Paragon Shipping Inc. Reports Fourth Quarter And Year Ended December 31, 2013 Results

Paragon Shipping Inc. Reports Fourth Quarter And Year Ended December 31, 2013                                    Results  - Net revenue of $15.6 million in the fourth quarter of 2013, up 20.3% year over year  - Adjusted EBITDA of $4.7 million in the fourth quarter of 2013, up 6.6% year over year  - Adjusted net loss of $1.8 million, or $0.10 per common share in the fourth quarter of 2013  - Cancelled one 4,800 TEU containership newbuilding and reduced the contract price on the one remaining containership  - Purchased two additional Eco-Design Ultramax newbuilding drybulk carriers, bringing the total to four  - Secured financing for two Ultramax newbuilding drybulk carriers (Hull no. DY152 and Hull no. DY153)  PR Newswire  ATHENS, Greece, March 13, 2014  ATHENS, Greece, March 13, 2014 /PRNewswire/ --Paragon Shipping Inc. (NASDAQ: 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, 2013.  Financial Highlights (Expressed in thousands of United States Dollars, except for vessel data, TCE and share data)                          Quarter Ended Quarter Ended Year Ended   Year Ended                           December 31,  December 31,  December 31, December 31,                                        2013          2012         2013                          2012 Average number of        12.0          13.0          11.2         12.9 vessels Time charter equivalent  10,563        11,804        11,923       10,729 rate (TCE) ^(1) Net Revenue              12,945        15,571        50,301       56,257 EBITDA ^(1)              6,858         556           7,577        7,873 Adjusted EBITDA ^(1)     4,409         4,698         24,169       19,657 Net Income / (Loss)      329           (5,960)       (17,557)     (16,953) Adjusted Net Loss ^(1)   (2,120)       (1,818)       (965)        (5,169) Earnings / (Loss) per common share basic and   0.05          (0.34)        (2.84)       (1.31) diluted Adjusted Loss per common share basic and diluted  (0.33)        (0.10)        (0.16)       (0.40) ^(1)      Please see the table at the back of this release for a reconciliation of     TCE to Charter Revenue, EBITDA and Adjusted EBITDA to Net Income / (Loss),     Adjusted Net Income / (Loss) to Net Income / (Loss) and Adjusted Earnings (1) / (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").  Management Commentary Commenting on the results, Michael Bodouroglou, Chairman and Chief Executive Officer of Paragon Shipping, stated, "During the fourth quarter of 2013, we experienced a significant improvement in the time charter market, which boosted our revenues year over year and helped improve our EBITDA and earnings on an adjusted basis."  Mr. Bodouroglou continued, "In 2013, we capitalized on the foundation we set at the end of 2012 and continued to execute on our growth strategy. During 2013, we increased and modernized our fleet with the delivery of one Handysize drybulk vessel, the M/V Priceless Seas, and the purchase of four new Eco-Design Ultramax newbuildings. We transitioned our fleet employment strategy away from medium and long-term time charters to the spot market and short-term contracts, in order to take advantage of the expected improvement in time charter rates in 2014. We also secured financing for our newbuilding vessels that are expected to be delivered in 2014. So far, 2014 has continued to be rather active with respect to our fleet growth. In January 2014, we took delivery of our fourth Handysize drybulk vessel, the M/V Proud Seas. In addition, following the completion of our public offering of 6,785,000 common shares in February 2014, we signed shipbuilding contracts for Eco-Design Kamsarmax newbuildings that increased our current newbuilding program to eight vessels with scheduled deliveries between the second quarter of 2014 and the fourth quarter of 2015."  Mr. Bodouroglou concluded, "Our mission is to continue to position the Company for growth in order to take advantage of what we expect to be a stronger drybulk market in the coming years, which in turn should create additional value for our shareholders."  Fourth Quarter 2013 Financial Results Gross charter revenue for the fourth quarter of 2013 was $16.5 million, compared to $13.7 million for the fourth quarter of 2012, an increase of 20.7% year over year. The Company reported a net loss of $6.0 million, or $0.34 per basic and diluted share, for the fourth quarter of 2013, calculated based on a weighted average number of basic and diluted shares outstanding for the period of 17,162,948 and reflecting the impact of the non-cash items discussed below. For the fourth quarter of 2012, the Company reported net income of $0.3 million, or $0.05 per basic and diluted share, calculated based on a weighted average number of basic and diluted shares of 6,354,014.  Excluding all non-cash items described below, the adjusted net loss for the fourth quarter of 2013 was $1.8 million, or $0.10 per basic and diluted share, compared to adjusted net loss of $2.1 million, or $0.33 per basic and diluted share, for the fourth quarter of 2012.  EBITDA for the fourth quarter of 2013 was $0.6 million, compared to $6.9 million for the fourth quarter of 2012. EBITDA for the fourth quarter of 2013 was calculated by adding the net loss of $6.0 million to 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 $4.7 million for the fourth quarter of 2013, compared to $4.4 million for the fourth quarter of 2012.  The Company operated an average of 13.0 vessels during the fourth quarter of 2013, earning an average TCE rate of $11,804 per day, compared to an average of 12.0 vessels during the fourth quarter of 2012, earning an average TCE rate of $10,563 per day.  Total adjusted operating expenses for the fourth quarter of 2013 equaled $9.9 million, or approximately $8,301 per vessel per day, which included vessel operating expenses, management fees, general and administrative expenses and dry-docking costs, and excluded share-based compensation for the period of $0.3 million. For the fourth quarter of 2012, total adjusted operating expenses were $7.4 million, or approximately $6,663 per vessel per day, which included the items mentioned above, and excluded share-based compensation of $0.1 million.  Following the cancellation of one of the two 4,800 TEU containership newbuildings, the Company recorded a loss from contract cancellation of $0.6 million in the fourth quarter of 2013, of which $0.2 million related to capitalized expenses incurred in prior fiscal years.  As of December 31, 2013, the Company owned approximately 13.6% 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. Based on the unaudited financial statements reported by Box Ships on March 11, 2014, for the fourth quarter of 2013, the Company recorded income of $0.3 million, representing its share of Box Ships' net income for the period, compared to $0.4 million for the fourth quarter of 2012. In the fourth quarter of 2013, we received a cash amount of $0.2 million, representing dividend distributions from Box Ships, compared to $0.8 million received in the fourth quarter of 2012.  As of December 31, 2013, 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 $2.8 million.  As of December 31, 2013, the change in the fair value of the 65,896 shares of Korea Line Corporation ("KLC"), which the Company received as part of the settlement agreement entered into with KLC in September 2011 and pursuant to the amended KLC rehabilitation plan that was approved by the Seoul Central District Court on March 28, 2013, was considered as other than temporary, and therefore the Company recorded a non-cash loss of $1.0 million in the fourth quarter of 2013.  Fourth Quarter 2013 Non-cash Items The Company's results for the three months ended December 31, 2013 included the following non-cash items:    oWrite off of capitalized expenses from contract cancellation of $0.2     million, or $0.01 per basic and diluted share.   oLoss on marketable securities of $1.0 million, or $0.05 per basic and     diluted share.   oLoss on investment in affiliate of $2.8 million, or $0.17 per basic and     diluted share.   oAn unrealized gain on interest rate swaps of $0.2 million, or $0.01 per     basic and diluted share.   oNon-cash expenses of $0.3 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 executive officers, directors and     employees.  In the aggregate, these non-cash items decreased the Company's earnings by $4.1 million, which represents a $0.24 decrease in earnings per basic and diluted share, for the three months ended December 31, 2013.  Year ended December 31, 2013 Financial Results Gross charter revenue for the year ended December 31, 2013 was $59.5 million, compared to $53.2 million for the year ended December 31, 2012. The Company reported a net loss of $17.0 million, or $1.31 per basic and diluted share, for the year ended December 31, 2013, calculated based on a weighted average number of basic and diluted shares outstanding for the period of 12,639,128 and reflecting the impact of the non-cash items discussed below. For the year ended December 31, 2012, the Company reported a net loss of $17.6 million, or $2.84 per basic and diluted share, calculated based on a weighted average number of basic and diluted shares of 6,035,910.  Excluding all non-cash items described below, the adjusted net loss for the year ended December 31, 2013 was $5.2 million, or $0.40 per basic and diluted share, compared to adjusted net loss of $1.0 million, or $0.16 per basic and diluted share, for the year ended December 31, 2012.  EBITDA for the year ended December 31, 2013 was $7.9 million, compared to $7.6 million for the year ended December 31, 2012. EBITDA for the year ended December 31, 2013 was calculated by adding the net loss of $17.0 million to net interest expense, including interest expense from interest rate swaps, and depreciation that in the aggregate amounted to $24.8 million. Adjusted EBITDA, excluding all non-cash items described below, was $19.7 million for the year ended December 31, 2013, compared to $24.2 million for the year ended December 31, 2012.  The Company operated an average of 12.9 vessels during the year ended December 31, 2013, earning an average TCE rate of $10,729 per day, compared to an average of 11.2 vessels during the year ended December 31, 2012, earning an average TCE rate of $11,923 per day.  Total adjusted operating expenses for the year ended December 31, 2013 equaled $37.2 million, or approximately $7,895 per vessel per day, which included vessel operating expenses, management fees, general and administrative expenses and dry-docking costs, and excluded share-based compensation for the period of $1.9 million. For the year ended December 31, 2012, total adjusted operating expenses were $28.3 million, or approximately $6,896 per vessel per day, which included the items mentioned above, and excluded share-based compensation of $2.5 million.  For the year ended December 31, 2013, the Company recorded a $2.3 million gain from vessel early redelivery, mainly representing the total cash compensation, net of commissions, received due to the early termination of the M/V Coral Seas and M/V Deep Seas time charter agreements with Morgan Stanley Capital Group Inc.  Following the cancellation of one of the two 4,800 TEU containership newbuildings, the Company recorded a loss from contract cancellation of $0.6 million in 2013, of which $0.2 million related to capitalized expenses incurred in prior fiscal years.  Based on the unaudited financial statements reported by Box Ships on March 11, 2014, for the year ended December 31, 2013, the Company recorded income of $1.7 million, representing its share of Box Ships' net income for the period, compared to $2.0 million for the year ended December 31, 2012. In the year ended December 31, 2013, we received a cash amount of $1.8 million, representing dividend distributions from Box Ships, compared to $3.7 million received in the year ended December 31, 2012.  In the year ended December 31, 2013, the Company recorded a non-cash loss of $0.4 million relating to the dilution effect from the Company's non-participation in the public offering by Box Ships of 4,000,000 of Box Ships' common shares, which was completed on March 18, 2013. In addition, as of September 30, 2013 and December 31, 2013, 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 $5.4 million and $2.8 million, respectively. Both items are included in "Loss on investment in affiliate" in the unaudited condensed consolidated statements of comprehensive loss at the end of this release.  Pursuant to the amended KLC rehabilitation plan, in the year ended December 31, 2013, the Company recorded a gain from marketable securities of $3.1 million, representing the fair value of 58,483 additional KLC shares issued to the Company, based on the closing price of KLC shares as of May 9, 2013, the date of issuance. As of September 30, 2013 and December 31, 2013, the change in the fair value of the 65,896 shares of KLC owned by the Company was considered as other than temporary, and therefore the Company recorded a non-cash loss that in the aggregate amounted to $1.9 million in 2013.  Year ended December 31, 2013 Non-cash Items The Company's results for the year ended December 31, 2013 included the following non-cash items:    oWrite off of capitalized expenses from contract cancellation of $0.2     million, or $0.02 per basic and diluted share.   oLoss on marketable securities of $1.9 million, or $0.15 per basic and     diluted share.   oLoss on investment in affiliate of $8.6 million, or $0.66 per basic and     diluted share.   oAn unrealized gain on interest rate swaps of $0.8 million, or $0.06 per     basic and diluted share.   oNon-cash expenses of $1.9 million, or $0.14 per basic and diluted share,     relating to share based compensation to the management company amounting     to $1.1 million and to the amortization of the compensation cost     recognized for non-vested share awards issued to executive officers,     directors and employees amounting to $0.8 million.  In the aggregate, these non-cash items decreased the Company's earnings by $11.8 million, which represents a $0.91 decrease in earnings per basic and diluted share, for the year ended December 31, 2013.  Cash Flows For the year ended December 31, 2013, the Company generated net cash from operating activities of $4.6 million, compared to $13.4 million for the year ended December 31, 2012. For the year ended December 31, 2013, net cash used in investing activities was $6.4 million and net cash from financing activities was $15.5 million. 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.  Time Charter Coverage Update Pursuant to our chartering strategy, we will continue to employ our vessels on short-term time charters or voyage charters, which generally last for periods of ten days to four months, to be in a position to take advantage of any further strengthening of the spot market as the charter market continues to improve.  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 6% of our fleet capacity for the remainder of 2014.  Follow-On Public Offering On February 18, 2014, the Company completed a public offering of 6,785,000 of its Class A common shares at $6.25 per share, including the full exercise of the over-allotment option granted to the underwriters to purchase up to 885,000 additional common shares. The gross proceeds from the offering before the underwriting discounts and commissions amounted to approximately $42.4 million (including $5.5 million from the exercise of the over-allotment option). The net proceeds from the offering, after the underwriting discounts and commissions and estimated offering expenses payable by us, amounted to $39.7 million.  Newbuilding Program Update In December 2013, the Company agreed to acquire shipbuilding contracts for two additional Ultramax newbuilding drybulk carriers. The Ultramax newbuildings are sister ships to the two Ultramax newbuildings the Company previously acquired, have a carrying capacity of 63,500 dwt each and are currently under construction at Yangzhou Dayang Shipbuilding Co. Ltd., member of Sinopacific Shipbuilding Group, with scheduled deliveries in the second quarter of 2015. The total consideration for these two Ultramax newbuildings amounted to $56.5 million.  The Company also entered into an agreement with Zhejiang Ouhua Shipbuilding, a Chinese shipyard, to cancel one of its two 4,800 TEU containership newbuilding contracts at no cost to the Company, to transfer the deposit to the remaining vessel and to reduce its contract price from the original $57.5 million to $55.0 million. The balance of the contract price is due upon the delivery of the vessel in the second quarter of 2014 and is expected to be financed through the loan facility with China Development Bank ("CDB"), subject to certain closing conditions. The Company is currently in discussions with CDB to amend the terms of the credit facility to reflect the cancellation of one of its two 4,800 TEU containership newbuilding contracts.  On January 7, 2014, the Company took delivery of its fourth Handysize drybulk vessel; the M/V Proud Seas. In January 2014, an amount of $21.6 million was paid to the shipyard representing the final installment of the respective vessel, which was financed from the syndicated secured loan facility led by Nordea Bank Finland Plc.  In March 2014, the Company signed shipbuilding contracts for three Kamsarmax newbuilding drybulk carriers. These Eco-Design Kamsarmax newbuildings have a carrying capacity of 81,800 dwt each and will be built at Jiangsu Yangzijiang Shipbuilding Co. Two of the newbuildings are scheduled to be delivered in the second quarter of 2015 and one is scheduled to be delivered in the fourth quarter of 2015. The total consideration for these three newbuilding contracts is $91.7 million.  Financing Update In December 2013, the Company entered into a commitment with HSH Nordbank AG ("HSH"), subject to the execution of definitive documentation, for a $47.0 million senior secured post-delivery term loan facility, for the refinancing of the M/V Friendly Seas and the partial financing of the first two Ultramax newbuilding drybulk carriers, the Hull no. DY152 and the Hull no. DY153. For M/V Friendly Seas, HSH agreed to finance the lower of $12.6 million or 60% of the vessel's market value upon the respective drawdown date. For each of the two Ultramax vessels, HSH agreed to finance the lower of $17.2 million or 65% of the vessels' market value upon their delivery.  On January 20, 2014, the Company agreed with Unicredit Bank AG to extend the existing waiver relating to the EBITDA coverage ratio covenant contained in the respective loan facility until January 1, 2015.  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, 2013 results on March 14, 2014 at 9:00 am Eastern Time.  Participants should dial into the call ten minutes before the scheduled time using the following numbers 1-877-300-8521 (USA) or +1-412-317-6026 (international) to access the call. A replay of the conference call will be available for seven days and can be accessed by dialing 1-877-870-5176 (USA) or +1-858-384-5517 (international) and using passcode 10042306.  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 Inc. is an international shipping company incorporated under the laws of the Republic of the Marshall Islands with executive offices in Athens, Greece, specializing in the transportation of drybulk cargoes. Paragon Shipping's current fleet consists of fourteen drybulk vessels with a total carrying capacity of 853,699 dwt. In addition, Paragon Shipping's current newbuilding program consists of two Ultramax drybulk carriers and one 4,800 TEU containership that are scheduled to be delivered in 2014, as well as two Ultramax drybulk carriers and three Kamsarmax drybulk carriers that are scheduled to be delivered in 2015. Paragon Shipping has granted Box Ships Inc., an affiliated company, the option to acquire its containership under construction. For more information, visit: www.paragonship.com. The information contained on the Paragon Shipping'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 March 13, 2014.  Operating Drybulk Fleet  Name            Type / No. of Vessels 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 Proud Seas      Handysize             37,227  2014 Total Handysize 4                     148,927 Grand Total     14                    853,699  Drybulk Newbuildings that we have agreed to acquire  Hull no.         Type / No. of Vessels Dwt     Expected Delivery Ultramax Hull no. DY152   Ultramax              63,500  Q2 2014 Hull no. DY153   Ultramax              63,500  Q3 2014 Hull no. DY4050  Ultramax              63,500  Q2 2015 Hull no. DY4052  Ultramax              63,500  Q2 2015 Total Ultramax   4                     254,000 Kamsarmax Hull no. YZJ1144 Kamsarmax             81,800  Q2 2015 Hull no. YZJ1145 Kamsarmax             81,800  Q2 2015 Hull no. YZJ1142 Kamsarmax             81,800  Q4 2015 Total Kamsarmax  3                     245,400 Grand Total      7                     499,400  Containership Fleet  The following table represents the containership newbuilding vessel that we have agreed to acquire as of March 13, 2014.  Containership Newbuilding that we have agreed to acquire  Hull no.      TEU   Dwt    Expected Delivery Box King ^(1) 4,800 56,500 Q2 2014 Total         4,800 56,500  (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 Year ended    Year ended                         December 31,  December 31,                December 31,                         2012          2013          December 31, 2013                                                     2012 FLEET DATA Average number of       12.0          13.0          11.2          12.9 vessels (1) Calendar days for fleet 1,104         1,196         4,099         4,717 (2) Available days for      1,104         1,196         4,099         4,652 fleet (3) Operating days for      1,083         1,180         4,063         4,622 fleet (4) Fleet utilization (5)   98.1%         98.7%         99.1%         99.4% AVERAGE DAILY RESULTS Time charter equivalent 10,563        11,804        11,923        10,729 (6) Vessel operating        4,328         4,185         4,588         4,401 expenses (7) Dry-docking expenses    -             -             -             360 (8) Management fees - related party adjusted  1,001         1,049         999           1,023 (9) General and administrative expenses 1,334         3,067         1,309         2,111 adjusted (10) Total vessel operating  6,663         8,301         6,896         7,895 expenses adjusted (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 - 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 thousands of United States Dollars where applicable, except for TCE)                          Quarter Ended Quarter Ended Year Ended   Year Ended                           December 31,  December 31,  December 31, December 31,                          2012          2013          2012         2013 Charter Revenue          13,682        16,509        53,219       59,531 Commissions              (737)         (938)         (2,918)      (3,274) Voyage Expenses, net     (1,505)       (1,642)       (1,856)      (6,669) Net Revenue, net of      11,440        13,929        48,445       49,588 voyage expenses Total operating days     1,083         1,180         4,063        4,622 Time Charter Equivalent  10,563        11,804        11,923       10,729    Condensed Cash Flow Information (Unaudited) (Expressed in thousands of United States Dollars)                                            Year Ended        Year Ended                                             December 31, 2012 December 31, 2013 Cash and Cash Equivalents, beginning of    14,564            17,677 period Cash generated from / (used in): Operating Activities                       13,377            4,564 Investing Activities                       (15,702)          (6,442) Financing Activities                       5,438             15,503 Net increase in Cash and Cash Equivalents  3,113             13,625 Cash and Cash Equivalents, end of period   17,677            31,302    Reconciliation of U.S. GAAP Financial Information to Non-GAAP Financial Information EBITDA and Adjusted EBITDA Reconciliation (1) (Expressed in thousands of United States Dollars)                           Quarter Ended Quarter      Year Ended   Year Ended                           December 31,  Ended        December 31, December 31,                           2012          December 31, 2012         2013                                         2013 Net Income / (Loss)       329           (5,960)      (17,557)     (16,953) Plus Net interest expense, including        2,454         2,213        8,748        7,839 interest expense from interest rate swaps Plus Depreciation         4,075         4,303        16,386       16,987 EBITDA                    6,858         556          7,577        7,873 Adjusted EBITDA Reconciliation Net Income / (Loss)       329           (5,960)      (17,557)     (16,953) Write off of capitalized expenses from contract    -             233          -            233 cancellation Loss on marketable        -             959          980          1,911 securities Gain from debt            (1,893)       -            (1,893)      - extinguishment Loss on investment in     -             2,852        16,985       8,620 affiliate Unrealized gain on        (692)         (175)        (2,017)      (835) interest rate swaps Non-cash expenses from the amortization of share based compensation cost   136           273          2,537        1,855 recognized and share based compensation to the management company Adjusted Net Loss         (2,120)       (1,818)      (965)        (5,169) Plus Net interest expense, including        2,454         2,213        8,748        7,839 interest expense from swaps Plus Depreciation         4,075         4,303        16,386       16,987 Adjusted EBITDA           4,409         4,698        24,169       19,657      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.    Reconciliation of U.S. GAAP Financial Information to Non-GAAP Financial Information Adjusted Net Income / (Loss) and Adjusted Earnings / (Loss) per common share Reconciliation (Expressed in thousands of United States Dollars - except for shares and share data)                          Quarter Ended Quarter Ended Year Ended   Year Ended U.S. GAAP Financial Information              December 31,  December 31,  December 31, December 31,                          2012          2013          2012         2013 Net Income / (Loss)      329           (5,960)       (17,557)     (16,953) Net Income / (Loss) attributable to          6             (123)         (444)        (352) non-vested share awards Net Income / (Loss) available to common      323           (5,837)       (17,113)     (16,601) shareholders Weighted average number of common shares basic   6,354,014     17,162,948    6,035,910    12,639,128 and diluted Earnings / (Loss) per common share basic and   0.05          (0.34)        (2.84)       (1.31) diluted Reconciliation of Net Income / (Loss) to Adjusted Net Income / (Loss) Net Income / (Loss)      329           (5,960)       (17,557)     (16,953) Write off of capitalized expenses from contract   -             233           -            233 cancellation Loss on marketable       -             959           980          1,911 securities Gain from debt           (1,893)       -             (1,893)      - extinguishment Loss on investment in    -             2,852         16,985       8,620 affiliates Unrealized gain on       (692)         (175)         (2,017)      (835) interest rate swaps Non-cash expenses from the amortization of share based compensation cost recognized and      136           273           2,537        1,855 share based compensation to the management company Adjusted Net Loss (1)    (2,120)       (1,818)       (965)        (5,169) Adjusted Net Loss attributable to          (38)          (37)          (24)         (108) non-vested share awards Adjusted Net Loss available to common      (2,082)       (1,781)       (941)        (5,061) shareholders Weighted average number of common shares basic   6,354,014     17,162,948    6,035,910    12,639,128 and diluted Adjusted Loss per common share basic and diluted  (0.33)        (0.10)        (0.16)       (0.40) (1)      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.    Paragon Shipping Inc. Unaudited Condensed Consolidated Balance Sheets As of December 31, 2012 and December 31, 2013 (Expressed in thousands of United States Dollars)                                           December 31, 2012  December 31, 2013 Assets Cash and restricted cash (current and     27,687             41,312 non-current) Vessels, net                              298,376            306,136 Advances for vessels under construction   49,593             45,209 Other fixed assets, net                   498                596 Investment in affiliate                   19,988             11,309 Loan to affiliate                         14,000             - Other assets                              9,833              14,984 Total Assets                              419,975            419,546 Liabilities and Shareholders' Equity Total debt                                195,542            180,115 Total other liabilities                   8,912              6,780 Total shareholders' equity                215,521            232,651 Total Liabilities and Shareholders'       419,975            419,546 Equity    Paragon Shipping Inc. Unaudited Condensed Consolidated Statements of Comprehensive Income / (Loss) For the three months ended December 31, 2012 and 2013 (Expressed in thousands of United States Dollars - except for shares and share data)                                         Three Months Ended  Three Months Ended                                         December 31, 2012   December 31, 2013 Revenue Charter revenue                        13,682              16,509 Commissions                            (737)               (938) Net Revenue                             12,945              15,571 Expenses / (Income) Voyage expenses, net                    1,505               1,642 Vessels operating expenses             4,778               5,005 Management fees - related party        1,105               1,254 Depreciation                            4,075               4,303 General and administrative expenses    1,608               3,940 Bad debt provisions                     125                 (69) Loss from contract cancellation         -                   569 Loss from marketable securities, net    -                   959 Other income                            (47)                (638) Operating Loss                          (204)               (1,394) Other Income / (Expenses) Interest and finance costs              (1,946)             (2,022) Gain / (loss) on derivatives, net       13                  (41) Interest income                         171                 24 Equity in net income of affiliate       398                 342 Gain from debt extinguishment           1,893               - Loss on investment in affiliate         -                   (2,852) Foreign currency gain / (loss)          4                   (17) Total Other Income / (Expenses), net    533                 (4,566) Net Income / (Loss)                     329                 (5,960) Other Comprehensive Income / (Loss) Unrealized gain / (loss) on cash flow   10                  (61) hedges Transfer of realized loss on cash flow  75                  79 hedges to "Interest and finance costs" Equity in other comprehensive loss of   (107)               - affiliate Unrealized gain / (loss) on change in   153                 (959) fair value of marketable securities Transfer of impairment of marketable securities to                           -                   959 "Loss from marketable securities, net" Total Other Comprehensive Income        131                 18 Comprehensive Income / (Loss)           460                 (5,942) Earnings / (Loss) per Class A common    $ 0.05              ($0.34) share, basic and diluted Weighted average number of Class A      6,354,014           17,162,948 common shares, basic and diluted  Paragon Shipping Inc. Unaudited Condensed Consolidated Statements of Comprehensive Loss For the years ended December 31, 2012 and 2013 (Expressed in thousands of United States Dollars - except for shares and share data)                                           Year Ended         Year Ended                                           December 31, 2012  December 31, 2013 Revenue Charter revenue                          53,219             59,531 Commissions                              (2,918)            (3,274) Net Revenue                               50,301             56,257 Expenses / (Income) Voyage expenses, net                      1,856              6,669 Vessels operating expenses               18,808             20,759 Dry-docking expenses                      -                  1,698 Management fees - related party          4,095              5,874 Depreciation                              16,386             16,987 General and administrative expenses      7,902              10,764 Bad debt provisions                       125                - Gain from vessel early redelivery         -                  (2,268) Loss from contract cancellation           -                  569 Gain from marketable securities, net      (414)              (1,202) Other income                              (751)              (638) Operating Income / (Loss)                 2,294              (2,955) Other Income / (Expenses) Interest and finance costs                (6,745)            (7,440) Loss on derivatives, net                  (714)              (95) Interest income                           729                531 Equity in net income of affiliate         1,987              1,652 Gain from debt extinguishment             1,893              - Loss on investment in affiliate           (16,985)           (8,620) Foreign currency loss                     (16)               (26) Total Other Expenses, net                 (19,851)           (13,998) Net Loss                                  (17,557)           (16,953) Other Comprehensive Income / (Loss) Unrealized (loss) / gain on cash flow     (848)              131 hedges Transfer of realized loss on cash flow    175                312 hedges to "Interest and finance costs" Equity in other comprehensive (loss) /    (107)              77 income of affiliate Unrealized loss on change in fair value   (827)              (2,064) of marketable securities Transfer of impairment of marketable securities to                             980                1,911 "Gain from marketable securities, net" Total Other Comprehensive (Loss) /        (627)              367 Income Comprehensive Loss                        (18,184)           (16,586) Loss per Class A common share, basic and  ($2.84)            ($1.31) diluted (1) Weighted average number of Class A        6,035,910          12,639,128 common shares, basic and diluted (1)    SOURCE Paragon Shipping Inc.  Website: http://www.paragonship.com  
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