1.	Basis of Presentation and General Information

Euroseas Ltd. was formed on

May 5, 2005

under the laws of the Republic of the Marshall Islands to consolidate the beneficial owners of the ship owning companies in existence at that time. Euroseas Ltd, through its wholly owned vessel owning subsidiaries (collectively the “Company”) is engaged in the ocean transportation of containers through ownership and operation of containerships.

The operations of the vessels are managed by Eurobulk Ltd. (“Eurobulk” or “Management Company” or “Manager”), a corporation controlled by members of the Pittas family. Eurobulk has an office in Greece located at

Messogiou & Evropis Street, Maroussi, Greece. The Manager provides the Company with a wide range of shipping services such as technical support and maintenance, insurance consulting, chartering, financial and accounting services, while Eurobulk also provides executive management services, in consideration for fixed and variable fees (see Note

The Pittas family is the controlling shareholder of Friends Investment Company Inc., which, in turn, owns

36.5%

of the Company’s shares as of

June 30, 2018.

Following the close of trading on the Nasdaq Capital Market on

May 30, 2018,

the Company completed the spin-off of its drybulk fleet (excluding M/V Monica P, a handymax drybulk carrier, which was agreed to be sold) to EuroDry Ltd (“EuroDry”). Shareholders of the Company received

one

EuroDry common share for every

five

common shares of the Company they owned as of

May 23, 2018.

Shares of EuroDry commenced trading on

May 31, 2018

on the Nasdaq Capital Market under the symbol "EDRY." EuroDry operates in the dry cargo, drybulk shipping markets, owning and operating drybulk vessels previously owned and operated by Euroseas, and is now a separate publicly traded company. Euroseas continues to operate in the container shipping market and remains a publicly traded company. Accordingly, the results of operations and financial condition of EuroDry have been presented in discontinued operations for all periods presented.

The accompanying unaudited condensed consolidated financial statements include the accounts of Euroseas Ltd., and its wholly owned vessel owning subsidiaries and should be read in conjunction with the audited consolidated financial statements for the year ended

December 31, 2017

as filed with the U.S. Securities and Exchange Commission (“SEC”) on Form

-F/A and the registration statement on Form F-

of EuroDry Ltd., the Company’s drybulk fleet spin-off as declared effective by the Securities and Exchange Commission on

May 8, 2018.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP) for interim financial information. Accordingly, they do

not

include all the information and notes required by US GAAP for complete financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments considered necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the periods presented. Operating results for the

six

month period ended

June 30, 2018

are

not

necessarily indicative of the results that might be expected for the fiscal year ending

December 31, 2018.

As of

June 30, 2018,

the Company had a working capital deficit of

$3.15

million. The Company intends to fund any working capital requirements via cash at hand, cash flow from operations, debt balloon payment refinancing, proceeds from its at-the-market offering and other equity offerings. In the unlikely event that these are

not

sufficient, the Company

may

also draw down up to

$2.00

million under a commitment from COLBY Trading Ltd., a company controlled by the Pittas family and affiliated with the Company’s Chief Executive Officer, with possible vessel sales (where equity will be released), among other options. The Company believes that it will have adequate funding through the sources described above and, accordingly, it believes it has the ability to continue as a going concern and finance its obligations as they come due over the next

twelve

months following the date of the issuance of these financial statements. Consequently, the interim condensed consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.