Ardmore Shipping (ASC) Risk Analysis

The market supply of tankers is affected by a number of factors, such as demand for energy resources, oil, petroleum, and chemical products, as well as the level of global and regional economic growth. If the capacity of new ships delivered exceeds the capacity of tankers being scrapped and lost, tanker capacity will increase. The global newbuilding orderbook for MR product tankers was approximately 13.4% of the global MR product tanker fleet and the orderbook for chemical tankers was approximately 20.2% of the global chemical tanker fleet as of December 31, 2025. If the supply of product or chemical tanker capacity increases and if the demand for such respective tanker capacity does not increase correspondingly, charter rates and vessel values could materially decline. A reduction in charter rates and the value of our vessels may have a material adverse effect on our business, results of operations, and financial condition. In addition, product tankers currently used to transport crude oil and other "dirty" products may be "cleaned up" and reintroduced into the product tanker market, which would increase the available product tanker tonnage, which may affect the supply and demand balance for product tankers. This could have an adverse effect on our business, results of operations, and financial position.

The operation of an ocean-going vessel carries inherent risks. Our vessels and their cargoes will be at risk of being damaged or lost because of events, such as marine disasters, bad weather, business interruptions caused by mechanical failures, grounding, fire, explosions, collisions, human error, conflict, terrorism, piracy, cyberattack, latent defects, "acts of God", climate change, and other circumstances or events. These hazards may result in death or injury to persons, loss of revenues or property, environmental damage, higher insurance rates, damage to customer relationships, market disruptions, delays, or rerouting. In addition, the operation of tankers has unique operational risks associated with the transportation of oil and chemical products. An oil or chemical spill may cause significant environmental damage and the associated costs could exceed the insurance coverage available to us. Compared to other types of vessels, tankers are exposed to a higher risk of damage and loss by fire, whether ignited by a terrorist attack, collision or other causes, due to the high flammability and high volume of the oil or chemicals transported in tankers. If our vessels suffer damage, they may need to be repaired at a drydocking facility. The costs of these repairs are unpredictable and may be substantial. We may have to pay drydocking costs if our insurance does not cover them in full. The loss of revenues while these vessels are being repaired and repositioned, as well as the actual cost of these repairs, may adversely affect our business, results of operations, and financial condition. In addition, space at drydocking facilities is sometimes limited and not all drydocking facilities are conveniently located. We may be unable to find space at a suitable drydocking facility or our vessels may be forced to travel to a drydocking facility that is not conveniently located to our vessels' positions. The loss of earnings while such vessels wait for space or travel or are towed to more distant drydocking facilities may be significant. The total loss of any of our vessels could harm our reputation as a safe and reliable vessel owner and operator. If we are unable to adequately maintain or safeguard our vessels, we may be unable to prevent any such damage, costs or loss, which could adversely affect our business, results of operations, and financial condition.

We, indirectly through our technical manager, employ masters, officers, and crews to operate our vessels, exposing us to the risk that industrial actions or other labor unrest may occur. A significant portion of the seafarers that crew our vessels are employed under collective bargaining agreements. We may suffer labor disruptions if relationships deteriorate with the seafarers or the unions that represent them. The collective bargaining agreements may not prevent labor disruptions, particularly when the agreements are being renegotiated. If not resolved in a timely and cost-effective manner, industrial action or other labor unrest could prevent or hinder our operations from being carried out as we expect and could have a material adverse effect on our business, results of operations, and financial condition.

The delivery of any such vessels could be delayed, not completed, or cancelled, which would delay or eliminate our expected receipt of revenues from the employment of these vessels. The seller could fail to deliver these vessels to us as agreed, or we could cancel a purchase contract because the seller has not met its obligations. The delivery of any vessels we may propose to acquire could be delayed because of, among other things, hostilities or political disturbances, non-performance of the purchase agreement with respect to the vessels by the seller, our inability to obtain requisite permits, approvals or financings or damage to or destruction of vessels while being operated by the seller prior to the delivery date. If the delivery of any vessel is materially delayed or cancelled, especially if we have committed the vessel to a charter under which we become responsible for substantial liquidated damages to the customer as a result of the delay or cancellation, our business, financial condition, and results of operations could be adversely affected. The delivery of vessels we may purchase or sell could be delayed because of, among other things: - work stoppages or other labor disturbances or other events that disrupt the operations of the shipyard building the vessels;- quality or other engineering problems;- changes in governmental regulations or maritime self-regulatory organization standards;- lack of raw materials;- bankruptcy or other financial crisis of the shipyard building the vessels or of the vessel buyer or seller;- our inability to obtain requisite financing or make timely payments;- a backlog of orders at the shipyard building the vessels;- hostilities or political or economic disturbances in or affecting the countries where the vessels are being built, or the imposition of sanctions on such countries or applicable parties;- weather interference or catastrophic event, such as a major earthquake or fire;- our requests for changes to the original vessel specifications;- shortages or delays in the receipt of necessary construction materials, such as steel;- our inability to obtain requisite permits or approvals; or - a dispute with the shipyard building the vessels.

Global crude oil prices fluctuate significantly over time and in response to various events. Any meaningful decrease in oil prices may adversely affect our business, results of operations, our financial condition, and our ability to service our indebtedness and other financial obligations and to pay dividends on shares of our common stock, as a result of, among other things: - a possible reduction in exploration for or development of new oil fields or energy projects, or the delay or cancellation of existing projects as energy companies lower their capital expenditures budgets, which may reduce our growth opportunities;- potential lower demand for tankers, which may reduce available charter rates and revenue to us upon chartering or rechartering of our vessels;- customers failing to extend or renew contracts upon expiration;- the inability or refusal of customers to make charter payments to us due to financial constraints or otherwise; or - declines in vessel values, which may result in losses to us upon vessel sales or impairment charges against our earnings.

We periodically drydock each of our vessels for inspection, repairs and maintenance, and any modifications to comply with industry certification or governmental requirements. Generally, each vessel is drydocked every 30 months to 60 months. Depending on the type of drydocking required, a vessel will incur a number of days of downtime where it will not be in service. During times of favorable market conditions, any increase in the number of required drydockings in a given timeframe and the lost revenue days arising from this downtime could result in a material loss of earnings.

Fuel, or bunkers, is a significant expense for our vessels employed in the spot market and can have a significant impact on earnings. For any vessels which may be employed on time charters, the charterer is generally responsible for the cost and supply of fuel; however, such cost may affect the time charter rates we may be able to negotiate for such vessels. Changes in the price of fuel may adversely affect our profitability. The price and supply of fuel is unpredictable and fluctuates based on events outside our control, including, among other factors, geopolitical developments, supply and demand for oil and gas, actions by the Organization of Petroleum Exporting Countries ("OPEC") and other oil and gas producers, conflict and unrest in oil producing countries and regions, regional production patterns, and environmental concerns. In addition, fuel price increases may reduce the profitability and competitiveness of our business versus other forms of transportation, such as truck or rail.

The IMO, the United Nations agency for maritime safety and the prevention of pollution by vessels has imposed updated guidelines for ballast water management systems specifying the maximum amount of viable organisms allowed to be discharged from a vessel's ballast water. All of our vessels currently comply with the updated guidelines of compliance. The cost of any non-compliance with these regulations may be substantial and may adversely affect our results of operations and financial condition.

We are a Marshall Islands corporation with our headquarters in Bermuda. A majority of our subsidiaries are Marshall Islands entities and certain of our subsidiaries are either organized or registered in Bermuda. These jurisdictions have enacted economic substance laws and regulations with which we may be obligated to comply. We believe that we and our subsidiaries are compliant with the Bermuda and the Marshall Islands economic substance requirements. However, if there were a change in the requirements or interpretation thereof, or if there were an unexpected change to our operations, any such change could result in noncompliance with the economic substance legislation and related fines or other penalties, increased monitoring and audits, and dissolution of the non-compliant entity, which could have an adverse effect on our business, financial condition, or operating results. EU Finance ministers rate jurisdictions for tax rates and tax transparency, governance and real economic activity. Countries that are viewed by such finance ministers as not adequately cooperating, including by not implementing sufficient standards in respect of the foregoing, may be put on a "grey list" or a "blacklist". If any jurisdiction in which we operate is added to the list of non-cooperative jurisdictions in the future and sanctions or other financial, tax or regulatory measures were applied by European Member States to countries on the list or further economic substance requirements were imposed by the Marshall Islands or Bermuda, our business could be harmed.

Our operations are subject to numerous laws and regulations in the form of international conventions and treaties, national, state and local laws, and national and international regulations in force in the jurisdictions in which our vessels operate or are registered, which can significantly affect the ownership and operation of our vessels and business. Cost of compliance with such laws and regulations may be significant and, where applicable, may require installation of costly equipment or operational changes and may affect the resale value or useful lives of our vessels. Compliance with existing and future regulatory obligations may include costs relating to, among other things: air emissions including greenhouse gases; the management of ballast and bilge waters; maintenance and inspection; elimination of tin-based paint; development and implementation of emergency procedures; Eco-mod upgrades of secondhand vessels; and insurance coverage, or other financial assurance of our ability to address pollution incidents. Environmental or other incidents may result in additional regulatory initiatives or statutes or changes to existing laws that may affect our operations or require us to incur additional expenses to comply with such regulatory initiatives, statutes or laws. These costs could have a material adverse effect on our business, results of operations, and financial condition. A failure to comply with applicable laws and regulations may, among other things, result in administrative and civil penalties, criminal sanctions, or the suspension or termination of operations. Environmental laws often impose strict, joint and several liability for remediation of spills and releases of oil and hazardous substances, which could subject us to liability without regard to whether we were negligent or at fault. Under the U.S. Oil Pollution Act of 1990, for example, owners, operators, and bareboat charterers are jointly, severally, and strictly liable for the discharge of oil in U.S. waters, including the 200-nautical mile exclusive economic zone around the United States. An oil spill could also result in significant liability, including fines, penalties, criminal liability, remediation costs, and natural resource damages under international and U.S. federal, state, local and foreign laws, as well as third-party damages, and could harm our reputation with current or potential charterers of our tankers. We are required to satisfy insurance and financial responsibility requirements for potential spills of oil (including marine fuel) and other pollution incidents. Although we have arranged insurance to cover certain environmental risks, there can be no assurance that such insurance will be sufficient to cover all such risks or that any claims will not have a material adverse effect on our business, results of operations, and financial condition.

We expect that our vessels will call on ports where smugglers may attempt to hide drugs and other contraband on vessels, with or without the knowledge of crew members. To the extent our vessels are found with contraband, whether inside or attached to the hull of our vessel and whether with or without the knowledge of any of our crew, we may face governmental or other regulatory claims which could have an adverse effect on our business, results of operations, and financial condition.

Under the Code, 50% of the gross shipping income of a corporation that owns or charters vessels, as we and our subsidiaries do, that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States will be subject to a 4% U.S. federal income tax without allowance for deduction, unless that corporation qualifies for exemption from tax under Section 883 of the Code and the applicable Treasury Regulations promulgated thereunder or that corporation is entitled to an exemption from such tax under an applicable U.S. income tax treaty. We expect to take the position that we qualify for this statutory exemption for U.S. federal income tax return reporting purposes for our 2025 taxable year and we intend to so qualify for future taxable years. However, there are factual circumstances beyond our control that could cause us to lose the benefit of this tax exemption and thereby cause us to become subject to U.S. federal income tax on our U.S. source shipping income. For example, there is a risk that we could no longer qualify for exemption under Section 883 of the Code for a particular taxable year if "non-qualified" shareholders with a 5% or greater interest in our stock were, in combination with each other, to own 50% or more of the outstanding shares of our stock on more than half the days during the taxable year. Due to the factual nature of the issues involved, we can give no assurances on our tax-exempt status or that of any of our subsidiaries. If we or our subsidiaries were not entitled to exemption under Section 883 of the Code for any taxable year, we or our subsidiaries would be subject for such year to a 4% U.S. federal income tax on 50% of the shipping income we or our subsidiaries derive during the year which is attributable to the transport of cargoes to or from the United States. The imposition of this taxation would have a negative effect on our business and would decrease our earnings available for distribution to our shareholders. For a discussion of the U.S. federal income tax treatment of our operating income, please read "Additional Information-Taxation of Holders-U.S. Federal Income Tax Considerations-U.S. Federal Income Taxation of Operating Income: In General."

Public health threats and highly communicable diseases could adversely affect our operations, the operations of our customers or suppliers and the global economy. In response to a pandemic or epidemic, many countries, ports and organizations, including those where we conduct a large part of our operations, may implement measures to combat such outbreaks, such as quarantines and travel restrictions. Such measures could cause severe trade disruptions. In addition, pandemics, epidemics, and other public health crises may result in a significant decline in global demand for refined oil products. As our business is the transportation of refined oil products on behalf of oil majors, oil traders, and other customers, any significant decrease in demand for the cargo we transport has and could continue to adversely affect demand for our vessels and services. The extent to which any pandemic, epidemic, or any other public health crises may impact our business, results of operations, and financial condition, including possible impairments, will depend on future developments, which are uncertain and cannot be predicted.

As of December 31, 2025 we had $272.2 million in liquidity available, with cash and cash equivalents of $46.8 million and amounts available and undrawn under our revolving credit facilities of $225.4 million. Our short-term liquidity requirements include the payment of operating expenses, drydocking expenditures, debt servicing costs, operating lease payments, dividends on our shares of common stock, and scheduled repayments of long-term debt, as well as funding our other working capital requirements. Our short-term and spot charters contribute to the volatility of our net operating cash flow, and thus our ability to generate sufficient cash flows to meet our short-term liquidity needs. We expect to manage our near-term liquidity needs from our working capital, together with expected cash flows from operations and availability under credit facilities. Our existing long-term debt facilities require, among other things, that we maintain minimum cash and cash equivalents based on the greater of a set amount per number of vessels owned and 5% of outstanding debt. The required minimum cash and cash equivalents as of December 31, 2025, was $18.75 million. Should we not meet this financial covenant or other covenants in our debt facilities, whether due to market volatility that reduces our liquidity or other factors, the lenders may declare our obligations under the applicable agreements immediately due and payable, and terminate any further loan commitments, which would significantly affect our short-term liquidity requirements. A default under financing arrangements could also result in foreclosure on any of our vessels and other assets securing the related loans.

The market values of tankers have historically experienced high volatility. The market value of our vessels will fluctuate depending on general economic and market conditions affecting the shipping industry and prevailing charter hire rates, competition from other shipping companies, and other modes of transportation, the types, sizes, and ages of vessels, applicable governmental and environmental regulations and the cost of newbuildings. If the market value of our fleet declines, we may not be able to obtain other financing on terms that are acceptable to us or at all. A decrease in vessel values could also cause us to breach certain loan-to-value covenants that are contained in our financing arrangements that we may enter into from time to time. If we breach such covenants due to decreased vessel values and we are unable to remedy the relevant breach, our lenders could accelerate our debt and foreclose on vessels in our fleet, which would adversely affect our business, results of operations, and financial condition. In addition, if we sell one or more of our vessels at a time when vessel prices have fallen, the sale price may be less than the vessel's carrying value on our consolidated financial statements, resulting in a loss on sale or an impairment loss being recognized, leading to a reduction in earnings. Also, if vessel values fall significantly, this could indicate a decrease in the estimated undiscounted future cash flows for the vessel, which may result in an impairment adjustment in our financial statements, which could adversely affect our results of operations and financial condition.

Recently, government leaders have declared that their countries may turn to trade barriers to protect or revive their domestic industries in the face of foreign imports. The U.S. government, for example, has made statements and taken actions that may impact U.S. and international trade policies, including threatening new and increased tariffs affecting imports from certain countries. In 2025, the U.S. Trade Representative proposed and enacted heavy tariffs and port fees to be levied on vessels owned or operated by a Chinese entity arriving at a U.S. port, with China's Ministry of Transport enacting retaliatory port fees of the same type applicable to vessels calling at Chinese ports which are built or flagged in the U.S. or owned or operated by certain U.S.-linked persons. While both the U.S. and China have since agreed to a one-year suspension of the implementation of such tariff programs, it is unknown whether and to what extent any new or increased tariffs (or other new laws or regulations) will be adopted or implemented by the U.S. or any other country, or the effect that any such actions would have on us or our industry. In addition, in February 2026 the U.S. administration proposed a new "universal infrastructure or security fee" on all non-U.S.-built commercial ships docking at U.S. ports, with the proceeds intended to be used to revitalize domestic shipbuilding. If any new tariffs, legislation and/or regulations are implemented, or if existing trade agreements are renegotiated or, in particular, if the U.S. government takes retaliatory trade actions in response to the actions of any foreign nation, such changes could disrupt or alter current trade flows of oil, oil products, and chemicals and have an adverse effect on the demand for our vessels, our business, results of operations, and financial condition.

As of March 6, 2026, owners of approximately 24.4% of the worldwide fleet of tankers with capacity over 10,000 dwt had fitted or planned to fit scrubbers on their vessels. Fitting scrubbers allows a vessel to consume high sulfur fuel oil, which is less expensive than the low sulfur fuel oil that vessels without scrubbers must consume to comply with the IMO 2020 low sulfur emission requirements. Generally, owners of vessels with higher operating fuel requirements - generally larger vessels - are more inclined to install scrubbers to comply with IMO 2020. As of March 6, 2026, a total of 14 of our owned fleet of 25 vessels are equipped with scrubbers. Fuel expense reductions from operating scrubber-fitted ships could result in a substantial reduction of bunker cost for charterers compared to vessels in our fleet which do not have scrubbers. If (a) the supply of scrubber-fitted vessels in the worldwide fleet increases, (b) the differential between the cost of high-sulfur fuel oil ("HSFO") and low-sulfur fuels such as very-low-sulfur fuel oil ("VLSFO") and marine gas oil ("MGO") oil is high and (c) charterers prefer such vessels over our vessels to the extent they do not have scrubbers, demand for our vessels without operational scrubbers may be reduced and our ability to re-charter such vessels at competitive rates may be impaired, which may have a material adverse effect on our business, operating results, and financial condition.

The tanker industry is both cyclical and volatile in terms of charter rates and profitability. A prolonged downturn in the tanker industry could adversely affect our ability to charter our vessels or to sell them. In addition, the rates payable in respect of any of our vessels operating in a commercial pool, or any renewal or replacement charters that we enter into, may not be sufficient for us to operate our vessels profitably. Fluctuations in charter rates and tanker values result from changes in the supply and demand for tanker capacity and changes in the supply and demand for oil, oil products, and chemicals. The factors affecting the supply and demand for tankers are outside of our control, and the nature, timing, and degree of changes in industry conditions are unpredictable. Factors that influence demand for tanker capacity include: - supply of and demand for oil, oil products, and chemicals;- regional availability of refining capacity;- global and regional economic and political conditions;- the distance oil, oil products, and chemicals are to be moved by sea;- changes in seaborne and other transportation patterns;- environmental and other legal and regulatory developments;- weather and natural disasters;- competition from alternative sources of energy; and - international sanctions, embargoes, import and export restrictions, nationalizations, and conflicts. Factors that influence the supply of tanker capacity include: - the number of newbuilding deliveries;- scrapping rates of older vessels;- conversion of tankers to other uses;- the price of steel and other raw materials;- the number of vessels that are out of service;- environmental concerns and regulations; and - international sanctions, embargoes, import and export restrictions, nationalizations, and conflicts. Historically, the tanker markets have been volatile as a result of a variety of conditions and factors that can affect the price, supply and demand for tanker capacity. Demand for transportation of oil products and chemicals over longer distances was significantly reduced during the last economic downturn. In addition, from 2015 to 2019 high refined product inventory levels, continued supply of new vessels, oil price volatility, and trading levels all contributed to low charter rates in the tanker industry. As of March 6, 2026, five of our vessels were on time charter, and 21 of our vessels, including one chartered-in vessel, were operating in the spot market directly. If charter rates decline, we may be unable to achieve a level of charter hire sufficient for us to operate our vessels profitably or we may have to operate our vessels at a loss. Geopolitical tensions also cause volatility in the market. The recent U.S. Israel-Iran conflict has significantly disrupted shipping transits via the Strait of Hormuz, a major oil and gas trade route, and the conflict has widened across the Middle East, increasing security concerns and uncertainty. The conflict in Ukraine has also significantly increased tanker demand and rates by reordering global oil trading patterns, including the rerouting of Russian oil and oil product exports away from Europe and the subsequent backfilling of imports into Europe from other more distant sources. Changes in or resolution of the conflict in Ukraine may lead to a reversal of these trading patterns or other effects that could significantly decrease tanker demand and rates. Furthermore, although the Hamas-Israel conflict has not to date had a direct material effect on the tanker industry, since mid-December 2023 Houthi rebels in Yemen have carried out numerous attacks on vessels in the Red Sea. As a result of these attacks, many shipping companies have routed their vessels away from transiting the Red Sea, which has affected trading patterns, rates, and expenses. Although these vessel attacks decreased in the first quarter of 2025, Houthi activity levels remains uncertain given the unpredictable nature of this group.. The U.S. military operation in Venezuela, including the U.S.' recent seizures of certain sanctioned oil tankers calling on Venezuelan ports, has similarly added uncertainty in that region and caused some tankers to re-route or delay voyages. Further escalation or expansion of international hostilities could continue to affect the price of crude oil and the oil industry, the tanker industry, demand for our services, and our business, results of operations, financial condition, and cash flows.