Paragon Shipping Inc. Reports Fourth Quarter And Year Ended December 31, 2012 Results, Completion Of Debt Restructuring And

Paragon Shipping Inc. Reports Fourth Quarter And Year Ended December 31, 2012
 Results, Completion Of Debt Restructuring And Delivery Of M/V Priceless Seas

PR Newswire

ATHENS, Greece, Feb. 19, 2013

ATHENS, Greece, Feb. 19, 2013 /PRNewswire/ --Paragon Shipping Inc. (NYSE:
PRGN) ("Paragon Shipping", or the "Company"), a global shipping transportation
company specializing in drybulk cargoes, announced today its results for the
fourth quarter and year ended December 31, 2012.

Financial Highlights
(Expressed in United States Dollars where applicable)

                        Quarter Ended Quarter Ended Year Ended    Year Ended
                                      December 31,
                        December 31,  2012          December 31,  December 31,
                        2011                        2011          2012
Average number of       10.3          12.0          11.5          11.2
vessels
Time charter equivalent 17,905        10,563        21,312        11,923
rate (TCE) ^(1)
Net Revenue             15,990,199    12,944,841    86,907,967    50,300,679
EBITDA ^(1)             (262,397,641) 6,857,133     (238,367,357) 7,577,086
Adjusted EBITDA ^(1)    9,875,239     4,407,954     57,723,605    24,168,733
Net (Loss) / Income     (272,436,933) 328,685       (283,498,759) (17,557,125)
Adjusted Net Income /   531,772       (2,120,494)   15,352,812    (965,478)
(Loss) ^(1)
(Loss) / Earnings per
common share basic and  (45.25)       0.05          (47.61)       (2.84)
diluted ^(2)
Adjusted Earnings /
(Loss) per common share 0.09          (0.33)        2.58          (0.16)
basic and diluted
^(1),(2)

    Please see the table at the back of this release for a reconciliation of
    TCE to Time Charter Revenue, EBITDA and Adjusted EBITDA to Net Income /
    (Loss), Adjusted Net Income / (Loss) to Net Income / (Loss) and Adjusted
(1) Earnings / (Loss) per common share to Earnings / (Loss) per common share,
    the most directly comparable financial measures calculated and presented
    in accordance with generally accepted accounting principles in the United
    States ("U.S. GAAP").
    All per-share figures in this table and in our financial results reported
(2) below have been adjusted to give effect to the 10-for-1 reverse stock
    split that became effective on November 5, 2012.

Financing Update

We are pleased to announce that on February 8, 2013, we completed our debt
restructuring by finalizing the documentation for amendments to the loan
agreements with each of our lenders and successfully fulfilling all conditions
precedent to these amendments.

We had previously announced our entry into supplemental agreements with
several of our lenders. In January 2013, we signed supplemental agreements
with HSH Nordbank AG and Nordea Bank Finland Plc, and in February 2013, we
finalized the documentation with Commerzbank AG, which completed our debt
restructuring. On December 24, 2012, we raised $10.0 million though the
private placement of 4,901,961 shares of the Company's common stock to Mr.
Michael Bodouroglou, the Company's Chairman and Chief Executive Officer, in
fulfillment of a condition to our debt restructuring. Under the terms of the
private placement, we were granted a right to repurchase the shares issued in
the private placement, which has now been expired upon the execution of
definitive documentation of our debt restructuring.

As part of our debt restructuring program, we obtained waivers and agreed to
the relaxation of several financial and security coverage ratio covenants, the
deferral of a portion of our scheduled quarterly installments and, in the case
of our loan agreements with Bank of Ireland and The Bank of Scotland Plc, the
extension of the loan agreements to the second quarter of 2017 and to the
third quarter of 2015, respectively. In addition, in respect to the loan
agreement with The Bank of Scotland Plc, we agreed to a payment of $2.8
million for the full and final settlement of $4.7 million in debt,
representing the portion of the loan of one of the syndicate members. This
advance payment of $2.8 million was made on December 10, 2012, resulting in a
gain from debt extinguishment of $1.9 million that was recorded in the fourth
quarter of 2012.

Furthermore, we extended the availability period of the syndicate facility led
by Nordea Bank Finland Plc for nine months, securing the financing of our last
Handysize newbuilding drybulk vessel (Hull no. 625) that is expected to be
delivered in the fourth quarter of 2013.

Overall, by successfully completing our debt restructuring program, we reduced
our debt repayment requirements for 2013 and 2014 by $44.4 million and $6.9
million, respectively.

Recent Fleet Developments and Time Charter Coverage Update

On January 29, 2013, we took delivery of our third newbuilding vessel, the M/V
Priceless Seas, a 37,202 dwt Handysize vessel, from the Zhejiang Ouhua
Shipbuilding Co. in China. The vessel was financed purely with equity and
therefore, no additional amount was drawn under the syndicate facility led by
Nordea Bank Finland Plc. Currently, the M/V Priceless Seas is not subject to
any mortgage.

The M/V Priceless Seas is currently employed on a short-term time charter trip
with STX Pan Ocean Co. Ltd. for a period of about one month and at a gross
daily rate of $6,000.

Pursuant to our time chartering strategy, we mainly employ vessels under fixed
rate time charters for periods ranging from one to five years.

Assuming all charter counterparties fully perform under the terms of the
charters, based on the earliest redelivery dates  and including our
newbuilding vessels, we have secured employment for 55% and 7% of our fleet
capacity for the remainder of 2013 and full year 2014, respectively.

Management Commentary

Commenting on the results, Michael Bodouroglou, Chairman and Chief Executive
Officer of Paragon Shipping, stated, "We are pleased to announce our results
for the fourth quarter of 2012. After the recognition of a $1.9 million gain
from our debt restructuring, our EBITDA for the quarter was $6.9 million,
while we reported a net income of $0.3 million, or 5 cents per share. On
average, we operated 12.0 vessels, with a utilization rate in excess of 98%.
In addition, on January 29, 2013 we took delivery of our third Handysize
newbuilding vessel, the M/V Priceless Seas, and expanded our fleet size to 13
vessels. The respective vessel is currently debt-free, which results in a
decreased breakeven-point and an increased contribution to the Company's cash
flow."

Mr. Bodouroglou continued, "We are also pleased to announce that we have
successfully completed our debt restructuring by signing supplemental
agreements with all of our lenders. Based on our debt restructuring program,
we achieved the relaxation of several financial and security coverage ratio
covenants and the overall increase of the Company's projected liquidity by
reducing our quarterly debt repayments by almost half and extending the
profile of two facilities, which reduced our annual debt repayments by $44.4
million in 2013 and $6.9 million in 2014."

Mr. Bodouroglou concluded, "Overall, despite the severe and protracted
downturn and the prevailing market conditions, in 2012 we continued to execute
on our strategy of conservative growth and cash preservation."

Fourth Quarter 2012 Financial Results

Gross time charter revenue for the fourth quarter of 2012 was $13.7 million,
compared to $17.0 million for the fourth quarter of 2011. The Company reported
a net income of 0.3 million, or $0.05 per basic and diluted share, for the
fourth quarter of 2012, calculated on 6,354,014 weighted average number of
basic and diluted shares outstanding for the period and reflecting the impact
of the non-cash items discussed below. For the fourth quarter of 2011, the
Company reported a net loss of $272.4 million, or $45.25 per basic and diluted
share, calculated on 5,866,532 weighted average number of basic and diluted
shares.

Excluding all non-cash items described below, the adjusted net loss for the
fourth quarter of 2012 was $2.1 million, or $0.33 per basic and diluted share,
compared to adjusted net income of $0.5 million, or $0.09 per basic and
diluted share, for the fourth quarter of 2011.

EBITDA for the fourth quarter of 2012 was positive $6.9 million, compared to
negative $262.4 million for the fourth quarter of 2011. EBITDA for the fourth
quarter of 2012 was calculated by adding to net income of 0.3 million, net
interest expense, including interest expense from interest rate swaps, and
depreciation that in the aggregate amounted to $6.5 million. Adjusted EBITDA,
excluding all non-cash items described below, was $4.4 million for the fourth
quarter of 2012, compared to $9.9 million for the fourth quarter of 2011.

The Company operated an average of 12.0 vessels during the fourth quarter of
2012, earning an average TCE rate of $10,563 per day, compared to an average
of 10.3 vessels during the fourth quarter of 2011, earning an average TCE rate
of $17,905 per day.

Total adjusted operating expenses for the fourth quarter of 2012 equaled $7.4
million, or approximately $6,663 per day per vessel, including vessel
operating expenses, management fees, general and administrative expenses and
dry-docking costs, but excluding $0.1 million of share-based compensation for
the period. For the fourth quarter of 2011, total adjusted operating expenses
were $8.8 million, or approximately $9,218 per day per vessel, including the
same items as mentioned above, but excluding $1.1 million of share-based
compensation.

Depreciation is computed using the straight-line method over the estimated
useful life of the vessels, after considering the estimated salvage value.
Each vessel's salvage value is equal to the product of its lightweight tonnage
and estimated scrap rate. In order to adjust the Company's scrap rate
estimates to be aligned with the historical average scrap rate, effective from
October 1, 2012 and with prospective effect, we adjusted the estimated scrap
rate used to calculate our vessels' salvage value from $150 to $300 per
lightweight ton.

As of December 31, 2012, the Company owned approximately 16.4% of the
outstanding common stock of Box Ships Inc. (NYSE:TEU) ("Box Ships"), a former
wholly-owned subsidiary of the Company which successfully completed its
initial public offering in April 2011. The investment in Box Ships is
accounted for under the equity method and is separately reflected on the
Company's unaudited condensed consolidated balance sheets. For the fourth
quarter of 2012, the Company recorded income of $0.4 million, representing its
share of Box Ships' net income for the period, compared to $1.2 million for
the fourth quarter of 2011. In the fourth quarter of 2012, we received a cash
amount of $0.8 million, representing dividend distributions from Box Ships,
compared to $1.0 million received in the fourth quarter of 2011.

Fourth Quarter 2012 Non-cash Items

The Company's results for the three months ended December 31, 2012 included
the following non-cash items:

  oA non-cash gain from debt extinguishment of $1.9 million, or $0.29 per
    basic and diluted share, relating to the syndicate loan facility led by
    The Bank of Scotland Plc and the write-off of the portion of the loan of
    one of the syndicate members.
  oAn unrealized gain from interest rate swaps of $0.7 million, or $0.11 per
    basic and diluted share.
  oNon-cash expenses of $0.1 million, or $0.02 per basic and diluted share,
    relating to the amortization of the compensation cost recognized for
    non-vested share awards issued to the Company's executive officers,
    directors and employees.

In the aggregate, these non-cash items increased net income by $2.4 million,
which represents a $0.38 increase in earnings per basic and diluted share, for
the three months ended December 31, 2012.

Year ended December 31, 2012 Financial Results

Gross time charter revenue for the year ended December 31, 2012, was $53.2
million, compared to $92.1 million for the year ended December 31, 2011. The
Company reported a net loss of $17.6 million, or $2.84 per basic and diluted
share, for the year ended December 31, 2012, calculated on 6,035,910 weighted
average number of basic and diluted shares outstanding for the period and
reflecting the impact of the non-cash items discussed below. For the year
ended December 31, 2011, the Company reported a net loss of $283.5 million, or
$47.61 per basic and diluted share, calculated on 5,793,792 weighted average
number of basic and diluted shares.

Excluding all non-cash items described below, the adjusted net loss for the
year ended December 31, 2012, was $1.0 million, or $0.16 per basic and diluted
share. Adjusted net income for the year ended December 31, 2011 was $15.4
million, or $2.58 per basic and diluted share.

EBITDA for the year ended December 31, 2012, was positive $7.6 million,
compared to negative $238.4 million for the year ended December 31, 2011. This
was calculated by adding to net loss of $17.6 million for the year ended
December 31, 2012, net interest expense, including interest expense from
interest rate swaps, and depreciation that in the aggregate amounted to $25.1
million for the year ended December 31, 2012. Adjusted EBITDA, excluding all
non-cash items described below, was $24.2 million for the year ended December
31, 2012, compared to $57.7 million for the year ended December 31, 2011.

The Company operated an average of 11.2 vessels during the year ended December
31, 2012, earning an average TCE rate of $11,923 per day, compared to an
average of 11.5 vessels during the year ended December 31, 2011, earning an
average TCE rate of $21,312 per day.

Total adjusted operating expenses for the year ended December 31, 2012, were
$28.3 million, or approximately $6,896 per day per vessel, including vessel
operating expenses, management fees, general and administrative expenses and
dry-docking costs, but excluding $2.5 million of share-based compensation for
the period. For the year ended December 31, 2011, total adjusted operating
expenses were $33.1 million, or approximately $7,866 per day per vessel,
including vessel operating expenses, management fees and general and
administrative expenses and dry-docking costs, but excluding $5.1 million of
share-based compensation.

For the year ended December 31, 2012, the Company recorded income of $2.0
million, representing its share of Box Ships' net income for the period,
compared to $2.7 million for the year ended December 31, 2011. In the year
ended December 31, 2012, we received a cash amount of $3.7 million
representing dividend distributions from Box Ships, compared to $1.5 million
in the year ended December 31, 2011.

In the year ended December 31, 2012, the Company recorded a non-cash loss of
$2.9 million relating to the dilution effect from the Company's
non-participation in the public offering by Box Ships of 4,285,715 of Box
Ships' common shares, which was completed on July 18, 2012. In addition, as of
September 30, 2012, the difference between the fair value and the book value
of the Company's investment in Box Ships was considered to be other than
temporary and therefore, the investment was impaired and the Company recorded
a non-cash loss of $14.1 million. Both items are included in "Loss on
investment in affiliate" in the unaudited condensed consolidated statements of
operations at the end of this release.

As of September 30, 2012, the change in the fair value of the shares of Korea
Line Corporation ("KLC"), which the Company received as part of the settlement
agreement entered into with KLC in September 2011, in connection with the
early termination of the time charter in respect of the M/V Pearl Seas, was
considered as other than temporary, and therefore the Company recorded a
non-cash loss of $1.0 million in the year ended December 31, 2012.

Year ended December 31, 2012 Non-cash Items

The Company's results for the year ended December 31, 2012, included the
following non-cash items:

  oLoss on investment in affiliate of $17.0 million, or $2.74 per basic and
    diluted share.
  oA non-cash gain from debt extinguishment of $1.9 million, or $0.31 per
    basic and diluted share, relating to the syndicate loan facility led by
    The Bank of Scotland Plc and the write-off of the portion of the loan of
    one of the syndicate members.
  oLoss on marketable securities of $1.0 million, or $0.16 per basic and
    diluted share.
  oAn unrealized gain from interest rate swaps of $2.0 million, or $0.33 per
    basic and diluted share.
  oNon-cash expenses of $2.5 million, or $0.41 per basic and diluted share,
    relating to the amortization of the compensation cost recognized for
    non-vested share awards issued to the Company's executive officers,
    directors and employees.

In the aggregate, these non-cash items decreased net income by $16.6 million,
which represents a $2.68 decrease in earnings per basic and diluted share, for
the year ended December 31, 2012.

Cash Flows

For the year ended December 31, 2012, the Company generated net cash from
operating activities of $13.4 million, compared to $45.5 million for the year
ended December 31, 2011. For the year ended December 31, 2012, net cash used
in investing activities was $15.7 million and net cash from financing
activities was $5.4 million. For the year ended December 31, 2011, net cash
from investing activities was $43.7 million and net cash used in financing
activities was $109.4 million.

Conference Call and Webcast details

The Company's management team will host a conference call to discuss its
fourth quarter and year ended December 31, 2012 results today at 10:00 am
Eastern Time.

Participants should dial into the call ten minutes before the scheduled time
using the following numbers 1-877-317-6789 (USA) or +1-412-317-6789
(international) to access the call. A replay of the conference call will be
available for seven days and can be accessed by dialing 1-877-344-7529 (USA)
or +1-412-317-0088 (international) and using passcode 10025328.

Slides and audio webcast

There will also be a simultaneous live webcast through the Company's website,
www.paragonship.com. Participants should register on the website approximately
ten minutes prior to the start of the webcast. If you would like a copy of the
release mailed or faxed, please contact Allen & Caron Investor Relations at
212-691-8087.

About Paragon Shipping Inc.

Paragon Shipping is a Marshall Islands-based international shipping company
with executive offices in Athens, Greece, specializing in the transportation
of drybulk cargoes. The Company's current fleet consists of thirteen drybulk
vessels with a total carrying capacity of 816,472 dwt. In addition, the
Company's current newbuilding program consists of one Handysize drybulk
carrier that is scheduled to be delivered in the fourth quarter of 2013 and
two 4,800 TEU containerships that are scheduled to be delivered in 2014.
Paragon Shipping has granted Box Ships Inc., an affiliated company, the option
to acquire its two containerships under construction. For more information,
visit: www.paragonship.com. The information contained on the Company's website
does not constitute part of this press release.

Forward-Looking Statements

Certain statements in this press release are "forward-looking statements"
within the meaning of the Private Securities Litigation Act of 1995. These
forward-looking statements are based on our current expectations and beliefs
and are subject to a number of risk factors and uncertainties that could cause
actual results to differ materially from those described in the
forward-looking statements. Such risks and uncertainties include, without
limitation, the strength of world economies and currencies, general market
conditions, including fluctuations in charter rates and vessel values, changes
in demand for drybulk shipping capacity, changes in our operating expenses,
including bunker prices, dry-docking and insurance costs, the market for our
vessels, availability of financing and refinancing, charter counterparty
performance, ability to obtain financing and comply with covenants in such
financing arrangements, changes in governmental rules and regulations or
actions taken by regulatory authorities, potential liability from pending or
future litigation, general domestic and international political conditions,
potential disruption of shipping routes due to accidents or political events,
vessels breakdowns and instances of off-hires and other factors, as well as
other risks that have been included in filings with the Securities and
Exchange Commission, all of which are available at www.sec.gov.

Contacts:

Paragon Shipping Inc.
Robert Perri, CFA
Chief Financial Officer
ir@paragonshipping.gr

Allen & Caron Inc.
Rudy Barrio (Investors)
r.barrio@allencaron.com
(212) 691-8087

Len Hall (Media)
len@allencaron.com
(949) 474-4300

- Tables Follow -

Fleet List
Drybulk Fleet
The following tables represent our drybulk fleet and the drybulk newbuilding
vessels that we have agreed to acquire as of February 19, 2013.
Operating Drybulk Fleet

Name            Type      Dwt     Year Built
Panamax
Dream Seas      Panamax   75,151  2009
Coral Seas      Panamax   74,477  2006
Golden Seas     Panamax   74,475  2006
Pearl Seas      Panamax   74,483  2006
Diamond Seas    Panamax   74,274  2001
Deep Seas       Panamax   72,891  1999
Calm Seas       Panamax   74,047  1999
Kind Seas       Panamax   72,493  1999
Total Panamax   8         592,291
Supramax
Friendly Seas   Supramax  58,779  2008
Sapphire Seas   Supramax  53,702  2005
Total Supramax  2         112,481
Handysize
Prosperous Seas Handysize 37,293  2012
Precious Seas   Handysize 37,205  2012
Priceless Seas  Handysize 37,202  2013
Total Handysize 3         111,700
Grand Total     13        816,472



Drybulk Newbuildings that we have agreed to acquire

Hull no.        Type      Dwt    Expected Delivery
Handysize
Hull no. 625    Handysize 37,200 Q4 2013
Total Handysize 1         37,200

Containership Fleet
The following table represents the containership newbuilding vessels that we
have agreed to acquire as of February 19, 2013.
Containership Newbuildings that we have agreed to acquire

Hull no.          TEU   Dwt     Expected Delivery
Hull no. 656 ^(1) 4,800 56,500  Q2 2014
Hull no. 657 ^(1) 4,800 56,500  Q2 2014
Total             9,600 113,000

(1) The Company has granted to Box Ships an option to purchase.

Summary Fleet Data
(Expressed in United States Dollars where applicable)

                                           Quarter Ended     Quarter Ended

                                           December 31, 2011 December 31, 2012
FLEET DATA
Average number of vessels (1)              10.3              12.0
Calendar days for fleet (2)                952               1,104
Available days for fleet (3)               934               1,104
Operating days for fleet (4)               922               1,083
Fleet utilization (5)                      98.7%             98.1%
AVERAGE DAILY RESULTS
Time charter equivalent (6)                17,905            10,563
Vessel operating expenses (7)              4,060             4,328
Dry-docking expenses (8)                   609               -
Management fees - related party adjusted   1,041             1,001
(9)
General and administrative expenses        3,508             1,334
adjusted (10)
Total vessel operating expenses adjusted   9,218             6,663
(11)

                                           Year Ended        Year Ended

                                           December 31, 2011 December 31, 2012
FLEET DATA
Average number of vessels (1)              11.5              11.2
Calendar days for fleet (2)                4,211             4,099
Available days for fleet (3)               4,104             4,099
Operating days for fleet (4)               4,054             4,063
Fleet utilization (5)                      98.8%             99.1%
AVERAGE DAILY RESULTS
Time charter equivalent (6)                21,312            11,923
Vessel operating expenses (7)              4,321             4,588
Dry-docking expenses (8)                   694               -
Management fees - related party adjusted   1,076             999
(9)
General and administrative expenses        1,775             1,309
adjusted (10)
Total vessel operating expenses adjusted   7,866             6,896
(11)

     Average number of vessels is the number of vessels that constituted our
(1)  fleet for the relevant period, as measured by the sum of the number of
     calendar days each vessel was a part of our fleet during the period
     divided by the number of days in the period.
(2)  Calendar days for the fleet are the total days the vessels were in our
     possession for the relevant period.
     Available days for the fleet are the total calendar days for the relevant
(3)  period less any off-hire days associated with scheduled dry-dockings or
     special or intermediate surveys.
     Operating days for the fleet are the total available days for the
     relevant period less any off-hire days due to any reason, other than
(4)  scheduled dry-dockings or special or intermediate surveys, including
     unforeseen circumstances. Any idle days relating to the days a vessel
     remains unemployed are included in operating days.
     Fleet utilization is the percentage of time that our vessels were able to
(5)  generate revenues and is determined by dividing operating days by fleet
     available days for the relevant period.
     Time charter equivalent ("TCE") is a measure of the average daily revenue
     performance of a vessel on a per voyage basis. Our method of calculating
     TCE is consistent with industry standards and is determined by dividing
     Net Revenue generated from charters less voyage expenses by operating
     days for the relevant time period. Voyage expenses consist of all costs
     that are unique to a particular voyage, primarily including port
(6)  expenses, canal dues, war risk insurances and fuel costs, net of gains or
     losses from the sale of bunkers to charterers. TCE is a non-GAAP standard
     shipping industry performance measure used primarily to compare
     period-to-period changes in a shipping company's performance despite
     changes in the mix of charter types (i.e., spot voyage charters, time
     charters and bareboat charters) under which the vessels may be employed
     between the periods.
     Daily vessel operating expenses, which includes crew costs, provisions,
(7)  deck and engine stores, lubricating oil, insurance, maintenance and
     repairs, is calculated by dividing vessel operating expenses by fleet
     calendar days for the relevant time period.
(8)  Daily dry-docking expenses are calculated by dividing dry-docking
     expenses by fleet calendar days for the relevant time period.
     Daily management fees - related party adjusted are calculated by dividing
(9)  management fees charged by a related party, excluding share based
     compensation to the management company, by fleet calendar days for the
     relevant time period.
     Daily general and administrative expenses adjusted are calculated by
     dividing general and administrative expenses, excluding non-cash expenses
(10) relating to the amortization of the share based compensation cost for
     non-vested share awards, by fleet calendar days for the relevant time
     period.
     Total vessel operating expenses ("TVOE") is a measurement of our total
     expenses associated with operating our vessels. TVOE is the sum of vessel
     operating expenses, dry-docking expenses, management fees and general and
(11) administrative expenses. Daily TVOE adjusted is calculated by dividing
     TVOE, excluding non-cash expenses relating to the amortization of the
     share based compensation cost for non-vested share awards and share based
     compensation to the management company, by fleet calendar days for the
     relevant time period.


Time Charter Equivalents Reconciliation
(Expressed in United States Dollars where applicable)

                                    Quarter Ended     Quarter Ended

                                    December 31, 2011 December 31, 2012
Time Charter Revenue                16,950,609        13,682,383
Commissions                         (960,410)         (737,542)
Voyage Expenses                     517,774           (1,505,216)
Net Revenue, net of voyage expenses 16,507,973        11,439,625
Total operating days                922               1,083
Time Charter Equivalent             17,905            10,563

                                    Year Ended        Year Ended

                                    December 31, 2011 December 31, 2012
Time Charter Revenue                92,093,426        53,218,975
Commissions                         (5,185,459)       (2,918,296)
Voyage Expenses                     (507,636)         (1,855,964)
Net Revenue, net of voyage expenses 86,400,331        48,444,715
Total operating days                4,054             4,063
Time Charter Equivalent             21,312            11,923

Condensed Cash Flow Information (Unaudited)
(Expressed in United States Dollars)

                                           Year Ended        Year Ended

                                           December 31, 2011 December 31, 2012
Cash and Cash Equivalents,
                                           34,787,935        14,563,517
beginning of period
Cash generated from / (used in):
Operating Activities                       45,467,429        13,376,809
Investing Activities                       43,673,793        (15,702,244)
Financing Activities                       (109,365,640)     5,438,803
Net (decrease) / increase in Cash and Cash (20,224,418)      3,113,368
Equivalents
Cash and Cash Equivalents,
                                           14,563,517        17,676,885
end of period



Reconciliation of U.S. GAAP Financial Information to Non-GAAP Financial
Information
EBITDA Reconciliation (1)
(Expressed in United States Dollars)

                                           Quarter Ended     Quarter Ended

                                           December 31, 2011 December 31, 2012
Net (Loss) / Income                        (272,436,933)     328,685
Plus Net interest expense, including       2,383,410         2,453,799
interest expense from interest rate swaps
Plus Depreciation                          7,655,882         4,074,649
EBITDA                                     (262,397,641)     6,857,133
Adjusted EBITDA Reconciliation
Net (Loss) / Income                        (272,436,933)     328,685
Non-cash depreciation due to below market  695,825           -
acquired time charters
Impairment loss                            271,587,148       -
Gain from debt extinguishment              -                 (1,893,254)
Loss on sale of assets                     396,233           -
Unrealized gain from interest rate swaps   (808,021)         (691,875)
Non-cash expenses from the amortization of 1,097,520         135,950
share based compensation cost recognized
Adjusted Net Income / (Loss)               531,772           (2,120,494)
Plus Net interest expense, including       2,383,410         2,453,799
interest expense from swaps
Plus Depreciation, adjusted (2)            6,960,057         4,074,649
Adjusted EBITDA                            9,875,239         4,407,954

                                           Year Ended        Year Ended

                                           December 31, 2011 December 31, 2012
Net Loss                                   (283,498,759)     (17,557,125)
Plus Net interest expense, including       12,587,203        8,747,785
interest expense from interest rate swaps
Plus Depreciation                          32,544,199        16,386,426
EBITDA                                     (238,367,357)     7,577,086
Adjusted EBITDA Reconciliation
Net Loss                                   (283,498,759)     (17,557,125)
Non-cash depreciation due to below market  2,760,609         -
acquired time charters
Impairment loss                            277,327,148       -
Loss on investment in affiliate            -                 16,985,066
Gain from debt extinguishment              -                 (1,893,254)
Loss on marketable securities              -                 980,430
Loss on sale of assets                     15,192,704        -
Unrealized gain from interest rate swaps   (1,517,932)       (2,017,297)
Non-cash expenses from the amortization of
share based compensation cost recognized
and share                                  5,089,042         2,536,702

based compensation to the management
company
Adjusted Net Income / (Loss)               15,352,812        (965,478)
Plus Net interest expense, including       12,587,203        8,747,785
interest expense from interest rate swaps
Plus Depreciation, adjusted (2)            29,783,590        16,386,426
Adjusted EBITDA                            57,723,605        24,168,733

    The Company considers EBITDA to represent Net Income / (Loss) plus net
    interest expense, including interest expense from interest rate swaps, and
    depreciation and amortization. The Company's management uses EBITDA and
    Adjusted EBITDA as a performance measure. EBITDA and Adjusted EBITDA are
    not items recognized by U.S. GAAP and should not be considered as an
    alternative to Net Income / (Loss), Operating Income / (Loss) or any other
    indicator of a Company's operating performance required by U.S. GAAP. The
(1) Company's definition of EBITDA and Adjusted EBITDA may not be the same as
    that used by other companies in the shipping or other industries. The
    Company believes that EBITDA is useful to investors because the shipping
    industry is capital intensive and may involve significant financing costs.
    The Company excluded non-cash items to derive the Adjusted Net Income /
    (Loss) and the Adjusted EBITDA because the Company believes that these
    adjustments provide additional information on the fleet operational
    results.
(2) Excludes a portion of depreciation charged on purchase price adjustment
    allocated to vessel cost for vessels acquired with below market charters.



Reconciliation of U.S. GAAP Financial Information to Non-GAAP Financial
Information
Net Income and Adjusted Net Income Reconciliation
(Expressed in United States Dollars - except for share data)

                                           Quarter Ended     Quarter Ended
U.S. GAAP Financial Information
                                           December 31, 2011 December 31, 2012
Net (Loss) / Income                        (272,436,933)     328,685
Net (Loss) / Income attributable to        (6,984,618)       6,013
non-vested share awards
Net (Loss) / Income available to common    (265,452,315)     322,672
shareholders
Weighted average number of common shares   5,866,532         6,354,014
basic and diluted (2)
(Loss) / Earnings per common share basic   (45.25)           0.05
and diluted (2)
Reconciliation of Net (Loss) / Income to
Adjusted Net Income / (Loss)
Net (Loss) / Income                        (272,436,933)     328,685
Non-cash depreciation due to below market  695,825           -
acquired time charters
Impairment loss                            271,587,148       -
Gain from debt extinguishment              -                 (1,893,254)
Loss on sale of assets                     396,233           -
Unrealized gain from interest rate swaps   (808,021)         (691,875)
Non-cash expenses from the amortization of 1,097,520         135,950
share based compensation cost recognized
Adjusted Net Income / (Loss) (1)           531,772           (2,120,494)
Adjusted Net Income / (Loss) attributable  13,633            (38,791)
to non-vested share awards
Adjusted Net Income / (Loss) available to  518,139           (2,081,703)
common shareholders
Weighted average number of common shares   5,866,532         6,354,014
basic and diluted (2)
Adjusted Earnings / (Loss) per common      0.09              (0.33)
share basic and diluted (1), (2)

    Adjusted Net Income / (Loss) and Adjusted Earnings / (Loss) per common
    share are not items recognized by U.S. GAAP and should not be considered
    as alternatives to Net Income / (Loss) and Earnings / (Loss) per common
    share, respectively, or any other indicator of a Company's operating
    performance required by U.S. GAAP. The Company excluded non-cash items to
(1) derive at the Adjusted Net Income / (Loss) and the Adjusted Earnings /
    (Loss) per common share basic and diluted because the Company believes
    that these adjustments provide additional information on the fleet
    operational results. The Company's definition of Adjusted Net Income /
    (Loss) and Adjusted Earnings / (Loss) per common share may not be the same
    as that used by other companies in the shipping or other industries.
(2) Adjusted to give effect to the 10-for-1 reverse stock split that became
    effective on November 5, 2012.



Reconciliation of U.S. GAAP Financial Information to Non-GAAP Financial
Information
Net Income and Adjusted Net Income Reconciliation
(Expressed in United States Dollars - except for share data)

                                           Year Ended        Year Ended
U.S. GAAP Financial Information
                                           December 31, 2011 December 31, 2012
Net Loss                                   (283,498,759)     (17,557,125)
Net Loss attributable to non-vested share  (7,644,949)       (444,326)
awards
Net Loss available to common shareholders  (275,853,810)     (17,112,799)
Weighted average number of common shares   5,793,792         6,035,910
basic and diluted (2)
Loss per common share basic and diluted    (47.61)           (2.84)
(2)
Reconciliation of Net Loss to Adjusted Net
Income / (Loss)
Net Loss                                   (283,498,759)     (17,557,125)
Non-cash depreciation due to below market  2,760,609         -
acquired time charters
Impairment loss                            277,327,148       -
Loss on investment in affiliate            -                 16,985,066
Gain from debt extinguishment              -                 (1,893,254)
Loss on marketable securities              -                 980,430
Loss on sale of assets                     15,192,704        -
Unrealized gain from interest rate swaps   (1,517,932)       (2,017,297)
Non-cash expenses from the amortization of
share based compensation cost recognized   5,089,042         2,536,702
and share based compensation to the
management company
Adjusted Net Income / (Loss) (1)           15,352,812        (965,478)
Adjusted Net Income / (Loss) attributable  414,010           (24,434)
to non-vested share awards
Adjusted Net Income / (Loss) available to  14,938,802        (941,044)
common shareholders
Weighted average number of common shares   5,793,792         6,035,910
basic and diluted (2)
Adjusted Earnings / (Loss) per common      2.58              (0.16)
share basic and diluted (1), (2)

    Adjusted Net Income / (Loss) and Adjusted Earnings / (Loss) per common
    share are not items recognized by U.S. GAAP and should not be considered
    as alternatives to Net Income / (Loss) and Earnings / (Loss) per common
    share, respectively, or any other indicator of a Company's operating
    performance required by U.S. GAAP. The Company excluded non-cash items to
(1) derive at the Adjusted Net Income / (Loss) and the Adjusted Earnings /
    (Loss) per common share basic and diluted because the Company believes
    that these adjustments provide additional information on the fleet
    operational results. The Company's definition of Adjusted Net Income /
    (Loss) and Adjusted Earnings / (Loss) per common share may not be the same
    as that used by other companies in the shipping or other industries.
(2) Adjusted to give effect to the 10-for-1 reverse stock split that became
    effective on November 5, 2012.

Paragon Shipping Inc.
Unaudited Condensed Consolidated Balance Sheets
As of December 31, 2011 and 2012
(Expressed in United States Dollars)
                                          December 31, 2011  December 31, 2012
Assets
Cash and restricted cash (current and     39,563,517         27,686,885
non-current)
Other current assets                      4,029,047          7,231,319
Vessels, net                              268,608,363        298,376,440
Advances for vessel acquisitions and      63,450,706         49,592,684
vessels under construction
Other fixed assets, net                   510,042            497,619
Investment in equity affiliate            38,805,802         20,094,826
Loan to affiliate                         15,000,000         14,000,000
Other non-current assets                  2,106,460          2,602,212
Total Assets                              432,073,937        420,081,985
Liabilities and Shareholders' Equity
Total debt                                201,285,000        195,542,176
Total other liabilities                   9,564,790          8,912,213
Total shareholders' equity                221,224,147        215,627,596
Total Liabilities and Shareholders'       432,073,937        420,081,985
Equity

Paragon Shipping Inc.
Unaudited Condensed Consolidated Statements of Operations and Comprehensive
(Loss) / Income
For the three months ended December 31, 2011 and 2012
(Expressed in United States Dollars - except for share data)
                                        Three Months Ended  Three Months Ended
                                        December 31, 2011   December 31, 2012
Revenue
Time charter revenue                   16,950,609          13,682,383
Commissions                            (960,410)           (737,542)
Net Revenue                             15,990,199          12,944,841
Expenses / (Income)
Voyage expenses                         (517,774)           1,505,216
Vessels operating expenses             3,864,757           4,778,456
Dry-docking expenses                    579,798             -
Management fees - related party        990,680             1,105,224
Depreciation                            7,655,882           4,074,649
General and administrative expenses    4,437,292           1,608,194
Impairment loss                         271,587,148         -
Bad debt provisions                     (38,949)            124,717
Loss on sale of assets                  396,233             -
Gain from vessel early redelivery       (916,780)           -
Other income                            -                   (47,293)
Operating Loss                          (272,048,088)       (204,322)
Other Income / (Expenses)
Interest and finance costs              (1,830,194)         (1,946,183)
Gain on derivatives, net                61,429              13,266
Interest income                         193,376             170,993
Equity in net income of affiliate       1,174,854           397,951
Gain from debt extinguishment           -                   1,893,254
Foreign currency gain                   11,690              3,726
Total Other Expenses, net               (388,845)           533,007
Net (Loss) / Income                     (272,436,933)       328,685
Other Comprehensive Income
Unrealized gain on cash flow hedges     -                   84,950
Unrealized gain on change in fair       -                   153,053
value of marketable securities
Total Other Comprehensive Income        -                   238,003
Comprehensive (Loss) / Income           (272,436,933)       566,688
(Loss) / Earnings per Class A common    ($45.25)            $0.05
share, basic and diluted (1)
Weighted average number of Class A      5,866,532           6,354,014
common shares, basic and diluted (1)

(1) Adjusted to give effect to the 10-for-1 reverse stock split that became
    effective on November 5, 2012.



Paragon Shipping Inc.
Unaudited Condensed Consolidated Statements of Operations and Comprehensive
Loss
For the years ended December 31, 2011 and 2012
(Expressed in United States Dollars - except for share data)
                                          Year Ended         Year Ended
                                          December 31, 2011  December 31, 2012
Revenue
Time charter revenue                     92,093,426         53,218,975
Commissions                              (5,185,459)        (2,918,296)
Net Revenue                               86,907,967         50,300,679
Expenses / (Income)
Voyage expenses                           507,636            1,855,964
Vessels operating expenses               18,193,648         18,808,084
Dry-docking expenses                      2,924,046          -
Management fees - related party          4,780,500          4,094,744
Depreciation                              32,544,199         16,386,426
General and administrative expenses      12,315,054         7,901,762
Impairment loss                           277,327,148        -
Bad debt provisions                       296,719            124,717
Loss on sale of assets                    15,192,704         -
Gain from vessel early redelivery         (1,947,947)        -
Gain from marketable securities           -                  (414,235)
Other income                              -                  (750,715)
Operating (Loss) / Income                 (275,225,740)      2,293,932
Other Income / (Expenses)
Interest and finance costs                (9,349,714)        (6,744,917)
Loss on derivatives, net                  (2,340,418)        (714,074)
Interest income                           620,861            728,503
Equity in net income of affiliate         2,749,866          1,986,590
Gain from debt extinguishment             -                  1,893,254
Loss on investment in affiliate           -                  (16,985,066)
Foreign currency gain / (loss)            46,386             (15,347)
Total Other Expenses, net                 (8,273,019)        (19,851,057)
Net Loss                                  (283,498,759)      (17,557,125)
Other Comprehensive Loss
Unrealized loss on cash flow hedges       -                  (673,074)
Unrealized loss on change in fair value   -                  (827,377)
of marketable securities
Reclassification adjustment on change in  -                  980,430
fair value of marketable securities
Total Other Comprehensive Loss            -                  (520,021)
Comprehensive Loss                        (283,498,759)      (18,077,146)
Loss per Class A common share, basic and  ($47.61)           ($2.84)
diluted (1)
Weighted average number of Class A        5,793,792          6,035,910
common shares, basic and diluted (1)

(1) Adjusted to give effect to the 10-for-1 reverse stock split that became
    effective on November 5, 2012.

SOURCE Paragon Shipping Inc.

Website: http://www.paragonship.com
 
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