million, in open market purchases under our previously announced repurchase program and in privately negotiated share repurchases. As of the date of this report, $6.2 million remains available under our previously announced $10.0 million repurchase program.

Our principal sources of funds for our liquidity needs have been equity offerings and cash flows from operations, which we expect to continue to be components of the financing for further fleet growth. Potential additional sources of funds may include bank borrowings. Our principal use of funds has been to acquire our vessels, maintain the quality of our vessels, and fund working capital requirements.

Our liquidity needs, as of June 30, 2026, primarily relate to funding expenses for operating our vessels, any vessel acquisition and vessel improvements that may be required, including our four contracted vessels, and general and administrative expenses. Our long-term liquidity needs primarily relate to payments for our contracted vessels acquisitions.

Under existing vessel purchase agreements, we are committed to the following cash payments and equity issuances through the end of 2026: (i) cash payments of $59.7 million for two handysize drybulk vessels and one product tanker; and (ii) cash payments of $14.2 million and the issuance of 505,859 common shares for one handysize drybulk vessel. All of these vessels remain to be delivered to the Company by the end of 2026.

 

6

As of June 30, 2026, we had no outstanding debt.

We believe that our working capital along with our cash flows generated from operations are sufficient for our present short-term liquidity requirements. We believe that, unless there is a major and sustained downturn in market conditions applicable to our specific shipping industry segment, our internally generated cash flows will be sufficient to fund our operations, including working capital requirements, for at least 12 months, from the date of issuance of unaudited interim condensed consolidated financial statements, taking into account any possible capital commitments and debt service requirements that may arise in the future.

Critical Accounting Estimates

A discussion of our critical accounting estimates can be found in our Annual Report.

Forward-Looking Statements

Matters discussed in this report may constitute forward-looking statements. Forward-looking statements reflect our current views with respect to future events and financial performance and may include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The forward-looking statements in this report are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management’s examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we assure you that it will achieve or accomplish these expectations, beliefs or projections. Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, geopolitical conditions, including any trade disruptions resulting from tariffs, port fees or other protectionist measures imposed by the United States, China or other countries, general market conditions, including changes in charter hire rates and vessel values, supply and demand for oil and oil products, charter counterparty performance, changes in demand that may affect attitudes of time charterers to scheduled and unscheduled drydockings, shipyard performance, changes in our operating expenses, including bunker prices, drydocking and insurance costs, ability to obtain financing and comply with covenants in our financing arrangements, the ability to consummate the acquisition of our four contracted vessels and operate them profitably, potential liability from pending or future litigation or actions taken by regulatory authorities, domestic and international political conditions, including the conflict in Ukraine and related sanctions and the conflict in the Middle East, potential disruption of shipping routes due to ongoing attacks by Houthis in the Red Sea and Gulf of Aden and the effective closure of the Persian Gulf, including the Strait of Hormuz, due to the conflict between Iran and the U.S. and Israel, accidents and political events or acts by terrorists. Risks and uncertainties are further described in the Annual Report and other reports we file with the U.S. Securities and Exchange Commission.

 

7

1.	General Information and Basis of Presentation

Imperial Petroleum Inc. (“Imperial” or “Company”) was formed by StealthGas Inc (the “former Parent Company”) on May 14, 2021 under the laws of the Republic of the Marshall Islands. Initial share capital of Imperial consisted of 33 common shares. StealthGas Inc. separated its crude and product tankers by transferring to Imperial its interest in 4 subsidiaries, Clean Power Inc., MR Roi Inc., King of Hearts Inc. and Tankpunk Inc. (the “Subsidiaries”), each owning one tanker. The transfer was completed on November 10, 2021 in exchange for 318,318 newly issued common shares and 795,878 Series A 8.75% Preferred Shares (the “Series A Preferred Shares”) in Imperial. On December 3, 2021, StealthGas Inc. distributed the 318,351 common shares and 795,878 8.75% Series A Preferred Shares (with a liquidation preference of $25.00 per share) in Imperial to holders of StealthGas Inc.’s common stock on a pro rata basis (the “Spin-Off”).

The accompanying unaudited interim consolidated financial statements include the accounts of Imperial and its wholly owned subsidiaries (collectively, the “Company”) using the historical carrying costs of the assets and the liabilities of the Subsidiaries from their dates of incorporation until their dates of disposal, if any.

On June 21, 2023, the Company completed the spin-off transaction (the “Spin-off”) of its wholly owned subsidiary C3is Inc. (“C3is”), which was formed by the Company in July 2022. Prior to the Spin-off, Imperial received all issued and outstanding common shares and all 600,000 5.00% Series A Perpetual Convertible Preferred shares of C3is (Note 3) in exchange for the contribution to C3is of the entities owning Imperial’s two Handysize drybulk carriers, “Eco Bushfire” and “Eco Angelbay” together with $5,000,000 in cash as working capital. Imperial, as the sole shareholder of C3is, distributed the C3is’s common shares to the Company’s stockholders and warrant holders in accordance with the terms of the Company’s outstanding warrants on a pro rata basis on June 21, 2023. Common shares of C3is commenced trading on June 21, 2023 on the Nasdaq Capital Market under the ticker symbol “CISS”. Imperial continues to operate in the tanker and dry bulk shipping market and remains a publicly traded company.

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or U.S. GAAP, for interim financial information. Accordingly, they do not include all the information and notes required by U.S. GAAP for complete financial statements. These unaudited interim condensed consolidated financial statements have been prepared on the same basis and should be read in conjunction with the consolidated financial statements for the year ended December 31, 2025 included in the Company’s Annual Report on Form 20-F filed with the Securities and Exchange Commission on April 29, 2026 (the “2025 Consolidated Financial Statements”) and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments considered necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the periods presented. The reporting and functional currency of the Company is the United States Dollar. Operating results for the six months ended June 30, 2026 are not necessarily indicative of the results that might be expected for the fiscal year ending December 31, 2026.

The consolidated balance sheet as of December 31, 2025 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.

On June 30, 2026, the Company’s fleet was comprised of 21 vessels consisting of 7 medium range (M.R.) type product tankers, 2 Suezmax crude oil tankers, 4 Handysize drybulk carriers, 5 Supramax drybulk carriers, 2 Kamsarmax drybulk and 1 Postmax carrier providing worldwide marine transportation services under long, medium or short-term charters.

The Company’s vessels are managed by Stealth Maritime Corporation S.A. (the “Manager”), a company controlled by members of the family of the Company’s Chief Executive Officer. The Manager, a related party, was incorporated in Liberia and registered in Greece on May 17, 1999 under the provisions of law 89/1967, 378/1968 and article 25 of law 27/75 as amended by article 4 of law 2234/94. (See Note 3).

As of June 30, 2026, the Company’s subsidiaries included in the Company’s unaudited interim condensed consolidated financial statements were:

 

Company

Date of Incorporation

Name of Vessel Owned by Subsidiary

Dead Weight Tonnage (“dwt”)

Acquisition Date

Disposal Date

Clean Power Inc.

05/02/2007

Magic Wand

47,000

09/01/2008

—

MR Roi Inc.

05/02/2007

Clean Thrasher

47,000

27/02/2008

—

King of Hearts Inc.

17/03/2008

Clean Sanctuary

46,000

14/07/2009

—

Nirvana Product Trading Inc

25/02/2022

Clean Nirvana

50,000

28/03/2022

—

Volume Jet Trading Inc.

25/02/2022

Clean Justice

46,000

31/05/2022

—

Intercontinental Crude and Product Enterprises Inc.

18/05/2022

Suez Enchanted

160,000

03/06/2022

—

Petroleum Trading and Shipping Inc.

21/04/2022

Suez Protopia

160,000

03/06/2022

—

 

F-6

Haven Exotic Trading Inc.			31/01/2023				Eco Wildfire				33,000				28/03/2023				—
Blue Oddysey International Inc.			31/01/2023				Glorieuse				38,000				27/03/2023				—
Aquatic Success International Inc.			06/09/2023				Aquadisiac				51,000				18/02/2024				—
Alpine Hydrocarbons Inc.			06/09/2023				Gstaad Grace II *				113,000				28/02/2024				26/04/2024
Poseidonas Corporation Inc.			20/05/2024				Neptulus				33,000				24/08/2024				—
Imperial Petroleum Product Solutions Inc.			20/05/2024				Clean Imperial				40,000				10/01/2025				—
Sapphira Wheat Inc.			13/09/2024				Supra Pasha				56,000				26/04/2025				—
Laurentia Bulk Inc.			13/09/2024				Supra Monarch				56,000				23/05/2025				—
Edrys Shipments Inc.			13/09/2024				Supra Baron				56,000				22/06/2025				—
Ophellia Grain Inc.			13/09/2024				Supra Sovereign				56,000				19/06/2025				—
Guinevere Dry Cargoes Inc.			13/09/2024				Supra Duke				56,000				13/06/2025				—
Artemisia Commodities Inc.			13/09/2024				Eco Sikousis				82,000				31/05/2025				—
Aurellia World Transports Inc.			13/09/2024				Eco Czar				82,000				14/06/2025				—
Marvellous Iron Transport Inc.			30/12/2025				Post Marvel				96,000				12/01/2026				—
Blackhawk Fire Industries Inc.			30/12/2025				Eco Crossfire				33,000				03/04/2026				—
Ancient Mythology Trading Inc.**			22/12/2025				—				—				—				—
Catharge Transports Inc. **			30/12/2025				—				—				—				—
Out and About Grain and Wheat Inc. ***			22/12/2025				—				—				—				—
Panacea Potions Inc. **			22/12/2025				—				—				—				—
Rider Petroleum Products Inc. **			22/12/2025				—				—				—				—

 

*	This vessel was sold on April 26, 2024, and the vessel owning company became dormant.

**	Companies are associated with the acquisition of three dry bulk carriers and one product tanker (Note 3).

***	The dry bulk carrier vessel “Outrider” owned by Out and About Grain and Wheat Inc. was delivered to the Company on August 21, 2026

2.	Significant Accounting Policies

A discussion of the Company’s significant accounting policies can be found in the 2025 Consolidated Financial Statements.

3.	Transactions with Related Parties

The Manager provides the vessels with a wide range of shipping services such as chartering, technical support and maintenance, insurance, consulting, financial and accounting services, for a fixed daily fee of $440 per vessel operating under a voyage or time charter (the “Management fees”) and a brokerage commission of 1.25% on freight, hire and demurrage per vessel (the “Brokerage commissions”), as per the management agreement between the Manager and the Company. In addition, the Manager arranges for supervision onboard the vessels, when required, by superintendent engineers and when such visits exceed a period of five days in a twelve-month period, an amount of $500 is charged for each additional day (the “Superintendent fees”).

The Manager also provides crew management services to the vessels. These services have been subcontracted by the Manager to an affiliated ship-management company, Hellenic Manning Overseas Inc. (ex. Navis Maritime Services Inc.). The Company pays to the Manager a fixed monthly fee of $2,500 per vessel for crew services (the “Crew management fees”).

The Manager also acts as a sales and purchase broker for the Company in exchange for a commission fee equal to 1% of the gross sale or purchase price of vessels or companies. The commission fees relating to vessels purchased (“Commissions – vessels purchased”) are capitalized to the cost of the vessels as incurred.

In addition to management services, the Company reimburses the Manager for the compensation of its executive officers (the “Executive compensation”). Furthermore, the Company rents office space from the Manager and incurs a rental expense (the “Rental Expense”).

On June 21, 2023, the Company completed the Spin-off (Note 1) and received 600,000 Series A Perpetual Convertible Preferred shares of C3is, having a liquidation preference of $25 per share and a par value of $0.01 per share. The Company is the holder of all of the issued and outstanding Series A Perpetual Convertible Preferred shares of C3is (Note 1). The Series A Perpetual Convertible Preferred shares entitle the Company to a number of votes equal to the number of C3is common shares into which the shares are then convertible multiplied by 30 provided however, that voting rights may not be exercised pursuant to Series A Perpetual Convertible Preferred shares that would result in the aggregate voting power of any beneficial owner of such shares and its affiliates (whether pursuant to ownership of Series A Perpetual Convertible Preferred shares, C3is’ common shares or otherwise) exceeding 49.99% of the total number of votes eligible to be cast on any matter submitted to a vote of shareholders. The Series A Perpetual Convertible Preferred are convertible into common stock of C3is at the Company’s option at any time and from time to time on or after the date that is the date 90 days following the issuance date. The conversion price has been determined to $2.4444, as adjusted based on certain retrospective events in C3is. Furthermore, Imperial is entitled to receive cumulative cash dividends, at the annual rate of 5.00% on the stated amount of $25 per share, of the 600,000 Series A Perpetual Convertible Preferred shares, receivable quarterly in arrears on the 15th day of January, April, July and October in each year, subject to C3is’s Board of Directors approval. The Company recognized for the six-month periods

 

F-7

Preferred Shares:

Aggregate

 

dividends of $

0.9

 million were paid on the Company’s 

795,878

 Series A Preferred Shares during the

six-month

period ended June 30, 2026.

7.	Equity Compensation Plan

Details of the Company’s Equity Compensation Plan (the “Plan”) and 2024 Equity Compensation Plan (the “2024 Equity Plan”) are discussed in Note 10 of the 2025 Consolidated Financial Statements and are supplemented by the below new transactions in the six-month period ended June 30, 2026.

On June 22, 2026, the Company granted under the 2024 Equity Plan (1) 440,000 of restricted shares of common stock, and (2) options to acquire up to 299,000 of common stock to the Company’s CEO. 50% of these restricted shares and options vest on June 22, 2027 and the remaining 50% vest on June 22, 2028. The options expire on June 22, 2036. The fair value of each restricted share granted was $4.95 which is equal to the market value of the Company’s common stock on that day. The fair value of each option to acquire a common stock was $2.92. The fair value of each option granted was estimated on the date of the grant using the Black-Scholes option pricing model. The following weighted-average assumptions were used in computing the fair value of the options granted: expected volatility of 63.88%; expected term of 5.75 years; risk-free interest rate of 4.24%. The expected term of the options granted was estimated to be the average of the vesting and the contractual term. The expected volatility was generally based on historical volatility of the stock prices of various tanker shipping companies as calculated using historical data during approximately 7 years prior to the grant date.

The related expense for shares granted for the six-month periods ended June 30, 2025 and 2026, amounted to $1,560,719 and $1,101,156, respectively, and is included under general and administration expenses in the unaudited interim condensed consolidated statements of comprehensive income.

The unrecognized cost for the non-vested shares granted as of December 31, 2025 and June 30, 2026 amounted to $1,354,891 and $2,736,186, respectively. On June 30, 2026, the weighted-average period over which the total compensation cost related to non-vested awards not yet recognized is expected to be recognized is 1.3 years.

The unrecognized cost for the non-vested options granted as of December 31, 2025 and June 30, 2026 amounted to $540,824 and $1,106,529, respectively. On June 30, 2026, the weighted-average period over which the total compensation cost related to non-vested options not yet recognized is expected to be recognized is 1.3 years.

8.	Earnings per share

The Company calculates basic and diluted earnings per share as follows:

 

						For the six-month periods ended June 30,
		2025								2026
		Basic EPS				Diluted EPS				Basic EPS				Diluted EPS
Numerator
Net income			24,050,420				24,050,420				62,779,787				62,779,787
Less: Cumulative dividends on Series A Preferred Shares			(870,492	)			(870,492	)			(870,492	)			(870,492	)
Less: Undistributed earnings allocated to non-vested shares			(869,583	)			(837,909	)			(1,041,668	)			(1,041,668	)
Net income attributable to common shareholders			22,310,345				22,342,019				60,867,627				60,867,627
Denominator
Weighted average number of shares outstanding, basic			33,107,097				33,107,097				45,338,067				45,338,067
Options to purchase common shares			—				140,727				—				223,526
Warrants			—				1,159,549				—				2,313,080
Effect of dilutive shares			—				1,300,276				—				2,536,606
Weighted average number of shares outstanding, diluted			—				34,407,373				—				47,874,673
Earnings per share			0.67				0.65				1.34				1.27

As of June 30, 2026, the most dilutive method was the two-class method and the diluted earnings per share reflects the potential dilution of the unexercised options to acquire common shares calculated using the treasury stock method which resulted in 223,526 incremental shares and of the 3,166,666 Class E warrants that are in the money as of the reporting date calculated using the treasury stock method which resulted in 2,313,080 incremental shares. Securities that could potentially dilute basic EPS in the future that were not included in the computation of diluted EPS, because

 

F-10

to do so would have anti-dilutive effect, are any incremental shares, resulting from the

non-vested

restricted share awards and any incremental shares resulting from the exercise of the unexercised Class A, B, C, D, F and G warrants that were

out-of-the

money as of the reporting date, calculated using the treasury stock method. As of June 30, 2026, the aggregate number of common shares issuable upon the exercise of the unexercised Class A, B, C, D, F and G warrants

was 21,358,068.

As of June 30, 2025, the most dilutive method was the

two-class

method and the diluted earnings per share reflects the potential dilution of the unexercised options to acquire common shares calculated using the treasury stock method which resulted in 140,727 incremental shares and of the 4,199,999 Class E warrants that are in the money as of the reporting date calculated using the treasury stock method which resulted in 1,159,549 incremental shares. Securities that could potentially dilute basic EPS in the future that were not included in the computation of diluted EPS, because to do so would have anti-dilutive effect, are any incremental shares

,

 resulting from the

non-vested

restricted share awards and any incremental shares resulting from the exercise of the unexercised Class A, B, C and D warrants that were

out-of-the

money as of the reporting date, calculated using the treasury stock method. As of June 30, 2025, the aggregate number of common shares issuable upon the exercise of the unexercised Class A, B, C and D warrants was 2,310,268.

9.

Revenues

The amounts in the accompanying unaudited interim condensed consolidated statements of comprehensive income are analyzed as follows:

 

		For the six-month periods ended June 30,
		2025				2026
Time charter revenues			22,427,217				35,056,416
Voyage charter revenues			42,939,727				104,849,256
Other income			3,073,501				8,881,189
Total			68,440,445				148,786,861

The amount of revenue earned as demurrage relating to the Company’s voyage charters for the six-month periods ended June 30, 2025 and 2026 was $9.4 million and $18.7 million, respectively and is included within “Voyage charter revenues” in the above table.

As of December 31, 2025 and June 30, 2026, receivables from the Company’s voyage charters amounted to $5.3 million and $2.8 million, respectively.

As of December 31, 2025 and June 30, 2026, the Company recognized $1,107,956 and $1,239,819, respectively, of contract fulfillment costs which mainly represent bunker expenses incurred prior to commencement of loading relating to the Company’s voyage charters. These costs are recorded in “Other current assets” in the unaudited interim condensed consolidated balance sheets.

As of December 31, 2025 and June 30, 2026, revenues relating to undelivered performance obligations of the Company’s voyage charters amounted to $10.8 million and $16.0 million, respectively. The Company recognized the undelivered performance obligation as of December 31, 2025 as revenues in the first quarter of 2026 and the undelivered performance obligation as of June 30, 2026 as revenues in the third quarter of 2026.

10.	Other operating income

For the six-month period ended June 30, 2025 and 2026, the other operating income amounted to nil and $430,324, respectively. The other operating income in the six-month period ended June 30, 2026 related to a claim in connection with repairs undertaken in prior years and included within “Other operating income” in the unaudited interim condensed consolidated statements of comprehensive income.

11.	Commitments and Contingencies

 

•

From time to time the Company expects to be subject to legal proceedings and claims in the ordinary course of its business, principally relating to personal injury and property casualty claims. Such claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources. Currently, the Company is not aware of any such claims or contingent liabilities, which should be disclosed, or for which a provision should be established in the accompanying unaudited interim consolidated financial statements.

 

•

Future minimum contractual charter revenues, gross of commissions, based on vessels committed to non-cancellable, time charter contracts as of June 30, 2026, amounted to $18,170,250 during the twelve months ending June 30, 2027, $2,236,000 during the twelve months ending June 30, 2028 and nil during the twelve months ending June 30, 2029.

 

•

As of June 30, 2026, the Company had obligations under memoranda of agreements (Note 3) for the acquisitions of the four bulkers, one product tanker, “Post Marvel” and “Eco Crossfire” of $129,510,000, out of which $124,350,000 will be paid in cash and $5,160,000 in Company’s common shares.

12.	Subsequent events

In July 2026, the Company received dividends of $377,083 on Series A preferred shares from C3is Inc.

On July 10, 2026, the Company entered into a memorandum of agreement for the disposal of the vessel “Suez Enchanted” to an unaffiliated third party for an aggregate consideration of $48,500,000. The vessel was delivered to her new owners on August 7, 2026, resulting in a net gain on sale of approximately $32 million.

On August 7, 2026, the Company repaid the remaining purchase price, amounting in aggregate to $32,220,000 plus the payable relating to inventory on board of the vessels of vessels “Post Marvel” and “Eco Crossfire”, amounting in aggregate to $1,568,171 and the amount of $518,688, representing previous owners’ drydocking costs, covered by the new owners (Note 3, 11).

On August 21, 2026, the vessel “Outrider” was delivered to the Company (Note 3).

On September 8, 2026, the Company repaid the purchase price of the vessel “Outrider”, amounting to $18,235,000 plus the payable relating to inventory on board of the vessels, amounting to $744,957 and the amount of $143,414, representing previous owners’ drydocking costs, covered by the new owners (Note 3, 11).