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

For the month of May 2019

Commission File Number:  001-34153

Global Ship Lease, Inc.
(Translation of registrant's name into English)
 
c/o Portland House,
Stag Place,
London SW1E 5RS,
United Kingdom
(Address of principal executive office)

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 [X]       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): [  ].

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

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): [  ].

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant's "home country"), or under the rules of the home country exchange on which the registrant's securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant's security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.





INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Attached hereto as Exhibit I is a press release dated May 7, 2019 of Global Ship Lease, Inc. (the “Company”) reporting the Company’s financial results for the three months ended March 31, 2019. Attached hereto as Exhibit II are the Company’s interim unaudited consolidated financial statements for the three months ended March 31, 2019.



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.

 
GLOBAL SHIP LEASE, INC.
 
 
(registrant)
 
     
     
Dated: May 7, 2019
By:
/s/ Ian J. Webber
 
   
Ian J. Webber
 
   
Chief Executive Officer
 
       




Exhibit I


Investor and Media Contacts:
The IGB Group
Bryan Degnan
646-673-9701
or
Leon Berman
212-477-8438
Global Ship Lease Reports Results for the First Quarter of 2019
LONDON, ENGLAND — May 7, 2019 - Global Ship Lease, Inc. (NYSE:GSL) (the “Company” or “Global Ship Lease”), a containership charter owner, announced today its unaudited results for the three months ended March 31, 2019.

First Quarter 2019

- Reported operating revenues(1) of $64.5 million for the first quarter 2019.
- Reported net income(2) of $10.1 million for the first quarter 2019.
- Generated $40.5 million of Adjusted EBITDA(3) for the first quarter 2019.
- Effected a one-for-eight reverse stock split of the Company's Class A common shares following approval at a special meeting of shareholders held on March 20, 2019. The reverse stock split became effective as of the opening of trading on the NYSE on March 25, 2019.
- Agreed a three-year charter with Hapag-Lloyd for the 2015-built, 9,115 TEU containership UASC Al Khor. The new charter, which is in direct continuation of the current charter, is expected to commence in June, 2019, with re-delivery in the second quarter 2022. The charter is expected to generate approximately $28 million of Adjusted EBITDA.
- Agreed a minimum 30-month / maximum 38-month charter with Maersk Line for the 2000-built, 5,936 TEU containership Tasman. The new charter is expected to commence in July 2019 on the completion of the current charter and is subject to a further 12-month extension at the charterer’s option. The charter is expected to generate approximately $5.3 million of Adjusted EBITDA for the median firm period and an additional $4.4 million if the 12-month extension option is exercised.
- Agreed minimum 21-month / maximum 24-month charters with ZIM for the 2000-built, 5,936 TEU containerships Dimitris Y and Ian H. The new charters are expected to commence in June and July, 2019 in direct continuation of their current charters, and to generate approximately $4.4 million of Adjusted EBITDA per vessel for the median firm period.
Page 1


- Agreed new five year charters with MSC for 8,667 TEU GSL Tianjin (built 2005) and OOCL Qingdao (built 2004) (to be renamed MSC Tianjin and MSC Qingdao). The new charters are expected to commence on redelivery of vessels by current charterers in late Q2 early Q3 and are expected to generate Adjusted EBITDA of approximately $25.6 million per vessel for the median firm period.
- Agreed to retrofit scrubbers on three vessels against longer charters at premium rates, already announced.
George Youroukos, Executive Chairman of Global Ship Lease, stated, “GSL has continued to benefit from the integrated commercial platform created through the Poseidon merger and from our ability to offer charterers vessels with what we believe to be best-in-class specifications and which provide the lowest slot costs in an increasingly cost-conscious liner industry. Amid consistently strong demand for our high-specification containerships, which are focused in vessel classes experiencing net supply contraction, we have made substantial progress in extending our forward contract coverage and locking in contracted cashflow at a time when charter rates have shown significant improvement. In particular, a recent surge of demand for high reefer capacity post-panamax vessels has enabled us to secure profitable, multi-year charters for some of the older vessels in our fleet. Moving forward, we remain confident in the supportive long-term fundamentals for mid-sized and smaller containerships, and we will continue to take action to fully unlock the value of GSL’s leading commercial capabilities, strong balance sheet, extensive contracted revenue, and high-quality, modern fleet.”
Ian Webber, Chief Executive Officer of Global Ship Lease, commented, “Having successfully integrated GSL and Poseidon, we are seeing the anticipated wide-ranging benefits of our superior platform which are reflected in every aspect of our business. Our success in securing six longer-term charters in 2019 adds approximately $146 million, or 21.4%, to mid-point contracted net revenue, improving forward charter cover and cashflow visibility. Altogether, we are ensuring that GSL is in a position to fully benefit from opportunities arising out of the ongoing market recovery.”

SELECTED FINANCIAL DATA – UNAUDITED (thousands of U.S. dollars)
   
Three
   
Three
 
   
months ended
   
months ended
 
   
March 31, 2019
   
March 31, 2018
 
             
Operating Revenues (1)
   
64,514
     
36,146
 
Operating income
   
29,225
     
15,491
 
Net Income (2)
   
10,052
     
4,192
 
Adjusted EBITDA(3)
   
40,527
     
23,653
 

The results for the three months ended March 31, 2019 include the results of the Poseidon Containers containerships acquired on November 15, 2018 (the “Poseidon Containers Fleet”).
(1) Operating Revenues are net of address commissions. Brokerage commissions are included in Time charter and voyage expenses.
(2) Net Income available to common shareholders.
(3) Adjusted EBITDA is a non-US Generally Accepted Accounting Principles (US GAAP) financial measure, as explained further in this press release, and are considered by Global Ship Lease to be a useful measure of its performance.  For reconciliations of this non-GAAP financial measure to net income, the most directly comparable US GAAP financial measure, please see “Reconciliation of Non-U.S. GAAP Financial Measure” below.
Page 2


Following the Poseidon Transaction, minor reclassifications of expenses and balance sheet items have been made.
Operating Revenues and Utilization
The fleet generated operating revenues from fixed-rate time charters of $64.5 million in the three months ended March 31, 2019, an increase of $28.4 million compared to $36.1 million for the first quarter of 2018, with the increase principally due to the addition of the GSL Valerie in June 2018 and the Poseidon Containers Fleet on November 15, 2018, partially offset by reduced revenue from GSL Ningbo as the charter for this vessel renewed at a lower rate in September 2018. There were 3,420 ownership days in the quarter, an increase of 111% compared to 1,620 days in the first quarter of 2018, which was primarily due to the addition of the GSL Valerie and the Poseidon Containers Fleet. In the first quarter of 2019, there was no planned offhire from regulatory drydocking and five days of unplanned offhire, giving an overall utilization of 99.8%. There were 17 days offhire in the first quarter of 2018, of which 13 were for a scheduled drydocking, giving an overall utilization of 99.0%.
The table below shows our fleet utilization for the three months ended March 31, 2019 and 2018 and for the years ended December 31, 2018, 2017, 2016, 2015 and 2014.
   
Three months ended
   
Year ended
 
   
Mar 31,
   
Mar 31,
   
Dec 31,
   
Dec 31,
   
Dec 31,
   
Dec 31,
   
Dec 31,
 
Days
 
2019
   
2018
   
2018
   
2017
   
2016
   
2015
   
2014
 
                                           
Ownership days
   
3,420
     
1,620
     
7,675
     
6,570
     
6,588
     
6,893
     
6,270
 
Planned offhire - scheduled drydockings
   
0
     
(13
)
   
(34
)
   
(62
)
   
(100
)
   
(9
)
   
(48
)
Unplanned offhire
   
(5
)
   
(4
)
   
(17
)
   
(40
)
   
(3
)
   
(7
)
   
(12
)
Idle time
   
0
     
0
     
(47
)
   
0
     
0
     
(13
)
   
(64
)
Operating days
   
3,415
     
1,603
     
7,577
     
6,468
     
6,485
     
6,864
     
6,146
 
                                                         
Utilization
   
99.8
%
   
99.0
%
   
98.7
%
   
98.4
%
   
98.4
%
   
99.6
%
   
98.0
%

There were two regulatory drydockings in 2018 and four in 2017. Four regulatory drydockings are due in 2019.
Vessel Operating Expenses
Vessel operating expenses, which include costs of crew, lubricating oil, repairs, maintenance, insurance and technical management fees, were $21.0 million for the three months ended March 31, 2019, compared to $10.4 million in the prior year period. The increase was due to 1,800 (up 111%) additional ownership days as a result of the acquisition of the Poseidon Containers Fleet and the addition of GSL Valerie. The average cost per ownership day in the quarter was $6,127, compared to $6,432 for the prior year period, down $305 per day.
Time Charter and Voyage Expenses
Time charter and voyage expenses comprise mainly commission paid to ship brokers, the cost of bunker fuel for owner’s account when a vessel is off-hire or idle and miscellaneous costs associated with a vessel’s voyage. Time charter and voyage expenses were $1.6 million for the three months ended March 31, 2019, compared to $0.1 million in the prior year period. The increase was mainly due to the addition of the Poseidon Containers Fleet, all of which incur such commission, compared to our legacy vessels, where commission has been paid only for those which have completed their initial charters to CMA CGM or OOCL and which have been employed on a new charter obtained with the assistance of a broker.
Page 3


Depreciation and amortization
Depreciation and amortization for the three months ended March 31, 2019 was $10.8 million, compared to $8.2 million in the prior year period in 2018; the increase was mainly due to the addition of the Poseidon Containers Fleet offset by a reduction due to the effect of lower book values for a number of vessels following an impairment charge taken in December 2018 as well as a change in estimated scrap value per LWT to $400.
General and Administrative Expenses
General and administrative expenses were $2.0 million in the three months ended March 31, 2019, compared to $1.9 million in the prior year period. The increase was mainly due to increase in payroll and other costs associated with the Poseidon Transaction.
Adjusted EBITDA
As a result of the above, Adjusted EBITDA was $40.5 million for the three months ended March 31, 2019, an increase from $23.7 million for the prior year period, mainly as a result of the addition of the Poseidon Containers Fleet.
Interest Expense
Debt at March 31, 2019 totaled $882.9 million, comprising $340.0 million of indebtedness on our 9.875% notes due 2022 (our “Notes”), $34.8 million of indebtedness under a secured term loan, both collateralized by 18 vessels, $500.0 million bank debt collateralized by the Poseidon Containers Fleet and $8.1 million drawn under our growth facility and secured by one vessel.
Debt at March 31, 2018 totaled $414.8 million, comprised $360.0 million outstanding on our Notes and $54.8 million under the secured term loan.
Interest expense for the three months ended March 31, 2019, was $19.4 million, an increase of $8.6 million, or 80%, on the interest expense for the prior year period of $10.8 million due to the assumption of debt associated with the Poseidon Transaction.
Interest income for the three months ended March 31, 2019 was $0.4 million, an increase of $0.1 million compared to the prior year period. The increase was mainly due to higher average cash balances and increased interest rates.
Other income, net
Other income, net is mainly comprised of gains in bunkers following deliveries and redeliveries of vessels from charterers and passenger income. Other income, net was $0.5 million in the three months ended March 31, 2019, compared to $0.01 in the prior year period; the increase was mainly due to the addition of the Poseidon Containers Fleet.
Taxation
Taxation for the three months ended March 31, 2019 was $16,000 compared to $15,000 in the first quarter of 2018.
Earnings Allocated to Preferred Shares
The Series B Preferred Shares carry a coupon of 8.75%, the cost of which for the three months ended March 31, 2019 was $0.8 million, the same as in the prior year period.
Net Income Available to Common Shareholders
Net income for the three months ended March 31, 2019 was $10.1 million, compared to $4.2 million in the prior year period.
Page 4

Fleet
The following table provides information about our fleet of 38 vessels as at March 31, 2019.
Vessel Name
TEUs
LWT
Year Built
Charterer
Earliest Charter Expiry Date
Latest Charter Expiry Date
Daily Charter Rate $
               
CMA CGM Thalassa
11,040
38,577
2008
CMA CGM
4Q25
1Q26
47,200
UASC Al Khor(1)
9,115
31,764
2015
Hapag-Lloyd
1Q19
2Q19(2)
40,000(2)
Anthea Y(1)
9,115
31,890
2015
COSCO
2Q20
3Q20
39,200
Maira XL(1)
9,115
31,820
2015
COSCO
2Q20
3Q20
39,200
GSL Tianjin
8,667
34,243
2005
CMA CGM
2Q19
3Q19(3)
13,000(3)
OOCL Qingdao
8,667
34,305
2004
OOCL
2Q19
2Q19(3)
14,000(3)
GSL Ningbo
8,667
34,243
2004
Maersk
2Q19
4Q20
12,100(4)
Mary(1)
6,927
23,424
2013
CMA CGM
3Q23
4Q23
25,910
Kristina (1)
6,927
23,424
2013
Wan Hai
2Q19
3Q19(5)
19,500(5)
Katherine(1)
6,927
23,424
2013
CMA CGM
1Q24
2Q24
25,910
Alexandra(1)
6,927
23,424
2013
ONE
2Q19
2Q19(5)
20,750(5)
Alexis(1)(6)
6,882
23,919
2015
Hapag-Lloyd
2Q19
2Q19(5)
20,000(5)
Olivia I(1)(7)
6,882
23,864
2015
CMA CGM
1Q24
2Q24
25,910
CMA CGM Berlioz
6,621
26,776
2001
CMA CGM
2Q21
4Q21
34,000
Agios Dimitrios
6,572
24,746
2011
MSC
3Q19
4Q23(8)
12,500(8)
Tasman
5,936
25,010
2000
ZIM
2Q19
3Q19(9)
11,500(9)
Dimitris Y
5,936
25,010
2000
ZIM
2Q19
3Q19(10)
16,750(10)
Ian H
5,936
25,128
2000
ZIM
2Q19
3Q19(10)
17,000(10)
Dolphin II
5,095
20,596
2007
HMM
2Q19
4Q19
7,700(11)
Orca I
5,095
20,696
2006
ZIM
2Q19
3Q19
11,750
CMA CGM Alcazar
5,089
20,087
2007
CMA CGM
4Q20
2Q21
33,750
CMA CGM Château d’If
5,089
20,100
2007
CMA CGM
4Q20
2Q21
33,750
CMA CGM Jamaica
4,298
17,272
2006
CMA CGM
3Q22
1Q23
25,350
CMA CGM Sambhar
4,045
17,355
2006
CMA CGM
3Q22
1Q23
25,350
CMA CGM America
4,045
17,355
2006
CMA CGM
3Q22
1Q23
25,350
GSL Valerie
2,824
11,971
2005
CMA CGM
2Q19
3Q19
9,000
Athena
2,762
13,538
2003
MSC
1Q20
2Q20
9,000
Maira
2,506
11,453
2000
MSC
3Q19
3Q19
8,500
Nikolas
2,506
11,370
2000
MSC
1Q20
1Q20
9,000
Newyorker
2,506
11,463
2001
MSC
1Q20
1Q20
9,000
CMA CGM La Tour
2,272
11,742
2001
CMA CGM
3Q19
1Q20
15,300
CMA CGM Manet
2,272
11,742
2001
CMA CGM
3Q19
1Q20
15,300
CMA CGM Matisse
2,262
11,676
1999
CMA CGM
3Q19
1Q20
15,300
CMA CGM Utrillo
2,262
11,676
1999
CMA CGM
3Q19
1Q20
15,300
GSL Keta
2,207
11,731
2003
ANL
2Q19
3Q19
8,450
GSL Julie
2,207
11,731
2002
CMA CGM
3Q19
2Q20(12)
7,200(12)
Kumasi
2,207
11,731
2002
CMA CGM
4Q19
1Q21(13)
9,800(13)
Marie Delmas
2,207
11,731
2002
CMA CGM
4Q19
1Q21(13)
9,800(13)

(1)
Modern design, high reefer capacity, fuel efficient vessels.
(2)
Thereafter, in direct continuation, three years at an implied Adjusted EBITDA of $28.0 million for the period.
(3)
Thereafter, five years to MSC at an implied Adjusted EBITDA of $25.6 million for the period.
(4)
Rate increased to $12,400 per day from April 21, 2019. Charterer has option to extend by 12 months plus or minus 45 days from September 21, 2019 at $18,000 per day.
(5)
Thereafter, five years to CMA CGM at $25,910 per day
(6)
Previously UASC Bubiyan; renamed Alexis, effective April 24, 2019.
(7)
Previously UASC Yas; renamed Oliva I, effective March 19, 2019.
(8)
Thereafter, option for four years at $20,000 per day, callable by us
(9)
Thereafter, new charter with Maersk Line for 30 - 38 months at an implied Adjusted EBITDA of $5.3 million for the median period.  Additional 12 - month extension at charterer’s option, for an additional implied Adjusted EBITDA of $4.4 million.
(10)
Thereafter, in direct continuation, 21-24 month at an implied Adjusted EBITDA $4.4 million per vessel for the median firm period.
(11)
Rate increases to $11,500 per day from August 15, 2019.
(12)
$7,200 per day from March 16, 2019 to between August 16, 2019 and October 16, 2019, at charterer’s option, with an option in favour of charterer to extend from October 16, 2019 at $8,500 per day for six months plus or minus 30 days.
(13)
Option at $9,800 per day to December 31, 2020 plus or minus 90 days, callable by us.

Page 5


Conference Call and Webcast
Global Ship Lease will hold a conference call to discuss the Company's results for the three months ended March 31, 2019 today, Tuesday May 7, 2019 at 10:00 a.m. Eastern Time. There are two ways to access the conference call:
   (1) Dial-in: (877) 445-2556 or (908) 982-4670; Passcode: 8458699
 Please dial in at least 10 minutes prior to 10:30 a.m. Eastern Time to ensure a prompt start to the call.
   (2) Live Internet webcast and slide presentation: http://www.globalshiplease.com
If you are unable to participate at this time, a replay of the call will be available through Thursday, May 23, 2019 at (855) 859-2056 or (404) 537-3406. Enter the code 8458699 to access the audio replay. The webcast will also be archived on the Company’s website: http://www.globalshiplease.com.
Annual Report on Form 20-F
The Company’s Annual Report for 2018 is on file with the Securities and Exchange Commission.  A copy of the report can be found under the Investor Relations section (Annual Reports) of the Company’s website at http://www.globalshiplease.com   Shareholders may request a hard copy of the audited financial statements free of charge by contacting the Company at info@globalshiplease.com or by writing to Global Ship Lease, Inc, care of Global Ship Lease Services Limited, Portland House, Stag Place, London SW1E 5RS or by telephoning +44 (0) 207 869 8806.
About Global Ship Lease
Global Ship Lease is a leading independent owner of containerships with a diversified fleet of mid-sized and smaller containerships. Incorporated in the Marshall Islands, Global Ship Lease commenced operations in December 2007 with a business of owning and chartering out containerships under fixed-rate charters to top tier container liner companies. On November 15, 2018, it completed a strategic combination with Poseidon Containers.
Global Ship Lease owns 38 vessels ranging from 2,207 to 11,040 TEU, of which nine are fuel efficient new-design wide beam, with a total capacity of 200,615 TEU and an average age, weighted by TEU capacity, of 11.3 years determined as at March 31, 2019.
The average remaining term of the charters at March 31, 2019, including subsequent announcements and to the mid-point of redelivery, including options under owners control, was 3.0 years on a TEU-weighted basis. Contracted revenue on the same basis is $826.3 million. Contracted revenue is $891.1, including options under charterers control and with latest redelivery date, representing a weighted average remaining term of 3.2 years.
Reconciliation of Non-U.S. GAAP Financial Measure
Adjusted EBITDA
Adjusted EBITDA represents net income before interest income and expense including amortization of deferred finance costs, earnings allocated to preferred shares, income taxes, depreciation and amortization of drydocking costs.  Adjusted EBITDA is a non-US GAAP quantitative measure used to assist in the assessment of the Company's ability to generate cash from its operations.  We believe that the presentation of Adjusted EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. Adjusted EBITDA is not defined in US GAAP and should not be considered to be an alternate to Net income or any other financial metric required by such accounting principles. Our use of Adjusted EBITDA may vary from the use of similarly titled measures by others in our industry.
Page 6


ADJUSTED EBITDA - UNAUDITED
(thousands of U.S. dollars)

     
Three months ended Mar 31, 2019
   
Three months ended Mar 31, 2018
 
Net income available to common shareholders
   
10,052
     
4,192
 
                   
Adjust:   Depreciation and amortization

   
10,758
     
8,156
 
Interest income
   
(417
)
   
(269
)
Interest expense
   
19,352
     
10,793
 
Income taxes
   
16
     
15
 
Earnings allocated to preferred shares
   
766
     
766
 
                   
Adjusted EBITDA
   
40,527
     
23,653
 

Safe Harbor Statement
This communication contains forward-looking statements. Forward-looking statements provide Global Ship Lease's current expectations or forecasts of future events. Forward-looking statements include statements about Global Ship Lease's expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. Words or phrases such as "anticipate," "believe," "continue," "estimate," "expect," "intend," "may," "ongoing," "plan," "potential," "predict," "project," "will" or similar words or phrases, or the negatives of those words or phrases, may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking. These forward-looking statements are based on assumptions that may be incorrect, and Global Ship Lease cannot assure you that these projections included in these forward-looking statements will come to pass. Actual results could differ materially from those expressed or implied by the forward-looking statements as a result of various factors.
The risks and uncertainties include, but are not limited to:

future operating or financial results;

expectations regarding the future growth of the container shipping industry, including the rates of annual demand and supply growth;

the financial condition of our charterers, particularly CMA CGM, our principal charterer and main source of operating revenue, and their ability to pay charterhire in accordance with the charters;

Global Ship Lease’s financial condition and liquidity, including its level of indebtedness or ability to obtain additional financing to fund capital expenditures, vessel acquisitions and other general corporate purposes;
Page 7



Global Ship Lease’s ability to meet its financial covenants and repay its credit facilities;

Global Ship Lease’s expectations relating to dividend payments and forecasts of its ability to make such payments including the availability of cash and the impact of constraints under its credit facility;

risks relating to the acquisition of Poseidon Containers and Global Ship Lease’s ability to realize the anticipated benefits of the acquisition;

future acquisitions, business strategy and expected capital spending;

operating expenses, availability of crew, number of off-hire days, drydocking and survey requirements and insurance costs;

general market conditions and shipping industry trends, including charter rates and factors affecting supply and demand;

assumptions regarding interest rates and inflation;

changes in the rate of growth of global and various regional economies;

risks incidental to vessel operation, including piracy, discharge of pollutants and vessel accidents and damage including total or constructive total loss;

estimated future capital expenditures needed to preserve its capital base;

Global Ship Lease’s expectations about the availability of ships to purchase, the time that it may take to construct new ships, or the useful lives of its ships;

Global Ship Lease’s continued ability to enter into or renew long-term, fixed-rate charters or other vessel employment arrangements;

the continued performance of existing long-term, fixed-rate time charters;

Global Ship Lease’s ability to capitalize on its management’s and board of directors’ relationships and reputations in the containership industry to its advantage;

changes in governmental and classification societies’ rules and regulations or actions taken by regulatory authorities;

expectations about the availability of insurance on commercially reasonable terms;

unanticipated changes in laws and regulations including taxation;

potential liability from future litigation.
Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Global Ship Lease's actual results could differ materially from those anticipated in forward-looking statements for many reasons specifically as described in Global Ship Lease's filings with the U.S Securities and Exchange Commission (the “SEC”).  Accordingly, you should not unduly rely on these forward-looking statements, which speak only as of the date of this communication. Global Ship Lease undertakes no obligation to publicly revise any forward-looking statement to reflect circumstances or events after the date of this communication or to reflect the occurrence of unanticipated events. You should, however, review the factors and risks Global Ship Lease describes in the reports it will file from time to time with the SEC after the date of this communication.

Page 8

Global Ship Lease, Inc.

Interim Unaudited Consolidated Balance Sheets

         
As of
 
   
Note
   
March 31,
2019
   
December 31,
2018
 
ASSETS
                 
CURRENT ASSETS
                 
Cash and cash equivalents
       
$
97,966
   
$
82,059
 
Restricted cash
         
3,023
     
2,186
 
Accounts receivable, net
         
1,738
     
1,927
 
Inventories
         
5,327
     
5,769
 
Prepaid expenses and other current assets
         
7,162
     
6,214
 
Due from related parties
   
5
     
1,086
     
817
 
Total current assets
         
$
116,302
   
$
98,972
 
NON-CURRENT ASSETS
                       
Vessels in operation
   
3
   
$
1,103,604
   
$
1,112,766
 
Other fixed assets
           
4
     
5
 
Intangible assets-charter agreements
           
4,430
     
5,400
 
Deferred charges, net
           
8,661
     
9,569
 
Other non-current assets
           
291
     
948
 
Restricted cash, net of current portion
           
5,938
     
5,827
 
Total non-current assets
           
1,122,928
     
1,134,515
 
TOTAL ASSETS
         
$
1,239,230
   
$
1,233,487
 
LIABILITIES AND SHAREHOLDERS' EQUITY
                       
CURRENT LIABILITIES
                       
Accounts payable
         
$
7,140
   
$
9,586
 
Accrued liabilities
           
21,576
     
15,407
 
Current portion of long-term debt
   
4
     
74,533
     
64,088
 
Deferred revenue
           
2,637
     
3,118
 
Due to related parties
   
5
     
1,548
     
3,317
 
Total current liabilities
           
107,434
     
95,516
 
LONG-TERM LIABILITIES
                       
Long-term debt, net of current portion and deferred financing costs
   
4
   
$
797,406
   
$
813,130
 
Intangible liability-charter agreements
           
7,967
     
8,470
 
Deferred tax liability
           
9
     
9
 
Total non-current liabilities
           
805,382
     
821,609
 
Total liabilities
         
$
912,816
   
$
917,125
 
Commitments and Contingencies
   
6
             
 
SHAREHOLDERS' EQUITY
                       
Class A common shares - authorized
214,000,000 shares with a $0.01 par value
9,942,950 shares issued and outstanding (2018 – 9,017,205 shares)
   
7
   
$
99
   
$
90
 
Class B common shares - authorized
20,000,000 shares with a $0.01 par value
nil shares issued and outstanding (2018 – 925,745 shares)
   
7
     
     
9
 
Series B Preferred Shares - authorized
16,100 shares with a $0.01 par value
14,000 shares issued and outstanding (2018 – 14,000 shares)
   
7
     
     
 
Series C Preferred Shares - authorized
250,000 shares with a $0.01 par value
250,000 shares issued and outstanding (2018 - 250,000 shares)
   
7
     
3
     
3
 
Additional paid in capital
           
512,379
     
512,379
 
Accumulated deficit
           
(186,067
)
   
(196,119
)
Total shareholders' equity
           
326,414
     
316,362
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
         
$
1,239,230
   
$
1,233,487
 



Page 9

Global Ship Lease, Inc.

Interim Unaudited Consolidated Statements of Income

         
Three months ended
March 31,
 
   
Note
   
2019
   
2018
 
OPERATING REVENUES
                 
Time charter revenue
       
$
29,881
   
$
5,770
 
Time charter revenue-related parties
   
5
     
34,633
     
30,376
 
             
64,514
     
36,146
 
OPERATING EXPENSES:
                       
Vessel operating expenses
           
19,150
     
10,098
 
Vessel operating expenses-related parties
   
5
     
1,805
     
322
 
Time charter and voyage expenses
           
1,121
     
144
 
Time charter and voyage expenses-related parties
           
430
     
 
Depreciation and amortization
   
3
     
10,758
     
8,156
 
General and administrative expenses
           
2,025
     
1,935
 
Operating Income
           
29,225
     
15,491
 
                         
Interest income
           
417
     
269
 
Interest and other financial expense
           
(19,352
)
   
(10,793
)
Other income, net
           
544
     
6
 
Total non operating expense
           
(18,391
)
   
(10,518
)
Income before income taxes
           
10,834
     
4,973
 
Income taxes
           
(16
)
   
(15
)
Net Income
         
$
10,818
   
$
4,958
 
Earnings allocated to Series B Preferred Shares
   
7
     
(766
)
   
(766
)
Net Income available to Common Shareholders
         
$
10,052
   
$
4,192
 
Earnings per Share
                       
Weighted average number of Class A common shares outstanding
                       
Basic and diluted (including RSU’s without service conditions)
   
9
     
9,932,664
     
6,001,217
 
 
                       
Net Income per Class A common share
                       
Basic and diluted (including RSU’s without service conditions)
   
9
   
$
0.44
   
$
0.72
 
 
                       
Weighted average number of Class B common shares outstanding
                       
Basic and diluted
   
9
   
nil
     
925,745
 
                         
Net Income per Class B common share
                       
Basic and diluted
   
9
    $
nil
    $
nil
 


Page 10

Global Ship Lease, Inc.

Interim Unaudited Consolidated Statements of Cash Flows


         
Three months ended
March 31,
 
   
Note
   
2019
   
2018
 
Cash flows from operating activities:
                 
Net Income
       
$
10,818
   
$
4,958
 
Adjustments to reconcile net income to net cash provided by operating activities:
                     
Depreciation and amortization
   
3
     
10,758
     
8,156
 
Amortization of deferred financing costs
   
4
     
745
     
1,029
 
Amortization of original issue discount / premium on repurchase of notes
   
4
     
202
     
201
 
Amortization of intangible asset/liability-charter agreements
           
468
     
(443
)
Share based compensation
   
8
     
     
45
 
Changes in operating assets and liabilities:
                       
Increase in accounts receivable and other assets
           
(94
)
   
(1,104
)
Decrease (increase) increase in inventories
           
442
     
(1,783
)
Increase in accounts payable and other liabilities
           
3,719
     
7,850
 
(Decrease) increase in related parties' balances
   
5
     
(2,038
)
   
1,838
 
Decrease in deferred revenue
           
(481
)
   
(312
)
Unrealized foreign exchange (gain) loss
           
(5
)
   
4
 
Net cash provided by operating activities
           
24,534
     
20,439
 
Cash flows from investing activities:
                       
Cash paid for vessel improvements
           
(637
)
   
(150
)
Cash paid for dry-dockings
           
(50
)
   
(373
)
Cash paid for vessel deposits
           
     
(1,128
)
Net cash used in investing activities
           
(687
)
   
(1,651
)
Cash flows from financing activities:
                       
Repayment of credit facilities
   
4
     
(6,226
)
   
 
Series B Preferred Shares-dividends paid
   
7
     
(766
)
   
(766
)
Net cash used in financing activities
           
(6,992
)
   
(766
)
Net increase in cash and cash equivalents and restricted cash
           
16,855
     
18,022
 
Cash and cash equivalents and restricted cash at beginning of the period
           
90,072
     
73,266
 
Cash and cash equivalents and restricted cash at end of the period
         
$
106,927
   
$
91,288
 
Supplementary Cash Flow Information:
                       
Cash paid for interest
         
$
9,563
   
$
648
 
Cash paid for income taxes
         
$
   
$
12
 
Non-cash investing activities:
                       
Unpaid capitalized expenses
         
$
826
   
$
 

Page 11



Exhibit II










GLOBAL SHIP LEASE, INC.

INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

THREE MONTHS ENDED MARCH 31, 2019







Global Ship Lease, Inc.

Interim Unaudited Consolidated Balance Sheets

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


         
As of
 
   
Note
   
March 31,
2019
   
December 31,
2018
 
ASSETS
                 
CURRENT ASSETS
                 
Cash and cash equivalents
       
$
97,966
   
$
82,059
 
Restricted cash
         
3,023
     
2,186
 
Accounts receivable, net
         
1,738
     
1,927
 
Inventories
         
5,327
     
5,769
 
Prepaid expenses and other current assets
         
7,162
     
6,214
 
Due from related parties
   
5
     
1,086
     
817
 
Total current assets
         
$
116,302
   
$
98,972
 
NON-CURRENT ASSETS
                       
Vessels in operation
   
3
   
$
1,103,604
   
$
1,112,766
 
Other fixed assets
           
4
     
5
 
Intangible assets-charter agreements
           
4,430
     
5,400
 
Deferred charges, net
           
8,661
     
9,569
 
Other non-current assets
           
291
     
948
 
Restricted cash, net of current portion
           
5,938
     
5,827
 
Total non-current assets
           
1,122,928
     
1,134,515
 
TOTAL ASSETS
         
$
1,239,230
   
$
1,233,487
 
LIABILITIES AND SHAREHOLDERS' EQUITY
                       
CURRENT LIABILITIES
                       
Accounts payable
         
$
7,140
   
$
9,586
 
Accrued liabilities
           
21,576
     
15,407
 
Current portion of long-term debt
   
4
     
74,533
     
64,088
 
Deferred revenue
           
2,637
     
3,118
 
Due to related parties
   
5
     
1,548
     
3,317
 
Total current liabilities
           
107,434
     
95,516
 
LONG-TERM LIABILITIES
                       
Long-term debt, net of current portion and deferred financing costs
   
4
   
$
797,406
   
$
813,130
 
Intangible liability-charter agreements
           
7,967
     
8,470
 
Deferred tax liability
           
9
     
9
 
Total non-current liabilities
           
805,382
     
821,609
 
Total liabilities
         
$
912,816
   
$
917,125
 
Commitments and Contingencies
   
6
             
 
SHAREHOLDERS' EQUITY
                       
Class A common shares - authorized
214,000,000 shares with a $0.01 par value
9,942,950 shares issued and outstanding (2018 – 9,017,205 shares)
   
7
   
$
99
   
$
90
 
Class B common shares - authorized
20,000,000 shares with a $0.01 par value
nil shares issued and outstanding (2018 – 925,745 shares)
   
7
     
     
9
 
Series B Preferred Shares - authorized
16,100 shares with a $0.01 par value
14,000 shares issued and outstanding (2018 – 14,000 shares)
   
7
     
     
 
Series C Preferred Shares - authorized
250,000 shares with a $0.01 par value
250,000 shares issued and outstanding (2018 - 250,000 shares)
   
7
     
3
     
3
 
Additional paid in capital
           
512,379
     
512,379
 
Accumulated deficit
           
(186,067
)
   
(196,119
)
Total shareholders' equity
           
326,414
     
316,362
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
         
$
1,239,230
   
$
1,233,487
 




See accompanying notes to interim unaudited consolidated financial statements
Page 1

Global Ship Lease, Inc.

Interim Unaudited Consolidated Statements of Income

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

         
Three months ended
March 31,
 
   
Note
   
2019
   
2018
 
OPERATING REVENUES
                 
Time charter revenue
       
$
29,881
   
$
5,770
 
Time charter revenue-related parties
   
5
     
34,633
     
30,376
 
             
64,514
     
36,146
 
OPERATING EXPENSES:
                       
Vessel operating expenses
           
19,150
     
10,098
 
Vessel operating expenses-related parties
   
5
     
1,805
     
322
 
Time charter and voyage expenses
           
1,121
     
144
 
Time charter and voyage expenses-related parties
           
430
     
 
Depreciation and amortization
   
3
     
10,758
     
8,156
 
General and administrative expenses
           
2,025
     
1,935
 
Operating Income
           
29,225
     
15,491
 
                         
Interest income
           
417
     
269
 
Interest and other financial expense
           
(19,352
)
   
(10,793
)
Other income, net
           
544
     
6
 
Total non operating expense
           
(18,391
)
   
(10,518
)
Income before income taxes
           
10,834
     
4,973
 
Income taxes
           
(16
)
   
(15
)
Net Income
         
$
10,818
   
$
4,958
 
Earnings allocated to Series B Preferred Shares
   
7
     
(766
)
   
(766
)
Net Income available to Common Shareholders
         
$
10,052
   
$
4,192
 
Earnings per Share
                       
Weighted average number of Class A common shares outstanding
                       
Basic and diluted (including RSU’s without service conditions)
   
9
     
9,932,664
     
6,001,217
 
 
                       
Net Income per Class A common share
                       
Basic and diluted (including RSU’s without service conditions)
   
9
   
$
0.44
   
$
0.72
 
 
                       
Weighted average number of Class B common shares outstanding
                       
Basic and diluted
   
9
   
nil
     
925,745
 
                         
Net Income per Class B common share
                       
  Basic and diluted
    9
     $ nil
     $ nil
 



















See accompanying notes to interim unaudited consolidated financial statements
Page 2

Global Ship Lease, Inc.

Interim Unaudited Consolidated Statements of Cash Flows

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

         
Three months ended
March 31,
 
   
Note
   
2019
   
2018
 
Cash flows from operating activities:
                 
Net Income
       
$
10,818
   
$
4,958
 
Adjustments to reconcile net income to net cash provided by operating activities:
                     
Depreciation and amortization
   
3
     
10,758
     
8,156
 
Amortization of deferred financing costs
   
4
     
745
     
1,029
 
Amortization of original issue discount / premium on repurchase of notes
   
4
     
202
     
201
 
Amortization of intangible asset/liability-charter agreements
           
468
     
(443
)
Share based compensation
   
8
     
     
45
 
Changes in operating assets and liabilities:
                       
Increase in accounts receivable and other assets
           
(94
)
   
(1,104
)
Decrease (increase) increase in inventories
           
442
     
(1,783
)
Increase in accounts payable and other liabilities
           
3,719
     
7,850
 
(Decrease) increase in related parties' balances
   
5
     
(2,038
)
   
1,838
 
Decrease in deferred revenue
           
(481
)
   
(312
)
Unrealized foreign exchange (gain) loss
           
(5
)
   
4
 
Net cash provided by operating activities
           
24,534
     
20,439
 
Cash flows from investing activities:
                       
Cash paid for vessel improvements
           
(637
)
   
(150
)
Cash paid for dry-dockings
           
(50
)
   
(373
)
Cash paid for vessel deposits
           
     
(1,128
)
Net cash used in investing activities
           
(687
)
   
(1,651
)
Cash flows from financing activities:
                       
Repayment of credit facilities
   
4
     
(6,226
)
   
 
Series B Preferred Shares-dividends paid
   
7
     
(766
)
   
(766
)
Net cash used in financing activities
           
(6,992
)
   
(766
)
Net increase in cash and cash equivalents and restricted cash
           
16,855
     
18,022
 
Cash and cash equivalents and restricted cash at beginning of the period
           
90,072
     
73,266
 
Cash and cash equivalents and restricted cash at end of the period
         
$
106,927
   
$
91,288
 
Supplementary Cash Flow Information:
                       
Cash paid for interest
         
$
9,563
   
$
648
 
Cash paid for income taxes
         
$
   
$
12
 
Non-cash investing activities:
                       
Unpaid capitalized expenses
         
$
826
   
$
 




















See accompanying notes to interim unaudited consolidated financial statements
Page 3

Global Ship Lease, Inc.

Interim Unaudited Consolidated Statements of Changes in Shareholders’ Equity

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

   
Number of Series B
Preferred Shares
at par value $0.01
Number of Series C
Preferred Shares
at par value $0.01
           
 
Number of Common Shares
 
Series B
Series C
Additional paid-in capital
 
Total
 
at par value $0.01
Common Shares
Preferred Shares
Preferred Shares
Accumulated Deficit
Shareholders' Equity
Balance
at December 31, 2017
6,876,961
14,000
$550
$ —
$ —
$ 386,748
$ (135,693)
$ 251,605
                   
Restricted Stock Units
(Note 8)
277
277
Net Income for the period
 4,958
 4,958
Series B Preferred Shares dividend (Note 7)
 (766)
 (766)
Balance
at March 31, 2018
6,876,961
14,000
$550
$ —
$ —
$ 387,025
$ (131,501)
$ 256,074
                   
Balance
at December 31, 2018
9,942,950
14,000
250,000
$99
$ —
$3
$512,379
$(196,119)
$ 316,362
Net Income for the period
10,818
10,818
Series B Preferred Shares dividend (Note 7)
(766)
(766)
Balance
at March 31, 2019
9,942,950
14,000
250,000
$99
$ —
$3
$512,379
$(186,067)
$ 326,414




































See accompanying notes to interim unaudited consolidated financial statements
Page 4

Global Ship Lease, Inc.

Notes to the Interim Unaudited Consolidated Financial Statements

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

1. Description of Business

On August 14, 2008, Global Ship Lease, Inc. (the “Company”) merged indirectly with Marathon Acquisition Corp. (“Marathon”), a company then listed on The American Stock Exchange. Under the merger agreement, Marathon, a U.S. corporation, first merged with its wholly owned Marshall Islands subsidiary, GSL Holdings, Inc. (“Holdings”), with Holdings continuing as the surviving company. Global Ship Lease, Inc., at that time a subsidiary of CMA CGM S.A. (“CMA CGM”), then merged with Holdings, with Holdings again being the surviving company. Holdings was renamed Global Ship Lease, Inc. and became listed on the New York Stock Exchange on August 15, 2008 (the “Marathon Merger”).
On November 15, 2018, the Company completed the acquisition of 20 containerships, one of which, the Argos, was contracted to be sold which sale was completed in December 2018, from Poseidon Containers Holdings LLC and K&T Marine LLC (together, “Poseidon Containers”) and the transaction (the “Poseidon Transaction”). References herein to “GSL Fleet” are to the 19 vessels that were owned by the Company prior to the consummation of the Poseidon Transaction, and references to “Poseidon Fleet” are to the 19 vessels that were acquired by the Company from Poseidon Containers upon consummation of the Poseidon Transaction, excluding the one additional vessel acquired but held for sale and was delivered to its new owner on December 19, 2018.
On March 25, 2019, the Company’s common shares began trading on a reverse-split-adjusted basis, following approval received from the Company’s shareholders at a Special Meeting held on March 20, 2019 and subsequently approval from the Company’s Board of Directors to reverse split the Company’s common shares at a ratio of one-for-eight.
The Class A common shares and Class B common shares per share amounts disclosed in the interim unaudited consolidated financial statements and notes give effect to the reverse stock split retroactively, for all periods presented.
The Company’s business is to own and charter out containerships to leading liner companies. As of March 31, 2019, the Company owned 38 vessels with average age weighted by TEU capacity of 11.3 years.
The following table provides information about the vessels:
Company Name (1)
Fleet
Country of
Incorporation
Vessel 
Name
Capacity in TEUs
(2)
Year Built
Earliest 
Charter Expiry Date
Global Ship Lease 3 Limited
GSL
Cyprus
CMA CGM Matisse(3)
2,262
1999
3Q19
Global Ship Lease 4 Limited
GSL
Cyprus
CMA CGM Utrillo(3)
2,262
1999
3Q19
Global Ship Lease 5 Limited
GSL
Cyprus
GSL Keta
2,207
2003
2Q19
Global Ship Lease 6 Limited
GSL
Cyprus
GSL Julie
2,207
2002
3Q19
Global Ship Lease 7 Limited
GSL
Cyprus
Kumasi
2,207
2002
4Q19
Global Ship Lease 8 Limited
GSL
Cyprus
Marie Delmas(3)
2,207
2002
4Q19
Global Ship Lease 9 Limited
GSL
Cyprus
CMA CGM La Tour
2,272
2001
3Q19
Global Ship Lease 10 Limited
GSL
Cyprus
CMA CGM Manet
2,272
2001
3Q19
Global Ship Lease 12 Limited
GSL
Cyprus
CMA CGM Château d’If
5,089
2007
4Q20
Global Ship Lease 13 Limited
GSL
Cyprus
CMA CGM Thalassa(3)
11,040
2008
4Q25
Global Ship Lease 14 Limited
GSL
Cyprus
CMA CGM Jamaica(3)
4,298
2006
3Q22
Global Ship Lease 15 Limited
GSL
Cyprus
CMA CGM Sambhar
4,045
2006
3Q22
Global Ship Lease 16 Limited
GSL
Cyprus
CMA CGM America(3)
4,045
2006
3Q22
Global Ship Lease 20 Limited
GSL
Hong Kong
GSL Tianjin
8,667
2005
2Q19
Global Ship Lease 21 Limited
GSL
Hong Kong
OOCL Qingdao(3)
8,667
2004
2Q19
Global Ship Lease 22 Limited
GSL
Hong Kong
GSL Ningbo(3)
8,667
2004
2Q19
Global Ship Lease 23 Limited
GSL
Hong Kong
CMA CGM Berlioz(3)
6,621
2001
2Q21
Global Ship Lease 26 Limited
GSL
Hong Kong
GSL Valerie
2,824
2005
2Q19
GSL Alcazar Inc.
GSL
Marshall Islands
CMA CGM Alcazar(3)
5,089
2007
4Q20

Page 5



Global Ship Lease, Inc.
 
Notes to the Interim Unaudited Consolidated Financial Statements (continued)
 
(Expressed in thousands of U.S. dollars except share data)

1. Description of Business (continued)

Company Name (1)
Fleet
Country of
Incorporation
Vessel 
Name
Capacity in TEUs
(2)
Year Built
Earliest 
Charter Expiry Date
Aris Marine LLC
Poseidon
Marshall Islands
Maira
2,506
2000
3Q19
Aphrodite Marine LLC
Poseidon
Marshall Islands
Nikolas
2,506
2000
1Q20
Athena Marine LLC
Poseidon
Marshall Islands
Newyorker
2,506
2001
1Q20
Hephaestus Marine LLC
Poseidon
Marshall Islands
Dolphin II
5,095
2007
2Q19
Pericles Marine LLC
Poseidon
Marshall Islands
Athena
2,762
2003
1Q20
Zeus One Marine LLC
Poseidon
Marshall Islands
Orca I
5,095
2006
2Q19
Leonidas Marine LLC
Poseidon
Marshall Islands
Agios Dimitrios
6,572
2011
3Q19
Alexander Marine LLC
Poseidon
Marshall Islands
Mary
6,927
2013
3Q23
Hector Marine LLC
Poseidon
Marshall Islands
Kristina
6,927
2013
2Q19(4)
Ikaros Marine LLC
Poseidon
Marshall Islands
Katherine
6,927
2013
1Q24
Tasman Marine LLC
Poseidon
Marshall Islands
Tasman
5,936
2000
2Q19
Hudson Marine LLC
Poseidon
Marshall Islands
Dimitris Y
5,936
2000
2Q19
Drake Marine LLC
Poseidon
Marshall Islands
Ian H
5,936
2000
2Q19
Phillipos Marine LLC
Poseidon
Marshall Islands
Alexandra
6,927
2013
2Q19(4)
Aristoteles Marine LLC
Poseidon
Marshall Islands
UASC Bubiyan(5)
6,882
2015
2Q19(4)
Menelaos Marine LLC
Poseidon
Marshall Islands
Olivia I (ex. UASC Yas)
6,882
2015
1Q24
Laertis Marine LLC
Poseidon
Marshall Islands
UASC Al Khor
9,115
2015
1Q22(6)
Penelope Marine LLC
Poseidon
Marshall Islands
Maira XL
9,115
2015
2Q20
Telemachus Marine LLC
Poseidon
Marshall Islands
Anthea Y
9,115
2015
2Q20

(1)   All subsidiaries are 100% owned, either directly or indirectly;      
(2)   Twenty-foot Equivalent Units;
(3)  The management of these vessels was transferred to Technomar during the quarter ended March 31, 2019;
(4)   Thereafter, five years to CMA CGM at $25,910 per day;
(5)   Renamed as M/V Alexis effective April 24, 2019;
(6)  Entered into a three-year charter with Hapag-Loyd commencing on June 1, 2019 at $34,000 per day.

   
Page 6


Global Ship Lease, Inc.

Notes to the Interim Unaudited Consolidated Financial Statements (continued)

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


2.
Summary of Significant Accounting Policies and Disclosures 
   
(a)
Basis of Presentation
   
The accompanying financial information is unaudited and reflects all adjustments, consisting solely of normal recurring adjustments, which, in the opinion of management, are necessary for a fair statement of financial position and results of operations for the interim periods presented. The financial information does not include all disclosures required under United States Generally Accepted Accounting Principles (“US GAAP”) for annual financial statements. These interim unaudited consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements as of December 31, 2018 filed with the Securities and Exchange Commission on March 29, 2019 in the Company’s Annual Report on Form 20-F. Certain comparative figures have been reclassified to conform to changes in presentation in the current period.
Adoption of new accounting standards

On January 1, 2019, the Company adopted the requirements of ASU 2016-02 ”Leases”  (“ASC 842” or “the new lease standard”), applying the alternative transition method, which is consistent, with the approach the Company elected under the new revenue standard adopted as of January 1, 2018.  The Company has elected to adopt the practical expedient for lessors to combine lease and non-lease components of revenue earned by its vessels under time charter agreements classified as operating leases. A time charter involves placing a vessel at the charterer’s 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. The performance obligations in a time charter contract are satisfied over the term of the contract beginning when the vessel is delivered to the charterer until it is redelivered back to the Company. All of the Company’s time charter agreements provide for fixed consideration. The revenue earned under time charter contracts is not negotiated in separate components. The Company assessed that the lease component included in its time charter contracts, if accounted separately, would be classified as an operating lease. In addition, the timing and pattern of transfer of the non-lease component and the associated lease component in a time charter are the same. All of the Company’s revenues for the three months ended March 31, 2019 and 2018 derive from time charter agreements that are classified as operating leases.
The Company believes that combining the lease and non-lease components provides for more meaningful financial reporting as it is more reflective of the predominant component in the time charter contracts that is the lease component.
As a result of this adoption, there was no cumulative impact to the Company’s retained earnings at January 1, 2019. The comparative information has not been recasted and continues to be reported under the accounting standards in effect for those periods (ASC 840), including disclosure requirements.
Counterparty risk

The majority of the Company’s revenues are derived from charters to CMA CGM. The Company is consequently highly dependent on the performance by CMA CGM of its obligations under these charters. The container shipping industry is volatile and is currently experiencing a sustained cyclical downturn. Many container shipping companies have reported financial losses.
If CMA CGM ceases doing business or fails to perform its obligations under the charters, the Company’s business, financial position and results of operations would be materially adversely affected as it is probable that, even if the Company was able to find replacement charters, such replacement charters would be at significantly lower daily rates and shorter durations. If such events occur, there would be significant uncertainty about the Company’s ability to continue as a going concern.
These interim unaudited consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The interim unaudited consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, nor to the amounts and classification of liabilities that may be necessary should the Company be unable to continue as a going concern.
Page 7


Global Ship Lease, Inc.

Notes to the Interim Unaudited Consolidated Financial Statements (continued)

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

2.
Summary of Significant Accounting Policies and Disclosures (continued)

(b)
Principles of Consolidation
   
The accompanying interim unaudited consolidated financial information include the financial statements of the Company and its wholly owned subsidiaries; the Company has no other interests. All significant intercompany balances and transactions have been eliminated in the Company’s interim unaudited consolidated financial statements.

(c)
Vessels in operation
   
Vessels are generally recorded at their historical cost, which consists of the acquisition price and any material expenses incurred upon acquisition. Vessels acquired in a corporate transaction accounted for as an asset acquisition are stated at the acquisition price, which consists of consideration paid, plus transaction costs less any negative goodwill, if applicable. Vessels acquired in a corporate transaction accounted for as a business combination are recorded at fair value. Vessels acquired as part of the Marathon Merger in 2008 were accounted for under ASC 805, which required that the vessels be recorded at fair value, less the negative goodwill arising as a result of the accounting for the merger.
Subsequent expenditures for major improvements and upgrades are capitalized, provided they appreciably extend the life, increase the earnings capacity or improve the efficiency or safety of the vessels.
Borrowing costs incurred during the construction of vessels or as part of the prefinancing of the acquisition of vessels are capitalized. There was no capitalized interest for the three months ended March 31, 2019 and the year ended December 31, 2018, respectively. Other borrowing costs are expensed as incurred. Vessels are stated less accumulated depreciation and impairment, if applicable. Vessels are depreciated to their estimated residual value using the straight-line method over their estimated useful lives which are reviewed on an ongoing basis to ensure they reflect current technology, service potential and vessel structure. The useful lives are estimated to be 30 years from original delivery by the shipyard.
Management estimates the residual values of our container vessels based on a scrap value cost of steel times the weight of the ship noted in lightweight tons (LWT). Residual values are periodically reviewed and revised to recognize changes in conditions, new regulations or other reasons. Revision of residual values affect the depreciable amount of the vessels and affects depreciation expense in the period of the revision and future periods. Up to December 31, 2018, management estimated the residual values of its vessels based on scrap rate of $250 per LWT. Effective January 1, 2019 following management’s consideration of current market trends for scrap rates and historical scrap rates of the residual values of the Company’s vessels, the estimated scrap value per LWT was increased to $400. This change in accounting estimates did not materially affect the statements of income and the loss per share of the Company for the three months ended March 31, 2019.
For any vessel group which is impaired, the impairment charge is recorded against the cost of the vessel and the accumulated depreciation as at the date of impairment is removed from the accounts. 
The cost and related accumulated depreciation of assets retired or sold are removed from the accounts at the time of sale or retirement and any gain or loss is included in the interim unaudited Consolidated Statements of Income.
Vessels acquisitions

The Poseidon Transaction has been accounted for under ASU 2017-01 as an asset acquisition. The vessels acquired on November 15, 2018, described in note 1, were recorded at their fair value, based on valuations obtained from third party independent ship brokers, less negative goodwill arising as a result of the accounting for the overall Poseidon Transaction, allocated pro-rata. The following table summarizes the accounting for the Poseidon Transaction, including the fair value of the stock-based consideration given:
Page 8


Global Ship Lease, Inc.

Notes to the Interim Unaudited Consolidated Financial Statements (continued)

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


2.
Summary of Significant Accounting Policies and Disclosures (continued)

(c)
Vessels in operation (continued)

Assets and Liabilities Acquired
 
Amount
 
Vessels fair value as of November 15, 2018
 
$
761,248
 
Negative goodwill allocated pro-rata to the vessels acquired
   
(143,726
)
Vessels fair value recognized as of November 15, 2018 (see note 3)
   
617,522
 
Cash and cash equivalents
   
35,044
 
Fair value of time charter contracts attached, net of pro-rata allocation of negative goodwill
   
5,404
 
Debt assumed
   
(509,673
)
Working capital (excluding cash and cash equivalents)
   
(11,331
)
Total
 
$
136,966
 
         
Fair Value of Consideration Given
 
Amount
 
Share price as of November 15, 2018 (as adjusted for reverse stock split)
 
$
7.84
 
 
       
Fair value of stock-based consideration
   
125,133
 
Capitalized transaction expenses
   
11,833
 
Total consideration
 
$
136,966
 

(d)
Impairment of Long-lived assets
   
Tangible fixed assets, such as vessels, are reviewed individually for impairment when events or changes in circumstances indicate that their carrying amounts may not be recoverable. Undiscounted projected operating cash flows are determined for each vessel group, which comprises of the vessel, the unamortized portion of deferred dry-docking related to the vessel and the related carrying value of the intangible asset or liability (if any) with respect to the time charter attached to the vessel at its purchase, if applicable (together the “vessel group”) and compared to the carrying value of the vessel group (step one). Within the shipping industry, vessels can be purchased with a charter attached.
The value of the charter may be favorable or unfavorable when comparing the contracted charter rate to then current market rates. An impairment charge is recognized when the sum of the expected undiscounted future cash flows from the vessel group over its estimated remaining useful life is less than its carrying amount (step one) and is recorded equal to the amount by which the vessel group’s carrying amount exceeds its fair value, including any applicable charter. Fair value is determined with the assistance from valuations obtained from third party independent ship brokers (step two).
The assumptions used involve a considerable degree of estimation. Actual conditions may differ significantly from the assumptions and thus actual cash flows may be significantly different to those estimated with a material effect on the recoverability of each vessel’s carrying amount.
The most significant assumptions made for the determination of expected cash flows are (i) charter rates on expiry of existing charters, which are based on forecast charter rates, where relevant, in the four years from the date of the impairment test and a reversion to the historical mean for each vessel thereafter (ii) off-hire days, which are based on actual off-hire statistics for the Company’s fleet (iii) operating costs, based on current levels escalated over time based on long term trends (iv) dry-docking frequency, duration and cost  (v) estimated useful life, which is assessed as a total of 30 years from original delivery by the shipyard and (vi) scrap values.
There were no impairment charges for the three months ended March 31, 2019 and 2018.

Page 9


Global Ship Lease, Inc.

Notes to the Interim Unaudited Consolidated Financial Statements (continued)

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


2.
Summary of Significant Accounting Policies and Disclosures (continued)

(e)
Revenue recognition and related expense

The Company generates revenue by time chartering out its vessels. Revenue is recorded when services are rendered under a signed charter agreement or with other evidence of an arrangement, the price is fixed or determinable, and collection is reasonably assured.
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 rate.
Revenues from time chartering of vessels are accounted for as operating leases and are thus recognized on a straight line basis as the average revenue over the rental periods of such charter agreements as service is performed, except for loss generating time charters, in which case the loss is recognized in the period when such loss is determined. A time charter involves placing a vessel at the charterer’s disposal for a period of time during which the charterer uses the vessel in return for the payment of a specified daily hire rate. Any difference between the charter rate invoiced and the time charter revenue recognized is classified as, or released from, deferred revenue within the interim unaudited Consolidated Balance Sheets.
Charter revenue received in advance which relates to the period after a balance sheet date is recorded as deferred revenue within current liabilities until the respective charter services are rendered. 
Under time charter agreements, operating costs such as for crews, maintenance and insurance are typically paid by the owner of the vessel whereas voyage expenses primarily consisting of port, canal and bunkers expenses that are unique to a particular charter are paid for by the charterer, except for commissions, which are always paid for by the owner and are included in time charter and voyage expenses as would be provisions for losses on time charters in progress and other miscellaneous owner’s expenses.
Expenses related to our revenue-generating contracts are recognized as incurred. 

(f)
Fair Value Measurement and Financial Instruments

Financial instruments carried on the balance sheet include cash and cash equivalents, restricted cash, trade receivables and payables, other receivables and other liabilities and long-term debt. The particular recognition methods applicable to each class of financial instrument are disclosed in the applicable significant policy description of each item or included below as applicable.
Fair value measurement: Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e. the “exit price”) in an orderly transaction between market participants at the measurement date. The hierarchy is broken down into three levels based on the observability of inputs as follows:
Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.  Valuation adjustments and block discounts are not applied to Level 1 instruments. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.
Level 2 - Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
Financial Risk Management: The Company activities expose it to a variety of financial risks including fluctuations in, time charter rates, credit and interest rates risk. Risk management is carried out under policies approved by executive management. Guidelines are established for overall risk management, as well as specific areas of operations.

Page 10


Global Ship Lease, Inc.

Notes to the Interim Unaudited Consolidated Financial Statements (continued)

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

2.
Summary of Significant Accounting Policies and Disclosures (continued)

(g)
Fair Value Measurement and Financial Instruments (continued)
   
Credit risk: The Company closely monitors its credit exposure to customers and counter-parties for credit risk. The Company has entered into commercial management agreement with Conchart Commercial Inc. (“Conchart”), pursuant to which Conchart has agreed to provide commercial management services to the Company, including the negotiation, on behalf of the Company, vessel employment contracts (see note 5).  Conchart has policies in place to ensure that it trades with customers and counterparties with an appropriate credit history.
Financial instruments that potentially subject the Company to concentrations of credit risk are accounts receivable and cash and cash equivalents. The Company does not believe its exposure to credit risk is likely to have a material adverse effect on its financial position, results of operations or cash flows.
Liquidity Risk: Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. The Company monitors cash balances appropriately to meet working capital needs.
(h)
Recent accounting pronouncements

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables. In December 2018, the FASB issued Accounting Standards Update No. 2018-19 “Codification improvements to Topic 326”, which clarifies that impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases. The ASU 2016-13 is effective for public entities for fiscal years beginning after December 15, 2019, with early adoption permitted. The Company is currently evaluating the impact of the new standard on its consolidated financial statements.
The Company does not believe that any other recently issued, but not yet effective, accounting pronouncements would have a material impact on its interim unaudited consolidated financial statements.

Page 11


Global Ship Lease, Inc.

Notes to the Interim Unaudited Consolidated Financial Statements (continued)

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


3. Vessels in Operation

   
Vessel Cost, as adjusted for Impairment charges
   
Accumulated Depreciation
   
Net Book Value
 
As of January 1, 2018
 
$
734,534
   
$
(148,014
)
 
$
586,520
 
                         
Additions
   
11,675
     
     
11,675
 
Acquisitions through the Poseidon Transaction
   
617,522
     
     
617,522
 
Depreciation
   
     
(31,117
)
   
(31,117
)
Impairment loss
   
(139,354
)
   
67,520
     
(71,834
)
                         
As of December 31, 2018
 
$
1,224,377
   
$
(111,611
)
 
$
1,112,766
 
                         
Additions
   
637
     
     
637
 
Depreciation
   
     
(9,799
)
   
(9,799
)
 
                       
As of March 31, 2019
 
$
1,225,014
   
$
(121,410
)
 
$
1,103,604
 

On June 18, 2018, the Company took delivery of a 2005-built, 2,824 TEU containership, now named GSL Valerie, for a total cost of $11,436.

On November 15, 2018, the Company completed the Poseidon Transaction, acquiring 20 containerships, one of which, the Argos, was contracted to be sold which sale was completed in December 2018. The Poseidon vessels were recorded at their fair value, less negative goodwill arising as a result of the accounting for the Poseidon Transaction, allocated pro-rata at that date. The vessel contracted to be sold at the date of the transaction was classified as an asset held-for-sale and was held at a fair value which equalled the agreed sale price. As a result, no gain or loss was been recognized in the Company’s Consolidated Statements of Income.

Whilst charter rates in the spot market and asset values saw overall improvements through 2018, taking into account the seasonal as well as cyclical nature of the container shipping industry, the recovery was not considered to have been sufficiently sustained not to undertake a fleet-wide review for impairment as at December 31, 2018 for the 19 vessels in the GSL Fleet. The impairment review resulted in an impairment charge on three vessels, totalling $71,834, being recognized during the year ended December 31, 2018.

As of March 31, 2019, 18 vessels of the GSL Fleet were pledged as collateral under the 2022 Notes and the Citi Super Senior Term Loan (“Citi Credit Facility”), and one vessel of the GSL Fleet was pledged as collateral under the Hayfin Credit Facility. Additionally, the loan facilities of Poseidon Fleet are collateralized by preferred mortgages over the 19 Poseidon vessels (see note 3).
Page 12



Global Ship Lease, Inc.

Notes to the Interim Unaudited Consolidated Financial Statements (continued)

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

4.
Long-Term Debt

Facilities
 
March 31,
2019
   
December 31, 2018
 
2022 Notes
 
$
360,000
   
$
360,000
 
Less repurchase of Notes
   
(20,000
)
   
(20,000
)
Less original issue discount
   
(3,600
)
   
(3,600
)
Accumulated amortization of original issue discount
   
1,143
     
941
 
2022 Notes (a)
 
$
337,543
   
$
337,341
 
Poseidon-DVB Credit Facility (b)
   
50,164
     
51,063
 
Poseidon-Credit Agricole Credit Facility (c)
   
52,664