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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