Report of Foreign Issuer (6-k)

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: May 17, 2018

Commission File No. 001-36738

NAVIOS MARITIME MIDSTREAM PARTNERS L.P.

7 Avenue de Grande Bretagne, Office 11B2

Monte Carlo, MC 98000 Monaco

(Address of Principal Executive Offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of 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

NAVIOS MARITIME MIDSTREAM PARTNERS L.P.

FORM 6-K

TABLE OF CONTENTS


	Page
Operating and Financial Review		3
Financial Statements Index		F-1

The information contained in this Report is hereby incorporated by reference into the Registration Statement on Form F-3, File No. 333-208623.

Operating and Financial Review and Prospects

The following is a discussion of the financial condition and results of operations for the three month periods ended March 31, 2018 and 2017 of Navios Maritime Midstream Partners L.P. (referred to herein as “we”, “us”, “Navios Midstream” or the “Company”). All of the financial statements have been prepared 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 Midstream’s 2017 Annual Report (the “2017 Annual Report”) filed on Form 20-F with the U.S. Securities and Exchange Commission.

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 with respect to Navios Midstream’s future dividends and Navios Midstream’s growth strategy and measures to implement such strategy; including expected vessel acquisitions and entering into further time charters. 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 time charters. These forward-looking statements are based on the information available to, and the expectations and assumptions deemed reasonable by, Navios Midstream at the time this filing was made. Although Navios Midstream believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. These statements involve known and unknown risks and are based upon a number of assumptions and estimates which are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of Navios Midstream. 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, the creditworthiness of our charterers and the ability of our contract counterparties to fulfill their obligations to us, tanker industry trends, including charter rates and vessel values and factors affecting vessel supply and demand, the aging of our vessels and resultant increases in operation and drydocking 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, increases in costs and expenses, including but not limited to: crew wages, 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 Midstream operates, risks associated with operations outside the United States, and other factors listed from time to time in Navios Midstream’s filings with the Securities and Exchange Commission, including its Form 20-Fs and Form 6-Ks. Navios Midstream 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 Midstream’s expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based. Navios Midstream makes no prediction or statement about the performance of its common units.

Overview

Navios Midstream was formed on October 13, 2014, as a Marshall Islands limited partnership to own, operate and acquire crude oil tankers, refined petroleum product tankers, chemical tankers, and LPG tankers under long-term employment contracts. Navios Maritime Midstream Partners GP LLC, a wholly-owned subsidiary of Navios Maritime Acquisition Corporation (“Navios Acquisition”), was formed on October 13, 2014 to act as our general partner. On November 18, 2014, we completed our initial public offering (“IPO”).

Recent Developments

On March 29, 2018, Navios Midstream acquired from Navios Acquisition the Nave Galactic for a purchase price of $44.5 million paid in cash. The Nave Galactic’s acquisition was effected through the acquisition of all of the capital stock of the vessel-owning company, which held the ownership and other contractual rights and obligations related to the acquired vessel, Management accounted for the transaction as an asset acquisition under ASC 805. The working capital acquired was $0.4 million.

On March 22, 2018, Navios Midstream sold the Shinyo Kannika to an unaffiliated third party for net cash proceeds of $16.2 million. The loss on sale of the vessel, upon write-off of the unamortized dry-docking, was $32.4 million and is separately presented under Loss on Sale of Asset in the condensed consolidated statements of operations.

Equity Transactions

On July 29, 2016, Navios Midstream entered into a Continuous Offering Program Sales Agreement (the “Sales Agreement”) with S. Goldman Capital LLC, as sales agent (the “Agent”), pursuant to which Navios Midstream may issue and sell from time to time through the Agent common units representing limited partner interests having an aggregate offering price of up to $25.0 million.

In the first quarter of 2018, there were no equity transactions or units sold.

As of March 31, 2018, there were outstanding: 19,354,498 common units, no subordinated units, 1,592,920 subordinated Series A units and 427,499 general partnership units.

Our Fleet

Our fleet consists of six very large crude carriers (“VLCC”), which have an average remaining employment term of approximately 3.0 years, including the backstop commitment from Navios Acquisition. They are chartered to three counterparties, Dalian Ocean Shipping Co. Ltd. (“Cosco Dalian”), a Chinese state-owned enterprise, SK Shipping Company Limited (“SK Shipping”) and VL8 Pool Inc. (“VL8”).

The following table provides summary information about our fleet as of May 17, 2018:


Vessels	Type		Built/ Delivery Date		DWT		Net Charter Rate ⁽¹⁾		Profit Share to Owner			Expiration Date ⁽²⁾
Shinyo Ocean		VLCC		2001		281,395		Pool earnings		—			Upon notice	⁽³⁾
							$	38,400		—			January 2019	⁽⁴⁾
Shinyo Saowalak		VLCC		2010		298,000	$	48,153	35% above $	54,388	⁽⁵⁾		June 2025
									40% above $	59,388	⁽⁵⁾
									50% above $	69,388	⁽⁵⁾
Shinyo Kieran		VLCC		2011		297,066	$	48,153	35% above $	54,388	⁽⁵⁾		June 2026
									40% above $	59,388	⁽⁵⁾
									50% above $	69,388	⁽⁵⁾
C. Dream		VLCC		2000		298,570	$	29,625	50% above $	30,000	⁽⁷⁾		March 2019
									40% above $	40,000	⁽⁷⁾
Nave Celeste		VLCC		2003		298,717		Pool earnings		—			Upon notice	⁽³⁾
							$	35,000		—			December 2018	⁽⁶⁾
Nave Galactic		VLCC		2009		297,168		Pool earnings					Upon notice	⁽³⁾
							$	38,025					February 2019	⁽⁸⁾

(1)	Net time charter-out rate per day in dollars (net of commissions).

(2)	Estimated dates assuming midpoint of redelivery of charterers.

(3)	Evergreen until terminated by owner or charterer’s notice.

(4)	Includes a backstop period for the Shinyo Ocean. Navios Acquisition has provided a backstop commitment for a two-year period at the net time charter out rate of $38,400 per day. All data in the table is based on a charter length inclusive of both the initial and backstop periods.

(5)

Calculated annually on the basis of the weighted average of the daily values of four Baltic Exchange Tanker Routes for the past four quarters adjusted for certain agreed specifications (i.e. actual consumption and other voyage expenses). Any profit is split between the owner and the charterer with the owner receiving the percentage stated in the table above.

(6)	Includes a backstop period for the Nave Celeste. Navios Acquisition has provided a backstop commitment for a two-year period at the net time charter out rate of $35,000 per day. All data in the table is based on a charter length inclusive of both the initial and backstop periods.

(7)	Calculated annually based on the actual earnings of the vessel. Any profit is split between the owner and the charterer with the owner receiving the percentage stated in the table above.

(8)

Includes a backstop period for the Nave Galactic. Navios Acquisition agreed to extend the backstop commitment of the Shinyo Kannika to the Nave Galactic at the net time charter out rate of $38,025 per day. All data in the table is based on a charter length inclusive of both the initial and backstop periods.

Option Vessels

We have options, exercisable through November 18, 2018, to purchase the following three VLCCs from Navios Acquisition at fair market value. Although we anticipate that we may exercise some or all of our options to purchase the following three VLCCs, the timing of such purchases is uncertain and each such purchase is subject to various conditions, including reaching an agreement with Navios Acquisition regarding the fair market value of the vessel and the availability of financing, which we anticipate would be from external sources. Generally, we expect to fund the acquisition of any or all of the three additional VLCCs we may elect to purchase with cash from operations, bank borrowings and the issuance of debt and equity securities.

The following table provides summary information about the vessels subject to the options as of May 17, 2018:

Vessels

Purchase Option
Expiration Date

Type

Built/
Delivery
Date

DWT

Net Charter
Rate ⁽¹⁾

Profit Share to
Owner

Employment
Expiration
Date ⁽²⁾

Nave Buena Suerte

November 2018

VLCC

2011

297,491

Floating Rate

⁽³⁾

—

Upon notice

⁽⁴⁾

Nave Neutrino

November 2018

VLCC

2003

298,287

—

Spot

Nave Electron

November 2018

VLCC

2002

305,178

Floating Rate

⁽³⁾

—

Upon notice

⁽⁴⁾

(1)	Net time charter-out rate per day in dollars (net of commissions).

(2)	Estimated dates assuming midpoint of redelivery of charterers.

(3)	Rate based on VLCC pool earnings.

(4)	Evergreen until terminated by owner or charterer’s notice.

Our Customers

We provide seaborne shipping services under contracts with customers that we believe are creditworthy.

For the three month period ended March 31, 2018, customers representing 10% or more of total revenue were Cosco Dalian, VL8 and SK Shipping that accounted for 44.4%, 17.4% and 13.7%, respectively, of our revenue. For the year ended December 31, 2017, our customers representing 10% or more of total revenue were Cosco Dalian and VL8 that accounted for 44.7% and 15.1%, respectively, of our revenue.

Our revenues are driven by the number of vessels in the fleet, the number of days during which the vessels operate and our charters hire rates, which, in turn, are affected by a number of factors, including:

•

the duration of the charters;

•

the level of spot and long-term market rates at the time of charter;

•

decisions relating to vessel acquisitions and disposals;

•

the amount of time spent positioning vessels;

•

the amount of time that vessels spend undergoing repairs and upgrades in drydock;

•

the age, condition and specifications of the vessels; and

•

the aggregate level of supply and demand in the tanker shipping industry.

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. We intend to operate our vessels in the long-term charter market. 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 our control. Please read “Risk Factors” in our 2017 Annual Report, filed with SEC on March 9, 2018, for a discussion of certain risks inherent in our business.

If we lose a charter, we may be unable to re-deploy the related vessel on terms as favorable to us due to the long-term nature of certain charters and the cyclical nature of the industry or we may be forced to charter the vessel on the spot market at then market rates which may be less favorable than the charter that has been terminated. The loss of any of our customers, time charters or vessels, or a decline in payments under our charters, could have a material adverse effect on our business, results of operations and financial condition and our ability to make cash distributions in the event we are unable to replace such customer, time charter or vessel.

Under some of our time charters, either party may terminate the charter contract in the event of war in specified countries or in locations that would significantly disrupt the free trade of the vessel. Some of the time charters covering our vessels require us to return to the charterer, upon the loss of the vessel, all advances paid by the charterer but not earned by us.

Trends and Factors Affecting Our Future 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. Please read “Risk Factors” in our 2017 Annual Report, filed with SEC on March 9, 2018, for a discussion of certain risks inherent in our business.

Results of Operations

Overview

The financial condition and the results of operations presented for the three month periods ended March 31, 2018 and 2017 of Navios Midstream discussed below include the following entities:

Company name

Vessel name

Country of
incorporation

2018

2017

Navios Maritime Midstream Operating LLC

N/A

Marshall Islands

1/1-3/31

Navios Maritime Midstream Partners L.P.

N/A

Marshall Islands

1/1-3/31

Navios Maritime Midstream Partners Finance (US) Inc.

N/A

Delaware

1/1-3/31

Shinyo Kannika Limited

Shinyo Kannika

Hong Kong ⁽¹⁾

1/1-3/22

1/1-3/31

Shinyo Ocean Limited

Shinyo Ocean

Hong Kong

1/1-3/31

Shinyo Saowalak Limited

Shinyo Saowalak

British Virgin Is.

1/1-3/31

Shinyo Kieran Limited

Shinyo Kieran

British Virgin Is.

1/1-3/31

Shinyo Dream Limited

C. Dream

Hong Kong

1/1-3/31

Sikinos Shipping Corporation

Nave Celeste

Marshall Islands

1/1-3/31

Kerkyra Shipping Corporation

Nave Galactic

Marshall Islands ⁽²⁾

3/29-3/31

—

(1)	The vessel Shinyo Kannika was sold to an unaffiliated third party on March 22, 2018.

(2)	The vessel Nave Galactic was acquired from Navios Acquisition on March 29, 2018.

The accompanying interim condensed consolidated financial statements of Navios Midstream are unaudited, but, in the opinion of management, contain all adjustments necessary to present a fair statement of results, in all material respects, Navios Midstream’s condensed consolidated financial position as of March 31, 2018 and the condensed consolidated results of operations for the three month periods ended March 31, 2018 and 2017. The footnotes are condensed as permitted by the requirements for interim financial statements and, accordingly, do not include information and disclosures required under U.S. GAAP for complete financial statements. All such adjustments are deemed to be of a normal, recurring nature. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the consolidated financial statements and related notes included in Navios Midstream’s Annual Report on Form 20-F for the year ended December 31, 2017.

FINANCIAL HIGHLIGHTS

The following table presents consolidated revenue and expense information for the three month periods ended March 31, 2018 and 2017.


	Three Month Period ended March 31, 2018 ($’000) (unaudited)			Three Month Period ended March 31, 2017 ($’000) (unaudited)
Revenue	$	19,779		$	21,100
Time charter expenses		(228	)		(285	)
Direct vessel expenses		(1,197	)		(780	)
Management fees		(5,064	)		(5,130	)
General and administrative expenses		(806	)		(724	)
Depreciation and amortization		(6,168	)		(6,293	)
Interest expenses and finance cost		(3,438	)		(3,131	)
Interest income		14			6
Loss on Sale of Asset		(32,444	)		—
Other expense, net		(16	)		(261	)
Net (loss)/ income	$	(29,568	)	$	4,502
EBITDA ⁽¹⁾	$	(18,779	)	$	14,700
Adjusted EBITDA ⁽²⁾	$	13,665		$	14,700
Operating Surplus ⁽¹⁾	$	7,822		$	9,469

(1)

EBITDA, Adjusted EBITDA and Operating Surplus are non-GAAP financial measures. See “—Reconciliation of EBITDA and Adjusted EBITDA to Net Cash from Operating Activities, Operating Surplus” for a description of EBITDA and Operating Surplus and a reconciliation of EBITDA and Operating Surplus to the most comparable measure under U.S. GAAP.

(2)	Adjusted EBITDA for the three month period ended March 31, 2018 in this document exclude loss on sale of vessel of $32.4 million.

Period over Period Comparisons

For the Three Month Period ended March 31, 2018 compared to the Three Month Period ended March 31, 2017

Revenue: Revenue for the three month period ended March 31, 2018 decreased by $1.3 million to $19.8 million, as compared to $21.1 million for the same period in 2017. The decrease was attributable to less available days from 540 for the three month period ended March 31, 2017 to 500 days for the three month period ended March 31, 2018, that mainly resulted from the: (i) sale of the Shinyo Kannika; and (ii) drydock of one of our vessels. Time Charter Equivalent (“TCE”) was $39,139 for the three month period ended March 31, 2018 and $38,547 for the three month period ended March 31, 2017.

Time charter expenses: Time charter expenses for the three month period ended March 31, 2018 were $0.2 million, as compared to $0.3 million for the three month period ended March 31, 2017.

Direct vessel expenses: Direct vessel expenses, comprised of the amortization of dry dock and special survey costs, of certain vessels in our fleet amounted to $1.2 million for the three month period ended March 31, 2018, as compared to $0.8 million for the three month period ended March 31, 2017.

Management fees: Management fees amounted to $5.1 million for each of the three month periods ended March 31, 2018 and 2017.

General and administrative expenses: Total general and administrative expenses for the three month period ended March 31, 2018 increased by $0.1 million to $0.8 million, as compared to $0.7 million for the three month period ended March 31, 2017, due to a $0.1 million increase in legal and professional fees. The expenses charged by Navios Tankers Management Inc. (“the Manager”), a wholly-owned subsidiary of Navios Maritime Holdings Inc. (“Navios Holdings”), for administrative services were $0.4 million for each of the three month periods ended March 31, 2018 and March 31, 2017.

Depreciation and amortization: Depreciation and amortization for the three month period ended March 31, 2018 amounted to $6.2 million as compared to $6.3 million for the three month period ended March 31, 2017. Depreciation of a vessel is calculated using an estimated useful life of 25 years for the date the vessel was originally delivered from the shipyard. Intangible assets are amortized over the contract periods, which extend up to 15 years at inception.

Interest expense and finance cost: Interest expense and finance cost for the three month period ended March 31, 2018 amounted to $3.4 million as compared to $3.1 million for the three month period ended March 31, 2017. As of March 31, 2018 and 2017, the outstanding weighted average loan balance was $199.9 million and $201.9 million, respectively, and the weighted average interest rate was 6.20% for three month period ended March 31, 2018 as compared to 5.52% for the three month period ended March 31, 2017.

Loss on sale of Asset: On March 22, 2018, Navios Midstream sold the Shinyo Kannika to an unaffiliated third party for net cash proceeds of $16.2 million. The loss on sale of the vessel, upon write-off of the unamortized dry-docking, for the three month period ended March 31, 2018 amounted to $32.4 million, as compared to $0 for the three month period ended March 31, 2017.

Operating surplus: Navios Midstream generated operating surplus for the three month period ended March 31, 2018 of $7.8 million as compared to $9.5 million for the three month period ended

March 31, 2017. Operating Surplus is a non-GAAP financial measure used by certain investors to assist in evaluating a partnership’s ability to make quarterly cash distributions. (See “Reconciliation of EBITDA to Net Cash from Operating Activities, EBITDA, Operating Surplus” contained herein).

Liquidity and Capital Resources

Our primary short-term liquidity needs are to fund general working capital requirements, dry docking expenditures 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, proceeds from asset sales and bank borrowings, which we believe will be sufficient to meet our existing short-term liquidity needs for the next 12 months. Generally, our long-term sources of funds will be from cash from operations, long-term bank borrowings and other debt or equity financings. We expect that we will rely upon cash from operations and upon external financing sources, including bank borrowings, to fund acquisitions, expansion and investment capital expenditures and other commitments we have entered into. We cannot assure you that we will be able to secure adequate financing or obtaining additional funds on favorable terms, to meet our liquidity needs.

On July 29, 2016, Navios Midstream entered into a Sales Agreement with the Agent, pursuant to which Navios Midstream may issue and sell from time to time through the Agent common units representing limited partner interests having an aggregate offering price of up to $25.0 million.

In the first quarter of 2018, there were no equity transactions or units sold.

As of March 31, 2018, there were outstanding: 19,354,498 common units, no subordinated units, 1,592,920 subordinated Series A units and 427,499 general partnership units.

Credit Facilities

Term Loan B: On June 18, 2015, Navios Midstream and Navios Finance, as co-borrowers, completed the issuance of the $205.0 million Term Loan B. The Term Loan B is set to mature on June 18, 2020 and is repayable in equal quarterly installments of 0.25% of the initial principal amount of the Term Loan B, beginning on September 18, 2015, with a final payment of the aggregate principal amount of the Term Loan B, plus accrued and unpaid interest, due on maturity. The Term Loan B bears interest at LIBOR plus 4.50% per annum, is secured by first priority mortgages covering six vessels owned by subsidiaries of Navios Midstream, in addition to other collateral, and is guaranteed by such subsidiaries.

The Term Loan B requires maintenance of a loan to value ratio of no greater than 0.85 to 1.0 and a minimum interest coverage ratio of at least 3.75 to 1.0, and other restrictive covenants including restrictions on indebtedness, liens, acquisitions and investments, restricted payments and dispositions. The Term Loan B also provides for excess cash flow prepayments and customary events of default.

Following the acquisition of the Nave Galactic and the sale of the Shinyo Kannika, the Nave Galactic substituted for the Shinyo Kannika under the Term Loan B.

As of March 31, 2018, an amount of $199.4 million was outstanding under this facility, as compared to $201.4 million for the same period in 2017. The weighted average interest rate for the three month periods ended March 31, 2018 and 2017 was 6.20% and 5.52%, respectively.

As of March 31, 2018, Navios Midstream was in compliance with the covenants set forth in the Term Loan B.

The following table presents cash flow information derived from the unaudited condensed consolidated statements of cash flows of Navios Midstream for the three month periods ended March 31, 2018 and 2017.


	Three Month Period Ended March 31, 2018 ($’000) (Unaudited)			Three Month Period Ended March 31, 2017 ($’000) (Unaudited)
Net cash provided by operating activities	$	22,248		$	1,147
Net cash used in investing activities		(28,320	)		—
Net cash used in financing activities		(9,544	)		(5,676	)
Net decrease in cash, cash equivalents and restricted cash	$	(15,616	)	$	(4,529	)

Cash provided by operating activities for the three month period ended March 31, 2018 as compared to the three month period ended March 31, 2017:

Net cash provided by operating activities increased by $21.1 million to $22.2 million for the three month period ended March 31, 2018 as compared to $1.1 million for the same period in 2017. The $21.1 million increase is analyzed as follows:

The net loss for the three month period ended March 31, 2018 was $29.6 million compared to $4.5 million net income for the three month period ended March 31, 2017. In determining net cash provided by operating activities for the three month period ended March 31, 2018, net income was adjusted for the effect of depreciation and amortization of $6.2 million, $0.3 million for amortization of deferred financing cost and $1.2 million for the amortization of drydock and special survey costs. In determining net cash provided by operating activities for the three month period ended March 31, 2017, net income was adjusted for the effect of depreciation and amortization of $6.3 million, $0.3 million for amortization of deferred financing cost and $0.8 million for the amortization of drydock and special survey costs.

Amounts due from related parties as of March 31, 2018 and December 31, 2017 was $7.4 million and $22.7 million, respectively, which mainly related to the backstop commitment from Navios Acquisition, as well as, payments of management fees and other expenses including dry docking expenses to the Manager in accordance with our Management Agreement. See “Item 7.—Major Unitholders and Related Party Transactions,” included in the 2017 Annual Report.

Accounts receivable increased by $1.4 million from $2.4 million for the year ended December 31, 2017, to $3.8 million for the three month period ended March 31, 2018, mainly due to working capital required under certain charter contract and due to the increase in receivables from charterers.

Accounts payable increased by $0.8 million from $2.0 million for the year ended December 31, 2017 to $2.8 million for the three month period ended March 31, 2018. This increase was attributable to the increase in broker’s and supplier’s expenses and other payable.

Prepaid expenses and other current assets increased by $0.2 million from $3.0 million for the year ended December 31, 2017 to $3.2 million for the three month period ended March 31, 2018.

Accrued expenses were $1.3 million and $0.6 million as of March 31, 2018 and December 31, 2017, respectively.

Deferred voyage revenue primarily relates to cash received from charterers prior to it being earned. These amounts are recognized as revenue over the voyage or charter period. Deferred voyage revenue amounted to $0.9 million for the three month period ended March 31, 2018 as compared to $1.7 million for the year ended December 31, 2017.

Cash used in investing activities for the three month period ended March 31, 2018 as compared to the three month period ended March 31, 2017:

Net cash used in investing activities was $28.3 million for the three month period ended March 31, 2018 as compared to no cash used in investing activities for the same period in 2017.

Net cash used in investing activities for the three month period ended March 31, 2018, resulted from $44.5 million paid for the acquisition of the Nave Galactic, partially mitigated by $16.2 million net proceeds from sale of the Shinyo Kannika.

Cash used in financing activities for the three month period ended March 31, 2018 as compared to the three month period ended March 31, 2017:

Net cash used in financing activities for the three month period ended March 31, 2018 was $9.5 million compared to $5.7 million net cash used in financing activities for the three month period ended March 31, 2017.

Net cash used in financing activities for the three month period ended March 31, 2018 resulted from: (a) $9.0 million of dividends paid; and (b) $0.5 million of loan repayments.

Net cash used in financing activities for the three month period ended March 31, 2017 primarily resulted from: (a) $9.0 million of dividends paid; and (b) $0.5 million of loan repayments, partially mitigated by: (i) $3.8 million proceeds from issuance of common units; and (ii) $0.1 million proceeds from issuance of general partner units.

Reconciliation of EBITDA and Adjusted EBITDA to Net Cash from Operating Activities and Operating Surplus


	Three Month Period ended March 31, 2018 ($’000) (unaudited)			Three Month Period ended March 31, 2017 ($’000) (unaudited)
Net cash provided by operating activities	$	22,248		$	1,147
Net (decrease)/ increase in operating assets		(11,162	)		3,729
Net (decrease)/ increase in operating liabilities		(505	)		7,043
Net interest cost		3,424			3,125
Amortization of deferred finance cost and bond premium		(340	)		(344	)
Loss on sale of vessel		(32,444	)		—
EBITDA	$	(18,779	)	$	14,700
Loss on sale of vessel		32,444			—
Adjusted EBITDA		13,665			14,700
Cash interest paid	$	(3,064	)	$	(2,777	)
Cash interest income		23			7
Maintenance and replacement capital expenditures	$	(2,802	)	$	(2,461	)
Operating Surplus	$	7,822		$	9,469
Cash reserves		(5,150	)		(447	)
Available cash for distribution		2,672			9,022


	Three Month Period ended March 31, 2018 ($’000) (unaudited)			Three Month Period ended March 31, 2017 ($’000) (unaudited)
Net cash provided by operating activities	$	22,248		$	1,147
Net cash used in investing activities	$	(28,320	)	$	—
Net cash used in financing activities	$	(9,544	)	$	(5,676	)

EBITDA and Adjusted EBITDA

EBITDA and Adjusted EBITDA are non-U.S. GAAP financial measures and should not be used in isolation or as substitution for Navios Midstream’s results calculated in accordance with U.S. GAAP.

EBITDA represents net (loss)/income before interest and finance costs, before depreciation and amortization and before income taxes. Adjusted EBITDA in this document represents EBITDA excluding loss on sale of vessel. 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 in this document 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; and (v) gain/ loss on sale of assets. Navios Midstream believes that EBITDA and Adjusted EBITDA are each the basis upon which liquidity can be assessed and present useful information to investors regarding Navios Midstream’s ability to service and/or incur indebtedness, pay capital expenditures, meet working capital requirements and pay dividends. Navios Midstream 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 Midstream’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 Midstream’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.

EBITDA was affected by a $32.4 million book loss on the sale of the Shinyo Kannika. Excluding this item, adjusted EBITDA was $13.7 million compared to $14.7 million for the same period in 2017. The decrease in Adjusted EBITDA was due to a: (a) $1.3 million decrease in revenue; and (b) $0.1 million increase in general and administrative expenses; partially mitigated by a: (i) $0.2 million decrease in other expense; (ii) $0.1 million decrease in time charter expenses; and (iii) $0.1 million decrease in management fees.

Operating Surplus

Operating Surplus represents net income adjusted for depreciation and amortization expense, non-cash interest expense and estimated maintenance and replacement capital expenditures. Maintenance and replacement capital expenditures are those capital expenditures required to maintain over the long term the operating capacity of, or the revenue generated by, Navios Midstream’s capital assets.

Operating Surplus is a quantitative measure used in the publicly-traded partnership investment community to assist in evaluating a partnership’s ability to make quarterly cash distributions. Operating Surplus is not required by U.S. GAAP and should not be considered a substitute for net income, cash flow from operating activities and other operations or cash flow statement data prepared in accordance with U.S. GAAP or as a measure of profitability or liquidity.

Available Cash

Available Cash generally means, for each fiscal quarter, all cash on hand at the end of the quarter:

•

less the amount of cash reserves established by the Board of Directors to:

•

provide for the proper conduct of Navios Midstream’s business (including reserve for maintenance and replacement capital expenditures);

•

comply with applicable law, any of Navios Midstream’s debt instruments, or other agreements; or

•

provide funds for distributions to the unitholders and to the general partner for any one or more of the next four quarters;

•

plus all cash on hand on the date of determination of available cash for the quarter resulting from working capital borrowings made after the end of the quarter. Working capital borrowings are generally borrowings that are made under any revolving credit or similar agreement used solely for working capital purposes or to pay distributions to partners.

Available Cash is a quantitative measure used in the publicly traded partnership investment community to assist in evaluating a partnership’s ability to make quarterly cash distributions. Available Cash is not required by U.S. GAAP and should not be considered a substitute for net income, cash flow from operating activities and other operations or cash flow statement data prepared in accordance with U.S. GAAP or as a measure of profitability or liquidity.

Borrowings

Navios Midstream’s long-term third party borrowings are reflected in its balance sheet as “Long-term debt, net of deferred finance costs and discount”. As of March 31, 2018 and December 31, 2017, the loan balance outstanding amounted to $199.4 million and $199.9 million, respectively, under the Term Loan B, discussed above. The current portion of long-term debt amounted to $2.1 million for each of the periods ended March 31, 2018 and December 31, 2017.

Capital Expenditures

Maintenance for our vessels and expenses related to drydocking are paid to the Manager at cost under the Management Agreement.

Maintenance and replacement capital expenditures

Our partnership agreement requires our Board of Directors to deduct from operating surplus each quarter estimated maintenance and replacement capital expenditures, as opposed to actual maintenance and replacement capital expenditures, in order to reduce disparities in operating surplus caused by fluctuating maintenance and replacement capital expenditures, such as drydocking and vessel replacement. The actual cost of replacing the vessels in our fleet will depend on a number of factors, including prevailing market conditions, hire rates and the availability and cost of financing at the time of replacement. Our Board of Directors, with the approval of the conflicts committee, may determine that one or more of our assumptions should be revised, which could cause our Board of Directors to increase the amount of estimated maintenance and replacement capital expenditures. We may elect to finance some or all of our maintenance and replacement capital expenditures through the issuance of additional common units, which could be dilutive to our existing unitholders. We must make substantial capital expenditures to maintain the operating capacity of our fleet, which will reduce cash available for distribution. In addition, each quarter we are required to deduct estimated maintenance and replacement capital expenditures from operating surplus, which may result in less cash available to unitholders than if actual maintenance and replacement capital expenditures were deducted.

Maintenance Capital Expenditures . Our annual estimated drydocking capital expenditure reserve was expected to be $1.9 million. The estimation was based on assumptions and estimates regarding the remaining useful lives of the vessels, a relative net investment rate, and drydocking and special survey costs based on current industry data.

Replacement Capital Expenditures . Because of the substantial capital expenditures we are required to make to maintain our fleet over time, our initial annual estimated replacement capital expenditures for estimating maintenance and replacement capital expenditures was expected to be $8.6 million per year, for replacing vessels at the end of their useful lives. The future vessel

replacement is based on assumptions and estimates regarding the remaining useful lives of the vessels, a relative net investment rate, vessel replacement values based on current market conditions and residual value of the vessels at the end of their useful lives based on current steel prices.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have, a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

F. Contractual Obligations and Contingencies

The following table summarizes our long-term contractual obligations as of March 31, 2018:


	Payments due by period (Unaudited)
	Less than 1 year		1-3 years		3-5 years		More than 5 years		Total
	(In thousands of U.S. dollars)
Loan obligations ^{(1), (2)}	$	2,050	$	197,313	$	—	$	—	$	199,363
Total contractual obligations	$	2,050	$	197,313	$	—	$	—	$	199,363

(1)	The amount identified does not include interest costs associated with the outstanding Term Loan B, which are based on LIBOR, plus the costs of complying with any applicable regulatory requirements and a margin of 4.50% per annum.

(2)	The amount identified excludes the discount associated with the outstanding Term Loan B.

Fleet Employment Profile

Set forth below are selected historical and statistical data of our fleet for each of the three month periods ended March 31, 2018 and March 31, 2017 that we believe may be useful in better understanding our fleet’s financial position and results of operations.


	Three Month Period Ended March 31, 2018 (unaudited)			Three Month Period Ended March 31, 2017 (unaudited)
FLEET DATA
Available days ⁽¹⁾		500			540
Operating days ⁽²⁾		492			537
Fleet utilization ⁽³⁾		98.6	%		99.5	%
Vessels operating at period end		6			6
AVERAGE DAILY RESULTS
Time Charter Equivalent per day ⁽⁴⁾	$	39,139		$	38,547

(1)

Available days: total calendar days the vessels were in Navios Midstream’s possession for the relevant period after subtracting off-hire days associated with major repairs, drydocking or special surveys. The shipping industry uses available days to measure the number of days in a relevant period during which vessels should be capable of generating revenues.

(2)

Operating days: the number of available days in the relevant period less the aggregate number of days that the vessels are off-hire due to any reason, including unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in a relevant period during which vessels actually generate revenues.

(3)

Fleet utilization: the percentage of time that the Navios Midstream’s vessels were available for generating revenue, determined by dividing the number of operating days during a relevant period by the number of available days during that period. The shipping industry uses fleet utilization to measure a company’s efficiency in finding suitable employment for its vessels.

(4)

Time Charter Equivalent: time charter revenues less time charter expenses during a relevant period divided by the number of available days during the period.

Cash Distribution Policy

Our cash distribution policy is consistent with the terms of our partnership agreement, which requires that we distribute all of our available cash quarterly (after deducting expenses, including estimated maintenance and replacement capital expenditures and reserves).

Limitations on Cash Distributions and Our Ability to Change Our Cash Distribution Policy

There is no guarantee that unitholders will receive quarterly distributions from us. Our distribution policy is subject to certain restrictions and may be changed at any time, including:

•

Our unitholders have no contractual or other legal right to receive distributions other than the obligation under our partnership agreement to distribute available cash on a quarterly basis, which is subject to the broad discretion of our board of directors to establish reserves and other limitations.

•

While our partnership agreement requires us to distribute all of our available cash, our partnership agreement, including provisions requiring us to make cash distributions contained therein, may be amended. During the subordination period which expired in November 2017, with certain exceptions, our partnership agreement could not have been amended without the approval of non-affiliated common unitholders, however, after the expiration of the subordination period our partnership agreement can be amended with the approval of a majority of the outstanding common units. Currently, Navios Acquisition owns 54.7% of our outstanding common units and 100.0% of our outstanding Series A units.

•

Even if our cash distribution policy is not modified or revoked, the amount of distributions we pay under our cash distribution policy and the decision to make any distribution is determined by our board of directors, taking into consideration the terms of our partnership agreement.

•

Under Section 51 of the Marshall Islands Limited Partnership Act, we may not make a distribution to our unitholders if the distribution would cause our liabilities to exceed the fair value of our assets.

•

We may lack sufficient cash to pay distributions to our unitholders due to decreases in net revenues or increases in operating expenses, principal and interest payments on outstanding debt, tax expenses, working capital requirements, maintenance and replacement capital expenditures or anticipated cash needs.

•

Our distribution policy will be affected by restrictions on distributions under our credit facility. Specifically, our credit facility contains material financial tests that must be satisfied and we will not pay any distributions that will cause us to violate our credit facility or other debt instruments. Should we be unable to satisfy these restrictions included in the credit facility or if we are otherwise in default under our credit facility, our ability to make cash distributions to you, notwithstanding our cash distribution policy, would be materially adversely affected.

•

If we make distributions out of capital surplus, as opposed to operating surplus, such distributions will constitute a return of capital and will result in a reduction in the minimum quarterly distribution and the target distribution levels. We do not anticipate that we will make any distributions from capital surplus.

Our ability to make distributions to our unitholders depends on the performance of our subsidiaries and their ability to distribute funds to us. The ability of our subsidiaries to make distributions to us may be restricted by, among other things, the provisions of existing and future indebtedness, applicable partnership and limited liability company laws and other laws and regulations.

Quarterly Distribution

In general, our general partner is entitled to 2.0% of all distributions that we make prior to our liquidation. The general partner’s initial 2.0% interest in these distributions may, however, be reduced if we issue additional units in the future and our general partner does not contribute a proportionate

amount of capital to us to maintain its initial 2.0% general partner interest. Our general partner has the right, but not the obligation, to contribute a proportionate amount of capital to us to maintain its current general partner interest.

On January 22, 2018, the Board of Directors authorized a quarterly cash distribution for the three month period ended December 31, 2017 of $0.4225 per unit. The distribution was paid on February 14, 2018 to all holders of record of common, subordinated Series A units and general partner units on February 9, 2018. The aggregate amount of the distribution paid was $9.0 million.

On April 26, 2018, the Board of Directors authorized a quarterly cash distribution for the three month period ended March 31, 2018 of $0.125 per unit. The distribution was paid on May 11, 2018 to all record holders of common units, subordinated Series A units and general partner units on May 9, 2018. The aggregate amount of the declared distribution was $2.7 million.

Incentive Distribution Rights

Incentive distribution rights represent the right to receive an increasing percentage of quarterly distributions of available cash from operating surplus after the minimum quarterly distribution and the target distribution levels have been achieved. Our general partner currently holds the incentive distribution rights, but may transfer these rights separately from its general partner interest, subject to restrictions in the partnership agreement.

The following table illustrates the percentage allocations of the additional available cash from operating surplus among the unitholders and our general partner up to the various target distribution levels. The amounts set forth under “Marginal Percentage Interest in Distributions” are the percentage interests of the unitholders and our general partner in any available cash from operating surplus we distribute up to and including the corresponding amount in the column “Total Quarterly Distribution Target Amount,” until available cash from operating surplus we distribute reaches the next target distribution level, if any. The percentage interests shown for the unitholders and our general partner for the minimum quarterly distribution are also applicable to quarterly distribution amounts that are less than the minimum quarterly distribution. The percentage interests shown for our general partner assume that our general partner maintains its 2.0% general partner interest and assume our general partner has not transferred the incentive distribution rights.


	Total Quarterly Distribution Total Amount		Marginal Percentage Interest in Distributions
	Total Quarterly Distribution Total Amount		Unitholders			General Partner			Holders of IDRs
Minimum Quarterly Distribution	$	0.4125		98.0	%		2.0	%		0	%
First Target Distribution	up to $	0.4744		98.0	%		2.0	%		0	%
Second Target Distribution	above $	0.4744		85.0	%		2.0	%		13.0	%
	up to $	0.5156
Third Target Distribution	above $	0.5156		75.0	%		2.0	%		23.0	%
	up to $	0.6188
Thereafter	above $	0.6188		50.0	%		2.0	%		48.0	%

On November 16, 2017, the subordination period, as defined in the limited partnership agreement of Navios Midstream expired, resulting in the conversion of the 9,342,692 subordinated units into common units. Any future cash distributions will be made in accordance with the terms in the limited partnership agreement applicable to the periods following the subordination period.

Related Party Transactions

Management fees: On November 18, 2014, the Company entered into a Management Agreement with the Manager pursuant to which the Manager provides commercial and technical management services to Navios Midstream’s vessels for a daily fee of $9,500 per VLCC tanker vessel that had originally been fixed until November 2016.

In October 2016, Navios Midstream amended its existing Management Agreement with the Manager to extend the fixed fee period for commercial and technical management services of its fleet, until December 31, 2018 at the current rate of $9,500 per day per VLCC. Dry docking expenses are reimbursed at cost for all vessels.

Total management fees for each of the three month periods ended March 31, 2018 and 2017 amounted to $5.1 million.

General and administrative expenses: On November 18, 2014, Navios Midstream entered into a Administrative Services Agreement with the Manager, expiring on November 18, 2019, pursuant to which the Manager provides certain administrative management services to Navios Midstream 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.

Total general and administrative expenses for the three month periods ended March 31, 2018 and March 31, 2017 amounted to $0.8 million and $0.7 million, respectively. For each of the three month periods ended March 31, 2018 and March 31, 2017, the expenses charged by Navios Holdings for administrative services were $0.4 million.

Balances due from related parties: Balance due from related parties as of March 31, 2018 and December 31, 2017, were $7.4 million and $22.6 million, respectively, and included the current and non-current amounts mainly due from Navios Holdings and Navios Acquisition and its subsidiaries. Amounts due from related parties mainly consisted of the backstop commitment from Navios Acquisition (see paragraph below in current note), as well as special survey and dry docking expenses for certain vessels of our fleet, and management fees in accordance with the Management Agreement.

Omnibus agreement: On November 18, 2014, Navios Midstream entered into an omnibus agreement, with Navios Acquisition, Navios Holdings and Navios Partners in connection with the Navios Midstream IPO, pursuant to which Navios Acquisition, Navios Holdings, Navios Maritime Partners L.P. (“Navios Partners”) and their controlled affiliates generally have agreed not to acquire or own any VLCCs, crude oil tankers, refined petroleum product tankers, LPG tankers or chemical tankers under time charters of five or more years. The omnibus agreement contains significant exceptions that will allow Navios Acquisition, Navios Holdings, Navios Partners or any of their controlled affiliates to compete with Navios Midstream under specified circumstances.

Under the omnibus agreement, Navios Midstream and its subsidiaries 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 granted a similar right of first offer to Navios Midstream for any of the VLCCs, crude oil tanker, refined petroleum product tanker, LPG tanker or chemical tanker under charter for five or more years it 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 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 Midstream entered into an omnibus agreement with Navios Maritime Containers Inc. (“Navios Containers”), Navios Acquisition, 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.

Backstop agreements: On November 18, 2014, Navios Acquisition entered into backstop agreements with Navios Midstream. In accordance with the terms of the backstop agreements, Navios Acquisition has provided a backstop commitment at a net rate of $35,000 per day for the Nave Celeste, $38,000 per day for the Shinyo Ocean and $38,000 per day for the Shinyo Kannika. The backstop rates apply for a two-year period as of the redelivery of each of the vessels from its original charterer, if the actual rates achieved are below the agreed backstop rates for each of the vessels. The backstop commitment for the Shinyo Kannika was terminated in relation to the sale of this vessel in March 2018. Navios Acquisition agreed to extend the backstop commitment of the Shinyo Kannika to the Nave Galactic, following the acquisition of the latter by Navios Acquisition in March 2018. For the three month periods ended March 31, 2018 and 2017 backstop revenue amounted to $4.9 million and $1.2 million, respectively and is included in the balance due from related parties (see paragraph above in current section).

General Partner option agreement: Navios Holdings has a ten-year option to purchase a minimum of 25% of the general partner interest held by the general partner, the incentive distribution rights held by the general partner and/or the membership interests in the general partner from Navios Acquisition, each at fair market value. The option expires on November 18, 2024.

Option vessels: Navios Midstream has options expiring on November 18, 2018 to acquire the Nave Buena Suerte, the Nave Neutrino and the Nave Electron from Navios Acquisition.

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. dollar 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. Expenses incurred in foreign currencies against which the U.S. dollar falls in value can increase thereby decreasing our income or vice versa if the U.S. dollar increases in value.

Interest Rate Risk

Borrowings under our credit facility bear interest at rates based on a premium over U.S. $ LIBOR except for the interest rate, 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 March 31, 2018, we paid interest on our outstanding debt at a weighted average interest rate of 6.20%. A 1% increase in LIBOR would have increased our interest expense for the three month period ended March 31, 2018 by $0.5 million. For the three month period ended March 31, 2017, we paid interest on our outstanding debt at a weighted average interest rate of 5.52%.

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 three month period ended March 31, 2018, customers representing 10% or more of total revenue were Cosco Dalian, VL8 and SK Shipping that accounted for 44.4%, 17.4% and 13.7%, respectively, of our revenue.

For the year ended December 31, 2017, our customers representing 10% or more of total revenue were Cosco Dalian and VL8 that accounted for 44.7% and 15.1%, respectively, of our revenue.

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 direct expenses in the current and foreseeable economic environment.

Critical Accounting Policies

Our interim condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates in the application of our accounting policies based on the best assumptions, judgments and opinions of management. Following is a discussion of the accounting policies that involve a higher degree of judgment and the methods of their application that affect the reported amount of assets and liabilities, revenues and expenses and related disclosure of contingent assets and liabilities at the date of our financial statements. 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. For a description of all of our significant accounting policies, see Note 2.

NAVIOS MARITIME MIDSTREAM PARTNERS L.P.


CONDENSED CONSOLIDATED BALANCE SHEETS AT MARCH 31, 2018 (UNAUDITED) AND DECEMBER 31, 2017			F-2
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2018 AND 2017			F-3
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2018 AND 2017			F-4
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2018 AND 2017			F-5
CONDENSED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)			F-6

F-1

NAVIOS MARITIME MIDSTREAM PARTNERS L.P.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of U.S. dollars except unit amounts)


	Notes		March 31, 2018 (unaudited)		December 31, 2017
ASSETS
Current assets
Cash and cash equivalents		3	$	21,470	$	27,086
Restricted cash		3		—		10,000
Accounts receivable, net				3,758		2,357
Prepaid expenses and other current assets				3,172		3,022
Due from related parties, current		8		4,847		20,086
Total current assets				33,247		62,551
Vessels, net		4		349,184		356,220
Intangible assets		5		21,615		22,318
Deferred dry dock and special survey costs, net				11,838		12,893
Due from related parties, non-current		8		2,565		2,565
Total non-current assets				385,202		393,996
Total assets			$	418,449	$	456,547
LIABILITIES AND PARTNERS’ CAPITAL
Current liabilities
Accounts payable			$	2,831	$	1,999
Accrued expenses				1,256		572
Deferred revenue				887		1,731
Current portion of long-term debt, net of deferred finance costs and discount		6		679		675
Total current liabilities				5,653		4,977
Long-term debt, net of deferred finance costs and discount		6		195,664		195,839
Total non-current liabilities				195,664		195,839
Total liabilities			$	201,317	$	200,816
Commitments and contingencies		9		—		—
Total Partners’ capital
Common Unitholders (19,354,498 units issued and outstanding at March 31, 2018 and December 31, 2017, respectively)				190,790		225,742
Subordinated Series A Unitholders (1,592,920 units issued and outstanding at March 31, 2018 and December 31, 2017, respectively)				22,116		24,992
General Partner (427,499 units issued and outstanding at March 31, 2018 and at December 31, 2017, respectively)				4,226		4,997
Partners’ capital				217,132		255,731
Total liabilities and Partners’ capital			$	418,449	$	456,547

See unaudited condensed notes to the condensed consolidated financial statements.

F-2

NAVIOS MARITIME MIDSTREAM PARTNERS L.P.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Expressed in thousands of U.S. Dollars, except unit and per unit data)


	Notes		Three Month Period ended March 31, 2018 (unaudited)			Three Month Period ended March 31, 2017 (unaudited)
Revenue (includes related party revenue of $4,867 and $1,155 for the three months ended March 31, 2018 and 2017, respectively)			$	19,779		$	21,100
Time charter expenses				(228	)		(285	)
Direct vessel expenses				(1,197	)		(780	)
Management fees (entirely through related party transactions)		8		(5,064	)		(5,130	)
General and administrative expenses		8		(806	)		(724	)
Depreciation and amortization		4, 5		(6,168	)		(6,293	)
Interest expenses and finance cost		6		(3,438	)		(3,131	)
Loss on Sale of Asset		4		(32,444	)		—
Interest income				14			6
Other expense, net				(16	)		(261	)
Net (loss)/ income			$	(29,568	)	$	4,502
(Loss)/ Earnings attributable to:
Common unit holders			$	(26,775	)	$	2,108
Subordinated Series A unit holders			$	(2,203	)	$	336
Subordinated unit holders			$	—		$	1,971
General Partner			$	(590	)	$	87
(Loss)/ Earnings per unit (basic and diluted)
Common unitholders:			$	(1.38	)	$	0.22
Subordinated Series A unitholders:			$	(1.38	)	$	0.21
Subordinated unitholders:			$	—		$	0.19
General Partner:			$	(1.38	)	$	0.21

See unaudited condensed notes to the condensed consolidated financial statements.

F-3

NAVIOS MARITIME MIDSTREAM PARTNERS L.P.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of U.S. Dollars)


	Notes		Three Month Period ended March 31, 2018 (unaudited)			Three Month Period ended March 31, 2017 (unaudited)
OPERATING ACTIVITIES
Net (loss)/ income			$	(29,568	)	$	4,502
Adjustments to reconcile net (loss)/ income to net cash provided by operating activities:
Depreciation and amortization		4,5		6,168			6,293
Amortization of deferred finance fees				340			344
Amortization of dry dock and special survey costs				1,197			780
Loss on Sale of Assets		4		32,444			—
Changes in operating assets and liabilities:
Increase in prepaid expenses and other current assets				(679	)		(2,189	)
Increase in accounts receivable				(1,401	)		(1,540	)
Increase in accounts payable				665			234
Increase/ (decrease) in accrued expenses				684			(10	)
Payments for Drydocking				(1,997	)		—
Decrease/ (increase) in due from/ to related parties		8		15,239			(6,504	)
Decrease in deferred revenue				(844	)		(763	)
Net cash provided by operating activities			$	22,248		$	1,147
INVESTING ACTIVITIES
Acquisition of vessels		4		(44,526	)		—
Net proceeds from sale of assets		4		16,206			—
Net cash used in investing activities			$	(28,320	)	$	—
FINANCING ACTIVITIES
Loan repayment				(513	)		(513	)
Dividend paid				(9,031	)		(9,019	)
Proceeds from issuance of general partner units				—			79
Proceeds from issuance of common units				—			3,777
Net cash (used in) financing activities			$	(9,544	)	$	(5,676	)
Net decrease in cash, cash equivalents and restricted cash				(15,616	)		(4,529	)
Cash, cash equivalents and restricted cash, beginning of period			$	37,086		$	52,791
Cash, cash equivalents and restricted cash, end of period			$	21,470		$	48,262
Supplemental disclosures of cash flow information
Cash interest paid			$	3,064		$	2,777

See unaudited condensed notes to the condensed consolidated financial statements.

F-4

NAVIOS MARITIME MIDSTREAM PARTNERS L.P.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL

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


						Limited Partners
	General Partner					Common Unitholders					Subordinated Unitholders					Subordinated Series A Unitholders					Total Partners’ Capital
	Units		$			Units		$			Units		$			Units		$			$
Consolidated Balance December 31, 2016		420,641		5,343			9,675,795		125,635			9,342,692		115,552			1,592,920		26,593			273,123
Net Income		—		87			—		2,108			—		1,971			—		336			4,502
Equity offering		6,446		79			315,846		3,777					—					—			3,856
Cash distribution		—		(178	)		—		(4,221	)		—		(3,947	)		—		(673	)		(9,019	)
Consolidated Balance March 31, 2017		427,087		5,331			9,991,641		127,299			9,342,692		113,576			1,592,920		26,256			272,462
Consolidated Balance December 31, 2017		427,499		4,997			19,354,498		225,742			—		—			1,592,920		24,992			255,731
Net Loss		—		(590	)		—		(26,775	)		—		—			—		(2,203	)		(29,568	)
Cash distribution		—		(181	)		—		(8,177	)		—		—			—		(673	)		(9,031	)
Consolidated Balance March 31, 2018		427,499		4,226			19,354,498		190,790			—		—			1,592,920		22,116			217,132

See unaudited condensed notes to the condensed consolidated financial statements.

F-5

NAVIOS MARITIME MIDSTREAM PARTNERS L.P.

CONDENSED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(Expressed in thousands of U.S. Dollars except unit and per unit data)

NOTE 1: DESCRIPTION OF BUSINESS

Navios Maritime Midstream Partners L.P. (“Navios Midstream” or the “Company”) (NYSE: NAP), was formed in The Republic of the Marshall Islands on October 13, 2014. Navios Maritime Midstream Partners GP LLC (the “General Partner”), a Marshall Islands limited liability company and wholly-owned subsidiary of Navios Maritime Acquisition Corporation (“Navios Acquisition”), was also formed on that date to act as the General Partner of Navios Midstream and receive a 2.0% general partner interest.

Navios Midstream’s principal activity is to own, operate and acquire crude oil tankers under long-term employment contracts as well as refined petroleum product tankers, chemical tankers, and LPG tankers under long-term employment contracts. The Company intends to charter the vessels under long-term employment contracts to international oil companies, refiners, and large vessel operators.

As of March 31, 2018, there were outstanding: 19,354,498 common units, no subordinated units, 1,592,920 subordinated Series A Units and 427,499 general partnership units. As of March 31, 2018, Navios Acquisition owned a 58.97% limited partner interest in Navios Midstream, which included a 2.0% general partner interest.

As of March 31, 2018, the Company owned six very large crude carriers (“VLCC”) tanker vessels.

For the three month period ended March 31, 2018, customers representing 10% or more of total revenue were Dalian Ocean Shipping Co. Ltd. (“Cosco Dalian”), a Chinese state-owned enterprise, VL8 Pool Inc. (“VL8”) and SK Shipping Company Limited (“SK Shipping”) that accounted for 44.4%, 17.4% and 13.7%, respectively, of our revenue. For the year ended December 31, 2017, our customers representing 10% or more of total revenue were Cosco Dalian and VL8 that accounted for 44.7% and 15.1%, respectively, of our revenue.

As of March 31, 2018, the entities included in these condensed consolidated financial statements were:

Company name

Vessel name

Country of
incorporation

2018

2017

Navios Maritime Midstream Operating LLC

N/A

Marshall Islands

1/1-3/31

Navios Maritime Midstream Partners L.P.

N/A

Marshall Islands

1/1-3/31

Navios Maritime Midstream Partners Finance (US) Inc.

N/A

Delaware

1/1-3/31

Shinyo Kannika Limited

Shinyo Kannika

Hong Kong ⁽¹⁾

1/1-3/22

1/1-3/31

Shinyo Ocean Limited

Shinyo Ocean

Hong Kong

1/1-3/31

Shinyo Saowalak Limited

Shinyo Saowalak

British Virgin Is.

1/1-3/31

Shinyo Kieran Limited

Shinyo Kieran

British Virgin Is.

1/1-3/31

Shinyo Dream Limited

C. Dream

Hong Kong

1/1-3/31

Sikinos Shipping Corporation

Nave Celeste

Marshall Islands

1/1-3/31

Kerkyra Shipping Corporation

Nave Galactic

Marshall Islands ⁽²⁾

3/30-3/31

—

(1)	The vessel Shinyo Kannika was sold to an unaffiliated third party on March 22, 2018.

(2)	The vessel Nave Galactic was acquired from Navios Acquisition on March 29, 2018.

F-6

NAVIOS MARITIME MIDSTREAM PARTNERS L.P.

CONDENSED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(Expressed in thousands of U.S. Dollars except unit and per unit data)

NOTE 2: 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 Midstream’s condensed consolidated financial position, statements of operations and cash flows for the periods presented. Adjustments consist of normal, recurring entries. The yearend condensed balance sheet data was derived from audited financial statements, but does not include all disclosure required by accounting principles generally accepted in the United States of America (“GAAP”). 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 GAAP for complete financial statements. These interim financial statements should be read in conjunction with the Company’s consolidated financial statements and notes included in Navios Midstream’s 2017 Annual Report filed on Form 20-F with the U.S. Securities and Exchange Commission.

(b) Principles of consolidation: The accompanying interim condensed consolidated financial statements include the accounts of Navios Midstream, a Marshall Islands corporation, and its subsidiaries that are all 100% owned. All significant intercompany balances and transactions have been eliminated in the condensed consolidated statements.

(c) Restricted Cash: Restricted cash was $0 and $10,000 as of March 31, 2018 and December 31, 2017, respectively, and was held as required by certain provisions of Navios Midstream’s credit facility.

The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the condensed consolidated balance sheet:


Reconciliation of cash, cash equivalents and restricted cash:	March 31, 2018		December 31, 2017
Current assets:
Cash and cash equivalents	$	21,470	$	27,086
Restricted cash		—		10,000
Total cash, cash equivalents and restricted cash	$	21,470	$	37,086

(d) Revenue recognition: On January 1, 2018, the Company adopted the provisions of ASC 606, Revenue from Contracts with Customers (ASC 606). The guidance provides a unified model to determine how revenue is recognized. In doing so, the Company makes judgments including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price, and allocating the transaction price to each performance obligation. Revenue is recognized when (or as) the Company transfers promised goods or services to its customers in amounts that reflect the consideration to which the company expects to be entitled to in exchange for those goods or services, which occurs when (or as) the Company satisfies its contractual obligations and transfers control of the promised goods or services to its customers. Revenues are recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In determining the appropriate amount of revenue to be recognized as it fulfills its obligations under its agreements, the Company performs the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations based on estimated selling prices; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. The Company’s contract revenues consist of revenues from time chartering and pooling arrangements. Upon adoption of ASC 606, the timing and recognition of earnings from the pool arrangements and time charter contracts to which the Company is party did not change significantly from previous practice.

F-7

NAVIOS MARITIME MIDSTREAM PARTNERS L.P.

CONDENSED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(Expressed in thousands of U.S. Dollars except unit and per unit data)

Revenues from time chartering of vessels are accounted for as operating leases and are therefore recognized on a straight-line basis as the average revenue over the rental periods of such charter agreements, as service is performed. A time charter involves placing a vessel at the charterers’ disposal for a period of time during which the charterer uses the vessel in return for the payment of a specified daily hire rate. Under time charters, operating costs such as for crews, maintenance and insurance are typically paid by the owner of the vessel. Revenues from time chartering of vessels amounted to $11,479 and $16,497 for the three month periods ended March 31, 2018 and 2017, respectively.

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 margins awarded to each vessel in the pool based on the vessel’s age, design and other performance characteristics. Accordingly, the Company accounts for its agreements with commercial pools as variable rate operating leases. For the pools in which the Company participates, management monitors, among other things, the relative proportion of the Company’s vessels operating in each of the pools to the total number of vessels in each of the respective pools, and assesses whether or not the Company’s participation interest in each of the pools is sufficiently significant so as to determine that the Company has effective control of the pool.

Profit-sharing revenues are calculated at an agreed percentage of the excess of the charterer’s average daily income (calculated on a quarterly, half-yearly or annually basis) over an agreed amount and accounted for on an accrual basis based on provisional amounts and for those contracts that provisional accruals cannot be made due to the nature of the profit share elements, these are accounted for or when such revenue becomes determinable.

Revenue from vessels operating in pooling and profit sharing arrangements amounted $3,433 and $3,448 for the three month periods ended March 31, 2018 and 2017, respectively.

Revenue from backstop agreements. For more information on revenue from backstop agreements, please refer to Note 8. Revenue from backstop agreements amounted to $4,867 and $1,155 for the three month periods ended March 31, 2018 and March 31, 2017, respectively.

Revenues are recorded net of address commissions. Address commissions represent a discount provided directly to the charterers based on a fixed percentage of the agreed upon charter. Since address commissions represent a discount (sales incentive) on services rendered by the Company and no identifiable benefit is received in exchange for the consideration provided to the charterer, these commissions are presented as a reduction of revenue.

Adoption of new accounting standards

On January 1, 2018, the Company adopted ASU No. 2014-09, “Revenue from Contracts with Customers” and the related amendments (“ASC 606” or “the new revenue standard”) using the modified retrospective method, requiring to recognize the cumulative effect of adopting this guidance as an adjustment to the 2018 opening balance of retained earnings and not retrospectively adjusting prior periods.

F-8

NAVIOS MARITIME MIDSTREAM PARTNERS L.P.

CONDENSED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(Expressed in thousands of U.S. Dollars except unit and per unit data)

Under the new guidance, there is a five-step model to apply to revenue recognition. The five-steps consist of: (1) determination of whether a contract, an agreement between two or more parties that creates legally enforceable rights and obligations, exists; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; and (5) recognition of revenue when (or as) the performance obligation is satisfied.

As a result of adoption, there was no cumulative impact to the Company’s retained earnings at January 1, 2018. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The Company expects the impact of the adoption of the new standard to be immaterial to its net income on an ongoing basis.

In August 2016, the FASB issued Accounting Standards Update No. 2016-15, “Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). This Update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The Company adopted the new guidance on January 1, 2018 and it did not have a material impact on the consolidated results of operations, financial condition, or cash flows.

In January 2017, FASB issued ASU 2017-01, “Business Combinations” to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisition (or disposals) of assets or businesses. Under current implementation guidance the existence of an integrated set of acquired activities (inputs and processes that generate outputs) constitutes an acquisition of business. This ASU provides a screen to determine when a set of assets and activities does not constitute a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This update is effective for public entities with reporting periods beginning after December 15, 2017, including interim periods within those years. The amendments of this ASU should be applied prospectively on or after the effective date. The Company adopted the requirements of ASU 2017-01 effective beginning on January 1, 2018. The adoption of this ASU did not have a material effect on the Company’s consolidated financial statements, results of operations and cash flows.

On January 1, 2018 the Company adopted ASU 2016-18, “Restricted Cash” (“ASU 2016-18”), which updated ASC Topic 230, “Statement of Cash Flows.” ASU 2016-18 required companies to include restricted cash and restricted cash equivalents with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The adoption of this standard resulted in a decrease in net cash used in financing activities of $10,000 for the three months ended March 31, 2017.

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). ASU 2016-02 will apply to both types of leases – capital (or finance) leases and operating leases. According to the new Accounting Standard, (a) lessees will be required to recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases with terms of more than 12 months and (b) previous accounting standards for lessors will be updated to align certain requirements with the updates to lessee accounting standards and the revenue recognition accounting standards. ASU 2016 – 02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. In a recent update in January 2018, targeted improvements were proposed to the accounting standards that provides for (a) an optional new transition method for adoption that results in initial recognition of a cumulative effect adjustment to retained earnings in the year of adoption and (b) a practical expedient for lessors, under certain circumstances, to combine the lease and non-lease components of revenues for presentation purposes. If the targeted improvements are approved, the Company intends to apply the alternative transition method, which is consistent, in

F-9

NAVIOS MARITIME MIDSTREAM PARTNERS L.P.

CONDENSED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(Expressed in thousands of U.S. Dollars except unit and per unit data)

application, with the approach the Company has elected under the revenue accounting standards update, and intends to elect the practical expedient for lessors for presentation purposes. The Company’s adoption, and the ultimate effect on the consolidated financial statements, will be based on an evaluation of the contract-specific facts and circumstances. The Company does not expect any changes to the timing of revenue recognition for the current contracts with customers. The Company is currently assessing the impact that adopting this new accounting guidance will have on its consolidated financial statements and footnotes disclosures.

NOTE 3: CASH AND CASH EQUIVALENTS AND RESTRICTED CASH

Cash and cash equivalents consisted of the following:


	March 31, 2018		December 31, 2017
Cash at banks	$	18,428	$	12,556
Short-term deposits		3,042		14,530
Total cash and cash equivalents	$	21,470	$	27,086

The bank accounts are legally owned by the entities referenced in Note 2.

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. The Company does maintain cash deposits and equivalents in excess of government-provided insurance limits. The Company also minimizes exposure to credit risk by dealing with a diversified group of major financial institutions.

Restricted cash as of March 31, 2018 decreased by $10,000 as compared to December 31, 2017, which was used for the acquisition of the Nave Galactic.

NOTE 4: VESSELS, NET


	Cost			Accumulated Depreciation			Net Book Value
Balance at December 31, 2017	$	487,640		$	(131,420	)	$	356,220
Additions		44,526			(5,465	)		39,061
Disposals		(76,382	)		30,285			(46,097	)
Balance at March 31, 2018	$	455,784		$	(106,600	)	$	349,184

On March 29, 2018, Navios Midstream acquired from Navios Acquisition the Nave Galactic for a total purchase price of $44,526 paid in cash. The working capital acquired was $424.

The Nave Galactic’s acquisition was effected through the acquisition of all of the capital stock of the vessel-owning company, which held the ownership and other contractual rights and obligations related to the acquired vessel Management accounted for the transaction as an asset acquisition under ASC 805.

On March 22, 2018, Navios Midstream sold the Shinyo Kannika to an unaffiliated third party for net cash proceeds of $16,206. The loss on sale of the vessel, upon write-off of the unamortized dry-docking, was $32,444 and is separately presented under Loss on Sale of Assets in the condensed consolidated statements of operations.

F-10

NAVIOS MARITIME MIDSTREAM PARTNERS L.P.

CONDENSED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(Expressed in thousands of U.S. Dollars except unit and per unit data)

NOTE 5: INTANGIBLE ASSETS

Intangible assets as of March 31, 2018 and December 31, 2017 consisted of the following:


Favorable lease terms	Cost		Accumulated Amortization			Net Book Value
Balance at December 31, 2017	$	41,851	$	(19,533	)		22,318
Additions		—		(703	)		(703	)
Balance at March 31, 2018	$	41,851	$	(20,236	)	$	21,615

Amortization expense of favorable lease terms for the three month periods ended March 31, 2018 and 2017 are presented in the following table:


	March 31, 2018			March 31, 2017
Favorable lease terms charter-out		(703	)		(737	)
Total	$	(703	)	$	(737	)

The aggregate amortizations of intangible assets will be as follows:


Description	Within One Year			Year Two			Year Three			Year Four			Year Five			Thereafter			Total
Favorable lease terms	$	(2,811	)	$	(2,811	)	$	(2,811	)	$	(2,811	)	$	(2,811	)	$	(7,560	)	$	(21,615	)
Total	$	(2,811	)	$	(2,811	)	$	(2,811	)	$	(2,811	)	$	(2,811	)	$	(7,560	)	$	(21,615	)

Intangible assets subject to amortization are amortized using the straight-line method over their estimated useful lives to their estimated residual value of zero. Intangible assets are amortized over the contract periods, which extend up to 15 years at inception.

NOTE 6: LONG-TERM DEBT

Long-term debt consisted of the following:


	March 31, 2018			December 31, 2017
Term Loan B		199,363			199,875
Less deferred finance costs, net		(2,125	)		(2,365	)
Total long term debt		197,238			197,510
Less unamortized discount		(895	)		(996	)
Less current portion, net of deferred finance cost		(679	)		(675	)
Total Long Term Debt, net of current portion and net of deferred finance costs	$	195,664		$	195,839

Term Loan B: On June 18, 2015, Navios Midstream and Navios Maritime Midstream Partners Finance (US) Inc., as co-borrowers, completed the issuance of the $205,000 Term Loan B (the “Term Loan B”). The Term Loan B is set to mature on June 18, 2020 and is repayable in equal quarterly installments of 0.25% of the initial principal amount of the Term Loan B, beginning on September 18, 2015, with a final payment of the aggregate principal amount of the Term Loan B, plus accrued and unpaid interest, due on the maturity. The Term Loan B bears interest at LIBOR plus 4.50% per annum.

F-11

NAVIOS MARITIME MIDSTREAM PARTNERS L.P.

CONDENSED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(Expressed in thousands of U.S. Dollars except unit and per unit data)

Amounts drawn under the facilities are secured by first preferred mortgages on Navios Midstream’s vessels and other collateral and are guaranteed by each vessel-owning subsidiary.

Following the acquisition of the Nave Galactic and the sale of the Shinyo Kannika, the Nave Galactic substituted for the Shinyo Kannika under the Term Loan B.

As of March 31, 2018, Navios Midstream was in compliance with the covenants set forth in the Term Loan B.

As of March 31, 2018, a balance of $199,363 was outstanding under the Term Loan B.

The table below reflects the principal payments of credit facilities outstanding as of March 31, 2018 for the next three years based on the repayment schedule of the respective loan facilities (as described above).


	March 31, 2018
Long-Term Debt Obligations:
Year
March 31, 2019	$	2,050
March 31, 2020		2,050
March 31, 2021		195,263
Total	$	199,363

The weighted average interest rate as of March 31, 2018 and 2017 was 6.20% and 5.52%, respectively.

NOTE 7: FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value of each class of financial instrument:

Cash and cash equivalents: The carrying amounts reported in the consolidated balance sheets for interest bearing deposits approximate their fair value because of the short maturity of these investments.

Accounts receivable, net: Carrying amounts are considered to approximate fair value due to the short-term nature of these accounts receivables and no significant changes in interest rates. All amounts that are assumed to be uncollectible are written-off and/or reserved.

Accounts payable: The carrying amount of accounts payable reported in the balance sheet approximates its fair value due to the short-term nature of these accounts payable and no significant changes in interest rates.

Due from related parties, current: The carrying amount of due from related parties, current reported in the balance sheet approximates its fair value due to the short-term nature of these receivables.

Due from related parties, non-current: The carrying amount of due from related parties, non-current reported in the balance sheet approximates its fair value.

F-12

NAVIOS MARITIME MIDSTREAM PARTNERS L.P.

CONDENSED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(Expressed in thousands of U.S. Dollars except unit and per unit data)

Term Loan B facility: The fair value of the Company’s debt is estimated based on currently available debt with similar contract terms, interest rate and remaining maturities, as well as taking into account our creditworthiness.

The fair value hierarchy is explained as follows:

Level I: Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets that we have the ability to access. Valuation of these items does not entail a significant amount of judgment.

Level II: Inputs other than quoted prices included in Level I that are observable for the asset or liability through corroboration with market data at the measurement date.

Level III: Inputs that are unobservable. The Company did not use any Level 3 inputs as of March 31, 2018 or December 31, 2017.


	March 31, 2018				December 31, 2017
	Book Value		Fair Value		Book Value		Fair Value
Cash and cash equivalents	$	21,470	$	21,470	$	27,086	$	27,086
Restricted cash	$	—	$	—		10,000	$	10,000
Accounts receivable	$	3,758	$	3,758	$	2,357	$	2,357
Due from related parties, current	$	4,847	$	4,847	$	20,086	$	20,086
Due from related parties, non-current	$	2,565	$	2,565	$	2,565	$	2,565
Accounts payable	$	2,831	$	2,831	$	1,999	$	1,999
Long-term debt	$	197,238	$	199,363	$	197,510	$	199,375

Fair Value Measurements

The estimated fair value of our financial instruments that are not measured at fair value on a recurring basis, categorized based upon the fair value hierarchy, are as follows:

Fair Value Measurements at March 31, 2018 Using


	Total		Level I		Level II		Level III
Cash and cash equivalents	$	21,470	$	21,470	$	—	$	—
Long-term debt	$	199,363	$	—	$	199,363	$	—
Due from related parties, current	$	4,847	$	4,847	$	—	$	—
Due from related parties, non-current	$	2,565	$	—	$	2,565	$	—

Fair Value Measurements at December 31, 2017 Using


	Total		Level I		Level II		Level III
Cash and cash equivalents	$	27,086	$	27,086	$	—	$	—
Restricted cash	$	10,000		10,000	$	—	$	—
Long-term debt	$	199,375	$	—	$	199,375	$	—
Due from related parties, current	$	20,086	$	20,086	$	—	$	—
Due from related parties, non-current	$	2,565	$	—	$	2,565	$	—

F-13

NAVIOS MARITIME MIDSTREAM PARTNERS L.P.

CONDENSED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(Expressed in thousands of U.S. Dollars except unit and per unit data)

NOTE 8: TRANSACTIONS WITH RELATED PARTIES

Management fees: On November 18, 2014, the Company entered into a Management Agreement with Navios Tankers Management Inc. (“the Manager”), a wholly-owned subsidiary of Navios Maritime Holdings Inc. (“Navios Holdings”), pursuant to which the Manager provides commercial and technical management services to Navios Midstream’s vessels for a daily fee of $9.5 per VLCC tanker vessel that was originally fixed for the first two years.

In October 2016, Navios Midstream amended its existing Management Agreement with the Manager to extend the fixed fee period for commercial and technical management services of its fleet, until December 31, 2018 at the current rate of $9.5 per day per VLCC. Dry docking expenses are reimbursed at cost for all vessels.

Total management fees for each of the three month periods ended March 31, 2018 and 2017 amounted to $5,064 and $5,130, respectively.

General and administrative expenses: On November 18, 2014, Navios Midstream entered into the Administrative Services Agreement with the Manager, expiring on November 18, 2019, pursuant to which the Manager provides certain administrative management services to Navios Midstream 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.

Total general and administrative expenses for the three month periods ended March 31, 2018 and March 31, 2017 amounted to $806 and $724, respectively. For each of the three month periods ended March 31, 2018 and 2017, the expense arising from the administrative services rendered by the Manager to the Company’s vessels amounted to $369 and $375, respectively.

Balances due from related parties: Balance due from related parties as of March 31, 2018 and December 31, 2017, were $7,412 and $22,651, respectively, and included the current and non-current amounts mainly due from Navios Holdings and Navios Acquisition and its subsidiaries. Amounts due from related parties mainly consisted of the backstop commitment from Navios Acquisition (see paragraph below in current note), as well as special survey and dry docking expenses for certain vessels of our fleet, and management fees in accordance with the Management Agreement.

F-14

NAVIOS MARITIME MIDSTREAM PARTNERS L.P.

CONDENSED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(Expressed in thousands of U.S. Dollars except unit and per unit data)

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.

Backstop agreements: On November 18, 2014, Navios Acquisition entered into backstop agreements with Navios Midstream. In accordance with the terms of the backstop agreements, Navios Acquisition has provided a backstop commitment at a net rate of $35.0 per day for the Nave Celeste, $38.4 per day for the Shinyo Ocean and $38.0 per day for the Shinyo Kannika. The backstop rates apply for a two-year period as of the redelivery of each of the vessels from its original charterer, if the actual rates achieved are below the agreed backstop rates for each of the vessels. The backstop commitment for the Shinyo Kannika terminated following the sale of this vessel in March 2018. Navios Acquisition agreed to extend the backstop commitment of the Shinyo Kannika to the Nave Galactic, following the acquisition of the latter by Navios Acquisition in March 2018. For the three month period ended March 31, 2018, backstop revenue amounted to $4,867 ($1,155 for the respective period in 2017) and was included in the balance due from related parties (see paragraph above in current note).

Option vessels: Navios Midstream has options expiring on November 18, 2018 to acquire the Nave Buena Suerte, the Nave Neutrino and the Nave Electron from Navios Acquisition.

NOTE 9: COMMITMENTS AND CONTINGENCIES

The Company is involved in various disputes and arbitration proceedings arising in the ordinary course of business. Provisions are 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.

NOTE 10: SEGMENT INFORMATION

The Company reports financial information and evaluates its operations by charter revenues. The Company 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 the Company has determined that it operates under one reportable segment.

Company monitors operating revenue by geographic region for the Company’s reportable segment. Revenue is allocated on the basis of the geographic region in which the customer is located. Revenues from specific geographic regions which contribute over 10% of total revenue are disclosed separately. For the three month periods ended March 31, 2018 and 2017, all the revenues were derived from customers located in Asia.

Vessels operate on a worldwide basis and are not restricted to specific locations. Accordingly, it is not possible to allocate the assets of these operations to specific countries.

NOTE 11: ISSUANCE OF UNITS

On July 29, 2016, Navios Midstream entered into a Continuous Offering Program Sales Agreement with S. Goldman Capital LLC. as sales agent (the “Agent”), pursuant to which Navios Midstream may issue and sell from time to time through the Agent common units representing limited partner interests having an aggregate offering price of up to $25,000.

F-15

NAVIOS MARITIME MIDSTREAM PARTNERS L.P.

CONDENSED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(Expressed in thousands of U.S. Dollars except unit and per unit data)

During the quarter ended March 31, 2017, Navios Midstream issued 315,846 common units and received net proceeds of $3,777. Pursuant to the issuance of the common units, Navios Midstream issued 6,446 general partnership units to its general partner in order to maintain its 2.0% general partner interest. The net proceeds from the issuance of the general partnership units were $79. As of March 31, 2017, there were outstanding: 9,991,641 common units, 9,342,692 subordinated units, 1,592,920 subordinated Series A Units and 427,087 general partnership units. As of March 31, 2018, Navios Acquisition owned a 58.97% limited partner interest in Navios Midstream, which included a 2.0% general partner interest.

In the first quarter of 2018, there were no equity transactions or units sold.

As of March 31, 2018, there were outstanding: 19,354,498 common units, no subordinated units, 1,592,920 subordinated Series A units and 427,499 general partnership units.

NOTE 12: CASH DISTRIBUTIONS AND EARNINGS/ (LOSSES) PER UNIT

The partnership agreement of Navios Midstream requires that all available cash is distributed quarterly, after deducting expenses, including estimated maintenance and replacement capital expenditures and reserves. Distributions may be restricted by, among other things, the provisions of existing and future indebtedness, applicable partnership and limited liability company laws and other laws and regulations.

Thereafter there are incentive distribution rights held by the General Partner, which are analyzed as follows:


			Marginal Percentage Interest in Distributions
	Total Quarterly Distribution Total Amount		Common and subordinated Unitholders			General Partner			Holders of IDRs
Minimum Quarterly Distribution	$	0.4125		98.0	%		2.0	%		0	%
First Target Distribution	up to $	0.4744		98.0	%		2.0	%		0	%
Second Target Distribution	above $ up to $	0.4744 0.5156		85.0	%		2.0	%		13.0	%
Third Target Distribution	above $ up to $	0.5156 0.6188		75.0	%		2.0	%		23.0	%
Thereafter	above $	0.6188		50.0	%		2.0	%		48.0	%

In November 2017, the then outstanding subordinated units converted into common units in accordance with the Navios Midstream’s Limited Partnership Agreement.

On January 22, 2018, the Board of Directors authorized its quarterly cash distribution for the three month period ended December 31, 2017 of $0.4225 per unit. The distribution was paid on February 14, 2018 to all holders of record of common, subordinated Series A units and general partner units on February 9, 2018. The aggregate amount of the distribution paid was $9,031.

On March 26, 2018, the Board of Directors has set the annual distribution policy to $0.50 per unit.

Navios Midstream calculates earnings per unit by allocating reported net income for each period to each class of units based on the distribution waterfall for available cash specified in Navios

F-16

NAVIOS MARITIME MIDSTREAM PARTNERS L.P.

CONDENSED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(Expressed in thousands of U.S. Dollars except unit and per unit data)

Midstream’s partnership agreement, net of the unallocated earnings. Basic earnings per unit are determined by dividing net income by the weighted average number of units outstanding during the period. Basic and diluted net earnings per unit are the same because the Company does not have any potentially dilutive units outstanding for the period presented.

Net loss per unit undistributed is determined by taking the distributions in excess of net income and allocating between common units, subordinated units and general partner units on a 98%-2% basis.

The calculations of the basic and diluted earnings per unit are presented below.


	Three Month Period ended March 31, 2018 ($ ’000) (unaudited)			Three Month Period ended March 31, 2017 ($ ’000) (unaudited)
Net (loss)/ income attributable to Navios Maritime Midstream Partners L.P. and limited partners’ interest in net income:	$	(29,568	)	$	4,502
(Losses)/ earnings attributable to:
Common unit holders	$	(26,775	)	$	2,108
Subordinated unit holders Series A	$	(2,203	)	$	336
Subordinated unit holders	$	—		$	1,971
General Partner	$	(590	)	$	87
Weighted average units outstanding (basic and diluted)
Common unit holders		19,354,498			9,863,461
Subordinated unit holders Series A		1,592,920			1,592,920
Subordinated unit holders		—			9,342,692
General Partner		427,499			423,363
(Losses)/ Earnings per unit (basic and diluted):
Common unit holders	$	(1.38	)	$	0.22
Subordinated unit holders Series A	$	(1.38	)	$	0.21
Subordinated unit holders	$	—		$	0.19
General Partner	$	(1.38	)	$	0.21
Earnings per unit—distributed (basic and diluted):
Common unit holders	$	0.13		$	0.43
Subordinated unit holders Series A	$	0.13		$	0.42
Subordinated unit holders	$	—		$	0.42
General Partner	$	0.13		$	0.42
(Losses) per unit—undistributed (basic and diluted):
Common unit holders	$	(1,51	)	$	(0.21	)
Subordinated unit holders Series A	$	(1,51	)	$	(0.21	)
Subordinated unit holders	$	—		$	(0.23	)
General Partner	$	(1,51	)	$	(0.21	)

NOTE 13: INCOME TAXES

Marshall Islands, British Virgin Islands, and Hong Kong, do not impose a tax on international shipping income. Under the laws of Marshall Islands, British Virgin Islands, and Hong Kong, of the companies’ incorporation and vessels’ registration, the companies are subject to registration and tonnage taxes which have been included in the daily management fee.

F-17

NAVIOS MARITIME MIDSTREAM PARTNERS L.P.

CONDENSED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(Expressed in thousands of U.S. Dollars except unit and per unit data)

In accordance with the currently applicable Greek law, foreign flagged vessels that are managed by Greek or foreign ship management companies having established an office in Greece are subject to duties towards the Greek state, which are calculated on the basis of the relevant vessels’ tonnage. The payment of said duties exhausts the tax liability of the foreign ship owning company and the relevant manager against any tax, duty, charge or contribution payable on income from the exploitation of the foreign flagged vessel.

Pursuant to Section 883 of the Internal Revenue Code of the United States, U.S. source income from the international operation of ships is generally exempt from U.S. income tax if the company operating the ships meets certain incorporation and ownership requirements. Among other things, in order to qualify for this exemption, the company operating the ships must be incorporated in a country, which grants an equivalent exemption from income taxes to U.S. corporations. All of the Company’s vessel- owning subsidiaries satisfy these initial criteria. In addition, these companies must meet an ownership test. Subject to proposed regulations becoming finalized in their current form, the management of Navios Midstream believes by virtue of a special rule applicable to situations where the ship operating companies are beneficially owned by a publicly traded company like Navios Midstream, the second criterion can also be satisfied based on the trading volume and ownership of the Company’s units, but no assurance can be given that this will remain so in the future.

NOTE 14: SUBSEQUENT EVENTS

On April 26, 2018, the Board of Directors authorized a quarterly cash distribution for the three month period ended March 31, 2018 of $0.125 per unit. The distribution was paid on May 11, 2018 to all holders of record holders of common units, subordinated Series A units and general partner units as of May 9, 2018. The aggregate amount of the declared distribution was $2,672.

F-18

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.


NAVIOS MARITIME MIDSTREAM PARTNERS L.P.

By:		/s/ Angeliki Frangou
		Angeliki Frangou
		Chief Executive Officer
Date: May 17, 2018

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